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

                                    FORM 10-Q


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

For the quarterly period ended                September 29, 2002
                              --------------------------------------------------

                                       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)



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
                                      -----    -----

Number of shares of the registrant's  common stock outstanding as of November 1,
2002 was 55,250,390.

                                       1
<PAGE>


                         APPLEBEE'S INTERNATIONAL, INC.
                                    FORM 10-Q
                     FISCAL QUARTER ENDED SEPTEMBER 29, 2002
                                      INDEX

<TABLE>
<CAPTION>

                                                                                                               Page

<S>                <C>                                                                                          <C>
Part I              Financial Information

Item 1.             Consolidated Financial Statements:

                    Consolidated Balance Sheets as of September 29, 2002
                       and December 30, 2001................................................................      3

                    Consolidated Statements of Earnings for the 13 Weeks and 39 Weeks
                       Ended September 29, 2002 and September 30, 2001......................................      4

                    Consolidated Statement of Stockholders' Equity for the
                       39 Weeks Ended September 29, 2002....................................................      5

                    Consolidated Statements of Cash Flows for the 39 Weeks
                       Ended September 29, 2002 and September 30, 2001......................................      6

                    Notes to Consolidated Financial Statements..............................................      8

Item 2.             Management's Discussion and Analysis of
                       Financial Condition and Results of Operations........................................     12

Item 3.             Quantitative and Qualitative Disclosures About Market Risk..............................     20

Item 4.             Controls and Procedures.................................................................     20


Part II             Other Information

Item 1.             Legal Proceedings.......................................................................     21

Item 6.             Exhibits and Reports on Form 8-K........................................................     21


Signatures .................................................................................................     22

Exhibit Index...............................................................................................     25

</TABLE>

                                       2
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                        September 29,      December 30,
                                                                                            2002               2001
                                                                                        --------------     -------------
                                     ASSETS

<S>                                                                                     <C>                <C>
Current assets:
     Cash and cash equivalents.......................................................    $    7,522         $   22,048
     Short-term investments, at market value (amortized cost of $478 in 2002 and
        $677 in 2001)................................................................           504                699
     Receivables (less allowance for bad debts of $5,443 in 2002 and $4,343 in 2001).        25,207             22,827
     Inventories.....................................................................         7,070             10,165
     Prepaid and other current assets................................................        13,782             12,260
                                                                                        --------------     -------------
        Total current assets.........................................................        54,085             67,999
Property and equipment, net..........................................................       353,730            330,924
Goodwill, net........................................................................        78,614             78,614
Franchise interest and rights, net...................................................         1,551              1,800
Other assets.........................................................................        20,864             21,074
                                                                                        --------------     -------------
                                                                                         $  508,844         $  500,411
                                                                                        ==============     =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of long-term debt...............................................    $      375         $       43
     Notes payable...................................................................         3,500                 --
     Accounts payable................................................................        28,106             22,196
     Accrued expenses and other current liabilities..................................        63,894             71,551
     Accrued dividends...............................................................            --              2,977
     Accrued income taxes............................................................         1,919                979
                                                                                        --------------     -------------
        Total current liabilities....................................................        97,794             97,746
                                                                                        --------------     -------------
Non-current liabilities:
     Long-term debt - less current portion...........................................        35,192             74,525
     Franchise deposits..............................................................         1,182              1,515
     Deferred income taxes...........................................................         2,026              1,442
                                                                                        --------------     -------------
        Total non-current liabilities................................................        38,400             77,482
                                                                                        --------------     -------------
        Total liabilities............................................................       136,194            175,228
                                                                                        --------------     -------------
Commitments and contingencies (Note 2)
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 - 72,336,788 shares...................................................           723                723
     Additional paid-in capital......................................................       186,055            180,802
     Retained earnings...............................................................       417,652            354,950
     Accumulated other comprehensive income, net of income taxes ....................            17                 14
                                                                                        --------------     -------------
                                                                                            604,447            536,489
     Treasury stock - 17,123,011 shares in 2002 and 16,522,099 shares in 2001, at
        cost.........................................................................      (231,797)          (211,306)
                                                                                        --------------     -------------
        Total stockholders' equity...................................................       372,650            325,183
                                                                                        --------------     -------------
                                                                                         $  508,844         $  500,411
                                                                                        ==============     =============

</TABLE>

                               See notes to consolidated financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>

