10-Q 1 arpq.txt ARP 3RD QTR 2003 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 September 30, 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 September 30, 2003 and December 31, 2002 1 Consolidated Condensed Statements of Income for the Three and Nine Periods Ended September 30, 2003 and September 24, 2002 2 Consolidated Condensed Statements of Cash Flows for the Nine Periods Ended Septmeber 30, 2003 and September 24, 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 September 30, December 31, ASSETS 2003 2002 --------------------------------------------- ------------- ------------- Current assets: Cash and cash equivalents $ 1,052,214 $ 522,098 Investment securities available-for-sale - 190,174 Accounts receivable 406,777 328,356 Due from affiliates 16,280 74,424 Notes receivable from affiliates - current portion 10,220 11,628 Inventories 528,692 430,542 Prepaid expenses 892,241 626,448 ---------- ---------- Total current assets 2,906,424 2,183,670 Net property and equipment 18,969,842 18,704,186 Other assets: Franchise rights, net 8,498,054 4,748,392 Notes receivable from affiliates 84,029 91,780 Deposit with affiliate 570,000 535,000 Goodwill 2,540,864 2,540,864 Other 880,135 800,374 ---------- ---------- 12,573,082 8,716,410 ---------- ---------- $34,449,348 $29,604,266 ========== ========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY) ---------------------------------------------- Current liabilities: Accounts payable $ 3,460,450 $ 2,383,477 Due to affiliates 4,428 12,434 Accrued payroll and other taxes 1,284,657 738,773 Accrued liabilities 1,436,984 1,244,191 Current maturities of long-term debt 2,988,413 3,062,704 Current portion of capital lease obligations 363,542 560,405 ---------- ---------- Total current liabilities 9,538,474 8,001,984 Long-term liabilities less current maturities: Capital lease obligations 3,259,862 3,454,437 Long-term debt 25,361,363 22,036,387 Other noncurrent liabilities 941,014 1,067,792 ---------- ---------- Total long-term liabilities 29,562,239 26,558,616 Minority interests in Operating Partnerships 383,027 147,163 Commitments and contingencies - - Partners' capital (deficiency): General Partners (7,572) (7,620) Limited Partners: Class A Income Preference 5,201,976 5,212,980 Classes B and C (7,549,160) (7,654,589) Notes receivable employees - sale of partnership units (603,231) (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) (5,034,392) (5,103,497) ---------- ---------- $34,449,348 $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 Nine Periods Ended September 30, September 24, 2003 2002 ------------- ------------- Cash flows from operating activities: Net income $ 1,436,359 $ 2,600,493 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,430,847 2,278,047 Equity in loss of unconsolidated affiliates 155,731 160,244 Loss on disposition of assets 3,388 127,680 Gain on sale of investment securities (6,486) - Minority interest in income (loss) of Operating Partnerships (5,619) 34,359 Unit compensation expense 61,875 53,462 Gain on fire settlement (59,209) - Net change in operating assets and liabilities, net of acquisition: Accounts receivable (33,646) 135,726 Due from affiliates 58,144 (19,871) Inventories (37,537) (73,303) Prepaid expenses (196,193) (193,797) Deposit with affiliate (35,000) (50,000) Accounts payable 579,419 (540,375) Due to affiliates (8,006) (10,771) Accrued payroll and other taxes 366,235 (235,216) Accrued liabilities 51,951 (101,310) Other, net (243,573) (49,748) ---------- ---------- Net cash provided by operating activities 4,518,680 4,115,620 Investing activities: Cash acquired in acquisition of MVP 91,900 - Investment in unconsolidated affiliates (117,640) (181,512) Purchase of investment securities - (199,804) Proceeds from sale of investment securities 197,783 - Additions to property and equipment 1,032,023) (1,764,516) Proceeds from sale of property and equipment 5,500 - Proceeds from sale and leaseback of property and equipment - 3,187,202 Purchase of franchise rights - (15,000) Collections of notes receivable from affiliates 9,159 11,879 Net proceeds from fire settlement 193,888 - ---------- ---------- Net cash provided by (used in) investing activities (651,433) 1,038,249 Financing activities: Payments on long-term borrowings (4,122,030) (4,782,982) Proceeds from long-term borrowings 2,649,346 847,750 Principal payments on capital lease obligations (415,678) (480,230) Distributions to