10-Q 1 arpq.txt ARP 10Q 9/24/02 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 24, 2002 Commission file number 1-9606 AMERICAN RESTAURANT PARTNERS, L.P. (Exact name of registrant as specified in its charter) Delaware 48-1037438 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification) 3020 North Cypress Road, Suite 100 Wichita, Kansas 67226 (Address of principal executive offices) (Zip-Code) Registrant's telephone number, including area code (316) 634-1190 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 [ ] AMERICAN RESTAURANT PARTNERS, L.P. INDEX Page Number ------ Part I. Financial Information --------------------- Item 1. Financial Statements Consolidated Condensed Balance Sheets at September 24, 2002 and December 25, 2001 1 Consolidated Condensed Statements of Income for the Three and Nine Periods Ended September 24, 2002 and September 25, 2001 2 Consolidated Condensed Statements of Cash Flows for the Nine Periods Ended September 24, 2002 and September 25, 2001 3 Notes to Consolidated Condensed Financial Statements 4-6 Item 2. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations 7-10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 11 Item 4. Controls and Procedures 12 Part II. Other Information ----------------- Item 6. Exhibits and Reports on Form 8-K 13 AMERICAN RESTAURANT PARTNERS, L.P. CONSOLIDATED CONDENSED BALANCE SHEETS September 24, December 25, ASSETS 2002 2001 ---------------------------------------------- ------------- ------------ Current assets: Cash and cash equivalents $ 773,920 $ 1,594,934 Investments available-for-sale, at fair market value 187,760 - Accounts receivable 352,460 482,185 Due from affiliates 84,539 64,668 Notes receivable from affiliates - current portion 13,454 16,173 Inventories 471,124 397,821 Prepaid expenses 553,389 359,592 ---------- ---------- Total current assets 2,436,646 2,915,373 Net property and equipment 18,945,802 20,134,758 Other assets: Franchise rights, net 4,799,109 4,969,167 Notes receivable from affiliates 44,249 53,409 Deposit with affiliate 535,000 485,000 Goodwill 2,540,864 1,967,627 Other 1,149,460 1,193,205 ---------- ---------- 9,068,682 8,668,408 ---------- ---------- $30,451,130 $31,718,539 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY) ---------------------------------------------- Current liabilities: Accounts payable $ 2,589,203 $ 3,129,578 Due to affiliates 41,992 52,763 Accrued payroll and other taxes 746,326 981,542 Accrued liabilities 1,303,476 1,404,786 Current maturities of long-term debt 2,960,838 5,406,737 Current portion of capital lease obligations 550,760 596,356 ---------- ---------- Total current liabilities 8,192,595 11,571,762 Long-term liabilities less current maturities: Capital lease obligations 3,599,846 1,995,197 Long-term debt 22,177,847 23,667,180 Other noncurrent liabilities 1,117,458 817,104 ---------- ---------- 26,895,151 26,479,481 Minority interests in Operating Partnerships 154,888 140,406 Commitments and contingencies - - Partners' capital (deficiency): General Partners (7,213) (8,358) Limited Partners: Class A Income Preference 5,286,626 5,131,262 Classes B and C (8,206,045) (9,146,027) Classes B and C units to be issued (see Note 5) 790,999 - Notes receivable employees - sale of partnership units (567,422) (591,344) Cost in excess of carrying value of assets acquired (2,076,405) (1,858,643) Cumulative comprehensive loss (12,044) - ---------- ---------- Total partners' deficiency (4,791,504) (6,473,110) ---------- ---------- $30,451,130 $31,718,539 ========== ========== See accompanying notes. AMERICAN RESTAURANT PARTNERS, L.P. CONSOLIDATED CONDENSED STATEMENTS OF INCOME

AMERICAN RESTAURANT PARTNERS, L.P. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

AMERICAN RESTAURANT PARTNERS, L.P. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Nine Periods Ended September 24, 2002 and September 25, 2001 1. General ------- The accompanying consolidated condensed financial statements include the accounts of American Restaurant Partners, L.P. and its majority owned subsidiaries, American Pizza Partners, L.P. (APP), APP Concepts, LLC and Oklahoma Magic, L.P. (Magic). American Restaurant Partners, L.P., APP, APP Concepts, LLC and Magic are hereinafter collectively referred to as the Partnership. All significant intercompany balances and transactions have been eliminated. The consolidated condensed financial statements have been prepared without audit. The Balance Sheet at December 25, 2001 has been derived from the Partnership's audited financial statements. In the opinion of management, all adjustments of a normal and recurring nature which are necessary for a fair presentation of such financial statements have been included. These statements should be read in conjunction with the consolidated financial statements and notes contained in the Partnership's Annual Report filed on Form 10-K for the fiscal year ended December 25, 2001. The results of operations for interim periods are not necessarily indicative of the results for the full year. The Partnership does not experience significant seasonality but sales continue to be largely driven through advertising and promotion. 