UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

For the fiscal year ended                   December 30, 2001
                          ------------------------------------------------------

                                       OR

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

For the transition period from                         to
                               -----------------------    ----------------------

Commission File Number:    000-17962
                       -----------------

                         Applebee's International, Inc.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                     43-1461763
  --------------------------------          ------------------------------------
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
   incorporation or organization)

          4551 W. 107th Street, Suite 100, Overland Park, Kansas 66207
 -------------------------------------------------------------------------------
              (Address of principal executive offices and zip code)

                                 (913) 967-4000
              ----------------------------------------------------
              (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: Common  Stock,   par
                                                            value $.01 per share

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. |_|

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of March 21, 2002 was  $1,313,008,921  based upon the closing sale
price on March 21, 2002.

The number of shares of the  registrant's  common stock  outstanding as of March
21, 2002 was 37,174,658.

                       DOCUMENTS INCORPORATED BY REFERENCE

Proxy  statement to be filed  pursuant to  Regulation  14A under the  Securities
Exchange Act of 1934 is incorporated into Part III hereof.


                                       1
<PAGE>


                         APPLEBEE'S INTERNATIONAL, INC.
                                    FORM 10-K
                       FISCAL YEAR ENDED DECEMBER 30, 2001
                                      INDEX

<TABLE>
<CAPTION>

                                                                                                               Page
PART I
<S>            <C>                                                                                            <C>

Item 1.         Business................................................................................        3

Item 2.         Properties..............................................................................       14

Item 3.         Legal Proceedings.......................................................................       16

Item 4.         Submission of Matters to a Vote of Security Holders.....................................       16


PART II

Item 5.         Market for Registrant's Common Equity and
                      Related Stockholder Matters.......................................................       17

Item 6.         Selected Financial Data.................................................................       18

Item 7.         Management's Discussion and Analysis of
                      Financial Condition and Results of Operations.....................................       19

Item 8.         Financial Statements and Supplementary Data.............................................       27

Item 9.         Changes in and Disagreements with Accountants
                      on Accounting and Financial Disclosure............................................       27

PART III

Item 10.        Directors and Executive Officers of the Registrant......................................       28

Item 11.        Executive Compensation..................................................................       28

Item 12.        Security Ownership of Certain Beneficial Owners and Management..........................       28

Item 13.        Certain Relationships and Related Transactions..........................................       28


PART IV

Item 14.        Exhibits and Reports on Form 8-K........................................................       29

Signatures..............................................................................................       30

</TABLE>


                                       2
<PAGE>


                                     PART I

Item 1.       Business

General

References  to  "Applebee's",  "we",  "us",  and  "our"  in  this  document  are
references  to  Applebee's  International,  Inc.  and its  subsidiaries  and any
predecessor companies of Applebee's  International,  Inc. We develop,  franchise
and operate casual dining  restaurants  under the name "Applebee's  Neighborhood
Grill & Bar." With nearly 1,400  restaurants  and $2.93 billion in annual system
sales,  Applebee's  Neighborhood  Grill  and Bar is the  largest  casual  dining
concept in America, both in terms of number of restaurants and market share.

We opened our first restaurant in 1986. We initially  developed and operated six
restaurants as a franchisee of the Applebee's  Neighborhood Grill & Bar Division
(the  "Applebee's  Division") of an indirect  subsidiary of W.R.  Grace & Co. In
March 1988, we acquired substantially all the assets of our franchisor.  When we
acquired  the  Applebee's  Division,  it  operated  14  restaurants  and had ten
franchisees, including us, operating 41 franchise restaurants.

As of December 30, 2001,  there were 1,392 Applebee's  restaurants.  Franchisees
operated 1,082 of these  restaurants and 310 restaurants were company  operated.
The  restaurants  were located in 49 states and eight  international  countries.
During 2001, 109 new restaurants were opened, including 84 franchise restaurants
and 25 company restaurants.

We acquired the Rio Bravo Cantina chain of Mexican casual dining  restaurants in
March 1995.  On April 12, 1999,  we completed  the sale of the Rio Bravo Cantina
concept,  which  was  comprised  of 65  restaurants.  We  operated  40 of  these
restaurants and franchisees operated the remaining 25 restaurants.  On April 26,
1999, we completed the sale of our four specialty restaurants, which we had also
acquired in 1995.

Our current strategy is to focus on the Applebee's  concept. We divested the Rio
Bravo Cantina concept as a part of that strategy.  We expect that the Applebee's
system will encompass at least 1,800 restaurants in the United States.



                                       3


<PAGE>


The following table sets forth certain unaudited financial information and other
restaurant data relating to company and franchise restaurants, as reported to us
by franchisees:

<TABLE>
<CAPTION>

                                                                             Fiscal Year Ended
                                                            -----------------------------------------------------
                                                             December 30,       December 31,      December 26,
                                                                 2001               2000              1999
                                                           -----------------  ----------------  -----------------
<S>                                                               <C>               <C>                <C>
   Number of restaurants:
   Applebee's:
        Company:
            Beginning of year............................            285               262                247
            Restaurant openings..........................             25                25                 27
            Restaurant closings..........................             --                (2)                --
            Restaurants acquired from (by) franchisees...             --                --                (12)
                                                           -----------------  ----------------  -----------------
            End of year..................................            310               285                262
                                                           -----------------  ----------------  -----------------
        Franchise:
            Beginning of year............................          1,001               906                817
            Restaurant openings..........................             84               100                 80
            Restaurant closings..........................             (3)               (5)                (3)
            Restaurants acquired by (from) franchisees...             --                --                 12
                                                           -----------------  ----------------  -----------------
            End of year..................................          1,082             1,001                906
                                                           -----------------  ----------------  -----------------
        Total Applebee's:
            Beginning of year............................          1,286             1,168              1,064
            Restaurant openings..........................            109               125                107
            Restaurant closings..........................             (3)               (7)                (3)
                                                           -----------------  ----------------  -----------------
            End of year..................................          1,392             1,286              1,168
                                                           =================  ================  =================

   Rio Bravo Cantinas:
        Company:
            Beginning of year............................             --                --                 40
            Restaurants divested.........................             --                --                (40)
                                                           -----------------  ----------------  -----------------
            End of year..................................             --                --                 --
                                                           -----------------  ----------------  -----------------
        Franchise:
            Beginning of year............................             --                --                 26
            Restaurant closings..........................             --                --                 (1)
            Restaurants divested.........................             --                --                (25)
                                                           -----------------  ----------------  -----------------
            End of year..................................             --                --                 --
                                                           -----------------  ----------------  -----------------
        Total Rio Bravo Cantinas:
            Beginning of year............................             --                --                 66
            Restaurant closings..........................             --                --                 (1)
            Restaurants divested.........................             --                --                (65)
                                                           -----------------  ----------------  -----------------
            End of year..................................             --                --                 --
                                                           =================  ================  =================

   Total number of restaurants:
            Beginning of year............................          1,286             1,168              1,134
            Restaurant openings..........................            109               125                107
            Restaurant closings..........................             (3)               (7)                (4)
            Restaurants divested.........................             --                --                (69)
                                                           -----------------  ----------------  -----------------
            End of year..................................          1,392             1,286              1,168
                                                           =================  ================  =================

</TABLE>


                                       4
<PAGE>

<TABLE>
<CAPTION>


                                                                             Fiscal Year Ended
                                                           ------------------------------------------------------
                                                             December 30,       December 31,      December 26,
                                                                 2001               2000              1999
                                                           -----------------  ----------------  -----------------
<S>                                                         <C>                <C>               <C>
   Weighted average weekly sales per restaurant:
        Applebee's:
            Company.....................................     $    42,660        $    42,183       $    41,674
            Franchise...................................     $    42,241        $    41,137       $    40,297
            Total Applebee's............................     $    42,334        $    41,370       $    40,619

   Change in comparable restaurant sales(1):
        Applebee's:
            Company.....................................             2.5%               1.8%              4.4%
            Franchise...................................             3.0%               1.6%              2.9%
            Total Applebee's............................             2.9%               1.7%              3.2%
   Total system sales (in thousands):
        Applebee's......................................     $ 2,926,288        $ 2,668,539       $ 2,347,388
        Rio Bravo Cantinas..............................             --                 --             42,661
        Specialty restaurants...........................             --                 --              4,806
                                                           -----------------  ----------------  -----------------
            Total system sales..........................     $ 2,926,288        $ 2,668,539       $ 2,394,855
                                                           =================  ================  =================


</TABLE>




























--------
   (1) When computing comparable restaurant sales, restaurants open for at least
   18 months are compared from period to period.



                                       5
<PAGE>


The Applebee's System

Concept.  Each  Applebee's  restaurant is designed as an  attractive,  friendly,
neighborhood  establishment  featuring  moderately priced, high quality food and
beverage  items,  table service and a comfortable  atmosphere.  Our  restaurants
appeal to a wide range of customers including young adults,  senior citizens and
families with young children.

During 1998, we initiated a strategy to enter into counties with a population of
less  than  50,000.  We  have  been  successful  at  market  penetration  of the
Applebee's  concept,  and we recognize that small towns  represent a market with
significant  potential.  As of  December  30,  2001,  there  were a total  of 92
restaurants  open in these  smaller  markets,  and we  anticipate  at least  150
restaurants to be opened long-term in small towns.  Because of these factors, we
expect that the Applebee's  system will encompass at least 1,800  restaurants in
the United States.

We have set  certain  specifications  for the  design  of our  restaurants.  Our
restaurants are located in free-standing  buildings,  end caps of strip shopping
centers,  and shopping malls.  Each  restaurant has a bar, and many  restaurants
offer patio seating.  The decor of each  restaurant  incorporates  artifacts and
memorabilia such as old movie posters, musical instruments and sports equipment.
Restaurants also frequently display photographs, magazine articles and newspaper
articles  highlighting  local history and  personalities.  These items give each
restaurant an individual, neighborhood identity. We require that each restaurant
be  remodeled  every six years to embody  the  design  elements  of the  current
prototype.

Menu. Each restaurant  offers a diverse menu of high quality,  moderately priced
food and beverage  items  consisting  of  traditional  favorites  and  signature
dishes.  The restaurants  feature a broad selection of entrees,  including beef,
chicken,  seafood and pasta items prepared in a variety of cuisines,  as well as
appetizers, salads, sandwiches, specialty drinks and desserts. Substantially all
restaurants offer beer, wine, liquor and premium specialty drinks.  During 2001,
alcoholic beverages accounted for 14.1% of company owned restaurant sales.

Restaurant  Operations.  We and  our  franchisees  operate  all  restaurants  in
accordance with uniform operating standards and specifications.  These standards
pertain to the quality and  preparation of menu items,  selection of menu items,
maintenance and cleanliness of premises,  and employee  conduct.  We develop all
standards and specifications  with input from franchisees,  and they are applied
on a system-wide basis.

Training.  We have an operations  training course for general managers,  kitchen
managers  and  other  restaurant  managers.  The  course  consists  of  in-store
task-oriented  training  and  formal   administrative,   customer  service,  and
financial training.  We ensure that new restaurants comply with our standards by
providing  them with a team of trainers  to conduct  hands-on  training  for all
restaurant  employees.  We also provide  periodic  training  for our  restaurant
employees regarding various topics, generally through in-restaurant seminars and
video presentations.

Advertising.  We have  historically  concentrated  our advertising and marketing
efforts  primarily  on  food-specific  promotions.  We  advertise on a national,
regional and local basis, utilizing primarily television, radio and print media.
In 2001,  approximately  4.3% of sales  for  company  restaurants  was  spent on
advertising. This amount includes contributions to the national advertising pool
which  develops  and  funds  the  specific  national  promotions.  We focus  the
remainder of our  advertising  expenditures  on local  advertising in areas with
company owned restaurants.



                                       6
<PAGE>




Purchasing.  Maintaining  high food  quality and  system-wide  consistency  is a
central focus of our purchasing  program.  We mandate quality  standards for all
products  used in the  restaurants,  and we maintain a limited  list of approved
suppliers  from which we and our  franchisees  must select.  We have  negotiated
purchasing agreements with most of our approved suppliers which result in volume
discounts for us and our franchisees.  Additionally,  when necessary we purchase
and maintain inventories of Riblets, a specialty item on the Applebee's menu, to
assure  sufficient  supplies for the system.  In 2001, we began a new multi-year
supply  chain  management  initiative  designed  to leverage  our size,  improve
sourcing of products and optimize distribution.

Company Restaurants

Company  Restaurant  Openings and  Acquisitions.  Our  expansion  strategy is to
cluster restaurants in targeted markets,  thereby increasing consumer awareness.
Our strategy  enables us to take  advantage  of  operational,  distribution  and
advertising efficiencies. Our development experience indicates that when we open
multiple restaurants within a particular market, our market share increases.

In order to maximize overall system growth,  our expansion strategy through 1992
emphasized franchise  arrangements with experienced,  successful and financially
capable restaurant operators. We continue to expand the Applebee's system across
the United States  through  franchise  operations,  but  beginning in 1992,  our
growth   strategy  also  included   increasing   the  number  of  company  owned
restaurants.  We have tried to  achieve  this goal in two ways.  First,  we have
developed  strategic  territories.  Second,  when  franchises  are available for
purchase under acceptable financial terms, we have selectively acquired existing
franchise   restaurants   and  terminated  the  selling   franchisee's   related
development  rights.  Using this  strategy,  we have expanded from a total of 31
company owned or operated  restaurants as of December 27, 1992 to a total of 310
as of December  30,  2001.  We  accomplished  this  expansion by opening 234 new
restaurants and acquiring 81 franchise  restaurants over the last nine years. In
addition,  as  part  of our  portfolio  management  strategy,  we  have  sold 26
restaurants to franchisees during this nine-year period.

We  opened  25  new  Applebee's  restaurants  in  2001  and  anticipate  opening
approximately  25 new Applebee's  restaurants in 2002. We may open more or fewer
restaurants  depending  upon the  availability  of  appropriate  new sites.  The
following table shows the areas where our company restaurants were located as of
December 30, 2001:



                                       7
<PAGE>


<TABLE>
<CAPTION>





                                     Area
        ---------------------------------------------------------------
<S>                                                                              <C>
        Detroit/Southern Michigan...................................               55
        New England (includes Massachusetts, Vermont,
          New Hampshire, Rhode Island and Maine)....................               52
        Minneapolis/St. Paul, Minnesota.............................               44
        Virginia....................................................               38
        North/Central Texas.........................................               36
        St. Louis, Missouri/Illinois................................               25
        Kansas City, Missouri/Kansas................................               24
        Las Vegas/Reno, Nevada......................................               12
        Atlanta, Georgia............................................                9
        Albuquerque, New Mexico.....................................                8
        San Diego/Southern California...............................                7
                                                                       -------------------
                                                                                  310
                                                                       ===================
</TABLE>

Restaurant  Operations.  The  staff  for a typical  restaurant  consists  of one
general  manager,  one kitchen  manager,  two or three  assistant  managers  and
approximately  60 hourly  employees.  All managers of company owned  restaurants
receive a salary and performance  bonus based on restaurant  sales,  profits and
adherence to our  standards.  As of December 30, 2001,  we employed ten Regional
Vice Presidents of Operations/Directors of Operations and 50 Area Directors. The
Area Directors'  duties include regular  restaurant visits and inspections which
ensure  the  ongoing   maintenance   of  our  standards  of  quality,   service,
cleanliness,  value,  and  courtesy.  In  addition to  providing  a  significant
contribution  to  revenues  and  operating   earnings,   we  use  company  owned
restaurants  for many  purposes  which are  integral to the  development  of the
entire  system,  including  testing of new menu items and  training of franchise
restaurant managers and operating personnel.

The Applebee's Franchise System

Franchise  Territory  and  Restaurant  Openings.  We  currently  have  exclusive
franchise  arrangements  with 66 franchise  groups,  including 15  international
franchisees.  We  have  generally  selected  franchisees  that  are  experienced
multi-unit  restaurant  operators who have been  involved with other  restaurant
concepts.  Our franchisees operate Applebee's restaurants in 43 states and eight
international  countries.  We have assigned the vast majority of all territories
in the contiguous 48 states or have designated them for company development.

As of December 30, 2001,  there were 1,082  franchise  restaurants.  Franchisees
opened 80  restaurants  in 1999,  100  restaurants in 2000 and 84 restaurants in
2001. We anticipate between 80 to 90 franchise restaurant openings in 2002.

Development  of  Restaurants.  We make  available  to  franchisees  the physical
specifications for a typical restaurant,  and we retain the right to prohibit or
modify the use of any plan.  Each  franchisee is  responsible  for selecting the
site for each  restaurant  within  their  territory.  We assist  franchisees  in
selecting  appropriate  sites, and any selection made by a franchisee is subject
to our  approval.  We also  conduct a physical  inspection,  review any proposed
lease or purchase agreement, and make available demographic studies.


                                       8
<PAGE>

Domestic  Franchise  Arrangements.  Each  franchise  arrangement  consists  of a
development agreement and separate franchise agreements.  Development agreements
grant the  exclusive  right to develop a number of  restaurants  in a designated
geographical area. The term of a domestic development  agreement is generally 20
years.  The  franchisee  enters  into a  separate  franchise  agreement  for the
operation of each restaurant.  Each agreement has a term of 20 years and permits
renewal for up to an additional 20 years in accordance  with the terms contained
in the then current  franchise  agreement  (including  the then current  royalty
rates and advertising fees) and upon payment of an additional franchise fee.

For each  restaurant  developed,  a franchisee is currently  obligated to pay an
initial  franchisee fee (which  typically  ranges from $30,000 to $35,000) and a
royalty  fee  equal  to 4% of the  restaurant's  monthly  gross  sales.  We have
executed  agreements  with a majority  of our  franchisees  which  maintain  the
existing  royalty fees of 4% and extend the current  franchise  and  development
agreements  until  January  1,  2020.  The  revised  agreements   establish  new
restaurant development obligations over the next several years which support our
long-term  expectation of at least 1,800  restaurants in the United States.  The
terms,  royalties  and  advertising  fees  under a limited  number of  franchise
agreements and the franchise fees under older  development  agreements vary from
the currently offered arrangements.

