18
                                  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                  March 30, 2003
                               -------------------------------------------------

                                       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
                                        -----    -----

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined by Rule 12b-2 of the Act).   Yes  X    No
                                        -----    -----

The number of shares of the  registrant's  common stock  outstanding as of April
24, 2003 was 55,471,691.

                                        1
<PAGE>


                         APPLEBEE'S INTERNATIONAL, INC.
                                    FORM 10-Q
                       FISCAL QUARTER ENDED MARCH 30, 2003
                                      INDEX

<TABLE>
<CAPTION>

                                                                                                               Page

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

Item 1.             Consolidated Financial Statements:

                    Consolidated Balance Sheets as of March 30, 2003
                       and December 29, 2002................................................................      3

                    Consolidated Statements of Earnings for the 13 Weeks
                       Ended March 30, 2003 and March 31, 2002..............................................      4

                    Consolidated Statement of Stockholders' Equity for the
                       13 Weeks Ended March 30, 2003........................................................      5

                    Consolidated Statements of Cash Flows for the 13 Weeks
                       Ended March 30, 2003 and March 31, 2002 .............................................      6

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

Item 2.             Management's Discussion and Analysis of
                       Financial Condition and Results of Operations........................................     13

Item 3.             Quantitative and Qualitative Disclosures About Market Risk..............................     22

Item 4.             Controls and Procedures.................................................................     22



Part II             Other Information

Item 1.             Legal Proceedings.......................................................................     23

Item 6.             Exhibits and Reports on Form 8-K........................................................     23


Signatures .................................................................................................     25

Certifications .............................................................................................     26

Exhibit Index...............................................................................................     28

</TABLE>

                                       2
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                          March 30,         December 29,
                                                                                            2003               2002
                                                                                        --------------     -------------
                                     ASSETS

<S>                                                                                     <C>                <C>
Current assets:
     Cash and cash equivalents........................................................   $    9,805         $   15,169
     Short-term investments, at market value (amortized cost of $428 in 2003 and
        $478 in 2002).................................................................          471                503
     Receivables (less allowance for bad debts of $4,309 in 2003 and $4,089 in 2002)..       29,469             26,092
     Receivables related to captive insurance subsidiary..............................       14,031              1,803
     Inventories......................................................................       19,852             11,504
     Prepaid income taxes.............................................................          --               5,002
     Prepaid and other current assets.................................................        7,489              9,506
                                                                                        --------------     -------------
        Total current assets..........................................................       81,117             69,579
Property and equipment, net...........................................................      390,143            383,002
Goodwill..............................................................................      105,326             88,715
Franchise interest and rights, net....................................................        1,385              1,468
Other assets..........................................................................       25,667             23,350
                                                                                        --------------     -------------
                                                                                         $  603,638         $  566,114
                                                                                        ==============     =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of long-term debt................................................   $      497         $      377
     Accounts payable.................................................................       28,992             27,479
     Accrued expenses and other current liabilities...................................       72,836             82,204
     Accrued liabilities related to captive insurance subsidiary......................       14,009              1,803
     Accrued dividends................................................................          --               3,323
     Accrued income taxes.............................................................        6,809                --
                                                                                        --------------     -------------
        Total current liabilities.....................................................      123,143            115,186
                                                                                        --------------     -------------
Non-current liabilities:
     Long-term debt - less current portion............................................       58,789             52,186
     Other non-current liabilities....................................................        8,163              6,161
                                                                                        --------------     -------------
        Total non-current liabilities.................................................       66,952             58,347
                                                                                        --------------     -------------
        Total liabilities.............................................................      190,095            173,533
                                                                                        --------------     -------------
Commitments and contingencies (Note 3)
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.......................................................      191,830            187,523
     Retained earnings................................................................      459,223            434,621
     Accumulated other comprehensive income, net of income taxes......................           27                 16
                                                                                        --------------     -------------
                                                                                            651,803            622,883
     Treasury stock - 16,908,555 shares in 2003 and 16,948,371 shares in 2002, at
        cost..........................................................................     (238,260)          (230,302)
                                                                                        --------------     -------------
        Total stockholders' equity....................................................      413,543            392,581
                                                                                        --------------     -------------
                                                                                         $  603,638         $  566,114
                                                                                        ==============     =============

</TABLE>

                 See notes to consolidated financial statements.

                                       3
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                 13 Weeks Ended
                                                                         --------------------------------
                                                                           March 30,         March 31,
                                                                             2003              2002
                                                                         -------------     -------------
<S>                                                                       <C>               <C>
       Revenues:
            Company restaurant sales................................       $ 208,410         $ 174,973
            Franchise royalties and fees............................          27,163            24,840
            Other franchise income..................................           2,641               134
                                                                         -------------     -------------
               Total operating revenues.............................         238,214           199,947
                                                                         -------------     -------------
       Cost of company restaurant sales:
            Food and beverage.......................................          54,846            47,407
            Labor...................................................          68,364            57,457
            Direct and occupancy....................................          50,561            42,872
            Pre-opening expense.....................................             221               335
                                                                         -------------     -------------
               Total cost of company restaurant sales...............         173,992           148,071
                                                                         -------------     -------------
       Cost of other franchise income...............................           2,500                60
       General and administrative expenses..........................          22,620            19,320
       Amortization of intangible assets............................              99               138
       Loss on disposition of restaurants and equipment.............             467               294
                                                                         -------------     -------------
       Operating earnings...........................................          38,536            32,064
                                                                         -------------     -------------
       Other income (expense):
            Investment income.......................................             336               397
            Interest expense........................................            (521)             (633)
            Other income............................................             205               101
                                                                         -------------     -------------
               Total other income (expense).........................              20              (135)
                                                                         -------------     -------------
       Earnings before income taxes.................................          38,556            31,929
       Income taxes.................................................          13,954            11,654
                                                                         -------------     -------------
       Net earnings.................................................       $  24,602         $  20,275
                                                                         =============     =============