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

                                                              13 Weeks Ended                   39 Weeks Ended
                                                       ------------------------------   ------------------------------
                                                       September 29,    September 30,   September 29,    September 30,
                                                           2002            2001              2002             2001
                                                       -------------   --------------   -------------    -------------
<S>                                                    <C>              <C>             <C>              <C>
Revenues:
     Company restaurant sales....................       $ 182,807        $ 164,238       $ 536,673        $ 486,416
     Franchise income............................          26,033           23,787          76,357           69,906
                                                       -------------   --------------   -------------    -------------
        Total operating revenues.................         208,840          188,025         613,030          556,322
                                                       -------------   --------------   -------------    -------------
Cost of company restaurant sales:
     Food and beverage...........................          47,765           44,489         142,245          131,427
     Labor.......................................          60,054           52,864         176,392          155,297
     Direct and occupancy........................          47,009           41,459         134,172          123,322
     Pre-opening expense.........................             792              632           1,432              899
                                                       -------------   --------------   -------------    -------------
        Total cost of company restaurant sales...         155,620          139,444         454,241          410,945
                                                       -------------   --------------   -------------    -------------
General and administrative expenses..............          20,049           19,197          58,848           54,448
Amortization of intangible assets................              95            1,463             285            4,388
Loss on disposition of restaurants and equipment.             458              329           1,479            1,087
                                                       -------------   --------------   -------------    -------------
Operating earnings...............................          32,618           27,592          98,177           85,454
                                                       -------------   --------------   -------------    -------------
Other income (expense):
     Investment income...........................             346              479           1,124            1,251
     Interest expense............................            (414)          (1,831)         (1,602)          (6,231)
     Other income................................             513              322           1,096              797
                                                       -------------   --------------   -------------    -------------
        Total other income (expense).............             445           (1,030)            618           (4,183)
                                                       -------------   --------------   -------------    -------------
Earnings before income taxes.....................          33,063           26,562          98,795           81,271
Income taxes.....................................          12,068            9,776          36,060           29,908
                                                       -------------   --------------   -------------    -------------
Net earnings.....................................       $  20,995        $  16,786       $  62,735        $  51,363
                                                       =============   ==============   =============    =============

Basic net earnings per common share..............       $    0.38        $    0.30       $    1.12        $    0.93
                                                       =============   ==============   =============    =============
Diluted net earnings per common share............       $    0.37        $    0.30       $    1.10        $    0.91
                                                       =============   ==============   =============    =============

Basic weighted average shares outstanding........          55,654           55,366          55,801           55,470
                                                       =============   ==============   =============    =============
Diluted weighted average shares outstanding......          56,714           56,821          57,119           56,736
                                                       =============   ==============   =============    =============

</TABLE>




                 See notes to consolidated financial statements.


                                       4
<PAGE>



                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Unaudited)
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>


                                                                                         Accumulated
                                              Common Stock        Additional                Other                      Total
                                        ------------------------   Paid-In     Retained  Comprehensive   Treasury   Stockholders'
                                            Shares       Amount     Capital    Earnings      Income        Stock        Equity
                                        --------------- -------- ------------ ---------- ------------- ------------ ----------------

<S>                                      <C>            <C>      <C>         <C>           <C>         <C>           <C>
Balance, December 30, 2001.............   72,336,788     $ 723    $ 180,802   $ 354,950     $    14     $(211,306)    $ 325,183

   Comprehensive income:
     Net earnings......................         --         --           --       62,735          --          --          62,735
     Change in unrealized gain on
       short-term investments,
       net of income taxes.............         --         --           --          --            3          --               3
                                        --------------- -------- ------------ ---------- ------------- ------------ ----------------
   Total comprehensive income..........         --         --           --       62,735           3          --          62,738
                                        --------------- -------- ------------ ---------- ------------- ------------ ----------------

   Purchases of treasury stock.........         --         --           --          --           --       (26,113)      (26,113)
   Stock options exercised and
     related tax benefit...............         --         --         1,898         --           --         3,290         5,188
   Shares issued under employee
     stock and 401(k) plans............         --         --         2,390         --           --         1,839         4,229
   Restricted shares awarded
     under equity incentive plan.......         --         --             8         --           --           493           501
   Unearned compensation relating
     to restricted shares..............         --         --           467         --           --          --             467
   Repayments of notes receivable from
     officers for stock sales..........         --         --           490         --           --          --             490
   Dividends paid for fractional shares         --         --           --         (33)          --          --             (33)
                                        --------------- -------- ------------ --- ------ ------------- ------------ ----------------

Balance, September 29, 2002............   72,336,788     $ 723    $ 186,055   $ 417,652     $    17     $(231,797)    $ 372,650
                                        =============== ======== ============ ========== ============= ============ ================


</TABLE>

                 See notes to consolidated financial statements.

                                       5
<PAGE>



                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                             39 Weeks Ended
                                                                                   -----------------------------------
                                                                                   September 29,       September 30,
                                                                                        2002               2001
                                                                                   ---------------    ----------------
<S>                                                                                 <C>                <C>
       CASH FLOWS FROM OPERATING ACTIVITIES:
            Net earnings.....................................................        $    62,735        $     51,363
            Adjustments to reconcile net earnings to net
               cash provided by operating activities:
               Depreciation and amortization.................................             25,812              23,544
               Amortization of intangible assets.............................                285               4,388
               Amortization of deferred financing costs......................                145                 544
               Deferred income tax benefit (provision).......................                635              (3,503)
               Loss on disposition of restaurants and equipment..............              1,479               1,087
               Income tax benefit from exercise of options...................              1,397               3,017
            Changes in assets and liabilities:
               Receivables...................................................             (2,380)               (209)
               Inventories...................................................              3,095               2,668
               Prepaid and other current assets..............................             (1,574)             (1,205)
               Accounts payable..............................................              5,910              (3,689)
               Accrued expenses and other current liabilities................             (5,263)               (471)
               Accrued income taxes..........................................                940               9,854
               Franchise deposits............................................               (333)               (140)
               Other.........................................................              1,371              (1,897)
                                                                                   ---------------    ----------------
               NET CASH PROVIDED BY OPERATING ACTIVITIES.....................             94,254              85,351
                                                                                   ---------------    ----------------
       CASH FLOWS FROM INVESTING ACTIVITIES:
            Purchases of property and equipment..............................            (49,680)            (38,181)
            Proceeds from sale of restaurants and equipment..................                  3                 433
            Purchases of short-term investments..............................               (150)               (149)
            Maturities and sales of short-term investments...................                350                 474
                                                                                   ---------------    ----------------
               NET CASH USED BY INVESTING ACTIVITIES.........................            (49,477)            (37,423)
                                                                                   ---------------    ----------------
       CASH FLOWS FROM FINANCING ACTIVITIES:
            Purchases of treasury stock......................................            (26,113)            (44,987)
            Dividends paid...................................................             (3,010)             (2,779)
            Issuance of common stock upon exercise of stock options..........              3,791              13,049
            Shares sold under employee stock purchase plan...................              1,529                 828
            Proceeds from issuance of notes payable..........................              3,500                 --
            Payments on long-term debt.......................................            (39,000)            (11,430)
                                                                                   ---------------    ----------------
               NET CASH USED BY FINANCING ACTIVITIES.........................            (59,303)            (45,319)
                                                                                   ---------------    ----------------
       NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................            (14,526)              2,609
       CASH AND CASH EQUIVALENTS, beginning of period........................             22,048              10,763
                                                                                   ---------------    ----------------
       CASH AND CASH EQUIVALENTS, end of period..............................        $     7,522        $     13,372
                                                                                   ===============    ================

