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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 2002

                        Commission file number 333-52442

                         TRAVELCENTERS OF AMERICA, INC.
             (Exact name of Registrant as specified in its charter)

            DELAWARE                                         36-3856519
  (State or other jurisdiction of                           (IRS Employer
  incorporation or organization)                         Identification No.)

                       24601 Center Ridge Road, Suite 200
                             Westlake, OH 44145-5639
          (Address of principal executive offices, including zip code)

                                 (440) 808-9100
              (Registrant's telephone number, including area code)

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

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

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 [ ]

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. [x]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).  Yes [ ]   No [X]

As of March 15, 2003, there were outstanding 6,939,498 shares of common stock,
par value $0.00001 per share. The outstanding shares of our common stock were
issued in transactions not involving a public offering. As a result, there is no
public market for our common stock.

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                                         INDEX

<S>           <C>                                                                  <C>
PART I
    Item 1.   Business...........................................................   2
    Item 2.   Properties.........................................................  15
    Item 3.   Legal Proceedings..................................................  15
    Item 4.   Submission of Matters to a Vote of Security Holders................  15

PART II
    Item 5.   Market for Our Common Equity and Related Stockholder Matters.......  16
    Item 6.   Selected Financial Data............................................  19
    Item 7.   Management's Discussion and Analysis...............................  21
    Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.........  38
    Item 8.   Financial Statements and Supplementary Data........................  39
    Item 9.   Changes in and Disagreements With Accountants......................  82

PART III
    Item 10.  Our Directors and Executive Officers...............................  82
    Item 11.  Executive Compensation.............................................  82
    Item 12.  Security Ownership of Certain Beneficial Owners and Management.....  82
    Item 13.  Certain Relationships and Related Transactions.....................  82
    Item 14.  Controls and Procedures............................................  82

PART IV
    Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K....  83

SIGNATURES.......................................................................  85

CERTIFICATIONS...................................................................  86
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                                       1
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                                     PART I

ITEM 1.  BUSINESS

BUSINESS OVERVIEW

         We are a holding company which, through our wholly owned subsidiaries,
owns, operates and franchises travel centers along the United States interstate
highway system to serve long-haul trucking fleets and their drivers, independent
truck drivers and general motorists. Our network is the largest, and only
nationwide, full-service travel center network in the United States. At December
31, 2002, our geographically diverse network consisted of 152 sites located in
40 states. In January 2003, we began operating in Canada through the acquisition
of a travel center located in Woodstock, Ontario. Our operations are conducted
through three distinct types of travel centers:

         -     sites owned or leased and operated by us, which we refer to as
               company-operated sites;

         -     sites owned by us and leased to independent lessee-franchisees,
               which we refer to as leased sites; and

         -     sites owned and operated by independent franchisees, which we
               refer to as franchisee-owned sites.

         Our travel centers are located at key points along the U.S. interstate
highway system, typically on 20- to 25-acre sites. Most of our network
properties were developed more than 20 years ago when prime real estate
locations along the interstate highway system were more readily available than
they are today, making a network such as ours difficult to replicate. Operating
under the "TravelCenters of America" and "TA" brand names, our nationwide
network provides an advantage to long-haul trucking fleets by enabling them to
reduce the number of their suppliers by routing their trucks within our network
from coast to coast.

         One of the primary strengths of our business is the diversity of our
revenue sources. We have a broad range of product and service offerings,
including diesel fuel and gasoline, truck repair and maintenance services,
full-service restaurants, 22 different brands of fast food restaurants, which we
refer to as quick service restaurants, or QSRs, travel and convenience stores
and other driver amenities.

         The U.S. travel center and truck stop industry in which we operate
consists of travel centers, truck stops, diesel fuel outlets and similar
facilities designed to meet the needs of long-haul trucking fleets and their
drivers, independent truck drivers and general motorists. According to the
National Association of Truck Stop Operators, or "NATSO," the travel center and
truck stop industry is highly fragmented, with in excess of 3,000 travel centers
and truck stops located on or near interstate highways nationwide, of which we
consider approximately 500 to be full-service facilities. Further, only eight
chains in the United States have 25 or more travel center and truck stop
locations on the interstate highways, which we believe is the minimum number of
locations needed to provide even regional coverage to truck drivers and trucking
fleets.

HISTORY AND ORGANIZATION

         We were formed in December 1992 by a group of institutional investors.
We were originally incorporated as National Auto/Truckstops Holdings Corporation
but changed our name to TravelCenters of America, Inc. in March 1997. We
primarily have created our network through the following series of acquisitions:

         -     In April 1993, we acquired the truckstop network assets of a
               subsidiary of Unocal Corporation, which sites we refer to as the
               "Unocal network." The Unocal network included a total of 139
               facilities, of which 95 were leased sites, 42 were
               franchisee-owned sites and two sites were company-operated sites.


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         -     In December 1993, we acquired the truckstop network assets of
               certain subsidiaries of The British Petroleum Company p.l.c.,
               which assets we refer to as the "BP network." The BP network
               included 38 company-operated sites and six franchisee-owned
               sites.

         -     In December 1998, we acquired substantially all of the truckstop
               network assets of Burns Bros., Inc. and certain of its
               affiliates, which assets we refer to as the Burns Bros. network.
               The Burns Bros. network included 17 company-operated sites,
               located in nine western and northwestern states.

         -     In June 1999, we acquired the travel center and truck stop
               network assets of Travel Ports of America, Inc. through the
               acquisition of 100% of the stock of Travel Ports. The Travel
               Ports network consisted of 16 company-operated sites in seven
               states, primarily in the northeastern region of the United
               States.

         Historically, until 1997, the Unocal network operated principally as a
fuel wholesaler and franchisor, with relatively few company-operated sites. In
contrast to the Unocal network, the BP network operated principally as an
owner-operator of travel centers. In January 1997, we instituted a plan to
combine the Unocal network and the BP network, which had been previously managed
and financed separately, into a single network to be operated under the
"TravelCenters of America" and "TA" brand names under the leadership of a single
management team. Prior to combining the Unocal and BP networks, the Unocal
network was operated through National Auto/Truckstops, Inc. and the BP network
was operated through TA Operating Corporation, each of National Auto/Truckstops,
Inc. and TA Operating Corporation being a wholly owned subsidiary of ours. At
the time we approved the plan to combine our networks, there were 122 sites
operating in the Unocal network and 49 sites operating in the BP network. In
November 2000, National Auto/Truckstops, Inc. merged with and into TA Operating
Corporation.

         In July 1999, we signed an agreement with Freightliner LLC to become an
authorized provider of express service, minor repair work and a specified menu
of warranty repairs to Freightliner's customers through the Freightliner
ServicePoint Program. Under the agreement, our truck repair facilities have been
added to Freightliner's 24-hour customer assistance center database as a major
referral point for emergency and roadside repairs and also have access to
Freightliner's parts distribution, service and technical information systems.
Freightliner, a DaimlerChrysler company, is a leading manufacturer of heavy
trucks in North America. Freightliner also acquired a minority ownership
interest in us at that time.

         On May 31, 2000, we and shareholders owning a majority of our voting
stock entered into a recapitalization agreement and plan of merger, as amended,
with TCA Acquisition Corporation, a newly created corporation formed by Oak Hill
Capital Partners, L.P. and its affiliates ("Oak Hill"), under which TCA
Acquisition Corporation agreed to merge with and into us. This merger was
completed on November 14, 2000. Concurrent with the closing of the merger, we
completed a series of transactions to effect a recapitalization and a
refinancing that included the following:

         -     TCA Acquisition Corporation issued 6,456,698 shares of common
               stock to Oak Hill and a group of other institutional investors,
               which we refer to as the Other Investors, for proceeds of $205.0
               million and then merged TCA Acquisition Corporation with and into
               us. At the time of the merger, the Other Investors were Olympus
               Growth Fund III, L.P., Olympus Executive Fund, L.P., Monitor
               Clipper Equity Partners, L.P., Monitor Clipper Equity Partners
               (Foreign), L.P., UBS Capital Americas II, LLC, Credit Suisse
               First Boston LFG Holdings 2000, L.P. and Credit Suisse First
               Boston Corporation, each of whom is an affiliate of certain of
               our former shareholders. Since that time, certain of these
               investors have sold their shares to other investors, including
               affiliates of certain of the Other Investors. Such sales of our
               shares are not frequent but could occur in the future.


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         -     We redeemed all shares of our common and preferred stock
               outstanding prior to the closing of the merger, with the
               exception of 473,064 shares of common stock with a market value
               at that time of $15.0 million that were retained by continuing
               stockholders, and cancelled all then outstanding common stock
               options and warrants for cash payments totaling $263.2 million.

         -     We repaid all amounts outstanding under our then existing debt
               agreements.

         -     We borrowed $328.3 million under a secured credit agreement with
               a group of lenders and issued units consisting of Senior
               Subordinated Notes due 2009 with a face amount of $190.0 million
               and initial warrants and contingent warrants that in the
               aggregate could be exercised in exchange for 277,165 shares of
               our common stock.

         -     We merged National Auto/Truckstops, Inc. with and into TA
               Operating Corporation.

         Prior to the closing of the transactions described above, we issued
137,572 shares of common stock for cash proceeds of $3.7 million upon the
exercise of stock options held by existing shareholders, which shares remain
outstanding. After the transactions described above, Oak Hill owned 60.5% of our
outstanding common stock, the Other Investors owned, in the aggregate, 32.7% of
our outstanding common stock, Freightliner owned 4.3% of our outstanding common
stock and certain members of our management owned 2.5% of our outstanding common
stock. The total market value of our equity capitalization after these
transactions was $220.0 million.

         At December 31, 2002, we had two wholly owned subsidiaries, TA
Operating Corporation, which is our primary travel center operating entity, and
TA Franchise Systems Inc, which maintains our franchise agreements and
relationships. TA Operating Corporation has the following direct or indirect
wholly owned subsidiaries:

         -   TA Licensing, Inc.

         -   TA Travel, L.L.C.

         -   TravelCenters Properties, L.P.

         -   TravelCenters Realty, L.L.C.

         In January 2003, we formed three wholly-owned Canadian entities through
which our Canadian operations are conducted:

         -   3703000 Nova Scotia Company

         -   TravelCentres Canada Inc.

         -   TravelCentres Canada Limited Partnership

NETWORK DEVELOPMENT

         Due to historical competition between the Unocal and BP networks, there
were certain markets in which each of these networks had an existing site at the
time we instituted our plan to combine these two networks. Likewise, there was
competition in certain markets between our networks and the networks of Burns
Bros. and of Travel Ports. In addition, there were certain franchisee-owned
sites in the Unocal network that were not considered to be in strategic
locations. Further, there were, and continue to be, locations on the interstate
highway system that we consider to be strategic but in which we do not have an
adequate presence. As a result, since 1997 we have significantly reshaped the
composition of our network through the following:

         -   17 company-operated sites were acquired from Burns Bros. in 1998;

         -   16 company-operated sites in the Travel Ports network were acquired
             in 1999;


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         -   40 leased sites were converted to company-operated sites, five
             during 2002, three during 2000, five during 1998 and 27 during
             1997;

         -   one franchisee-owned site was converted to a company-operated site
             during 2000;

         -   five new network sites were constructed, one in 2002, one in 2001,
             one in 2000 and two in 1999;

         -   two company-operated sites were added to our network through
             individual site acquisitions during 2000 (one additional site was
             acquired in January 2003);

         -   franchise agreements covering 28 franchisee-owned sites were
             terminated, one in 2000 and 27 in 1997;

         -   31 sites we owned were sold, three during 2002, four during 2001,
             two during 2000, five during 1999, two during 1998 and 15 during
             1997 (one additional site was sold in January 2003);

         -   three franchisee-owned sites were added to our network, one in
             2002, one in 1999 and one in 1998; and

         -   two company-operated sites were closed during 1999 (one was sold
             during 2002 and our selling efforts are continuing for the other).

         In 1997, we initiated a capital program to upgrade, rebrand and
re-image our travel centers and to build new travel centers. This capital
program was substantially completed during 2002. Under this capital program, as
revised as a result of the Burns Bros. acquisition and the Travel Ports
acquisition, we invested approximately $407 million in our sites by the end of
2002. Through December 31, 2002, we had completed full re-image projects at 36
of our sites at an average investment of $2.1 million per site. These full
re-image projects typically include expanding the square footage of the travel
and convenience store, adding a fast food court with two or three QSRs,
upgrading showers and restrooms and updating the full-service restaurant. We
also had completed smaller scale re-image projects at another 60 sites at an
average cost of $0.3 million. During 2003, we intend to continue our re-imaging
program for the company-operated sites by completing full re-image projects at
an additional three sites at an aggregate cost of approximately $5.3 million.
After 2003, we will have only eight company-operated sites at which a re-image
project may be completed some time in the future. In addition to improving our
existing sites, we have identified several new interstate areas available for
our network's expansion. We have designed a "protoype" facility and a smaller
"protolite" facility to standardize our travel centers and expand our brand name
into new geographic markets while also increasing our appeal to motorists. The
prototype and protolite designs combine an improved and efficient facility
layout with nationally branded QSRs and gasoline brands as well as expanded
product and service offerings. Since May 1999, we have completed construction of
seven prototype facilities and three protolite facilities. Further, we are
currently developing two protolite facilities, one of which is a rebuilding of a
current site. Most of our future expansion will be with the protolite format,
which requires significantly less land and capital investment than the prototype
design and enables us to quickly and cost efficiently gain a presence in smaller
markets. We also intend to pursue strategic acquisitions and additional
franchisee-owned sites. Our franchisees will also continue to invest additional
amounts of their own capital for reimaging and other projects at the sites they
operate.

REFINANCING

         As part of the transactions we completed to consummate our merger with
TCA Acquisition Corporation and the related recapitalization, we completed a
refinancing of our indebtedness, which refinancing transactions we refer to as
the "2000 Refinancing." In the 2000 Refinancing, we issued $190 million of
senior subordinated notes due 2009 and borrowed $328.3 million under our amended
and restated senior credit facility that consists of a fully-drawn $328 million
term loan facility and a $100 million revolving credit facility. The proceeds
from these borrowings, along with proceeds from the issuance of common stock and
other cash on hand, were used to:

         -   pay for the tender offer and consent solicitation for our 10 1/4%
             Senior Subordinated Notes due 2007, including accrued interest,
             premiums and a prepayment penalty;


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         -   repay all amounts, including accrued interest, then outstanding
             under our existing amended and restated credit agreement;

         -   redeem in full all of our then existing senior secured notes and
             pay related accrued interest and prepayment penalties;

         -   make cash payments to certain of our then current equity owners,
             whose shares and unexercised stock options and warrants were
             redeemed and cancelled pursuant to the recapitalization agreement
             and plan of merger; and

         -   pay fees and expenses related to the financings and the merger and
             recapitalization transactions.

         The $190 million of Senior Subordinated Notes were issued as part of
units that also included warrants exercisable for 277,165 shares of our common
stock. See "Liquidity and Capital Resources" in Item 7 for further discussion of
the 2000 Refinancing.

OUR TRAVELCENTERS

         Our travel centers are designed to appeal to drivers seeking either a
quick stop or a more extended visit. Substantially all of our travel centers are
full-service facilities located on or near an interstate highway and offer fuel
and non-fuel products and services 24 hours per day, 365 days per year.

         Property. The layouts of the travel centers we own vary from site to
site. The facilities we own are located on properties averaging 22 acres, of
which an average of approximately 19 acres are developed. The majority of the
developed acreage consists of truck and car fuel islands, separate truck and car
paved parking and the main building, which contains a full-service restaurant
and one or more QSRs, a travel and convenience store and driver amenities and a
truck maintenance and repair shop. The remaining developed acreage contains
landscaping and access roads.

         Product and Service Offerings. We have developed an extensive and
diverse offering of products and services to complement our diesel fuel
business, which includes:

         -   Gasoline. We sell nationally recognized branded gasoline,
             consistently offering one of the top three gasoline brands in each
             geographic region. Of our 122 company-operated sites as of December
             31, 2002, we offered branded gasoline at 93 sites and unbranded
             gasoline at 17 sites.

         -   Full-Service and Fast Food Restaurants. Most of our travel centers
             have both full-service restaurants and QSRs that offer customers a
             wide variety of nationally recognized brand names and food choices.
             Our full-service restaurants, branded under our "Country Pride,"
             "Buckhorn Family Restaurants" and "Fork in the Road" proprietary
             brands, offer "home style" meals through menu table service and
             buffets. We also offer nationally branded QSRs such as Arby's,
             Burger King, Dunkin' Donuts, Pizza Hut, Popeye's Chicken &
             Biscuits, Sbarro, Subway, Taco Bell and 14 other brands. We
             generally attempt to locate QSRs within the main travel center
             building, as opposed to constructing stand-alone buildings. As of
             December 31, 2002, we had 159 QSRs in our company-operated sites,
             and 101 of our network travel centers offered at least one branded
             QSR.

         -   Truck Repair and Maintenance Shops. All but eight of our network
             travel centers have truck repair and maintenance shops. The typical
             repair shop has between two and four service bays, a parts storage
             room and trained mechanics on duty at all times. These shops, which
             generally operate 24 hours per day, 365 days per year, offer
             extensive maintenance and emergency repair and road services,
             ranging from basic services such as oil changes and tire repair to
             specialty services such as diagnostics and repair of air
             conditioning, air brake and electrical systems. Our work is backed
             by a warranty honored at all of our repair and maintenance
             facilities. As of December 31, 2002, all but two of our network
             sites that have truck repair and maintenance shops were
             participating in the Freightliner ServicePoint Program.


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         -   Travel and Convenience Stores. Each travel center has a travel and
             convenience store that caters to truck drivers, motorists,
             recreational vehicle operators and bus drivers and passengers. Each
             travel and convenience store has a selection of over 4,000 items,
             including food and snack items, beverages, non-prescription drug
             and beauty aids, batteries, automobile accessories, music and audio
             products. In addition to complete travel and convenience store
             offerings, the stores sell items specifically designed for the
             truck driver's on-the-road lifestyle, including laundry supplies
             and clothing as well as truck accessories. Many stores also have a
             "to go" snack bar installed as an additional food offering.

         -   Additional Driver Services. We believe that fleets can improve the
             retention and recruitment of truck drivers by directing them to
             visit high-quality, full-service travel centers. We strive to
             provide a consistently high level of service and amenities to
             drivers at all of our travel centers, making our network an
             attractive choice for trucking fleets. Most of our travel centers
             provide truck drivers with access to specialized business services,
             including an information center where drivers can send and receive
             faxes, overnight mail and other communications and a banking desk
             where drivers can cash checks and receive fund transfers from fleet
             operators. Most sites have installed telephone rooms with 25 to 30
             pay telephones with AT&T long distance service. The typical travel
             center also has a video game room and designated "truck driver
             only" areas, including a television room with a VCR and comfortable
             seating for drivers, a laundry area with washers and dryers and an
             average of six to 12 private showers.

             Additionally, we offer truck drivers a loyal fueler program, which
             we call the RoadKing Club, that is similar to the frequent flyer
             programs offered by airlines. Drivers receive a point for each
             gallon of diesel fuel purchased and can redeem their points for
             discounts on non-fuel products and services at any of our travel
             centers.

         -   Motels. Twenty of our company-operated travel centers offer motels,
             with an average capacity of 40 rooms. Sixteen of these motels are
             operated under franchise grants from nationally branded motel
             chains, including Days Inn, HoJo Inn, Super 8, Rodeway and
             Travelodge.

OPERATIONS

         Fuel Supply. We purchase diesel fuel from various suppliers at rates
that fluctuate with market prices and are reset daily, and resell fuel to our
customers at prices that we establish daily. By establishing supply
relationships with an average of four to five alternate suppliers per location,
we have been able to effectively create competition for our purchases among
various diesel fuel suppliers on a daily basis. We believe that this positioning
with our suppliers will help our sites avoid product outages during times of
diesel fuel supply disruptions. We have a single source of supply for gasoline
at most of our sites that offer branded gasoline. Sites selling unbranded
gasoline do not have exclusive supply arrangements.

         Other than pipeline tenders, fuel purchases made by us are delivered
directly from suppliers' terminals to our travel centers. We do not contract to
purchase substantial quantities of fuel for our inventory and are therefore
susceptible to price increases and interruptions in supply. We use pipeline
tenders and leased terminal space to mitigate the risk of supply disruptions.
The susceptibility to market price increases for diesel fuel is substantially
mitigated by the significant percentage of our total diesel fuel sales volume
that is sold under pricing formulae that are indexed to market prices, which
reset daily. We do not engage in any fixed-price contracts with customers. We
sell a majority of our diesel fuel on the basis of a daily industry index of
average fuel costs plus a pumping fee and we hold less than three days of diesel
fuel inventory at our sites. We engage in only a minimal level of hedging of our
fuel purchases with futures and other derivative instruments that primarily are
traded on the New York Mercantile Exchange.


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         The Environmental Protection Agency has promulgated regulations to
decrease the sulfur content of diesel fuel by 2006. The enactment of these
regulations could reduce the supply and/or increase the cost of diesel fuel. A
material decrease in the volume of diesel fuel sold for an extended period of
time or instability in the prices of diesel fuel could have a material adverse
effect on us.

         Non-fuel products supply. There are many sources for the large variety
of non-fuel products that we purchase and sell. We have developed strategic
relationships with several suppliers of key non-fuel products, including
Freightliner LLC for truck parts, Bridgestone/Firestone Tire Sales Company for
truck tires, and Equilon Enterprises LLC for Shell brand lubricants and oils. We
believe that our relationships with these and our other suppliers are
satisfactory and that supply of the non-fuel products we require is adequate.

         Centralized Purchasing and Distribution. We maintain a distribution and
warehouse center that services our network. The distribution center is located
near Nashville, Tennessee and has approximately 85,000 square feet of storage
space. Approximately every two weeks, the distribution center delivers products
to our network sites using a combination of contract carriers and our fleet of
trucks and trailers. In 2002, the distribution center shipped approximately
$43.5 million of products. We believe the distribution center provides us with
cost savings by using its consolidated purchasing power to negotiate volume
discounts with third-party suppliers. The distribution center is also able to
obtain further price reductions from suppliers in the form of reduced shipping
charges, as suppliers need only deliver their products to the distribution
center warehouse, as opposed to each site individually.

COMPETITION

         The U.S. travel center and truck stop industry in which we operate
consists of travel centers, truck stops, diesel fuel outlets and similar
facilities designed to meet the needs of long-haul trucking fleets and their
drivers, independent truck drivers and general motorists. The travel center and
truck stop industry is highly competitive and fragmented. According to NATSO,
there are in excess of 3,000 travel center and truck stops located on or near
highways nationwide, of which we consider approximately 500 to be full-service
facilities. Further, only eight chains in the United States have 25 or more
travel center and truck stop locations on the interstate highways, which we
believe is the minimum number of locations needed to provide even regional
coverage to truck drivers and trucking fleets. There are generally two types of
facilities designed to serve the trucking industry:

         -   full-service travel centers, such as those in our network, which
             offer a broad range of products and services to long-haul trucking
             fleets and their drivers, independent truck drivers and general
             motorists, such as diesel fuel and gasoline; full-service and fast
             food dining; truck repair and maintenance; travel and convenience
             stores; secure parking areas and other driver amenities; and,

         -   pumper-only truck stops, which provide diesel fuel, typically at
             discounted prices, with a more limited mix of additional services
             than a full-service travel center.

         Fuel and non-fuel products and services can be obtained by long-haul
truck drivers from a wide variety of sources other than us, including regional
full-service travel center and pumper-only truck stop chains, independently
owned and operated truck stops, some large service stations and fleet-operated
fueling terminals.

         We believe that we experience substantial competition from pumper-only
truck stop chains and that this competition is based principally on diesel fuel
prices. In the pumper-only truck stop segment, the largest networks, based on
the number of facilities, are Pilot Travel Centers LLC, with approximately 296
sites, Flying J Inc., with approximately 153 sites, and Love's Travel Stops &
Country Stores, Inc., with approximately 75 sites. We experience additional
substantial competition from major full-service travel center networks and
independent chains, which is based principally on diesel fuel prices, non-fuel
product and service offerings and customer service. In the full-service travel
center segment, the only large network, other than ours, is operated by Petro
Stopping Centers, L.P., with approximately 60 sites. Our truck repair and
maintenance shops compete with regional full-service travel center and truck
stop chains, full-service independently owned and operated truck stops, fleet
maintenance terminals, independent garages, truck dealerships and auto parts
service centers. We also compete with a variety of


                                       8
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establishments located within walking distance of our travel centers, including
full-service restaurants, QSRs, electronics stores, drugstores and travel and
convenience stores.

         A significant portion of all intercity diesel fuel consumption by
trucking fleets and companies with their own trucking capability occurs through
self-fueling at both dedicated terminals and at fuel depots strategically
located across the country. These terminals often provide facilities for truck
repair and maintenance. Our pricing decisions for diesel fuel and truck repair
and maintenance services cannot be made without considering the existence of
these operations and their capacity for expansion. However, we believe that a
trucking industry trend has been to reduce the use of these terminals and to
outsource fuel, repair and maintenance services to maximize the benefits of
competitive fuel pricing, superior driver amenities and reduced environmental
compliance expenditures.

         A potential additional source of competition in the future could result
from the possible commercialization of state-owned interstate rest areas.
Historically, these rest areas have been precluded from offering for sale fuel
and non-fuel products and services, similar to that of a travel center. In
response to repeated requests over the past several years from state governments
that want to earn additional revenues from these rest areas, recent federal
legislation provides for limited tests for commercializing these rest areas.
Past attempts for such commercialization historically have been successfully
opposed by a group of opponents that includes NATSO, fast food restaurant
operators and others. If commercialized, these rest areas, and any additional
rest area commercialized in ensuing years, will increase the number of outlets
competing with us for the business of highway travelers. It is possible we may
obtain the opportunity to play a role in these commercialization efforts, which
would reduce any negative effects of such commercialization on our travel center
business.

RELATIONSHIPS WITH THE OPERATORS AND FRANCHISEE-OWNERS

         TA Licensing, Inc., a wholly owned subsidiary of TA Operating
Corporation, licenses its trademarks to us, TA Operating Corporation and TA
Franchise Systems. We enter into franchise agreements with operators and
franchisee-owners of travel centers through TA Franchise Systems, and TA
Franchise Systems collects franchise fees and royalties under these agreements.
TA Franchise System's assets consist primarily of the rights under the original
franchise agreements, the network franchise agreements and its trademark
licenses from TA Licensing. TA Franchise Systems has no tangible assets.

Network Franchise Agreement

         As of December 31, 2002, there were 22 sites operating under network
franchise agreements. The more significant provisions of the network franchise
agreement are described in the following paragraphs.

         Initial Franchise Fee. The initial franchise fee for a new franchise is
$100,000.

         Term of Agreement. The initial term of the network franchise agreement
is ten years. The network franchise agreement provides for two five-year
renewals on the terms being offered to prospective franchisees at the time of
the franchisee's renewal. We reserve the right to decline renewal under certain
circumstances or if specified terms and conditions are not satisfied by the
franchisee. The average remaining term of these agreements, including all
renewal periods, is approximately 20 years. The initial terms of the current
network franchise agreements expire in July 2012 through January 2013.

         Protected Territory. Subject to specified exceptions, including
existing operations, so long as the franchisee is not in default under the
network franchise agreement, we agree not to operate, or allow another person to
operate, a travel center or travel center business that uses the "TA" brand,
within 75 miles in either direction along the primary interstate on which the
franchised site is located.

         Restrictive Covenants. Except for the continued operation of specified
businesses identified by the franchisee at the time of execution of the network
franchise agreement, the franchisee cannot, during the term of the


                                       9
<PAGE>

agreement, operate any travel center or truck stop-related business under a
franchise agreement, licensing agreement or marketing plan or system of its own
or another person or entity. If the franchisee owns the franchised premises, the
franchisee may continue to operate a travel center at the franchised premises
after termination of the franchise agreement, but if the termination is for any
reason other than a termination at the expiration of the term of the agreement,
the franchisee is restricted for a two-year period from re-branding the facility
with any other truck stop or travel center company or other organization
offering similar services and/or fleet billing services.

         Royalty Payments. Franchisees are required to pay us a continuing
services and royalty fee generally equal to 3.75% of all non-fuel revenues. If
branded fast food is sold from the franchised premises, the franchisee must pay
us 3% of all net revenues earned directly or indirectly in connection with those
sales after deduction of royalties paid to the fast food franchisor.

         Advertising, Promotion and Image Enhancement. The network franchise
agreement requires the franchisees to contribute 0.6% of their non-fuel revenues
and net revenues from fast food sales to partially fund system-wide advertising,
marketing and promotional expenses we incur. We are required to match the
amounts of the franchisees' contributions.

         Fuel Purchases and Sales. Under the network franchise agreement for
those franchisees operating leased sites, we agree to sell to franchisees, and
franchisees agree to buy from us, 100% of their requirements of diesel fuel.
Those franchisees operating franchisee-owned sites are not required to purchase
their diesel fuel from us. The franchisee agrees to purchase gasoline from only
those suppliers that we approve in writing. The franchisee generally must pay a
$0.03 per gallon royalty fee to us on all gallons of gasoline sold.

         Non-fuel Product Offerings. Franchisees are required to operate their
sites in conformity with guidelines that we establish and offer any products and
services that we deem integral to the network.

         Termination/Nonrenewal. We may terminate the network franchise
agreement for the following reasons, among others:

         -   the default of the franchisee;

         -   our withdrawal from the marketing of motor fuel in the state,
             county or parish where the franchise is located; or

         -   the default or termination of the lease.

         The foregoing reasons also constitute grounds for nonrenewal of the
network franchise agreement. In addition, we can decline to renew the network
franchise agreement for the following reasons, among others:

         -   we and the operator fail to agree to changes or additions to the
             network franchise agreement;

         -   we make a good faith determination not to renew the network
             franchise agreement because it would be uneconomical to us; or

         -   if we own the franchise premises, we make a good faith
             determination to sell the premises or convert it to a use other
             than for a truck stop or travel center.

         If we do not renew the network franchise agreement due to any of the
three foregoing reasons, we may not enter into another network franchise
agreement relating to the same franchised premises with another party within 180
days of the expiration date on terms materially different from those offered to
the prior franchisee, unless the prior franchisee is offered the right, for a
period of 30 days, to accept a renewal of the network franchise agreement on
those different terms. If we do not renew the network franchise agreement
because we make a good faith determination to withdraw from the marketing of
fuel in the area of the franchised premises, we may not sell the franchised
premises or franchised business for 90 days following the expiration of the
network franchise agreement. The prior franchisee does not have a right of first
refusal on the sale of the franchised premises.