       Basic net earnings per common share..........................       $    0.45         $    0.36
                                                                         =============     =============
       Diluted net earnings per common share........................       $    0.43         $    0.35
                                                                         =============     =============

       Basic weighted average shares outstanding....................          55,272            55,878
                                                                         =============     =============
       Diluted weighted average shares outstanding..................          56,677            57,327
                                                                         =============     =============


</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 (Loss)     Stock         Equity
                                    -------------- ---------- ------------ ---------- ------------- ------------ ----------------

<S>                                  <C>            <C>       <C>          <C>          <C>         <C>            <C>
Balance, December 29, 2002........    72,336,788     $ 723     $ 187,523    $434,621     $     16    $(230,302)     $ 392,581

   Comprehensive income:
     Net earnings.................         --          --           --        24,602           --         --           24,602
     Change in unrealized gain on
       short-term investments,
       net of income taxes........         --          --           --          --             11         --               11
                                    -------------- ---------- ------------ ---------- ------------- ------------ ----------------

   Total comprehensive income.....         --          --           --        24,602           11         --           24,613
                                    -------------- ---------- ------------ ---------- ------------- ------------ ----------------

   Purchases of treasury stock....         --          --           --          --             --      (13,282)       (13,282)
   Stock options exercised and
     related tax benefit..........         --          --          3,477        --             --        4,019          7,496
   Shares issued under employee
     stock and 401(k) plans.......         --          --          1,116        --             --          736          1,852
   Restricted shares awarded
     under equity incentive plan..         --          --           (540)       --             --          569             29
   Unearned compensation relating
     to restricted shares.........         --          --            254        --             --         --              254
                                    -------------- ---------- ------------ ---------- ------------- ------------ ----------------

Balance, March 30, 2003...........    72,336,788     $ 723     $ 191,830    $459,223     $     27    $(238,260)     $ 413,543
                                    ============== ========== ============ ========== ============= ============ ================


</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>

                                                                                            13 Weeks Ended
                                                                                    --------------------------------
                                                                                      March 30,          March 31,
                                                                                        2003               2002
                                                                                    --------------     -------------
<S>                                                                                  <C>                <C>
       CASH FLOWS FROM OPERATING ACTIVITIES:
            Net earnings.......................................................       $  24,602          $  20,275
            Adjustments to reconcile net earnings to net
               cash provided by operating activities:
               Depreciation and amortization...................................           9,940              8,381
               Amortization of intangible assets...............................              99                138
               Amortization of deferred financing costs........................              48                 48
               Deferred income tax provision...................................             287                873
               Loss on disposition of restaurants and equipment................             467                294
               Income tax benefit from exercise of stock options...............           2,154                665
            Changes in assets and liabilities (exclusive of effects of
               acquisition):
               Receivables.....................................................          (3,022)              (254)
               Receivables related to captive insurance subsidiary.............         (12,228)               --
               Inventories.....................................................          (8,154)            (1,846)
               Prepaid income taxes............................................           5,002                --
               Prepaid and other current assets................................           1,201              1,760
               Accounts payable................................................           1,513              1,462
               Accrued expenses and other current liabilities..................          (9,082)           (11,566)
               Accrued liabilities related to captive insurance subsidiary.....          12,206                --
               Accrued income taxes............................................           6,809              7,007
               Other...........................................................            (610)               157
                                                                                    --------------     -------------
               NET CASH PROVIDED BY OPERATING ACTIVITIES.......................          31,232             27,394
                                                                                    --------------     -------------
       CASH FLOWS FROM INVESTING ACTIVITIES:
            Purchases of property and equipment................................         (10,215)           (10,972)
            Acquisition of restaurants.........................................         (20,758)               --
            Purchases of short-term investments................................             --                 (50)
            Maturities and sales of short-term investments.....................              50                250
                                                                                    --------------     -------------
               NET CASH USED BY INVESTING ACTIVITIES...........................         (30,923)           (10,772)
                                                                                    --------------     -------------
       CASH FLOWS FROM FINANCING ACTIVITIES:
            Purchases of treasury stock........................................         (13,282)            (8,324)
            Dividends paid.....................................................          (3,323)            (2,977)
            Issuance of common stock upon exercise of stock options............           5,342              1,967
            Shares sold under employee stock purchase plan.....................             590                399
            Net proceeds from issuance of long-term debt.......................           5,000                --
            Proceeds from issuance of notes payable............................             --                 500
            Net payments on long-term debt.....................................             --             (20,000)
                                                                                    --------------     -------------
               NET CASH USED BY FINANCING ACTIVITIES...........................          (5,673)           (28,435)
                                                                                    --------------     -------------
       NET DECREASE IN CASH AND CASH EQUIVALENTS...............................          (5,364)           (11,813)
       CASH AND CASH EQUIVALENTS, beginning of period..........................          15,169             22,048
                                                                                    --------------     -------------
       CASH AND CASH EQUIVALENTS, end of period................................       $   9,805          $  10,235
                                                                                    ==============     =============


</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>

                                                                                           13 Weeks Ended
                                                                                 ------------------------------------
                                                                                    March 30,           March 31,
                                                                                      2003                2002
                                                                                 ----------------    ----------------

<S>                                                                                <C>                 <C>
Supplemental disclosures of cash flow information:
     Cash paid during the 13 week period for:
       Income taxes........................................................         $       201         $       203
                                                                                 ================    ================
       Interest............................................................         $       306         $       463
                                                                                 ================    ================
</TABLE>

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

We issued  restricted  common stock of $1,666,000  and $256,000 for the thirteen
weeks ended March 30, 2003 and March 31, 2002, respectively.

