10-Q 1 arpq.txt 2ND QUARTER 10-Q 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 July 1, 2003 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 July 1, 2003 and December 31, 2002 1 Consolidated Condensed Statements of Income for the Three and Six Periods Ended July 1, 2003 and June 25, 2002 2 Consolidated Condensed Statements of Cash Flows for the Six Periods Ended July 1, 2003 and June 25, 2002 3 Notes to Consolidated Condensed Financial Statements 4-6 Item 2. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations 7-12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Item 4. Controls and Procedures 14 Part II. Other Information --------------------------- Item 6. Exhibits and Reports on Form 8-K 15 AMERICAN RESTAURANT PARTNERS, L.P. CONSOLIDATED CONDENSED BALANCE SHEETS July 1, December 31, ASSETS 2003 2002 ------------------------------------------ ----------- ----------- Current assets: Cash and cash equivalents $ 551,446 $ 522,098 Investment securities available-for-sale - 190,174 Accounts receivable 182,009 328,356 Due from affiliates 23,713 74,424 Notes receivable from affiliates - current portion 9,994 11,628 Inventories 503,731 430,542 Prepaid expenses 535,633 626,448 ---------- ---------- Total current assets 1,806,526 2,183,670 Net property and equipment 19,520,770 18,704,186 Other assets: Franchise rights, net 8,445,580 4,748,392 Notes receivable from affiliates 86,671 91,780 Deposit with affiliate 570,000 535,000 Goodwill 2,540,864 2,540,864 Other 845,396 800,374 ---------- ---------- 12,488,511 8,716,410 ---------- ---------- $33,815,807 $29,604,266 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY) ---------------------------------------------- Current liabilities: Accounts payable $ 2,402,295 $ 2,383,477 Due to affiliates 115,554 12,434 Accrued payroll and other taxes 812,998 738,773 Accrued liabilities 1,218,165 1,244,191 Current maturities of long-term debt 2,909,778 3,062,704 Current portion of capital lease obligations 434,636 560,405 ---------- ---------- Total current liabilities 7,893,426 8,001,984 Long-term liabilities less current maturities: Capital lease obligations 3,307,196 3,454,437 Long-term debt 26,004,408 22,036,387 Other noncurrent liabilities 983,375 1,067,792 ---------- ---------- Total long-term liabilities 30,294,979 26,558,616 Minority interests in Operating Partnerships 403,567 147,163 Commitments and contingencies - - Partners' capital (deficiency): General Partners (7,276) (7,620) Limited Partners: Class A Income Preference 5,262,577 5,212,980 Classes B and C (7,400,729) (7,654,589) Notes receivable employees - sale of partnership units (554,332) (576,740) Cost in excess of carrying value of assets acquired (2,076,405) (2,076,405) Cumulative comprehensive loss - (1,123) ---------- ---------- Total partners' capital (deficiency) (4,776,165) (5,103,497) ---------- ---------- $33,815,807 $29,604,266 ========== ========== See accompanying notes. AMERICAN RESTAURANT PARTNERS, L.P. CONSOLIDATED CONDENSED STATEMENTS OF INCOME

AMERICAN RESTAURANT PARTNERS, L.P. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Six Periods Ended July 1, June 25, 2003 2002 ---------- ---------- Cash flows from operating activities: Net income $1,336,178 $2,144,465 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,608,464 1,490,815 Equity in loss of unconsolidated affiliates 124,923 122,375 Loss on disposition of assets 4,394 122,624 Gain on sale of investment securities (6,486) - Minority interest in income of Operating Partnerships 9,406 29,214 Unit compensation expense 40,634 33,426 Net change in operating assets and liabilities, net of acquisition: Accounts receivable 191,122 267,803 Due from affiliates 50,711 (153) Inventories (12,576) (6,904) Prepaid expenses 160,415 79,256 Deposit with affiliate (35,000) - Accounts payable (478,736) (1,059,369) Due to affiliates 103,120 (16,216) Accrued payroll and other taxes (105,424) 51,445 Accrued liabilities (166,868) (231,676) Other, net (139,073) (804) --------- --------- Net cash provided by operating activities 2,685,204 3,026,301 Investing activities: Cash acquired in acquisition of MVP 91,900 - Investment in unconsolidated affiliates (87,980) (108,212) Proceeds from sale of investment securities 197,783 - Additions to property and equipment (620,412) (669,469) Proceeds from sale of property and equipment 999 - Proceeds from sale and leaseback of property and equipment - 3,188,044 Collections of notes receivable from affiliates 6,743 7,668 --------- --------- Net cash provided by (used in) investing activities (410,967) 2,418,031 Financing activities: Payments on long-term borrowings (2,657,621) (4,099,269) Proceeds from long-term borrowings 1,749,347 336,250 Principal payments on capital lease obligations (273,010) (333,354) Distributions to Partners (950,117) (879,636) Proceeds from issuance of Class B and C units 6,750 9,698 Repurchase of units (107,236) (79,185) General Partners' distributions from Operating Partnerships (10,002) (9,545) Minority interests' distributions from Operating Partnerships (3,000) (3,000) --------- --------- Net cash used in financing activities (2,244,889) (5,058,041) --------- --------- Net increase in cash and cash equivalents 29,348 386,291 Cash and cash equivalents at beginning of period 522,098 1,594,934 --------- --------- Cash and cash equivalents at end of period $ 551,446 $1,981,225 ========= ========= See accompanying notes. AMERICAN RESTAURANT PARTNERS, L.P. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Six Periods Ended July 1, 2003 and June 25, 2002 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). Effective May 13, 2003, the Partnership purchased an 87% interest in Mountain View Pizza, LLC (MVP). Accordingly, the Partnership began consolidating the accounts of MVP from May 13, 2003. American Restaurant Partners, L.P., APP, APP Concepts, LLC, Magic and MVP 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 31, 2002 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 31, 2002. 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 ----------------- Subsequent to July 1, 2003, the Partnership refinanced $878,000 of notes payable to Intrust Bank with a new note to Stillwater National Bank of $900,000, which matures with a balloon payment in five years. Accordingly, the current and non-current portions of long- term debt reflect the terms of the new agreement. The Partnership has declared a quarterly distribution of $0.10 per unit to all unitholders of record as of July 12, 2003. The distribution is not reflected in the July 1, 2003 consolidated condensed financial statements. 3. Purchase of Mountain View Pizza, LLC (MVP) ------------------------------------------ Effective May 13, 2003, Restaurant Management Company of Wichita, Inc. (the "Management Company"), an affiliate of the Partnership, purchased the stock of Winny Enterprises, Inc. "Winny," a company that owned and operated thirteen Pizza Hut restaurants in Colorado, for $260,000. Winny was then merged into a newly formed limited liability company, Mountain View Pizza, LLC (MVP), the surviving entity resulting from the merger. The Partnership contributed $1,740,000 to MVP, effectively acquiring an 87% ownership interest in MVP. The remaining ownership interests are held by the Management Company. A summary of the assets acquired and liabilities assumed of Winny at the acquisition date is as follows: Cash $ 91,900 Current assets 174,988 Property and equipment 1,650,000 Franchise rights 3,796,095 Other assets 113,356 Current liabilities (818,045) Notes payable to bank (4,748,294) ---------- Cash paid by RMC $ 260,000 ========== 4. Supplemental Cash Flow Information ---------------------------------- Six Periods Ended 7/01/03 6/25/02 --------- --------- Cash paid for interest $1,481,779 $1,445,828 Noncash investing and financing activities: Distributions offset against notes receivable 40,148 65,309 Reduction of notes receivable recorded as compensation expense 40,634 33,426 Capital leases entered into as part of sale-leaseback transactions - 2,039,283 Issuance of units for notes receivable 84,750 147,277 Acquisition of MVP, LLC: Liabilities assumed 5,566,339 - Minority ownership interest 260,000 - 5. FRANCHISE RIGHTS ---------------- The Partnership entered into a new franchise agreement effective January 1, 2003 for a period of 30 years. The Partnership has the option at the expiration of the initial or any subsequent term of the franchise agreement to renew the franchise granted thereunder for a renewable term of 20 years, subject to the approval of the franchisor. Beginning January 1, 2003, the remaining franchise rights are being amortized over the initial term of the new franchise agreement of 30 years. Prior to January 1, 2003, franchise rights were amortized over the 20 year life of the original franchise agreement. Amortization expense was $105,470 and $184,954 for the three and six periods ended July 1, 2003, respectively, and $107,466 and $209,412 for the three and six periods ended June 25, 2002, respectively. 