Advertising.  We currently  require domestic  franchisees to contribute 2.25% of
gross  sales to the  national  advertising  pool.  This amount is in addition to
their required spending of at least 1.5% of gross sales on local advertising and
promotional activities.  Franchisees also promote the opening of each restaurant
and we reimburse the franchisee for 50% of the out-of-pocket opening advertising
expenditures,  subject  to  certain  conditions.  The  maximum  amount  we  will
reimburse for these expenditures is $2,500. Under our franchise  agreements,  we
can increase the combined  amount of the advertising fee and the amount required
to be spent on local  advertising and promotional  activities to a maximum of 5%
of gross sales.

Training and Support. We provide ongoing advice and assistance to franchisees in
connection with the operation and management of each restaurant through training
sessions,  meetings,  seminars,  on-premises  visits,  and by  written  or other
material.  We also  assist  franchisees  with  business  planning,  development,
technology and human resource efforts.

Quality  Control.  We  continuously  monitor  franchisee  operations and inspect
restaurants,  principally through our full-time franchise  consultants (22 as of
December 30,  2001).  We make both  scheduled  and  unannounced  inspections  of
restaurants  to  ensure  that  only  approved  products  are in use and that our
prescribed  operations practices and procedures are being followed. A minimum of
three planned visits are made each year, during which one of our representatives
conducts an inspection and consultation at each restaurant. We have the right to
terminate a franchise if a franchisee does not operate and maintain a restaurant
in accordance with our requirements.

Franchise  Business  Council.  We maintain a Franchise  Business  Council  which
provides us with advice about  operations,  marketing,  product  development and
other  aspects  of  restaurant  operations  for the  purpose  of  improving  the
franchise  system.  As of December  30, 2001,  the  Franchise  Business  Council
consisted  of seven  franchisee  representatives  and two  members of our senior
management. Two franchisee representatives are permanent members, one franchisee
representative  must be a  franchisee  with  five or less  restaurants,  and any
franchisee  who operates  10% or more of the total number of system  restaurants
(currently none) is reserved a seat.  Franchisees elect the remaining franchisee
representatives annually.


                                       9
<PAGE>

International   Franchise  Agreements.   We  continue  to  pursue  international
franchising of the Applebee's  concept under a long-term  strategy of controlled
expansion.  This  strategy  includes  seeking  qualified  franchisees  with  the
resources  to  open  multiple  restaurants  in each  territory  and  those  with
familiarity  with the specific  local  business  environment.  We are  currently
focusing  on  international   franchising  in  Canada,  Latin  America  and  the
Mediterranean/Middle  East.  In  this  regard,  we  currently  have  development
agreements  with  15   international   franchisees.   Franchisees   operated  38
international  restaurants  as of  December  30,  2001.  The  success of further
international  expansion will depend on, among other things, local acceptance of
the  Applebee's  concept and our ability to attract  qualified  franchisees  and
operating personnel. We must also comply with the regulatory requirements of the
local  jurisdictions,   and  supervise   international   franchisee   operations
effectively.

Franchise  Financing.  Although  financing  is the  sole  responsibility  of the
franchisee,  we  make  available  to  franchisees  information  about  financial
institutions  interested in financing the costs of  restaurant  development  for
qualified franchisees.  None of these financial institutions is our affiliate or
agent,  and we have no control  over the terms or  conditions  of any  financing
arrangement offered by these financial institutions.  Under a previous franchise
financing  program,  we  provided  a limited  guaranty  of loans made to certain
franchisees.

Competition

We expect competition in the casual dining segment of the restaurant industry to
remain intense with respect to price, service,  location,  concept, and the type
and quality of food.  There is also intense  competition  for real estate sites,
qualified  management  personnel,  and hourly  restaurant staff. Our competitors
include  national,  regional and local chains,  as well as local  owner-operated
restaurants.  We have a number of  well-established  competitors.  Some of these
companies have been in existence  longer than we have, and therefore they may be
better established in the markets where our restaurants are or may be located.

Service Marks

We own the rights to the "Applebee's  Neighborhood  Grill & Bar(R)" service mark
and  certain  variations  thereof  in the United  States and in various  foreign
countries.  We are aware of names and marks similar to our service marks used by
third parties in certain  limited  geographical  areas. We intend to protect our
service marks by appropriate legal action where and when necessary.

Government Regulation

Our restaurants are subject to numerous federal, state, and local laws affecting
health,  sanitation and safety  standards.  Our  restaurants are also subject to
state and local licensing  regulation of the sale of alcoholic  beverages.  Each
restaurant  is  required  to  obtain   appropriate   licenses  from   regulatory
authorities  allowing it to sell liquor,  beer,  and wine.  We also require that
each restaurant obtain food service licenses from local health authorities.  Our
licenses  to sell  alcoholic  beverages  must  be  renewed  annually  and may be
suspended or revoked at any time for cause.  This would include violation of any
law  or  regulation  pertaining  to  alcoholic  beverage  control  by us or  our
employees.  Among such laws are those  regulating  the minimum age of patrons or
employees,  advertising,  wholesale purchasing, and inventory control. If one of
our restaurants failed to maintain its license to sell alcohol or serve food, it
would significantly harm the success of that restaurant. In order to reduce this
risk,  we operate each  restaurant in accordance  with  standardized  procedures
designed to facilitate compliance with all applicable codes and regulations.



                                       10
<PAGE>


Our  employment  practices  are  governed  by  various  governmental  employment
regulations. These include minimum wage, overtime, immigration, family leave and
working condition regulations.

We are subject to a variety of federal and state laws governing  franchise sales
and the franchise  relationship.  In general,  these laws and regulations impose
certain disclosure and registration requirements prior to the sale and marketing
of franchises. Recent decisions of several state and federal courts and recently
enacted or proposed  federal and state laws demonstrate a trend toward increased
protection of the rights and interests of franchisees against franchisors.  Such
decisions  and laws may limit the  ability of  franchisors  to  enforce  certain
provisions  of  franchise   agreements  or  to  alter  or  terminate   franchise
agreements.  Due to the scope of our  business and the  complexity  of franchise
regulations,  we may encounter minor compliance  issues from time to time. We do
not  believe,  however,  that any of these  issues will have a material  adverse
effect on our business.

Under certain court  decisions and statutes,  owners of restaurants  and bars in
some  states  in which we own or  operate  restaurants  may be held  liable  for
serving  alcohol to intoxicated  customers whose  subsequent  conduct results in
injury  or death  to a third  party.  We  cannot  guarantee  that we will not be
subject to such liability. We do believe,  however, that our insurance presently
provides adequate coverage for such liability.

Employees

As of December 30, 2001,  we employed  approximately  20,900 full and  part-time
employees.  Of those,  approximately  450 were corporate  personnel,  1,350 were
restaurant  managers  or  managers  in  training  and 19,100  were  employed  in
non-management  full and part-time  restaurant  positions.  Of the 450 corporate
employees,  approximately 160 were in management  positions and 290 were general
office employees, including part-time employees.

We consider  our  employee  relations  to be good.  Most  employees,  other than
restaurant  management and corporate personnel,  are paid on an hourly basis. We
believe that we provide working conditions and wages that compare favorably with
those of our competition. We have never experienced a work stoppage due to labor
difficulty,  and  our  employees  are not  covered  by a  collective  bargaining
agreement.



                                       11

<PAGE>


Executive Officers of the Registrant

Our executive officers as of December 30, 2001 are shown below.

<TABLE>
<CAPTION>

                 Name                Age                                    Position

<S>                                  <C>    <C>
    Lloyd L. Hill.................... 57     Chairman  of the  Board of  Directors,  Chief  Executive  Officer  and
                                                President
    George D. Shadid................. 47     Executive Vice President and Chief Financial  Officer (Chief Operating
                                                Officer  effective  March 1,  2002),  Treasurer  and  Member of the
                                                Board of Directors
    Steven K. Lumpkin................ 47     Executive  Vice  President  and  Chief   Development   Officer  (Chief
                                                Financial Officer and Treasurer effective March 1, 2002)
    Larry A. Cates................... 53     President of International Division
    John C. Cywinski................. 39     Senior Vice President and Chief Marketing Officer
    David L. Goebel.................. 51     Senior Vice President of Franchise Operations
    Louis A. Kaucic.................. 50     Senior Vice President and Chief People Officer
    David R. Parsley................. 55     Senior Vice President of Purchasing and Distribution
    Carin L. Stutz................... 45     Senior Vice President of Company Operations

</TABLE>

Lloyd L. Hill was elected a director  in August  1989.  Mr.  Hill was  appointed
Executive  Vice  President  and Chief  Operating  Officer  in January  1994.  In
December 1994, he assumed the role of President in addition to his role as Chief
Operating  Officer.  Effective  January 1, 1997,  Mr.  Hill  assumed the role of
Co-Chief Executive Officer. In January 1998, he assumed the full duties of Chief
Executive  Officer.  In May 2000, Mr. Hill was elected  Chairman of the Board of
Directors.  Prior to joining  Applebee's,  he served as  President  of  Kimberly
Quality  Care,  a home health care and nurse  personnel  staffing  company  from
December 1989 to December 1993,  where he also served as a director from 1988 to
1993, having joined that organization in 1980.

George D. Shadid was employed by Applebee's in August 1992, and served as Senior
Vice  President  and Chief  Financial  Officer  until  January  1994 when he was
promoted to Executive Vice President and Chief Financial Officer. He also became
Treasurer in March 1995. In March 1999,  Mr.  Shadid was elected a director.  In
March 2002, he assumed the position of Chief Operating Officer. Prior to joining
Applebee's,  he served as Corporate  Controller of  Gilbert/Robinson,  Inc. from
1985 to 1987,  at which  time he was  promoted  to Vice  President,  and in 1988
assumed the position of Vice  President and Chief  Financial  Officer,  which he
held until  August  1992.  From 1976 until  1985,  Mr.  Shadid was  employed  by
Deloitte & Touche LLP.

Steven K. Lumpkin was employed by  Applebee's  in May 1995 as Vice  President of
Administration.  In January  1996,  he was promoted to Senior Vice  President of
Administration.  In  November  1997,  he assumed  the  position  of Senior  Vice
President of Strategic Development and in January 1998 was promoted to Executive
Vice President of Strategic Development.  He was named Chief Development Officer
in March  2001.  In March  2002,  Mr.  Lumpkin  assumed  the  position  of Chief
Financial Officer and Treasurer.  Prior to joining Applebee's, Mr. Lumpkin was a
Senior Vice President with a division of the Olsten Corporation, Olsten Kimberly
Quality Care from July 1993 until January 1995.  From June 1990 until July 1993,
Mr.  Lumpkin  was an  Executive  Vice  President  and a member  of the  board of
directors of Kimberly  Quality  Care.  From  January  1978 until June 1990,  Mr.
Lumpkin was employed by Price  Waterhouse  LLP,  where he served as a management
consulting partner and certified public accountant.


                                       12
<PAGE>


Larry A.  Cates was  employed  by  Applebee's  in May 1997 as  President  of the
International  Division.  Prior to joining Applebee's,  Mr. Cates spent 17 years
with PepsiCo  Restaurants  developing  international  markets for that company's
Pizza  Hut,  Taco Bell and KFC  brands.  From 1994 to 1997,  Mr.  Cates was Vice
President of Franchising and Development - Europe/Middle  East, and from 1990 to
1994,  he was Chief  Executive  Officer of Pizza Hut UK, Ltd.,  a joint  venture
between PepsiCo Restaurants and Whitbread.

John C.  Cywinski  was  employed  by  Applebee's  in July  2001 as  Senior  Vice
President and Chief Marketing Officer. Prior to joining Applebee's, Mr. Cywinski
was employed as Vice President of Brand Strategy for McDonald's Corporation from
April 1999 to July 2001.  From October 1996 to April 1999,  he was  President of
Buena Vista Pictures  Marketing,  the motion picture division of The Walt Disney
Company.  Prior to 1996,  Mr.  Cywinski held various  positions with Burger King
Corporation.

David L. Goebel was  employed  by  Applebee's  in  February  2001 as Senior Vice
President of  Franchise  Operations.  Prior to joining  Applebee's,  Mr.  Goebel
headed a management  company that provided  consulting  and  strategic  planning
services to various  businesses from April 1998 to February 2001. Prior to 1998,
he held several executive positions with various restaurant companies.

Louis A.  Kaucic was  employed  by  Applebee's  in October  1997 as Senior  Vice
President of Human  Resources.  He was named Chief People Officer in March 2001.
Prior to joining  Applebee's,  Mr. Kaucic was Vice President of Human  Resources
and later  promoted  to Senior Vice  President  of Human  Resources  with Unique
Casual  Restaurants, Inc., which operated several restaurant concepts, from July
1992 until  October  1997.  From 1982 to 1992, he was employed by Pizza Hut in a
variety of positions,  including  Director of Employee  Relations.  From 1978 to
1982, Mr. Kaucic was employed by Kellogg's as an Industrial Relations Manager.

David R.  Parsley  was  employed  by  Applebee's  in April  2000 as Senior  Vice
President of  Purchasing  and  Distribution.  Prior to joining  Applebee's,  Mr.
Parsley held  several  positions  with  Prandium,  Inc.,  operator of El Torito,
Chi-Chi's and Koo Koo Roo, from  November  1996 to April 2000,  most recently as
Senior Vice President of Quality and Supply Chain  Management.  He has also held
purchasing   positions  with  The  Panda   Management   Company,   Carl  Karcher
Enterprises, Proficient Food Company, Inc., and Baxter Healthcare Corporation.

Carin L. Stutz was  employed  by  Applebee's  in  November  1999 as Senior  Vice
President  of Company  Operations.  Prior to joining  Applebee's,  Ms. Stutz was
Division Vice  President with Wendy's  International  from July 1994 to November
1999. From 1993 to 1994, she was Regional Operations Vice President for Sodexho,
USA. From 1990 to 1993, Ms. Stutz was employed by  Nutri/System,  Inc. as a Vice
President of Corporate Operations.  Prior to 1990, Ms. Stutz was employed for 12
years with Wendy's International.


                                       13



<PAGE>


Item 2.       Properties


As of December 30,  2001,  we owned or operated 310  restaurants.  Of these,  we
leased the land and  building  for 60 sites,  owned the  building and leased the
land for 116 sites,  and owned the land and building for 134 sites. In addition,
as of December 30, 2001, we owned 4 sites for future  development of restaurants
and had entered into 12 lease  agreements for  restaurant  sites we plan to open
during 2002. Our leases  generally have an initial term of 15 to 20 years,  with
renewal terms of 5 to 20 years,  and provide for a fixed rental plus, in certain
instances, percentage rentals based on gross sales.

We own an 80,000 square foot office building in Overland Park,  Kansas,  located
in the  Kansas  City  metropolitan  area,  in which our  corporate  offices  are
headquartered. We also lease office space in certain regions in which we operate
restaurants.

Under our  franchise  agreements,  we have  certain  rights to gain control of a
restaurant  site in the  event of  default  under  the  lease  or the  franchise
agreement.

The  following  table  sets  forth  the 49 states  and the  eight  international
countries  in  which  Applebee's  are  located  and the  number  of  restaurants
operating in each state or country as of December 30, 2001:


                                       14
<PAGE>

<TABLE>
<CAPTION>



                                                                 Number of Restaurants
                                                  -----------------------------------------------------
                    State or Country                 Company            Franchise        Total System
            ----------------------------------    --------------      --------------     --------------

<S>                                                     <C>              <C>                 <C>
            Domestic:
            --------
            Alabama........................               --                 27                  27
            Alaska.........................               --                  1                   1
            Arizona........................               --                 22                  22
            Arkansas.......................               --                  7                   7
            California.....................                7                 70                  77
            Colorado.......................               --                 28                  28
            Connecticut....................               --                  9                   9
            Delaware.......................               --                  5                   5
            Florida........................               --                 82                  82
            Georgia........................                9                 53                  62
            Idaho..........................               --                  9                   9
            Illinois.......................                6                 43                  49
            Indiana........................               --                 51                  51
            Iowa...........................               --                 22                  22
            Kansas.........................               10                 15                  25
            Kentucky.......................               --                 31                  31
            Louisiana......................               --                 17                  17
            Maine..........................                6                 --                   6
            Maryland.......................               --                 19                  19
            Massachusetts..................               26                 --                  26
            Michigan.......................               55                 12                  67
            Minnesota......................               41                  1                  42
            Mississippi....................               --                 14                  14
            Missouri.......................               33                 10                  43
            Montana........................               --                  7                   7
            Nebraska.......................               --                 14                  14
            Nevada.........................               12                 --                  12
            New Hampshire..................               12                 --                  12
            New Jersey.....................               --                 26                  26
            New Mexico.....................                8                  5                  13
            New York.......................               --                 63                  63
            North Carolina.................                1                 43                  44
            North Dakota...................               --                  7                   7
            Ohio...........................               --                 69                  69
            Oklahoma.......................               --                 13                  13
            Oregon.........................               --                 12                  12
            Pennsylvania...................               --                 43                  43
            Rhode Island...................                6                 --                   6
            South Carolina.................               --                 40                  40
            South Dakota...................               --                  4                   4
            Tennessee......................               --                 44                  44
            Texas..........................               36                 25                  61
            Utah...........................               --                 10                  10
            Vermont........................                2                 --                   2
            Virginia.......................               37                  9                  46
            Washington.....................               --                 16                  16
            West Virginia..................               --                 13                  13
            Wisconsin......................                3                 29                  32
            Wyoming........................               --                  4                   4
                                                  --------------      --------------     --------------
            Total Domestic.................              310              1,044               1,354
                                                  --------------      --------------     --------------

</TABLE>


                                       15
<PAGE>


<TABLE>
<CAPTION>


                                                                 Number of Restaurants
                                                  -----------------------------------------------------
                    State or Country                 Company            Franchise        Total System
            ----------------------------------    --------------      --------------     --------------
            International:
            -------------
<S>                                                     <C>              <C>                 <C>
            Canada.........................               --                 14                  14
            Egypt..........................               --                  1                   1
            Greece.........................               --                  2                   2
            Honduras.......................               --                  2                   2
            Kuwait.........................               --                  2                   2
            Mexico.........................               --                 11                  11
            Netherlands....................               --                  5                   5
            Sweden.........................               --                  1                   1
                                                  --------------      --------------     --------------
            Total International............               --                 38                  38
                                                  --------------      --------------     --------------
                                                         310              1,082               1,392
                                                  ==============      ==============     ==============

</TABLE>


Item 3.      Legal Proceedings

We are  involved  in various  legal  actions  arising  in the  normal  course of
business. These matters include, without limitation,  such matters as employment
law related claims and disputes with certain international franchisees regarding
disclosures we allegedly made or omitted.  In each instance,  we believe that we
have  meritorious  defenses  to the  allegations  made  and  we  are  vigorously
defending these claims.