On March 24, 2003, we assumed a loan of  approximately  $1,400,000 in connection
with the acquisition of 11 restaurants.


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.


                                       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
29, 2002 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 29, 2002.

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 2003 presentation.

2.  Stock-Based Compensation

We have adopted the disclosure  provisions of Statement of Financial  Accounting
Standards  ("SFAS")  No.  148,   "Accounting  for  Stock-Based   Compensation  -
Transition  and  Disclosure,  an  amendment  of FASB  Statement  No.  123."  The
Statement  requires  prominent  disclosures in both annual and interim financial
statements   regarding  the  method  of  accounting  for  stock-based   employee
compensation and the effect of the method used on reported  results.  We account
for  stock  compensation   awards  under  the  intrinsic  method  of  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.  All options  awarded under all of our plans are granted with
an exercise  price equal to the fair market value on the date of the grant.  The
following  table  presents the effect on our net earnings and earnings per share
had we adopted the fair value method of accounting for stock-based  compensation
under SFAS No. 123,  "Accounting  for Stock-Based  Compensation"  (in thousands,
except for per share amounts).




                                       8
<PAGE>

<TABLE>
<CAPTION>

                                                                             13 Weeks Ended
                                                                   ----------------------------------
                                                                      March 30,         March 31,
                                                                        2003              2002
                                                                   ----------------  ----------------
<S>                                                                 <C>               <C>
Net earnings, as reported........................................    $     24,602      $     20,275

Less: Total stock-based employee compensation expense
    determined under fair value based methods for all
    awards, net of related taxes.................................           2,363               998
                                                                   ----------------  ----------------

Pro forma net earnings...........................................    $     22,239      $     19,277
                                                                   ================  ================

Basic net earnings per common share, as reported.................    $       0.45      $       0.36
                                                                   ================  ================
Basic net earnings per common share, pro forma...................    $       0.40      $       0.34
                                                                   ================  ================

Diluted net earnings per common share, as reported...............    $       0.43      $       0.35
                                                                   ================  ================
Diluted net earnings per common share, pro forma.................    $       0.39      $       0.34
                                                                   ================  ================
</TABLE>

3.  Commitments and Contingencies

Litigation,  claims and disputes: We are involved in various legal actions which
include,  without limitation,  employment law related matters, dram shop claims,
personal injury claims and other such normal restaurant  operational matters. 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 our
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 guarantees:  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 March 30, 2003, the aggregate  amount of these
lease payments totaled approximately $23,900,000. These leases expire at various
times throughout the next several years with the final lease agreement  expiring
in 2018.  The  buyers  have  indemnified  us from any  losses  related  to these
guarantees.  We have not  recorded a liability  as of March 30, 2003 or December
29, 2002.

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 March 30, 2003,  we would have been required to make
payments totaling approximately  $9,400,000.  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  $5,800,000  if such  officers  had  been
terminated as of March 30, 2003.

4.  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

                                       9
<PAGE>


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
                                                                ----------------------------------------------
                                                                      March 30,               March 31,
                                                                        2003                    2002
                                                                ----------------------  ----------------------
<S>                                                                <C>                     <C>
      Net earnings............................................      $     24,602            $     20,275
                                                                ======================  ======================

      Basic weighted average shares outstanding...............            55,272                  55,878
      Dilutive effect of stock options and
           equity-based compensation..........................             1,405                   1,449
                                                                ----------------------   ----------------------
      Diluted weighted average shares outstanding.............            56,677                  57,327
                                                                ======================  ======================

      Basic net earnings per common share.....................      $       0.45            $       0.36
                                                                ======================  ======================
      Diluted net earnings per common share...................      $       0.43            $       0.35
                                                                ======================  ======================
</TABLE>

5.  Goodwill and Other Intangible Assets

Changes in goodwill are summarized below (in thousands):
<TABLE>
<CAPTION>

                                                                      March 30,             December 29,
                                                                        2003                    2002
                                                                ----------------------  ----------------------
<S>                                                                <C>                     <C>
      Carrying amount, beginning of the year..................      $     88,715            $     78,614
      Goodwill acquired during the period.....................            16,611                  10,101
                                                                ----------------------  ----------------------
                                                                    $    105,326            $     88,715
                                                                ======================  ======================
</TABLE>


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

<TABLE>
<CAPTION>

                                                                 March 30,              December 29,
                                                                   2003                     2002
                                                            --------------------     -------------------
<S>                                                          <C>                      <C>
Gross carrying amount..................................       $      6,371             $       6,371
Less, accumulated amortization.........................              4,986                     4,903
                                                            --------------------     -------------------
Net....................................................       $      1,385             $       1,468
                                                            ====================     ===================
</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.  Captive Insurance Subsidiary

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 qualified  franchisees  with workers'  compensation and
general  liability  insurance.   Applebee's  International,   Inc.  and  covered
franchisees  make premium payments to the captive  insurance  company which pays