                                       10
<PAGE>

Network Lease Agreement

         In addition to franchise fees, we also collect rent from those
franchisees that operate a travel center owned by us. As of December 31, 2002,
there were 20 leased sites. Each operator of a leased site that enters into a
network franchise agreement also must enter into a network lease agreement. The
more significant provisions of the network lease agreement are described in the
following paragraphs.

         Term of Agreement. The lease agreements we have with our franchisees
have a term of ten years and allow for two renewals of five years each. We
reserve the right to decline renewal under certain circumstances or if specified
terms and conditions are not satisfied by the operator. The average remaining
term of these agreements, including all renewal periods, is approximately 20
years. The initial terms of the current network lease agreements expire in July
2012 through January 2013.

         Rent. Under the network lease, an operator must pay annual fixed rent
equal to the sum of

         -   base rent agreed upon by the operator and us, plus

         -   improvement rent, if any, which is defined as an amount equal to
             14% of the cost of all capital improvements we fund that we and the
             operator mutually agree will enhance the value of the leased
             premises and which cost in excess of $2,500, plus

         -   an annual inflator equal to the percentage increase in the consumer
             price index.

         The base rent will not be increased by the improvement rent if the
operator elects to pay for the capital improvements. If we and the operator
agree upon an amortization schedule for a capital improvement funded by the
operator, we will, upon termination of the network lease, reimburse the operator
for an amount equal to the unamortized portion of the cost of the capital
improvement. The operator is responsible for the payment of all charges and
expenses in connection with the operation of the leased sites, including
environmental registration fees and certain maintenance costs.

         Use of the Leased Site. The operator must operate the leased site as a
travel center in compliance with all laws, including all environmental laws. The
operator must submit to quality inspections that we request and appoint a
manager that we approve, who is responsible for the day-to-day operations at the
leased site.

         Termination/Nonrenewal/Transferability/Right of First Refusal. The
network lease agreement contains terms and provisions regarding termination,
nonrenewal, transferability and our right of first refusal which are
substantially the same as the terms and provisions of the network franchise
agreement.

Original Franchise Agreement with BP Network Independent Franchisees

         There are eight sites that continue to operate under the franchise
agreements they had with TA Franchise Systems prior to the network franchise
agreement being revised to its current form in 2002. The terms of these
franchise agreements are generally the same as the network franchise agreement,
but they do not require the franchises to purchase their diesel fuel from us and
their provisions vary. At the expiration of these agreements, the respective
franchisees may be offered an option to renew their franchises under a form of
our then-current franchise agreement for franchisee-owned sites.

         Term of Agreement. In general, the initial terms of the original
franchise agreements are 10 years. The original franchise agreements provide for
one or two renewals for an aggregate of 10 years. The original franchise
agreements offer no assurance that the terms of the renewal will be the same as
those of the initial franchise agreements. We may decline renewal under some
circumstances or if specified terms and conditions are not satisfied by the
franchisee. Excluding one franchise agreement that expired in January 2002 and
for which a network franchise agreement is currently being negotiated, the
average remaining term of these agreements is approximately five years.


                                       11
<PAGE>

         Protected Territory. So long as the franchisee is not in default under
the franchise agreement, we agree not to operate, or allow another person to
operate, the travel center or travel center business that uses the "TA" brand,
within a specified area in either direction along one or more interstates at
which the franchised site is located.

         Restrictive Covenants. Although the restrictive covenants in the
original franchise agreements may vary slightly from franchise to franchise,
each franchisee is subject to restrictions that prohibit two or more of the
following during the term of the franchise agreement and for two years after its
expiration:

         -   operation of any other truck stop or travel center within its
             protected territory;

         -   operation of the franchise location under any national brand other
             than "TA";

         -   operation of the branded facility within a certain distance of any
             other TA facility; and

         -   operation of any competitive business or a business that trades
             upon the franchise within the area adjacent to the franchise
             location.

         Royalty Payments. In general, we require franchisees to pay us a
continuing services and royalty fee generally equal to 4% of all revenues earned
directly or indirectly by the franchisee from any business conducted at or from
the franchised premises, excluding fuel sales and sales of branded fast food. As
part of the royalty fee, we generally require the franchisee to pay us $0.004
per gallon on all sales of qualified diesel fuel.

         Advertising, Promotion and Image Enhancement. The network franchise
agreement requires the franchisees to contribute 0.25% of all revenues,
including revenues from fuel and fast food sales, to partially fund system-wide
advertising, marketing and promotional expenses we incur, and mandates certain
minimum franchisee expenditures on advertising. We are required to match the
amounts of the franchisees' contributions towards the system-wide expenses.

         Fuel Purchases and Sales. We do not require franchisees to purchase
gasoline or diesel fuel from us. However, we charge royalty fees generally on
diesel fuel sales as described above.

         Non-fuel Product Offerings. Franchisees are required to operate their
travel centers in conformity with our guidelines, participate in and comply with
all programs that we prescribe as mandatory and offer any products and services
we deem integral to the network.

         Termination of an Original Franchise Agreement. We may terminate the
franchise agreement upon the occurrence of certain defaults, upon notice and
without affording the franchisee an opportunity to cure the defaults. When other
defaults occur, we may terminate the franchise agreement if, after receipt of a
notice of default, the franchisee has not cured the default within the
applicable cure period. The franchisee may terminate the franchise agreement
upon thirty days notice, if we are in material default under the franchise
agreement and we fail to cure or attempt to cure the default within a reasonable
period after notification.

REGULATION

         Franchise Regulation. State franchise laws apply to TA Franchise
Systems, and some of these laws require TA Franchise Systems to register with
the state before it may offer a franchise, require TA Franchise Systems to
deliver specified disclosure documentation to potential franchisees, and impose
special regulations upon petroleum franchises. Some state franchise laws also
impose restrictions on TA Franchise Systems' ability to terminate or not to
renew its respective franchises, and impose other limitations on the terms of
the franchise relationship or the conduct of the franchisor. Finally, 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 antitrust laws at the federal
and state levels.


                                       12
<PAGE>

         The Federal Trade Commission, or the FTC, regulates us under their rule
entitled "Disclosure Requirements and Prohibitions Concerning Franchising and
Business Opportunity Ventures." Under this rule, the FTC requires that
franchisors make extensive disclosure to prospective franchisees but does not
require registration. We believe that we are in compliance with this rule.

         We cannot predict the effect of any future federal, state or local
legislation or regulation on our franchising operations.

         Environmental Regulation. Our operations and properties are extensively
regulated by Environmental Laws that:

         -   govern operations that may have adverse environmental effects, such
             as discharges to air, soil and water, as well as the management of
             Hazardous Substances or

         -   impose liability for the costs of cleaning up sites affected by,
             and for damages resulting from disposal or other releases of
             Hazardous Substances.

         We own and use underground storage tanks and aboveground storage tanks
to store petroleum products and waste at our facilities. These tanks must comply
with requirements of Environmental Laws regarding tank construction, integrity
testing, leak detection and monitoring, overfill and spill control, release
reporting, financial assurance and corrective action in case of a release. At
some locations, we must also comply with Environmental Laws relating to vapor
recovery and discharges to water. We have completed necessary upgrades to
underground storage tanks to comply with federal regulations that took effect on
December 22, 1998, and believe that all of our travel centers are in material
compliance with applicable requirements of Environmental Laws.

         We have received notices of alleged violations of Environmental Laws,
or are otherwise aware of the need to undertake corrective actions to comply
with Environmental Laws, at travel centers owned by us in a number of
jurisdictions. We do not expect that any financial penalties associated with
these alleged violations, or instances of noncompliance, or compliance costs
incurred in connection with these violations or corrective actions, will be
material to our results of operations or financial condition. We are conducting
investigatory and/or remedial actions with respect to releases of Hazardous
Substances that have occurred subsequent to the acquisition of the Unocal and BP
networks and also regarding historical contamination at certain of the former
Burns Bros. and Travel Ports facilities. While we cannot precisely estimate the
ultimate costs we will incur in connection with the investigation and
remediation of these properties, based on our current knowledge, we do not
expect that the costs to be incurred at these properties, individually or in the
aggregate, will be material to our results of operations or financial condition.
While the matters discussed above are, to the best of our knowledge, the only
proceedings for which we are currently exposed to potential liability,
particularly given the Unocal and BP indemnities discussed below, we cannot
assure you that additional contamination does not exist at these or additional
network properties, or that material liability will not be imposed on us in the
future. If additional environmental problems arise or are discovered, or if
additional environmental requirements are imposed by government agencies,
increased environmental compliance or remediation expenditures may be required,
which could have a material adverse effect on us. As of December 31, 2002, we
had a reserve for those matters of $2.9 million. In addition, we have obtained
environmental insurance of up to $25.0 million for unanticipated costs regarding
certain known environmental liabilities and for up to $40.0 million regarding
certain unknown environmental liabilities.

         As part of the acquisition of the Unocal network, Phase I environmental
assessments were conducted at the 97 Unocal network properties purchased by us.
Under an agreement with Unocal, Phase II environmental assessments of all Unocal
network properties were completed by Unocal by December 31, 1998. Under the
terms of this agreement, Unocal is responsible for all costs incurred for:

         -   remediation of environmental contamination, and

         -   otherwise bringing the properties into compliance with
             Environmental Laws as in effect at the date of the acquisition of
             the Unocal network,


                                       13
<PAGE>

with respect to the matters identified in the Phase I or Phase II environmental
assessments, which matters existed on or prior to the date of the acquisition of
the Unocal network. Under the terms of this agreement, Unocal also must
indemnify us against any other environmental liabilities that arise out of
conditions at, or ownership or operations of, the Unocal network prior to the
date of the acquisition of the Unocal network. The remediation must achieve
compliance with the Environmental Laws in effect on the date the remediation is
completed. We must make claims for indemnification prior to April 14, 2004.
Except as described above, Unocal does not have any responsibility for any
environmental liabilities arising out of the ownership or operations of the
Unocal network after the date of the acquisition of the Unocal network. We
cannot assure you that Unocal, if additional environmental claims or liabilities
were to arise under the agreement with Unocal, would not dispute our claims for
indemnification.

         Prior to the acquisition of the BP network, all of the 38 company-owned
locations purchased by us were subject to Phase I and Phase II environmental
assessments, undertaken at BP's expense. The environmental agreement with BP
provides that, with respect to environmental contamination or non-compliance
with Environmental Laws identified in the Phase I or Phase II environmental
assessments, BP is responsible for:

         -   all costs incurred for remediation of the environmental
             contamination, and

         -   for otherwise bringing the properties into compliance with
             Environmental Laws as in effect at the date of the acquisition of
             the BP network.

         The remediation must achieve compliance with the Environmental Laws in
effect on the date the remedial action is completed. The environmental agreement
with BP requires BP to indemnify us against any other environmental liabilities
that arise out of conditions at, or ownership or operations of, the BP network
locations prior to the date of the acquisition of the BP network. We must make
claims for indemnification before December 11, 2004. BP must also indemnify us
for liabilities relating to non-compliance with Environmental Laws for which
claims were made before December 11, 1996. Except as described above, BP does
not have any responsibility for any environmental liabilities arising out of the
ownership or operations of the BP network after the date of the acquisition of
the BP network. We cannot assure you that BP, if additional environmental claims
or liabilities were to arise under the environmental agreement with BP, would
not dispute our claims for indemnification.

         As part of the Burns Bros. acquisition, Phase I environmental
assessments were conducted on all 17 sites acquired. Based on the results of
those assessments, Phase II environmental assessments were conducted on nine of
the sites. The purchase price paid to Burns Bros. was adjusted based on the
findings of the Phase I and Phase II environmental assessments. Under the asset
purchase agreement with Burns Bros., we released Burns Bros. from any
environmental liabilities that may have existed as of the Burns Bros.
acquisition date, other than specified non-waived environmental claims as
described in the agreement with Burns Bros.

         As part of the Travel Ports acquisition, Phase I environmental
assessments were conducted on all 16 sites acquired. Based on the results of
those assessments, Phase II environmental assessments were conducted on five of
these sites. The results of these assessments were taken into account in
recognizing the related environmental contingency accrual for purchase
accounting purposes.


                                       14
<PAGE>

EMPLOYEES

         As of December 31, 2002, we employed approximately 10,000 people on a
full- or part-time basis. Of this total, approximately 9,630 were employees at
our company-operated sites, approximately 320 performed managerial, operational
or support services at our headquarters or elsewhere and approximately 50
employees staffed the distribution center. All but nine of our employees are
non-union. We believe that our relationship with our employees is satisfactory.

ITEM 2.  PROPERTIES

         Our principal executive offices are leased and are located at 24601
Center Ridge Road, Suite 200, Westlake, Ohio 44145-5639. Our distribution center
is a leased facility located at 1450 Gould Boulevard, LaVergne, Tennessee
37086-3535.

         Of our 142 owned sites in operation as of December 31, 2002, the land
and improvements at 13 are leased, the improvements but not the land at eight
are leased, three are subject to ground leases of the entire site and seven are
subject to ground leases of portions of these sites. We consider our facilities
suitable and adequate for the purposes for which they are used. In addition to
these 142 sites, we own one site that will be developed as a travel center and
one site that is closed and held for sale.

ITEM 3.  LEGAL PROCEEDINGS

         We are involved from time to time in various legal and administrative
proceedings and threatened legal and administrative proceedings incidental to
the ordinary course of our business. We believe we are currently not involved in
any litigation, individually or in the aggregate, which could have a material
adverse effect on our business, financial condition, results of operations or
cash flows.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during the
fourth quarter of 2002.


                                       15
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Market information. The outstanding shares of our common stock were
         issued in transactions not involving a public offering. As a result,
         there is no public market for our common stock.

         Holders. As of March 15, 2003, the outstanding shares of our common
         stock were held of record by 38 stockholders.

         Dividends. We have never paid or declared any cash dividends on our
         common stock, and we do not anticipate paying any cash dividends in the
         foreseeable future. We intend to retain our future earnings, if any, to
         fund the development and growth of our business. Our future decisions
         concerning the payment of dividends on the common stock will depend
         upon our results of operations, financial condition and capital
         expenditure plans, as well as other factors as the board of directors,
         in its sole discretion, may consider relevant. In addition, our
         existing indebtedness restricts, and we anticipate our future
         indebtedness may restrict, our ability to pay dividends.

         Recent sales of unregistered securities. During 2000, 2001 and 2002, we
         sold or issued the unregistered securities described below. None of the
         following transactions involved any public offering. All sales were
         made in reliance on Section 4(2) of the Securities Act of 1933, as
         amended (the "Securities Act"), Rule 701 promulgated under the
         Securities Act and/or Regulation D promulgated under the Securities
         Act. These sales were made without general solicitation or advertising.
         The recipients in each such transaction represented their intention to
         acquire the securities for investment only and not with a view to sell
         or for sale in connection with any distribution thereof.

              (1)  In November 2000, in connection with our merger and
                   recapitalization transactions further described in number (5)
                   below, we sold 100,000 shares to Freightliner at $33.30 per
                   share.

              (2)  In a series of sales to management, we sold the following:

                   -   In 2000, we sold 2,321 shares at $31.75 per share. The
                       proceeds from this sale were used for general corporate
                       purposes.

                   -   In November 2000, in connection with our merger and
                       recapitalization transactions further described in number
                       (5) below, certain members of management exercised
                       options to purchase an aggregate of 37,572 shares for
                       aggregate proceeds of $421,726.

                   -   In 2001, we sold 2,434 shares at $31.75 per share. The
                       proceeds from this sale were used for general corporate
                       purposes.

                   -   In 2002, we sold 7,302 shares at $31.75 per share. The
                       proceeds from these sales were used for general corporate
                       purposes.

                                       16
<PAGE>

              (3)  We consummated an offering of Senior Subordinated Notes due
                   2009 to "qualified institutional buyers," as defined in Rule
                   144A under the Securities Act and to non-U.S. persons under
                   Regulation S of the Securities Act. The offering was
                   consummated on November 14, 2000 with the sale of 190,000
                   units, each unit consisting of one 12 3/4% Senior
                   Subordinated Note due 2009 of TravelCenters of America, Inc.
                   with a principal amount of $1,000, three initial warrants to
                   purchase 0.36469 shares of our common stock and one
                   contingent warrant to purchase 0.36469 shares of our common
                   stock. We filed an exchange offer registration statement on
                   December 21, 2000 with respect to a proposed exchange of the
                   outstanding notes for registered notes having substantially
                   the same terms as the outstanding notes. A second
                   registration statement was filed on December 21, 2000 to
                   register the warrants and the shares of common stock issuable
                   upon exercise of the warrants.

                   We received net proceeds of approximately $171.7 million from
                   the sale of the units, which included the sale of the
                   outstanding notes, the initial warrants and contingent
                   warrants, (after deducting discounts, commissions and certain
                   expenses of the offering of the notes). The net proceeds from
                   the unit sale, together with cash, borrowings under the
                   Senior Credit Facility and the proceeds from the sale of
                   common equity were used to:

                   -   make cash payments totaling approximately $263.2 million
                       to certain of our then current equity owners, whose
                       shares and unexercised common stock options and warrants
                       were redeemed or canceled in connection with the
                       Transactions;

                   -   pay $16.3 million for the merger transaction expense of
                       certain of our then current equity owners;

                   -   repay all amounts outstanding under our Amended and
                       Restated Credit Agreement dated as of November 24, 1998;

                   -   redeem in full all of our then existing senior secured
                       notes and pay a prepayment penalty;

                   -   pay for the tender offer and consent solicitation for our
                       10 1/4% Senior Subordinated Notes due 2007, including
                       related premiums and a prepayment penalty; and

                   -   pay other transaction fees and expenses.

                   The initial warrants may be exercised at any time on or after
                   November 14, 2001, and the contingent warrants may be
                   exercised at any time after March 31, 2003. However, holders
                   of warrants will be able to exercise their warrants only if
                   the shelf registration statement is effective or the exercise
                   of the warrants is exempt from the registration requirements
                   of the Securities Act and only if the shares of common stock
                   are qualified for sale or exempt from qualification under the
                   applicable securities laws of the states or other
                   jurisdictions in which the holders reside. Unless earlier
                   exercised, the warrants will expire on May 1, 2009.


                                       17
<PAGE>

         Summary of Equity Compensation Plans. The following table sets forth
         information about all our equity compensation plans in effect as of
         December 31, 2002, which consisted solely of the 2001 Stock Incentive
         Plan, which plan was approved by our stockholders during 2001. All of
         our equity compensation plans currently in effect have been approved by
         our stockholders.

                      Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                                                              (C)
                                                                           Number of
                                                                          securities
                                   (A)                                     remaining
                                 Number of                                available for
                              securities to be            (B)            future issuance
                                issued upon        Weighted-average       under equity
                                exercise of         exercise price         compensation
                                outstanding         of outstanding       plans (excluding
                                  options,             options,             securities
                               warrants and           warrants            reflected in
Plan Category                     rights             and rights            column (A))
---------------------------   ----------------      ---------------      ----------------
<S>                             <C>                   <C>                 <C>
Equity compensation
plans approved by
stockholders...............     944,881               $  31.75                 --

Equity compensation plans
  not approved by
  stockholders.............          --                     --                 --
                                -------               --------               ----
Total                           944,811               $  31.75                 --
                                =======               ========               ====
</TABLE>


                                       18
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

         The following table sets forth our selected historical consolidated
financial data for each of the last five fiscal years. Such data should be read
in conjunction with "Management's Discussion and Analysis" and our audited
consolidated financial statements included elsewhere in this annual report. The
results of operations and other financial and operating data of the 17 sites
acquired from Burns Bros. and the 16 sites acquired in the Travel Ports
acquisition are included in our consolidated financial statements beginning on
the dates we completed the acquisitions, December 3, 1998 and June 3, 1999,
respectively.

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                                -------------------------------------------------------------------------
                                                  1998(1)        1999(2)           2000            2001         2002(3)
                                                -----------    -----------     -----------     -----------    -----------
                                                    (IN THOUSANDS OF DOLLARS, EXCEPT GALLONAGE AND SITE COUNT AMOUNTS)
<S>                                             <C>            <C>             <C>             <C>            <C>
INCOME STATEMENT DATA:
     Revenues:
         Fuel.................................. $   554,735    $   955,105     $ 1,485,732     $ 1,331,807    $ 1,237,989
         Non-fuel..............................     347,531        479,059         555,491         585,717        616,919
         Rent and royalties....................      21,544         20,460          18,822          17,491         15,539
                                                -----------    -----------     -----------     -----------    -----------
             Total revenues....................     923,810      1,454,624       2,060,045       1,935,015      1,870,447
     Gross profit (excluding depreciation).....     296,661        403,544         448,725         467,262        480,767
     Income from operations(4).................      20,576         39,724          19,141          41,527         52,804
     Extraordinary loss (net of applicable
       income taxes)...........................      (3,905)             -         (13,800)              -              -
     Net income (loss).........................      (8,082)            99         (37,714)         (9,842)         1,010

 BALANCE SHEET DATA (END OF PERIOD):
     Total assets.............................. $   609,219    $   651,716     $   735,055     $   679,856    $   660,549
     Long-term debt (net of unamortized
           discount)...........................     390,865        404,369         547,607         548,869        525,131
     Mandatorily redeemable preferred
           stock(5)............................      69,974         79,739               -               -              -
     Working capital...........................      97,378         35,232          38,727          26,949         19,252
OTHER FINANCIAL AND OPERATING DATA:
     Total diesel fuel sold (in thousands of
          gallons).............................     973,812      1,370,017       1,384,759       1,369,251      1,349,741
     Capital expenditures, excluding business
          acquisitions......................... $    65,704    $    87,401     $    68,107     $    54,490    $    42,640
     Cash flows (used in) provided by:
         Operating activities..................      48,521         44,712          65,952          37,106         61,512
         Investing activities..................    (125,505)      (136,016)        (77,115)        (46,234)       (42,110)
         Financing activities..................      94,428         20,144          22,142              (3)       (25,243)
     EBITDA(6).................................      68,708         97,976         103,547         105,035        113,577
NUMBER OF SITES (END OF PERIOD):

     Company-operated sites....................         105            118             122             119            122
     Leased sites..............................          30             29              26              25             20
     Franchisee-owned sites....................          10             11               9               9             10
                                                 ----------    -----------    ------------     -----------    -----------
         Total network sites...................         145            158             157             153            152
                                                 ==========    ===========    ============     ===========    ===========
</TABLE>


                                       19
<PAGE>




Notes to Selected Financial Data

(1)      Reflects the operating results of 17 sites we acquired from Burns Bros.
         on December 3, 1998.

(2)      Reflects the operating results of 16 sites we acquired as part of our
         acquisition of Travel Ports on June 3, 1999.

(3)      Beginning in 2002, as a result of adopting a new accounting
         pronouncement, we ceased amortization of our goodwill and trademark
         intangible assets.

(4)      For the year ended December 31, 2000, income from operations was
         reduced by $22,004,000 of merger and recapitalization expenses incurred
         in connection with the transactions we completed to consummate our
         merger with TCA Acquisition Corporation and related recapitalization.

(5)      "Mandatorily redeemable preferred stock" was comprised of two series of
         convertible preferred stock that were redeemed as part of our merger
         and recapitalization transactions in November 2000.

(6)      "EBITDA," as used here for years after 1999, is based on the definition
         for EBITDA in our bank debt agreement and consists of net income plus
         the sum of (a) income taxes, (b) interest expense, net, (c)
         depreciation, amortization and other noncash charges, which includes
         stock compensation expense, (d) transition expense and (e) costs of the
         merger and recapitalization transactions. For years prior to 2000,
         gains or losses on sales of property and equipment were also adjusted
         out of net income to determine EBITDA, as this was the definition for
         EBITDA in our prior bank debt agreement. We have included certain
         information concerning EBITDA because management believes that EBITDA
         is generally accepted by our security holders as providing useful
         information regarding a company's ability to service and/or incur debt.
         Further, EBITDA is a key measure monitored by our stockholders and
         lenders and, importantly, is a primary component of the financial ratio
         covenants in our debt agreements. EBITDA should not be considered in
         isolation from, or as a substitute for, net income, cash flows from
         operating activities or other consolidated income or cash flow
         statement data prepared in accordance with generally accepted
         accounting principles. While EBITDA is frequently used by other
         companies as a measure of operations and ability to meet debt service
         requirements, EBITDA as we use the term is not necessarily comparable
         to similarly titled captions of other companies due to differences in
         methods of calculation.


                                       20
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS

CRITICAL ACCOUNTING POLICIES

         Our discussion and analysis of our financial position and results of
operations is based upon, and should be read in conjunction with, our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses and
related disclosure of contingent assets and liabilities. Management believes the
critical accounting policies and areas that require the most significant
judgments and estimates to be used in the preparation of our consolidated
financial statements are the allowance for doubtful accounts, asset impairment,
environmental liabilities, income tax accounting, recognition of stock
compensation expense related to stock options and redeemable common stock held
by employees, and consolidation of special purpose entities.

         Allowances for doubtful accounts and notes receivable are maintained
based on historical payment patterns, aging of accounts receivable, periodic
review of our customers' financial condition, and actual writeoff history. If
the financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.

         We record impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying value of those assets, and when the carrying value of a long-lived
asset to be disposed of exceeds the estimated fair value of the asset less the
estimated cost to sell the asset. The net carrying value of assets not
recoverable is then reduced to fair value. Our estimated cash flows are based on
historical results adjusted to reflect the best estimate of future market and
operating conditions. The estimates of fair value represent the best estimate
based on industry trends and reference to market rates and transactions. If
these estimates or their underlying assumptions change in the future, we may be
required to record additional impairment charges for these assets or to reverse
previously recognized impairment charges.

         For purposes of assessing our goodwill for impairment, we have
determined that we are one reporting unit and that the estimated fair value of
that reporting unit, based on a discounted cash flow analysis, exceeded its
carrying value. With respect to our trademark intangible assets, the estimated
fair value, based on a discounted cash flow analysis, exceeded the carrying
value. Accordingly, we have not recognized an impairment charge with respect to
any of our intangible assets. A number of assumptions and methods are used in
preparing the valuations underlying these impairment tests, including estimates
of future cash flows and discount rates. Applying other assumptions or valuation
methods could result in different results of these impairment tests. Similarly,
defining the reporting unit differently could lead to a different result for
goodwill. Our goodwill and trademark intangible assets will be assessed for
impairment annually as of January 1 of each year.

         We establish an environmental contingency reserve when the
responsibility to remediate is probable and the amount of associated costs is
reasonably determinable. The estimates of these costs are based on our best
estimates of our future obligations given current and pending laws and the
currently available facts concerning each environmental incident, as well as our
estimate of amounts recoverable under indemnification agreements and/or state or
private insurance plans. Should the actual costs to remediate an incident differ
from our estimates, or should new facts come to light or laws become enacted
that modify the scope of our remediation projects, revisions to the estimated
environmental contingency reserve would be required.

         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. The process involves estimating actual
current tax expense along with assessing temporary differences resulting from
differing treatment of items for financial statement and tax purposes. These
timing differences result in deferred tax assets and liabilities, which are
included


                                       21
<PAGE>

in our consolidated balance sheet. We are required to record a valuation
allowance to reduce our deferred tax assets to the amount that is more likely
than not to be realized, although we have not to date recognized such a
valuation allowance as we believe realization of our deferred tax assets is more
likely than not. Increases in the valuation allowance would result in additional
expenses to be reflected within the tax provision in the consolidated statement
of operations. For further discussion regarding the realization of our deferred
tax assets, see the "Results of Operations - Income Taxes" section of this
"Management's Discussion and Analysis."

         Certain members of our senior management have purchased shares of our
common stock pursuant to individual management subscription agreements. We have
the right to repurchase, and the employees have the right to require us to
repurchase, subject to certain limitations, at fair market value, these shares
of common stock upon termination of employment due to death, disability or a
scheduled retirement. These shares are classified as redeemable equity in our
consolidated balance sheet. Prior to an initial public offering of our common
stock, the fair market value is determined by a formula set forth in the
agreement that can be modified by the Board of Directors. At the point in time
that redemption of shares of redeemable common stock becomes probable, the fair
value of the shares will be accreted to their estimated redemption value by a
charge to retained earnings. Such a charge to retained earnings will occur only
if our value, and therefore the fair value of our common stock, has increased.
Our policy is to consider redemption of an individual stockholder's shares
probable at the time that the stockholder provides notice of his or her
intention to retire, dies or is declared disabled. In addition to these
redeemable shares of common stock purchased by management employees, we have
granted to certain of our executives non-qualified stock options to purchase
944,881 shares of our common stock under a stock incentive plan. Each option
grant consists of 41.67% time options and 58.33% performance options. Time
options become exercisable with the passage of time, while performance options
become exercisable if certain investment return targets are achieved. Time
options generally vest 20% per year over a period of five years. Performance
options vest if Oak Hill achieves specified internal rates of return on
specified measurement dates. The time options are subject to fixed plan
accounting and, accordingly, no charge to earnings will be required with respect
to them since the exercise price equaled the fair value at the date of grant.
The performance options are subject to variable plan accounting and,
accordingly, a non-cash charge to earnings will be required when it becomes
probable that the performance triggers for such options will be achieved.
Because our common stock is privately held, determining its value is subject to
estimates and to factors, such as multiples being paid in the mergers and
acquisitions market at the time of the measurement and/or the state of the
capital markets at that time, that are not easily forecasted or controlled and
which may not have a direct relationship to our financial results or condition.
It is not possible to determine at this time, nor may it be possible until close
to the end of the five-year performance period, whether it will be probable that
we will achieve the performance triggers. It is not possible to predict whether
any such required non-cash charge will be material to our results for the period
in which the charge is recognized, as we expect that the performance triggers
can only be attained as a result of a significant increase in our results of
operations.

         We have entered into lease transactions of travel centers with a
special purpose entity. These lease transactions are evaluated for lease
classification in accordance with Statement of Financial Accounting Standards
(FAS) No. 13, "Accounting for Leases." We do not consolidate the lessor entity
so long as the owners of the special purpose entity maintain a substantial
residual equity investment of at least three percent that is at risk during the
entire term of the lease, which has been the case to date. In January 2003, the
FASB issued FASB Interpretation No. (FIN) 46 "Consolidation of Variable Interest
Entities." We must adopt this accounting guidance by July 1, 2003. Under FIN 46,
as the lessor with whom we have entered into our master lease program is
currently capitalized and structured, we would be required to consolidate the
lessor in our consolidated financial statements. We and the lessor are currently
evaluating our alternatives with respect to the master lease facility and have
not yet concluded on our course of action. Consolidating the lessor would affect
our consolidated balance sheet by increasing property and equipment, other
assets and long-term debt and would affect our consolidated statement of
operations by reducing operating expenses, increasing depreciation expense and
increasing interest expense. Consolidating the lessor is not expected to result
in violation of our debt covenants.