While the  resolution of the matters  described  above may have an impact on the
financial results for the period in which they are resolved, we believe that the
ultimate  disposition  of  these  matters  will  not,  individually  or  in  the
aggregate,  have a material  adverse  effect upon our  business or  consolidated
financial position.

Item 4.      Submission of Matters to a Vote of Security Holders

Not applicable.



                                       16
<PAGE>


                                     PART II

Item 5.      Market  for  Registrant's  Common  Equity  and  Related Stockholder
             Matters

1.       Our  common  stock trades on The Nasdaq Stock Market(R)under the symbol
         APPB.

         The  table below  sets  forth for  the fiscal  quarters  indicated  the
         reported  high  and low sale prices of our common stock, as reported on
         The Nasdaq Stock Market.


<TABLE>
<CAPTION>


                                                       2001                              2000
                                          -------------------------------   -------------------------------
                                               High            Low               High            Low
                                          --------------- ---------------   --------------- ---------------
<S>                                       <C>             <C>               <C>             <C>
                First Quarter              $      24.29    $     18.67       $      19.92    $     16.00
                Second Quarter             $      32.00    $     23.81       $      25.04    $     17.04
                Third Quarter              $      33.08    $     25.98       $      21.42    $     13.63
                Fourth Quarter             $      36.89    $     26.40       $      23.08    $     15.00
</TABLE>

2.       Number of stockholders of record at December 30, 2001:    941

3.       We  declared  an   annual  dividend  of  $0.08  per  common   share  on
         December 13, 2001 for stockholders of record on  December 26, 2001, and
         the dividend  was  payable  on January 29, 2002. We  declared an annual
         dividend  of   $0.07  per  common   share  on  December  14,  2000  for
         stockholders  of  record  on  December 29, 2000,  and  the dividend was
         payable on January 29, 2001.

         We presently anticipate  continuing the payment of cash dividends based
         upon our annual net income.  The actual  amount of  such dividends will
         depend   upon   future   earnings,  results  of   operations,   capital
         requirements, our  financial condition and certain other factors. There
         can  be  no  assurance  as  to  the  amount of  net income that we will
         generate in  2002 or future  years  and, accordingly, there  can  be no
         assurance as  to the amount  that will be available for the declaration
         of dividends, if any.


                                       17
<PAGE>


Item 6.       Selected Financial Data

The  following  table sets forth for the  periods  and the dates  indicated  our
selected  financial  data.  The fiscal year ended December 31, 2000 contained 53
weeks, and all other periods presented  contained 52 weeks. The following should
be read in  conjunction  with the  Consolidated  Financial  Statements and Notes
thereto and  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations"  appearing elsewhere in this Form 10-K. All per share and
weighted average share  information has been restated to reflect a three-for-two
stock split in 2001.

<TABLE>
<CAPTION>

                                                                          Fiscal Year Ended
                                           --------------------------------------------------------------------------------
                                            December 30,    December 31,    December 26,    December 27,     December 28,
                                                2001            2000            1999            1998             1997
                                           --------------- --------------- --------------- --------------- ----------------
                                                              (in thousands, except per share amounts)
<S>                                          <C>             <C>             <C>             <C>             <C>
STATEMENT OF EARNINGS DATA:
Company restaurant sales.................     $  651,119      $  605,414      $  596,754      $  580,840      $  452,173
Franchise income.........................         93,225          84,738          72,830          66,722          63,647
                                           --------------- --------------- --------------- --------------- ----------------
     Total operating revenues............     $  744,344      $  690,152      $  669,584      $  647,562      $  515,820
                                           =============== =============== =============== =============== ================
Operating earnings.......................     $  112,427      $  107,207      $   94,910      $   88,562      $   71,283
Earnings before extraordinary item.......     $   65,650      $   63,161      $   54,198      $   50,656      $   45,091
Basic earnings per share before
   extraordinary item....................     $     1.77      $     1.61      $     1.27      $     1.12      $     0.96
Diluted earnings per share before
   extraordinary item....................     $     1.73      $     1.60      $     1.26      $     1.11      $     0.95
Net earnings.............................     $   64,401      $   63,161      $   54,198      $   50,015      $   45,091
Basic net earnings per share.............     $     1.74      $     1.61      $     1.27      $     1.10      $     0.96
Diluted net earnings per share...........     $     1.70      $     1.60      $     1.26      $     1.10      $     0.95
Dividends per share......................     $     0.08      $     0.07      $     0.07      $     0.06      $     0.05
Basic weighted average shares
   outstanding...........................         37,008          39,228          42,605          45,408          47,102
Diluted weighted average shares
   outstanding...........................         37,918          39,447          42,902          45,578          47,460

BALANCE SHEET DATA
     (AT END OF FISCAL YEAR):
Total assets.............................     $  500,411      $  471,707      $  442,216      $  510,904      $  377,474
Long-term obligations, including
  current portion........................     $   74,568      $   91,355      $  108,100      $  147,188      $   29,105
Stockholders' equity.....................     $  325,183      $  281,718      $  253,873      $  296,053      $  290,443

</TABLE>

                                       18
<PAGE>


Item 7.       Management's  Discussion  and Analysis  of Financial Condition and
              Results of Operations

General

Our revenues are generated from two primary sources:

o        Company restaurant sales (food and beverage sales)
o        Franchise income

Franchise  income consists of franchise  restaurant  royalties  (generally 4% of
each  franchise  restaurant's  monthly  gross sales) and  franchise  fees (which
typically range from $30,000 to $35,000 for each Applebee's  restaurant opened).
Beverage  sales  include  sales  of  alcoholic  beverages,  while  non-alcoholic
beverages are included in food sales.

Certain expenses relate only to company operated restaurants. These include:

o        Food and beverage costs
o        Labor costs
o        Direct and occupancy costs
o        Pre-opening expenses

Other expenses,  such as general and administrative  and amortization  expenses,
relate to both company operated restaurants and franchise operations.

We operate on a 52 or 53 week fiscal year ending on the last Sunday in December.
Our fiscal years ended  December  30,  2001,  December 31, 2000 and December 26,
1999 contained 52, 53 and 52 weeks, respectively,  and are referred to hereafter
as 2001, 2000 and 1999, respectively.

Critical Accounting Policies

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  are based upon our  consolidated  financial  statements,  which were
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States of America.  These  principles  require us to make  estimates and
assumptions  that  affect the  reported  amounts in the  consolidated  financial
statements  and notes thereto.  Actual results may differ from these  estimates,
and such differences may be material to the consolidated  financial  statements.
We believe that the following  significant  accounting policies involve a higher
degree of  judgement or  complexity  (see Note 2 of our  Consolidated  Financial
Statements for a complete discussion of our significant accounting policies).

Property  and   equipment:   Property  and  equipment  are   depreciated   on  a
straight-line  basis over the estimated  useful lives of the assets.  The useful
lives of the assets are based upon  management's  expectations for the period of
time that the asset will be used for the generation of revenue.  We periodically
review the assets for changes in  circumstances  which may impact  their  useful
lives.

Impairment of long-lived  assets: We periodically  review property and equipment
for  impairment  using  historical  cash flows as well as current  estimates  of
future cash flows.  This  assessment  process  requires the use of estimates and
assumptions  which are subject to a high degree of  judgement.  In addition,  we
periodically  assess the  recoverability of goodwill and other intangible assets
which requires us to make assumptions  regarding the future cash flows and other
factors to determine the fair value of the assets. If these  assumptions  change
in the future, we may be required to record impairment charges for these assets.


                                       19
<PAGE>



Other  estimates:  We are  required to make  judgements  and or estimates in the
determination  of several of the accruals that are reflected in our consolidated
financial  statements.  We believe that the following  accruals are subject to a
higher degree of judgement.

We are  periodically  involved in various  legal  actions  arising in the normal
course of  business.  We are required to assess the  probability  of any adverse
judgements  as well as the  potential  ranges of any losses.  We  determine  the
required accruals after a careful review of the facts of each legal action.  Our
accruals may change in the future due to new developments in these matters.

We use  estimates  in the  determination  of the  required  accruals for general
liability, workers' compensation and health insurance. These estimates are based
upon a detailed  examination of historical and industry claims experience.  This
claims  information  may change in the future and may require us to revise these
accruals.

We continually  assess the  collectibility  of our receivables  based on several
factors.  This assessment  requires us to use estimates and make  determinations
regarding  collectibility based upon specific information available to us at the
time.  The  allowance  for  bad  debts  may  change  in  the  future  due to new
developments.

We continually reassess our assumptions and judgements and make adjustments when
significant facts and circumstances dictate.  Historically,  actual results have
not been materially different than the estimates that are described above.

Divestitures

On April 12, 1999, we completed the sale of our Rio Bravo Cantina concept, which
was  comprised  of 65  restaurants.  We  operated  40 of these  restaurants  and
franchisees  operated the remaining 25  restaurants.  We received $47 million in
cash at closing and a $6 million subordinated note for a total of $53 million in
consideration.  The $6 million subordinated note bears interest at 8% and is due
in 2009.  On April 26, 1999, we also  completed  the sale of our four  specialty
restaurants for $12 million in cash. In connection with these two  transactions,
we recognized a loss in the first quarter of 1999 of $9,000,000  ($5,670,000 net
of income taxes).  The following amounts were attributable to both the Rio Bravo
Cantina and specialty restaurants during the 1999 period prior to their sale:

o        Company restaurant sales                               $33,444,000
o        Franchise income                                           $26,000
o        Cost of company restaurant sales                       $30,331,000


                                       20

<PAGE>


On December 13, 1999, we completed the sale of 12 Applebee's  restaurants in the
Philadelphia market for $23,465,000.  An existing Applebee's  franchisee assumed
the  operations of the  restaurants  and future  restaurant  development  in the
market. In connection with this transaction,  we recognized a gain in the fourth
quarter of 1999 of $4,193,000  ($2,650,000  net of income taxes).  The following
amounts were attributable to the 12 Philadelphia restaurants for the 1999 period
prior to their sale:

o        Company restaurant sales                               $22,759,000
o        Cost of company restaurant sales                       $18,568,000

Results of Operations

The  following  table  contains   information   derived  from  our  consolidated
statements of earnings  expressed as a percentage of total  operating  revenues,
except where otherwise noted. Percentages may not add due to rounding.

<TABLE>
<CAPTION>

                                                                           Fiscal Year Ended
                                                            ------------------------------------------------
                                                             December 30,    December 31,     December 26,
                                                                 2001            2000             1999
                                                            --------------  ---------------  ---------------
<S>                                                              <C>             <C>              <C>
  Revenues:
       Company restaurant sales.........................           87.5%           87.7%            89.1%
       Franchise income.................................           12.5            12.3             10.9
                                                            --------------  ---------------  ---------------
          Total operating revenues......................          100.0%          100.0%           100.0%
                                                            ==============  ===============  ===============
  Cost of sales (as a percentage of company restaurant sales):
       Food and beverage................................           27.0%           27.4%            27.5%
       Labor............................................           32.1            31.6             31.6
       Direct and occupancy.............................           25.3            25.0             24.4
       Pre-opening expense..............................            0.3             0.3              0.3
                                                            --------------  ---------------  ---------------
          Total cost of sales...........................           84.7%           84.4%            83.7%
                                                            ==============  ===============  ===============

  General and administrative expenses...................            9.8%            9.4%             9.5%
  Amortization of intangible assets.....................            0.8             0.9              0.9
  Loss on disposition of restaurants and equipment......            0.2             0.2              0.8
                                                            --------------  ---------------  ---------------
  Operating earnings....................................           15.1            15.5             14.2
                                                            --------------  ---------------  ---------------
  Other income (expense):
       Investment income................................            0.2             0.2              0.2
       Interest expense.................................           (1.0)           (1.3)            (1.6)
       Other income (expense)...........................           (0.4)            0.1              0.1
                                                            --------------  ---------------  ---------------
          Total other expense...........................           (1.1)           (1.1)            (1.4)
                                                            --------------  ---------------  ---------------
  Earnings before income taxes and extraordinary item...           14.0            14.5             12.8
  Income taxes..........................................            5.1             5.3              4.7
                                                            --------------  ---------------  ---------------
  Earnings before extraordinary item....................            8.8             9.2              8.1
  Extraordinary loss from early extinguishment
       of debt, net of income taxes.....................           (0.2)            --               --
                                                            --------------  ---------------  ---------------
  Net earnings..........................................            8.7%            9.2%             8.1%
                                                            ==============  ===============  ===============

</TABLE>

                                       21
<PAGE>


Fiscal  Year   Ended  December  30,  2001  Compared   With   Fiscal  Year  Ended
December 31, 2000
--------------------------------------------------------------------------------

Company Restaurant Sales.  Total company restaurant sales increased  $45,705,000
(7.5%)  from  $605,414,000  in 2000 to  $651,119,000  in 2001 due  primarily  to
company restaurant  openings and increases in comparable  restaurant sales which
were partially offset by the fifty-third week in 2000.

Comparable  restaurant sales at company  restaurants  increased by 2.5% in 2001.
Weighted average weekly sales at company restaurants increased 1.1% from $42,183
in 2000 to $42,660 in 2001. These increases were due primarily to an increase in
the average guest check  resulting from the company's  food  promotions and menu
price increases of approximately 2.0%.

Franchise  Income.  Overall franchise income increased  $8,487,000  (10.0%) from
$84,738,000 in 2000 to $93,225,000 in 2001 due primarily to the increased number
of franchise restaurants operating during 2001 as compared to 2000 and increases
in  comparable  restaurant  sales.  This  increase was  partially  offset by the
fifty-third  week in 2000.  Comparable  restaurant  sales and  weighted  average
weekly sales for franchise restaurants increased 3.0% and 2.7%, respectively, in
2001.

Cost of Company  Restaurant  Sales. Food and beverage costs decreased from 27.4%
in 2000 to 27.0% in 2001.  This  decrease was due primarily to the impact of the
menu price increases in 2001, a supply chain management  initiative in 2001, and
higher costs relating to the  implementation of a new menu in the fourth quarter
of 2000.

Labor costs increased from 31.6% in 2000 to 32.1% in 2001. This increase was due
to higher costs  related to  management  staffing  levels and higher  management
incentive compensation.

Direct and  occupancy  costs  increased  from 25.0% in 2000 to 25.3% in 2001 due
primarily to higher  utility  costs and repairs and  maintenance  expense.  This
increase  was  partially  offset  by  a  decrease  in  advertising  costs,  as a
percentage  of sales,  due to  increased  advertising  in 2000  relating  to the
implementation of our new menu in company restaurants.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased  from 9.4% in 2000 to 9.8% in 2001 due  primarily to costs  associated
with our supply chain  management  initiative  and  strategic  brand  assessment
project  as well as higher  incentive  compensation  expense.  These  costs were
partially offset by the absorption of general and administrative expenses over a
larger revenue base.

Interest  Expense.  Interest  expense  decreased  in 2001  compared  to 2000 due
primarily  to a reduction in our debt levels,  the  termination  of our interest
rate  swap  agreements  in  November  2001 and lower  interest  rates in 2001 as
compared to 2000.

Other Expense. Other expense increased in 2001 compared to 2000 due primarily to
a payment of $4,470,000 to terminate our interest rate swap agreements.

Income Taxes.  The effective income tax rate, as a percentage of earnings before
income  taxes,  was 36.8% in both 2000 and 2001.  Beginning in fiscal  2002,  we
anticipate the effective income tax rate will decrease to  approximately  36.5%,
as a percentage of earnings before income taxes.

Extraordinary  Item. In  connection  with the early  extinguishment  of debt, we
wrote-off the remaining  unamortized  portion of the related deferred  financing
costs which is reflected as an extraordinary  loss of $1,249,000,  net of income
taxes, in the accompanying consolidated statement of earnings for 2001.



                                       22
<PAGE>


Fiscal  Year  Ended  December  31,  2000  Compared   With   Fiscal   Year  Ended
December 26, 1999
--------------------------------------------------------------------------------

Company Restaurant Sales.  Total company  restaurant sales increased  $8,660,000
(1.5%) from  $596,754,000  in 1999 to  $605,414,000  in 2000.  Sales for company
restaurants   increased   $42,104,000   (7.5%)  from  $563,310,000  in  1999  to
$605,414,000  in  2000  due  primarily  to  company  restaurant  openings,   the
fifty-third  week in 2000 and increases in comparable  restaurant  sales.  These
increases were partially offset by the sale of the  Philadelphia  restaurants in
December 1999. The remaining  change in total company  restaurant sales resulted
from the sale of the Rio Bravo Cantina and specialty restaurants in April 1999.

Comparable restaurant sales at company Applebee's  restaurants increased by 1.8%
in 2000.  Weighted  average  weekly  sales  at  company  Applebee's  restaurants
increased 1.2% from $41,674 in 1999 to $42,183 in 2000. These increases were due
primarily to an increase in the average guest check resulting from the company's
food promotions and increased sales of appetizers, drinks and desserts.