2. Subsequent Events ----------------- On October 1, 2002 the Partnership declared a quarterly distribution of $0.10 per unit, and an additional cash distribution of $0.05 per unit, for a total of $0.15 per unit to all unitholders of record as of October 12, 2002. The distribution is not reflected in the September 24, 2002 consolidated condensed financial statements. 3. Supplemental Cash Flow Information ---------------------------------- Nine Periods Ended 9/24/02 9/25/01 ---------- ---------- Cash paid for interest $2,139,531 $2,335,820 Noncash investing and financing activity: Distributions offset against notes receivable 103,206 78,678 Reduction of notes receivable recorded as compensation expense 53,462 36,796 Capital leases entered into as part of sale-leaseback transactions 2,039,283 - Equipment acquired through capital lease - 202,573 Issuance of units for notes receivable 147,277 - Partnership units to be issued as contingent consideration in purchase of Magic 790,999 - 4. Goodwill -------- Statement of Financial Accounting Standards (SFAS) 142, Goodwill and Intangible Assets, was issued in June 2001 and adopted by the Partnership on December 26, 2001. SFAS 142 provides that goodwill is no longer amortized effective December 26, 2001, but is instead reviewed for impairment at least annually and whenever there is an impairment indicator. The Partnership has completed its transitional fair value based impairment test of goodwill, which indicated the value of goodwill is not impaired at December 26, 2001, and as a result, no impairment loss was recognized. Goodwill amortization for the three and nine periods ended September 25, 2001 was approximately $21,000 and $64,000, respectively. Net income for the three and nine periods ended September 25, 2001, adjusted to exclude goodwill amortization, would have been approximately $289,000 and $1,041,000, respectively. 5. Contingency ----------- On July 26, 2000, APP purchased 39% of Magic from Restaurant Management Company of Wichita, Inc. (RMC) for $2,500,000 cash and contingent consideration of 233,333 Class B and Class C Partnership Units. The contingent consideration was to become due in the event that Magic's cash flow (determined on a 12 month trailing basis) exceeded $2.6 million at any time between January 1, 2001 and December 31, 2005. Magic's cash flow exceeded $2.6 million for the twelve months ended September 24, 2002. As a result, on October 10, 2002, the Partnership issued RMC a total of 233,333 Class B and C Units as payment of the remaining balance. The 233,333 units were valued at $3.39 per unit, which was the unit value at September 24, 2002. RMC is considered a related party in that one individual has controlling interest in both RMC and the Partnership's general partner. To the extent that the Partnership and RMC had common ownership, the original transaction was recorded at RMC's historical cost. The contingent consideration was recorded in a manner consistent with the original transaction. The Partnership recorded an increase in limited partners capital of $790,999, which represents the value of the units issued, goodwill of $573,237 and cost in excess of carrying value of assets acquired of $217,762. This transaction is reflected in the consolidated condensed financial statements at September 24, 2002. For earnings per Partnership unit calculations, the contingent units were considered outstanding for the entire quarter ended September 24, 2002. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS --------------------- As of September 24, 2002, the Partnership operated 70 traditional Pizza Hut red roof restaurants, 16 delivery/carryout units and 2 dualbrand locations. Comparison of the Three and Nine Periods Ended September 24, 2002 ----------------------------------------------------------------- with the Three and Nine Periods Ended September 25, 2001 -------------------------------------------------------- Net sales for the three periods ended September 24, 2002 were $16,911,000, which was an $898,000, or 5.6%, increase over net sales of $16,013,000 reported for the same three periods of 2001. For the year-to-date, net sales increased $4,057,000, or 8.6% over the prior year. Comparable restaurant sales increased 