</TABLE>


                 See notes to consolidated financial statements.


                                       6
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                            39 Weeks Ended
                                                                                 -------------------------------------
                                                                                  September 29,       September 30,
                                                                                      2002                 2001
                                                                                 ----------------    -----------------

<S>                                                                                <C>                 <C>
Supplemental disclosures of cash flow information:
     Cash paid during the 39 week period for:
       Income taxes........................................................         $   30,172          $   20,483
                                                                                 ================    =================
       Interest............................................................         $    1,159          $    5,676
                                                                                 ================    =================

</TABLE>


Disclosure of Accounting Policy:

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


                               See notes to consolidated financial statements.


                                       7
<PAGE>


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

1.    Basis of Presentation

Our  consolidated  financial  statements  included  in this  Form 10-Q have been
prepared without audit (except that the balance sheet information as of December
30, 2001 has been  derived from  consolidated  financial  statements  which were
audited) in accordance  with the rules and  regulations  of the  Securities  and
Exchange  Commission.  Although  certain  information  and footnote  disclosures
normally included in financial statements prepared in accordance with accounting
principles  generally  accepted  in the  United  States  of  America  have  been
condensed or omitted,  we believe that the  disclosures are adequate to make the
information presented not misleading.  The accompanying  consolidated  financial
statements should be read in conjunction with the audited  financial  statements
and notes thereto included in our Annual Report on Form 10-K for the fiscal year
ended December 30, 2001.

We  believe  that  all   adjustments,   consisting  only  of  normal   recurring
adjustments,  necessary  for a fair  presentation  of the results of the interim
periods  presented  have been made.  The results of  operations  for the interim
periods  presented are not necessarily  indicative of the results to be expected
for the full year.

We have made certain  reclassifications to the consolidated financial statements
to conform to the 2002 presentation.

2.  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 two
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.

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 September 29, 2002,  the aggregate  amount of
these remaining lease payments  totaled  approximately  $25,200,000.  The buyers
have indemnified us from any losses related to these guaranties.

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 September  29, 2002,  we would have been required to
make payments totaling approximately  $7,900,000. 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  $5,900,000 if such officers had
been terminated as of September 29, 2002.


                                       8
<PAGE>


3.  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 amounts in the chart,  except per share  amounts,  are  expressed in
thousands.
<TABLE>
<CAPTION>

                                                            13 Weeks Ended                   39 Weeks Ended
                                                   ----------------------------------------------------------------
                                                    September 29,   September 30,    September 29,   September 30,
                                                        2002             2001            2002             2001
                                                   --------------- ---------------  --------------- ---------------

<S>                                                  <C>            <C>              <C>             <C>
Net earnings......................................   $   20,995      $    16,786      $   62,735      $    51,363
                                                   =============== ===============  =============== ===============

Basic weighted average shares outstanding.........       55,654           55,366          55,801           55,470
Dilutive effect of stock options and
     performance shares...........................        1,060            1,455           1,318            1,266
                                                   --------------- ---------------  --------------- ---------------
Diluted weighted average shares outstanding.......       56,714           56,821          57,119           56,736
                                                   =============== ===============  =============== ===============

Basic net earnings per common share...............   $     0.38      $      0.30      $     1.12      $      0.93
                                                   =============== ===============  =============== ===============
Diluted net earnings per common share.............   $     0.37      $      0.30      $     1.10      $      0.91
                                                   =============== ===============  =============== ===============
</TABLE>


4.  Stock Split

On May 9, 2002, we declared a three-for-two stock split, effected in the form of
a 50% stock dividend, to shareholders of record on May 24, 2002, payable on June
11, 2002. We issued approximately  24,100,000 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.

5.  Goodwill and Other Intangible Assets

We adopted  Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  142,
"Goodwill and Other Intangible  Assets",  effective  December 31, 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.  In the first quarter
of fiscal 2002,  we completed the first step of the required  two-step  goodwill
impairment  testing and ceased  amortization of goodwill.  The first step of the
impairment  test required us to compare the fair value of each reporting unit to
its  carrying  value  to  determine  whether  there  was an  indication  that an
impairment existed. If there had been an indication of impairment, we would have
allocated the fair value of the reporting unit to its assets and  liabilities as
if the reporting unit had been acquired in a business combination. No impairment
losses were recorded upon the initial adoption of SFAS No. 142.