Franchise Income.  Overall franchise income increased  $11,908,000  (16.4%) from
$72,830,000 in 1999 to $84,738,000 in 2000 due primarily to the increased number
of franchise Applebee's  restaurants  operating during 2000 as compared to 1999,
the  fifty-third  week in 2000  and an  increase  in  franchise  fees  due to an
increase  in  franchise  openings  from 80 in 1999  to 100 in  2000.  Comparable
restaurant  sales and weighted  average  weekly sales for  franchise  Applebee's
restaurants increased 1.6% and 2.1%, respectively, in 2000.

Cost of Company  Restaurant  Sales. Food and beverage costs decreased from 27.5%
in 1999 to  27.4%  in 2000.  This  decrease  was due  primarily  to  operational
improvements  including the implementation of a new theoretical food cost system
in 2000.  In  addition,  the sale of the Rio  Bravo  restaurants  in April  1999
positively  impacted food and beverage  costs.  These  decreases  were partially
offset by  higher  costs  relating  to the  implementation  of a new menu in the
fourth quarter of 2000.

Labor  costs  were  31.6% in both  1999  and  2000.  The  sale of the Rio  Bravo
restaurants in April 1999 and lower  management  incentive  compensation in 2000
positively  impacted  labor costs.  These  decreases  were  partially  offset by
continued  pressure  on  both  hourly  labor  and  management  costs  due to low
unemployment  as  well  as the  highly  competitive  nature  of  the  restaurant
industry.

Direct and occupancy  costs  increased from 24.4% in 1999 to 25.0% in 2000. This
increase  resulted  primarily  from  an  increase  in  advertising  costs,  as a
percentage of sales, relating in part to the implementation of our new menu, and
higher  utility  costs.  These  increases  were  partially  offset by lower rent
expense, as a percentage of sales.

General  and  Administrative  Expenses.   General  and  administrative  expenses
decreased  from 9.5% in 1999 to 9.4% in 2000 due  primarily  to lower  incentive
compensation  expense.  This decrease was partially  offset by the absorption of
general and administrative expenses over a lower revenue base in 2000 due to the
divestiture of the Rio Bravo and Philadelphia restaurants.

Loss on  Disposition  of  Restaurants  and  Equipment.  Loss on  disposition  of
restaurants  and equipment  decreased  from  $5,607,000 in 1999 to $1,265,000 in
2000 due primarily to the loss on the  disposition  of the Rio Bravo Cantina and
specialty  restaurants of $9,000,000  which was partially  offset by the gain on
the sale of the Philadelphia restaurants of $4,193,000 in 1999.

Interest  Expense.  Interest  expense  decreased  in 2000  compared  to 1999 due
primarily  to the  reduction  in debt  resulting  from the sale of the Rio Bravo
Cantina, specialty and Philadelphia restaurants in 1999.

                                       23
<PAGE>


Income Taxes.  The effective income tax rate, as a percentage of earnings before
income taxes, was 36.8% in both 1999 and 2000.

Liquidity and Capital Resources

Our need for  capital  historically  has  resulted  from  the  construction  and
acquisition  of restaurants  and the  repurchase of our common  shares.  For the
foreseeable  future,  this should  continue to be the case. In the past, we have
obtained capital through public stock offerings, debt financing, and our ongoing
operations.  Income from our ongoing  operations  includes cash  generated  from
company and franchise operations, credit from trade suppliers, real estate lease
financing,  and landlord contributions to leasehold  improvements.  We have also
used our common stock as  consideration  in the acquisition of  restaurants.  In
addition,  we have  assumed debt or issued new debt in  connection  with certain
mergers and acquisitions.

Capital  expenditures  were  $46,220,000  in 2000 and  $50,086,000  in 2001.  We
currently expect to open  approximately 25 Applebee's  restaurants,  and capital
expenditures are expected to be between  $60,000,000 and  $65,000,000,  in 2002.
These  expenditures  will primarily be for the  development of new  restaurants,
refurbishment  and  capital  replacement  for  existing  restaurants,   and  the
enhancement of information systems including a new accounting and human resource
information  system.  Because we expect to continue to purchase a portion of our
sites, the amount of actual capital  expenditures  will be dependent upon, among
other things, the proportion of leased versus owned properties.  In addition, if
we open more  restaurants  than we currently  anticipate  or acquire  additional
restaurants, our capital requirements will increase accordingly.

In November  2001,  we  completed  the  refinancing  of our senior term loan and
working  capital  facilities.  The new  bank  credit  agreement  provides  for a
$150,000,000   three-year   unsecured   revolving  credit  facility,   of  which
$25,000,000 may be used for the issuance of letters of credit. The proceeds were
used to repay  indebtedness  related  to our prior  credit  facilities.  The new
facility is subject to various  covenants and  restrictions  which,  among other
things,  require the  maintenance  of  stipulated  fixed  charge,  leverage  and
indebtedness  to  capitalization   ratios,  as  defined,  and  limit  additional
indebtedness  and capital  expenditures  in excess of  specified  amounts.  Cash
dividends  are  limited to  $10,000,000  annually.  The  facility  is subject to
standard  other terms,  conditions,  covenants,  and fees.  We are  currently in
compliance with the covenants contained in our new credit agreement.

     In February 2001, our Board of Directors authorized the repurchase of up to
$55,000,000 of our common stock through 2001,  subject to market  conditions and
applicable restrictions imposed by our then-current credit agreement.  Including
this authorization, our Board of Directors has approved a total of five plans to
repurchase up to $262,500,000 of our common stock, subject to market conditions,
since 1997. We repurchased  1,909,000 shares of our common stock at an aggregate
cost of $44,987,000 in 2001. Since 1997, we have repurchased  13,214,000  shares
of  our  common  stock  at  an  aggregate  cost  of  $240,470,000   under  these
authorizations.  In February 2002, our Board of Directors extended the remaining
$20,600,000 of the 2001 authorization through 2002.

     As of December 30,  2001,  our liquid  assets  totaled  $22,747,000.  These
assets  consisted of cash and cash  equivalents in the amount of $22,048,000 and
short-term  investments in the amount of $699,000.  The working  capital deficit
decreased from $42,995,000 as of December 31, 2000 to $29,747,000 as of December
30,  2001.  This  decrease  was due  primarily  to  increases  in cash  and cash
equivalents.  As of December 30, 2001,  we had  borrowings  of  $70,000,000  and
standby  letters  of credit of  $5,486,000  outstanding  under our  $150,000,000
revolving credit  facility.  We also had a standby letter of credit for $827,000
outstanding with another financial institution.


                                       24
<PAGE>


We believe that our liquid assets and cash generated from  operations,  combined
with borrowings  available under our credit facilities,  will provide sufficient
funds for our  operating,  capital and other  requirements  for the  foreseeable
future.

The  following  table  shows our bank debt  amortization  schedule,  our  future
capital lease  commitments  and our future  operating  lease  commitments  as of
December 30, 2001:
<TABLE>
<CAPTION>

                                  Financial Commitments (in thousands)
----------------------------------------------------------------------------------------------------------
                                                2002            2003            2004           Beyond
                                           --------------- --------------- --------------- ---------------
<S>                                          <C>             <C>             <C>             <C>
Bank Debt................................     $      --       $      --       $   70,000      $      --
Capital Lease Obligations................     $      691      $      715      $      741      $    9,097
Operating Leases.........................     $   14,206      $   14,105      $   13,173      $  129,303


</TABLE>

In addition, we have lease guarantees of approximately $27,800,000 and franchise
guarantees of approximately $400,000 as of December 30, 2001 (see Note 10 to our
Consolidated Financial Statements).

Inflation

Substantial  increases in costs and expenses could impact our operating  results
to the extent such increases cannot be passed along to customers. In particular,
increases  in  food,  supplies,  labor  and  operating  expenses  could  have  a
significant  impact on our operating  results.  We do not believe that inflation
has materially affected our operating results during the past three years.

A majority of our  employees  are paid hourly rates related to federal and state
minimum  wage laws and  various  laws that allow for  credits to that wage.  The
Federal  government  continues  to consider  an  increase  in the minimum  wage.
Several  state  governments  have  increased  the  minimum  wage and other state
governments are also discussing an increased  minimum wage. In the past, we have
been able to pass along cost  increases to  customers  through food and beverage
price  increases,  and  we  will  attempt  to do so in  the  future.  We  cannot
guarantee,  however,  that all future cost  increases  can be  reflected  in our
prices or that increased  prices will be absorbed by customers  without at least
somewhat diminishing customer spending in our restaurants.

New Accounting Pronouncements

In July 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
"Business  Combinations"  and SFAS  No.  142,  "Goodwill  and  Other  Intangible
Assets." SFAS No. 141 requires that all business  combinations  be accounted for
using the purchase  method of accounting  and requires  separate  recognition of
intangible  assets that meet certain  criteria.  This  Statement  applies to all
business combinations after June 30, 2001.

SFAS No.  142  requires  that an  intangible  asset  that is  acquired  shall be
initially  recognized and measured based on its fair value.  This Statement also
provides  that  goodwill  should  not be  amortized,  but  shall be  tested  for
impairment  annually,  or more frequently if  circumstances  indicate  potential
impairment,  through a comparison of fair value to its carrying amount. SFAS No.
142 is effective  for us beginning in fiscal 2002.  Beginning in fiscal 2002, we
will  cease   amortization  of  our  goodwill  and  will  perform  the  required
transitional  goodwill impairment test within six months of adoption of SFAS No.
142.


                                       25


<PAGE>

At the  adoption  date,  we will  have  unamortized  goodwill  of  approximately
$77,965,000,  which will be subject to the  transitional  provisions of SFAS No.
142.  The  termination  of  goodwill   amortization  is  expected  to  eliminate
approximately $5,300,000 of expense in fiscal 2002, subject to identification of
other intangible  assets which would continue to be amortized.  We are currently
performing  the initial  transitional  goodwill  impairment  test which includes
determining  whether  we have an  impairment  charge  to be  recognized.  Such a
transitional impairment charge would be recognized as the cumulative effect of a
change in accounting principle in our consolidated financial statements.

During the first quarter of 2002, we are required to assess the useful lives and
residual values of our other  intangible  assets  acquired in purchase  business
combinations  and make any necessary  adjustments.  Any  intangible  assets with
indefinite  useful lives will be tested for  impairment in accordance  with SFAS
No. 142. The adoption of SFAS No. 142 is not expected to have a material  impact
on our consolidated financial statements.

In October 2001, the Financial  Accounting  Standards Board issued SFAS No. 144,
"Accounting for the Impairment of Long-Lived  Assets" which  supersedes SFAS No.
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 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."  SFAS No. 144 retains many of the  provisions of SFAS
No. 121,  but  addresses  certain  implementation  issues  associated  with that
Statement.  We will adopt SFAS No. 144 beginning in fiscal 2002. The adoption of
SFAS No.  144 will not have a  material  impact  on our  consolidated  financial
statements.

Forward-Looking Statements

The  statements  contained  in the  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of  Operations"  section  regarding  restaurant
development,  capital expenditures and financial commitments are forward-looking
and based on current  expectations.  There are several  risks and  uncertainties
that could cause actual results to differ materially from those described. These
risks  include but are not limited to the impact of intense  competition  in the
casual  dining  segment of the  restaurant  industry  and our ability to control
restaurant  operating costs which are impacted by market  changes,  minimum wage
and other  employment  laws,  food  costs  and  inflation.  For a more  detailed
discussion  of the  principal  factors  that could  cause  actual  results to be
materially  different,  you should read our current  report on Form 8-K which we
filed with the  Securities  and Exchange  Commission  on February  13, 2002.  We
disclaim any obligation to update forward-looking statements.


                                       26
<PAGE>


Item 7A.      Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from fluctuations in interest rates and changes in
commodity  prices.  Our revolving  credit  facility bears interest at either the
bank's  prime rate or LIBOR plus 1.0%,  at our option.  As of December 30, 2001,
the total amount of debt subject to interest rate  fluctuations  was $70,000,000
which was outstanding on our revolving credit facility.  A 1% change in interest
rates would  result in an  increase or decrease in interest  expense of $700,000
per year. We may from time to time enter into  interest rate swap  agreements to
manage the impact of interest rate changes on our earnings.


Item 8.       Financial Statements and Supplementary Data

See the Index to Consolidated Financial Statements on Page F-1.


Item 9.       Changes in  and Disagreements  with Accountants  on Accounting and
              Financial Disclosure

Not applicable.

                                       27
<PAGE>


                                    PART III

Item 10.      Directors and Executive Officers of the Registrant

If you would like information about our executive officers,  you should read the
section  entitled  "Executive  Officers  of the  Registrant"  in  Part I of this
report. If you would like information  about our Directors,  you should read the
Proxy  Statement for the Annual Meeting of  Stockholders  to be held on or about
May 9, 2002. We incorporate that Proxy Statement in this document by reference.

Item 11.      Executive Compensation

If you would like information about our executive compensation,  you should read
the  information  under  the  caption  "Executive  Compensation"  in  the  Proxy
Statement for the Annual Meeting of  Stockholders  to be held on or about May 9,
2002. We incorporate that information in this document by reference.

Item 12.      Security Ownership of Certain Beneficial Owners and Management

If you  would  like  information  about the stock  owned by our  management  and
certain large  stockholders,  you should read the information  under the caption
"Stock  Ownership of Officers,  Directors and Major  Stockholders"  in the Proxy
Statement for the Annual Meeting of  Stockholders  to be held on or about May 9,
2002. We incorporate that information in this document by reference.

Item 13.      Certain Relationships and Related Transactions

If you would like information about certain transactions which we have completed
or  certain  relationships  which we have  entered  into,  you  should  read the
information under the caption "Certain  Transactions" in the Proxy Statement for
the  Annual  Meeting  of  Stockholders  to be held on or about May 9,  2002.  We
incorporate that information in this document by reference.


                                       28

<PAGE>


                                     PART IV

Item 14.      Exhibits and Reports on Form 8-K

(a)      List of documents filed as part of this report:

         1.      Financial Statements:

                 The financial statements are listed in the accompanying "Index
                 to Consolidated Financial Statements" on Page F-1.

         2.      Exhibits:

                 The exhibits filed with or  incorporated by  reference in  this
                 report are listed on the Exhibit Index beginning on page E-1.

(b)      Reports on Form 8-K:

         We filed a report  on Form  8-K on  October  3,  2001,  announcing  the
         webcast  of  our   presentations  at  the  RBC  Dain  Rauscher  Wessels
         Restaurant and Specialty  Foods  Conference and the Robertson  Stephens
         Consumer Conference.

         We filed a report on Form 8-K on October 3, 2001,  reporting  September
         2001  comparable  sales and updating  our outlook for the  remainder of
         2001.

         We filed a report  on Form 8-K on  October  25,  2001,  announcing  the
         broadcast of our third quarter 2001 earnings  conference  call over the
         Internet.

         We filed a report on Form 8-K on October  31,  2001,  announcing  third
         quarter  2001  diluted  earnings  per share of 44 cents  and  providing
         guidance for fiscal year 2002.

         We filed a report  on Form 8-K on  November  7,  2001,  announcing  the
         completion of a new credit agreement.

         We filed a report on Form 8-K on November 29, 2001,  reporting November
         2001 comparable sales.

         We filed a report  on Form 8-K on  December  14,  2001,  announcing  an
         increased annual dividend.



                                       29
<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.

                                       APPLEBEE'S INTERNATIONAL, INC.


Date:  March 26, 2002               By:  /s/   Lloyd L. Hill
     -------------------               ------------------------------------
                                       Lloyd L. Hill
                                       Chairman and Chief Executive Officer


                                POWER OF ATTORNEY

KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below  constitutes and appoints Lloyd L. Hill and Robert T. Steinkamp,  and each
of them,  his true and lawful  attorney-in-fact  and  agent,  with full power of
substitution  and  resubstitution,  for him and in his name, place and stead, in
any and all  capacities,  to sign any  amendments to this Form 10-K, and to file
the same,  with exhibits  thereto and other  documents in connection  therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitute or substitutes,  may do or cause to
be done by virtue hereof.

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 and on the dates indicated.


By:  /s/   Lloyd L. Hill                           Date:  March 26, 2002
     -------------------------------------              ------------------
     Lloyd L. Hill
     Director, Chairman of the Board  and Chief
      Executive Officer
     (principal executive officer)

By:  /s/   Steven K. Lumpkin                       Date:  March 26, 2002
     -------------------------------------              ------------------
     Steven K. Lumpkin
     Executive Vice President and Chief
      Financial Officer
     (principal financial and accounting officer)

By:  /s/   George D. Shadid                        Date:  March 26, 2002
     -------------------------------------              ------------------
     George D. Shadid
     Director, Executive Vice President and
      Chief Operating Officer



                                       30
<PAGE>



By:  /s/   Erline Belton                           Date:  March 26, 2002
     -------------------------------------              ------------------
     Erline Belton
     Director


By:  /s/   Douglas R. Conant                       Date:  March 26, 2002
     -------------------------------------              ------------------
     Douglas R. Conant
     Director


By:  /s/   D. Patrick Curran                       Date:  March 26, 2002
     -------------------------------------              ------------------
     D. Patrick Curran
     Director


By:  /s/   Eric L. Hansen                          Date:  March 26, 2002
     -------------------------------------              ------------------
     Eric L. Hansen
     Director


By:  /s/   Mark S. Hansen                          Date:  March 26, 2002
     -------------------------------------              ------------------
     Mark S. Hansen
     Director


By:  /s/   Jack P. Helms                           Date:  March 26, 2002
     -------------------------------------              ------------------
     Jack P. Helms
     Director


By:  /s/   Burton M. Sack                          Date:  March 26, 2002
      ------------------------------------              ------------------
     Burton M. Sack
     Director



                                       31


<PAGE>

                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                   Index to Consolidated Financial Statements

<TABLE>
<CAPTION>

                                                                                                              Page


<S>                                                                                                          <C>
   Independent Auditors' Report.............................................................................  F-2

   Consolidated Balance Sheets as of December 30, 2001 and
       December 31, 2000  ..................................................................................  F-3

   Consolidated Statements of Earnings for the Fiscal Years Ended
       December 30, 2001, December 31, 2000 and December 26, 1999...........................................  F-4

   Consolidated Statements of Stockholders' Equity for the Fiscal Years
       Ended December 30, 2001, December 31, 2000 and December 26, 1999.....................................  F-5

   Consolidated Statements of Cash Flows for the Fiscal Years Ended
       December 30, 2001, December 31, 2000 and December 26, 1999...........................................  F-6

   Notes to Consolidated Financial Statements...............................................................  F-8


</TABLE>




                                      F-1

<PAGE>


                          Independent Auditors' Report


Applebee's International, Inc.:

We have  audited the  accompanying  consolidated  balance  sheets of  Applebee's
International, Inc. and subsidiaries (the "Company") as of December 30, 2001 and
December  31,  2000,  and  the  related  consolidated  statements  of  earnings,
stockholders'  equity and cash flows for each of the three  fiscal  years in the
period  ended   December  30,  2001.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  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.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of Applebee's International,  Inc. and
subsidiaries  at December 30, 2001 and  December  31,  2000,  and the results of
their  operations and their cash flows for each of the three fiscal years in the
period  ended  December 30,  2001,  in  conformity  with  accounting  principles
generally accepted in the United States of America.