3.7% for the quarter and 5.4% for the year-to-date. The sales increase was primarily attributable to a price increase the Partnership implemented at the end of the third quarter of 2001. The year-to-date sales increase was also due to the successful introduction of a new product, P'ZONE, in the first quarter of 2002. Results of Operations as a Percentage of Sales: Three Periods Nine Periods Ended Ended 9/24/02 9/25/01 9/24/02 9/25/01 ------- ------- ------- ------- Cost of sales 24.3% 26.6% 24.1% 25.8% Restaurant labor and benefits 29.2% 29.0% 28.5% 29.2% Advertising 6.0% 6.3% 6.1% 6.2% Other restaurant operating expenses exclusive of depreciation and amortization 20.7% 19.2% 19.0% 19.0% General and administrative: Management fees 6.2% 6.3% 6.2% 6.2% Other 1.8% 1.8% 2.3% 1.7% Depreciation and amortization 4.7% 5.0% 4.4% 4.9% Income from operations 7.1% 5.8% 9.5% 7.0% Income from operations for the three periods ended September 24, 2002 increased $264,000 from $932,000 to $1,196,000, a 28.3% increase from the same three periods of 2001. Year-to-date income from operations increased $1,591,000, or 47.9%, from $3,323,000 to $4,914,000. Cost of sales as a percentage of net sales decreased 230 and 170 basis points for the quarter and year-to-date, respectively. This decrease was primarily due to 24% and 14% decreases in cheese costs during the third quarter and year-to-date, respectively. The year- to-date decrease was also due to a decrease in the cost of meat toppings as well as the effect of the price increase the Partnership implemented at the end of the third quarter of 2001. Labor and benefits expense for the quarter increased 20 basis points but decreased 70 basis points year-to-date. The increase for the quarter was primarily attributable to pre-opening labor costs of approximately $54,000 for a new store that opened in the fourth quarter of 2002. The year-to-date decrease was primarily due to efficiencies gained at higher sales levels. Other restaurant operating expenses increased 150 basis points for the quarter but remained at 19.0% of sales year-to-date. The increase for the quarter was primarily due to a change in the timing of vendor credits received by the Partnership. In 2001, vendor credits totaling approximately $216,000 were received in the third quarter. In 2002, the Partnership received approximately $150,000 of these vendor credits in the first quarter and approximately $73,000 in the third quarter. The increase for the quarter is also due to a 40% increase in property and liability insurance premiums and a 60% increase in workers' compensation insurance premiums effective July 1, 2002. Other general and administrative expense remained at 1.8% of sales for the quarter, but increased 60 basis points year-to-date. The year-to-date increase was primarily due to increased management bonuses paid in 2002 resulting from increased cash flow results. Depreciation and amortization expense decreased 30 and 50 basis points for the quarter and year-to-date, respectively, as a result of no longer amortizing goodwill in 2002 in accordance with Statement of Financial Accounting Standards (SFAS) 142 (see Note 4 in Notes to Consolidated Condensed Financial Statements). For the quarter, the Partnership had net income of $456,000, a $188,000 increase over the prior year's net income of $268,000. This increase was primarily due to the increase in income from operations noted above and a $90,000 decrease in interest expense offset by the prior year's gain on fire settlement of $159,000. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- At September 24, 2002 the Partnership had a working capital deficiency of $5,756,000 compared to a working capital deficiency of $8,656,000 at December 25, 2001. This decrease in working capital deficiency is primarily attributable to a $2,446,000 decrease in the current portion of long-term debt resulting from sale-leaseback transactions on eight real estate properties in January 2002. The Partnership routinely operates with a negative working capital position which is common in the restaurant industry and which results from the cash sales nature of the restaurant business and payment terms with vendors. The Partnership generates its principal source of funds from net cash provided by operating activities. Management believes net cash provided by operating activities and various other sources of income will provide sufficient funds to meet planned capital expenditures for recurring replacement of equipment in existing restaurants and to service debt obligations. NET CASH PROVIDED BY OPERATING ACTIVITIES. For the nine periods ended September 24, 2002, net cash provided by operating activities amounted to $4,116,000 