                                       9

<PAGE>


The effect of the  adoption of SFAS No. 142 on net income and earnings per share
is as  follows  (in  thousands,  except  per share  amounts.  May not add due to
rounding):
<TABLE>
<CAPTION>

                                                            13 Weeks Ended                   39 Weeks Ended
                                                   ----------------------------------------------------------------
                                                    September 29,   September 30,    September 29,   September 30,
                                                        2002             2001            2002             2001
                                                   --------------- ---------------  --------------- ---------------

<S>                                                 <C>             <C>              <C>             <C>
Net earnings, as reported.........................   $   20,995      $    16,786      $   62,735      $    51,363
Goodwill amortization (net of income taxes).......          --               837             --             2,512
                                                   --------------- ---------------  --------------- ---------------
Net earnings, as adjusted.........................   $   20,995      $    17,623      $   62,735      $    53,875
                                                   =============== ===============  =============== ===============

Basic net earnings per common share,
    as reported...................................   $     0.38      $      0.30      $     1.12      $      0.93
Goodwill amortization (net of income taxes).......          --              0.02             --              0.05
                                                   --------------- ---------------  --------------- ---------------
Basic net earnings per common share,
    as reported...................................   $     0.38      $      0.32      $     1.12      $      0.97
                                                   =============== ===============  =============== ===============

Diluted net earnings per common share,
    as reported...................................   $     0.37      $      0.30      $     1.10      $      0.91
Goodwill amortization (net of income taxes).......          --              0.01             --              0.04
                                                   --------------- ---------------  --------------- ---------------
Diluted net earnings per common share,
    as reported                                      $     0.37      $      0.31      $     1.10      $      0.95
                                                   =============== ===============  =============== ===============
</TABLE>

Intangible  assets  subject to  amortization  pursuant  to SFAS No. 142  consist
primarily  of  franchise  interest  and  rights  and are  summarized  below  (in
thousands):
<TABLE>
<CAPTION>

                                              September 29,          December 30,
                                                  2002                   2001
                                            ------------------    ------------------
<S>                                                <C>                   <C>
Gross carrying amount                               $6,371                $6,371
Less, accumulated amortization                       4,820                 4,571
                                            ------------------    ------------------
Net                                                 $1,551                $1,800
                                            ==================    ==================
</TABLE>

We expect annual  amortization  expense for all  intangible  assets for the next
five fiscal years to range from approximately $280,000 to $380,000.

6.  New Accounting Pronouncements

     In August 2001, the Financial  Accounting  Standards  Board ("FASB") 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 adopted SFAS No. 144 effective  December 31,
2001.  The  adoption  of SFAS No.  144 did not  have a  material  impact  on our
consolidated financial statements.


                                       10
<PAGE>


In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical  Corrections."
SFAS Nos. 4 and 64 required gains and losses from  extinguishment  of debt to be
classified as  extraordinary  items.  SFAS No. 145 rescinds this requirement and
stipulates that gains or losses on extinguishment of debt would have to meet the
criteria of APB Opinion No. 30 to be  classified  as an  extraordinary  item. In
addition,  any extraordinary  gains or losses on extinguishment of debt in prior
periods presented would require reclassification.  SFAS No. 145 is effective for
fiscal years  beginning  after May 15, 2002.  We are  currently  evaluating  the
impact of this Statement.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities." This Statement requires that a liability for
a cost associated with an exit or disposal  activity be recognized only when the
liability is incurred and measured at fair value.  SFAS No. 146 is effective for
exit or disposal  activities  that are initiated  after December 31, 2002. We do
not expect the initial  adoption of this Statement to have a material  impact on
our results of operations or financial position.

7.  Subsequent Event

On November 7, 2002,  we acquired  the  operations  and assets of 21  Applebee's
restaurants  located in the Washington,  D.C. area from a franchisee.  Under the
terms of the purchase agreement and the agreement with the franchisee's  secured
lender,  the total purchase price of the acquisition was $34.3 million,  subject
to  adjustment.  The  agreement  also  provides for  additional  payments if the
restaurants  achieve cash flows in excess of  historical  levels in the first 18
months  after the closing of the  acquisition.  Our  financial  statements  will
reflect the results of operations for these  restaurants  subsequent to the date
of acquisition.


                                       11
<PAGE>



Item 2.       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 restaurant  opened).  Beverage
sales represent 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  quarters  ended  September  29,  2002 and  September  30,  2001 each
contained 13 weeks and are  referred to hereafter as the "2002  quarter" and the
"2001 quarter",  respectively.  Our 39 week periods ended September 29, 2002 and
September 30, 2001 are referred to hereafter as the "2002  year-to-date  period"
and the "2001 year-to-date period," respectively.

Application of Critical Accounting Policies

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  is 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  have  identified  the  following  accounting  policies  as  critical  to the
understanding  of  our  consolidated  financial  statements  (see  Note 2 of our
Consolidated  Financial  Statements  in our  Annual  Report on Form 10-K for the
fiscal year ended December 30, 2001 for a complete discussion of our significant
accounting policies).