                                       22
<PAGE>

OVERVIEW

         We are a holding company which, through our wholly owned subsidiaries,
owns, operates and franchises travel centers along the United States interstate
highway system to serve long-haul trucking fleets and their drivers, independent
truck drivers and general motorists. Our network is the largest, and only
nationwide, full-service travel center network in the United States. Our
geographically diverse network consists of 152 sites located in 40 states in the
United States and, effective January 2003, in the province of Ontario, Canada.
Our operations are conducted through three distinct types of travel centers:

         -    sites owned or leased and operated by us, which we refer to as
              company-operated sites;

         -    sites owned by us and leased to independent lessee-franchisees,
              which we refer to as leased sites; and

         -    sites owned and operated by independent franchisees, which we
              refer to as franchisee-owned sites.

         Our travel centers are located at key points along the U.S. interstate
highway system and in Canada, typically on 20- to 25-acres sites. Most of our
network properties were developed more than 22 years ago when prime real estate
locations along the interstate highway system were more readily available than
they are today, making a network such as ours difficult to replicate. Operating
under the "TravelCenters of America" and "TA" brand names, our nationwide
network provides an advantage to long-haul trucking fleets by enabling them to
route their trucks within a single network from coast to coast.

         One of the primary strengths of our business is the diversity of our
revenue sources. We have a broad range of product and service offerings,
including diesel fuel and gasoline, truck repair and maintenance services,
full-service restaurants, 22 different brands of fast food restaurants, travel
and convenience stores and other driver amenities.

         The non-fuel products and services we offer to our customers complement
our fuel business and provide us a means to increase our revenues and gross
profit despite price pressure on fuel as a result of competition and volatile
crude oil and petroleum product prices. For the years ended December 31, 2000,
2001, and 2002, our revenues and gross profit were composed as follows:

<TABLE>
<CAPTION>
                                                                     YEAR ENDED
                                                                    DECEMBER 31,
                                                           -------------------------------
                                                            2000        2001        2002
                                                            -----       -----       -----
<S>                                                          <C>         <C>         <C>
Revenues:
   Fuel..................................................    72.1%       68.8%       66.2%
   Non-fuel..............................................    27.0%       30.3%       33.0%
   Rent and royalties....................................     0.9%        0.9%        0.8%
                                                            -----       -----       -----
         Total revenues..................................   100.0%      100.0%      100.0%
                                                            =====       =====       =====
Gross profit (excluding depreciation):
   Fuel..................................................    23.1%       22.1%       21.2%
   Non-fuel..............................................    72.7%       74.2%       75.6%
   Rent and royalties....................................     4.2%        3.7%        3.2%
                                                            -----       -----       -----
         Total gross profit (excluding depreciation).....   100.0%      100.0%      100.0%
                                                            =====       =====       =====
</TABLE>


                                       23
<PAGE>

COMPOSITION OF OUR NETWORK

         Since December 31, 1999, the changes in the number of sites within our
network and in their method of operation (company-operated, leased or
franchisee-owned) are significant factors influencing the changes in our results
of operations. The following table summarizes the changes in the composition of
our network from December 31, 1999 through December 31, 2002:

<TABLE>
<CAPTION>
                                              COMPANY-               FRANCHISEE-
                                              OPERATED     LEASED       OWNED       TOTAL
                                                SITES       SITES       SITES       SITES
                                              --------     ------    -----------    -----
<S>                                            <C>         <C>         <C>         <C>
Number of sites at December 31, 1999(1)          118         29          11          158

2000 Activity:
   New sites...............................        2          -           -            2
   Sales of sites..........................       (2)         -           -           (2)
   Conversion of franchisee-owned site
     to company-operated site..............        1          -          (1)           -
   Conversions of leased sites to
       company-operated sites..............        3         (3)          -            -
   Termination of franchisee-owned site....        -          -          (1)          (1)
                                               -----       ----        ----         ----
Number of sites at December 31, 2000(1)....      122         26           9          157

2001 Activity:
   Sales of sites..........................       (3)        (1)          -           (4)
                                               -----       ----        ----         ----
Number of sites at December 31, 2001.......      119         25           9          153
                                               -----       ----        ----         ----

2002 Activity:
   New sites...............................        1          -           1            2
   Sales of sites..........................       (3)         -           -           (3)
   Conversions of leased sites to
     company-operated sites................        5         (5)          -            -
                                               -----       ----        ----         ----
Number of sites at December 31, 2002.......      122         20          10          152
                                               =====       ====        ====         ====
</TABLE>

(1)  Includes one company-operated site held for development until its
     construction was completed during 2001.

         In January 2003, we acquired an operating travel center in Woodstock,
Ontario, Canada, our first location in Canada. We also sold one company-operated
site in January 2003.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

         Revenues. Our consolidated revenues for the year ended December 31,
2002 were $1,870.4 million, which represents a decrease from the year ended
December 31, 2001 of $64.6 million, or 3.3%, that is primarily attributable to a
decrease in fuel revenue.

         Fuel revenue for the year ended December 31, 2002 decreased by $93.8
million, or 7.0%, as compared to the same period in 2001. The decrease was
attributable principally to decreases in diesel fuel and gasoline average
selling prices. Average diesel fuel and gasoline sales prices for the year ended
December 31, 2002 decreased by 8.4% and 7.4%, respectively, as compared to the
same period in 2001, primarily reflecting decreases in commodity prices and also
reflecting our more competitive retail fuel pricing. The fuel revenue decline
also resulted from a decrease in our diesel fuel sales volumes that was
partially offset by an increase in gasoline sales volumes. Diesel fuel and
gasoline sales volumes for the year ended December 31, 2002 decreased 1.4% and
increased 27.5%,


                                       24
<PAGE>

respectively, as compared to the same period in 2001. For the year ended
December 31, 2002, we sold 1,349.7 million gallons of diesel fuel and 160.6
million gallons of gasoline, as compared to 1,369.3 million gallons of diesel
fuel and 125.9 million gallons of gasoline for the year ended December 31, 2001.
The diesel fuel sales volume decrease resulted from a 0.9% decrease in same-site
diesel fuel sales volumes and a net reduction in sales volumes at sites we added
to or eliminated from our network during 2001 and 2002 of 11.6 million gallons,
partially offset by an increase in our wholesale diesel fuel sales of 1.6
million gallons, or 2.7%. The gasoline sales volume increase was primarily
attributable to a 20.2% increase in same-site gasoline sales volumes and also
resulted from a 2.8 million net increase in gasoline sales volume at
company-operated sites we added to or eliminated from our network during 2001
and 2002, as well as an 8.2 million increase in wholesale gasoline sales volume.
We believe the same-site diesel fuel sales volume decrease resulted from a
decline in trucking activity in 2002 as compared to 2001, resulting from the
general condition of the United States economy, and occurred in spite of our
continued emphasis on competitively pricing our diesel fuel. The increased level
of wholesale diesel fuel sales volumes reflects our renewed efforts in this area
made possible by software and control process improvements we implemented during
2002. We believe the same-site increase in gasoline sales volume resulted
primarily from increased general motorist visits to our sites as a result of our
gasoline and QSR offering upgrades and additions under our capital program, as
well as our more competitive retail gasoline pricing.

         Non-fuel revenues for the year ended December 31, 2002 of $616.9
million reflected an increase of $31.2 million, or 5.3%, from the same period in
2001. The increase was primarily attributable to an increase in non-fuel sales
on a same-site basis of 3.7% for the year ended December 31, 2002 versus the
same period in 2001. We believe the same-site increase reflected increased
customer traffic resulting, in part, from the significant capital improvements
that we have made in the network under our capital investment program to
re-image, re-brand and upgrade our travel centers. The increase was also
attributable to the net increase in sales at the company-operated sites added
to, or eliminated from, our network during 2001 and 2002.

         Rent and royalty revenues for the year ended December 31, 2002
reflected a $2.0 million, or 11.2%, decrease from the same period in 2001. This
decrease was primarily attributable to the rent and royalty revenue lost as a
result of the conversions of leased sites to company-operated sites, partially
offset by a 2.0% increase in same-site royalty revenue that results from
increased levels of retail sales by our franchisees, and a 3.3% increase in
same-site rent revenue.

         Gross Profit (excluding depreciation). Our gross profit for the year
ended December 31, 2002 was $480.8 million, compared to $467.3 million for the
same period in 2001, an increase of $13.5 million, or 2.9%. The increase in our
gross profit was primarily due to increased margin resulting from the increased
level of non-fuel sales, partially offset by the decline in rent and royalty
revenues and a decline in fuel margin that resulted from decreased diesel fuel
sales volumes and a 2.6% decrease in fuel margin per gallon.

         Operating and Selling, General and Administrative Expenses. Operating
expenses included the direct expenses of company-operated sites and the
ownership costs of leased sites. Selling, general and administrative expenses
included corporate overhead and administrative costs.

         Our operating expenses increased by $4.5 million, or 1.4%, to $330.2
million for the year ended December 31, 2002 compared to $325.7 million for the
same period in 2001. This increase was attributable to a $4.4 million net
increase resulting from company-operated sites we added to our network or
eliminated from our network during 2001 or 2002, partially offset by a 0.1%
decline in operating expenses on a same-site basis. On a same-site basis,
operating expenses as a percentage of non-fuel revenues for the year ended
December 31, 2002 were 52.9%, compared to 54.9% for the same period in 2001,
reflecting reduced utility costs and the results of our cost-control measures at
our sites.


                                       25
<PAGE>

         Our selling, general and administrative expenses for the year ended
December 31, 2002 were $38.1 million, which reflected a decrease of $0.2
million, or 0.5% from the same period in 2001.

         Depreciation and Amortization Expense. Depreciation and amortization
expense for the year ended December 31, 2002 was $60.8 million, compared to
$63.5 million for the same period in 2001. This decrease was attributable to a
$1.8 million decrease in amortization of intangible assets, a $1.0 million
decrease in the amount of impairment charges recognized in 2002 as compared to
2001 and the change we made in depreciable lives of certain assets effective
April 1, 2001. During the year ended December 31, 2002 we recognized impairment
charges aggregating $1.5 million with respect to certain of the sites we were
holding for sale as a result of reductions in the estimated sales proceeds of
certain of those sites. During 2002, we sold four of the facilities that we were
holding for sale as of December 31, 2001. On January 3, 2003, we sold the one
remaining site held for sale that had been impaired. The other three sites we
had been holding for sale were not sold within the one-year period required by
FAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," and
so will no longer be accounted for as assets to be disposed of but as assets
held for use. In the fourth quarter of 2002, we recognized a charge to
depreciation expense of $0.2 million for the depreciation expense related to
these unsold sites that had not been recognized during 2002 when these sites
were being accounted for as held for sale.

         As a result of adopting FAS 142, "Goodwill and Other Intangible
Assets," effective January 1, 2002, our goodwill and trademark intangible assets
are no longer amortized. Pursuant to FAS 142, intangible assets must be
periodically tested for impairment. During the first quarter of 2002, we
completed our transitional impairment review of our trademark intangible assets
and determined that there was no impairment. During the second quarter of 2002
we completed the transitional impairment review of goodwill and determined that
there was no impairment. We also adopted FAS 144 effective January 1, 2002. The
adoption of FAS 144 did not have a material effect on our consolidated results
of operations.

         Income from Operations. We generated income from operations of $52.8
million for the year ended December 31, 2002, compared to income from operations
of $41.5 million for the same period in 2001. This increase of $11.3 million, or
27.2%, was primarily attributable to the increase in gross profit that was
partially offset by the increase in operating expenses. The net decrease in
depreciation and amortization expense and in gains on sales of property and
equipment also contributed to the increase in operating income. EBITDA for the
year ended December 31, 2002 was $113.6 million, as compared to EBITDA of $105.0
million for the year ended December 31, 2001. This increase of $8.6 million, or
8.1%, occurred despite a $0.7 million decrease in gains on sales of property and
equipment in 2002 as compared to 2001 and was primarily attributable to the
increase in gross profit that was partially offset by increased operating
expenses. EBITDA, as used here, is based on the definition for EBITDA in our
debt agreements and consists of net income plus the sum of (a) income taxes, (b)
interest and other financial costs, net, (c) depreciation, amortization and
other noncash charges, which includes stock compensation expense, and (d)
transition expense.

         Interest and Other Financial Costs--Net. Interest and other financial
costs, net, for the year ended December 31, 2002 decreased by $6.5 million, or
11.3%, compared to 2001. This decrease resulted from the decline in interest
rates during 2001 and 2002 as well as from the decrease in our indebtedness.

         Income Taxes. Our effective income tax benefit rates for the years
ended December 31, 2002 and 2001 were 33.5% and 39.6%, respectively. These rates
differed from the federal statutory rate due primarily to state income taxes and
nondeductible expenses, partially offset by the effect of certain tax credits.
The change between years in the effective tax rate was primarily the result of
the swing from a taxable loss incurred in 2001 as compared to a relatively low
level of pre-tax income earned in 2002, as well as an estimated adjustment of
prior year tax liabilities in 2002. As a result of the relatively low level of
pre-tax earnings in 2002, permanent differences had a larger effect on the
effective rate in 2002 than in 2001. We have not recognized a valuation
allowance for our net deferred tax assets, as we believe we are more likely than
not to realize those assets. We need to generate $58.0 million of future taxable
income to fully realize our net deferred tax assets. Our existing level of
pretax earnings for financial reporting purposes, as represented by our 2002
results, would not be sufficient to generate that amount of future


                                       26
<PAGE>

taxable income. However, we believe we will generate sufficient future taxable
income to realize our net deferred tax assets for the reasons, and based on the
estimates, described below. Different assumptions as to our future expected
taxable income could lead to revisions in the estimated amount of valuation
allowance required to be recognized against our deferred tax assets.

    -  We expect to increase our profitability as compared to that generated in
       2002, which reflected an increase over 2001. Earnings from the
       significant capital improvements made to our network sites over the past
       few years are expected to increase as these assets fully mature. We
       intend to add new company-operated and franchisee-owned travel centers to
       our network. We also intend to increase the earnings capability of our
       existing sites through other capital investments, such as for site
       re-image projects, additional truck and maintenance repair shop capacity,
       expanded QSR offerings, expanded parking areas and other similar
       projects. We also expect to benefit from a strengthening United States
       economy during and after 2003.

    -  We expect that in succeeding years, as was the case during 2002, our
       interest expense will decline as we begin to reduce the level of our
       indebtedness, through scheduled repayments, reducing our outstanding
       revolver borrowings and making required excess cash flow prepayments in
       future years as our available cash flow increases while we maintain a
       relatively lower level of capital expenditures.

    -  We have made significant capital investments in our business since our
       formation, especially in 1993 and in 1998 through 2000. Many of these
       assets, which typically have depreciable lives of five to 15 years, are
       at or near the ends of their depreciable lives. As our level of capital
       expenditures is anticipated to remain at a relatively lower level than
       these periods, we expect our depreciation expense to decline. This is
       particularly so for tax depreciation due to the double-declining balance
       depreciation method we followed for our tax returns. For our 2001 and
       2002 property and equipment additions, we have elected to use the
       alternative depreciation system, which generally depreciates assets on a
       straight-line basis over longer depreciable lives than those we have been
       using, decreasing the annual depreciation deductions over the next
       several years relative to what they otherwise would have been.

    -  We have available to us tax planning strategies we could employ to
       increase our taxable income. The principal tax planning strategy we could
       undertake is the sale/leaseback of certain of our travel centers. The
       sale/leaseback transaction would be expected to generate a sufficient
       taxable gain in the year consummated to fully utilize any expiring unused
       net operating loss carryforwards and could be expected to increase our
       taxable income in subsequent years as lower interest expense and
       depreciation deductions would, in all likelihood, more than offset the
       additional operating lease expense. Although we would not ordinarily
       execute this tax planning strategy, we would do so to prevent our net
       operating loss carryforwards from expiring unused in 2020 and subsequent
       years.

         The following table sets forth the historical relationship between
pretax earnings for financial reporting purposes and taxable income for income
tax purposes.

<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31,
                                           -------------------------------
                                            2000         2001        2002
                                           ------      -------      ------
                                              (IN MILLIONS OF DOLLARS)

<S>                                        <C>          <C>          <C>
Pretax earnings (loss) for financial
     reporting purposes ............       $(48.9)     $ (16.3)     $  1.5
State income tax expense ...........         (0.8)        (1.6)       (1.2)
Accelerated tax depreciation .......         (8.0)       (12.2)       (1.0)
Benefit of tax credits .............          0.8          0.9         0.6
Non-deductible expenses ............         11.9          1.6         0.5
Temporary differences, net .........         (4.5)        (7.4)        4.0
                                           ------      -------      ------
Federal taxable income (loss) ......       $(49.5)     $ (35.0)     $  4.4
                                           ======      =======      ======
</TABLE>


                                       27
<PAGE>

         Of our total net operating loss carryforwards at December 31, 2002 of
$72.9 million, the $45.0 million remaining carryforward generated in 2000
expires in 2020 and the $27.9 million remaining carryforward generated in 2001
expires in 2021. United States tax law limits the amount of the $49.3 million
net operating loss carryforward we generated in 2000 that can be utilized each
year to approximately $12 million. As a total of $4.4 million of the 2000 net
operating loss was utilized in 2002, the usage of the net operating loss
generated in 2000 will be limited to approximately $31.6 million for 2003. We do
not anticipate a need to use more than this amount in our federal tax return for
2003. Use of the net operating loss generated in 2001 is unlimited.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

         Revenues. Our consolidated revenues for the year ended December 31,
2001 were $1,935.0 million, which represents a decrease from the year ended
December 31, 2000 of $125.0 million, or 6.1%. This decrease was primarily the
result of a decrease in our fuel revenue, largely due to decreased fuel
commodity prices. Our level of sales during the first eight months of 2001 was
adversely affected by the worsening United States economy that began to weaken
during 2000. The September 11, 2001 terrorist attacks on the United States
disrupted the financial markets and consumer confidence, further exacerbating
the adverse effect of the economic slowdown on our sales levels.

         Fuel revenue for the year ended December 31, 2001 decreased by $153.9
million, or 10.4%, from 2000. The decrease was attributable principally to
decreases in diesel fuel average selling prices. This decrease was also caused
by a decline in the average selling prices of gasoline and a slight decrease in
diesel fuel sales volume, partially offset by increased gasoline sales volume.
Average diesel fuel and gasoline sales prices for the year ended December 31,
2001 decreased by 11.0% and 11.6%, respectively, as compared to the same period
in 2000, primarily reflecting decreases in commodity prices but also reflecting
our more competitive fuel pricing. Diesel fuel and gasoline sales volumes for
the year ended December 31, 2001 decreased 1.1% and increased 23.3%,
respectively, as compared to the year ended December 31, 2000. For the year
ended December 31, 2001, we sold 1,369.3 million gallons of diesel fuel and
125.9 million gallons of gasoline, as compared to 1,384.8 million gallons of
diesel fuel and 102.1 million gallons of gasoline for the year ended December
31, 2000. The diesel fuel sales volume decrease resulted from a decline in our
wholesale diesel fuel sales of 53.2 million gallons, or 50.7%, as a result of a
planned retrenchment in this area and reduced sales volumes at sites we sold
during 2000 and 2001, partially offset by increased sales volume on a same-site
basis and at new sites acquired or constructed during 2000 and 2001. The
gasoline sales volume increase was due to increased sales volume on a same-site
basis and at new sites acquired or constructed during 2000 and 2001, partially
offset by reduced sales volumes at sites sold during 2000 and 2001. Same-site
diesel fuel sales volume for 2001 reflected a 4.3% increase from 2000 and
same-site gasoline sales volume for 2001 reflected a 24.1% increase from 2000.
We believe the same-site diesel fuel sales volume increase was a result of our
more competitive retail fuel pricing posture adopted in July 2000, in
combination with the September 2000 introduction of our enhanced customer
loyalty program, which we refer to as the RoadKing Club. We believe the
same-site increase in gasoline sales volume resulted primarily from increased
general motorist visits to our sites as a result of our gasoline and QSR
offering upgrades and additions under our capital program, as well as our more
competitive retail gasoline pricing.

         Non-fuel revenues for the year ended December 31, 2001 of $585.7
million reflected an increase of $30.2 million, or 5.4%, from the year ended
December 31, 2000. The increase was attributable to both same-site sales
increases and the increased sales at the company-operated sites added to our
network in 2000 and 2001. On a same-site basis, non-fuel revenue increased 3.3%
for the year ended December 31, 2001 versus the same period in 2000. We believe
the same-site increase reflected increased customer traffic resulting, in part,
from both the significant capital improvements that we have made in the network
under our capital investment program to re-image, re-brand and upgrade our
travel centers, and our more competitive fuel prices, partially offset by the
weakening of the United States economy throughout 2001.


                                       28
<PAGE>

         Rent and royalty revenues for the year ended December 31, 2001
reflected a $1.3 million, or 6.9%, decrease from the same period in 2000. This
decrease was primarily attributable to the rent and royalty revenue lost as a
result of the conversions of three leased sites to company-operated sites; the
termination of the franchise agreements with the franchisees of one
franchisee-owned site that was converted to a company-operated site and one
leased site that was sold; and the termination of the franchise agreement
covering one franchisee-owned site that left our network. This decrease was
partially offset by a 1.1% increase in same-site royalty revenue and a 3.0%
increase in same-site rent revenue.

         Gross Profit (excluding depreciation). Our gross profit for the year
ended December 31, 2001 was $467.3 million, compared to $448.7 million for the
same period in 2000, an increase of $18.5 million, or 4.1%. The increase in our
gross profit was primarily due to increases in gasoline and non-fuel sales
volume that were partially offset by a decrease in diesel fuel volume, a reduced
level of diesel fuel and gasoline margins per gallon and decreased rent and
royalty revenue.

         Operating and Selling, General and Administrative Expenses. Operating
expenses included the direct expenses of company-operated sites and the
ownership costs of leased sites. Selling, general and administrative expenses
included corporate overhead and administrative costs.

         Our operating expenses increased by $17.2 million, or 5.6%, to $325.7
million for the year ended December 31, 2001 compared to $308.5 million for the
year ended December 31, 2000. This increase reflected both increased non-fuel
sales volume and a $2.8 million increase in utility expenses that resulted from
significantly higher electricity prices and relatively colder weather in early
2001 as compared to 2000. On a same-site basis, operating expenses as a
percentage of non-fuel revenues for the year ended December 31, 2001 were 54.0%,
compared to 53.7% for the same period in 2000, reflecting the increased utility
costs, partially offset by the results of our cost-cutting measures at our
sites.

         Our selling, general and administrative expenses for the year ended
December 31, 2001 were $38.3 million, as compared to $38.2 million for the year
ended December 31, 2000. This increase of $0.1 million, or 0.1%, was
attributable to increased salary expense almost completely offset by decreases
in travel costs, professional fees and other costs.

         Transition Expenses. Transition expenses were the costs incurred in
combining the Unocal, BP, Burns Bros. and Travel Ports networks. As the
integration of sites from our acquisitions was completed during 2000, we did not
incur transition expenses in 2001.

         Depreciation and Amortization Expense. Depreciation and amortization
expense for the year ended December 31, 2001 was $63.5 million, compared to
$62.8 million for the year ended December 31, 2000. The increase in depreciation
and amortization expense was attributable to a larger base of depreciable assets
due to our capital expenditures during 2000 and 2001, $2.5 million of impairment
charges we recognized during 2001 with respect to sites we are holding for sale,
and partially offset by reduced depreciation expense resulting from a change in
the estimated useful lives of certain types of our assets that extended the
estimated lives by five years. This change, which was effective as of April 1,
2001, decreased depreciation expense for the year ended December 31, 2001 by
approximately $8.5 million from what it would have been.

         Merger and Recapitalization Expenses. Merger and recapitalization
expenses were the costs we incurred during 2000 in completing a recapitalization
and a merger with TCA Acquisition Corporation, a newly created company formed by
Oak Hill Capital Partners, L.P. and its affiliates. These costs principally
consisted of legal, accounting, investment banker and other consultants' fees as
well as bonus payments to certain members of our management, and totaled $22.0
million during 2000. We incurred no such costs during 2001.


                                       29
<PAGE>
         Income from Operations. We generated income from operations of $41.5
million for the year ended December 31, 2001, compared to income from operations
of $19.1 million for the same period in 2000. The most significant reason for
this increase of $22.4 million, or 117.3%, was the lack of merger and
recapitalization expenses in 2001 as compared to $22.0 million of such expenses
in 2000. The increase in gross profit was also attributable to the variations in
gross profit and expenses described above, as well as a $0.3 million increase in
gain on sales of property and equipment and our recognizing no stock
compensation expense or benefit in 2001 as compared to a $1.4 million benefit
for stock compensation in 2000.

         EBITDA for the year ended December 31, 2001 was $105.0 million, as
compared to EBITDA of $103.5 million for the year ended December 31, 2000, an
increase of $1.5 million, or 1.4%. EBITDA, as used here, is based on the
definition for EBITDA in our bank debt agreement and consists of net income plus
the sum of (a) income taxes, (b) interest and other financial costs, net, (c)
depreciation, amortization and other noncash charges, which includes stock
compensation expense and (d) transition expense. EBITDA for the year ended
December 31, 2001 increased over the year ended December 31, 2000 primarily as a
result of the increases in gross profit, partially offset by the increase in
operating expenses.

         Interest and Other Financial Costs--Net. Interest and other financial
costs, net, for the year ended December 31, 2001 increased by $10.7 million, or
22.7%, compared to the year ended December 31, 2000. This increase resulted from
the increased debt levels associated with the refinancing we completed in
November 2000 as part of our merger and recapitalization transactions. In
addition, we recognized an increase in amortization of debt discount and of
deferred financing costs as a result of the debt discount and deferred financing
costs incurred as part of our refinancing in November 2000. These increases were
partially offset by reduced interest rates on our term loan and revolving credit
agreement borrowings as a result of the decline in market interest rates.

         Income Taxes. Our effective income tax benefit rates for the years
ended December 31, 2001 and 2000 were 39.6% and 14.6%, respectively. These rates
differed from the federal statutory rate due primarily to state income taxes and
nondeductible expenses, partially offset by the effect of certain tax credits.
The change between years in the effective tax rate was primarily the result of
recognizing the differences between the estimated and actual amounts of
non-deductible merger and recapitalization expenses incurred in 2000 and a
decrease in the amount of nondeductible expenses incurred in 2001 as compared to
2000.

         Extraordinary Loss. During the fourth quarter of 2000 we recognized an
extraordinary loss of $13.8 million in connection with the early extinguishment
of indebtedness. This amount was net of the applicable income tax benefits of
$7.1 million. This extraordinary loss consisted of (a) the write off of $7.6
million of unamortized deferred financing costs we had incurred when we had
issued the extinguished indebtedness, (b) $11.6 million of tender offer and
consent solicitation premium and related fees related to redeeming our then
outstanding Senior Subordinated Notes due 2007, (c) $0.8 million of prepayment
penalties related to redeeming our then outstanding senior secured notes and (d)
$0.9 million to exit an interest rate swap agreement related to the extinguished
debt. We incurred no extraordinary items during 2001.

LIQUIDITY AND CAPITAL RESOURCES

         Our principal liquidity requirements are to meet our working capital
and capital expenditure needs, including expenditures for acquisitions and
expansion, and to service the payments of principal and interest on outstanding
indebtedness. Our principal source of liquidity to meet these requirements is
operating cash flows. The revolving credit facility of our Senior Credit
Facility provides us a secondary source of liquidity, primarily to better match
the timing of cash expenditures to the timing of our cash receipts primarily due
to effects of changes in petroleum product prices, the uneven level of capital
expenditures throughout the year and the timing of debt and interest payments.
The primary risks we face with respect to the expected levels of operating cash
flows are a decrease in the demand of our customers for our products and
services, increases in crude oil and/or petroleum product prices and increases
in interest rates. It is reasonably likely that the United States economy could
either worsen, or make a slower recovery than expected. Similarly, it is
reasonably likely that interest rates and petroleum


                                       30
<PAGE>

product prices will increase during 2003 from levels that existed during 2002,
possibly to levels greater than that contemplated in our expectations. The
uncertainty surrounding each of the economy, interest rates and petroleum
product prices is exacerbated by the possibility of war in Iraq and by the labor
unrest within the Venezuelan petroleum industry. If the economy stagnates or
worsens, our customers could be adversely affected, which could further
intensify competition within our industry and reduce the level of cash we could
generate from our operations. A one-percentage point increase in interest rates
increases our annual cash outlays by approximately $4.2 million. A significant
increase in diesel fuel and gasoline prices increases our cash investment in
working capital and can also have a depressing effect on our sales volumes and
fuel margins per gallon. The primary risk we face with respect to the expected
availability of borrowing under our revolving credit facility are the
limitations imposed upon us by the covenants contained in our Senior Credit
Facility. Should our level of sales volume or interest rate and petroleum
products price levels vary adversely and significantly from expectations, it is
reasonably likely that we would need to reduce our capital expenditures or be
effectively barred from further revolving credit facility borrowings in order to
maintain compliance with our debt covenants, in the absence of a debt covenant
waiver or an amendment to the related agreement. We were in compliance with all
of our debt covenants throughout 2002 and as of December 31, 2002 and we expect
to remain in compliance with all of our debt covenants throughout 2003.

         We anticipate that we will be able to fund our 2003 working capital
requirements and capital expenditures primarily from funds generated from
operations, supplemented, to the extent necessary, from borrowings under our
revolving credit facility. Our long-term liquidity requirements, including
capital expenditures, are expected to be financed by a combination of internally
generated funds, borrowings and other sources of external financing as needed.
Our ability to fund our capital investment requirements, interest and principal
payment obligations and working capital requirements and to comply with all of
the financial covenants under our debt agreements depends on our future
operations, performance and cash flow. These are subject to prevailing economic
conditions and to financial, business and other factors, some of which are
beyond our control.

         The amounts we have invested for capital improvements have declined
each year from 2000 to 2002. The declining level of cash investments is in line
with our development plans and reflects our response to the slowing and then
stagnant U.S. economy throughout 2000, 2001 and 2002. Our capital investment
program to re-image, rebrand and upgrade our network has been substantially
completed. Since 1997, we have invested approximately $407 million to maintain,
re-image, rebrand, upgrade and expand our network. We also invested $115 million
to acquire the travel center networks of Burns Bros. and Travel Ports during
that period. We now are positioned to spend only approximately $15 million to
$20 million annually for sustaining capital projects and then to discriminately
choose the growth-related projects that will compose the remainder of our annual
capital expenditure plans. These growth-related projects include expenditures to
construct and/or acquire additional sites, re-image sites, add additional
non-fuel offerings, such as truck maintenance and repair shops and QSRs at
existing sites, and purchase, install and upgrade our information systems. The
capital expenditures budget for 2003 is approximately $42 million. Given our
forecasted level of cash flows from operations for 2003 and our planned level of
capital expenditures, we expect that during 2003 we will make our scheduled debt
payments of $3.5 million, make a mandatory term loan prepayment of $11.3 million
and will also repay an additional amount of outstanding borrowings under our
term loan and revolving credit facilities, barring a further decline in the U.S.
economy and/or an extended conflict in the Middle East or some other factor that
leads to significantly increased petroleum product prices.