6. COMPREHENSIVE INCOME -------------------- Comprehensive income is comprised of the following: Three Periods Ended Six Periods Ended 7/01/03 6/25/02 7/01/03 6/25/02 -------- -------- -------- -------- Net income $560,479 $891,597 $1,336,178 $2,144,465 Change in unrealized loss on investments held for sale - - 1,123 - ------- ------- --------- --------- Comprehensive income $560,479 $891,597 $1,337,301 $2,144,465 ======= ======= ========= ========= 7. RECENT ACCOUNTING PRNOUNCEMENTS ------------------------------- In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 requires that certain financial instruments, which under previous guidance were accounted for as equity, must now be accounted for as liabilities. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Partnership has not yet determined the effects of SFAS No. 150 on its financial statements. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS --------------------- As discussed in the notes to the accompanying consolidated financial statements, the consolidated results of operations include the full quarterly results of American Restaurant Partners, LP and its majority owned subsidiaries, American Pizza Partners, L.P. (APP), APP Concepts, LLC and Oklahoma Magic, L.P. (Magic). They also include the consolidated results of operations of MVP for the seven- week period May 13, 2003 through July 1, 2003 (see detail following). The consolidated results of operations were not significantly impacted by the results of MVP. As of July 1, 2003, the Partnership operated 78 traditional Pizza Hut red roof restaurants, 21 delivery/carryout units and 2 dualbrand locations. Comparison of the Three and Six Periods Ended July 1, 2003 ---------------------------------------------------------- with the Three and Six Periods Ended June 25, 2002 -------------------------------------------------- The following discussion relates to the comparison of the results of operations for the three and six periods ended July 1, 2003 compared to the three and six periods ended June 25, 2002, excluding the effects of the consolidation of MVP. The table below separates the effects of consolidating MVP from the consolidated totals for the three and six periods ended July 1, 2003 in order to provide a more meaningful basis for a comparative discussion of these results versus the three and six periods ended June 25, 2002.

Net sales for the three periods ended July 1, 2003 decreased $432,000 from $17,034,000 to $16,602,000, a 2.5% decrease from the same three periods of 2002. For the year-to-date, net sales decreased $661,000, or 1.9% from the prior year. Comparable restaurant sales decreased 2.2% for the quarter and 1.9% for the year-to-date. These decreases were not unexpected, as second quarter comparable restaurant sales in 2002 were 3.6% higher than in the same three periods of the prior year and year-to-date comparable restaurant sales in 2002 were 6.3% higher than in the same six periods of the prior year. The high sales in 2002 were primarily due to the introduction of a new product, P'Zone, in the first quarter of 2002. Results of Operations as a Percentage of Sales: Three Periods Six Periods Ended Ended 7/01/03 6/25/02 7/01/03 6/25/02 ------- ------- ------- ------- Cost of sales 24.0% 24.1% 24.3% 24.0% Restaurant labor and benefits 28.8% 28.4% 28.7% 28.1% Advertising 6.3% 5.8% 6.3% 6.1% Other restaurant operating expenses exclusive of depreciation and amortization 20.1% 18.7% 19.5% 18.1% General and administrative: Management fees 6.2% 6.2% 6.2% 6.2% Other 2.2% 2.7% 2.1% 2.5% Depreciation and amortization 4.6% 4.6% 4.5% 4.3% Income from operations 7.8% 9.5% 8.4% 10.8% Income from operations for the three periods ended July 1, 2003, decreased $324,000 from $1,621,000 to 1,297,000, a 20.0% decrease from the three periods ended June 25, 2002. Year-to-date income from operations decreased $872,000, or 23.5%, from $3,718,000 to $2,846,000. Cost of sales as a percentage of net sales decreased 10 basis points for the quarter but increased 30 basis points year-to-date. The year-to-date increase is primarily due to promoting more high-cost products in the first quarter of 2003, as well as offering free Cinnamon