Franchise income: Franchise income consists of franchise royalties and franchise
fees. We recognize  royalties on a franchisee's sales in the period in which the
sales  occur.  We also  receive  a  franchise  fee for  each  restaurant  that a
franchisee opens. This franchise fee is recognized as income when the restaurant
opens.


                                       12
<PAGE>



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  best  expectations.   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 and/or appraisals. This assessment process requires the use of
estimates  and  assumptions  which  are  subject  to  a  significant  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.

Legal and  insurance  reserves:  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 third party's  detailed  examination  of historical  and industry  claims
experience.  These  estimates  may change in the  future  and may  require us to
revise these accruals.

Employee  incentive  compensation  plans:  We have  various  long-term  employee
incentive compensation plans which require us to make estimates to determine our
liability.  If  performance  against the  criteria in each plan differs from our
estimates  in  the  future,   we  will  be  required  to  adjust  our  liability
accordingly.

Receivables:   We  continually   assess  the  collectibility  of  our  franchise
receivables  based on several  factors,  using  estimates  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 periodically  reassess our  assumptions  and judgements and make  adjustments
when significant facts and circumstances  dictate.  A change in any of the above
estimates could impact our  consolidated  statements of earnings and the related
asset or liability recorded in the consolidated balance sheets would be adjusted
accordingly.  Historically,  actual results have not been  materially  different
than the estimates that are described above.


                                       13
<PAGE>


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>

                                                                13 Weeks Ended                         39 Weeks Ended
                                                      -----------------------------------    ------------------------------------
                                                       September 29,      September 30,       September 29,       September 30,
                                                           2002                2001               2002                2001
                                                      ----------------    ---------------    ----------------    ----------------
<S>                                                        <C>                 <C>                <C>                 <C>
Revenues:
     Company restaurant sales.....................           87.5%               87.3%              87.5%               87.4%
     Franchise income.............................           12.5                12.7               12.5                12.6
                                                      ----------------    ---------------    ----------------    ----------------
        Total operating revenues..................          100.0%              100.0%             100.0%              100.0%
                                                      ================    ===============    ================    ================
Cost of sales (as a percentage of
     company restaurant sales):
     Food and beverage............................           26.1%               27.1%              26.5%               27.0%
     Labor........................................           32.9                32.2               32.9                31.9
     Direct and occupancy.........................           25.7                25.2               25.0                25.4
     Pre-opening expense..........................            0.4                 0.4                0.3                 0.2
                                                      ----------------    ---------------    ----------------    ----------------
        Total cost of sales.......................           85.1%               84.9%              84.6%               84.5%
                                                      ================    ===============    ================    ================
General and administrative expenses...............            9.6%               10.2%               9.6%                9.8%
Amortization of intangible assets.................            --                  0.8                --                  0.8
Loss on disposition of restaurants and equipment..            0.2                 0.2                0.2                 0.2
                                                      ----------------    ---------------    ----------------    ----------------
Operating earnings................................           15.6                14.7               16.0                15.4
                                                      ----------------    ---------------    ----------------    ----------------
Other income (expense):
     Investment income............................            0.2                 0.3                0.2                 0.2
     Interest expense.............................           (0.2)               (1.0)              (0.3)               (1.1)
     Other income.................................            0.2                 0.2                0.2                 0.1
                                                      ----------------    ---------------    ----------------    ----------------
        Total other income (expense)..............            0.2                (0.5)               0.1                (0.8)
                                                      ----------------    ---------------    ----------------    ----------------
Earnings before income taxes......................           15.8                14.1               16.1                14.6
Income taxes......................................            5.8                 5.2                5.9                 5.4
                                                      ----------------    ---------------    ----------------    ----------------
Net earnings......................................           10.1%                8.9%              10.2%                9.2%
                                                      ================    ===============    ================    ================

</TABLE>


                                       14


<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>

                                                           13 Weeks Ended                   39 Weeks Ended
                                                    -------------------------------  -------------------------------
                                                     September 29,   September 30,    September 29,   September 30,
                                                          2002            2001            2002             2001
                                                    --------------- ---------------  ---------------  --------------
<S>                                                 <C>             <C>              <C>              <C>
 Number of restaurants:
      Company:
          Beginning of period.....................          318             289              310              285
          Restaurant openings.....................           11               9               19               13
          Restaurant closings.....................           --              --               --               --
                                                    --------------- ---------------  ---------------  --------------
          End of period...........................          329             298              329              298
                                                    --------------- ---------------  ---------------  --------------
      Franchise:
          Beginning of period.....................        1,103           1,035            1,082            1,001
          Restaurant openings.....................           26              25               50               61
          Restaurant closings.....................           --              --               (3)              (2)
                                                    --------------- ---------------  ---------------  --------------
          End of period...........................        1,129           1,060            1,129            1,060
                                                    --------------- ---------------  ---------------  --------------
      Total:
          Beginning of period.....................        1,421           1,324            1,392            1,286
          Restaurant openings.....................           37              34               69               74
          Restaurant closings.....................           --              --               (3)              (2)
                                                    --------------- ---------------  ---------------  --------------
          End of period...........................        1,458           1,358            1,458            1,358
                                                    =============== ===============  ===============  ==============