HISTORICAL CASH FLOWS

         Net cash provided by operating activities totaled $61.5 million in
2002, $37.1 million in 2001 and $66.0 million in 2000. The $24.4 million
increase in cash provided by operations in 2002 as compared to 2001 primarily
resulted from the $11.3 million increase in operating income, the $6.5 million
decrease in interest and other financial costs and a $3.9 million reduction in
the amount of cash invested in working capital. The $28.9 million decrease in
cash provided by operating activities in 2001 as compared to 2000 was primarily
attributable to two factors: interest expense increased by $10.7 million and
cash from working capital decreased by $22.5 million. In 2001, we invested $10.3
million in working capital while in 2000 we generated $12.2 million of cash from
working capital.


                                       31
<PAGE>

         Net cash used in investing activities for 2002 was $42.1 million, as
compared to $46.2 million in 2001 and $77.1 million in 2000. During 2002, we
made capital expenditures of $42.6 million, invested $4.2 million to convert
five leased sites to company-operated sites and generated proceeds from the
sales of assets of $4.8 million. During 2001, we invested $54.5 million of
capital expenditures into our network and generated $8.3 million of proceeds
from sales of assets for net capital expenditures of $46.2 million. During 2000,
we invested $9.7 million to convert three leased sites to company-operated
sites, to convert one franchisee-owned site to a company-operated site, to
acquire two new company-operated sites and to acquire a minority interest in a
related business.

         We used $25.2 million of cash in financing activities during 2002,
primarily to reduce our debt. We made net repayments of outstanding borrowings
under our revolving credit facility of $21.5 million and made scheduled debt
payments of $3.4 million. For the year ended December 31, 2001, cash flows from
financing activities were negligible. We made net borrowings of $3.6 million
under our revolving credit facility, paid $3.3 million of costs of our merger
and recapitalization transactions of November 2000, and had net payments of $0.3
million for other financing activities. Net cash flows provided by financing
activities were $22.1 million in 2000. During 2000, we had net borrowings under
our revolving credit facilities of $25.3 million. We also completed the 2000
Refinancing in connection with our merger and recapitalization transactions,
which included proceeds from new debt borrowings of $511.0 million, proceeds
from the issuances of stock of $208.7 million, repurchases of equity securities
of $263.2 million, repayments of indebtedness of $423.6 million and payment of
various related fees, expenses and prepayment penalties of $67.1 million. We
also made $1.8 million of scheduled debt payments during 2000.

DESCRIPTION OF INDEBTEDNESS

         The Senior Credit Facility provides senior secured financing of up to
$428.0 million, consisting of a $328.0 million term loan facility with a
maturity of eight years and a $100.0 million revolving credit facility with a
maturity of six years. We have pledged substantially all of our assets as
collateral under the Senior Credit Facility. At December 31, 2002, we had
outstanding borrowings and issued letters of credit of $22.4 million and $20.9
million, respectively, leaving $56.7 million of our $100 million revolving
credit facility available for borrowings. The term loan facility and the
revolving credit facility bear interest at a rate equal to:

         -   in the case of the revolving credit facility, Adjusted LIBOR plus a
             margin of 2.75% or, at our election, the alternate base rate plus a
             margin of 1.75%; or

         -   in the case of the term loan facility, Adjusted LIBOR plus a margin
             of 3.25% or, at our election, the alternate base rate plus a margin
             of 2.25%.

         In addition to paying interest on outstanding principal under the
Senior Credit Facility, we are required to pay a commitment fee to the lenders
under the revolving credit facility equal to 0.50% per year of the unused
commitments thereunder.

         The Senior Credit Facility obligates us to make annual mandatory
prepayments of term loan indebtedness equal to one-half of the Excess Cash Flow
amount (as defined in the agreement) generated in the previous year. For the
year ended December 31, 2002 we generated approximately $22.6 million of Excess
Cash Flow and, therefore, are obligated to prepay $11.3 million of the term loan
by April 15, 2003. This $11.3 million mandatory prepayment will reduce the
amounts otherwise scheduled to be repaid in each quarter after the prepayment,
on a pro rata basis. After giving effect to this prepayment, the term loan
facility will amortize each year in quarterly amounts in the following
approximate aggregate principal amounts for each year set forth below.


                                       32
<PAGE>

<TABLE>
<CAPTION>

         YEAR ENDED                     PRINCIPAL
         DECEMBER 31,                  REPAYMENTS
         ------------                --------------
         <S>                          <C>
         2003...................     $   14,508,071
         2004...................          3,165,428
         2005...................          3,165,428
         2006...................          3,165,428
         2007...................         77,552,984
         2008...................        223,162,661
                                     --------------
         Total..................     $  324,720,000
                                     ==============
</TABLE>


         Principal amounts outstanding under the revolving credit facility are
due and payable in full at maturity in November 2006.

         The Senior Credit Facility contains a number of covenants that, among
other things, restrict our ability to dispose of assets, incur additional
indebtedness, incur guarantee obligations, repay other indebtedness, make
certain restricted payments and dividends, create liens on assets, make
investments, loans or advances, make certain acquisitions, engage in mergers or
consolidations, engage in material businesses other than our current businesses,
make capital expenditures, enter into sale and leaseback transactions, or engage
in certain transactions with affiliates.

         We have outstanding at December 31, 2002, Senior Subordinated Notes due
in 2009 with an aggregate face amount of $190 million. The Senior Subordinated
Notes due 2009 were issued in November 2000. Our obligations under the notes are
junior in right of payment to all of our existing and future senior
indebtedness, including all indebtedness under the Senior Credit Facility. The
indenture restricts, among other things, our ability to incur additional
indebtedness, issue shares of disqualified stock and preferred stock, pay
dividends or make certain other restricted payments and enter into certain
transactions with affiliates, and prohibits certain restrictions on the ability
of our subsidiaries to pay dividends or make certain payments to us, and
contains certain restrictions on our ability to merge or consolidate with any
other person or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of our assets.

         In the event of a change in control (as defined in the relevant
instruments) of the company, the total amount outstanding under the debt
agreements described above may be declared immediately due and payable.

         As of December 31, 2002, $4.3 million was outstanding under a note
payable by us to a former operator of a site, which we refer to as the Santa
Nella Note. The note bears interest at an annual rate of 5%, requires quarterly
principal and interest payments of $98,000 through October 1, 2018 and is
secured by the real estate and improvements located at the site.

OFF-BALANCE SHEET ARRANGEMENTS

         On September 9, 1999, we entered into a master lease program with a
lessor that has been used to finance the construction of eight travel centers on
land we own. These lease transactions are evaluated for lease classification in
accordance with FAS 13. We do not consolidate the lessor so long as the owners
of the lessor maintain a substantial residual equity investment of at least
three percent that is at risk during the entire term of the lease, which has
been the case to date and is expected to remain the case. Consolidating the
lessor would affect our consolidated balance sheet by increasing property and
equipment, other assets and long-term debt and would affect our consolidated
statement of operations by reducing operating expenses, increasing depreciation
expense and increasing interest expense. Consolidating the lessor is not
expected to result in a violation of our debt covenants. The initial term of the
lease expires on September 9, 2006, at which time, if the lease is not renewed
and extended,


                                       33
<PAGE>

we have the option to either purchase the improvements for an amount equal to
the sum of (a) the outstanding indebtedness of the lessor and (b) the equity
capital balance, or to make a termination payment to the lessor and abandon the
travel centers. We anticipate that on September 9, 2006 we will renew and extend
the lease agreement, but may either be unable to do so or elect not to do so and
instead either pay approximately $58.2 million to acquire the leased assets or
make the termination payment of approximately $44.1 million. As of December 31,
2002, the aggregate outstanding amount of the lessor's indebtedness and equity
capital was $68.4 million.

         Under the related lease agreement, our quarterly lease payments are
based on the capitalization and weighted-average cost of capital of the lessor.
The lessor was initially capitalized with $2.4 million of equity and entered
into a loan and security agreement through which it borrowed $69.7 million. The
lessor's equity holders receive a return on their contributed capital equal to
LIBOR plus 10.75%, while the interest rate for the indebtedness is equal to
LIBOR plus a spread that will decrease from 4.0% to 3.0% as our ratio of total
debt to EBITDA (as defined in our bank debt agreement) improves. Our quarterly
rent payments are calculated to equal the quarterly interest expense, return on
equity and debt amortization requirements of the lessor, based on a
straight-line amortization schedule that ensures 20% of the underlying
indebtedness is repaid by the expiration of the initial lease term on September
9, 2006. We do not guarantee the indebtedness of the lessor and the lessor's
creditors have no recourse against us beyond our obligation to continue our rent
payments.

         The following are additional amounts related to the master lease
program (all amounts are as of or for the year ended December 31, 2002):

         -   The lessor's total capitalization of $68.4 million consisted of
             $66.0 million of a term loan secured by the related travel centers
             assets and underlying leasehold interests, and $2.4 million of
             general and limited partners' contributed capital.

         -   The lessor's assets related to the master lease program consisted
             of $67.5 million of tangible fixed assets, $1.7 million of
             capitalized interest and $2.9 million of deferred financing costs.

         -   During 2002, for the seven sites that were leased for the full year
             and the one site that opened in July during the year, we recognized
             and paid lease rent expense under this master lease program of $5.8
             million. Excluding this rent expense, these eight sites generated
             income of $10.0 million for the year ended December 31, 2002.

         -   The depreciation expense and interest expense we would have
             recognized with respect to these leased travel centers if we had
             capitalized them and not leased them was approximately $5.1 million
             and $4.2 million, respectively, for the year ended December 31,
             2002.

         In January 2003, the FASB issued FIN 46 "Consolidation of Variable
Interest Entities." We must adopt this accounting guidance by July 1, 2003.
Under FIN 46, as the lessor with whom we have entered into our master lease
program is currently capitalized and structured, we would be required to
consolidate the lessor in our consolidated financial statements. We and the
lessor are currently evaluating our alternatives with respect to the master
lease facility and have not yet concluded on our course of action. Consolidating
the lessor is not expected to result in a violation of our debt covenants.


                                       34
<PAGE>

SUMMARY OF CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

         The following table summarizes our expected obligations to make future
required payments under various types of agreements.

<TABLE>
<CAPTION>
                                                          PAYMENTS DUE BY PERIOD
                                      --------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                TOTAL         2003      2004-2005     2006-2007    THEREAFTER
                                      -------       -------    ---------     ---------    ----------
                                                               (IN MILLIONS OF DOLLARS)
<S>                                   <C>           <C>          <C>          <C>           <C>
Long-term debt(1)...................  $ 541.4       $  14.7      $  6.7       $ 103.5       $ 416.5
Operating leases(2).................    200.5          16.3        30.0          80.4          73.8
Other long-term liabilities(3)......      3.7             -         2.0           0.6           1.1
                                      -------       -------      ------       -------       -------
Total contractual cash obligations..  $ 745.6       $  31.0      $ 38.7       $ 184.5       $ 491.4
                                      =======       =======      ======       =======       =======
</TABLE>

         (1)  Excludes interest.

         (2)  Assumes that the master lease facility is not renewed at the
              expiration of the initial lease term and the travel centers are
              acquired by us in 2006 for $58.2 million.

         (3)  We have an obligation to make future payments to redeem common
              stock of certain of our management employees upon the death,
              disability or scheduled retirement of the employees. Neither the
              timing nor the amounts of any such payments can be accurately
              estimated. As of December 31, 2002, the aggregate amount of these
              future redemption payments, assuming our Board of Directors would
              not modify the formula for calculating the fair market value per
              share, would be approximately $3.5 million.

         Our only commercial commitments of any significance are the $20.9
million of standby letters of credit we had outstanding as of December 31, 2002.

LEVERAGED RECAPITALIZATION

         On May 31, 2000, we and shareholders owning a majority of our voting
stock entered into a recapitalization agreement and plan of merger, as
subsequently amended, with TCA Acquisition Corporation, a newly created
corporation formed by Oak Hill Capital Partners, L.P. and its affiliates, under
which TCA Acquisition Corporation agreed to merge with and into us. This merger
was completed on November 14, 2000. Concurrent with the closing of the merger,
we completed a series of transactions to effect a recapitalization that included
the following.

         -   TCA Acquisition Corporation issued 6,456,698 shares of common stock
             to Oak Hill and the Other Investors for proceeds of $205.0 million
             and then merged with and into us. We incurred $3.0 million of fees
             and expenses related to the issuance of these shares of common
             stock. These stock issuance costs were charged against additional
             paid-in capital.

         -   We redeemed all shares of our common and preferred stock
             outstanding prior to the closing of the merger, with the exception
             of 473,064 shares of common stock with a market value at that time
             of $15.0 million that were retained by continuing stockholders, and
             cancelled all outstanding common stock options and warrants for
             cash payments totaling $263.2 million.

         -   All shares of treasury stock were cancelled.

         After the transactions described above, Oak Hill owned 60.5% of our
outstanding common stock, the Other Investors owned, in the aggregate, 32.7% of
our outstanding common stock, Freightliner owned 4.3% of our outstanding common
stock and certain members of our management owned 2.5% of our outstanding common
stock. The total amount of our equity capitalization after these transactions,
given the $31.75 per share merger consideration that was paid in our merger and
recapitalization transactions, was $220.0 million. The transactions described
above, which resulted in a change of control of us, have been accounted for as a
leveraged recapitalization, as opposed to a purchase business combination, since
the change of control was effected through issuance of new


                                       35
<PAGE>

shares to our new control group in conjunction with a redemption of most of our
then outstanding equity securities. We followed leveraged recapitalization
accounting because of the significance of the ownership interest in us that was
retained by continuing stockholders. In accounting for our leveraged
recapitalization, we retained the historical cost bases of our assets and
liabilities and consequently recorded charges totaling $179.0 million to our
equity accounts upon the redemption of equity securities. This accounting
treatment contrasts with that followed in a purchase business combination, in
which a company reflects the new basis in its assets and liabilities of its new
control group by increasing or decreasing its historical balances based on the
estimated fair values at that time and avoids the charge to equity that
accompanies the redemption of equity securities. Based on a limited appraisal of
our owned network sites performed in connection with the merger and
recapitalization transactions, the estimated fair value of our sites at June 15,
2000 was approximately $1.05 billion.

ENVIRONMENTAL MATTERS

         We own and operate underground storage tanks and aboveground storage
tanks at company-operated sites and leased sites that must comply with
Environmental Laws. We have estimated the current ranges of remediation costs at
currently active sites and what we believe will be our ultimate share for those
costs and, as of December 31, 2002, we had a reserve of $2.9 million for
unindemnified environmental matters for which we are responsible. Under the
environmental agreements entered into as part of the acquisition of the Unocal
and BP networks, Unocal and BP are required to provide indemnification for, and
conduct remediation of, certain pre-closing environmental conditions. In
addition, we have obtained insurance of up to $25.0 million for known and up to
$40.0 million for unknown environmental liabilities, subject, in each case, to
certain limitations. While it is not possible to quantify with certainty our
environmental exposure, we believe that the potential liability, beyond that
considered in the reserve, for all environmental proceedings, based on
information known to date, will not have a material adverse effect on our
financial condition, results of operations or our liquidity. For further
discussion of environmental matters, see the "Business - Regulation" section of
this annual report and the footnotes to the audited consolidated financial
statements included elsewhere in this annual report.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In June 2001, the FASB issued FAS 143, "Accounting for Asset Retirement
Obligations." FAS 143 requires recognition of the fair value of the liability
associated with the legal obligation to retire long-lived assets in the period
in which the obligation is incurred. At that time, an asset retirement cost of
an equal amount is to be capitalized and subsequently allocated to expense using
a systematic and rational approach over the estimated useful life of the related
asset. We adopted FAS 143 effective January 1, 2003. We are currently evaluating
the effects of adopting FAS 143, but do not anticipate that adopting FAS 143
will have a material effect on our results of operations or financial position.
FAS 143 has no effect on our liquidity.

         In January 2003, the FASB issued FIN 46 "Consolidation of Variable
Interest Entities." We must adopt this accounting guidance by July 1, 2003.
Under FIN 46, as the lessor with whom we have entered into our master lease
program is currently capitalized and structured, we would be required to
consolidate the lessor in our consolidated financial statements. We and the
lessor are currently evaluating our alternatives with respect to the master
lease facility and have not yet concluded on our course of action. Consolidating
the lessor would affect our consolidated balance sheet by increasing property
and equipment, other assets and long-term debt and would affect our consolidated
statement of operations by reducing operating expenses, increasing depreciation
expense and increasing interest expense. Consolidating the lessor is not
expected to result in a violation of our debt covenants or to have an effect on
our liquidity.

         In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." FIN 45 requires that, at the inception of a guarantee,
the guarantor recognize a liability for the noncontingent portion of that
guarantee, initially measured at fair value. FIN 45 also requires certain
disclosures about guarantees. The initial recognition provisions of FIN 45 must
be applied only on a prospective basis for guarantees issued after December 31,
2002, while we are required to


                                       36
<PAGE>

adhere, and have adhered, to the disclosure requirements in our financial
statements for 2002. While we offer a warranty of our workmanship in our truck
maintenance and repair shops, the annual warranty expense and corresponding
liability are immaterial. We do not issue or provide guarantees and do not
expect the initial recognition provisions of FIN 45 to have a material effect on
our results of operations or financial position. Adopting FIN 45 will not affect
our liquidity.

         In June 2002, the FASB issued FAS 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This new accounting standard significantly
changes how entities account for exit and disposal activities, including
restructuring activities. The provisions of FAS 146 are effective for exit or
disposal activities initiated after December 31, 2002. Such activities, and the
related costs, have not been significant for us in previous years and we do not
expect them to be in future years.

         In December 2002, the FASB issued FAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure (an amendment of FAS 123)." FAS 148
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation and also
amends the disclosure requirements of FAS 123 to require prominent disclosures
about the method of accounting for stock-based employee compensation and the
effect of the chosen method on reported results. We have not elected to change
to the fair value based method of accounting for stock-based employee
compensation and have made the required disclosures in our consolidated
financial statements for 2002. For further discussion of stock-based employee
compensation, see the footnotes to the consolidated financial statements
included elsewhere in this annual report.

FORWARD-LOOKING STATEMENTS

         This annual report includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements relate to our future prospects, developments and business strategies.
The statements contained in this annual report that are not statements of
historical fact may include forward-looking statements that involve a number of
risks and uncertainties. We have used the words "may," "will," "expect,"
"anticipate," "believe," "estimate," "plan," "intend" and similar expressions in
this annual report to identify forward-looking statements. These forward-looking
statements are made based on our expectations and beliefs concerning future
events affecting us and are subject to uncertainties and factors relating to our
operations and business environment, all of which are difficult to predict and
many of which are beyond our control, that could cause our actual results to
differ materially from those matters expressed in or implied by forward-looking
statements. The following factors are among those that could cause our actual
results to differ materially from the forward-looking statements:

         -   competition from other travel center and truck stop operators,
             including additional or improved services or facilities of
             competitors, and from the potential commercialization of
             state-owned interstate rest areas;

         -   the economic condition of the trucking industry, which in turn is
             dependent on general economic factors;

         -   increased environmental regulation;

         -   changes in governmental regulation of the trucking industry,
             including regulations relating to diesel fuel and gasoline;

         -   changes in interest rates;

         -   diesel fuel and gasoline pricing;

         -   availability of diesel fuel and gasoline supply; and

         -   availability of sufficient qualified personnel to staff
             company-operated sites.

         All of our forward-looking statements should be considered in light of
these factors and all other risks discussed from time to time in our filings
with the Securities and Exchange Commission. We do not undertake to update our
forward-looking statements or risk factors to reflect future events or
circumstances.


                                       37
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We are exposed to commodity price risk and interest rate risk. Our fuel
purchase contracts provide for purchase prices based on average market prices
for diesel fuel and gasoline, exposing us to commodity price risk. We mitigate
this risk exposure in several ways, but primarily by holding less than three
days of diesel fuel inventory at our sites and selling a large portion of our
fuel volume on the basis of a daily industry index of average fuel costs plus a
pumping fee, which minimize the effect on our margins of sudden sharp changes in
commodity market prices. We manage the price exposure related to sales volumes
not covered by the daily industry index pricing formulae through the use, on a
limited basis, of derivative instruments designated by management as hedges of
anticipated purchases. We had no open derivative contracts at any point in time
during the year ended December 31, 2002.

         The interest rate risk faced by us results from our highly-leveraged
position and our level of variable rate indebtedness, the rates for which are
based on short-term lending rates, primarily the London Interbank Offered Rate.
We use interest rate protection agreements to reduce our exposure to market
risks from changes in interest rates by fixing interest rates on variable rate
debt and reducing certain exposures to interest rate fluctuation. Amounts due to
or from interest rate protection agreement counterparties are recorded in
interest expense in the period in which they accrue. At December 31, 2002, we
were involved in no interest rate protection agreements.

         The following table summarizes information about our financial
instruments that are subject to changes in interest rates:

<TABLE>
<CAPTION>
                                              DECEMBER 31, 2002
                          ----------------------------------------------------------
                                 FIXED RATE                    VARIABLE RATE
                                INDEBTEDNESS                   INDEBTEDNESS
                          --------------------------  ------------------------------
                          PRINCIPAL      WEIGHTED                        WEIGHTED
                           PAYMENT        AVERAGE       PRINCIPAL         AVERAGE
                            AMOUNT     INTEREST RATE  PAYMENT AMOUNT   INTEREST RATE
                          ---------    -------------  --------------   -------------
                                           (DOLLARS IN THOUSANDS)

<S>                       <C>              <C>          <C>               <C>
Year Ended December 31:
     2003...............  $     180        12.58%       $   3,194         4.66%
     2004...............        189        12.59%           3,165         4.66%
     2005...............        198        12.60%           3,165         4.66%
     2006...............        209        12.60%          36,879         4.66%
     2007...............        219        12.61%          77,553         4.66%
Thereafter..............    193,289        12.23%         223,164         4.66%
                          ---------                     ---------
Total...................  $ 194,284        12.51%       $ 347,120         4.66%
                          =========                     =========
Fair value..............  $ 204,271                     $ 347,120
                          =========                     =========
</TABLE>


                                       38
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
Index to Consolidated Financial Statements and Supplementary Data:                                     PAGE
                                                                                                       ----
<S>                                                                                                     <C>
   Financial Statements:
       Report of Independent Accountants.............................................................   40
       Consolidated Balance Sheet at December 31, 2001 and 2002......................................   41
       Consolidated Statement of Operations for each of the three years in the period ended
         December 31, 2002...........................................................................   42
       Consolidated Statement of Cash Flows for each of the three years in the period ended
         December 31, 2002...........................................................................   43
       Consolidated Statement of Nonredeemable Stockholders' Equity for each of the three years in
         the period ended December 31, 2002..........................................................   44
       Notes to the Consolidated Financial Statements................................................   45
   Financial Statement Schedule:
       II - Valuation and Qualifying Accounts........................................................   83
</TABLE>



                                       39
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors
and Stockholders of
TravelCenters of America, Inc.

         In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of TravelCenters of America, Inc. and its subsidiaries at December 31,
2002 and 2001, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements and the financial statement
schedule are the responsibility of the Company's management; our responsibility
is to express an opinion on these financial statements and the financial
statement schedule based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 3 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," effective January 1, 2002.

PricewaterhouseCoopers LLP

Cleveland, Ohio
March 7, 2003


                                       40
<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                            DECEMBER 31,
                                                                                     --------------------------
                                                                                        2001            2002
                                                                                     ----------      ----------
                                                                                      (IN THOUSANDS OF DOLLARS)

<S>                                                                                  <C>             <C>
ASSETS
Current assets:
   Cash...........................................................................  $   19,888      $   14,047
   Accounts receivable (less allowance for doubtful accounts of $3,060 for 2001
      and $2,025 for 2002)........................................................      43,856          44,295
   Inventories....................................................................      57,419          61,937
   Deferred income taxes..........................................................       5,044           4,221
   Other current assets...........................................................       8,121           8,164
                                                                                    ----------      ----------
        Total current assets......................................................     134,328         132,664
Property and equipment, net.......................................................     461,167         445,692
Intangible assets, net............................................................      23,561          25,908
Deferred financing costs, net.....................................................      30,202          27,452
Deferred income taxes.............................................................      19,908          16,069
Other noncurrent assets...........................................................      10,690          12,764
                                                                                    ----------      ----------
        Total assets..............................................................  $  679,856      $  660,549
                                                                                    ==========      ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt...........................................  $    3,409      $    3,460
   Accounts payable...............................................................      60,429          58,512
   Other accrued liabilities......................................................      43,541          51,440
                                                                                    ----------      ----------
        Total current liabilities.................................................     107,379         113,412
Commitments and contingencies.....................................................           -               -
Long-term debt (net of unamortized discount)......................................     548,869         525,131
Deferred income taxes.............................................................       2,851           2,364
Other noncurrent liabilities......................................................       7,857           3,696
                                                                                    ----------      ----------
                                                                                       666,956         644,603

Redeemable equity.................................................................         565             681
Nonredeemable stockholders' equity:
   Common stock and other nonredeemable stockholders' equity......................     213,923         215,843
   Accumulated deficit (Note 15)..................................................    (201,588)       (200,578)
                                                                                    ----------      ----------
      Total nonredeemable stockholders' equity....................................      12,335          15,265
                                                                                    ----------      ----------
      Total liabilities, redeemable equity and nonredeemable stockholders' equity.  $  679,856      $  660,549
                                                                                    ==========      ==========
</TABLE>

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


                                       41
<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                               ------------------------------------------
                                                                  2000           2001            2002
                                                               -----------    -----------     -----------
                                                                       (IN THOUSANDS OF DOLLARS)

<S>                                                            <C>            <C>             <C>
Revenues:
   Fuel.....................................................   $ 1,485,732    $ 1,331,807     $ 1,237,989
   Non-fuel.................................................       555,491        585,717         616,919
   Rent and royalties.......................................        18,822         17,491          15,539
                                                               -----------    -----------     -----------
       Total revenues.......................................     2,060,045      1,935,015       1,870,447
Cost of goods sold (excluding depreciation):
   Fuel.....................................................     1,382,224      1,228,544       1,136,368
   Non-fuel.................................................       229,096        239,209         253,312
                                                               -----------    -----------     -----------
       Total cost of goods sold (excluding depreciation)....     1,611,320      1,467,753       1,389,680
                                                               -----------    -----------     -----------

Gross profit (excluding depreciation).......................       448,725        467,262         480,767

Operating expenses..........................................       308,480        325,736         330,206
Selling, general and administrative expenses................        38,160         38,279          38,073
Transition expense..........................................           996              -               -
Merger and recapitalization expenses........................        22,004              -               -
Depreciation and amortization expense.......................        62,768         63,508          60,773
(Gain) on sales of property and equipment...................        (1,462)        (1,788)         (1,089)
Stock compensation expense (benefit)........................        (1,362)             -               -
                                                               ------------   -----------     -----------

Income from operations......................................        19,141         41,527          52,804
Interest and other financial costs, net.....................       (47,143)       (57,818)        (51,286)
                                                               -----------    -----------     -----------

Income (loss) before income taxes and extraordinary item....       (28,002)       (16,291)          1,518
Provision (benefit) for income taxes........................        (4,088)        (6,449)            508
                                                               -----------    -----------     -----------
Income (loss) before extraordinary item.....................       (23,914)        (9,842)          1,010
Extraordinary loss, less income tax benefits of $7,110......       (13,800)             -               -
                                                               -----------    -----------     -----------

Net income (loss)...........................................       (37,714)        (9,842)          1,010

Less: preferred dividend accretion..........................        (8,255)             -               -
                                                               -----------    -----------     -----------
Income (loss) available to common stockholders..............   $   (45,969)   $    (9,842)    $     1,010
                                                               ===========    ===========     ===========
</TABLE>

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


                                       42
<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31,
                                                                       -----------------------------------
                                                                          2000         2001         2002
                                                                       ---------     ---------    --------
                                                                            (IN THOUSANDS OF DOLLARS)

<S>                                                                    <C>           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss) ................................................  $ (37,714)    $ (9,842)    $  1,010
   Adjustments to reconcile net income (loss) to net cash provided by
      operating activities:
      Extraordinary loss, less income tax benefits...................     13,800            -            -
      Merger and recapitalization expenses...........................     22,004            -            -
      Depreciation and amortization..................................     62,768       63,508       60,773
      Amortization of deferred financing costs.......................      1,457        2,620        3,050
      Deferred income tax provision..................................     (7,281)      (8,056)       3,183
      Provision for doubtful accounts................................      1,560        1,000          100
      Provision (benefit) for stock compensation.....................     (1,362)           -            -
      (Gain) on sales of property and equipment......................     (1,462)      (1,788)      (1,089)
      Changes in assets and liabilities, adjusted for the effects of
        business acquisitions:
        Accounts receivable..........................................    (22,332)      34,444       (2,194)
        Inventories..................................................     (1,148)       4,353       (3,819)
        Other current assets.........................................      2,902        3,259         (550)
        Accounts payable and other accrued liabilities...............     36,079      (47,832)       4,475
      Other, net.....................................................     (3,319)      (4,560)      (3,427)
                                                                       ---------     --------     --------
      Net cash provided by operating activities......................     65,952       37,106       61,512
                                                                       ---------     --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Business acquisitions.............................................     (9,675)           -       (4,243)
   Proceeds from sales of property and equipment.....................        667        8,256        4,773
   Capital expenditures..............................................    (68,107)     (54,490)     (42,640)
                                                                       ---------     --------     --------
      Net cash used in investing activities..........................    (77,115)     (46,234)     (42,110)
                                                                       ---------     --------     --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Revolving loan borrowings (repayments), net.......................     25,300        3,600      (21,500)
   Long-term debt borrowings.........................................    510,962            -            -
   Long-term debt repayments.........................................   (388,685)        (165)      (3,409)
   Proceeds from issuance of stock...................................    208,717           38          116
   Repurchase of equity securities...................................   (267,055)           -            -
   Debt issuance costs...............................................    (32,932)        (160)        (300)
   Stock issuance costs..............................................     (3,015)           -            -
   Premiums paid on debt extinguishment .............................    (12,778)        (899)           -
   Merger and recapitalization expenses paid.........................    (18,253)      (2,417)        (150)
   Other.............................................................       (119)           -
                                                                       ---------     --------     --------
      Net cash provided by (used in) financing activities............     22,142           (3)     (25,243)
                                                                       ---------     --------     --------

        Net increase (decrease) in cash..............................     10,979       (9,131)      (5,841)

Cash at the beginning of the year....................................     18,040       29,019       19,888
                                                                       ---------     --------     --------

Cash at the end of the year..........................................  $  29,019     $ 19,888     $ 14,047
                                                                       =========     ========     ========
</TABLE>

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


                                       43
<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
          CONSOLIDATED STATEMENT OF NONREDEEMABLE STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                       ----------------------------------------
                                                                          2000          2001           2002
                                                                       ----------     ----------    -----------
                                                                              (IN THOUSANDS OF DOLLARS)

<S>                                                                    <C>            <C>           <C>
PREFERRED STOCK:
   Balance at beginning of year....................................    $       38     $        -    $         -
      Leveraged recapitalization equity security redemptions.......           (38)             -              -
                                                                       ----------     ----------    -----------
   Balance at end of year..........................................    $        -     $        -    $         -
                                                                       ==========     ==========    ===========
COMMON STOCK:
   Balance at beginning of year....................................    $       17     $        3    $         3
          Stock option exercises...................................             1              -              -
          Classify management shares as redeemable equity..........            (1)             -              -
          Leveraged recapitalization equity security redemptions...           (14)             -              -
                                                                       ----------     ----------    -----------
   Balance at end of year..........................................    $        3     $        3    $         3
                                                                       ==========     ==========    ===========

TREASURY STOCK:
   Balance at beginning of year....................................    $   (9,058)    $        -    $         -
          Purchases of treasury stock..............................        (1,894)             -              -
          Cancel treasury shares...................................        10,952              -              -
                                                                       ----------     ----------    -----------
   Balance at end of year..........................................    $        -     $        -    $         -
                                                                       ==========     ==========    ===========

ADDITIONAL PAID-IN CAPITAL:
   Balance at beginning of year....................................    $   61,122     $  215,840    $   215,840
          Issuance of common stock.................................       205,038              -              -
          Stock option exercises...................................         4,521              -              -
          Issuance of stock warrants...............................         6,600              -              -
          Stock issuance costs.....................................        (3,015)             -              -
          Classify management shares as redeemable equity..........          (526)             -              -
          Leveraged recapitalization equity security redemptions...       (57,900)             -              -
                                                                       ----------     ----------    -----------
   Balance at end of year..........................................    $  215,840     $  215,840    $   215,840
                                                                       ==========     ==========    ===========

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
   Balance at beginning of year....................................    $        -     $        -    $    (1,920)
          Change in accounting principle, net of tax of $176.......             -           (343)             -
          Change in fair value of interest rate swap agreement,
            net of tax.............................................             -         (1,577)         1,920
                                                                       ----------     ----------    -----------
   Balance at end of year..........................................    $        -     $   (1,920)   $         -
                                                                       ==========     ==========    ===========

ACCUMULATED DEFICIT:
   Balance at beginning of year....................................    $  (24,764)    $ (191,746)   $  (201,588)
          Net income (loss)........................................       (37,714)        (9,842)         1,010
          Accretion of preferred stock dividends...................        (8,255)             -              -
          Leveraged recapitalization equity security redemptions ..      (121,013)             -              -
                                                                       ----------     ----------    -----------
   Balance at end of year..........................................    $ (191,746)    $ (201,588)   $  (200,578)
                                                                       ==========     ==========    ===========
</TABLE>

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


                                       44
<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.       BUSINESS DESCRIPTION AND SUMMARY OF OPERATING STRUCTURE

         We are a holding company which, through our wholly owned subsidiaries,
owns, operates and franchises travel centers along the United States interstate
highway system to serve long-haul trucking fleets and their drivers, independent
truck drivers and general motorists. At December 31, 2002, our geographically
diverse nationwide network of full-service travel centers consisted of 152 sites
located in 40 states. Our operations are conducted through three distinct types
of travel centers:

         -   sites owned or leased and operated by us, which we refer to as
             company-operated sites;

         -   sites owned by us and leased to independent lessee-franchisees,
             which we refer to as leased sites; and

         -   sites owned and operated by independent franchisees, which we refer
             to as franchisee-owned sites.