Sticks with certain orders in the same quarter. Labor and benefits expense for the quarter and year-to-date increased 40 and 60 basis points, respectively. Labor efficiencies were realized during 2002 due to significant sales increases. Advertising expense increased 50 and 20 basis points for the quarter and year-to-date, respectively. These increases were primarily due to a net increase in advertising fees of .25% effective January 1, 2003, as required by the new franchise agreement. Other restaurant operating expenses increased 140 basis points for the quarter and year-to-date. These increases were primarily due to a 40% increase in property and liability insurance premiums and a 60% increase in workers' compensation insurance premiums effective July 1, 2002, as well as an increase in utilities in 2003. Other general and administrative expense decreased 50 and 40 basis points for the quarter and year-to-date, respectively, due to a decrease in management bonuses paid in 2003 from lower cash flow results. Depreciation and amortization expense remained at 4.6% of net sales for the quarter and increased 20 basis points year-to-date. For the quarter, the Partnership had net income of $600,000, a $292,000 decrease over the prior year's net income of $892,000. This decrease was primarily due to the decrease in income from operations noted above which was offset by a $31,000 decrease in interest expense. The Partnership had year-to-date net income of $1,376,000, a decrease of $768,000 from the prior year net income of $2,144,000. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- At July 1, 2003 the Partnership had a working capital deficiency of $6,087,000 compared to a working capital deficiency of $5,818,000 at December 31, 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 six periods ended July 1, 2003, net cash provided by operating activities amounted to $2,685,000 compared to $3,026,000 for the six periods ended June 25, 2002. The decrease in net income of $808,000 in 2003 as compared to 2002 reduced cash flows by a like amount. Operating cash flows were also significantly affected by a decrease in operating liabilities, including accounts payable and accrued liabilities, of approximately $648,000 in the first six periods of 2003 compared to $1,256,000 in the same six periods of 2002. The 2002 reduction resulted from the deferred payment of certain liabilities in anticipation of sale-leaseback transactions that occurred in the first quarter of 2002. INVESTING ACTIVITIES. Capital expenditures for the six periods ended July 1, 2003 were $620,000, all of which was used for replacement of equipment in existing restaurants. FINANCING ACTIVITIES. Cash distributions paid during the six periods ended July 1, 2003 were $950,000 net of a reduction in employee notes receivable of $40,000. Distributions amounted to $.25 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 six periods ended July 1, 2003, the Partnership's payments on long-term borrowings totaled $2,658,000, which included a pay-down of $1,000,000 on debt assumed in connection with the purchase of an 87% interest in MVP. Proceeds from borrowings amounted to $1,749,000 during the six periods ended July 1, 2003. $1,740,000 of this amount was contributed to MVP for the purchase of the 87% interest. Management plans to open one new restaurant during 2003. Development of this restaurant will be financed through existing lenders. Management anticipates spending an additional $600,000 during the remainder of 2003 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 second quarter of 2003, the Partnership filed a Form 8-K dated May 20, 2003, reporting an acquisition of assets. 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: 8/14/03 By: /s/Hal W. McCoy ------- -------------------------------------- Hal W. McCoy Chairman and Chief Executive Officer Date: 8/14/03 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: 8/14/03 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: 8/14/03 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 July 1, 2003 (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: 8/14/03 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 July 1, 2003 (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: 8/14/03 By: /s/Terry Freund ------- -------------------------------------- Terry Freund Chief Financial and Accounting Officer

AMERICAN RESTAURANT PARTNERS L P 10-Q