 Weighted average weekly sales per restaurant:
          Company.................................   $   43,474      $   43,118       $   43,424       $   43,126
          Franchise...............................   $   44,105      $   42,680       $   44,252       $   42,646
          Total...................................   $   43,963      $   42,776       $   44,067       $   42,752
 Change in comparable restaurant sales:(1)
          Company.................................          1.7 %           1.9 %            1.5 %            2.9 %
          Franchise...............................          3.1 %           2.9 %            3.6 %            3.0 %
          Total...................................          2.8 %           2.7 %            3.1 %            3.0 %

 Total system sales (in thousands)................   $  822,640      $  745,887       $2,430,412       $2,191,326


</TABLE>







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





                                       15



<PAGE>



Company Restaurant Sales.  Total company restaurant sales increased  $18,569,000
(11%) from  $164,238,000 in the 2001 quarter to $182,807,000 in the 2002 quarter
and  increased  $50,257,000  (10%) from  $486,416,000  in the 2001  year-to-date
period to $536,673,000 in the 2002 year-to-date  period due primarily to company
restaurant openings and increases in comparable restaurant sales.

Comparable restaurant sales at company restaurants increased by 1.7% and 1.5% in
the  2002  quarter  and the 2002  year-to-date  period,  respectively.  Weighted
average weekly sales at company  restaurants  increased 0.8% from $43,118 in the
2001 quarter to $43,474 in the 2002 quarter and also increased 0.7% from $43,126
in the 2001  year-to-date  period to  $43,424 in the 2002  year-to-date  period.
These  increases  were due  primarily  to an increase  in guest  traffic in both
periods  and an increase  in the  average  guest check in the 2002  year-to-date
period resulting from the company's food promotions.  In addition,  a portion of
the  increase in both  periods  resulted  from the  implementation  of our To Go
initiative  in 2002 and a menu price  increase  of  approximately  1.0% in early
August 2002.

Franchise  Income.  Overall  franchise  income  increased  $2,246,000  (9%) from
$23,787,000 in the 2001 quarter to $26,033,000 in the 2002 quarter and increased
$6,451,000 (9%) from $69,906,000 in the 2001 year-to-date  period to $76,357,000
in the 2002  year-to-date  period.  These  increases  were due  primarily to the
increased number of franchise Applebee's  restaurants  operating during the 2002
quarter and 2002  year-to-date  period and  increases in  comparable  restaurant
sales. Weighted average weekly sales at franchise restaurants increased 3.3% and
3.8%  in the  2002  quarter  and  2002  year-to-date  period,  respectively  and
franchise  comparable  restaurant  sales  increased  3.1%  and  3.6% in the 2002
quarter and 2002 year-to-date periods, respectively.

Cost of Company  Restaurant  Sales. Food and beverage costs decreased from 27.1%
in the 2001 quarter to 26.1% in the 2002 quarter and decreased from 27.0% in the
2001 year-to-date period to 26.5% in the 2002 year-to-date period. The decreases
in both the 2002  quarter  and the 2002  year-to-date  period  were due to lower
commodity  costs  relating  to our food  promotions  and the  benefit of certain
supply chain management initiatives implemented in 2001.

Labor  costs  increased  from 32.2% and 31.9% in the 2001  quarter  and the 2001
year-to-date  period,  respectively,  to 32.9% in both the 2002 quarter and 2002
year-to-date  period. These increases were due primarily to higher costs related
to wage rates,  management incentive  compensation  relating to a new restaurant
management bonus program and workers compensation and group insurance costs.

Direct and occupancy  costs increased from 25.2% in the 2001 quarter to 25.7% in
the 2002 quarter and  decreased  from 25.4% in the 2001  year-to-date  period to
25.0% in the 2002 year-to-date period.  Direct and occupancy costs were impacted
in both periods by lower utility costs,  higher  packaging costs relating to our
To Go initiative and higher insurance costs.  Advertising costs, as a percentage
of sales, also decreased in the 2002 year-to-date period.

General  and  Administrative  Expenses.   General  and  administrative  expenses
decreased  from  10.2% in the  2001  quarter  and 9.8% in the 2001  year-to-date
period to 9.6% in both the 2002 quarter and 2002  year-to-date  period.  General
and  administrative  expenses  were  lower  in both the  2002  quarter  and 2002
year-to-date  period as a result of costs incurred in 2001  associated  with our
purchasing  supply  chain  and  strategic  brand  assessment  projects  and  the
absorption of general and  administrative  expenses over a larger  revenue base.
These decreases were partially  offset by higher legal fees and expenses related
to certain litigation and higher incentive compensation.

                                       16
<PAGE>

Amortization of Intangible  Assets:  Amortization of intangible assets decreased
from $1,463,000 in the 2001 quarter to $95,000 in the 2002 quarter and decreased
from  $4,388,000  in the  2001  year-to  date  period  to  $285,000  in the 2002
year-to-date  period.  These  decreases were due to the  elimination of goodwill
amortization in accordance with SFAS No. 142.

Interest  Expense:  Interest expense  decreased in both the 2002 quarter and the
2002  year-to-date  period due  primarily  to a reduction in our debt levels and
lower interest rates in both periods.

Income Taxes.  The effective income tax rate, as a percentage of earnings before
income  taxes,   decreased  from  36.8%  in  both  the  2001  quarter  and  2001
year-to-date  period to 36.5% in both the 2002 quarter and the 2002 year-to-date
period.