                                       10
<PAGE>

administrative  fees and insurance  claims,  subject to individual and aggregate
maximum claim limits under the captive insurance company's reinsurance policies.
Franchisee  premium  amounts  billed  by  the  captive  insurance  company  were
established based upon third-party  actuarial  estimates of settlement costs for
incurred claims and administrative fees. The franchisee premiums are included in
other  franchise  income  ratably over the policy year.  The related  offsetting
expenses are included in cost of other franchise income.  Accordingly, we do not
expect  franchisee  participation  in the captive  insurance  company to have an
impact on our net earnings. We have recognized  approximately $2,400,000 in both
revenues  and  expenses  in the  consolidated  statements  of  earnings  for the
thirteen weeks ended March 30, 2003. Our third-party  administrator is currently
holding  the cash  received  from  franchisees  and will  remit  the cash to our
captive  insurance  company,  as collected,  once certain  agreements  have been
finalized. A portion of these cash receipts will be restricted to the payment of
insurance claims and fees.

7.  New Accounting Pronouncements

In June 2002, the Financial  Accounting Standards Board ("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.  The initial  adoption of this Statement
did not have a  material  impact  on our  results  of  operations  or  financial
position.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees,  including  Indirect  Guarantees of
Indebtedness of Others." Interpretation No. 45 supersedes Interpretation No. 34,
"Disclosure  of Indirect  Guarantees  of  Indebtedness  of Others," and provides
guidance to guarantors on the recognition and disclosure concerning  obligations
under certain guarantees in interim and annual financial statements. The initial
recognition and measurement  provisions of  Interpretation  No. 45 are effective
for guarantees issued or modified after December 31, 2002, and are to be applied
prospectively.   The  disclosure   requirements  were  effective  for  financial
statements  for interim or annual  periods  ending after  December 15, 2002.  We
adopted the initial  recognition  provisions of Interpretation No. 45 in January
of 2003. The initial adoption of  Interpretation  No. 45 did not have a material
impact on our results of operations or financial position.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation  - Transition  and  Disclosure."  SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based  Compensation," and provides  alternative methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee compensation. This Statement also amends the disclosure
requirements  of SFAS No.  123 to  require  prominent  disclosure  in annual and
interim financial statements about the effects of stock-based compensation.  The
transition  guidance  and  annual  disclosure  provisions  of SFAS  No.  148 are
effective for financial statements issued for fiscal years ending after December
15, 2002. The interim disclosure provisions of this Statement were effective for
financial reports containing  financial statements for interim periods beginning
after December 15, 2002. We have adopted the  disclosure  provisions of SFAS No.
148.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable   Interest   Entities,   an   Interpretation   of  ARB  No.  51."  This
Interpretation  provides  clarification on the consolidation of certain entities
in which equity  investors do not have sufficient  equity at risk for the entity
to finance its activities without additional subordinated financial support from
other parties. Such entities are defined as variable interest entities ("VIEs").
This Interpretation  requires that VIEs be consolidated by the entity considered
to be the  primary  beneficiary  of the VIE.  The  Interpretation  is  effective
immediately  for newly  created VIEs after January 31, 2003 and effective in the
second  quarter  2003 for any VIEs  created  prior to February 1, 2003.  We have

                                       11
<PAGE>

evaluated our  relationships  with potential  unconsolidated  entities which may
meet  the  consolidation  requirements  of  this  Interpretation,  and we do not
believe the adoption will have a material impact on our  consolidated  financial
statements.

8.  Acquisitions

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  $34,250,000.  The
agreement  also  provides  for  additional  consideration  in  July  2004 if the
restaurants  achieve cash flows in excess of  historical  levels.  Our financial
statements reflect the results of operations for these restaurants subsequent to
the date of acquisition. The purchase price of $34,250,000 has been allocated to
the fair value of property and equipment of $25,200,000, goodwill of $10,100,000
and other net current liabilities of $1,050,000.

On March 24,  2003,  we  acquired  the  operations  and assets of 11  Applebee's
restaurants located in Illinois,  Indiana, Kentucky and Missouri for $21,800,000
in cash and $1,400,000 in assumed debt from a franchisee. The total cash payment
includes $20,800,000 paid at closing,  approximately  $200,000 paid as a deposit
in fiscal 2002 and  approximately  $800,000 to be paid when certain  contractual
conditions  have been met.  Our  financial  statements  reflect  the  results of
operations  for these  restaurants  subsequent to the date of  acquisition.  The
purchase price of  $23,200,000  has been allocated to the fair value of property
and equipment of $7,900,000,  goodwill of $16,600,000, and other net liabilities
of $1,300,000.

Actual  company   restaurant  sales  included  in  our  consolidated   financial
statements for these restaurants were approximately $12,000,000 for the thirteen
weeks ended March 30, 2003. Company restaurant sales for these restaurants would
have been approximately $18,000,000 and $16,700,000 for the thirteen weeks ended
March 30, 2003 and March 31, 2002,  respectively,  had the acquisitions occurred
at the beginning of each respective period.

9.  Subsequent Event

On April 8, 2003,  we  announced  that we have entered into an agreement to sell
eight company-owned  restaurants in the Atlanta,  Georgia market to an affiliate
of an existing  franchisee for  $8,000,000,  subject to adjustment.  The sale of
these  restaurants  is  expected  to close late in the  second  quarter of 2003,
subject to customary due diligence and third party  approvals.  We do not expect
this  transaction  to have a  significant  impact on our net earnings for fiscal
2003, and no significant gain or loss on the sale is anticipated.