Partners (1,330,066) (1,419,229) Proceeds from issuance of Class B and C units 16,500 9,698 Repurchase of units (116,686) (130,012) General Partners' distributions from Operating Partnerships (14,017) (15,378) Minority interests' distributions from Operating Partnerships (4,500) (4,500) ---------- ---------- Net cash used in financing activities (3,337,131) (5,974,883) ---------- ---------- Net increase (decrease) in cash and cash equivalents 530,116 (821,014) Cash and cash equivalents at beginning of period 522,098 1,594,934 ---------- ---------- Cash and cash equivalents at end of period $ 1,052,214 $ 773,920 ========== ========== See accompanying notes. AMERICAN RESTAURANT PARTNERS, L.P. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Nine Periods Ended September 30, 2003 and September 24, 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 Event ---------------- On October 1, 2003, the Partnership declared a quarterly distribution of $0.10 per unit to all unitholders of record as of October 12, 2003. The distribution is not reflected in the September 30, 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 1,525,000 Franchise rights 3,921,095 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 ---------------------------------- Nine Periods Ended 9/30/03 9/24/02 ---------- ---------- Cash paid for interest $2,041,820 $2,139,531 Noncash investing and financing activities: Distributions offset against notes receivable 57,758 103,206 Reduction of notes receivable recorded as compensation expense 61,875 53,462 Capital leases entered into as part of sale-leaseback transactions - 2,039,283 Issuance of units for notes receivable 172,500 147,277 Partnership units issued as contingent consideration in purchase of Magic - 790,999 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 $98,778 and $283,732 for the three and nine periods ended September 30, 2003, respectively, and $106,052 and $315,464 for the three and nine periods ended September 24, 2002, respectively. 6. COMPREHENSIVE INCOME -------------------- Comprehensive income is comprised of the following: Three Periods Ended Nine Periods Ended 9/30/03 9/24/02 9/30/03 9/24/02 -------- -------- ---------- ---------- Net income $100,181 $456,028 $1,436,359 $2,600,493 Change in unrealized loss on investments held for sale - (12,044) 1,123 (12,044) ------- -------- --------- --------- Comprehensive income $100,181 $443,984 $1,437,482 $2,588,449 ======= ======= ========= ========= 7. Fire Settlement --------------- During the second quarter of 2003, the Partnership incurred a fire at one of its restaurants. The property was insured for replacement cost and the Partnership realized a third quarter gain of $59,209. 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 results of American Restaurant Partners, L.P. and its majority owned subsidiaries, American Pizza Partners, L.P. (APP), APP Concepts, LLC, Oklahoma Magic, L.P. (Magic) and Mountain View Pizza, LLC (MVP). The results of MVP have been included since the acquisition date of May 13, 2003. As of September 30, 2003, the Partnership operated 78 traditional Pizza Hut red roof restaurants, 21 delivery/carryout units and 2 dualbrand locations. Comparison of the Three and Nine Periods Ended September 30, 2003 ----------------------------------------------------------------- with the Three and Nine Periods Ended September 24, 2002 -------------------------------------------------------- The following discussion relates to the comparison of the results of operations for the three and nine periods ended September 30, 2003 compared to the three and nine periods ended September 24, 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 nine periods ended September 30, 2003 in order to provide a more meaningful basis for a comparative discussion of these results versus the three and nine periods ended September 24, 2002. MVP had a net loss of $108,635 for the quarter and $148,609 year-to- date. Comparable restaurant sales decreased 1.2% for the quarter and 0.7% from the date of acquisition. Other factors that contributed to MVP's net losses included relocation expense of $20,000 for the quarter and $21,000 year-to-date, in addition to legal and beer license fees related to transferring beer licenses from Winny to MVP totaling $30,000 for the quarter and $42,000 year- to-date. Labor expenses were also high due to increasing staffing in anticipation of improving service and sales levels.