compared to $4,256,000 for the nine periods ended September 25, 2001. This decrease was primarily the result of net income of $2,600,000 which was used to pay down accounts payable and accrued liabilities, as well as higher prepaid expenses due to increased property and liability insurance and workers' compensation insurance premiums. INVESTING ACTIVITIES. Capital expenditures for the nine periods ended September 24, 2002 were $1,765,000 of which $911,000 was for construction of new restaurants. The remainder was for replacement of equipment in existing restaurants. The Partnership completed sale-leaseback transactions for the real estate of eight of its properties which generated funds of $3,187,000. FINANCING ACTIVITIES. Cash distributions paid during the nine periods ended September 24, 2002 were $1,419,000 net of a reduction in employee notes receivable of $103,000. Distributions amounted to $.41 per unit. The Partnership's distribution objective, generally, is to distribute all operating revenues less operating expenses (excluding noncash items such as depreciation and amortization), capital expenditures for existing restaurants, interest and principal payments on Partnership debt, and such cash reserves as the managing General Partner may deem appropriate. During the nine periods ended September 24, 2002, the Partnership's payments on long-term borrowings totaled $4,783,000, the majority of which were funded through proceeds from sale-leaseback transactions. Proceeds from borrowings amounted to $848,000 during the nine periods ended September 24, 2002. The Partnership opened one new delivery/carryout restaurant in the Oklahoma City, Oklahoma area during the first quarter of 2002. This unit is leased from an unrelated third party. The Partnership also opened one new traditional Pizza Hut red roof restaurant and closed one delivery/carryout unit in the fourth quarter of 2002, both in the Oklahoma City, Oklahoma area. The Partnership owns the land for the new restaurant, and the Partnership spent approximately $920,000 for the building and equipment at this location. Management plans to relocate one restaurant during the fourth quarter of 2002 due to a lease expiration. The new location will also be leased from an unrelated third party. Management anticipates the cost of developing this location at approximately $330,000. Development of the restaurants will be financed through existing lenders. Management anticipates spending an additional $200,000 during the remainder of 2002 for recurring replacement of equipment in existing restaurants which will be financed from net cash provided by operating activities. The actual level of capital expenditures may be higher in the event of unforeseen breakdowns of equipment or lower in the event of inadequate net cash flow from operating activities. OTHER MATTERS ------------- The Partnership delisted from the American Stock Exchange effective November 13, 1997 and limited trading of its units. As a result, the Partnership will continue to be taxed as a partnership rather than being taxed as a corporation. The Partnership does offer a Qualified Matching Service, whereby the Partnership will match persons desiring to buy units with persons desiring to sell units. EFFECTS OF INFLATION AND FUTURE OUTLOOK --------------------------------------- Inflationary factors such as increases in food and labor costs directly affect the Partnership's operations. Because most of the Partnership's employees are paid on an hourly basis, changes in rates related to federal and state minimum wage and tip credit laws will affect the Partnership's labor costs. The Partnership cannot always effect immediate price increases to offset higher costs and no assurance can be given the Partnership will be able to do so in the future. The Partnership's property and liability insurance and workers' compensation insurance policies renew annually on July 1. Effective July 1, 2002, the Partnership's property and liability insurance premiums increased 40% and its workers' compensation premiums increased 60%. The Partnership has implemented a renewed focus on risk management in order to mitigate these premium increases. This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act which are intended to be covered by the safe harbors created thereby. Although the Partnership believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. Factors that could cause actual results to differ from the results discussed in the forward-looking statements include, but are not limited to, consumer demand and market acceptance risk, the effect of economic conditions, including interest rate fluctuations, the impact of competing restaurants and concepts, the cost of commodities and other food products, labor shortages and costs and other risks detailed in the Partnership's Securities and Exchange Commission filings. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Partnership's earnings are affected by changes in interest rates primarily from its long-term debt arrangements. Under its current policies, the Partnership does not use interest rate derivative instruments to manage exposure to interest rate changes. Due to the small amount of debt at variable interest rates, a hypothetical 100 basis point adverse move (increase) in interest rates along the entire interest rate yield curve would not have a material effect on either the Partnership's interest expense or net income over the term of the related debt. This was determined by considering the impact of the hypothetical interest rates on the Partnership's borrowing cost. These analyses do not consider the effects of the reduced level of overall economic activity that could exist in such an environment. ITEM 4. CONTROLS AND PROCEDURES Within the 90 day period prior to the filing date of this Quarterly Report on Form 10-Q, the Partnership, under the supervision and with the participation of its Management, including its Chief Executive Officer and Chief Financial and Accounting Officer, performed an evaluation of the Partnership's disclosure controls and procedures, as contemplated by Rule 13a-15 under the Securities Exchange Act of 1934, as amended. Based on that evaluation, the Partnership's Chief Executive Officer and Chief Financial and Accounting Officer concluded that such disclosure controls and procedures are effective to ensure that material information relating to the Partnership is made known to them, particularly during the period for which the periodic reports are being prepared. No significant changes were made in the Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation performed pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended, referred to above. PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K During the fiscal period covered by this Form 10-Q, no reports on Form 8-K were filed. SIGNATURES Pursuant to the requirements 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. AMERICAN RESTAURANT PARTNERS, L.P. (Registrant) By: RMC AMERICAN MANAGEMENT, INC. Managing General Partner Date: 11/08/02 By: /s/Hal W. McCoy -------- -------------------------------------- Hal W. McCoy Chairman and Chief Executive Officer Date: 11/08/02 By: /s/Terry Freund -------- -------------------------------------- Terry Freund Chief Financial and Accounting Officer CERTIFICATIONS I, Hal W. McCoy, Chairman and Chief Executive Officer of American Restaurant Partners, L.P., certify that: 1. I have reviewed this quarterly report on Form 10-Q of American Restaurant Partners, L.P.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: 11/08/02 By: /s/Hal W. McCoy -------- -------------------------------------- Hal W. McCoy Chairman and Chief Executive Officer CERTIFICATIONS I, Terry Freund, Chief Financial and Accounting Officer of American Restaurant Partners, L.P., certify that: 1. I have reviewed this quarterly report on Form 10-Q of American Restaurant Partners, L.P.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: 11/08/02 By: /s/Terry Freund -------- -------------------------------------- Terry Freund Chief Financial and Accounting Officer CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Hal W. McCoy, Chairman and Chief Executive Officer of American Restaurant Parnters, L.P. (the "Partnership"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 that: 1. the Quarterly Report on Form 10-Q of the Partnership for the quarterly period ended September 24, 2002 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Partnership. AMERICAN RESTAURANT PARTNERS, L.P. (Registrant) By: RMC AMERICAN MANAGEMENT, INC. Managing General Partner Date: 11/08/02 By: /s/Hal W. McCoy -------- -------------------------------------- Hal W. McCoy Chairman and Chief Executive Officer CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Terry Freund, Chief Financial and Accounting Officer of American Restaurant Parnters, L.P. (the "Partnership"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 that: 1. the Quarterly Report on Form 10-Q of the Partnership for the quarterly period ended September 24, 2002 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Partnership. AMERICAN RESTAURANT PARTNERS, L.P. (Registrant) By: RMC AMERICAN MANAGEMENT, INC. Managing General Partner Date: 11/08/02 By: /s/Terry Freund -------- -------------------------------------- Terry Freund Chief Financial and Accounting Officer

AMERICAN RESTAURANT PARTNERS L P 10-Q