                                       12
<PAGE>


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

General

Our revenues are generated from three primary sources:

o  Company restaurant sales (food and beverage sales)
o  Franchise royalties and fees
o  Other franchise income

Beverage  sales  include  sales  of  alcoholic  beverages,  while  non-alcoholic
beverages  are included in food sales.  Franchise  royalties are generally 4% of
each franchise  restaurant's monthly gross sales. Franchise fees typically range
from  $30,000 to $35,000 for each  restaurant  opened.  Other  franchise  income
includes  insurance  premiums  from  franchisee  participation  in  our  captive
insurance company and revenue from information  technology products and services
provided to certain franchisees.

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

Cost of  other  franchise  income  includes  the  costs  related  to  franchisee
participation in our captive  insurance company and costs related to information
technology products and services provided to certain franchisees.

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

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 qualified  franchisees  with workers'  compensation and
general  liability  insurance.   Applebee's  International,   Inc.  and  covered
franchisees  make premium payments to the captive  insurance  company which pays
administrative  fees and insurance  claims,  subject to individual and aggregate
maximum claim limits under the captive insurance company's reinsurance policies.
Franchisee  premium  amounts  billed  by  the  captive  insurance  company  were
established based upon third-party  actuarial  estimates of settlement costs for
incurred claims and administrative fees. The franchisee premiums are included in
other  franchise  income  ratably over the policy year.  The related  offsetting
expenses are included in cost of other franchise income.  Accordingly, we do not
expect  franchisee  participation  in the captive  insurance  company to have an
impact on our net earnings. We have recognized  approximately $2,400,000 in both
revenues  and  expenses  in the  consolidated  statements  of  earnings  for the
thirteen weeks ended March 30, 2003. Our third-party  administrator is currently
holding  the cash  received  from  franchisees  and will  remit  the cash to our
captive  insurance  company,  as collected,  once certain  agreements  have been
finalized. A portion of these cash receipts will be restricted to the payment of
insurance claims and fees.

                                       13
<PAGE>

We operate on a 52 or 53 week fiscal year ending on the last Sunday in December.
Our fiscal  quarters  ended March 30, 2003 and March 31, 2002 each  contained 13
weeks  and are  referred  to  hereafter  as the  "2003  quarter"  and the  "2002
quarter," 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 believe that the following  significant  accounting policies involve a higher
degree of  judgement or  complexity  (see Note 2 of our  Consolidated  Financial
Statements in our Annual Report on Form 10-K for the fiscal year ended  December
29, 2002 for a complete discussion of our significant accounting policies).

Franchise revenues: Franchise revenues consist of franchise royalties, franchise
fees and other franchise income. 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.  Franchise fees are deferred until we have
performed substantially all of our related obligations as franchisor,  typically
when the restaurant opens.  Other franchise income includes  insurance  premiums
from franchisee  participation in our captive insurance company and revenue from
information technology products and services provided to certain franchisees.

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.  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.  We are required to assess the probability of any adverse  judgments as
well as the potential range of loss. We determine the required  accruals after a
review of the facts of each legal action.

We use estimates in the determination of the appropriate liabilities for general
liability,  workers' compensation and health insurance.  The estimated liability
is  established  based upon  historical  claims data and  third-party  actuarial
estimates of  settlement  costs for incurred  claims.  Unanticipated  changes in
these factors may require us to revise our estimates.

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

                                       14
<PAGE>


Receivables:   We  continually   assess  the  collectibility  of  our  franchise
receivables.  We establish our allowance for bad debts based on several factors,
including historical collection experience, the current economic environment and
other  specific  information  available to us at the time. The allowance for bad
debts may change in the future due to changes in the factors  above or other 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.

Acquisitions

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  $34,250,000.  The
agreement  also  provides  for  additional  consideration  in  July  2004 if the
restaurants  achieve cash flows in excess of  historical  levels.  Our financial
statements reflect the results of operations for these restaurants subsequent to
the date of acquisition.

On March 24,  2003,  we  acquired  the  operations  and assets of 11  Applebee's
restaurants located in Illinois,  Indiana, Kentucky and Missouri for $21,800,000
in cash  and  $1,400,000  in  assumed  debt  from a  franchisee.  Our  financial
statements reflect the results of operations for these restaurants subsequent to
the date of acquisition.

Actual  company   restaurant  sales  included  in  our  consolidated   financial
statements for these restaurants were approximately $12,000,000 for the thirteen
weeks ended March 30, 2003. Company restaurant sales for these restaurants would
have been approximately $18,000,000 and $16,700,000 for the thirteen weeks ended
March 30, 2003 and March 31, 2002,  respectively,  had the acquisitions occurred
at the beginning of each respective period.