Deloitte & Touche LLP

Kansas City, Missouri
February 13, 2002



                                      F-2
<PAGE>


                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>

                                                                                       December 30,       December 31,
                                                                                          2001               2000
                                                                                      --------------     -------------
                                                       ASSETS
<S>                                                                                   <C>                <C>
Current assets:
     Cash and cash equivalents......................................................   $  22,048          $  10,763
     Short-term investments, at market value........................................         699              1,312
     Receivables, net of allowance..................................................      22,827             19,760
     Inventories....................................................................      10,165             12,616
     Prepaid and other current assets...............................................      12,260              6,389
                                                                                      --------------     -------------
        Total current assets........................................................      67,999             50,840
Property and equipment, net.........................................................     330,924            314,216
Goodwill, net.......................................................................      77,965             83,265
Franchise interest and rights, net..................................................       2,449              2,949
Other assets........................................................................      21,074             20,437
                                                                                      --------------     -------------
                                                                                       $ 500,411          $ 471,707
                                                                                      ==============     =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of long-term debt..............................................   $      43          $     894
     Accounts payable...............................................................      22,196             26,556
     Accrued expenses and other current liabilities.................................      71,551             62,511
     Accrued dividends..............................................................       2,977              2,774
     Accrued income taxes...........................................................         979              1,100
                                                                                      --------------     -------------
        Total current liabilities...................................................      97,746             93,835
                                                                                      --------------     -------------
Non-current liabilities:
     Long-term debt - less current portion..........................................      74,525             90,461
     Franchise deposits.............................................................       1,515              1,596
     Deferred income taxes..........................................................       1,442              4,097
                                                                                      --------------     -------------
        Total non-current liabilities...............................................      77,482             96,154
                                                                                      --------------     -------------
        Total liabilities...........................................................     175,228            189,989
                                                                                      --------------     -------------
Commitments and contingencies (Notes 6, 7 and 10)
Stockholders' equity:
     Preferred stock - par value $0.01 per share:  authorized - 1,000,000 shares;
        no shares issued............................................................          --                 --
     Common stock - par value $0.01 per share:  authorized - 125,000,000 shares;
        issued - 48,225,358 shares in 2001 and 2000.................................         482                482
     Additional paid-in capital.....................................................     180,802            172,037
     Retained earnings..............................................................     355,191            293,772
     Accumulated other comprehensive income, net of income taxes....................          14                 39
                                                                                      --------------     -------------
                                                                                         536,489            466,330
     Treasury stock - 11,014,733 shares in 2001 and 10,395,795 shares in 2000, at
        cost........................................................................    (211,306)          (184,612)
                                                                                      --------------     -------------
        Total stockholders' equity..................................................     325,183            281,718
                                                                                      --------------     -------------
                                                                                       $ 500,411          $ 471,707
                                                                                      ==============     =============

</TABLE>





                 See notes to consolidated financial statements.

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                    (in thousands, except per share amounts)


                                                                                  Fiscal Year Ended
                                                                  --------------------------------------------------
                                                                   December 30,       December 31,      December 26,
                                                                      2001              2000                1999
                                                                  --------------     -------------     -------------
<S>                                                               <C>                <C>               <C>
Revenues:
     Company restaurant sales................................      $ 651,119          $ 605,414         $ 596,754
     Franchise income........................................         93,225             84,738            72,830
                                                                  --------------     -------------     -------------
        Total operating revenues.............................        744,344            690,152           669,584
                                                                  --------------     -------------     -------------
Cost of company restaurant sales:
     Food and beverage.......................................        175,977            166,014           163,865
     Labor...................................................        208,996            191,402           188,538
     Direct and occupancy....................................        164,965            151,611           145,747
     Pre-opening expense.....................................          1,701              1,659             1,582
                                                                  --------------     -------------     -------------
        Total cost of company restaurant sales...............        551,639            510,686           499,732
                                                                  --------------     -------------     -------------

General and administrative expenses..........................         72,935             65,060            63,338
Amortization of intangible assets............................          5,851              5,934             5,997
Loss on disposition of restaurants and equipment.............          1,492              1,265             5,607
                                                                  --------------     -------------     -------------
Operating earnings...........................................        112,427            107,207            94,910
                                                                  --------------     -------------     -------------
Other income (expense):
     Investment income.......................................          1,650              1,484             1,195
     Interest expense........................................         (7,456)            (9,304)          (10,814)
     Other income (expense) (Note 7).........................         (2,744)               551               444
                                                                  --------------     -------------     -------------
        Total other expense..................................         (8,550)            (7,269)           (9,175)
                                                                  --------------     -------------     -------------
Earnings before income taxes and extraordinary item..........        103,877             99,938            85,735
Income taxes.................................................         38,227             36,777            31,537
                                                                  --------------     -------------     -------------
Earnings before extraordinary item...........................         65,650             63,161            54,198
Extraordinary loss from early extinguishment
     of debt, net of income taxes (Note 7)...................         (1,249)                --                --
                                                                  --------------     -------------     -------------
Net earnings.................................................      $  64,401          $  63,161         $  54,198
                                                                  ==============     =============     =============

Basic earnings per common share:
     Basic earnings before extraordinary item................      $    1.77          $    1.61         $    1.27
     Extraordinary item......................................          (0.03)                --                --
                                                                  --------------     -------------     -------------
Basic net earnings per common share..........................      $    1.74          $    1.61         $    1.27
                                                                  ==============     =============     =============

Diluted earnings per common share:
     Diluted earnings before extraordinary item..............      $    1.73          $    1.60         $    1.26
     Extraordinary item......................................          (0.03)                --                --
                                                                  --------------     -------------     -------------
Diluted net earnings per common share........................      $    1.70          $    1.60         $    1.26
                                                                  ==============     =============     =============

Basic weighted average shares outstanding....................         37,008             39,228            42,605
                                                                  ==============     =============     =============
Diluted weighted average shares outstanding..................         37,918             39,447            42,902
                                                                  ==============     =============     =============

</TABLE>










                 See notes to consolidated financial statements.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      (in thousands, except share amounts)


                                                                                              Accumulated
                                                                                                 Other
                                                      Common Stock     Additional            Comprehensive                Total
                                                  -------------------   Paid-In    Retained      Income     Treasury   Stockholders'
                                                    Shares    Amount    Capital    Earnings      (Loss)       Stock         Equity
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
<S>                                               <C>         <C>     <C>         <C>         <C>          <C>         <C>
Balance, December 27, 1998.......................  48,225,358  $  482  $ 163,651   $181,849    $    113     $ (50,042)  $  296,053

Comprehensive income:
   Net earnings..................................        --        --        --      54,198          --           --        54,198
   Change in unrealized gain on short-term
     investments, net of income taxes............        --        --        --         --          (63)          --           (63)
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
Total comprehensive income.......................        --        --        --      54,198         (63)          --        54,135
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
   Purchases of treasury stock...................        --        --        --         --           --      (102,959)    (102,959)
   Dividends on common stock, $0.07 per share....        --        --        --      (2,660)         --           --        (2,660)
   Stock options exercised and related tax benefit       --        --      3,773        --           --         3,252        7,025
   Shares issued under employee stock and 401(k)
     plans.......................................        --        --      1,063        --           --         1,113        2,176
   Restricted shares awarded under equity
     incentive plan, net of cancellations........        --        --        121        --           --             6          127
   Unearned compensation relating to restricted
     shares......................................        --        --        431        --           --           --           431
   Notes receivable from officers for stock sales        --        --       (455)       --           --           --          (455)
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
Balance, December 26, 1999.......................  48,225,358     482    168,584    233,387          50      (148,630)     253,873

Comprehensive income:
   Net earnings..................................        --        --        --      63,161          --           --        63,161
   Change in unrealized gain on short-term
     investments, net of income taxes............        --        --        --         --          (11)          --           (11)
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
Total comprehensive income.......................        --        --        --      63,161         (11)          --        63,150
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
   Purchases of treasury stock...................        --        --        --         --           --       (43,192)     (43,192)
   Dividends on common stock, $0.07 per share....        --        --        --      (2,776)         --           --        (2,776)
   Stock options exercised and related tax benefit       --        --      2,298        --           --         4,201        6,499
   Shares issued under employee stock and 401(k)
     plans.......................................        --        --        760        --           --         2,066        2,826
   Restricted shares awarded under equity
     incentive plan, net of cancellations........        --        --        556        --           --           943        1,499
   Unearned compensation relating to restricted
     shares......................................        --        --        350        --           --           --           350
   Notes receivable from officers for stock sales,
     net of repayments...........................        --        --       (511)       --           --           --          (511)
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
Balance, December 31, 2000.......................  48,225,358     482    172,037    293,772          39      (184,612)     281,718

Comprehensive income:
   Net earnings..................................        --        --        --      64,401          --           --        64,401
   Change in unrealized gain on short-term
     investments, net of income taxes............        --        --        --         --          (25)          --           (25)
   Transition adjustment related to financial
     instruments, net of taxes...................        --        --        --         --         (250)          --          (250)
   Change in fair value of derivative instruments        --        --        --         --       (4,220)          --        (4,220)
   Adjustment for termination of interest rate
     swap agreements.............................        --        --        --         --        4,470           --         4,470
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
Total comprehensive income.......................        --        --        --      64,401         (25)          --        64,376
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
   Purchases of treasury stock...................        --        --        --         --           --       (44,987)     (44,987)
   Dividends on common stock, $0.08 per share....        --        --        --      (2,982)         --           --        (2,982)
   Stock options exercised and related tax benefit       --        --      7,472        --           --        16,518       23,990
   Shares issued under employee stock and 401(k)
     plans.......................................        --        --        870        --           --         1,392        2,262
   Restricted shares awarded under equity
     incentive plan, net of cancellations........        --        --       (254)       --           --           383          129
   Unearned compensation relating to restricted
     shares......................................        --        --        326        --           --           --           326
   Notes receivable from officers for stock sales,
     net of repayments...........................        --        --        351        --           --           --           351
                                                  ----------- ------- ----------- ---------- ------------- ----------- -------------
Balance, December 30, 2001.......................  48,225,358  $  482   $180,802   $355,191    $     14     $(211,306)  $  325,183
                                                  =========== ======= =========== ========== ============= =========== =============

</TABLE>

                 See notes to consolidated financial statements.

                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)


                                                                                      Fiscal Year Ended
                                                                       ----------------------------------------------
                                                                        December 30,    December 31,    December 26,
                                                                            2001            2000            1999
                                                                       --------------  --------------  --------------
<S>                                                                    <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net earnings.....................................................  $  64,401       $  63,161       $  54,198
     Adjustments to reconcile net earnings to net cash
       provided by operating activities:
        Depreciation and amortization.................................     31,780          30,208          28,930
        Amortization of intangible assets.............................      5,851           5,934           5,997
        Write-off of deferred financing costs.........................      1,976              --              --
        Amortization of deferred financing costs......................        648             734             678
        Deferred income tax provision (benefit).......................     (4,520)            118            (244)
        Loss on disposition of restaurants and equipment..............      1,492           1,265           5,607
        Income tax benefit from exercise of stock options.............      4,807             554             998
     Changes in assets and liabilities (exclusive of effects
        of divestitures):
        Receivables...................................................     (3,067)         (8,538)           (108)
        Inventories...................................................      2,451          (1,369)         (5,781)
        Prepaid and other current assets..............................     (3,992)            393             508
        Accounts payable..............................................     (4,360)          9,590            (461)
        Accrued expenses and other current liabilities................     10,068          10,353           9,937
        Accrued income taxes..........................................       (121)           (167)          1,182
        Franchise deposits............................................        (81)           (169)           (374)
        Other.........................................................     (2,242)         (1,224)            700
                                                                       --------------  --------------  --------------
        NET CASH PROVIDED BY OPERATING ACTIVITIES.....................    105,091         110,843         101,767
                                                                       --------------  --------------  --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment..............................    (50,086)        (46,220)        (53,945)
     Equity investment in unaffiliated company........................         --          (2,000)             --
     Proceeds from sale of restaurants and equipment..................        433           1,038          81,884
     Purchases of short-term investments..............................       (200)           (100)             --
     Maturities and sales of short-term investments...................        774           1,325           2,200
                                                                       --------------  --------------  --------------
        NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES..............    (49,079)        (45,957)         30,139
                                                                       --------------  --------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Purchases of treasury stock......................................    (44,987)        (43,192)       (102,959)
     Dividends paid...................................................     (2,779)         (2,662)         (2,659)
     Issuance of common stock upon exercise of stock options..........     19,183           5,945           6,027
     Shares sold under employee stock purchase plan...................      1,234           1,136             944
     Proceeds from issuance of long-term debt.........................     70,000              --          44,604
     Deferred financing costs relating to issuance of long-term debt..       (577)             --              --
     Payments on long-term debt.......................................    (86,801)        (16,777)        (78,203)
                                                                       --------------  --------------  --------------
        NET CASH USED BY FINANCING ACTIVITIES.........................    (44,727)        (55,550)       (132,246)
                                                                       --------------  --------------  --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................     11,285           9,336            (340)
CASH AND CASH EQUIVALENTS, beginning of period........................     10,763           1,427           1,767
                                                                       --------------  --------------  --------------
CASH AND CASH EQUIVALENTS, end of period..............................  $  22,048       $  10,763       $   1,427
                                                                       ==============  ==============  ==============

</TABLE>

                 See notes to consolidated financial statements.

                                      F-6
<PAGE>


                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                               Fiscal Year Ended
                                                             ------------------------------------------------------
                                                               December 30,      December 31,       December 26,
                                                                   2001              2000               1999
                                                             ----------------- -----------------  -----------------

<S>                                                            <C>               <C>                <C>
Supplemental disclosures of cash flow
information:
     Cash paid during the year for:
       Income taxes....................................         $     40,147      $     36,278       $     29,629
                                                             ================= =================  =================
       Interest........................................         $      7,728      $      8,188       $     10,651
                                                             ================= =================  =================

</TABLE>

Supplemental Disclosures of Noncash Investing and Financing Activities:

We received a $6,000,000  subordinated  note in connection  with the sale of the
Rio Bravo Cantina  restaurants in April 1999 (see Note 3), which is due in April
2009.

Disclosure of Accounting Policy:

For purposes of the consolidated statements of cash flows, we consider all
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents.




                               See notes to consolidated financial statements.


                                      F-7
<PAGE>


                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    Organization

Applebee's  International,  Inc. and our  subsidiaries  develop,  franchise  and
operate casual dining restaurants under the name "Applebee's  Neighborhood Grill
& Bar".  As of  December  30,  2001,  there were 1,392  Applebee's  restaurants.
Franchisees operated 1,082 of these restaurants and 310 restaurants were company
operated.  These  restaurants were located in 49 states and eight  international
countries.

2.    Summary of Significant Accounting Policies

Principles of consolidation:  The consolidated  financial statements include our
accounts and the accounts of our wholly-owned  subsidiaries.  We have eliminated
all intercompany profits, transactions and balances.

Fiscal year:  Our fiscal year ends on the last Sunday of the calendar  year. The
fiscal years ended  December  30, 2001,  December 31, 2000 and December 26, 1999
contained 52, 53 and 52 weeks, respectively. These fiscal years will be referred
to as 2001, 2000 and 1999, respectively.

Short-term investments:  Short-term investments are comprised of certificates of
deposit, state and municipal bonds, and preferred stocks. We determine gains and
losses from sales using the specific  identification  method. As of December 30,
2001, we have classified all short-term investments as available-for-sale.

Financial  instruments:  Our financial  instruments  as of December 30, 2001 and
December  31,  2000  consist of cash  equivalents,  short-term  investments  and
long-term debt,  excluding  capitalized lease obligations.  We also had interest
rate swaps (see Note 7) as of December  31, 2000.  The  carrying  amount of cash
equivalents  approximates  fair  value  because of the short  maturity  of those
instruments.  We based the carrying  amount of short-term  investments on quoted
market  prices.  We  based  the  fair  value of our  long-term  debt,  excluding
capitalized lease  obligations,  on quotations made on similar issues.  The fair
value of these financial instruments,  except interest rate swaps,  approximates
the carrying amounts reported in the consolidated balance sheets.