         Our travel centers are located at key points along the U.S. interstate
highway system, typically on 20- to 25-acre sites. Operating under the
"TravelCenters of America" and "TA" brand names, our nationwide network provides
our customers with diesel fuel and gasoline as well as non-fuel products and
services such as truck repair and maintenance services, full-service
restaurants, fast food restaurants, travel and convenience stores and other
driver amenities. We also collect rents and franchise royalties from the
franchisees who operate the leased sites and franchisee-owned sites and, as a
franchisor, assist our franchisees in providing service to long-haul trucking
fleets and their drivers, independent truck drivers and general motorists.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles 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.

Principles of Consolidation

         The consolidated financial statements include the accounts of
TravelCenters of America, Inc. and its wholly owned subsidiaries, TA Operating
Corporation and TA Franchise Systems Inc., as well as TA Licensing, Inc., TA
Travel, L.L.C., TravelCenters Realty, L.L.C. and TravelCenters Properties, L.P.,
which are all direct or indirect wholly owned subsidiaries of TA Operating
Corporation. National Auto/Truckstops, Inc. was a wholly owned subsidiary of
ours until November 14, 2000, at which time it was merged with and into TA
Operating Corporation. Intercompany accounts and transactions have been
eliminated.

         We have entered into lease transactions of travel centers with a
special purpose entity. These lease transactions are evaluated for lease
classification in accordance with Statement of Financial Accounting Standards
(FAS) No. 13, "Accounting for Leases." We do not consolidate the special purpose
entity so long as the owners of the special purpose entity maintain a
substantial residual equity investment of at least three percent that is at risk
during the entire term of the lease, which has been the case to date (see Note
3).

Revenue Recognition

         Sales revenues and related costs are recognized at the time of delivery
of motor fuel to customers at either the terminal or the customer's facility for
wholesale fuel sales and at the time of final sale to consumers at our
company-operated sites for retail fuel and non-fuel sales. The estimated cost to
us of the redemption by customers of


                                       45
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


our loyalty program points is recorded as a discount against gross sales in
determining the net sales amount presented in our consolidated statement of
operations.

         Rent revenue is recognized monthly for the portion of each month that a
lessee occupies one of our leased sites. Initial franchise fee revenues are
recognized at the point when the franchisee opens for business under our brand
name, which is when we have fulfilled all of our obligations under the related
agreements. Franchise royalty revenues are collected and recognized monthly and
are determined as a percentage of the franchisees' revenues.

Cash

         For purposes of the statement of cash flows, we consider all highly
liquid investments with an initial maturity of three months or less to be cash.

Inventories

         Inventories are stated at the lower of cost or market value, cost being
determined principally on the weighted average cost method.

Property and Equipment

         Property and equipment are stated at cost. Depreciation is computed on
a straight-line basis over the following estimated useful lives of the assets:

         Buildings and site improvements..........   15-20 years
         Pumps and underground storage tanks......    5-10 years
         Machinery and equipment..................    3-15 years
         Furniture and fixtures...................    5-10 years

         Repair and maintenance costs are charged to expense as incurred, while
major renewals and betterments are capitalized. The cost and related accumulated
depreciation of property and equipment sold, replaced or otherwise disposed of
are removed from the accounts. Any resulting gains or losses are recognized in
operations.

Deferred Financing Costs

         Deferred financing costs were incurred in conjunction with issuing
long-term debt and are amortized into interest expense over the lives of the
related debt instruments using the effective interest method (see Note 13).

Intangible Assets

         Acquired intangible assets, other than goodwill, are initially
recognized based on their fair value. Those intangible assets acquired in a
business combination are initially recognized in accordance with FAS 141,
"Business Combinations." FAS 141 requires an allocation of purchase price to all
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 relative fair values of the acquired assets and liabilities. Any excess of
acquisition cost over the fair value of the acquired net assets is recorded as
goodwill. 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 entity as a whole
are expensed as incurred. Intangible assets with finite lives are amortized on a
straight-line basis over their estimated lives, principally the terms of the
related contractual agreements giving rise to them. Until December 31, 2001
goodwill and intangible assets with indefinite lives were amortized. Effective
January 1, 2002, we adopted the provisions of


                                       46
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


FAS 142, "Goodwill and Other Intangible Assets." Under FAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized but are reviewed
annually (or more frequently if impairment indicators arise) for impairment.
Accordingly, effective January 1, 2002, we stopped amortizing our goodwill and
our trademarks, which have indefinite lives. All of our intangible assets with
indefinite lives are subject to the impairment tests required by FAS 142, which
include an annual test completed as of January 1 of each year and tests
throughout the year if circumstances indicate that the intangible assets may be
impaired (see Note 10).

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. The costs of significant upgrades and
enhancements that result in additional functionality are accounted for in the
same manner as similar costs for new software projects. The costs of all other
upgrades and enhancements are expensed as incurred.

Impairment of Long-Lived Assets

         In August 2001, the FASB issued FAS 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." FAS 144 supersedes FAS 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," and the accounting and reporting provisions of APB Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." FAS 144 addresses financial reporting for the
impairment or disposal of long-lived assets. We adopted FAS 144 effective
January 1, 2002. Under FAS 144, impairment charges are recognized when the
carrying value of a long-lived asset to be held and used in the business is not
recoverable and exceeds its fair value, and when the carrying value of a
long-lived asset to be disposed of exceeds the estimated fair value of the asset
less the estimated cost to sell the asset. Such impairment charges are
recognized 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. Such tests are performed at the individual travel center level. In
addition, intangible assets are subjected to further evaluation and impairment
charges are recognized when events and circumstances indicate the carrying value
of the intangible asset exceeds the fair market value of the asset. Impairment
charges are included in depreciation and amortization expense in our
consolidated statement of operations.

Classification of Costs and Expenses

         Cost of goods sold (excluding depreciation) represents the costs of
fuels and other products sold, including freight. Operating expenses principally
represent costs incurred in operating our sites, consisting primarily of labor,
maintenance, supplies, utilities and occupancy costs. Transition expenses
represent the nonrecurring costs we incurred in integrating the BP network, the
Unocal network, the Burns Bros. network and the Travel Ports network into a
single network under one management, including severance and relocation
expenses, costs to convert acquired sites, costs to dispose of leased sites,
convert leased sites to company-operated sites and terminate franchise
agreements, and related travel and training expenses. See Note 5 for a
discussion of the Combination Plan under which the majority of these costs have
been incurred. Merger and recapitalization expenses represent the nonrecurring
costs incurred in completing a recapitalization and a merger with TCA
Acquisition Corporation. These costs principally consist of legal, accounting,
investment banker and other consultants' fees as well as bonus payments to
certain members of our management. See Note 4 for a discussion of the merger and
recapitalization transactions. Costs of advertising are expensed as incurred.


                                       47
<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Stock-Based Employee Compensation

         We account for our stock-based employee compensation plans under the
recognition and measurement principles of APB Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations. For granted options
that vest over time, no compensation expense is reflected in net income, as all
of those options had an exercise price equal to or greater than the market value
of the underlying common stock at the date of grant. For granted options that
vest based on attaining certain measures of performance, compensation expense is
recognized when it becomes probable that the performance triggers for such
options will be achieved. The following table illustrates the effect on net
income (loss) if we had applied the fair value recognition provisions of FAS No.
123 to stock-based employee compensation.

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                       ------------------------------------------
                                                                          2000            2001            2002
                                                                       ----------      ----------      ----------
                                                                                (IN THOUSANDS OF DOLLARS)

<S>                                                                    <C>             <C>             <C>
Net income (loss), as reported......................................   $  (37,714)     $   (9,842)     $    1,010
Deduct:  Total stock-based employee compensation expense
    determined under fair value based methods for all awards,
    net of related tax effects......................................            -            (637)           (703)
                                                                       ----------      ----------      ----------
Pro forma net income (loss).........................................   $  (37,714)     $  (10,479)     $      307
                                                                       ==========      ==========      ==========
</TABLE>

         The fair value of these options used to calculate the pro forma
compensation expense amounts was estimated at the date of grant using the
Black-Sholes option-pricing model with the following weighted average
assumptions: a risk-free interest rate of 5.5%, a dividend yield of 0.0%, a
volatility factor of 0.0001%, and an expected life of the options of ten years.

Environmental Remediation

         We provide for remediation costs and penalties when the responsibility
to remediate is probable and the amount of associated costs is reasonably
determinable. Generally, the timing of remediation accruals coincides with
completion of a feasibility study or the commitment to a formal plan of action.
If recoveries of remediation costs from third parties are probable, a receivable
is recorded. Accruals are not recorded for the costs of remediation activities
undertaken on our behalf by Unocal and BP, at Unocal's and BP's sole expense
(see Note 18). In our consolidated balance sheet, the accrual for environmental
matters is included in other noncurrent liabilities, with the amount estimated
to be expended within the subsequent year reported as a current liability within
the other accrued liabilities balance.

Defined Contribution Plan

         We sponsor a 401(k) defined contribution plan to provide eligible
employees with additional income upon retirement. Our contributions to the plans
are based on employee contributions and compensation and are recognized in
operating expenses in the period incurred.


                                       48
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Asset Retirement Obligations

         In June 2001, the FASB issued FAS 143, "Accounting for Asset Retirement
Obligations." FAS 143 requires recognition of the fair value of the liability
associated with the legal obligation to retire long-lived assets in the period
in which the obligation is incurred. At that time, an asset retirement cost of
an equal amount is to be capitalized and subsequently allocated to expense using
a systematic and rational approach over the estimated useful life of the related
asset. We adopted FAS 143 effective January 1, 2003. We are currently evaluating
the effects of adopting FAS 143, which primarily applies to us with respect to
our underground storage tanks, but do not anticipate that adopting FAS 143 will
have a material effect on our results of operations or financial position. FAS
143 has no effect on our liquidity.

Income Taxes

         Deferred income tax assets and liabilities are established to reflect
the future tax consequences of differences between the tax bases and financial
statement bases of assets and liabilities. The measurement of deferred tax
assets is reduced, if necessary, by a valuation allowance.

Concentration of Credit Risk

         We grant credit to our customers and may require letters of credit or
other collateral.

Derivative Instruments

         We recognize derivatives as either assets or liabilities on the balance
sheet and measure those instruments at fair value. The accounting for changes in
the fair value of a derivative depends on the intended use of the derivative and
the resulting designation. We designate our derivatives based upon criteria
established by FAS 133, "Accounting for Derivative Instruments and Hedging
Activities." For a derivative designated as a fair value hedge, the change in
fair value is recognized in earnings in the period of change together with the
offsetting loss or gain on the hedged item attributed to the risk being hedged.
For a derivative designated as a cash flow hedge, the effective portion of the
derivative's gain or loss is initially reported as a component of accumulated
other comprehensive income (loss) and subsequently reclassified into earnings
when the hedged exposure affects earnings. The ineffective portion of the gain
or loss is reported in earnings immediately. We use derivatives to manage risk
arising from changes in interest rates. Our objectives for holding derivatives
are to decrease the volatility of earnings and cash flows associated with
changes in interest rates. (See Note 19.)

Fair Value of Financial Instruments

         The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which estimation is
practicable:

         Cash and short-term investments, accounts receivable and accounts
payable: The fair values of financial instruments classified as current assets
or liabilities approximate the carrying values due to the short-term maturity of
the instruments.

         Long-term debt: The fair value of our fixed-rate indebtedness that is
publicly traded is estimated based on the quoted price for those notes. The fair
value of our fixed-rate indebtedness that is not publicly traded is estimated
based on the current borrowing rates available to us for financings with similar
terms and maturities. (See Note 13.)


                                       49
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


         Interest Rate Protection Agreements: The fair values of our interest
rate protection agreements are based on bank-quoted market prices. (See Note
13.)

3.       RECENTLY ISSUED ACCOUNTING STANDARDS

         FAS 142. Effective January 1, 2002, we adopted Statement of Financial
Accounting Standards (FAS) No. 142, "Goodwill and Other Intangible Assets."
Under FAS 142, goodwill and intangible assets with indefinite lives are no
longer amortized but are reviewed annually (or more frequently if impairment
indicators arise) for impairment. Separable intangible assets that are not
deemed to have indefinite lives continue to be amortized over their useful
lives. Our trademark intangible assets have been deemed to have indefinite
lives. During the first quarter of 2002 we completed the transitional impairment
test for our trademarks and determined that the estimated fair values of these
intangible assets exceeded their respective carrying amounts. Accordingly, we
did not recognize an impairment loss with respect to our trademark intangible
assets. For purposes of testing goodwill for impairment under the transitional
accounting provisions of FAS 142, goodwill must first be allocated to reporting
units. FAS 142 requires us to compare the fair value of the reporting unit to
its carrying value to determine if there is potential impairment. If the fair
value of the reporting unit is less than its carrying value, an impairment loss
would be recognized to the extent that the fair value of the goodwill within the
reporting unit is less than the carrying value. For purposes of applying the
provisions of FAS 142, we have determined that we are one reporting unit. The
fair value of the reporting unit exceeded the carrying value of the reporting
unit at January 1, 2002. Accordingly, we did not recognize an impairment loss
with respect to our goodwill.

         The following table provides a reconciliation of the prior-year
periods' reported net income (loss) to adjusted net income (loss) had FAS 142
been applied as of the beginning of 2000.

<TABLE>
<CAPTION>
                                                    YEAR ENDED
                                                   DECEMBER 31,
                                       --------------------------------------
                                          2000          2001           2002
                                       ---------      ---------     ---------
                                             (IN THOUSANDS OF DOLLARS)

<S>                                    <C>            <C>           <C>
Reported net income (loss)...........  $ (37,714)     $  (9,842)    $   1,010
Add back amortization (net of tax):
  Goodwill...........................      1,289          1,266             -
  Trademarks.........................        127            127             -
                                       ---------      ---------     ---------
Adjusted net income (loss)...........  $ (36,298)     $  (8,449)    $   1,010
                                       =========      =========     =========
</TABLE>

         FAS 144. Effective January 1, 2002, we adopted FAS 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." This statement amended
previous accounting and disclosure requirements for impairments and disposals of
long-lived assets, including with respect to discontinued operations. The
provisions of FAS 144 are generally to be applied prospectively. Adoption of FAS
144 had an immaterial effect on our consolidated results of operations and
financial position and had no effect on our liquidity.

         FAS 143. In June 2001, the FASB issued FAS 143, "Accounting for Asset
Retirement Obligations." FAS 143 requires recognition of the fair value of the
liability associated with the legal obligation to retire long-lived assets in
the period in which the obligation is incurred. At that time, an asset
retirement cost of an equal amount is to be capitalized and subsequently
allocated to expense using a systematic and rational approach over the estimated
useful life of the related asset. We adopted FAS 143 effective January 1, 2003.
We are currently evaluating the effects of adopting FAS 143, but do not
anticipate that adopting FAS 143 will have a material effect on our results of
operations or financial position. FAS 143 has no effect on our liquidity.


                                       50
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


         FIN 46. In January 2003, the FASB issued FIN 46 "Consolidation of
Variable Interest Entities." We must adopt this accounting guidance by July 1,
2003. Under FIN 46, as the lessor with whom we have entered into our master
lease program is currently capitalized and structured, we would be required to
consolidate the lessor in our consolidated financial statements. We and the
lessor are currently evaluating our alternatives with respect to the master
lease facility and have not yet concluded on our course of action. Consolidating
the lessor would affect our consolidated balance sheet by increasing property
and equipment, other assets and long-term debt and would affect our consolidated
statement of operations by reducing operating expenses, increasing depreciation
expense and increasing interest expense. Consolidating the lessor is not
expected to result in a violation of our debt covenants or to have an effect on
our liquidity. We adopted the disclosure requirements of FIN 46 in our
consolidated financial statements for 2002.

         FIN 45. In November 2002, the FASB issued FIN 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." FIN 45 requires that, at the inception of
a guarantee, the guarantor recognize a liability for the noncontingent portion
of that guarantee, initially measured at fair value. FIN 45 also requires
certain disclosures about guarantees. The initial recognition provisions of FIN
45 must be applied only on a prospective basis for guarantees issued after
December 31, 2002, while we are required to adhere, and have adhered, to the
disclosure requirements in our consolidated financial statements for 2002. While
we offer a warranty of our workmanship in our truck maintenance and repair
shops, the annual warranty expense and corresponding liability are immaterial.
We do not issue or provide guarantees and do not expect the initial recognition
provisions of FIN 45 to have a material effect on our results of operations or
financial position. Adopting FIN 45 will not affect our liquidity.

         FAS 146. In June 2002, the FASB issued FAS 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This new accounting standard
significantly changes how entities account for exit and disposal activities,
including restructuring activities. The provisions of FAS 146 are effective for
exit or disposal activities initiated after December 31, 2002. Such activities,
and the related costs, have not been significant for us in previous years and we
do not expect them to be in future years.

         FAS 148. In December 2002, the FASB issued FAS 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure (an amendment of FAS 123)."
FAS 148 provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation and
also amends the disclosure requirements of FAS 123 to require prominent
disclosures about the method of accounting for stock-based employee compensation
and the effect of the chosen method on reported results. We have not elected to
change to the fair value based method of accounting for stock-based employee
compensation and have made the required disclosures in our consolidated
financial statements for 2002.

4.       MERGER AND RECAPITALIZATION TRANSACTIONS

         On May 31, 2000, we and shareholders owning a majority of our voting
stock entered into a recapitalization agreement and plan of merger, as
subsequently amended, with TCA Acquisition Corporation, a newly created
corporation formed by Oak Hill Capital Partners, L.P. and its affiliates, under
which TCA Acquisition Corporation agreed to merge with and into us. This merger
was completed on November 14, 2000. Concurrent with the closing of the merger,
we completed a series of transactions to effect a recapitalization and a
refinancing that included the following.

         -   TCA Acquisition Corporation issued 6,456,698 shares of common stock
             to Oak Hill and the Other Investors for proceeds of $205,000,000
             and then merged with and into us.


                                       51
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


         -   We redeemed all shares of our common and preferred stock
             outstanding prior to the closing of the merger, with the exception
             of 473,064 shares of common stock with a market value at that time
             of $15,020,000 that were retained by continuing stockholders, and
             cancelled all outstanding common stock options and warrants for
             cash payments totaling $263,153,000.

         -   All shares of treasury stock were cancelled.

         -   We repaid all amounts outstanding under our then existing debt
             agreements.

         -   We borrowed $328,300,000 under a secured credit agreement with a
             group of lenders and issued units consisting of Senior Subordinated
             Notes due 2009 with a face amount of $190,000,000 and initial
             warrants and contingent warrants that in the aggregate could be
             exercised in exchange for 277,165 shares of our common stock.

         -   We merged National Auto/Truckstops, Inc. with and into TA Operating
             Corporation and formed two new wholly owned subsidiaries of TA
             Operating Corporation to maintain our real property in certain
             states.

         Prior to the closing of the transactions described above, we issued
137,572 shares of common stock for cash proceeds of $3,752,000 upon the exercise
of stock options held by existing shareholders, which shares remain outstanding.
After the transactions described above, Oak Hill owned 60.5% of our outstanding
common stock, the Other Investors owned, in the aggregate, 32.7% of our
outstanding common stock, Freightliner owned 4.3% of our outstanding common
stock and certain members of our management owned 2.5% of our outstanding common
stock. The total amount of our equity capitalization after these transactions,
given the $31.75 per share merger consideration paid in our merger and
recapitalization transactions, was $220,020,000. The transactions described
above have been accounted for as a leveraged recapitalization (see Note 15). We
have retained the historical cost basis of our assets and liabilities, due to
the significance of the ownership interest in us that was retained by continuing
stockholders. We incurred $22,004,000 of expenses charged against operations in
connection with the merger and recapitalization transactions. We also recognized
an extraordinary loss of $13,800,000 (which was net of $7,110,000 of applicable
income tax benefits) as a result of the early extinguishment of indebtedness
completed as part of these transactions.

5.       COMBINATION PLAN AND TRANSITION EXPENSE

         In January 1997, we adopted a plan (which we refer to as the
"combination plan"), to combine the operations of the Unocal network and the BP
network into one network under the TravelCenters of America brand. There were
three primary elements to the combination plan: (1) integrating the management
of the BP and Unocal networks, (2) converting the Unocal and BP network sites to
one network, and (3) rationalizing and further developing our network. These
expenses related to implementing the combination plan are referred to as
transition expenses and included, among other things, (i) employee separations,
(ii) the costs to convert Unocal network travel centers, (iii) the costs to
dispose of travel centers or terminate lease or franchise agreements, and (iv)
the costs of integrating the management and operations of the Unocal and BP
networks, including relocation, travel, training, and legal expenses. The
combination plan was substantially completed during 1999.

         We have also incurred transition expenses as a result of the Burns
Bros. acquisition and the Travel Ports acquisition, primarily related to
integrating the acquired sites into our network. As a result of implementing the
combination plan and integrating the Burns Bros. network and Travel Ports
network sites, for the year ended December 31, 2000, we incurred approximately
$996,000 of expense, included in transition expense in our consolidated
financial statements. No such expenses were incurred during 2001 and 2002.


                                       52
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


6.       COMPREHENSIVE INCOME

         Comprehensive income (loss) consisted of the following:

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                          ---------------------------------------
                                                             2000           2001          2002
                                                          ----------     -----------   ----------
                                                                 (IN THOUSANDS OF DOLLARS)

<S>                                                       <C>            <C>           <C>
Net income (loss)......................................   $  (37,714)    $   (9,842)   $    1,010
Change in accounting principle, net of tax of $176.....            -           (343)            -
Gain (loss) on fair value of interest rate swap
  agreement, net of tax................................            -         (1,577)        1,920
                                                          ----------     ----------    ----------
  Total comprehensive income (loss)....................   $  (37,714)    $  (11,762)   $    2,930
                                                          ==========     ==========    ==========
</TABLE>


         In recognizing the gain (loss) related to the changes in fair value of
the interest rate protection agreement, for the year ended December 31, 2001 we
increased our deferred tax assets by $814,000, while for the year ended December
31, 2002 we decreased our deferred tax assets by $990,000.

7.       INVENTORIES

         Inventories consisted of the following:

<TABLE>
<CAPTION>
                                                                                DECEMBER 31,
                                                                        --------------------------
                                                                           2001            2002
                                                                        ----------      ----------
                                                                         (IN THOUSANDS OF DOLLARS)

<S>                                                                     <C>             <C>
Non-fuel merchandise..................................................  $   51,808      $   55,460
Petroleum products....................................................       5,611           6,477
                                                                        ----------      ----------
     Total inventories................................................  $   57,419      $   61,937
                                                                        ==========      ==========
</TABLE>

8.       NOTES RECEIVABLE

         We have notes receivable agreements with certain parties that financed
a portion of the purchases of travel center sites we have sold. The notes have
original terms ranging from five to ten years and principally accrue interest at
a variable rate of the prime lending rate plus 1% to 2%.

         We also have full recourse notes receivable from management
stockholders received as partial consideration for purchases of common stock
(see Note 14). These notes accrue interest at fixed rates between 4.86% and
7.0%, compounded semi-annually. Accrued and unpaid interest together with unpaid
principal, if not sooner paid, is due and payable on the earliest of:

         -   the date of cessation of employment of the employee;

         -   the date the employee is no longer the owner of the related shares
             of common stock; or

         -   generally, 14 1/2 years from the issuance date of the note.


                                       53
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


         Notes receivable consisted of the following:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                           -------------------------
                                                             2001            2002
                                                           ---------       ---------
                                                           (IN THOUSANDS OF DOLLARS)

<S>                                                        <C>             <C>
Principal amount of notes receivable outstanding......     $   1,621       $   1,636
Less: amount due for stock purchases..................           956           1,072
Less: allowance for doubtful notes....................           325             384
                                                           ---------       ---------
                                                                 340             180
Less: amounts due within one year, net of allowance...           340              44
                                                           ---------       ---------
Notes receivable, net.................................     $       -       $     136
                                                           =========       =========
</TABLE>

         The amount due within one year is included within other current assets
in our balance sheet and the amount of notes receivable, net is included within
other assets in our balance sheet. The amount due for stock purchases is
included as a reduction to the redeemable equity balance in our balance sheet
(see Note 14).

9.       PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following:

<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                           ------------------------------
                                             2001                2002
                                           -----------        -----------
                                              (IN THOUSANDS OF DOLLARS)

<S>                                        <C>                <C>
Land .................................     $    67,003        $    68,253
Buildings and improvements............         368,251            391,896
Machinery, equipment and furniture....         233,043            247,120
Construction in progress..............          44,694             34,373
                                           -----------        -----------
     Total cost.......................         712,991            741,642
Less: accumulated depreciation........         251,824            295,950
                                           -----------        -----------
     Property and equipment, net......     $   461,167        $   445,692
                                           ===========        ===========
</TABLE>

         At December 31, 2001, we were holding for sale eight facilities, two of
which had been closed during 1999. Based on the estimated sales proceeds and
costs of selling these sites, impairment charges of $2,489,000 and $1,475,000
were recognized during the years ended December 31, 2001 and 2002, respectively.
These charges were included in depreciation and amortization expense in our
consolidated statement of operations and our consolidated statement of cash
flows. During 2002, we sold four of these facilities, including one of the
closed locations, and in January 2003 we sold another of these facilities. The
other three sites for which we had been accounting as assets held for sale were
not sold within the one-year period required by FAS 144. Accordingly, we will no
longer account for these sites as assets held for sale. A charge of $231,000 was
recorded in the fourth quarter to recognize the depreciation expense related to
those sites that had not been depreciated throughout the year while these sites
were being accounted for as held for sale.

         Effective April 1, 2001, we changed our accounting estimates related to
depreciation. Based upon our evaluation of our assets, our estimates of the
useful lives for certain types of property and equipment were extended five
years. These changes reduced depreciation expense by $8,514,000 and net loss by
$5,142,000 for the year ended December 31, 2001.


                                       54
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10.      INTANGIBLE ASSETS

         As part of acquisition of the Unocal network, we entered into a
noncompetition agreement with Unocal pursuant to which Unocal agreed to refrain
from re-entering the truckstop business for a period of ten years from the
acquisition date. The intangible asset related to this noncompetition agreement
represents the present value, at the time of the acquisition of the Unocal
network, of the estimated cash flows we would lose due to competition resulting
from re-entry of Unocal into the travel center market were they not constrained
from doing so. The Unocal noncompetition agreement is being amortized over its
ten year life, which expires in April 2003.

