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, 2013, the franchise operations segment consisted of (i) 2,008 restaurants operated by Applebee’s franchisees in the United States, one U.S. territory and 15 countries outside the United States; and (ii) 1,577 restaurants operated by IHOP franchisees and area licensees in the United States, two U.S. territories and seven countries outside the United States. Franchise operations revenue consists primarily of franchise royalty revenues, sales of proprietary products (primarily pancake and waffle dry mixes for the IHOP restaurants), IHOP franchise advertising fees and the portion of the franchise fees allocated to IHOP and Applebee's intellectual property. Franchise operations expenses include IHOP advertising expense, the cost of proprietary products, pre-opening training expenses and other franchise-related costs.

At March 31, 2013, the company restaurant operations segment consisted of 23 Applebee’s company-operated restaurants, 10 IHOP company-operated restaurants and two IHOP restaurants reacquired from franchisees and operated by IHOP on a temporary basis until refranchised, all located 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, 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 for the three months ended March 31, 2013 and 2012 was as follows:



	Three Months Ended
	March 31,
	2013			2012
	(In millions)
Revenues from External Customers
Franchise operations	$	111.9		$	108.4
Company restaurants	16.5			100.9
Rental operations	31.0			32.0
Financing operations	3.8			4.3
Total	$	163.2		$	245.6
Interest Expense
Company restaurants	$	0.1		$	0.1
Rental operations	4.1			4.4
Corporate	25.3			30.2
Total	$	29.5		$	34.7
Depreciation and amortization
Franchise operations	$	2.8		$	2.5
Company restaurants	0.5			2.4
Rental operations	3.4			3.5
Corporate	2.1			2.1
Total	$	8.8		$	10.5
Income (loss) before income taxes
Franchise operations	$	83.7		$	80.8
Company restaurants	0.2			16.7
Rental operations	6.7			7.5
Financing operations	3.8			3.6
Corporate	(64.2		)	(59.6		)
Total	$	30.2		$	49.0