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 June 30, 2016, the franchise operations segment consisted of (i) 2,027 restaurants operated by Applebee’s franchisees in the United States, two U.S. territories and 15 countries outside the United States and (ii) 1,685 restaurants operated by IHOP franchisees and area licensees in the United States, two U.S. territories and 10 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 June 30, 2016, the company restaurant operations segment consisted of 10 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 is as follows:



	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
	(In millions)
Revenues from external customers:
Franchise operations	$	122.5		$	120.3		$	247.5		$	244.8
Rental operations	30.8			31.1			62.2			62.5
Company restaurants	4.5			17.4			9.3			34.8
Financing operations	2.5			2.7			4.8			5.3
Total	$	160.3		$	171.5		$	323.8		$	347.4

Interest expense:
Rental operations	$	3.0		$	3.4		$	6.1		$	6.9
Company restaurants	0.1			0.1			0.2			0.2
Corporate	15.4			15.7			30.7			31.3
Total	$	18.5		$	19.2		$	37.0		$	38.4

Depreciation and amortization:
Franchise operations	$	2.6		$	2.6		$	5.2		$	5.2
Rental operations	3.2			3.2			6.3			6.4
Company restaurants	0.1			0.2			0.2			0.4
Corporate	1.6			2.1			3.8			3.9
Total	$	7.5		$	8.1		$	15.5		$	15.9

Income (loss) before income tax provision:
Franchise operations	$	87.5		$	86.2		$	176.8		$	175.2
Rental operations	7.8			7.8			16.0			15.7
Company restaurants	(0.2		)	0.1			(0.6		)	0.9
Financing operations	2.3			2.7			4.6			5.3
Corporate	(57.7		)	(53.3		)	(116.0		)	(107.5		)
Total	$	39.7		$	43.5		$	80.8		$	89.6