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.  In 2002 and
for the foreseeable  future, we will also use our capital resources to invest in
information  technology  systems.  In the past, we have obtained capital through
public stock offerings,  debt financing, and our ongoing operations.  Cash flows
from our ongoing  operations  include 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 $50,086,000 in fiscal year 2001 and $49,680,000 in the
2002  year-to-date  period.  We  currently  expect  to open at least 25  company
restaurants  in 2002,  and  capital  expenditures  are  expected  to be  between
$63,000,000 and $68,000,000 in fiscal 2002,  excluding the purchase price of the
franchise  acquisition discussed below. 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.

On November 7, 2002,  we acquired  the  operations  and assets of 21  Applebee's
restaurants  located in the Washington,  D.C. area from a franchisee.  Under the
terms of the purchase agreement and the agreement with the franchisee's  secured
lender,  the total purchase price of the acquisition was $34.3 million,  subject
to  adjustment.  The  agreement  also  provides for  additional  payments if the
restaurants  achieve cash flows in excess of  historical  levels in the first 18
months  after the closing of the  acquisition.  Our  financial  statements  will
reflect the results of operations for these  restaurants  subsequent to the date
of acquisition.

Our 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 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 credit agreement.

                                       17
<PAGE>


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.  As of
December 30,  2001,  we had  $20,600,000  remaining  on this  authorization.  In
February 2002, our Board of Directors  extended the 2001  authorization  through
2002. In May 2002, our Board of Directors authorized an additional repurchase of
$75,000,000 of our common stock through May 2005.  During the 2002  year-to-date
period, we repurchased  1,210,000 shares of our common stock at an average price
of $21.58 for an aggregate cost of $26,100,000. As of September 29, 2002, we had
$69,500,000 remaining under these authorizations.

As of September 29, 2002,  our liquid assets  totaled  $8,026,000.  These assets
consisted  of  cash  and  cash  equivalents  in the  amount  of  $7,522,000  and
short-term  investments in the amount of $504,000.  The working  capital deficit
increased  from  $29,747,000  as of  December  30,  2001  to  $43,709,000  as of
September  29, 2002.  This  increase was due  primarily to decreases in cash and
cash  equivalents  due to payments on long-term  debt and an increase in accrued
insurance which were partially offset by the redemption of gift  certificates in
2002 sold in 2001. As of September 29, 2002,  we had  borrowings of  $34,500,000
and standby letters of credit of $5,291,000  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.

On  September  20,  2002,  we formed  Neighborhood  Insurance,  Inc.,  a Vermont
corporation  and a  wholly-owned  subsidiary,  as a captive  insurance  company.
Neighborhood   Insurance,   Inc.   was   established   to   provide   Applebee's
International,  Inc. and our franchisees  with workers  compensation and general
liability  insurance.  Applebee's  International,  Inc. and our franchisees will
make  premium  payments  to  the  captive   insurance  company  which  will  pay
administrative  fees and insurance  claims,  subject to individual and aggregate
maximum claim limits under the captive insurance company's reinsurance policies.
As a result, our cash and cash equivalents and accrued  liabilities may increase
in future periods due to the operation of the captive insurance company.

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  (including principal and interest payments) and other
obligations and our future operating lease commitments as of September 29, 2002:
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------
                      Financial Commitments (in thousands)
----------------------------------------------------------------------------------------------------------------
                                    2002          2003         2004         2005         2006       Thereafter
                                 ------------  ------------ ------------ ------------ ------------ -------------
<S>                              <C>           <C>          <C>          <C>          <C>          <C>
Bank Debt......................   $    3,500    $      --    $   31,000   $     --     $     --     $      --
Capital Lease and Other
      Obligations..............   $      176    $    1,040   $      741   $     767    $     794    $    7,536
Operating Leases...............   $    3,913    $   15,373   $   14,501   $  13,841    $  13,297    $  119,859
</TABLE>

                                       18
<PAGE>


Financial  commitments  for  2002  include  only  payments  to be  made  for the
remaining 13 weeks of fiscal  2002.  In addition,  we have lease  guarantees  of
approximately  $25,200,000  as  of  September  29,  2002  (see  Note  2  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 considering 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 August 2001, the FASB 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 adopted SFAS No. 144
effective  December  31,  2001.  The  adoption  of SFAS  No.  144 did not have a
material impact on our consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical  Corrections."
SFAS Nos. 4 and 64 required gains and losses from  extinguishment  of debt to be
classified as  extraordinary  items.  SFAS No. 145 rescinds this requirement and
stipulates that gains or losses on extinguishment of debt would have to meet the
criteria of APB Opinion No. 30 to be  classified  as an  extraordinary  item. In
addition,  any extraordinary  gains or losses on extinguishment of debt in prior
periods presented would require reclassification.  SFAS No. 145 is effective for
fiscal years  beginning  after May 15, 2002.  We are  currently  evaluating  the
impact of this Statement.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities." This Statement requires that a liability for
a cost associated with an exit or disposal  activity be recognized only when the
liability is incurred and measured at fair value.  SFAS No. 146 is effective for
exit or disposal  activities  that are initiated  after December 31, 2002. We do
not expect the initial  adoption of this Statement to have a material  impact on
our results of operations or financial position.

In October 2002, the FASB issued an Exposure Draft relating to the  transitional
methods for the accounting for stock-based compensation. Under the provisions of
this proposed Statement, the FASB provides for alternative methods of transition
for voluntary  changes to the fair value method of accounting.  We are currently
evaluating the adoption of the fair value method of accounting  for  stock-based
compensation.  In fiscal  2001,  the  impact on  diluted  earnings  per share of
adopting the fair value method of accounting  excluding any potential cumulative
effect of stock-based  compensation  prior to fiscal 2001 would have been $0.08.
We are waiting further  clarification from the FASB on this issue before we make
our final decision.