Interest  rate swap  agreements:  Interest  rate swaps were not  required  to be
reflected  in the  consolidated  financial  statements  at fair  value  prior to
adoption of  Statement  of  Financial  Accounting  Standards  ("SFAS")  No. 133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities."  Effective
January 1, 2001,  we adopted the  provisions of SFAS No. 133, as amended by SFAS
Nos. 137 and 138,  which  requires an entity to  recognize  all  derivatives  as
either assets or liabilities  on the balance sheet.  The Statement also requires
changes in the fair value of the derivative instruments to be recorded in either
net earnings or other  comprehensive  income depending on their intended use. In
1998, we entered into  interest  rate swap  agreements to manage our exposure to
interest rate fluctuations. The swap agreements effectively fixed the underlying
three-month  LIBOR  interest rate on  $75,000,000  of our  then-existing  senior
credit  facilities to rates ranging from 5.91% to 6.05%. The interest rate swaps
met the criteria for hedge  accounting  under the  Statement.  We recognized the
differential which we paid or received over the term of the swap agreements as a
component of interest expense. In November 2001, we terminated our interest rate
swap  agreements  in  connection  with  the  refinancing  of  our  prior  credit
facilities.  The  costs  relating  to the  termination  of these  agreements  of
$4,470,000  are  reflected in other  expense in the  consolidated  statements of
income. These interest rate swap agreements were the only derivative instruments
held during fiscal year 2001 as defined under SFAS No. 133.

Inventories:  We state  inventories  at the lower of cost,  using the  first-in,
first-out method, or market.



                                      F-8
<PAGE>


Pre-opening  expense:  We expense  direct  training  and other costs  related to
opening new or relocated restaurants in the month of opening.

Property and  equipment:  We state  property and equipment at  historical  cost.
Depreciation is provided primarily on a straight-line  method over the estimated
useful lives of the assets. Leasehold improvements are amortized over the lesser
of the lease term,  including  renewal options,  or the estimated useful life of
the related  asset.  The general  ranges of  original  depreciable  lives are as
follows:

o        Buildings                          20 years
o        Leasehold improvements             15-20 years
o        Furniture and equipment            2-7 years

We  record  capitalized  interest  in  connection  with the  development  of new
restaurants and amortize it over the estimated useful life of the related asset.
We capitalized  $523,000 in interest costs during 2001, $375,000 during 2000 and
$407,000 during 1999.

Goodwill:  Goodwill  represents the excess of cost over fair market value of net
assets we have  acquired.  Through  2001,  we  amortized  goodwill  over periods
ranging from 15 to 20 years on a straight-line basis.  Beginning in fiscal 2002,
we will cease  amortization  of our  goodwill in  accordance  with SFAS No. 142,
"Goodwill  and Other  Intangible  Assets" (see "New  accounting  pronouncements"
below).  Accumulated  amortization as of December 30, 2001 was $26,864,000,  and
accumulated amortization as of December 31, 2000 was $21,563,000.

Impairment of long-lived  assets:  We review  long-lived  assets for  impairment
whenever  events or changes in  circumstances  indicate that the carrying amount
may not be recoverable. We analyze potential impairments of tangible assets on a
restaurant-by-restaurant  basis.  In 2000,  we adjusted  the  carrying  value of
certain  assets based on their  historical  cash flows and current  estimates of
future cash flows. The related pre-tax charge of $263,000 is included in loss on
disposition  of  restaurants  and  equipment  in the  accompanying  consolidated
statement of earnings.  We determined the estimated  fair value using  financial
information available to us.

Franchise   interest  and  rights:   Franchise  interest  and  rights  represent
allocations  of  purchase  price to  either  restaurants  we have  purchased  or
franchise operations we have acquired.  We amortize the allocated costs over the
estimated life of the restaurants or the franchise agreements on a straight-line
basis ranging from 7 to 20 years.  Accumulated  amortization  as of December 30,
2001 was $8,057,000, and as of December 31, 2000, it was $7,557,000.

Franchise  revenues:  Franchise  revenues are deferred  until we have  performed
substantially all of our obligations as franchisor.  Franchise fees, included in
franchise income in the consolidated statements of earnings,  totaled $3,800,000
for 2001, $3,652,000 for 2000 and $2,897,000 for 1999.

Advertising   costs:  We  expense  most  advertising   costs  for  company-owned
restaurants as we incur them, but we expense the production costs of advertising
the first time the  advertising  takes  place.  Advertising  expense  related to
company-owned  restaurants was  $32,259,000  for 2001,  $31,014,000 for 2000 and
$28,340,000 for 1999.

Stock-based compensation:  We have adopted the disclosure provisions of SFAS No.
123, "Accounting for Stock-Based  Compensation." The Statement encourages rather
than requires  companies to adopt a method that accounts for stock  compensation
awards  based on their  estimated  fair  value  at the  date  they are  granted.
Companies are permitted, however, to account for stock compensation awards under
Accounting  Principles  Board  ("APB")  Opinion No. 25.  Opinion No. 25 requires
compensation  cost to be  recognized  based on the excess,  if any,  between the
quoted market price of the stock at the date of grant and the amount an employee
must pay to acquire the stock.  We have elected to continue to apply APB Opinion
No. 25, and we have disclosed the pro forma net earnings and earnings per share,
determined as if the fair value method had been applied, in Note 12.





                                      F-9
<PAGE>

Earnings  per share:  We compute  basic  earnings  per share by dividing  income
available to common shareholders by the weighted average number of common shares
outstanding for the reporting  period.  Diluted  earnings per share reflects the
potential  dilution that could occur if holders of options or other contracts to
issue common stock  exercised or converted  their  holdings  into common  stock.
Outstanding  stock  options and  equity-based  compensation  represent  the only
dilutive  effects  on  weighted  average  shares.  The chart  below  presents  a
reconciliation between basic and diluted weighted average shares outstanding and
the related  earnings per share.  All references to the number of shares and per
share  amounts of common  stock have been  restated  to reflect  the stock split
declared  in May 2001 (Note  11).  All  amounts  in the chart,  except per share
amounts, are expressed in thousands.
<TABLE>
<CAPTION>

                                                                2001              2000              1999
                                                          ----------------  ----------------  ----------------

<S>                                                        <C>               <C>               <C>
      Net earnings.......................................   $     64,401      $     63,161      $     54,198
                                                          ================  ================  ================

      Basic weighted average shares outstanding..........         37,008            39,228            42,605
      Dilutive effect of stock options and
          equity-based compensation......................            910               219               297
                                                          ----------------  ----------------  ----------------
      Diluted weighted average shares outstanding........         37,918            39,447            42,902
                                                          ================  ================  ================

      Basic net earnings per common share................   $       1.74      $       1.61      $       1.27
                                                          ================  ================  ================
      Diluted net earnings per common share..............   $       1.70      $       1.60      $       1.26
                                                          ================  ================  ================

</TABLE>


We excluded  stock options with exercise  prices greater than the average market
price of our common stock for the  applicable  periods from the  computation  of
diluted weighted average shares outstanding. There were approximately 112,000 of
these options for 2001, 1,084,000 options for 2000 and 12,000 options for 1999.

Pervasiveness  of  estimates:   The  preparation  of  financial   statements  in
conformity with accounting principles generally accepted in the United States of
America requires  management to make estimates and assumptions.  These estimates
affect the  reported  amounts  of assets  and  liabilities,  the  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.

New accounting pronouncements:  In July 2001, the Financial Accounting Standards
Board issued SFAS No. 141,  "Business  Combinations" and SFAS No. 142, "Goodwill
and  Other  Intangible   Assets."  SFAS  No.  141  requires  that  all  business
combinations  be  accounted  for using the  purchase  method of  accounting  and
requires  separate  recognition of intangible assets that meet certain criteria.
This Statement applies to all business combinations after June 30, 2001.

SFAS No.  142  requires  that an  intangible  asset  that is  acquired  shall be
initially  recognized and measured based on its fair value.  This Statement also
provides  that  goodwill  should  not be  amortized,  but  shall be  tested  for
impairment  annually,  or more frequently if  circumstances  indicate  potential
impairment,  through a comparison of fair value to its carrying amount. SFAS No.
142 is effective  for us beginning in fiscal 2002.  Beginning in fiscal 2002, we
will  cease   amortization  of  our  goodwill  and  will  perform  the  required
transitional  goodwill impairment test within six months of adoption of SFAS No.
142.


                                      F-10


<PAGE>


At the  adoption  date,  we will  have  unamortized  goodwill  of  approximately
$77,965,000,  which will be subject to the  transitional  provisions of SFAS No.
142.  The  termination  of  goodwill   amortization  is  expected  to  eliminate
approximately $5,300,000 of expense in fiscal 2002, subject to identification of
other intangible  assets which would continue to be amortized.  We are currently
performing  the initial  transitional  goodwill  impairment  test which includes
determining  whether  we have an  impairment  charge  to be  recognized.  Such a
transitional impairment charge would be recognized as the cumulative effect of a
change in accounting principle in our consolidated financial statements.

During the first quarter of 2002, we are required to assess the useful lives and
residual values of our other  intangible  assets  acquired in purchase  business
combinations  and make any necessary  adjustments.  Any  intangible  assets with
indefinite  useful lives will be tested for  impairment in accordance  with SFAS
No. 142. The adoption of SFAS No. 142 is not expected to have a material  impact
on our consolidated financial statements.

In October 2001, the Financial  Accounting  Standards Board issued SFAS No. 144,
"Accounting for the Impairment of Long-Lived  Assets" which  supersedes SFAS No.
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 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."  SFAS No. 144 retains many of the  provisions of SFAS
No. 121,  but  addresses  certain  implementation  issues  associated  with that
Statement.  We will adopt SFAS No. 144 beginning in fiscal 2002. The adoption of
SFAS No.  144 will not have a  material  impact  on our  consolidated  financial
statements.

Reclassifications:  We have made certain  reclassifications  to the consolidated
financial statements to conform to the 2001 presentation.

3.       Divestitures

On April 12, 1999, we completed the sale of our Rio Bravo Cantina concept, which
was  comprised  of 65  restaurants.  We  operated  40 of these  restaurants  and
franchisees  operated the remaining 25  restaurants.  We received $47 million in
cash at closing and a $6 million subordinated note for a total of $53 million in
consideration.  The $6 million subordinated note bears interest at 8% and is due
in 2009.  On April 26, 1999, we also  completed  the sale of our four  specialty
restaurants for $12 million in cash. The following  amounts were attributable to
both the Rio Bravo  Cantina  and  specialty  restaurants  during the 1999 period
prior to their sale:

o        Company restaurant sales                    $33,444,000
o        Franchise income                                $26,000
o        Cost of company restaurant sales            $30,331,000

In accordance with SFAS No. 121, we recorded a loss on disposition of $9,000,000
($5,670,000  net of income  taxes) in the first  quarter of 1999 to reflect  the
difference  between  the  carrying  value  of the net  assets  disposed  and the
estimated proceeds from the sale transactions.  We discontinued depreciation and
amortization  on the  long-lived  assets  to be  disposed  in  February  1999 in
anticipation of the sale of these restaurants.

On December 13, 1999, we completed the sale of 12 Applebee's  restaurants in the
Philadelphia market for $23,465,000.  An existing Applebee's  franchisee assumed
the  operations of the  restaurants  and future  restaurant  development  in the
market.  If  the  franchisee   achieves  certain  future  sales  levels  in  the
Philadelphia  market, the agreement requires that he pay us additional  amounts.
We discontinued  depreciation  and  amortization on the long-lived  assets to be
disposed in August 1999 in anticipation of the


                                      F-11
<PAGE>


sale of these restaurants.  In connection with this transaction, we recognized a
gain in the  fourth  quarter  of 1999 of  $4,193,000  ($2,650,000  net of income
taxes).   The  following  amounts  were  attributable  to  the  12  Philadelphia
restaurants prior to their sale:

o        Company restaurant sales                    $22,759,000
o        Cost of company restaurant sales            $18,568,000

4.    Receivables

Receivables are comprised of the following (in thousands):
<TABLE>
<CAPTION>
                                                                           December 30,        December 31,
                                                                               2001                2000
                                                                         -----------------   -----------------
<S>                                                                        <C>                 <C>
      Franchise royalty, advertising and trade receivables.............     $     21,828        $     17,622
      Credit card receivables..........................................            3,769               3,147
      Franchise fee receivables........................................              183                 244
      Interest and dividends receivable................................               34                  27
      Other............................................................            1,356               1,857
                                                                         -----------------   -----------------
                                                                                  27,170              22,897
      Less allowance for bad debts.....................................            4,343               3,137
                                                                         -----------------   -----------------
                                                                            $     22,827        $     19,760
                                                                         =================   =================
</TABLE>


The bad debts  provision  totaled  $1,253,000 for 2001,  $1,376,000 for 2000 and
$981,000 for 1999.  We had  write-offs  against the  allowance  for bad debts of
$47,000 during 2001, $674,000 during 2000 and $111,000 during 1999.

5.    Other Assets

Other assets are comprised of the following (in thousands):
<TABLE>
<CAPTION>

                                                                           December 30,        December 31,
                                                                               2001                2000
                                                                         -----------------   -----------------
<S>                                                                        <C>                 <C>
      Notes receivable.................................................     $      9,240        $      8,612
      Liquor licenses..................................................            4,426               3,685
      Minority investment in unaffiliated company, at cost.............            2,250               2,000
      Deferred financing costs, net....................................              547               2,684
      Other............................................................            4,611               3,456
                                                                         -----------------   -----------------
                                                                            $     21,074        $     20,437
                                                                         =================   =================
</TABLE>

6.    Property and Equipment

Property and equipment, net is comprised of the following (in thousands):
<TABLE>
<CAPTION>

                                                                           December 30,       December 31,
                                                                               2001               2000
                                                                         -----------------  ------------------
<S>                                                                        <C>                <C>
      Land.............................................................     $     67,663       $     66,468
      Buildings and leasehold improvements.............................          260,776            231,299
      Furniture and equipment..........................................          141,756            130,584
      Construction in progress.........................................            3,672              3,768
                                                                         -----------------  ------------------
                                                                                 473,867            432,119
      Less accumulated depreciation and capitalized
         lease amortization............................................          142,943            117,903
                                                                         -----------------  ------------------
                                                                            $    330,924       $    314,216
                                                                         =================  ==================
</TABLE>


                                      F-12
<PAGE>

We had property under capitalized  leases of $4,055,000 at December 30, 2001 and
December 31, 2000 which is included in buildings and leasehold improvements.  We
had accumulated amortization of such property of $1,129,000 at December 30, 2001
and  $890,000 at December  31,  2000.  These  capitalized  leases  relate to the
buildings on certain restaurant  properties.  The land portion of the restaurant
property leases is accounted for as an operating lease.

We had  depreciation  and capitalized  lease  amortization  expense  relating to
property  and  equipment  of  $31,780,000  for  2001,  $30,208,000  for 2000 and
$28,930,000  for 1999. Of these  amounts,  capitalized  lease  amortization  was
$239,000 during 2001, $243,000 during 2000 and $300,000 during 1999.

We lease certain of our restaurants. The leases generally provide for payment of
minimum annual rent, real estate taxes,  insurance and maintenance  and, in some
cases,  contingent  rent  (calculated  as a  percentage  of  sales) in excess of
minimum rent.  Total rental expense for all operating leases is comprised of the
following (in thousands):

<TABLE>
<CAPTION>

                                                           2001                2000                1999
                                                     ------------------  ------------------  -----------------
<S>                                                   <C>                 <C>                 <C>
      Minimum rent.................................    $       12,105      $       10,892      $       11,780
      Contingent rent..............................             1,054               1,112               1,070
                                                     ------------------  ------------------  -----------------
                                                       $       13,159      $       12,004      $       12,850
                                                     ==================  ==================  =================
</TABLE>

The present value of capitalized lease payments and the future minimum lease
payments under noncancelable operating leases (including leases executed for
sites to be developed in 2002) as of December 30, 2001 are as follows (in
thousands):
<TABLE>
<CAPTION>
                                                                            Capitalized         Operating
                                                                              Leases             Leases
                                                                         ------------------ ------------------
<S>                                                                        <C>                <C>
      2002.............................................................     $        691       $     14,206
      2003.............................................................              715             14,105
      2004.............................................................              741             13,173
      2005.............................................................              767             12,493
      2006.............................................................              794             11,925
      Thereafter.......................................................            7,536            104,885
                                                                         ------------------ ------------------
      Total minimum lease payments.....................................           11,244       $    170,787
                                                                                            ==================
      Less amounts representing interest...............................            7,001
                                                                         ------------------
      Present value of minimum lease payments..........................     $      4,243
                                                                         ==================

</TABLE>

                                      F-13
<PAGE>


7.    Long-Term Debt

Long-term debt, including capitalized lease obligations, is comprised of the
following (in thousands):
<TABLE>
<CAPTION>

                                                                           December 30,      December 31,
                                                                               2001              2000
                                                                         ----------------  ----------------
<S>                                                                        <C>               <C>
     Unsecured  revolving credit  facility;  interest at LIBOR plus 1%
         or prime rate, due November 2004.............................      $    70,000       $       --
     Unsecured senior term loan; interest at LIBOR plus 2.25% or prime
         rate plus 1.25%, with semi-annual principal payments;
         paid in 2001.................................................              --             83,801
     Unsecured  revolving  credit  facility;  interest  at LIBOR  plus
         1.125% or prime rate plus 0.125%; paid in 2001...............              --              3,000
     Capitalized lease obligations (Note 6)...........................            4,243             4,229
     Other............................................................              325               325
                                                                         ----------------  ----------------
     Total long-term debt.............................................           74,568            91,355
     Less current portion of long-term debt...........................               43               894
                                                                         ----------------  ----------------
     Long-term debt - less current portion............................      $    74,525       $    90,461
                                                                         ================  ================
</TABLE>

In November  2001,  we  completed  the  refinancing  of our senior term loan and
working  capital  facilities.  The new  bank  credit  agreement  provides  for a
$150,000,000   three-year   unsecured   revolving  credit  facility,   of  which
$25,000,000 may be used for the issuance of letters of credit. The proceeds were
used to repay  indebtedness  related to our prior credit  facilities.  Our prior
agreement   originally  provided  for  $225,000,000  in  senior  secured  credit
facilities which we reduced to $161,500,000 prior to the refinancing.

The new  facility  bears  interest at either the bank's prime rate or LIBOR plus
1%, at our  option.  We are  required  to pay a  commitment  fee of 0.20% on any
unused portion of the facility. The interest rate and commitment fee are subject
to change based upon our leverage ratio.