                                       15

<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
                                                                           ----------------------------------
                                                                              March 30,         March 31,
                                                                                2003              2002
                                                                           ---------------   ---------------
<S>                                                                             <C>               <C>
        Revenues:
             Company restaurant sales....................................         87.5%             87.5%
             Franchise royalties and fees................................         11.4              12.4
             Other franchise income......................................          1.1               0.1
                                                                           ---------------   ---------------
                Total operating revenues.................................        100.0%            100.0%
                                                                           ===============   ===============
        Cost of sales (as a percentage of company restaurant sales):
             Food and beverage...........................................         26.3%             27.1%
             Labor.......................................................         32.8              32.8
             Direct and occupancy........................................         24.3              24.5
             Pre-opening expense.........................................          0.1               0.2
                                                                           ---------------   ---------------
                Total cost of sales......................................         83.5%             84.6%
                                                                           ===============   ===============

        Cost of other franchise income (as a percentage of other
             franchise income)...........................................         94.7%             44.8%
        General and administrative expenses..............................          9.5               9.7
        Amortization of intangible assets................................          --                0.1
        Loss on disposition of restaurants and equipment.................          0.2               0.1
                                                                           ---------------   ---------------
        Operating earnings...............................................         16.2              16.0
                                                                           ---------------   ---------------
        Other income (expense):
             Investment income...........................................          0.1               0.2
             Interest expense............................................         (0.2)             (0.3)
             Other income................................................          0.1               0.1
                                                                           ---------------   ---------------
                Total other income (expense).............................          --               (0.1)
                                                                           ---------------   ---------------
        Earnings before income taxes.....................................         16.2              16.0
        Income taxes.....................................................          5.9               5.8
                                                                           ---------------   ---------------
        Net earnings.....................................................         10.3%             10.1%
                                                                           ===============   ===============
</TABLE>



                                       16
<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
                                                                           -----------------------------------------
                                                                                March 30,              March 31,
                                                                                  2003                   2002
                                                                           -------------------    -------------------
<S>                                                                          <C>                   <C>
   Number of restaurants:
        Company:
            Beginning of period........................................               357                    310
            Restaurant openings........................................                 3                      4
            Restaurants acquired from franchisees......................                11                    --
                                                                           -------------------    -------------------
            End of period..............................................               371                    314
                                                                           -------------------    -------------------
        Franchise:
            Beginning of period........................................             1,139                  1,082
            Restaurant openings........................................                16                      9
            Restaurant closings........................................                (2)                    (1)
            Restaurants acquired from franchisees......................               (11)                    --
                                                                           -------------------    -------------------
            End of period..............................................             1,142                  1,090
                                                                           -------------------    -------------------
        Total:
            Beginning of period........................................             1,496                  1,392
            Restaurant openings........................................                19                     13
            Restaurant closings........................................                (2)                    (1)
                                                                           -------------------    -------------------
            End of period..............................................             1,513                  1,404
                                                                           ===================    ===================
   Weighted average weekly sales per restaurant:
            Company....................................................       $    44,666           $     43,235
            Franchise..................................................       $    45,424           $     44,088
            Total......................................................       $    45,243           $     43,897
   Change in comparable restaurant sales:(1)
            Company....................................................               4.6%                   1.5%
            Franchise..................................................               2.9%                   4.1%
            Total......................................................               3.3%                   3.5%

   Total system sales (in thousands)...................................       $   884,722           $    795,065



<FN>

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


                                       17
<PAGE>


Company Restaurant Sales.  Total company restaurant sales increased  $33,437,000
(19%) from $174,973,000 in the 2002 quarter to $208,410,000 in the 2003 quarter.
Company restaurant openings contributed  approximately 8% of the 19% increase in
total  company   restaurant  sales.  The  remaining  increase  was  due  to  the
acquisitions  of 21  franchise  restaurants  in the  Washington,  D.C.  area  in
November 2002 and 11 restaurants in Illinois,  Indiana, Kentucky and Missouri in
late March 2003 as well as increases in weighted average weekly sales.

Comparable restaurant sales at company restaurants increased by 4.6% in the 2003
quarter.  Weighted  average weekly sales at company  restaurants  increased 3.3%
from $43,235 in the 2002 quarter to $44,666 in the 2003 quarter. These increases
were due  primarily to increases in guest traffic and in the average guest check
resulting  from our food  promotions.  In  addition,  a portion of the  increase
resulted  from  the  implementation  of  our To Go  initiative  and  menu  price
increases of approximately  1.5% in the 2003 quarter.  To Go sales mix increased
from 4.5% of  company  restaurant  sales in the 2002  quarter to 6.8% of company
restaurant sales in the 2003 quarter.

Franchise Royalties and Fees.  Franchise royalties and fees increased $2,323,000
(9%) from  $24,840,000  in the 2002 quarter to  $27,163,000 in the 2003 quarter.
The increased number of franchise  restaurants operating during the 2003 quarter
as compared to the 2002  quarter  contributed  approximately  6% of the 9% total
increase in franchise  royalties and fees, net of our  restaurant  acquisitions.
The remaining increase was due primarily to increases in weighted average weekly
sales.  Comparable  restaurant  sales  and  weighted  average  weekly  sales for
franchise  restaurants  increased  2.9%  and  3.0%,  respectively,  in the  2003
quarter.

Other Franchise  Income.  Other franchise  income increased from $134,000 in the
2002  quarter to  $2,641,000  in the 2003  quarter  due  primarily  to  revenues
recognized  related to the  franchisee  premium  amounts  billed by the  captive
insurance  company which was formed in September 2002.  Franchisee  premiums are
included in other franchise income ratably over the policy year.

Cost of Company  Restaurant  Sales. Food and beverage costs decreased from 27.1%
in the 2002 quarter to 26.3% in the 2003  quarter,  due  primarily to lower beef
usage related to our menu promotions and operational improvements resulting from
our supply chain management initiatives.

Labor costs were 32.8% in both the 2002 quarter and the 2003  quarter.  The 2003
quarter was favorably impacted by lower incentive  compensation which was offset
by higher workers' compensation and health insurance costs.

Direct and occupancy  costs decreased from 24.5% in the 2002 quarter to 24.3% in
the 2003  quarter  due  primarily  to a  decrease  in  advertising  costs,  as a
percentage  of sales,  which was  partially  offset  by higher  packaging  costs
relating to our To Go initiative.

