Segments

The Company’s revenues and expenses are recorded in four segments: franchise operations, company restaurant operations, rental operations and financing operations.

As of March 31, 2012, the franchise operations segment consisted of (i) 1,861 restaurants operated by Applebee’s franchisees in the United States, one U.S. territory and 15 countries outside the United States; and (ii) 1,542 restaurants operated by IHOP franchisees and area licensees in the United States, two U.S. territories and three countries outside the United States. Franchise operations revenue consists primarily of franchise royalty revenues, sales of proprietary products, certain franchise advertising fees and the portion of the franchise fees allocated to intellectual property. Franchise operations expenses include advertising expense, the cost of proprietary products, preopening training expenses and costs related to intellectual property provided to certain franchisees.

As of March 31, 2012, the company restaurant operations segment consisted of 160 Applebee’s company-operated restaurants and 12 IHOP company-operated restaurants, all in the United States. Company restaurant sales are retail sales at company-operated restaurants. Company restaurant expenses are operating expenses at company-operated restaurants and include food, labor, benefits, utilities, rent and other restaurant operating costs.

Rental operations revenue includes revenue from operating leases and interest income from direct financing leases. Rental operations expenses are costs of operating leases and interest expense on capital leases on franchisee-operated restaurants.

Financing operations revenue primarily consists of interest income from the financing of franchise fees and equipment leases, as well as sales of equipment associated with refranchised IHOP restaurants and a portion of franchise fees for restaurants taken back from franchisees not allocated to IHOP intellectual property. Financing expenses are primarily the cost of restaurant equipment.

Information on segments was as follows:



	Three Months Ended
	March 31,
	2012			2011
	(In millions)
Revenues from External Customers
Franchise operations	$	108.4		$	104.6
Company restaurants	100.9			154.7
Rental operations	32.0			32.2
Financing operations	4.3			8.7
Total	$	245.6		$	300.2
Interest Expense
Company restaurants	$	0.1		$	0.2
Rental operations	4.4			4.6
Corporate	30.2			36.3
Total	$	34.7		$	41.1
Depreciation and amortization
Franchise operations	$	2.5		$	2.5
Company restaurants	2.4			4.9
Rental operations	3.5			3.5
Corporate	2.1			2.4
Total	$	10.5		$	13.3
Income (loss) before income taxes
Franchise operations	$	80.8		$	77.1
Company restaurants	16.7			22.9
Rental operations	7.5			7.6
Financing operations	3.6			3.2
Corporate	(59.6		)	(69.6		)
Total	$	49.0		$	41.2