The new facility is subject to various covenants and restrictions  which,  among
other things,  require the maintenance of stipulated fixed charge,  leverage and
indebtedness  to  capitalization   ratios,  as  defined,  and  limit  additional
indebtedness  and capital  expenditures  in excess of  specified  amounts.  Cash
dividends  are  limited to  $10,000,000  annually.  The  facility  is subject to
standard  other terms,  conditions,  covenants,  and fees.  We are  currently in
compliance with the covenants contained in our new credit agreement.

As a result of the  refinancing,  we  wrote-off  the  remaining  balance  of the
deferred  financing  costs  related to our prior  agreement and  terminated  our
interest  rate swap  agreements.  The interest  rate swap  termination  costs of
$4,470,000  are  reflected  in  other  expense  and the  write-off  of  deferred
financing  costs  of  $1,249,000,  net of  income  taxes of  $727,000,  has been
recognized as an extraordinary loss in the consolidated statements of income.

As of December 30, 2001, borrowings of $70,000,000 and standby letters of credit
totaling  $5,486,000 were outstanding  under our  $150,000,000  revolving credit
facility.  We also have a standby letter of credit for $827,000 outstanding with
another financial institution.


                                      F-14


<PAGE>



Maturities of long-term debt, including capitalized lease obligations, for each
of the five fiscal years subsequent to December 30, 2001, ending during the
years indicated, are as follows (in thousands):

     2002...............................................       $        43
     2003...............................................               377
     2004...............................................            70,070
     2005...............................................                98
     2006...............................................               137

8.    Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities are comprised of the following
(in thousands):
<TABLE>
<CAPTION>

                                                                           December 30,        December 31,
                                                                               2001                2000
                                                                         ------------------  -----------------
<S>                                                                        <C>                 <C>
      Compensation and related taxes....................................    $     22,618        $     16,824
      Gift certificates.................................................          18,421              15,488
      Sales and use taxes...............................................           4,184               4,187
      Insurance.........................................................           8,611               8,445
      Rent..............................................................           4,276               3,609
      Other.............................................................          13,441              13,958
                                                                         ------------------  -----------------
                                                                            $     71,551        $     62,511
                                                                         ==================  =================
</TABLE>

9.    Income Taxes

We, along with our subsidiaries, file a consolidated federal income tax return.
The income tax provision consists of the following (in thousands):
<TABLE>
<CAPTION>

                                                                    2001             2000             1999
                                                               ---------------  ---------------  ---------------
<S>                                                             <C>              <C>             <C>
    Current provision:
        Federal............................................     $   37,204       $    31,289      $   27,019
        State..............................................          5,543             5,370           4,762
    Deferred provision (benefit)...........................         (4,520)              118            (244)
                                                               ---------------  ---------------  ---------------
    Income taxes...........................................     $   38,227       $    36,777      $   31,537
                                                               ===============  ===============  ===============
</TABLE>

The deferred income tax provision is comprised of the following (in thousands):
<TABLE>
<CAPTION>

                                                                    2001             2000            1999
                                                               ---------------  --------------- ----------------
<S>                                                            <C>              <C>             <C>
    Depreciation...........................................     $   (3,201)      $    1,311      $    1,635
    Other..................................................         (1,319)          (1,193)         (1,879)
                                                               ---------------  --------------- ----------------
    Deferred income tax provision (benefit)................         (4,520)             118            (244)
    Deferred income taxes related to change in
        unrealized gain on investments.....................            (15)              (6)            (38)
                                                               ---------------  --------------- ----------------
    Net change in deferred income taxes....................     $   (4,535)      $      112     $     (282)
                                                               ===============  =============== ================

</TABLE>


                                      F-15

<PAGE>


A  reconciliation  between  the  income  tax  provision  and  the  expected  tax
determined by applying the statutory federal income tax rates to earnings before
income taxes follows (in thousands):
<TABLE>
<CAPTION>

                                                                    2001             2000            1999
                                                               ---------------  --------------- ----------------
<S>                                                            <C>              <C>             <C>
    Federal income tax at statutory rates..................     $   36,357       $   34,978      $   30,007
    Increase (decrease) to income tax expense:
        State income taxes, net of federal benefit.........          3,188            3,502           3,043
        Employment related tax credits.....................         (2,582)          (2,207)         (2,195)
        Other..............................................          1,264              504             682
                                                               ---------------  --------------- ----------------
    Income taxes...........................................     $   38,227       $   36,777      $   31,537
                                                               ===============  =============== ================
</TABLE>

The net current  deferred  income tax asset amounts are included in "prepaid and
other current  assets" in the  accompanying  consolidated  balance  sheets.  The
significant  components of deferred  income tax assets and  liabilities  and the
related balance sheet classifications are as follows (in thousands):

<TABLE>
<CAPTION>



                                                                           December 30,          December 31,
                                                                               2001                  2000
                                                                         -----------------     -----------------
<S>                                                                        <C>                   <C>
    Classified as current:
        Allowance for bad debts.....................................        $     1,598           $     1,155
        Accrued expenses............................................              3,328                 1,955
        Other, net..................................................              1,776                 1,712
                                                                         -----------------     -----------------
        Net deferred income tax asset...............................        $     6,702           $     4,822
                                                                         =================     =================



    Classified as non-current:
        Depreciation................................................        $    (2,864)          $    (5,525)
        Franchise deposits..........................................                557                   587
        Other, net..................................................                865                   841
                                                                         -----------------    ------------------
        Net deferred income tax liability...........................        $    (1,442)          $    (4,097)
                                                                         =================    ==================
</TABLE>

10.   Commitments and Contingencies

Litigation,  claims and  disputes:  We are  involved  in various  legal  actions
arising  in the  normal  course of  business.  These  matters  include,  without
limitation,  such matters as  employment  law related  claims and disputes  with
certain  international  franchisees  regarding  disclosures we allegedly made or
omitted. In each instance,  we believe that we have meritorious  defenses to the
allegations made and we are vigorously defending these claims.

While the  resolution of the matters  described  above may have an impact on the
financial results for the period in which they are resolved, we believe that the
ultimate  disposition  of  these  matters  will  not,  individually  or  in  the
aggregate,  have a material  adverse  effect upon our  business or  consolidated
financial position.

Franchise  financing:  In 1992,  we entered into an  agreement  with a financing
source to provide up to  $75,000,000  of  financing to our  franchisees  to fund
development  of new  franchise  restaurants.  We provided a limited  guaranty of
loans  made  under the  agreement.  Our  maximum  recourse  obligation  for each
long-term  loan is 10% of the  amount  funded,  and  this is  gradually  reduced
beginning in the second year of each loan.  After the seventh year of each loan,
it  decreases  to  zero.  Approximately  $49,000,000  was  funded  through  this
financing  source.  Of this,  approximately  $2,300,000  was  outstanding  as of
December  30,  2001.  This  agreement  expired on December  31, 1994 and was not
renewed.


                                      F-16


<PAGE>


Lease guaranties:  In connection with the sale of restaurants to franchisees and
other parties, we have, in certain cases,  remained  contingently liable for the
remaining lease payments. As of December 30, 2001, the aggregate amount of these
lease payments totaled approximately $27,800,000. The buyers have indemnified us
from any losses related to these guaranties.

Philadelphia  divestiture:  In  connection  with  the  sale of the  Philadelphia
restaurants,  we provided a guarantee to a franchise group totaling  $1,250,000.
As of December 30, 2001, approximately $400,000 remains outstanding.

Severance  agreements:  We have severance and employment agreements with certain
officers  providing for severance  payments to be made in the event the employee
resigns or is terminated  related to a change in control.  The agreements define
the  circumstances  which will constitute a change in control.  If the severance
payments had been due as of December 30,  2001,  we would have been  required to
make payments totaling approximately  $7,800,000. In addition, we have severance
and  employment   agreements  with  certain  officers  which  contain  severance
provisions  not  related to a change in  control.  Those  provisions  would have
required  aggregate  payments of  approximately  $4,300,000 if such officers had
been terminated as of December 30, 2001.

11.   Stockholders' Equity

On September 7, 1994, our Board of Directors  adopted a Shareholder  Rights Plan
(the "Rights  Plan") and declared a dividend,  issued on September  19, 1994, of
one Right for each outstanding  share of our Common Stock (the "Common Shares").
Stockholders may exercise their Rights if any person or group acquires more than
15% of the  outstanding  Common Shares or makes a tender offer for more than 15%
of our  outstanding  Common  Shares  unless the person or group has acquired the
shares or made the tender offer as part of a Qualifying  Offer (as defined).  If
such an event  occurred,  each Right entitles its holder to purchase for $75 the
economic equivalent of Common Shares, or in certain circumstances,  stock of the
acquiring entity,  worth twice as much. This is true for all stockholders except
the acquiror.  The Rights will expire on September 7, 2004 unless we redeem them
earlier.  If we redeem the Rights before stockholders can exercise them, we will
pay $0.01 per Right.

In February  2001,  our Board of Directors  authorized  the  repurchase of up to
$55,000,000 of our common stock through 2001,  subject to market  conditions and
applicable restrictions imposed by our then-current credit agreement.  Including
this authorization, our Board of Directors has approved a total of five plans to
repurchase up to $262,500,000 of our common stock, subject to market conditions,
since 1997. We repurchased  1,909,000 shares of our common stock at an aggregate
cost of $44,987,000 in 2001. Since 1997, we have repurchased  13,214,000  shares
of  our  common  stock  at  an  aggregate  cost  of  $240,470,000   under  these
authorizations.  In February 2002, our Board of Directors extended the remaining
$20,600,000 of the 2001 authorization through 2002.

On May 10, 2001, we declared a three-for-two  stock split,  effected in the form
of a 50% stock dividend,  to shareholders of record on May 25, 2001,  payable on
June 12, 2001. We issued  approximately  16,100,000  shares of common stock as a
result of the stock split.  All references to the number of shares and per share
amounts of common stock have been  restated to reflect the stock split.  We have
reclassified  an amount equal to the par value of the number of shares issued to
common stock from retained earnings.

12.   Employee Benefit Plans

Employee stock option plans:  During 1989,  our Board of Directors  approved the
1989 Employee  Stock Option Plan (the "1989 Plan") which  provided for the grant
of  both  qualified  and  nonqualified  options  as  determined  by a  committee
appointed by the Board of Directors. At the 1995 Annual Meeting of Stockholders,
the 1989  Employee  Stock  Option  Plan  was  terminated,  and the  1995  Equity
Incentive Plan (the "1995 Plan") was approved. The termination of the 1989 Stock
Option Plan did not affect existing options which were outstanding when the plan
was terminated.


                                      F-17



<PAGE>


Options  under the 1989 Plan were  granted  for a term of three to ten years and
were generally exercisable one year from date of grant. The 1995 Plan allows the
committee to grant stock options,  stock appreciation  rights,  restricted stock
awards,  performance  unit awards and  performance  share awards  (collectively,
"Awards") to eligible  participants.  The 1995 Plan  authorizes the committee to
issue up to 5,400,000  shares.  Options  granted under the 1995 Plan during 1995
have a term of five to ten years and are generally  exercisable three years from
date of grant. Options granted under the 1995 Plan during 1996 through 1998 have
a term of ten years and are generally 50%  exercisable  three years from date of
grant,  25% exercisable  four years from date of grant, and 25% exercisable five
years  from date of grant.  Options  granted  under  the 1995 Plan  during  1999
through 2001 have a term of ten years and are  generally  exercisable  at either
one or three  years  from the date of  grant.  Subject  to the terms of the 1995
Plan,  the committee has the sole  discretion to determine the employees to whom
it grants Awards, the size and types of the Awards, and the terms and conditions
of the Awards.

During 1999,  our Board of Directors  approved the 1999 Employee  Incentive Plan
(the  "1999  Plan")  which  allows the  committee  to grant  nonqualified  stock
options,  stock  appreciation  rights,  restricted stock,  performance units and
performance shares to eligible participants. The 1999 Plan originally authorized
the committee to issue up to 499,500 shares. During 2001, our Board of Directors
authorized the committee to grant an additional  600,000 shares under this plan.
Options  granted  under the 1999 Plan have a term of ten years and are generally
exercisable  two or three years from the date of grant.  Under all three  plans,
the option price for both qualified and nonqualified options cannot be less than
the fair market value of our common stock on the date the  committee  grants the
options.

All three plans permit the committee to grant  performance  shares.  Performance
shares  represent  rights  to  receive  our  common  stock  based  upon  certain
performance criteria. In 1999 and 2000, the committee granted performance shares
which  have a  one-year  and a  three-year  performance  period.  In  2001,  the
committee granted  performance shares with a three-year  performance  period. We
recorded  compensation  expense  of  $926,000  in  2001,  $341,000  in 2000  and
$2,048,000  in 1999  related to these  grants.  These  amounts were based on the
market price of our common stock at the end of each fiscal year.

We account  for all three  plans in  accordance  with APB  Opinion  No. 25 which
requires us to recognize  compensation cost based on the excess, if any, between
the  quoted  market  price of the stock at the date of grant  and the  amount an
employee must pay to acquire the stock. Under this method, we have recognized no
compensation cost for stock option awards.

If we had determined  compensation cost for our stock-based  compensation  plans
based on the fair  value as  prescribed  by SFAS No.  123 (see Note 2),  our net
earnings  and net  earnings  per common share would have been reduced to the pro
forma amounts  indicated below.  All amounts are expressed in thousands,  except
per share amounts.

<TABLE>
<CAPTION>

                                                                    2001              2000              1999
                                                                --------------    --------------    -------------
<S>                                                             <C>               <C>               <C>
   Net earnings, as reported................................     $   64,401        $   63,161        $  54,198
   Net earnings, pro forma..................................     $   61,275        $   60,422        $  50,880

   Basic net earnings per common share, as reported.........     $     1.74        $     1.61        $    1.27
   Basic net earnings per common share, pro forma...........     $     1.66        $     1.54        $    1.19

   Diluted net earnings per common share, as reported.......     $     1.70        $     1.60        $    1.26
   Diluted net earnings per common share, pro forma.........     $     1.62        $     1.53        $    1.19

</TABLE>




                                      F-18
<PAGE>

The  weighted  average  fair value at date of grant for options  granted  during
2001, 2000 and 1999 was $11.00, $8.45 and $9.18 per share, respectively,  which,
for the  purposes  of this  disclosure,  is  assumed  to be  amortized  over the
respective  vesting period of the grants. The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following  weighted  average  assumptions  used for grants in 2001, 2000 and
1999: dividend yield of 0.4%, 0.3% and 0.3%,  respectively;  expected volatility
of 48.7%, 46.8% and 48.4%,  respectively;  risk-free interest rate of 4.2%, 5.1%
and  6.4%,  respectively;  and  expected  lives  of  5.0,  4.9  and  4.9  years,
respectively.

Transactions relative to all three plans are as follows:


<TABLE>
<CAPTION>

                                              1999 Plan                     1995 Plan                    1989 Plan
                                     ----------------------------- ----------------------------- ---------------------------
                                                      Weighted                       Weighted                    Weighted
                                                       Average                        Average                    Average
                                       Number of      Exercise        Number of      Exercise     Number of      Exercise
                                        Options         Price          Options         Price       Options        Price
                                     -------------- -------------- ---------------- ------------ ------------- -------------
<S>                                     <C>             <C>           <C>              <C>        <C>              <C>
  Options outstanding at
      December 27, 1998............          --             --          2,736,870       $17.42      426,618         $ 9.40
         Granted..................       124,500         $19.21           569,100       $18.81          --             --
         Exercised.................          --             --           (231,958)      $17.41     (226,027)        $ 8.76
         Canceled..................          --             --            (46,713)      $16.46         (341)        $ 4.98
                                     --------------                ----------------              -------------
  Options outstanding at
      December 26, 1999............      124,500         $19.21         3,027,299       $17.54      200,250         $10.12
         Granted..................       163,500         $18.33           536,250       $18.66          --             --
         Exercised.................          --             --           (310,194)      $17.66      (35,850)        $12.69
         Canceled..................      (36,750)        $18.80          (336,998)      $17.12          --             --
                                     --------------                ----------------              -------------
  Options outstanding at
      December 31, 2000............      251,250         $18.71         2,916,357       $17.95      164,400         $ 9.58
         Granted..................       538,250         $23.97           830,465       $23.63          --             --
         Exercised.................          --             --         (1,095,809)      $17.90     (113,850)        $ 9.74
         Canceled..................      (55,300)        $20.95         (179,816)       $17.82         (750)        $ 9.05
                                     --------------                ----------------              -------------
  Options outstanding at
      December 30, 2001............      734,200         $22.40         2,471,197       $19.90       49,800         $ 9.21
                                     ==============                ================              =============
  Options exercisable at
      December 30, 2001............          --             --            661,790       $18.47       49,800         $ 9.21
                                     ==============                ===============               =============
  Options available for grant at
      December 30, 2001............      365,300                        1,004,617                       --
                                     ==============                ================              =============

</TABLE>

                                      F-19
<PAGE>


The  following  table  summarizes  information  relating to  fixed-priced  stock
options outstanding for all three plans at December 30, 2001:
<TABLE>
<CAPTION>

                                                  Options Outstanding                       Options Exercisable
                                    ------------------------------------------------  --------------------------------
                                                         Average         Weighted
                                       Weighted         Remaining         Average                         Weighted
                                         Number        Contractual       Exercise          Number            Average
        Range of Exercise Prices      Outstanding         Life            Price        Exercisable      Exercise Price
       ---------------------------  ---------------  ---------------  --------------  ---------------  ---------------
<S>                                   <C>              <C>               <C>              <C>             <C>

        1989 Plan:
         $   9.20    to $   9.22          49,800        2.6 years         $   9.21          49,800         $   9.21
                                    ===============                                   ===============

        1995 Plan:
         $  12.53    to $  15.67         215,796        6.6 years         $  13.81          32,051         $  13.94
         $  16.62    to $  17.80         153,264        6.2 years         $  16.78          80,110         $  16.81
         $  18.45    to $  19.50       1,213,173        6.3 years         $  18.74         517,928         $  18.80
         $  20.16    to $  23.96         748,964        9.1 years         $  21.94          31,701         $  21.82
         $  30.30    to $  31.91         140,000        9.6 years         $  31.74             --               --
                                    ---------------                                   ---------------
         $  12.53    to $  31.91       2,471,197        7.4 years         $  19.90         661,790         $  18.47
                                    ===============                                   ===============

        1999 Plan:
         $  14.78    to $  16.71          18,000        8.5 years         $  15.69             --               --
         $  18.45    to $  22.75         579,675        8.7 years         $  20.89             --               --
         $  23.95    to $  36.13         136,525        9.6 years         $  29.69             --               --
                                    ---------------                                   ---------------
         $  14.78    to $  36.13         734,200        8.8 years         $  22.40             --               --
                                    ===============                                   ===============

</TABLE>


Restricted stock awards:  During 1999 and 2001, the committee granted restricted
stock  awards to certain  officers  and key  employees.  These  awards vest over
either a two-year or three-year  period. We recorded  unearned  compensation for
the  market  value of the  stock at the date of grant,  and we showed  this as a
reduction  to  stockholders'  equity in the  accompanying  consolidated  balance
sheets.  We are  amortizing  unearned  compensation  ratably to expense over the
vesting period.  Accordingly,  we recognized  compensation  expense of $326,000,
$350,000 and $388,000 in 2001, 2000 and 1999, respectively.

