Segments

The Company has two reportable segments: franchise operations (an aggregation of Applebee’s and IHOP franchise operations) and rental operations. The Company also has company-operated restaurant operations and financing operations, but neither of these operations exceeded 10% of consolidated revenues, income before income tax provision or total assets.

As of September 30, 2015, the franchise operations segment consisted of (i) 2,018 restaurants operated by Applebee’s franchisees in the United States, two U.S. territories and 15 countries outside the United States and (ii) 1,656 restaurants operated by IHOP franchisees and area licensees in the United States, three U.S. territories and eight countries outside the United States. Franchise operations revenue consists primarily of franchise royalty revenues, sales of proprietary products to franchisees (primarily pancake and waffle dry mixes for the IHOP restaurants), IHOP franchise advertising fees and franchise fees. Franchise operations expenses include IHOP advertising expenses, the cost of IHOP proprietary products, IHOP and Applebee's pre-opening training expenses and other franchise-related 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 from capital leases on franchisee-operated restaurants.

At September 30, 2015, the company restaurant operations segment consisted of 11 IHOP company-operated restaurants, all of which are 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.

Financing operations revenue primarily consists of interest income from the financing of franchise fees and equipment leases and sales of equipment associated with refranchised IHOP restaurants. Financing expenses are primarily the cost of restaurant equipment associated with refranchised IHOP restaurants.

Information on segments and a reconciliation to income before income tax provision for the three and nine months ended September 30, 2015 and 2014 were as follows:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
	(In millions)
Revenues from external customers:

Franchise operations	$	120.1		$	114.3		$	364.9		$	340.6
Rental operations	31.2			30.8			93.8			92.2
Company restaurants	8.1			15.0			42.8			47.0
Financing operations	3.0			2.8			8.3			10.8
Total	$	162.4		$	162.9		$	509.8		$	490.6

Interest expense:

Rental operations	$	3.3		$	3.6		$	10.1		$	11.2
Company restaurants	0.1			0.1			0.3			0.3
Corporate	15.4			25.0			46.8			74.9
Total	$	18.8		$	28.7		$	57.2		$	86.4

Depreciation and amortization:

Franchise operations	$	2.6		$	2.6		$	7.8		$	7.8
Rental operations	3.2			3.3			9.6			9.9
Company restaurants	0.1			0.5			0.5			1.6
Corporate	2.4			2.3			6.2			6.9
Total	$	8.3		$	8.7		$	24.1		$	26.2

Income before income tax provision:

Franchise operations	$	86.8		$	82.1		$	262.0		$	252.3
Rental operations	8.0			7.1			23.7			21.1
Company restaurants	(0.6		)	(0.3		)	0.3			(0.2		)
Financing operations	2.5			2.8			7.8			10.0
Corporate	(57.1		)	(61.9		)	(164.6		)	(188.6		)
Total	$	39.6		$	29.8		$	129.2		$	94.6