Net sales for the three periods ended September 30, 2003 decreased $399,000 from $16,911,000 to $16,512,000, a 2.4% decrease from the same three periods of 2002. For the year-to-date, net sales decreased $1,060,000, or 2.1% from the prior year. Comparable restaurant sales decreased 1.9% for the quarter and year-to-date. These decreases were not unexpected, as third quarter comparable restaurant sales in 2002 were 3.7% higher than in the same three periods of the prior year and year-to-date comparable restaurant sales in 2002 were 5.4% higher than in the same nine periods of the prior year. The sales increases 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 Nine Periods Ended Ended 9/30/03 9/24/02 9/30/03 9/24/02 ------- ------- ------- ------- Cost of sales 25.4% 24.3% 24.6% 24.1% Restaurant labor and benefits 29.0% 29.2% 28.8% 28.5% Advertising 6.3% 6.0% 6.3% 6.0% Other restaurant operating expenses exclusive of depreciation and amortization 22.2% 20.7% 20.4% 19.0% General and administrative: Management fees 6.3% 6.2% 6.2% 6.2% Other 1.6% 1.8% 2.0% 2.3% Depreciation and amortization 4.4% 4.7% 4.5% 4.4% Income from operations 4.9% 7.1% 7.3% 9.5% Income from operations for the three periods ended September 30, 2003, decreased $382,000 from $1,196,000 to $814,000, a 31.9% decrease from the three periods ended September 24, 2002. Year-to- date income from operations decreased $1,254,000, or 25.5%, from $4,914,000 to $3,660,000. Cost of sales as a percentage of net sales increased 110 basis points for the quarter and 50 basis points year-to-date. The increase for the quarter is primarily due to promoting more high cost products during the third quarter of 2003, as well as a 15% increase in cheese costs during the third quarter. The year-to-date increase is primarily due to promoting more high-cost products in the first and third quarters of 2003, as well as offering free Cinnamon Sticks with certain orders in the first quarter. Labor and benefits expense for the quarter decreased 20 basis points but increased 30 basis points year-to-date. The decrease for the quarter is primarily due to a decrease in driver wages resulting from a decrease in delivery sales as a percentage of total net sales. The year-to-date increase is due to labor efficiencies realized during 2002 resulting from significant sales increases. Advertising expense increased 30 basis points for the quarter and year-to-date. 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 150 basis points for the quarter and 140 basis points year-to-date. The increase for the quarter was primarily due to a 10% increase in property and liability insurance premiums and a 37% increase in workers compensation insurance premiums for the policy year July 2003 through June 2004. The year-to-date increase was primarily due to the increases noted above for the new policy year in addition to premium increases of 40% in property and liability insurance premiums and 60% in workers' compensation insurance premiums experienced by the Partnership at last year's renewal for the policy year July 2002 through June 2003. The year-to-date increase was also due to an increase in utilities in 2003. Other general and administrative expense decreased 20 and 30 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 decreased 30 basis points for the quarter, primarily due to amortizing franchise rights over the initial term of the new franchise agreement of 30 years beginning January 1, 2003, as discussed in the accompanying financial statement notes. Prior to 2003 franchise rights were amortized over 20 years. Depreciation and amortization expense increased 10 basis points year-to-date. For the quarter, the Partnership had net income of $209,000, a $247,000 decrease over the prior year's net income of $456,000. This decrease was primarily due to the decrease in income from operations noted above which was offset by a $68,000 decrease in interest expense and a gain on fire settlement of $59,000. The Partnership had year-to-date net income of $1,585,000, a decrease of $1,015,000 from the prior year net income of $2,600,000. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- At September 30, 2003 the Partnership had a working capital deficiency of $6,632,000 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 nine periods ended September 30, 2003, net cash provided by operating activities amounted to $4,519,000 compared to $4,116,000 for the nine periods ended September 24, 2002. The decrease in net income of $1,164,000 in 2003 as compared to 2002 reduced cash flows by a like amount. Operating cash flows were also significantly affected by an increase in operating liabilities, including accounts payable and accrued liabilities, of approximately $990,000 in the first nine periods of 2003 compared to a decrease of $888,000 in the same nine periods of 2002. The 2003 increase resulted from the deferred payment of certain liabilities due to decreasing cash balances. 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 nine periods ended September 30, 2003 were $1,032,000, all of which was used for replacement of equipment in existing restaurants, including $197,786 for replacement equipment at a restaurant that incurred a fire in 2003. The Partnership received insurance proceeds of $193,888 due to this restaurant fire. FINANCING ACTIVITIES. Cash distributions paid during the nine periods ended September 30, 2003 were $1,330,000 net of a reduction in employee notes receivable of $58,000. Distributions amounted to $.35 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 30, 2003, the Partnership's payments on long-term borrowings totaled $4,122,000, 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 $2,649,000 during the nine periods ended September 30, 2003. $1,740,000 of this amount was contributed to MVP for the purchase of the 87% interest. Management does not plan to open any new or replacement restaurants during the remainder of 2003. Management anticipates spending an additional $200,000 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, 2003, the Partnership's property and liability insurance premiums increased 10% and its workers' compensation premiums increased 37%. The Partnership continues to focus on risk management in order to control claims costs and is exploring insurance options for future policy renewals. 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: 11/13/03 By: /s/Hal W. McCoy -------- -------------------------------------- Hal W. McCoy Chairman and Chief Executive Officer Date: 11/13/03 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: 11/13/03 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: 11/13/03 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 September 30, 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: 11/13/03 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 September 30, 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: 11/13/03 By: /s/Terry Freund -------- -------------------------------------- Terry Freund Chief Financial and Accounting Officer

AMERICAN RESTAURANT PARTNERS L P 10-Q