         Leasehold interest represents the value, obtained through the BP
acquisition, of favorable lease provisions at one location, the lease for which
extended 11 1/2 years from the date of the BP acquisition. The leasehold
interest is being amortized over the 11-1/2 year period.

         Trademarks relate primarily to our purchase of the trademarks, service
marks, trade names and commercial symbols from BP and Travel Ports. The
trademarks were being amortized until our adoption of FAS 142 on January 1, 2002
(See Note 3).

         Goodwill results from our business acquisitions and represents the
excess of amounts paid to the sellers over the fair values of the tangible
assets acquired and was being amortized until our adoption of FAS 142 on January
1, 2002 (see Note 3). For the years ended December 31, 2000, 2001 and 2002, we
recorded goodwill of $3,030,000, $145,000 and $4,242,000, respectively, in
connection with converting leased sites to company-operated sites.

         Intangible assets consisted of the following:

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                    ----------------------
                                                                      2001            2002
                                                                    ---------    ---------
                                                                   (IN THOUSANDS OF DOLLARS)

<S>                                                                 <C>          <C>
Amortizable intangible assets:
       Noncompetition agreements.................................   $  17,200    $  17,200
       Leasehold interest........................................       1,724        1,724
       Other.....................................................         849          849
                                                                    ---------    ---------
           Total amortizable intangible assets...................      19,773       19,773
Less - accumulated amortization..................................      16,953       18,848
                                                                    ---------    ---------
           Net carrying value of amortizable intangible assets...       2,820          925
Net carrying value of goodwill...................................      19,343       23,585
Net carrying value of trademarks.................................       1,398        1,398
                                                                    ---------    ---------
           Intangible assets, net................................   $  23,561    $  25,908
                                                                    =========    =========
</TABLE>



                                       55
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


         The changes in the carrying amount of goodwill for the years ended
December 31, 2000, 2001 and 2002 were as follows:

<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                               ---------------------------------------
                                                 2000           2001           2002
                                               ----------     ----------    ----------
                                                      (IN THOUSANDS OF DOLLARS)

<S>                                            <C>            <C>           <C>
Balance as of beginning of period...........   $   19,387     $   20,790    $   19,343
Goodwill recorded during the period.........        3,030            145         4,242
Amortization recorded during the period.....       (1,627)        (1,592)            -
                                               ----------     ----------    ----------
Balance as of end of period.................   $   20,790     $   19,343    $   23,585
                                               ==========     ==========    ==========
</TABLE>

         Total amortization expense for our amortizable intangible assets for
the years ended December 31, 2000, 2001 and 2002 was $3,234,000, $1,896,000 and
$1,896,000, respectively. The estimated aggregate amortization expense for our
amortizable intangible assets for each of the three succeeding fiscal years are
$678,000 for 2003; $176,000 for 2004 and $70,000 for 2005. Our amortizable
intangible assets will be fully amortized during the year ending December 31,
2005.

11.      OTHER ACCRUED LIABILITIES

         Other accrued liabilities consisted of the following:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                             ---------------------------
                                                2001            2002
                                             ---------        ---------
                                              (IN THOUSANDS OF DOLLARS)

<S>                                          <C>              <C>
Taxes payable, other than income taxes....   $  13,872        $  17,864
Accrued wages and benefits................      10,498           17,058
Interest payable..........................       5,105            4,640
Other accrued liabilities.................      14,066           11,878
                                             ---------        ---------
Total other accrued liabilities...........   $  43,541        $  51,440
                                             =========        =========
</TABLE>

12.      REVOLVING LOAN

         We have available a revolving loan facility of $100,000,000 (see Note
13). The interest rate for borrowings under this revolving loan facility is
based on either a prime rate-based alternate base rate plus 1.75% or an adjusted
London Interbank Offered Rate (LIBOR) plus 2.75%. Commitment fees are calculated
as 0.5% of the daily average unused amount of the revolving loan commitment. At
December 31, 2001 and 2002, there were outstanding borrowings under our
revolving credit facilities of $43,900,000 and $22,400,000, respectively. There
were $20,948,000 of available borrowings reserved for letters of credit at
December 31, 2002. The revolving loan facility matures in November 2006.


                                       56
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


13.      LONG-TERM DEBT

         In November 2000, in connection with our recapitalization and merger
transactions (see Note 4), we completed a refinancing, which we refer to as the
"2000 Refinancing." In the 2000 Refinancing, we issued $190,000,000 of senior
subordinated notes due 2009 and borrowed $328,300,000 under our amended and
restated senior credit facility that consisted of a fully-drawn $328,000,000
term loan facility and a $100,000,000 revolving credit facility. The proceeds
from these borrowings, along with proceeds from the issuance of common stock and
other cash on hand, were utilized to:

         -   pay for the tender offer and consent solicitation for our 10 1/4%
             Senior Subordinated Notes due 2007, including accrued interest,
             premiums and a prepayment penalty;

         -   repay all amounts, including accrued interest, outstanding under
             our existing amended and restated credit agreement;

         -   redeem in full all of our senior secured notes and pay related
             accrued interest and prepayment penalties;

         -   make cash payments to certain of our equity owners, whose shares
             and unexercised stock options and warrants were redeemed and
             cancelled pursuant to the recapitalization agreement and plan of
             merger; and

         -   pay fees and expenses related to the financings and the merger
             and recapitalization transactions.

         Long-term debt (net of unamortized discount) consisted of the
following:

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                                  -------------------------
                                                      INTEREST     MATURITY         2001           2002
                                                      --------     --------       -----------  ------------
                                                                                  (IN THOUSANDS OF DOLLARS)

<S>                                                    <C>          <C>          <C>            <C>
Senior Credit Facility - Term Loan (a)..............     (b)         2008         $  328,000     $  324,720
Senior Credit Facility - Revolver (a)...............     (c)         2006             43,900         22,400
Senior Subordinated Notes due 2009 (d)..............    12.75%       2009            190,000        190,000
Note payable (e)....................................     5.00%       2018              4,413          4,284
                                                                                  ----------     ----------

     Total..........................................                                 566,313        541,404
Less: amounts due within one year...................                                   3,409          3,460
Less: unamortized discount..........................                                  14,035         12,813
                                                                                  ----------     ----------

     Long-term debt (net of unamortized discount)...                              $  548,869     $  525,131
                                                                                  ==========     ==========
</TABLE>

-----------
(a)  On November 14, 2000, in connection with the 2000 Refinancing, we entered
     into a $428,000,000 Amended and Restated Credit Agreement with a group of
     lenders, which borrowing we refer to as our Senior Credit Facility. The
     Senior Credit Facility consists of a $328,000,000 term loan facility, which
     was fully drawn at closing, and a $100,000,000 revolving credit facility
     (see Note 12). Principal payments are due at each quarter end. The term
     loan facility matures in November 2008.

(b)  Interest accrues at variable rates based on either adjusted LIBOR plus
     3.25% or, at our election, a prime rate-based alternate base rate plus
     2.25%. We have the option to select which rate will be applied at the
     beginning of each loan period, the term of which, for LIBOR borrowings,
     varies, at our election, from one to six months and, for alternate base
     rate borrowings, extends until we elect to convert to LIBOR borrowings. The
     interest rate was set on December 20, 2002 at 4.67% for a 30 day period.
     Interest payments are due at each quarter end for interest related to
     alternate base rate borrowings and at the end of each loan period, but not
     less frequently than quarterly, for LIBOR borrowings.


                                       57
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(c)  Interest accrues at variable rates based on either adjusted LIBOR plus
     2.75% or, at our election, a prime rate-based alternate base rate plus
     1.75%. We have the option to select which rate will be applied at the
     beginning of each loan period, the term of which, for LIBOR borrowings,
     varies, at our election, from one to six months and, for alternate base
     rate borrowings, extends until we elect to convert to LIBOR borrowings. At
     December 31, 2002 we had $16,000,000 of LIBOR borrowings at an average rate
     of 4.1875% for various 30-day periods ending in January 2002 and $6,400,000
     of alternate base rate borrowings at 6.0%. Interest payments are due at
     each quarter end for interest related to alternate base rate borrowings and
     at the end of each loan period, but not less frequently than quarterly, for
     LIBOR borrowings.

(d)  On November 14, 2000, in connection with the 2000 Refinancing, we issued
     Senior Subordinated Notes with an aggregate face amount of $190,000,000.
     These notes were issued at a discount of 3.704% and each $1,000 note was
     accompanied by detachable warrants (see Note 15). The warrants had an
     aggregate fair value at issuance of $6,600,000. The original issue discount
     and the fair value of the warrants were initially recognized as unamortized
     debt discount in our balance sheet and are being amortized into interest
     expense using the effective interest method. Interest payments on these
     notes are due semiannually on May 1 and November 1. Optional prepayments
     are allowed under certain circumstances, any such payments reducing the
     required payment of $190,000,000 due on May 1, 2009.

(e)  On September 1, 1998, in connection with the purchase of the operating
     assets of a leased site, we issued a note payable to the former operator of
     the site for $4,919,000. The note bears interest at 5% and requires
     quarterly payments of principal and interest of $98,000 thru October 1,
     2018. The note was recorded net of a discount of $1,875,000. This note is
     secured by a mortgage interest in the related travel center.

         Debt Extinguishments and Issuance Costs. As part of the 2000
Refinancing, we retired all of our outstanding indebtedness under the Amended
and Restated Credit Agreement, all of our Series I Senior Secured Notes and all
of our outstanding Senior Subordinated Notes due 2007, resulting in the early
extinguishment of $423,557,000 of debt. As a result, in 2000 we recognized an
extraordinary loss, net of the applicable income tax benefits of $7,110,000, of
$13,800,000. This extraordinary loss consisted of (a) the write off of
$7,632,000 of unamortized deferred financing costs incurred when issuing the
extinguished indebtedness, (b) $11,629,000 of tender offer and consent
solicitation premium and related fees related to redeeming the Senior
Subordinated Notes due 2007, (c) $750,000 of prepayment penalties related to
redeeming the Series I Senior Secured Notes, and (d) $899,000 to exit an
interest rate swap agreement related to the extinguished debt. We capitalized as
deferred financing costs $32,932,000 of costs associated with issuing the Senior
Credit Facility and the Senior Subordinated Notes due 2009.

         Pledged Assets. The borrowings under the Senior Credit Facility are
secured by mortgages on substantially all of our property and equipment, liens
on all of our accounts receivable and inventories and security agreements
related to our cash balances and significant operating contracts.

         Change of Control. In the event of a change in control (as defined in
the relevant instruments) of the company, the total amount outstanding under the
debt agreements described above may be declared immediately due and payable.

         Mandatory Prepayments. The Senior Credit Facility obligates us to make
annual mandatory prepayments of term loan indebtedness equal to one-half of the
Excess Cash Flow (as defined in the agreement) amount generated in the previous
year. We generated no Excess Cash Flow during the years ended December 31, 2000
and 2001. For the year ended December 31, 2002 we generated approximately
$22,627,000 of Excess Cash Flow and, therefore, are obligated to prepay
$11,314,000 of the term loan by April 15, 2003. This $11,314,000 payment will
reduce our scheduled future quarterly payments on a pro rata basis.


                                       58
<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


         Debt Covenants. Under the terms of the Senior Credit Facility, we are
required to maintain certain affirmative and negative covenants, that, among
other things, limit the amount of indebtedness we can incur, limit the amount of
lease payments we can make, limit the amount of dividend payments and debt
prepayments we can make, limit the amount of capital expenditures we can make
and require us to maintain a minimum interest coverage ratio and a maximum
leverage ratio. We were in compliance with the covenants throughout 2002 and at
December 31, 2002.

         Under the terms of the Indenture for the Senior Subordinated Notes due
2009, we are required to maintain certain affirmative and negative covenants
that, among other things, limit our ability to incur indebtedness, pay
dividends, redeem stock or sell assets or subsidiaries. We were in compliance
with the covenants throughout 2002 and at December 31, 2002.

         Future Payments. Scheduled payments of long-term debt in the next five
years, including the mandatory prepayment based on Excess Cash Flow generated in
the year ended December 31, 2002, are $14,688,000 in 2003; $3,354,000 in 2004;
$3,364,000 in 2005; $25,774,000 in 2006 and $77,772,000 in 2007. Although we are
obligated to make a $11,314,000 mandatory prepayment of the term loan, based on
our intent and ability to finance this short-term obligation with borrowings
under the revolving credit facility that does not mature until 2006, we have
continued to classify this $11,314,000 within the long-term debt balance in our
consolidated balance sheet as of December 31, 2002.

         Fair Value. Based on the borrowing rates currently available to us for
bank loans and other indebtedness with similar terms and average maturities and
the year-end quoted market price of the Senior Subordinated Notes due 2009, the
fair value of long-term debt at December 31, 2001 and 2002 was $576,242,000 and
$551,391,000, respectively.

14.      REDEEMABLE EQUITY

         At December 31, 2001 and 2002, there were 175,498 and 182,800 shares,
respectively, of our common stock owned by certain of our management employees.
We refer to these shares of common stock as management shares. For the purchase
of management shares, each of the management employees who entered into the
management subscription agreement received financing from us for no more than
one-half of the purchase price of the management shares. In connection with this
financing each management employee executed a note in our favor and a pledge
agreement. At December 31, 2001 and 2002, the aggregate principal amount of such
notes due us from the management employees was $956,000 and $1,072,000,
respectively (see Note 8), and is reflected as a reduction to the redeemable
common stock balance.

         Under the terms of the management subscription agreements and other
agreements governing the management shares, the management employees have rights
to require us to repurchase the management shares at fair market value upon the
employee's termination of employment due to death, disability or scheduled
retirement. Repurchase will generally be for cash at the fair market value on
the date of termination if termination is due to death or disability or
scheduled retirement at or after age 62, or for cash in installments over a
period of years at fair market value each year if termination is due to
scheduled retirement prior to age 62. Prior to an initial public offering of our
common stock, the fair market value is determined by a formula set forth in the
agreement that can be modified by the Board of Directors. The formula to
calculate the fair market value is (A) the product of (1) a multiplier
(currently 6.5) and (2) EBITDA (as defined in our bank debt agreement) for the
most recent four consecutive full fiscal quarters, plus (B) consolidated cash
and cash equivalents in excess of $10,000,000, minus (C) consolidated
indebtedness, divided by (D) the total number of shares of common stock
outstanding on a fully diluted basis assuming full conversion and exercise of
all common stock equivalents and similar stock rights.


                                       59
<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

     If there is a change of control of us which involves the sale by
stockholders of their equity interest to a third party during the time that
installments are being paid to the management employees, we will accelerate the
installment payments at the time of the close of the change of control. In other
cases of termination, we will have call rights at fair market value that
generally will be exercised for cash, although in limited circumstances the call
rights may be exercised by promissory note. In all cases, repurchase rights are
restricted under law, credit agreements, financing documents and other
contracts, and our board's good faith determination that repurchases would not
cause undue financial strain on us. The Senior Credit Facility and the Senior
Subordinated Notes limit our ability to repurchase the management shares. The
amount paid upon repurchase of any management shares will be reduced by the
principal balance of and unpaid accrued interest on the related notes
receivable. At the point in time that redemption of shares of redeemable common
stock becomes probable, the fair value of the shares will be accreted to their
estimated redemption value by a charge to retained earnings. Such a charge to
retained earnings will occur only if our value, and therefore the fair value of
our common stock, has increased. Our policy is to consider redemption of an
individual stockholder's shares probable at the time that the stockholder
provides notice of his or her intention to retire, dies or is declared disabled.

15.  NONREDEEMABLE STOCKHOLDERS' EQUITY

     Common stock and other nonredeemable stockholders' equity consisted of the
following:

<TABLE>
<CAPTION>
                                                                                          DECEMBER 31,
                                                                              --------------------------------------
                                                                                    2001                2002
                                                                              ------------------ -------------------
                                                                                    (IN THOUSANDS OF DOLLARS)
<S>                                                                              <C>                <C>
Common Stock - 20,000,000 shares authorized, $0.00001
     par value, 6,932,196 and 6,939,498 shares
     outstanding at December 31, 2001 and 2002,
     respectively............................................................       $      3        $      3
Accumulated other comprehensive income.......................................         (1,920)              -
Additional paid-in capital...................................................        215,840         215,840
                                                                                    --------        --------
           Total.............................................................       $213,923        $215,843
                                                                                    ========        ========
</TABLE>

     The numbers of outstanding shares of common stock in the table include the
redeemable shares owned by certain of our management employees as discussed in
Note 14.

MERGER AND RECAPITALIZATION

     On May 31, 2000, we and shareholders owning a majority of our voting stock
entered into a recapitalization agreement and plan of merger, as subsequently
amended, with TCA Acquisition Corporation, a newly created corporation formed by
Oak Hill Capital Partners, L.P. and its affiliates, under which TCA Acquisition
Corporation agreed to merge with and into us. This merger was completed on
November 14, 2000. Concurrent with the closing of the merger, we completed a
series of transactions to effect a recapitalization that included the following.

     *    TCA Acquisition Corporation issued 6,456,698 shares of common stock to
          Oak Hill and other institutional investors for proceeds of
          $205,000,000 and then merged with and into us. We incurred $3,015,000
          of fees and expenses related to the issuance of these shares of common
          stock. These stock issuance costs were charged against additional
          paid-in capital.

     *    We redeemed all shares of our common and preferred stock outstanding
          prior to the closing of the merger, with the exception of 473,064
          shares of common stock with a market value at that time of $15,020,000
          that were retained by continuing stockholders, and cancelled all
          outstanding common stock options and warrants for cash payments
          totaling $263,153,000.

                                       60

<PAGE>



                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

     *    All shares of treasury stock were cancelled.

     After the transactions described above, Oak Hill owned 60.5% of our
outstanding common stock, the Other Investors owned, in the aggregate, 32.7% of
our outstanding common stock, Freightliner owned 4.3% of our outstanding common
stock and certain members of our management owned 2.5% of our outstanding common
stock. The total amount of our equity capitalization after these transactions,
given the $31.75 per share merger consideration that was paid in our merger and
recapitalization transactions, was $220,020,000. The transactions described
above, which resulted in a change of control over us, have been accounted for as
a leveraged recapitalization, as opposed to a purchase business combination,
since the change of control was effected through issuance of new shares to our
new control group in conjunction with a redemption of most of our then
outstanding equity securities. We followed leveraged recapitalization accounting
because of the significance of the ownership interest in us that was retained by
continuing stockholders. In accounting for our leveraged recapitalization, we
retained the historical cost bases of our assets and liabilities and
consequently recorded charges totaling $178,965,000 to our equity accounts upon
the redemption of equity securities. This accounting treatment contrasts with
that followed in a purchase business combination, in which a company reflects
the new basis in its assets and liabilities of its new control group by
increasing or decreasing its historical balances based on the estimated fair
values at that time and avoids the charge to equity that accompanies the
redemption of equity securities.

OTHER COMMON STOCK ISSUANCES

     During the years ended December 31, 2000, 2001 and 2002, we issued 39,893,
2,434 and 7,302 respectively, shares of common stock to certain members of
management for cash and notes receivable (see Notes 8, 14 and 17) aggregating
$495,000, $77,000 and $232,000, respectively.

     In November 2000, Freightliner exercised an option to purchase 100,000
shares of common stock for cash consideration of $3,330,000.

PREFERRED STOCK

     The board of directors has the authority to issue preferred stock in one or
more classes or series and to fix the designations, powers, preferences and
dividend rates, conversion rights, terms of redemption, and liquidation
preferences and the number of shares constituting each class or series. Our
authorized capital stock includes 5,000,000 shares of preferred stock with a par
value of $0.00001.

COMMON STOCK

     Voting Rights. Each share of common stock entitles the holder to one vote
on all matters submitted to a vote of our stockholders.

     Dividends. Holders of common stock are entitled to receive dividends if, as
and when declared by our board of directors out of funds legally available. Our
debt agreements limit the amount of dividends we are able to pay.

     Liquidation Rights and Other Rights. Upon our liquidation, dissolution or
winding up, the holders of our common stock will be entitled to share pro rata
in the distribution of all of our assets remaining after satisfaction of all of
our liabilities and the payment of the liquidation preference of any outstanding
preferred stock. The holders of our common stock do not have any conversion,
redemption or preemptive rights.

     Repurchase Rights. Certain members of our senior management have purchased
shares of our common stock pursuant to individual management subscription
agreements. We have the right to repurchase, and the

                                       61

<PAGE>
                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

employees have the right to require us to repurchase, subject to certain
limitations, at fair market value, these shares of common stock upon termination
of employment due to death, disability or a scheduled retirement. These shares
are classified as redeemable equity in our consolidated balance sheet (see Note
14).

     Treasury Shares. From time to time we have acquired shares of our common
stock from former stockholders. For the year ended December 31, 2000, we
purchased 7,995,138 treasury shares. These shares were recorded at their
acquisition cost of $253,649,000. As part of our recapitalization, we cancelled
all of the treasury shares we owned, and since then we have acquired no treasury
stock.

REGISTRATION RIGHTS

     Under a stockholders' agreement to which all of our stockholders are party,
certain of our stockholders have the right, under certain circumstances, to
require us to register under the Securities Act of 1933 shares of our common
stock held by them and allow them to include shares of common stock held by them
in a registration under the Securities Act commenced by us.

COMMON STOCK WARRANTS

     In connection with the issuance of our Senior Subordinated Notes due 2009
as part of our merger and recapitalization transactions, we issued warrants
exercisable for shares of our common stock. The warrants were issued under a
warrant agreement between us and State Street Bank and Trust Company, as warrant
agent. We originally issued initial warrants in connection with a private
placement of 190,000 units, each unit consisting of one Senior Subordinated Note
due 2009, three initial warrants and one contingent warrant. Each warrant,
whether initial or contingent, entitles its holder to purchase 0.36469 shares of
our common stock at an exercise price of $0.001 per share, subject to
anti-dilution adjustments under some circumstances. We have no warrants
outstanding other than the 570,000 initial warrants and the 190,000 contingent
warrants.

     Initial Warrants. The initial warrants entitle the holders to purchase
207,874 shares of our common stock at an exercise price of $0.001 per share.

     Contingent Warrants. The contingent warrants entitle the holders to
purchase 69,291 shares of common stock at an exercise price of $0.001 per share.
Since consummation of the private placement in November 2000, the contingent
warrants have been held in escrow under an escrow agreement between us and State
Street Bank and Trust Company, as escrow agent and, subject to some conditions
that have been met, will be released from escrow and distributed to holders of
the initial warrants on March 31, 2003, the contingent warrant release date. The
contingent warrants were to be released from escrow and delivered to us for
cancellation only if, as of December 31, 2002:

     *    the Consolidated Leverage Ratio, as defined in the indenture governing
          the notes, is equal to or less than 4.5 to 1.0 and our chief financial
          officer delivers a certificate to that effect to the escrow agent
          prior to the contingent warrant release date, or

     *    all of the notes have been repaid, redeemed or repurchased by us.

As neither of these conditions were met on the contingent warrant release date,
the contingent warrants will be distributed pro rata to all the registered
holders of initial warrants determined as of the contingent warrant release
date. To the extent an initial warrant is exercised prior to the contingent
warrant release date, the last registered holder of the initial warrant will be
treated as the registered holder of the initial warrant as of the contingent
warrant release date for purposes of participating in the distribution of
contingent warrants.

                                       62

<PAGE>


                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

     Exercise of Warrants. The initial warrants may be exercised at any time on
or after November 14, 2001, and the contingent warrants may be exercised at any
time after the contingent warrant release date. However, holders of warrants
will be able to exercise their warrants only if the shelf registration statement
is effective or the exercise of the warrants is exempt from the requirements of
the Securities Act and only if the shares of common stock are qualified for sale
or exempt from qualification under the applicable securities laws of the states
or other jurisdiction in which the holders reside. Unless earlier exercised, the
warrants will expire on May 1, 2009.

     At our option, fractional shares of common stock may not be issued upon
exercise of the warrants. If any fraction of a share of common stock would,
except for the foregoing provision, be issuable upon the exercise of any
warrants, we will pay an amount in cash equal to the current market value per
share of common stock, as determined on the day immediately preceding the date
the warrant is presented for exercise, multiplied by the fraction, computed to
the nearest whole cent.

     The exercise price and the number of shares of common stock issuable upon
exercise of a warrant are both subject to adjustment in certain cases.

     No Rights as Stockholders. The holders of unexercised warrants are not
entitled, as such, to receive dividends, to vote, to consent, to exercise any
preemptive rights or to receive notice as our stockholders of any stockholders
meeting for the election of our directors or any other purpose, or to exercise
any other rights whatsoever as our stockholders.

STOCK AWARD AND OPTION PLANS

     2001 Stock Plan. During 2001, we granted to certain of our executives
non-qualified stock options to purchase 944,881 shares of our common stock under
a stock incentive plan our board of directors adopted in November 2000 and which
was approved by a vote of our stockholders in 2001. All of the options have a
term of 10 years from the date of grant, although the options will be terminated
earlier if certain customary events occur. For example, if an executive's
employment is terminated by us without cause or by the executive for good reason
or due to death, disability or scheduled retirement, all vested options will
expire 60 days following termination of employment. Under certain circumstances,
the executive will be allowed to hold a limited portion of his unvested options
for a longer period of time following termination of employment for further
vesting. Each option grant consists of 41.67% time options and 58.33%
performance options. Time options become exercisable with the passage of time,
while performance options become exercisable if certain investment return
targets are achieved. Time options generally vest 20% per year over a period of
five years. Performance options vest if Oak Hill achieves specified internal
rates of return on specified measurement dates. In general, the number of
performance options that will vest is based upon Oak Hill achieving internal
rates of return between 22.5% and 30.0% on a measurement date. A measurement
date is generally defined as the earliest of (1) five years from the closing of
the merger and recapitalization transactions (November 14, 2000), (2) specified
dates following an initial public offering of our stock, depending on the date
the initial public offering occurs, or (3) the date that at least 30% of our
shares owned by Oak Hill are distributed to its limited partners or sold, except
that a subsequent measurement date may occur if less than 100% of our shares
owned by Oak Hill are so sold or distributed. Vesting is partially accelerated
for time options following termination of employment due to death, disability or
scheduled retirement. If a change of control occurs, the vesting of time options
will fully accelerate. Option holders will have rights to require us to
repurchase shares obtained upon the exercise of vested options upon a
termination of employment due to disability, death or, subject to a six-month
holding period, scheduled retirement, and, in certain limited cases, upon a
change of control. In connection with our initial grant of options under this
plan, we established and granted a discretionary pool of options that will be
allocated periodically, first to new members of management who become option
holders after the date of the initial grant, and then to other members on a pro
rata basis. The total number of shares underlying the initial grant of options
will not increase as a result. The time options are subject to fixed plan
accounting and, accordingly, no charge to earnings will be required with respect
to them since the exercise price equaled the fair


                                       63

<PAGE>


                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

value at the date of grant. The performance options are subject to variable plan
accounting and, accordingly, a non-cash charge to earnings will be required when
it becomes probable that the performance triggers for such options will be
achieved. It is not possible to determine at this time, nor may it be possible
until close to the end of the five-year performance period, whether it will be
probable that we will achieve the performance triggers. It is not possible to
predict whether any such required non-cash charge will be material to our
results for the period in which the charge is recognized, as we expect that the
performance triggers can only be attained as a result of a significant increase
in our results of operations. The options granted to future participants in the
option plan under the discretionary pool, including time options, also may be
subject to a compensation charge.

     As part of our merger and recapitalization transactions in November 2000,
all of the then outstanding options to purchase shares of our common stock were
required to be either exercised or cancelled. These options had been granted to
certain members of management and nonemployee directors under the 1997 Stock
Incentive Plan and the 1993 Stock Incentive Plan.

     Stock Option Status Summary. The following table reflects the status and
activity of options under our stock plans:

<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                     -----------------------------------------------
                                                                          2000            2001            2002
                                                                     --------------- --------------- ---------------
<S>                                                                     <C>            <C>              <C>
Options outstanding, beginning of year...............................      777,280               -         944,881
Granted..............................................................      325,000         944,881               -
Exercised............................................................      (37,572)              -               -
Canceled.............................................................   (1,064,708)              -               -
                                                                      ------------     -----------     -----------
Options outstanding, end of year.....................................            -         944,881         944,881
                                                                       ===========     ===========     ===========
Options exercisable, end of year.....................................            -          78,740         157,480
Options available for grant, end of year.............................            -               -               -
</TABLE>

     The weighted-average exercise price was $31.75 per share for those options
granted during 2001 and for all outstanding options as of December 31, 2001 and
2002. The weighted-average exercise price was $33.30 for those options granted
during 2000.

     We account for our stock-based employee compensation plans under the
recognition and measurement principles of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related Interpretations. For the years ended
December 31, 2001 and 2002, no stock-based employee compensation cost is
reflected in net income, as all time options granted under those plans had an
excise price equal to the market value of the underlying common stock on the
date of grant and the vesting of the performance options is not considered to be
probable. For the year ended December 31, 2000, the stock-based employee
compensation cost recognized in relation to the options granted under the 1997
Stock Plan was based on the $31.75 fair market value per share reflected in the
merger and recapitalization transactions and represented a benefit of $1,362,000
as a result of exercising or canceling, for a cash settlement, all outstanding
options granted under the 1997 Stock Plan, which was cancelled as part of the
recapitalization, at a decreased fair market value per share from 1999.


                                       64

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


16.  INCOME TAXES

     The (benefit) provision for income taxes was as follows:

<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                     -----------------------------------------------
                                                                          2000            2001            2002
                                                                     --------------- --------------- ---------------
                                                                               (IN THOUSANDS OF DOLLARS)
<S>                                                                    <C>             <C>             <C>
Current:
   Federal...........................................................  $    2,418      $        -      $   (3,902)
   State.............................................................         775           1,607           1,227
                                                                       ----------      ----------      ----------
                                                                            3,193           1,607          (2,675)
                                                                       ----------      ----------      ----------
Deferred:
   Federal...........................................................      (8,285)         (8,447)          3,544
   State.............................................................       1,004             391            (361)
                                                                       ----------      ----------      ----------
                                                                           (7,281)         (8,056)          3,183
                                                                       ----------      -----------     ----------
        Total........................................................  $   (4,088)     $   (6,449)     $      508
                                                                       ==========      ===========     ==========
</TABLE>

     The difference between taxes calculated at the U. S. federal statutory tax
rate of 35% and our total income tax provision is as follows:

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31,
                                                                     -------------------------------------------
                                                                         2000            2001            2002
                                                                     --------------- --------------- -----------
                                                                               (IN THOUSANDS OF DOLLARS)
<S>                                                                    <C>             <C>             <C>
U.S. federal statutory rate applied to income before taxes and
   extraordinary items...............................................  $  (9,801)      $  (5,702)      $     531
State income taxes, net of federal income tax benefit................      1,508           1,450             661
Non-deductible meals and entertainment expenses......................        132             172             165
Non-deductible amortization..........................................        240             240               -
Non-deductible merger and recapitalization expenses..................      3,745          (2,212)              -
Other non-deductible expenses........................................          -               -             142
Benefit of tax credits...............................................       (423)           (569)           (358)
Adjustment of estimated prior year tax liabilities...................          -               -            (625)
Other - net..........................................................        511             172              (8)
                                                                       ---------       ---------       ---------
        Total........................................................  $  (4,088)      $  (6,449)      $     508
                                                                       =========       ==========      =========
</TABLE>

     For 2000, income tax benefits of $7,110,000 allocated to the extraordinary
loss of $20,910,000 differ from the amount calculated at the federal statutory
rate of 35% by $209,000. This difference is due to graduated tax rates.