Employee retirement plans: During 1992, we established a profit sharing plan and
trust in accordance  with Section  401(k) of the Internal  Revenue Code. We make
matching contributions of 50% of employee contributions not to exceed 4.0% of an
employee's  compensation in any year. We make our contributions in shares of our
common stock.  Our  contributions  vest at the rate of 20% after the  employee's
second year of service,  60% after three years of service,  80% after four years
of service and 100% after five years of service.  During 1994, we  established a
non-qualified  defined  contribution  retirement  plan  for key  employees.  Our
contributions  under both plans were $1,441,000 in 2001,  $1,170,000 in 2000 and
$965,000 in 1999.

Employee  stock  purchase  plan:  During 1996, we  established an employee stock
purchase plan in accordance  with Section 423 of the Internal  Revenue Code. The
plan was approved at the 1997 Annual Meeting of  Stockholders.  The plan allowed
employees  to  purchase  shares of our common  stock at a 10%  discount  through
payroll  deductions  through 2000. In 2001, the plan was amended to increase the
discount to 15%. The number of common shares authorized pursuant to the plan was
originally  300,000.  In 2001, the Board authorized an additional 300,000 common
shares,  subject  to  approval  at the  2002  Annual  Meeting  of  Stockholders.
Employees  purchased  62,540  shares under this plan during 2001,  69,730 during
2000 and 66,449 shares during 1999.

                                      F-20


<PAGE>


Employee stock ownership plan: Our Board of Directors approved an employee stock
ownership plan in January 1997. We  contributed  to this plan  completely at our
discretion.  Our  contributions  to the plan were $200,000 for 2000 and $400,000
for 1999 and were made in shares of our common stock. During 2001, we terminated
the employee  stock  ownership  plan and did not make any  contributions  to the
plan. The assets of this plan were transferred to the 401(k) plan.

13.   Related Party Transactions

We have a policy which allows us to loan  executives  money to be used to invest
in our stock to meet guidelines which require  executives to own certain amounts
of our stock.  In  accordance  with  these  policies,  we had loans of  $615,000
outstanding to three  officers at December 30, 2001 and $967,000  outstanding to
four officers at December 31, 2000.  These loans had interest rates ranging from
4.7% to 6.8% and are collateralized by the stock. These loans are reflected as a
reduction to additional paid-in capital in our consolidated balance sheets.

As of December 30,  2001,  we had a loan  outstanding  to one officer for moving
related  assistance in the amount of $310,000.  The loan has an interest rate of
5% and is due in August of 2002.

We had pricing  agreements in the normal course of business with a publicly-held
company that employed an individual  who was appointed to our Board of Directors
in December 1999. During 2000, we paid approximately $576,000 to this company.





                                      F-21
<PAGE>


14.   Quarterly Results of Operations (Unaudited)

The  following  presents  the  unaudited   consolidated   quarterly  results  of
operations  for 2001 and 2000.  During the fourth  quarter of 2001,  we incurred
costs  relating  to  the   termination  of  interest  rate  swap  agreements  of
$4,470,000,   which  are  reflected  in  other   expense,   and   recognized  an
extraordinary  loss of $1,249,000,  net of income taxes of $727,000,  due to the
write-off of previously  deferred financing costs relating to the refinancing of
our  prior  credit  facilities.  All  amounts,  except  per share  amounts,  are
expressed in thousands.
<TABLE>
<CAPTION>

                                                                                   2001
                                                      ---------------------------------------------------------------
                                                                           Fiscal Quarter Ended
                                                      ---------------------------------------------------------------
                                                        April 1,          July 1,       September 30,    December 30,
                                                          2001              2001            2001             2001
                                                      -------------    -------------    -------------   -------------
<S>                                                    <C>              <C>              <C>             <C>
Revenues:
     Company restaurant sales.......................    $160,143         $162,035         $164,238        $164,703
     Franchise income...............................      22,234           23,885           23,787          23,319
                                                      -------------    -------------    -------------   -------------
        Total operating revenues....................     182,377          185,920          188,025         188,022
                                                      -------------    -------------    -------------   -------------
Cost of company restaurant sales:
     Food and beverage..............................      43,305           43,633           44,489          44,550
     Labor..........................................      50,900           51,533           52,864          53,699
     Direct and occupancy...........................      40,759           41,104           41,459          41,643
     Pre-opening expense............................         135              132              632             802
                                                      -------------    -------------    -------------   -------------
        Total cost of company restaurant sales......     135,099          136,402          139,444         140,694
                                                      -------------    -------------    -------------   -------------
General and administrative expenses.................      17,166           18,085           19,197          18,487
Amortization of intangible assets...................       1,463            1,462            1,463           1,463
Loss on disposition of restaurants and equipment             187              571              329             405
                                                      -------------    -------------    -------------   -------------
Operating earnings..................................      28,462           29,400           27,592          26,973
                                                      -------------    -------------    -------------   -------------
Other income (expense):
     Investment income..............................         357              415              479             399
     Interest expense...............................      (2,357)          (2,043)          (1,831)         (1,225)
     Other income (expense).........................          90              385              322          (3,541)
                                                      -------------    -------------    -------------   -------------
        Total other expense.........................      (1,910)          (1,243)          (1,030)         (4,367)
                                                      -------------    -------------    -------------   -------------
Earnings before income taxes and extraordinary item.      26,552           28,157           26,562          22,606
Income taxes........................................       9,771           10,361            9,776           8,319
                                                      -------------    -------------    -------------   -------------
Earnings before extraordinary item..................      16,781           17,796           16,786          14,287
Extraordinary loss from early extinguishment
     of debt, net of income taxes...................         --               --               --           (1,249)
                                                      -------------    -------------    -------------   -------------
Net earnings........................................    $ 16,781         $ 17,796         $ 16,786        $ 13,038
                                                      =============    =============    =============   =============

Basic earnings per common share:
     Basic earnings before extraordinary item.......    $   0.45         $   0.48         $   0.45        $   0.38
     Extraordinary item.............................         --               --               --            (0.03)
                                                      -------------    -------------    -------------   -------------
Basic net earnings per common share.................    $   0.45         $   0.48         $   0.45        $   0.35
                                                      =============    =============    =============   =============

Diluted earnings per common share:
     Diluted earnings before extraordinary item.....    $   0.45         $   0.47         $   0.44        $   0.37
     Extraordinary item.............................         --               --               --            (0.03)
                                                      -------------    -------------    -------------   -------------
Diluted net earnings per common share...............    $   0.45         $   0.47         $   0.44        $   0.34
                                                      =============    =============    =============   =============

Basic weighted average shares outstanding...........      37,116           36,914           36,911          37,091
                                                      =============    =============    =============   =============
Diluted weighted average shares outstanding.........      37,628           37,872           37,880          38,109
                                                      =============    =============    =============   =============

</TABLE>

                                      F-22



<PAGE>

<TABLE>
<CAPTION>



                                                                                   2000
                                                      ---------------------------------------------------------------
                                                                           Fiscal Quarter Ended
                                                      ---------------------------------------------------------------
                                                        March 26,        June 25,       September 24,    December 31,
                                                          2000             2000             2000             2000
                                                      -------------    -------------    -------------   -------------
<S>                                                    <C>              <C>              <C>             <C>
Revenues:
     Company restaurant sales.......................    $145,451         $147,909         $151,038        $161,016
     Franchise income...............................      19,799           20,736           21,252          22,951
                                                      -------------    -------------    -------------   -------------
        Total operating revenues....................     165,250          168,645          172,290         183,967
                                                      -------------    -------------    -------------   -------------
Cost of company restaurant sales:
     Food and beverage..............................      40,058           39,323           41,408          45,225
     Labor..........................................      46,168           46,954           47,703          50,577
     Direct and occupancy...........................      35,660           36,095           38,005          41,851
     Pre-opening expense............................         296              213              322             828
                                                      -------------    -------------    -------------   -------------
        Total cost of company restaurant sales......     122,182          122,585          127,438         138,481
                                                      -------------    -------------    -------------   -------------
General and administrative expenses.................      16,007           16,338           16,224          16,491
Amortization of intangible assets...................       1,451            1,455            1,460           1,568
Loss on disposition of restaurants and equipment             353              322              231             359
                                                      -------------    -------------    -------------   -------------
Operating earnings..................................      25,257           27,945           26,937          27,068
                                                      -------------    -------------    -------------   -------------
Other income (expense):
     Investment income..............................         349              367              389             379
     Interest expense...............................      (2,364)          (2,267)          (2,225)         (2,448)
     Other income (expense).........................         118              303              (79)            209
                                                      -------------    -------------    -------------   -------------
        Total other expense.........................      (1,897)          (1,597)          (1,915)         (1,860)
                                                      -------------    -------------    -------------   -------------
Earnings before income taxes........................      23,360           26,348           25,022          25,208
Income taxes........................................       8,597            9,696            9,208           9,276
                                                      -------------    -------------    -------------   -------------
Net earnings........................................    $ 14,763         $ 16,652         $ 15,814        $ 15,932
                                                      =============    =============    =============   =============

Basic net earnings per common share.................    $   0.37         $   0.42         $   0.40        $   0.42
                                                      =============    =============    =============   =============

Diluted net earnings per common share...............    $   0.37         $   0.41         $   0.40        $   0.42
                                                      =============    =============    =============   =============

Basic weighted average shares outstanding...........      40,005           40,035           39,147          37,832
                                                      =============    =============    =============   =============
Diluted weighted average shares outstanding.........      40,182           40,550           39,281          38,076
                                                      =============    =============    =============   =============
</TABLE>


                                           -----------------------------


                                      F-23



<PAGE>


                         APPLEBEE'S INTERNATIONAL, INC.
                                  EXHIBIT INDEX

   Exhibit
    Number                           Description of Exhibit
---------------  ---------------------------------------------------------------

       3.1       Certificate  of  Incorporation,   as  amended,   of  Registrant
                 (incorporated  by reference to Exhibit 3.1 of the  Registrant's
                 Annual  Report on Form 10-K for the fiscal year ended  December
                 31, 1995).

       3.2       Restated and Amended By-laws of the Registrant (incorporated by
                 reference to Exhibit 3.2 of the  Registrant's  Annual Report on
                 Form 10-K for the fiscal year ended December 29, 1996).

       4.1       Shareholder  Rights Plan contained in Rights Agreement dated as
                 of September 7, 1994,  between Applebee's  International,  Inc.
                 and Chemical Bank, as Rights Agent  (incorporated  by reference
                 to Exhibit 4.1 of the  Registrant's  Annual Report on Form 10-K
                 for the fiscal year ended December 25, 1994).

       4.2       Amendment  dated  May  13,  1999  to  Shareholder  Rights  Plan
                 contained  in Rights  Agreement  dated as of September 7, 1994,
                 between  Applebee's  International,  Inc. and Chemical Bank, as
                 Rights Agent  (incorporated  by reference to Exhibit 4.1 of the
                 Registrant's  Quarterly  Report  on Form  10-Q  for the  fiscal
                 quarter ended June 27, 1999).

       4.3       Certificate of the Voting Powers, Designations, Preferences and
                 Relative  Participating,  Optional and Other Special Rights and
                 Qualifications of Series A Participating  Cumulative  Preferred
                 Stock  of  Applebee's  International,   Inc.  (incorporated  by
                 reference to Exhibit 4.2 of the  Registrant's  Annual Report on
                 Form 10-K for the fiscal year ended December 25, 1994).

       10.1      Indemnification Agreement, dated March 16, 1988, between Abe J.
                 Gustin, Jr. and Applebee's International, Inc. (incorporated by
                 reference to Exhibit 10.2 of the Registrant's  Annual Report on
                 Form 10-K for the fiscal year ended December 25, 1994).

       10.2      Indemnification Agreement, dated March 16, 1988, between Johyne
                 Reck  and  Applebee's  International,   Inc.  (incorporated  by
                 reference to Exhibit 10.3 of the Registrant's  Annual Report on
                 Form 10-K for the fiscal year ended December 25, 1994).

       10.3      Form  of  Applebee's  Development  Agreement  (incorporated  by
                 reference to Exhibit 10.4 of the Registrant's  Annual Report on
                 Form 10-K for the  fiscal  year  ended  December  31,  2000 and
                 Exhibit 10.1 of the Registrant's  Quarterly Report on Form 10-Q
                 for the fiscal quarter ended July 1, 2001).

       10.4      Form  of  Applebee's   Franchise  Agreement   (incorporated  by
                 reference to Exhibit 10.5 of the Registrant's  Annual Report on
                 Form 10-K for the  fiscal  year  ended  December  31,  2000 and
                 Exhibit 10.1 of the Registrant's  Quarterly Report on Form 10-Q
                 for the fiscal quarter ended July 1, 2001).

       10.5      Schedule of Applebee's  Development and Franchise Agreements as
                 of December 30, 2001.

       10.6      Revolving Credit Agreement dated as of November 5, 2001.

                                      E-1
<PAGE>



   Exhibit
    Number                           Description of Exhibit
---------------  ---------------------------------------------------------------

                 Management Contracts and Compensatory Plans or Arrangements

       10.7      1995 Equity Incentive Plan, as amended.

       10.8      Employee  Stock  Purchase  Plan,  as amended  (incorporated  by
                 reference to Exhibit 10.10 of the Registrant's Annual Report on
                 Form 10-K for the  fiscal  year  ended  December  31,  2000 and
                 Exhibit 10.2 of the Registrant's  Quarterly Report on Form 10-Q
                 for the fiscal quarter ended September 30, 2001).

       10.9      1999 Management and Executive  Incentive Plan  (incorporated by
                 reference to Exhibit 10.13 of the Registrant's Annual Report on
                 Form 10-K for the fiscal year ended December 26, 1999).

       10.10     Nonqualified   Deferred   Compensation  Plan  (incorporated  by
                 reference to Exhibit 10.12 of the Registrant's Annual Report on
                 Form 10-K for the fiscal year ended December 31, 2000).

       10.11     1999 Employee Incentive Plan, as amended.

       10.12     2001 Senior Executive Bonus Plan.

       10.13     Employment  Agreement,  dated  January 27, 1994,  with Lloyd L.
                 Hill   (incorporated  by  reference  to  Exhibit  10.4  of  the
                 Registrant's  Quarterly  Report  on Form  10-Q  for the  fiscal
                 quarter ended March 27, 1994).

       10.14     Severance and Noncompetition Agreement, dated January 27, 1994,
                 with Lloyd L. Hill  (incorporated  by reference to Exhibit 10.5
                 of the  Registrant's  Quarterly  Report  on Form  10-Q  for the
                 fiscal quarter ended March 27, 1994).

       10.15     Employment  Agreement,  dated  March 1,  1995,  with  George D.
                 Shadid  (incorporated  by  reference  to  Exhibit  10.3  of the
                 Registrant's  Quarterly  Report  on Form  10-Q  for the  fiscal
                 quarter ended March 26, 1995).

       10.16     Agreement  Regarding  Employment  (incorporated by reference to
                 Exhibit 10.1 of the Registrant's  Quarterly Report on Form 10-Q
                 for the fiscal quarter ended September 30, 2001).

       10.17     Form of Indemnification Agreement (incorporated by reference to
                 Exhibit  10.29 of the  Registrant's  Annual Report on Form 10-K
                 for the fiscal year ended December 25, 1994).

       10.18     Schedule of parties to Indemnification Agreement.

       10.19     Previous Form of Change in Control  Agreement  (incorporated by
                 reference to Exhibit 10.2 of the Registrant's  Quarterly Report
                 on Form 10-Q for the fiscal  quarter  ended March 29, 1998) and
                 schedule of parties thereto.


                                      E-2
<PAGE>



   Exhibit
    Number                           Description of Exhibit
---------------  ---------------------------------------------------------------

       10.20     Previous Form of Change in Control  Agreement  (incorporated by
                 reference to Exhibit 10.23 of the Registrant's Annual Report on
                 Form 10-K for the fiscal  year  ended  December  27,  1998) and
                 schedule of parties thereto.

       10.21     New  Form of  Change  in  Control  Agreement  (incorporated  by
                 reference to Exhibit 10.2 of the Registrant's  Quarterly Report
                 on Form 10-Q for the  fiscal  quarter  ended  July 1, 2001) and
                 schedule of parties thereto.

       21        Subsidiaries of Applebee's International, Inc.

       23.1      Consent of Deloitte & Touche LLP.

       24        Power of Attorney (see page 30 of the Form 10-K).



                                      E-3