Cost of Other Franchise  Income.  Cost of other franchise  income increased from
$60,000 in the 2002 quarter to  $2,500,000  in the 2003 quarter due primarily to
the costs  related to the operation of our captive  insurance  company which was
formed in September 2002.

General  and  Administrative  Expenses.   General  and  administrative  expenses
decreased  in the  2003  quarter  to 9.5%  from  9.7% in the 2002  quarter,  due
primarily  to lower  legal fees and  expenses  during the 2003  quarter  and the
absorption of general and administrative expenses over a larger revenue base.

Income Taxes.  The effective income tax rate, as a percentage of earnings before
income  taxes,  decreased  from  36.5% in the 2002  quarter to 36.2% in the 2003
quarter due to lower state and local income taxes.

                                       18

<PAGE>


Liquidity and Capital Resources

Our need for  capital  historically  has  resulted  from  the  construction  and
acquisition of restaurants, investment in information technology systems and the
repurchase of our common shares.  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 $64,874,000 in fiscal year 2002 (excluding $34,250,000
related to the acquisition of 21 restaurants in the  Washington,  D.C. area) and
$10,215,000 in the 2003 quarter  (excluding the acquisition of 11 restaurants on
March  24,  2003).  We  currently  expect  to  open   approximately  25  company
restaurants,  and capital expenditures excluding acquisitions are expected to be
between  $65,000,000 and $75,000,000 in 2003. These  expenditures will primarily
be for the development of new restaurants, refurbishment and capital replacement
for existing restaurants, and the enhancement of information systems. 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  $34,250,000.  The
agreement  also  provides  for  additional  consideration  in  July  2004 if the
restaurants  achieve cash flows in excess of  historical  levels.  Our financial
statements reflect the results of operations for these restaurants subsequent to
the date of acquisition.

On March 24,  2003,  we  acquired  the  operations  and assets of 11  Applebee's
restaurants located in Illinois,  Indiana, Kentucky and Missouri for $21,800,000
in cash and $1,400,000 in assumed debt from a franchisee. The total cash payment
includes $20,800,000 paid at closing,  approximately  $200,000 paid as a deposit
in fiscal 2002 and  approximately  $800,000 to be paid when certain  contractual
conditions  have been met.  Our  financial  statements  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. As of March 30,
2003,  we had  borrowings  of  $53,000,000  and  standby  letters  of  credit of
$9,116,000  outstanding  under  our  revolving  credit  facility.  We also had a
standby  letter  of credit  for  $827,000  outstanding  with  another  financial
institution.

In May 2002,  our Board of Directors  authorized  an  additional  repurchase  of
$75,000,000  of our common stock through May 2005.  During the 2003 quarter,  we
repurchased 545,000 shares at an average cost of $24.37 for an aggregate cost of
$13,300,000.  As of March 30, 2003, we had $56,200,000  remaining under the 2002
authorization.

                                       19
<PAGE>


As of March 30,  2003,  our liquid  assets  totaled  $10,276,000.  These  assets
consisted  of  cash  and  cash  equivalents  in the  amount  of  $9,805,000  and
short-term  investments in the amount of $471,000.  The working  capital deficit
decreased  from  $45,607,000  as of December 29, 2002 to $42,026,000 as of March
30, 2003. This decrease was due primarily to the redemption of gift certificates
in the 2003 quarter sold in 2002 and were partially  offset by decreases in cash
and cash  equivalents  due to the  acquisition  of 11  restaurants  in Illinois,
Indiana, Kentucky and Missouri and repurchases of our common stock.

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 debt  amortization  schedule,  our future capital
lease  commitments  (including  principal and interest  payments) and our future
operating lease commitments as of March 30, 2003 (in thousands):

<TABLE>
<CAPTION>

                                                                    Payments due by period
                                             -----------------------------------------------------------------------
                 Certain                                     Less than 1       1-3          3-5       More than 5
         Contractual Obligations                 Total          year          years        years         years
-------------------------------------------  -------------- ------------- ------------- ----------- ----------------
<S>                                           <C>             <C>           <C>          <C>          <C>
Long-term Debt (excluding capital
       lease obligations)................      $   55,053      $     441     $  53,235    $    173     $   1,204
Capital Lease Obligations................      $   10,363      $     722     $   1,542    $  1,625     $   6,474
Operating Leases.........................      $  216,362      $  18,292     $  34,411    $ 32,874     $ 130,785

</TABLE>

In addition,  we have outstanding lease guarantees of approximately  $23,900,000
as of March 30, 2003 (see Note 3 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.