                                       19
<PAGE>


Forward-Looking Statements

The  statements  contained  in the  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of  Operations"  section  regarding  restaurant
development,  costs and expenses, 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  from our  estimates,  you should  read our
current  report  on Form 8-K which we filed  with the  Securities  and  Exchange
Commission   on  July  16,   2002.   We  disclaim  any   obligation   to  update
forward-looking statements.

Item 3.       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 September 29, 2002,
the total amount of debt subject to interest rate  fluctuations  was $34,500,000
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 $345,000
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 4.       Controls and Procedures

Within  ninety days prior to the filing of this report,  we have  evaluated  the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures  under  the  supervision  and with  the  participation  of the  Chief
Executive  Officer ("CEO") and Chief Financial  Officer  ("CFO").  Based on this
evaluation,  our  management,  including  the CEO and  CFO,  concluded  that our
disclosure   controls  and  procedures  were  effective.   There  have  been  no
significant  changes in our  internal  controls or in other  factors  that could
significantly   affect  internal  controls  subsequent  to  the  date  of  their
evaluation.


                                       20
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.     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 two  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 6.     Exhibits and Reports on Form 8-K

            (a)   The  Exhibits listed  on the accompanying  Exhibit  Index  are
                  filed as part of this report.

            (b)   We  furnished a report on Form  8-K on July 8, 2002 announcing
                  our presentation  at  the  CIBC World Markets Consumer  Growth
                  Conference.

                  We filed a report on Form 8-K on July 16, 2002 announcing our
                  agreement to acquire 21 franchise restaurants.

                  We filed a report on Form 8-K on July 16,  2002 in  accordance
                  with the Private  Securities  Litigation Reform Act of 1995 as
                  it   relates   to  a  safe   harbor   for   companies   making
                  forward-looking  statements.  The factors listed in the report
                  are  important  factors  that could  cause  actual  results to
                  differ  materially  from those we  project in  forward-looking
                  statements.

                  We furnished a report on Form 8-K on July 26, 2002  announcing
                  our broadcast of the second  quarter 2002 earnings  conference
                  call over the Internet.

                  We filed a report  on Form 8-K on  August  1,  2002  reporting
                  second quarter earnings.

                  We filed a report on Form 8-K on  August  28,  2002  reporting
                  August comparable sales.

                  We filed a report on Form 8-K on September 6, 2002  announcing
                  a court  extension  of the  approval  date for the sale of the
                  Apple Capitol restaurants.

                  We  furnished  a report  on Form  8-K on  September  18,  2002
                  announcing our presentation at the Banc of America  Securities
                  Investment Conference.

                  We  furnished  a report  on Form  8-K on  September  27,  2002
                  announcing  our   presentation  at  the  RBC  Capital  Markets
                  Consumer Conference.


                                       21
<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.
                                   (Registrant)



Date: November 8, 2002          By:  /s/    Lloyd L. Hill
      ------------------           ---------------------------------------------
                                   Lloyd L. Hill
                                   Chairman and Chief Executive Officer
                                   (principal executive officer)

Date: November 8, 2002          By:  /s/    Steven K. Lumpkin
      ------------------           ---------------------------------------------
                                   Steven K. Lumpkin
                                   Executive Vice President and
                                   Chief Financial Officer
                                   (principal financial and accounting officer)




                                       22
<PAGE>



                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Lloyd L. Hill, certify that:

1.   I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  Applebee's
     International, Inc.;
2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;
4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;
          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and
          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;
5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):
          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and
          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and
6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: November 8, 2002           By:  /s/    Lloyd L. Hill
     --------------------           ---------------------------------------
                                    Lloyd L. Hill
                                    Chairman and Chief Executive Officer
                                    (principal executive officer)


                                       23
<PAGE>


                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Steven K. Lumpkin, certify that:

1.   I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  Applebee's
     International, Inc.;
2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;
4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;
          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and
          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;
5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):
          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and
          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and
6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: November 8, 2002           By: /s/    Steven K. Lumpkin
     --------------------           ---------------------------------------
                                    Steven K. Lumpkin
                                    Executive Vice President and
                                    Chief Financial Officer
                                    (principal financial and accounting officer)



                                       24
<PAGE>



                         APPLEBEE'S INTERNATIONAL, INC.
                                  EXHIBIT INDEX



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

        4.1    Certificate of Adjustment of Shareholder Rights Plan contained in
               Rights   Agreement  dated  as  of  September  7,  1994,   between
               Applebee's  International,  Inc.  and  Chemical  Bank,  as Rights
               Agent, as amended.

       10.1    Employment  Agreement  dated  August  7,  2002,  with  Steven  K.
               Lumpkin.

       10.2    Asset Purchase Agreement between Applebee's  International,  Inc.
               and Apple Capitol Group, LLC dated as of July 16, 2002.

       10.3    Assignment  Agreement between Lehman Brothers Holdings,  Inc. and
               Applebee's International, Inc. dated as of October 1, 2002.

       99.1    Certifications  of  Chairman  and  Chief  Executive  Officer  and
               Executive Vice President and Chief Financial Officer.





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