                                       65

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


     Deferred income tax assets and liabilities resulted from the following:


<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                                     -------------------------------
                                                                                          2001            2002
                                                                                     --------------- ---------------
                                                                                       (IN THOUSANDS OF DOLLARS)
<S>                                                                                    <C>             <C>
Deferred tax assets:
   Accounts receivable.............................................................    $    1,330      $      947
   Inventory.......................................................................           337             357
   Intangible assets...............................................................         9,424           8,231
   Deferred revenues...............................................................           749             334
   Minimum tax credit..............................................................         5,304           3,001
   Net operating loss carryforward (expiring 2020-2021)............................        28,657          24,773
   General business credits (expiring 2009-2022)...................................         4,047           4,576
   Fair value of derivative instruments............................................           990               -
   Other accrued liabilities.......................................................         4,899           6,154
                                                                                       ----------      ----------
        Total deferred tax assets..................................................        55,737          48,373
                                                                                       ----------      ----------
Deferred tax liabilities:
   Property and equipment..........................................................       (33,636)        (30,445)
                                                                                       -----------     ----------
        Total deferred tax liabilities.............................................       (33,636)        (30,445)
                                                                                       -----------     ----------
        Net deferred tax assets....................................................    $   22,101      $   17,928
                                                                                       ==========      ==========
</TABLE>

     At December 31, 2002, we had available to us a net operating loss
carryforward of approximately $72,862,000 that consisted of $44,965,000
remaining carryforward generated in 2000 that expires in 2020 and $27,897,000
remaining carryforward generated in 2001 that expires in 2021. Internal Revenue
Code Section 382 restricts our ability to utilize in the future the net
operating loss that we generated in 2000 because of the change of control we
experienced as a result of our merger and recapitalization transaction in
November 2000. The amount of net operating loss we can utilize will be limited
to approximately $12,000,000 per year and unused amounts of the annual Section
382 limitation can be carried forward to subsequent years within the
carryforward period. As none of the 2000 net operating loss was utilized in 2001
and $4,370,000 was utilized in 2002, usage of the net operating loss generated
in 2000 will be limited to approximately $31,630,000 for 2003. Usage of the net
operating loss generated in 2001 is unlimited. Realization of our net deferred
tax assets is dependent on future taxable income. We believe it is more likely
than not such net deferred tax assets will be realized and, accordingly, we have
not recognized a valuation allowance with respect to our net deferred tax
assets. Most of our net operating loss carryforwards were generated as a result
of our merger and recapitalization transactions in November 2000. The remainder
of our net operating loss carryforwards result largely from depreciation and
interest deductions and the trends for these items relative to operating income
are expected to decline, enabling us to generate sufficient taxable income to
utilize net operating loss carryforwards. The level of tax depreciation on our
significant capital investments in 1993 and 1997 through 1999 began to diminish
in 2002 and our level of capital investment in 2001, 2002 and future years as
compared to prior years has been, and will be, reduced. The relative level of
interest expense to operating income should diminish as the capital projects
completed in 1999 through 2002 continue to mature and produce greater amounts of
taxable income while our debt levels decrease or hold relatively steady,
enabling us to keep our interest expense relatively constant or growing at a
slower rate than operating income. Further, we could complete a sale/leaseback
of certain of our travel centers. Although we would not ordinarily execute this
tax planning strategy, we would do so to prevent our net operating loss
carryforwards from expiring unused. The sale/leaseback would be expected to
generate a sufficient taxable gain in the year consummated to fully utilize any
expiring unused net operating loss carryforwards and could be expected to
increase our taxable income in subsequent years as lower interest expense and
depreciation deductions would, in all likelihood, more than offset the
additional operating lease expense. However, ultimate realization of our net
deferred tax assets could be negatively affected by market conditions and other
variables not known or anticipated at this time.


                                       66

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

     Our federal income tax returns for 2001 through 2002 are subject to
examination by the Internal Revenue Service and certain of our state income tax
returns for various states for various years from 1996 through 2002 are subject
to examination by the respective state tax authorities. We believe we have made
adequate provision for income taxes and interest that may become payable for
years not yet examined.

17.  RELATED PARTY TRANSACTIONS

     We lease one of our travel centers from a realty company owned by two
individuals, one of whom was a stockholder and director of ours during a portion
of 2000. Rent expense related to this lease for the year ended December 31, 2000
was $450,000.

     During 2000 certain of our former shareholders were paid fees aggregating
$1,250,000 as consideration for their financial advisory services provided in
completing the Burns Bros. acquisition, debt refinancings, the Travel Ports
acquisition and the merger and recapitalization transactions. In addition,
during 2000, Oak Hill and the Other Investors were paid fees aggregating
$8,310,000 as consideration for their financial advisory services and other
services provided as part of the merger and recapitalization transactions,
including the related debt and equity financing transactions.

     During the years ended December 31, 2000, 2001 and 2002, we made purchases
of diesel fuel in the amounts of $200,190,000, $201,291,000 and $183,217,000,
respectively, from a company in which we have a minority investment and made
sales of diesel fuel in the amounts of $16,622,000, $12,742,000 and $2,888,000,
respectively, to this affiliate. We also lease a travel center from this
affiliate. Rent expense related to this site for the years ended December 31,
2000, 2001 and 2002 was $335,000, $408,000 and $408,000, respectively. At
December 31, 2001 and 2002, our receivables from this affiliate were $789,000
and $151,000, respectively, while our payables to this affiliate were $944,000
and $357,000, respectively.

     Certain members of our senior management have purchased common stock
pursuant to management subscription agreements (see Note 15 - Repurchase
Rights). As a result of such purchases, we have notes and related interest
receivable from the management stockholders totaling $1,310,000 and $1,497,000
at December 31, 2001 and 2002, respectively.

18.  COMMITMENTS AND CONTINGENCIES

GUARANTEES

     In the normal course of business we periodically enter into agreements that
incorporate indemnification provisions. While the maximum amount to which we may
be exposed under such agreements cannot be estimated, it is the opinion of
management that these indemnifications are not expected to have a material
adverse effect on our consolidated financial position or result of operations.
We also offer a warranty of our workmanship in our truck maintenance and repair
shops, but the annual warranty expense and corresponding liability are
immaterial.

LEASE COMMITMENTS

     We have entered into lease agreements covering certain of our travel center
locations, warehouse and office space, computer and office equipment and
vehicles. Most long-term leases include renewal options, escalation clauses and,
in certain cases, purchase options. Future minimum lease payments required under
operating leases that have remaining noncancelable lease terms in excess of one
year, as of December 31, 2002, were as follows:


                                       67

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,                                             MINIMUM LEASE PAYMENTS
                                                       (IN THOUSANDS OF DOLLARS)

<C>                                                         <C>
2003...................................................     $  16,293
2004...................................................        15,416
2005...................................................        14,606
2006...................................................        73,146
2008...................................................         7,224
Thereafter.............................................        73,789
                                                            ---------
                                                            $ 200,474
                                                            =========
</TABLE>

     The amount in the above table for minimum lease payments for 2006 assumes
we will not renew this lease and will instead pay $58,188,000 to acquire the
related assets. Currently, we would expect to renew and extend the lease at that
time and not expend this amount.

     On September 9, 1999, we entered into a master lease program with a lessor
that has been used to finance the construction of eight travel centers on land
we own. These lease transactions are evaluated for lease classification in
accordance with FAS 13. We do not consolidate the lessor so long as the owners
of the lessor maintain a substantial residual equity investment of at least
three percent that is at risk during the entire term of the lease, which has
been the case to date and is expected to remain the case. Consolidating the
lessor would affect our consolidated balance sheet by increasing property and
equipment, other assets and long-term debt and would affect our consolidated
statement of operations by reducing operating expenses, increasing depreciation
expense and increasing interest expense. The initial term of the lease expires
on September 9, 2006, at which time, if the lease is not renewed and extended,
we have the option to either purchase the improvements for an amount equal to
the sum of (a) the outstanding indebtedness of the lessor and (b) the equity
capital balance, or to make a termination payment to the lessor and abandon the
travel centers. We anticipate that on September 9, 2006 we will renew and extend
the lease agreement, but may either be unable to do so or elect not to do so and
instead either pay approximately $58,188,000 to acquire the leased assets or
make the termination payment of approximately $44,077,000. As of December 31,
2002, the aggregate outstanding amount of the lessor's indebtedness and equity
capital was $68,397,000.

     Under the related lease agreement, our quarterly lease payments are based
on the capitalization and weighted-average cost of capital of the lessor. The
lessor was initially capitalized with $2,380,000 of equity and entered into a
loan and security agreement through which it borrowed $69,760,000. The lessor's
equity holders receive a return on their contributed capital equal to LIBOR plus
10.75%, while the interest rate for the indebtedness is equal to LIBOR plus a
spread that will decrease from 4.0% to 3.0% as our ratio of total debt to EBITDA
(as defined in our bank debt agreement) improves. Our quarterly rent payments
are calculated to equal the quarterly interest expense, return on equity and
debt amortization requirements of the lessor, based on a straight-line
amortization schedule that ensures 20% of the underlying indebtedness is repaid
by the expiration of the initial lease term on September 9, 2006. We do not
guarantee the indebtedness of the lessor and the lessor's creditors have no
recourse against us beyond our obligation to continue our rent payments.

     The following are additional amounts related to the master lease program
(all amounts are as of or for the year ended December 31, 2002):

     *    The lessor's total capitalization of $68,397,000 consisted of
          $66,017,000 of a term loan secured by the related travel centers
          assets and underlying leasehold interests, and $2,380,000 of general
          and limited partners' contributed capital.


                                       68

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


     *    The lessor's assets related to the master lease program consisted of
          $67,502,000 of tangible fixed assets, $1,700,000 of capitalized
          interest and $2,938,000 of deferred financing costs.

     *    During 2002, for the seven sites that were leased for the full year
          and the one site that opened in July during the year, we recognized
          and paid lease rent expense under this master lease program of
          $5,846,000. Excluding this rent expense, these eight sites generated
          income of $9,999,000 for the year ended December 31, 2002.

     *    The depreciation expense and interest expense we would have recognized
          with respect to these leased travel centers if we had capitalized them
          and not leased them was approximately $5,063,000 and $4,170,000,
          respectively, for the year ended December 31, 2002.

     In January 2003, the FASB issued FIN 46 "Consolidation of Variable Interest
Entities." We must adopt this accounting guidance by July 1, 2003. Under FIN 46,
as the lessor with whom we have entered into our master lease program is
currently capitalized and structured, we would be required to consolidate the
lessor in our consolidated financial statements. We and the lessor are currently
evaluating our alternatives with respect to the master lease facility and have
not yet concluded on our course of action.

ENVIRONMENTAL MATTERS

     Our operations and properties are extensively regulated through
environmental laws and regulations ("Environmental Laws") that (1) govern
operations that may have adverse environmental effects, such as discharges to
air, soil and water, as well as the management of petroleum products and other
hazardous substances ("Hazardous Substances") or (2) impose liability for the
costs of cleaning up sites affected by, and for damages resulting from, disposal
or other releases of Hazardous Substances.

     We own and use underground storage tanks and aboveground storage tanks to
store petroleum products and waste at our facilities. We must comply with
requirements of Environmental Laws regarding tank construction, integrity
testing, leak detection and monitoring, overfill and spill control, release
reporting, financial assurance and corrective action in case of a release from a
storage tank into the environment. At some locations, we must also comply with
Environmental Laws relating to vapor recovery and discharges to water. We
believe that all of our travel centers are in material compliance with
applicable requirements of Environmental Laws. While the costs of compliance for
these matters have not had a material adverse impact on us, it is impossible to
predict accurately the ultimate effect changing laws and regulations may have on
us in the future. We incurred capital expenditures, maintenance, remediation and
other environmental related costs of approximately $3,363,000, $3,222,000 and
$3,947,000 in 2000, 2001 and 2002, respectively.

     We have received notices of alleged violations of Environmental Laws, or
are otherwise aware of the need to undertake corrective actions to comply with
Environmental Laws, at company-owned travel centers in a number of
jurisdictions. We do not expect that any financial penalties associated with
these alleged violations or instances of noncompliance, or compliance costs
incurred in connection therewith, will be material to our results of operation
or financial condition. We are conducting investigatory and/or remedial actions
with respect to releases and/or spills of Hazardous Substances at a number of
sites. While we cannot precisely estimate the ultimate costs we will incur in
connection with the investigation and remediation of these matters, based on our
current knowledge, we do not expect that the costs to be incurred for these
matters, individually or in the aggregate, will be material to our results of
operation or financial condition. While the aforementioned matters are, to the
best of our knowledge, the only proceedings for which we are currently exposed
to potential liability (particularly given the Unocal and BP indemnities
discussed below), there can be no assurance that additional contamination does
not exist at these or other of our properties, or that material liability will
not be imposed in the future. If additional environmental problems arise or are
discovered, or if additional environmental requirements are imposed by
government agencies, increased

                                       69

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


environmental compliance or remediation expenditures may be required, which
could have a material adverse effect on us. As of December 31, 2002, we had a
reserve for these matters of $2,924,000. We expect that the cash outlays related
to the matters for which we have accrued this reserve will be paid out over a
period of several years. While it is not possible to quantify with certainty the
environmental exposure, in our opinion the potential liability, beyond that
considered in the reserve, for all proceedings, based on information known to
date, will not have a material adverse effect on our financial condition,
results of operations or liquidity. However, it is reasonably possible that a
material change in estimate will occur in the near term as new matters, or new
facts regarding established matters, are identified and/or as Environmental Laws
and other requirements of government agencies continue to evolve.

     In connection with the acquisitions of the Unocal network, Phase I
environmental assessments were conducted of the 97 Unocal network properties
purchased by us. Pursuant to an agreement with Unocal, Phase II environmental
assessments of all Unocal network properties were completed by Unocal by
December 31, 1998. Under the terms of this agreement, Unocal is responsible for
all costs incurred for (a) remediation of environmental contamination, and (b)
otherwise bringing the properties into compliance with Environmental Laws as in
effect at the date of the acquisition of the Unocal network, with respect to the
matters identified in the Phase I or Phase II environmental assessments, which
matters existed on or prior to the date of the acquisition of the Unocal
network. Under the terms of this agreement, Unocal must also indemnify us
against any other environmental liabilities that arise out of conditions at, or
ownership or operations of, the Unocal network prior to the date of the
acquisition of the Unocal network. The remediation must achieve compliance with
the Environmental Laws in effect on the date the remediation is completed. We
must make claims for indemnification prior to April 14, 2004. Except as
described above, Unocal does not have any responsibility for any environmental
liabilities arising out of the ownership or operations of the Unocal network
after the date of the acquisition of the Unocal network. We cannot assure you
that Unocal, if additional environmental claims or liabilities were to arise
under the agreement with Unocal, would not dispute our claims for
indemnification.

     Prior to the acquisition of the BP network, all of the 38 company-owned
locations purchased by us were subject to Phase I and Phase II environmental
assessments, undertaken at BP's expense. The environmental agreement with BP
provides that, with respect to environmental contamination or noncompliance with
Environmental Laws identified in the Phase I or Phase II environmental
assessments, BP is responsible for (a) all costs incurred for remediation of
such environmental contamination, and (b) for otherwise bringing the properties
into compliance with Environmental Laws as in effect at the date of the
acquisition of the BP network.

     The remediation must achieve compliance with the Environmental Laws in
effect on the date the remedial action is completed. The environmental agreement
with BP requires BP to indemnify us against any other environmental liabilities
that arise out of conditions at, or ownership or operations of, the BP network
locations prior to the date of the acquisitions of the BP network. We must make
such claims for indemnification before December 11, 2004. BP must also indemnify
us for liabilities relating to non-compliance with Environmental Laws for which
claims were made before December 11, 1996. Except as described above, BP does
not have any responsibility for any environmental liabilities arising out of the
ownership or operations of the BP network after the date of the acquisition of
the BP network. There can be no assurance that BP, if additional environmental
claims or liabilities were to arise under the environmental agreement with BP,
would not dispute our claims for indemnification thereunder.

     In connection with the Burns Bros. acquisition, all of the 17 sites
acquired were subject to Phase I environmental assessments, and, based on the
results of those assessments, nine of the sites were subject to Phase II
environmental assessments. The purchase price paid to Burns was adjusted based
on the findings of the Phase I and Phase II environmental assessments. Under the
asset purchase agreement with Burns Bros., we released Burns Bros. from any
environmental liabilities that may have existed as of the Burns Bros.
acquisition date, other than specified non-waived environmental claims as
described in the agreement with Burns Bros.


                                       70

<PAGE>


                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

     In connection with the Travel Ports acquisition, all of the 16 sites
acquired were subject to Phase I environmental assessments, and, based on the
results of those assessments, five of the sites were subject to Phase II
environmental assessments. The results of these assessments were taken into
account in recognizing the related environmental contingency accrual for
purchase accounting purposes.

PENDING LITIGATION

     We are involved from time to time in various legal and administrative
proceedings and threatened legal and administrative proceedings incidental to
the ordinary course of our business. We believe we are currently not involved in
any litigation, individually or in the aggregate, which could have a material
adverse effect on our business, financial condition, results of operations or
cash flows.

19.  DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

     We attempt to manage the risk arising from changes in interest rates by
using derivative financial instruments such as interest rate swaps. On November
14, 2000, we entered into an interest rate swap agreement with a notional
principal amount of $80,000,000 to exchange our variable rate of LIBOR plus
3.25% with a fixed interest rate of 6.0875%. The swap agreement matured on
December 15, 2002. We had no swap agreements in place as of December 31, 2002.

     To qualify for hedge accounting, derivative contracts must meet defined
correlation and effectiveness criteria, be designated as hedges and result in
cash flows and financial statement effects which substantially offset those of
the position being hedged. Amounts receivable or payable under derivative
financial instrument contracts, when recognized, are reported in our
consolidated balance sheet. Pursuant to the provisions of FAS 133, we determined
that the interest rate swap agreement was 100% effective and qualified for cash
flow hedge accounting.

     The fair value of the interest rate swap at the time of transition resulted
in a reduction of accumulated other comprehensive income of $343,000 (net of
tax), which was recorded as the cumulative effect of an accounting change in the
first quarter of 2001. The decline in the fair value of the swap agreement for
the year ended December 31, 2001, based on bank-quoted market prices, resulted
in the recognition of a further decrease in other comprehensive income of
$1,577,000 (net of tax), and a liability of $2,911,000 as of December 31, 2001.
During the year ended December 31, 2002, the fair value of the swap agreement
increased until its maturity on December 15, 2002, resulting in the recognition
of an increase in other comprehensive income of $1,920,000 (net of tax).

20.  OPERATING LEASES AS A LESSOR

     Twenty-five of the travel centers we owned during the year ended December
31, 2002 were leased to franchisees under operating lease agreements. During
2002, five of these leases were mutually terminated, and, as a result, these
sites were converted to company-operated sites. At December 31, 2002, we had
such lease arrangements in place at 20 of our sites. Our lease agreements
provide for initial terms of ten years with two renewal terms of five years
each. Rent revenue from such operating lease arrangements totaled $11,808,000,
$10,981,000 and $9,488,000 for the years ended December 31, 2000, 2001 and 2002,
respectively. At December 31, 2002, the cost and accumulated depreciation of the
assets covered by these lease agreements was $56,160,000 and $28,144,000,
respectively.


                                       71

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


21.  OTHER INFORMATION

<TABLE>
<CAPTION>

                                                                                  YEAR ENDED DECEMBER 31,
                                                                       ----------------------------------------------
                                                                            2000            2001           2002
                                                                       --------------- ------------------------------
                                                                                 (IN THOUSANDS OF DOLLARS)
<S>                                                                      <C>             <C>            <C>
Operating expenses and Selling, general and administrative
   expenses included the following:
   Rent expense under operating leases.................................  $   17,986      $   21,197     $   20,817
   Repairs and maintenance expenses....................................  $    7,863      $   12,596     $   12,055
   Advertising expenses................................................  $    9,262      $    6,676     $    7,047
   Taxes other than payroll and income taxes...........................  $    5,580      $    6,480     $    7,840
   401(k) plan contribution expense....................................  $    1,712      $    1,818     $    1,779

Interest and other financial costs consisted of the following:
   Cash interest expense...............................................  $  (45,712)     $  (54,206)    $  (47,171)
   Cash interest income................................................         260             120            157
   Amortization of discount on debt....................................        (234)         (1,112)        (1,222)
   Amortization of deferred financing costs............................      (1,457)         (2,620)        (3,050)
                                                                         -----------     -----------    ----------
   Interest and other financial costs, net.............................  $  (47,143)     $  (57,818)    $  (51,286)
                                                                         ==========      ===========    ==========
</TABLE>

22.  SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                     -----------------------------------------------
                                                                          2000            2001            2002
                                                                     --------------- --------------- ---------------
                                                                               (IN THOUSANDS OF DOLLARS)
<S>                                                                   <C>             <C>             <C>
Revolving loan borrowings............................................ $   364,800     $   669,600     $   473,800
Revolving loan repayments............................................    (339,500)       (666,000)       (495,300)
                                                                      -----------     -----------     -----------
   Revolving loan borrowings (repayments), net....................... $    25,300     $     3,600     $   (21,500)
                                                                      ===========     ===========     ===========
Cash paid during the year for:
   Interest.......................................................... $    43,507     $    57,830     $    47,480
   Income taxes (net of refunds)..................................... $     1,931     $    (4,356)    $    (2,559)

Inventory, property and equipment, and goodwill received in .........
   liquidation of trade accounts and notes receivable................ $       646     $         -     $     2,060
Notes received from sales of property and equipment.................. $       340     $         -     $       250
Notes received upon common stock issuance............................ $        37     $        39     $       116
</TABLE>

     In 2000, we assumed a note payable for $549,000 as part of the
consideration in acquiring a travel center business and we recognized a
receivable of $2,088,000 upon the sale of a travel center for the cash proceeds
we did not receive from an escrow account until 2001.


                                       72

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


23.  CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES

     The following schedules set forth our condensed consolidating balance sheet
schedules as of December 31, 2001 and 2002 and our condensed consolidating
statement of operations schedules and condensed consolidating statement of cash
flows schedules for the years ended December 31, 2000, 2001 and 2002. In the
following schedules, "Parent Company" refers to the unconsolidated balances of
TravelCenters of America, Inc., "Guarantor Subsidiaries" refers to the combined
unconsolidated balances of TA Operating Corporation and its subsidiaries and
National Auto/Truckstops, Inc. (until its merger into TA Operating Corporation
on November 14, 2000), and "Nonguarantor Subsidiary" refers to the balances of
TA Franchise Systems Inc. "Eliminations" represent the adjustments necessary to
(a) eliminate intercompany transactions and (b) eliminate our investments in our
subsidiaries.

     The Guarantor Subsidiaries, (TA Operating Corporation, National
Auto/Truckstops, Inc. (until its merger into TA Operating Corporation on
November 14, 2000), TA Licensing, Inc., TA Travel, L.L.C., TravelCenters Realty,
L.L.C. and TravelCenters Properties, L.P.), are direct or indirect wholly-owned
subsidiaries of ours and have fully and unconditionally, jointly and severally,
guaranteed the indebtedness of TravelCenters of America, Inc., which consists of
the Senior Credit Facility and Senior Subordinated Notes due 2009 (see Note 13).


                                       73

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING BALANCE SHEET SCHEDULES:

<TABLE>
<CAPTION>

                                                                             DECEMBER 31, 2001
                                               ------------------------------------------------------------------------------
                                                   PARENT        GUARANTOR     NONGUARANTOR
                                                  COMPANY       SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS    CONSOLIDATED
                                               --------------- ------------------------------ --------------- ---------------
                                                                         (IN THOUSANDS OF DOLLARS)
<S>                                             <C>             <C>            <C>             <C>             <C>
 ASSETS
 Current assets:
    Cash....................................... $         -     $    19,888    $         -     $         -     $    19,888
    Accounts receivable, net...................           -          43,820          1,160          (1,124)         43,856
    Inventories................................           -          57,419              -               -          57,419
    Deferred income taxes......................           -           4,997             47               -           5,044
    Other current assets.......................         622           7,499              -               -           8,121
                                                -----------     -----------    -----------     -----------     -----------
         Total current assets..................         622         133,623          1,207          (1,124)        134,328
 Property and equipment, net...................           -         461,167              -               -         461,167
 Intangible assets, net........................           -          23,561              -               -          23,561
 Deferred financing costs, net.................      30,202               -              -               -          30,202
 Deferred income taxes.........................      28,571          (8,663)             -               -          19,908
 Other noncurrent assets.......................       1,249           9,441              -               -          10,690
 Investment in subsidiaries....................     226,137               -              -        (226,137)              -
                                                -----------     -----------    -----------     -----------     -----------
         Total assets.......................... $   286,781     $   619,129    $     1,207     $  (227,261)    $   679,856
                                                ===========     ===========    ===========     ===========     ===========

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
    Current maturities of long-term debt....... $     3,280     $       129    $         -     $         -     $     3,409
    Accounts payable...........................           -          60,269            160               -          60,429
    Other accrued liabilities..................       2,605          40,818          1,242          (1,124)         43,541
                                                -----------     -----------    -----------     -----------     -----------
         Total current liabilities.............       5,885         101,216          1,402          (1,124)        107,379
 Long-term debt (net of unamortized discount)..     546,110           2,759              -               -         548,869
 Deferred income taxes.........................           -           2,851              -               -           2,851
 Intercompany payable (receivable).............    (282,279)        287,346         (5,067)              -               -
 Other noncurrent liabilities..................       2,911           4,946              -               -           7,857
                                                -----------     -----------   ------------     -----------     -----------
         Total liabilities.....................     272,627         399,118         (3,665)         (1,124)        666,956

 Redeemable equity.............................         565               -              -               -             565

 Nonredeemable stockholders' equity:
    Common stock and other nonredeemable
      stockholder equity.......................     215,177         192,335              -        (193,589)        213,923
      Retained earnings (deficit)..............    (201,588)         27,676          4,872         (32,548)       (201,588)
                                                -----------     -----------    -----------     -----------     -----------

         Total nonredeemable stockholders'
            equity.............................      13,589         220,011          4,872        (226,137)         12,335
                                                -----------     -----------    -----------     -----------     -----------
         Total liabilities, redeemable equity
            and nonredeemable stockholders'
            equity............................. $   286,781     $   619,129    $     1,207     $  (227,261)    $   679,856
                                                ===========     ===========    ===========     ===========     ===========
</TABLE>


                                       74


<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                         DECEMBER 31, 2002
                                            -----------------------------------------------------------------------------
                                                PARENT       GUARANTOR      NONGUARANTOR
                                                COMPANY     SUBSIDIARIES     SUBSIDIARY    ELIMINATIONS    CONSOLIDATED
                                            ------------------------------ ------------------------------ ---------------
                                                                     (IN THOUSANDS OF DOLLARS)
<S>                                           <C>            <C>             <C>            <C>             <C>
 ASSETS
 Current assets:
    Cash..................................    $        -     $   14,047      $        -     $        -      $   14,047
    Accounts receivable, net..............             -         44,429             857           (991)         44,295
    Inventories...........................             -         61,937               -              -          61,937
    Deferred income taxes.................             -          4,181              40              -           4,221
    Other current assets..................           445          7,719               -              -           8,164
                                              ----------     ----------      ----------     ----------      ----------
         Total current assets.............           445        132,313             897           (991)        132,664
 Property and equipment, net..............             -        445,692               -              -         445,692
 Intangible assets........................             -         25,908               -              -          25,908
 Deferred financing costs.................        27,452              -               -              -          27,452
 Deferred income taxes....................        23,696         (7,627)              -              -          16,069
 Other noncurrent assets................             996         11,768               -              -          12,764
 Investment in subsidiaries...............       243,555              -               -       (243,555)              -
                                              ----------     ----------      ----------     ----------      ----------
         Total assets.....................    $  296,144     $  608,054      $      897     $ (244,546)     $  660,549
                                              ==========     ==========      ==========     ==========      ==========
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
    Current maturities of long-term debt..    $    3,280     $      180      $        -     $        -      $    3,460
    Accounts payable......................             -         58,354             158              -          58,512
    Other accrued liabilities.............         3,079         48,212           1,140           (991)         51,440
                                              ----------     ----------      ----------     ----------      ----------
         Total current liabilities........         6,359        106,746           1,298           (991)        113,412
 Long-term debt (net of unamortized
    discount).............................       522,440          2,691               -              -         525,131
 Deferred income taxes....................             -          2,364               -              -           2,364
 Intercompany advances....................      (249,856)       255,223          (5,367)             -               -
 Other noncurrent liabilities.............             -          3,696               -              -           3,696
                                              ----------     ----------      ----------     ----------      ----------
         Total liabilities................       278,943        370,720          (4,069)          (991)        644,603
 Redeemable equity........................           681              -               -              -             681
 Nonredeemable stockholders' equity:
    Common stock and other stockholders'
      equity..............................       217,098        192,336               -       (193,591)        215,843
    Retained earnings (accumulated deficit)     (200,578)        44,998           4,966        (49,964)       (200,578)
                                              ----------     ----------      ----------     ----------      ----------
         Total nonredeemable stockholders'
            equity........................        16,520        237,334           4,966       (243,555)         15,265
                                              ----------     ----------      ----------     ----------      ----------
         Total liabilities, redeemable
            equity and nonredeemable
            stockholders' equity..........    $  296,144     $  608,054      $      897     $ (244,546)     $  660,549
                                              ==========     ==========      ==========     ==========      ==========
</TABLE>

                                       75

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SCHEDULES:


<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31, 2000
                                            -------------------------------------------------------------------------------
                                               PARENT         GUARANTOR     NONGUARANTOR
                                               COMPANY       SUBSIDIARIES    SUBSIDIARY    ELIMINATIONS     CONSOLIDATED
                                            -------------- ------------------------------- -------------- -----------------
                                                                      (IN THOUSANDS OF DOLLARS)
<S>                                           <C>            <C>              <C>            <C>            <C>
 Revenues:
    Fuel...................................   $        -     $ 1,485,732      $        -     $        -     $  1,485,732
    Non-fuel...............................            -         555,491               -              -          555,491
    Rent and royalties.....................            -          16,447           7,014         (4,639)          18,822
                                              ----------     -----------      ----------     ----------     ------------
    Total revenues.........................            -       2,057,670           7,014         (4,639)       2,060,045
 Cost of goods sold  (excluding
    depreciation)..........................            -       1,611,320               -              -        1,611,320
                                              ----------     -----------      ----------     ----------     ------------
 Gross profit (excluding depreciation).....            -         446,350           7,014         (4,639)         448,725

 Operating expenses........................            -         308,390           4,729         (4,639)         308,480
 Selling, general and
     administrative expenses...............          607          31,689           5,864              -           38,160
 Transition expense........................            -             996               -              -              996
 Merger and recapitalization expenses......       22,004               -               -              -           22,004
 Depreciation and amortization expense.....            -          62,768               -              -           62,768
 (Gain) loss on sale of property and
    equipment..............................            -          (1,462)              -              -           (1,462)
 Stock compensation expense (benefit)......            -          (1,362)              -              -           (1,362)
                                              ----------     -----------      ----------     ----------     ------------
 Income (loss) from operations.............      (22,611)         45,331          (3,579)             -           19,141
 Interest and other financial costs, net...      (11,069)        (36,071)             (3)             -          (47,143)
 Equity income (loss)......................      (11,471)              -               -         11,471                -
                                              ----------     -----------      ----------     ----------     ------------
 Income (loss) before income taxes and
    extraordinary item.....................      (45,151)          9,260          (3,582)        11,471          (28,002)
 Provision (benefit) for income taxes......       (7,603)          4,778          (1,263)             -           (4,088)
                                              ----------     -----------      ----------     ----------     ------------
 Income (loss) before extraordinary item...      (37,548)          4,482          (2,319)        11,471          (23,914)
 Extraordinary loss (less applicable income
    tax benefit)...........................      (13,800)              -               -              -          (13,800)
                                              ----------     -----------      ----------     ----------     ------------
 Net income (loss).........................      (51,348)          4,482          (2,319)        11,471          (37,714)

 Less: preferred dividends accretion.......       (8,255)              -               -              -           (8,255)
                                              ----------     -----------      ----------     ----------     ------------
 Income (loss) available to common
    stockholders...........................   $  (59,603)    $     4,482      $   (2,319)    $   11,471     $    (45,969)
                                              ==========     ===========      ==========     ==========     ============
</TABLE>


                                       76

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                  YEAR ENDED DECEMBER 31, 2001
                                            --------------------------------------------------------------------------
                                               PARENT        GUARANTOR     NONGUARANTOR
                                              COMPANY       SUBSIDIARIES    SUBSIDIARY   ELIMINATIONS   CONSOLIDATED
                                            -------------- -------------- -------------- -----------------------------
                                                                    (IN THOUSANDS OF DOLLARS)
<S>                                           <C>          <C>              <C>           <C>          <C>
 Revenues:
    Fuel...................................   $        -   $  1,331,807     $        -    $        -   $  1,331,807
    Non-fuel...............................            -        585,717              -             -        585,717
    Rent and royalties.....................            -         15,395          6,510        (4,414)        17,491
                                              ----------     ----------     ----------    -----------    ----------
    Total revenues.........................            -      1,932,919          6,510        (4,414)     1,935,015
 Cost of goods sold  (excluding
    depreciation)..........................            -      1,467,753              -             -      1,467,753
                                              ----------     ----------     ----------    ----------     ----------
 Gross profit (excluding depreciation).....            -        465,166          6,510        (4,414)       467,262
 Operating expenses........................            -        325,676          4,474        (4,414)       325,736
 Selling, general and
     administrative expenses...............          609         35,288          2,382             -         38,279
 Depreciation and amortization expense.....            -         63,508              -             -         63,508
 (Gain) loss on sale of property and
    equipment..............................            -         (1,788)             -             -         (1,788)
                                              ----------     ----------     ----------    ----------     -----------
 Income (loss) from operations.............         (609)        42,482           (346)            -         41,527
 Interest and other financial costs, net...      (25,338)       (32,480)             -             -        (57,818)
 Equity income (loss)......................        5,559              -              -        (5,559)             -
                                              ----------     ----------     ----------    -----------    ----------
 Income (loss) before income taxes.........      (20,388)        10,002           (346)       (5,559)       (16,291)
 Provision (benefit) for income taxes......      (10,546)         4,252           (155)            -         (6,449)
                                              -----------    ----------     -----------   ----------     -----------
 Net income (loss).........................   $   (9,842)    $    5,750     $     (191)   $   (5,559)    $   (9,842)
                                              ==========     ==========     ===========   ===========    ===========
</TABLE>


                                       77

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31, 2002
                                            --------------------------------------------------------------------------
                                               PARENT        GUARANTOR     NONGUARANTOR
                                              COMPANY       SUBSIDIARIES    SUBSIDIARY   ELIMINATIONS   CONSOLIDATED
                                            -------------- -------------- -------------- -----------------------------
                                                                    (IN THOUSANDS OF DOLLARS)
<S>                                           <C>            <C>            <C>           <C>            <C>
 Revenues:
    Fuel...................................   $        -     $1,237,989     $        -    $        -     $1,237,989
    Non-fuel...............................            -        616,919              -             -        616,919
    Rent and royalties.....................            -         13,842          6,036        (4,339)        15,539
                                              ----------     ----------     ----------    ----------     ----------
    Total revenues.........................            -      1,868,750          6,036        (4,339)     1,870,447
 Cost of goods sold  (excluding
    depreciation)..........................            -      1,389,680              -             -      1,389,680
                                              ----------     ----------     ----------    ----------     ----------
 Gross profit (excluding depreciation).....            -        479,070          6,036        (4,339)       480,767

 Operating expenses........................            -        330,142          4,403        (4,339)       330,206
 Selling, general and
     administrative expenses...............        1,163         35,429          1,481             -         38,073
 Depreciation and amortization expense.....            -         60,773              -             -         60,773
 (Gain) loss on sale of property and
    equipment..............................            -         (1,089)             -             -         (1,089)
                                              ----------     ----------     ----------    ----------     ----------

 Income (loss) from operations.............       (1,163)        53,815            152             -         52,804
 Interest and other financial costs, net...      (22,272)       (29,014)             -             -        (51,286)
 Equity income (loss)......................       17,416              -              -       (17,416)             -
                                              ----------     ----------     ----------    ----------     ----------
 Income (loss) before income taxes.........       (6,019)        24,801            152       (17,416)         1,518
 Provision (benefit) for income taxes......       (7,029)         7,479             58             -            508
                                              ----------     ----------     ----------    ----------     ----------

 Net income loss...........................   $    1,010     $   17,322     $       94    $  (17,416)    $    1,010
                                              ==========     ==========     ==========    ==========     ==========
</TABLE>


                                       78

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS SCHEDULES:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31, 2000
                                           -------------------------------------------------------------------------
                                              PARENT        GUARANTOR    NONGUARANTOR
                                             COMPANY       SUBSIDIARIES   SUBSIDIARY   ELIMINATIONS   CONSOLIDATED
                                           -------------- -------------- ---------------------------- --------------
                                                                  (IN THOUSANDS OF DOLLARS)
<S>                                          <C>            <C>            <C>           <C>            <C>
 CASH FLOWS (USED IN) PROVIDED BY
    OPERATING ACTIVITIES:                    $  (26,962)    $   92,914     $        -    $        -     $   65,952
                                             ----------     ----------     ----------    ----------     ----------

 CASH FLOWS FROM INVESTING ACTIVITIES:
    Business acquisitions.................            -         (9,675)             -             -         (9,675)
    Proceeds from sales of property and
       equipment..........................            -            667              -             -            667
    Capital expenditures..................            -        (68,107)             -             -        (68,107)
                                             ----------     ----------     ----------    ----------     ----------
       Net cash used in investing
         activities.......................            -        (77,115)             -             -        (77,115)
                                             ----------     ----------     ----------    ----------     ----------
 CASH FLOWS FROM FINANCING ACTIVITIES:
    Revolving loan borrowings
       (repayments), net..................       25,300              -              -             -         25,300
    Long-term debt borrowings.............      510,962              -              -             -        510,962
    Long-term debt repayments.............     (387,942)          (743)             -             -       (388,685)
    Proceeds from issuance of stock.....        208,717              -              -             -        208,717
    Repurchase of equity securities.....       (267,055)             -              -             -       (267,055)
    Debt issuance costs.................        (32,932)             -              -             -        (32,932)
    Stock issuance costs................         (3,015)             -              -             -         (3,015)
    Premiums paid on debt extinguishment        (12,778)             -              -             -        (12,778)
    Merger and recapitalization expenses        (18,253)             -              -             -        (18,253)
    Other...............................              -           (119)             -             -           (119)
    Intercompany advances...............          3,958         (3,958)             -             -              -
                                             ----------     ----------     ----------    ----------     ----------
       Net cash (used in) provided by
         financing activities.............       26,962         (4,820)             -             -         22,142
                                             ----------     ----------     ----------    ----------     ----------
         Net increase (decrease) in cash..            -         10,979              -             -         10,979

 Cash at the beginning of the year........            -         18,040              -             -         18,040
                                             ----------     ----------     ----------    ----------     ----------
 Cash at the end of the year..............   $        -     $   29,019     $        -    $        -     $   29,019
                                             ==========     ==========     ==========    ==========     ==========
</TABLE>


                                       79

<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31, 2001
                                           -------------------------------------------------------------------------
                                               PARENT       GUARANTOR    NONGUARANTOR
                                              COMPANY      SUBSIDIARIES   SUBSIDIARY    ELIMINATIONS   CONSOLIDATED
                                           -------------- -------------- ------------   ------------- --------------
                                                                  (IN THOUSANDS OF DOLLARS)
<S>                                          <C>            <C>            <C>           <C>            <C>
 CASH FLOWS (USED IN) PROVIDED BY
    OPERATING ACTIVITIES:                    $  (22,023)    $   61,185     $   (2,056)   $        -     $   37,106
                                             -----------    ----------     ----------    ----------     ----------

 CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sales of property and
       equipment.......................... -                     8,256              -             -          8,256
    Capital expenditures..................            -        (54,490)             -             -        (54,490)
                                             ----------     -----------    ----------    ----------     -----------
       Net cash used in investing
         activities.......................            -        (46,234)             -             -        (46,234)
                                             ----------     -----------    ----------    ----------     -----------
 CASH FLOWS FROM FINANCING ACTIVITIES:
    Revolving loan borrowings (repayments,
       net)...............................        3,600              -              -             -          3,600
    Long-term debt repayments.............            -           (165)             -             -           (165)
    Proceeds from issuance of stock.....             38              -              -             -             38
    Debt issuance costs.................           (160)             -              -             -           (160)
    Premiums paid on debt extinguishment           (899)             -              -             -           (899)
    Merger and recapitalization
       expenses paid....................         (2,417)             -              -             -         (2,417)
    Intercompany advances...............         21,861        (23,917)         2,056             -              -
                                             ----------     ----------     ----------    ----------     ----------
       Net cash (used in) provided by
         financing activities.............       22,023        (24,082)         2,056             -             (3)
                                             ----------     -----------    ----------    ----------     -----------

         Net increase (decrease) in cash..            -         (9,131)             -             -         (9,131)

 Cash at the beginning of the year........            -         29,019              -             -         29,019
                                             ----------     ----------     ----------    ----------     ----------

 Cash at the end of the year..............   $        -     $   19,888     $        -    $        -     $   19,888
                                             ==========     ==========     ==========    ==========     ==========
</TABLE>


                                       80


<PAGE>

                         TRAVELCENTERS OF AMERICA, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31, 2002
                                           -------------------------------------------------------------------------
                                              PARENT        GUARANTOR    NONGUARANTOR
                                             COMPANY      SUBSIDIARIES    SUBSIDIARY   ELIMINATIONS   CONSOLIDATED
                                           -------------- -------------- ------------  ------------  ---------------
                                                                  (IN THOUSANDS OF DOLLARS)
<S>                                          <C>            <C>            <C>           <C>            <C>
 CASH FLOWS (USED IN) PROVIDED BY
    OPERATING ACTIVITIES:                    $   (7,459)    $   68,671     $      300    $        -     $   61,512
                                             ----------     ----------     ----------    ----------     ----------

 CASH FLOWS FROM INVESTING ACTIVITIES:
    Business acquisitions.................            -         (4,423)             -             -         (4,243)
    Proceeds from sales of property and
       equipment..........................            -          4,773              -             -          4,773
    Capital expenditures..................            -        (42,640)             -             -        (42,640)
                                             ----------     ----------     ----------    ----------     ----------

       Net cash used in investing
         activities.......................            -        (42,110)             -             -        (42,110)
                                             ----------     ----------     ----------    ----------     ----------
 CASH FLOWS FROM FINANCING ACTIVITIES:
    Revolving loan borrowings (repayments,
       net)...............................      (21,500)             -              -             -        (21,500)
    Long-term debt repayments.............       (3,280)          (129)             -             -         (3,409)
    Proceeds from issuance of stock.....            116              -              -             -            116
    Debt issuance costs.................           (300)             -              -             -           (300)
    Merger and recapitalization
       expenses paid....................           (150)             -              -             -           (150)
    Intercompany advances...............         32,573        (32,273)          (300)            -              -
                                             ----------     ----------     ----------    ----------     ----------
       Net cash (used in) provided by
         financing activities.............        7,459        (32,402)          (300)            -        (25,243)
                                             ----------     ----------     ----------    ----------     ----------

         Net increase (decrease) in cash..            -         (5,841)             -             -         (5,841)

 Cash at the beginning of the year........            -         19,888              -             -         19,888
                                             ----------     ----------     ----------    ----------     ----------

 Cash at the end of the year..............   $        -     $   14,047     $        -    $        -     $   14,047
                                             ==========     ==========     ==========    ==========     ==========
</TABLE>


                                       81

<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

         Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information concerning our directors and executive officers required by
this item is incorporated by reference to the material appearing under the
heading "Directors and Officers of the Registrant" in Exhibit 99.1 to this
annual report.

ITEM 11.  EXECUTIVE COMPENSATION

     Information concerning executive compensation required by this item is
incorporated by reference to the material appearing under the heading "Executive
Compensation" in Exhibit 99.1 to this annual report.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information concerning security ownership of certain of our beneficial
owners and management required by this item is incorporated by reference to the
material appearing under the heading "Security Ownership of Certain Beneficial
Owners and Management" in Exhibit 99.1 to this annual report.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information concerning certain relationships and related transactions
required by this item is incorporated by reference to the material appearing
under the heading "Certain Relationships and Related Transactions" in Exhibit
99.1 to this annual report.

ITEM 14.  CONTROLS AND PROCEDURES

(a)  Evaluation of disclosure controls and procedures.

     Our Chief Executive Officer and Chief Financial Officer, after conducting
an evaluation, together with other members of our management, of the
effectiveness of the design and operation of our disclosure controls and
procedures as of a date within 90 days of the filing of this report, have
concluded that our disclosure controls and procedures (as defined in Exchange
Act Rule 13a-14 (c)) were effective to ensure that information required to be
disclosed by us in our reports filed or submitted under the Securities Exchange
Act of 1934 (the "Exchange Act") is recorded, processed, summarized, and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission (the "SEC").

(b)  Changes in internal controls.

     There were no significant changes in our internal controls or in other
factors that could significantly affect our internal controls subsequent to the
date of our most recent evaluation of our internal controls.


                                       82


<PAGE>


                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

A.   Documents filed as part of this report:

     1.   Financial Statements

     Financial statements filed as part of this report are listed in the Index
     to Consolidated Financial Statements and Supplementary Data on page 39 of
     this annual report.

     2.   Financial Statement Schedule

          Schedule II - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                        Balance at      Charged      Charged to
                                         Beginning    (Credited)        Other        Deductions      Balance at
                                         of Period     To Income      Accounts     from Reserves   End of Period
                                         ---------     ---------      --------     -------------   -------------
                                                               (In Thousands of Dollars)
     <S>                                    <C>          <C>          <C>             <C>              <C>
      Year Ended December 31, 2000:
      ---------------------------------
      Deducted from accounts and
      notes receivable for doubtful
      accounts..........................    $3,481       $1,560       $340(a)         $  (163)(b)      $5,218

      Year Ended December 31, 2001:
      ---------------------------------
      Deducted from accounts and
      notes receivable for doubtful
      accounts..........................    $5,218       $1,000       $ --            $(2,833)(b)      $3,385

      Year Ended December 31, 2002:
      ---------------------------------
      Deducted from accounts and
      notes receivable for doubtful
      accounts..........................    $3,385       $  100       $ --            $(1,076)(b)      $2,409
</TABLE>

     (a)  Amounts charged against gain on sale of property and equipment.
     (b)  Uncollectible accounts and notes receivable charged off, net of
          amounts recovered.

     All other schedules are omitted because they are not applicable, not
     material or the required information is shown in the financial statements
     listed above.

     3.   Exhibits

     Reference is made to the Exhibit Index set forth at page i of this annual
     report.

B.   Reports on Form 8-K

     No reports on Form 8-K were filed during the fourth quarter of the year
ended December 31, 2002.


                                       83

<PAGE>



     SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
 SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 BY REGISTRANTS WHICH HAVE
   NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE
                                  ACT OF 1934


     No annual report or proxy statement has been furnished to our security
holders. We shall furnish to the Securities and Exchange Commission for its
information, at the time copies of such material are furnished to our security
holders, four copies of every proxy statement, form of proxy or other proxy
soliciting material sent to more than ten of our security holders with respect
to our annual meeting. The foregoing material shall not be deemed to be "filed"
with the Securities and Exchange Commission or otherwise subject to the
liabilities of Section 18 of the Securities Exchange Act of 1934, except to the
extent that we specifically incorporate it in this Form 10-K by reference.


                                       84

<PAGE>


                                   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, INC.

   March 26, 2003              By: /s/  James W. George
----------------------             ---------------------------------------------
      (Date)                       Name:  James W. George
                                   Title: Senior Vice President,
                                          Chief Financial Officer and Secretary


     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 on the date indicated.

<TABLE>
<CAPTION>

               Signature                                    Title                                  Date
               ---------                                    -----                                  ----
   <S>                                   <C>                                                  <C>
   /s/      Edwin P. Kuhn                Chairman of the Board of Directors,                  March 26, 2003
   ------------------------------          President and Chief Executive Officer
            Edwin P. Kuhn                  (Principal Executive Officer)


   /s/     James W. George               Senior Vice President, Chief Financial               March 26, 2003
   ------------------------------          Officer and Secretary (Principal
           James W. George                 Financial Officer and Principal
                                           Accounting Officer)

   /s/    Robert J. Branson              Director                                             March 26, 2003
   ------------------------------
          Robert J. Branson


   /s/     Michael Greene                Director                                             March 26, 2003
   ------------------------------
           Michael Greene


   /s/    Steven B. Gruber               Director                                             March 26, 2003
   ------------------------------
          Steven B. Gruber


   /s/   Louis J. Mischianti             Director                                             March 26, 2003
   ------------------------------
         Louis J. Mischianti


   /s/   Rowan G. P. Taylor              Director                                             March 26, 2003
   ------------------------------
         Rowan G. P. Taylor
</TABLE>


                                       85


<PAGE>


                                 CERTIFICATIONS

I, Edwin P. Kuhn, certify that:

     1.   I have reviewed this annual report on Form 10-K of TravelCenters of
          America, Inc.

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13A-14 and 15d-14) for the registrant
          and we have:

               a)   designed such disclosure controls and procedures to ensure
                    that material information relating to the registrant,
                    including its consolidated subsidiaries, is made known to us
                    by others within those entities, particularly during the
                    period in which this annual report is being prepared;

               b)   evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the filing date of this annual report (the "Evaluation
                    Date"); and

               c)   presented in this annual report our conclusions about the
                    effectiveness of the disclosure controls and procedures
                    based on our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

                    a)   All significant deficiencies in the design or operation
                         of internal controls which could adversely affect the
                         registrant's ability to record, process, summarize and
                         report financial data and have identified for the
                         registrant's auditors any material weaknesses in
                         internal controls; and

                    b)   any fraud, whether or not material, that involves
                         management or other employees who have a significant
                         role in the registrant's internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date: March 26, 2003                By: /s/ Edwin P. Kuhn
                                        ----------------------------------------
                                    Name:  Edwin P. Kuhn
                                    Title: Chairman of the Board of Directors,
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


                                       86

<PAGE>


I, James W. George, certify that:

     1.   I have reviewed this annual report on Form 10-K of TravelCenters of
          America, Inc.

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13A-14 and 15d-14) for the registrant
          and we have:

               d)   designed such disclosure controls and procedures to ensure
                    that material information relating to the registrant,
                    including its consolidated subsidiaries, is made known to us
                    by others within those entities, particularly during the
                    period in which this annual report is being prepared;

               e)   evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the filing date of this annual report (the "Evaluation
                    Date"); and

               f)   presented in this annual report our conclusions about the
                    effectiveness of the disclosure controls and procedures
                    based on our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

                    a)   All significant deficiencies in the design or operation
                         of internal controls which could adversely affect the
                         registrant's ability to record, process, summarize and
                         report financial data and have identified for the
                         registrant's auditors any material weaknesses in
                         internal controls; and

                    b)   any fraud, whether or not material, that involves
                         management or other employees who have a significant
                         role in the registrant's internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date: March 26, 2003             By: /s/ James W. George
                                     -------------------------------------------
                                 Name:  James W. George
                                 Title: Senior Vice President, Chief Financial
                                        Officer and Secretary
                                        (Principal Financial Officer and
                                        Principal Accounting Officer)


                                       87

<PAGE>



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

  Exhibit
  Number                                              Exhibit
-------------------------------------------------------------------------------------------------------   -------------
    <S>       <C>                                                                                              <C>
    2.1       Recapitalization Agreement and Plan of Merger dated as of May 31, 2000......................     (d)

    2.2       Amendment No. 1 to Recapitalization Agreement and Plan of Merger dated as of October 2,
              2000........................................................................................     (e)

    3.1       Amended and Restated Certificate of Incorporation of TravelCenters of America, Inc..........     (e)

    3.2       Amended and Restated By-laws of TravelCenters of America, Inc...............................     (g)

    3.3       Restated Certificate of Incorporation of TA Operating Corporation...........................     (a)

    3.4       Amended and Restated By-laws of TA Operating Corporation....................................     (a)

    3.5       Amended and Restated Certificate of Incorporation of TA Licensing, Inc......................     (e)

    3.6       By-laws of TA Licensing, Inc................................................................     (e)

    3.7       Certificate of Limited Partnership of TravelCenters Properties, L.P.........................     (e)

    3.8       Agreement of Limited Partnership of TravelCenters Properties, L.P...........................     (e)

    3.9       Certificate of Conversion from a Corporation to a Limited Liability Company of
              TravelCenters Realty, Inc...................................................................      +

    3.10      Certificate of Formation of TravelCenters Realty, L.L.C.....................................      +

    3.11      Operating Agreement of TravelCenters Realty, L.L.C..........................................      +

    3.12      Certificate of Formation of TA Travel, L.L.C................................................     (e)

    3.13      Operating Agreement of TA Travel, L.L.C.....................................................     (e)

    4.1       Indenture, dated as of November 14, 2000 by and among TravelCenters of America, Inc.,            (e)
              TA Operating Corporation, TA Travel, L.L.C., TA Licensing, Inc., TravelCenters
              Properties, L.P., TravelCenters Realty, Inc. and State Street Bank and Trust Company........     (e)

    4.2       Form of 12 3/4% Senior Subordinated Note due 2009 (included in Exhibit 4.1).................     (e)

    4.3       Exchange and Registration Rights Agreement, dated as of November 14, 2000 by and among
              TravelCenters of America, Inc., TA Operating Corporation, TA Travel, L.L.C., TA
              Licensing, Inc., TravelCenters Properties, L.P., TravelCenters Realty, Inc., Credit
              Suisse First Boston Corporation, Chase Securities Inc. and Donaldson, Lufkin & Jenrette
              Securities Corporation......................................................................     (e)

    4.4       Form of Warrant Certificate (included in Exhibit 10.21).....................................     (e)

    4.5       Form of Common Stock Certificate............................................................     (f)

   10.1       Amended and Restated Credit Agreement dated as of November 14, 2000.........................     (e)

   10.2       Stockholders' Agreement among TravelCenters of America, Inc., Oak Hill Capital
              Partners, L.P., Oak Hill Capital Management Partners, L.P., Olympus Growth Fund III,
              L.P., Olympus Executive Fund, L.P., Monitor Clipper Equity Partners, L.P., Monitor
              Clipper Equity Partners (Foreign), L.P., UBS Capital America II, LLC, Credit Suisse
              First Boston LFG Holdings 2000, LLC and Freightliner LLC dated as of November 14, 2000......     (e)

   10.3       Operating Agreement of Freightliner Corporation and TA Operating Corporation dated as
              of July 21, 1999............................................................................     (c)
</TABLE>

                                       i

<PAGE>

<TABLE>
<CAPTION>

  Exhibit
  Number                                              Exhibit
------------------------------------------------------------------------------------------------------- ------------------
  <S>         <C>                                                                                              <C>
   10.4       Amendment No. 1 to Operating Agreement of Freightliner LLC and TA Operating Corporation
              dated as of November 9, 2000...............................................................      (e)

   10.5       Agreement for Lease, dated as of September 9, 1999, among TA Operating Corporation,
              National Auto/Truckstops, Inc. and TCA Network Funding, LP.................................      (c)

   10.6       Lease Agreement, dated as of September 9, 1999, among TA Operating Corporation,
              National Auto/Truckstops, Inc. and TCA Network Funding, LP.................................      (c)

   10.7       Amendment No. 2, dated as of November 27, 2001, to Agreement for Lease among TCA
              Network Funding, LP and TA Operating Corporation...........................................      (h)

   10.8*      Employment Agreement, dated as of January 1, 2000, by and among TA Operating
              Corporation, TravelCenters of America, Inc. and Timothy L. Doane...........................      (e)

   10.9*      Employment Agreement, dated as of January 1, 2000, by and among TA Operating
              Corporation, TravelCenters of America, Inc. and James W. George............................      (e)

   10.10*     Employment Agreement, dated as of January 1, 2000, by and among TA Operating
              Corporation, TravelCenters of America, Inc. and Michael H. Hinderliter.....................      (e)

   10.11*     Employment Agreement, dated as of January 1, 2000, by and among TA Operating
              Corporation, TravelCenters of America, Inc. and Edwin P. Kuhn..............................      (e)

   10.12*     Amendment No. 1 to Employment Agreement dated as of May 26, 2000, by and among TA
              Operating Corporation, TravelCenters of America, Inc. and Timothy L. Doane.................      (e)

   10.13*     Amendment No. 1 to Employment Agreement dated as of May 26, 2000, by and among TA
              Operating Corporation, TravelCenters of America, Inc. and James W. George..................      (e)

   10.14*     Amendment No. 1 to Employment Agreement dated as of May 26, 2000, by and among TA
              Operating Corporation, TravelCenters of America, Inc. and Michael H. Hinderliter...........      (e)

   10.15*     Amendment No. 1 to Employment Agreement dated as of May 26, 2000, by and among TA
              Operating Corporation, TravelCenters of America, Inc. and Edwin P. Kuhn....................      (e)

   10.16*     Employment Agreement, dated as of January 1, 2002, by and among TA Operating
              Corporation, TravelCenters of America, Inc. and Steven C. Lee..............................       +

   10.17*     Amendment No. 2 to Employment Agreement, dated as of December 31, 2002, by and among TA
              Operating Corporation, TravelCenters of America, Inc. and Edwin P. Kuhn....................       +

   10.18*     Success Bonus Letter.......................................................................      (d)

   10.19      Warrant Agreement dated as of November 14, 2000 between TravelCenters of America, Inc.
              and State Street Bank and Trust Company, as warrant agent..................................      (e)

   10.20      Contingent Warrant Escrow Agreement dated as of November 14, 2000 between TravelCenters
              of America, Inc. and State Street Bank and Trust Company, as warrant escrow agent..........      (e)

   10.21*     Form of Management Subscription Agreement..................................................      (a)

   10.22*     Schedule of Management Subscription Agreements omitted pursuant to Instruction 2 to
              Item 601 of Regulation S-K.................................................................      (b)

   10.23*     Form of Management Note....................................................................      (b)

   10.24*     Schedule of Management Notes omitted pursuant to Instruction 2 to Item 601 of                    (b)
              Regulation S-K.............................................................................      (b)

   10.25*     2001 Stock Incentive Plan of TravelCenters of America, Inc. ...............................      (h)
   10.26*     Form of 2001 Stock Incentive Plan - Nonqualified Stock Option Agreement....................      (h)
</TABLE>


                                       ii

<PAGE>

<TABLE>
<CAPTION>
  Exhibit
  Number                                              Exhibit
------------------------------------------------------------------------------------------------------- ------------------
  <S>         <C>                                                                                              <C>
   21.1       List of Subsidiaries of TravelCenters of America, Inc....................................         +

   23.1       Consent of PricewaterhouseCoopers LLP....................................................         +

   99.1       Information Required by Part III of Form 10-K............................................         +
</TABLE>

(a)  Incorporated by reference to exhibits filed with our Annual Report on Form
     10-K for the year ended December 31, 1997.

(b)  Incorporated herein by reference to exhibits filed with our Annual Report
     on Form 10-K for the year ended December 31, 1998.

(c)  Incorporated herein by reference to exhibits filed with our Quarterly
     Report on Form 10-Q for the quarter ended September 30, 1999.

(d)  Incorporated herein by reference to exhibits filed with our Quarterly
     Report on Form 10-Q for the quarter ended June 30, 2000.

(e)  Incorporated herein by reference to exhibits filed with our Registration
     Statement on Form S-4 filed on December 21, 2000.

(f)  Incorporated herein by reference to exhibits filed with our Pre-Effective
     Amendment No. 1 to our Registration Statement on Form S-4 filed on January
     18, 2001.

(g)  Incorporated herein by reference to exhibits filed with our Annual Report
     on Form 10-K for the year ended December 31, 2000.

(h)  Incorporated herein by reference to exhibits filed with our Annual Report
     on Form 10-K for the year ended December 31, 2001.

+    Filed herewith

*    Executive compensation plans.

                                      iii