                                       20
<PAGE>


New Accounting Pronouncements

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.  The
initial adoption of this Statement did not have a material impact on our results
of operations or financial position.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees,  including  Indirect  Guarantees of
Indebtedness of Others." Interpretation No. 45 supersedes Interpretation No. 34,
"Disclosure  of Indirect  Guarantees  of  Indebtedness  of Others," and provides
guidance to guarantors on the recognition and disclosure concerning  obligations
under certain guarantees in interim and annual financial statements. The initial
recognition and measurement  provisions of  Interpretation  No. 45 are effective
for guarantees issued or modified after December 31, 2002, and are to be applied
prospectively.   The  disclosure   requirements  were  effective  for  financial
statements  for interim or annual  periods  ending after  December 15, 2002.  We
adopted the initial  recognition  provisions of Interpretation No. 45 in January
of 2003. The initial adoption of  Interpretation  No. 45 did not have a material
impact on our results of operations or financial position.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation  - Transition  and  Disclosure."  SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based  Compensation," and provides  alternative methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee compensation. This Statement also amends the disclosure
requirements  of SFAS No.  123 to  require  prominent  disclosure  in annual and
interim financial statements about the effects of stock-based compensation.  The
transition  guidance  and  annual  disclosure  provisions  of SFAS  No.  148 are
effective for financial statements issued for fiscal years ending after December
15, 2002. The interim disclosure provisions of this Statement were effective for
financial reports containing  financial statements for interim periods beginning
after December 15, 2002. We have adopted the  disclosure  provisions of SFAS No.
148.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable   Interest   Entities,   an   Interpretation   of  ARB  No.  51."  This
Interpretation  provides  clarification on the consolidation of certain entities
in which equity  investors do not have sufficient  equity at risk for the entity
to finance its activities without additional subordinated financial support from
other parties. Such entities are defined as variable interest entities ("VIEs").
This Interpretation  requires that VIEs be consolidated by the entity considered
to be the  primary  beneficiary  of the VIE.  The  Interpretation  is  effective
immediately  for newly  created VIEs after January 31, 2003 and effective in the
second  quarter  2003 for any VIEs  created  prior to February 1, 2003.  We have
evaluated our  relationships  with potential  unconsolidated  entities which may
meet  the  consolidation  requirements  of  this  Interpretation,  and we do not
believe the adoption will have a material impact on our  consolidated  financial
statements.

                                       21

<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,  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 our  ability  and  the  ability  of our
franchisees to open and operate additional restaurants  profitably,  the ability
of our franchisees to obtain financing, the continued growth of our franchisees,
our ability to attract and retain qualified  franchisees,  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 12,
2003. 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 March 30, 2003,  the
total amount of debt subject to interest rate fluctuations was $53,000,000 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 $530,000  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.  Many of the food
products we purchase  are subject to price  volatility  due to factors  that are
outside of our control such as weather and seasonality.  As part of our strategy
to  moderate  this  volatility,  we  have  entered  into  fixed  price  purchase
commitments.

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.


                                       22
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.     Legal Proceedings

We are involved in various  legal  actions which  include,  without  limitation,
employment law related  matters,  dram shop claims,  personal  injury claims and
other such normal restaurant  operational matters. 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 our
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 filed a  report on  Form 8-K on  January 8, 2003 announcing
                  the approval by our Board of Directors  of an amendment of our
                  Shareholder Rights Plan.

                  We  furnished  a  report  on  Form  8-K on  January  10,  2003
                  announcing   our   presentation   at  the  SG  Cowen  Consumer
                  Conference.

                  We filed a report on Form 8-K on January  13,  2003  reporting
                  December comparable sales and updating fourth quarter earnings
                  guidance and our 2003 outlook.

                  We filed a report on Form 8-K on January 23,  2003  announcing
                  an agreement to acquire 11 franchise restaurants.

                  We filed a report on Form 8-K on January  28,  2003  reporting
                  January  comparable  sales and  announcing  the webcast of our
                  fourth quarter earnings conference call over the Internet.

                  We filed a report on Form 8-K on February  12, 2003  reporting
                  fourth quarter  earnings per share and full year 2002 earnings
                  per share.

                  We  filed  a  report  on  Form  8-K on  February  12,  2003 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  February  21,  2003
                  announcing our  presentation  at the Bear Stearns Ninth Annual
                  Retail, Restaurants & Apparel Conference.

                  We filed a report on Form 8-K on February  25, 2003  reporting
                  February comparable sales.

                                       23
<PAGE>

                  We  furnished  a  report  on Form  8-K on  February  28,  2003
                  announcing our presentation at the Raymond James Institutional
                  Investors Conference.

                  We filed a report on Form 8-K on March 25, 2003 announcing the
                  completion of our acquisition of 11 franchise restaurants.

                  We furnished a report on Form 8-K on March 28, 2003 announcing
                  our  presentation at the Banc of America  Securities  Consumer
                  Conference.




                                       24
<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:  April 30, 2003               By:  /s/    Lloyd L. Hill
     --------------------              ---------------------------------------
                                       Lloyd L. Hill
                                       Chairman and Chief Executive Officer
                                       (principal executive officer)

Date:  April 30, 2003               By:  /s/    Steven K. Lumpkin
     --------------------              ---------------------------------------
                                       Steven K. Lumpkin
                                       Executive Vice President and
                                       Chief Financial Officer
                                       (principal financial officer)

Date:  April 30, 2003               By:  /s/    Beverly O. Elving
     --------------------              ---------------------------------------
                                       Beverly O. Elving
                                       Vice President, Accounting
                                       (principal accounting officer)




                                       25
<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  officer  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  officer 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  officer 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: April 30, 2003                By:  /s/    Lloyd L. Hill
     --------------------              ---------------------------------------
                                       Lloyd L. Hill
                                       Chairman and Chief Executive Officer
                                       (principal executive officer)


                                       26
<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  officer  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  officer 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  officer 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: April 30, 2003                By:  /s/    Steven K. Lumpkin
     ---------------------             ---------------------------------------
                                       Steven K. Lumpkin
                                       Executive Vice President and
                                       Chief Financial Officer
                                       (principal financial officer)


                                       27
<PAGE>


                         APPLEBEE'S INTERNATIONAL, INC.
                                  EXHIBIT INDEX


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

      10.1    Amendment to 1995 Equity Incentive Plan.

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




                                       28