Welcome toCapital Senior Living Capital Senior Living Corporation 2002 Summary Annual Report The right properties CONTENTS Shareholders’ Letter 15 Financial Review 21 at Capital Senior Living... ...we have the right properties for success. Our physical properties–residential communities in locations across the country–set and meet high standards for senior living. Capital Senior Living communities are mentally, physi- cally and emotionally stimulating environments that our residents love to call home. Physical locations, however, aren’t the only properties we care about. There are also the corporate attributes that set Capital Senior Living apart as an industry leader, and these properties foster the continuing success of our enterprise. With a strong man- agement team positioning Capital Senior Living to take advantage of favorable industry trends, we believe we have all the right properties in place to prosper in the years ahead. 3 A T C A P I T A L S E N I O R L I V I N G our atmosphere has war mth We provide seniors with an atmosphere that is sensitive to their needs. The close bond between Capital Senior Living’s staff and residents creates a warm environment. And our continuum of care philosophy allows us to maintain our relationship with residents as their needs change. 5 A T C A P I T A L S E N I O R L I V I N G the det matter ails Even the smallest details of our communities matter to us, from our elegant common areas to the well-appointed individual living areas of our residents. We employ this same attention to detail as we implement our business plan and evaluate business opportunities. 7 A T C A P I T A L S E N I O R L I V I N G we have sta foundations ble Our properties are high quality–carefully chosen locations, well designed for the senior resident, and purpose-built to last. Our Company has also been carefully built. With a track record that includes 10 consecutive years of successful operation and some of the highest lease-up rates and operating margins in our industry, we have a stable foundation on which to build our future. 9 9 A T C A P I T A L S E N I O R L I V I N G home is a comm unity The comfortable surroundings, combined with the services and activities we provide, generate a welcoming atmosphere that supports a sense of community among our residents. Capital Senior Living’s national platform is an extended community of 43 residences in 20 states, giving the Company a solid presence in several prime markets. 11 A T C A P I T A L S E N I O R L I V I N G our plan is insig htful As our residents demonstrate every day, years of experience lead to valuable insights. Our considerable industry experience has helped us develop an insightful business plan that takes advantage of compelling demographic and industry trends. With a proven plan to follow, and with the right corporate properties in place, we believe Capital Senior Living is well-positioned for the future. 13 To our fellow shareholders The strength of a long-term strategy is measured by the success of the initiatives that support it. Capital Senior Living’s 2002 financial and operational results present strong evidence that we have a time-tested business philosophy as well as the ability and agility to execute it in varying industry conditions, including the challenging environment of the past few years. Our 2002 Objectives We entered 2002 with two principal objectives. The first was to achieve our goal of increasing lease-up at our properties. Since 1999, we have opened 23 communities with a capacity of over 3,200 residents, providing the foundation for our internal growth. Of these, 16 com- munities have opened since the fourth quarter of 2000. Significantly, our new Waterford and Wellington com- munities increased their lease-up from 60 to 76 percent during 2002, representing a 27 percent growth in new residents. Our newest development, a Wellington community in Richardson, Texas, was one of our most successful openings ever. In May 2002, it commenced operations with more than 50 percent of the units pre- leased. By the end of 2002, we had achieved a 93 percent leased rate at our stabilized communities – which exceeds the industry averages of approximately 89 percent for independent living and 85 percent for assisted living. Our second principal objective was to improve the operating performance of our existing portfolio while sustaining the high standards of service and amenities we offer to our residents. One of the major strengths of our company is our management team. This strength extends throughout our national organization into each community and as a result, our fourth quarter 2002 operating margins of 46 percent were among the highest in the industry, and recurring earnings increased 91 percent over 2001. As we execute our business plan and achieve these positive results, we consider the approval ratings we have received from our residents as one of our biggest successes. For the last two years, our resident satisfaction survey shows a 97 percent approval rating. This high level of satisfaction has resulted in more than one-third of our new leases emanating as referrals from current residents in our communities. L A W R E N C E A . C O H E N –Chief Executive Officer (left) J A M E S A . S T R O U D –Chairman of the Company (right) 15 Capital Senior Living has a time-tested operating philosophy as well as the ability and agility to execute it. Accomplishing these initiatives contributed significantly to achieving our objective of increasing net income. By the third quarter of 2002, we had surpassed our total year 2001 net income, which was more than double our 2000 net income. The 24 cents per share of net income we earned in 2002 represents a 71 percent increase over 2001. We have realized these important objectives while also successfully meeting the financial goal of improving our balance sheet by increasing our cash position and reducing our debt. A major part of achieving this was contributing four properties to our joint venture with Blackstone Real Estate Advisors. As a result of this contribution, we retired $29.2 million of long- term debt, received $7.3 million in cash and retained a 10 percent interest in the joint venture. Additionally, in 2002, we extended the maturity of a $20 million note in a separate transaction. The combination of these actions has helped strengthen the financial platform we can use for future growth opportunities. The Capital Senior Difference Since our inception, we have remained focused on independent living communities for senior residents. The independent living segment of the industry shows the highest potential for growth, surpassing both assisted living and skilled nursing. About 86 percent of our residents utilize our independent living facilities. We believe in a continuum of care philosophy, and therefore provide assistance with daily living activities and home health care for about 14 percent of our residents. This allows our residents to remain in their community while having access to additional services as they age. This continuum of care philosophy also allows residents to join our communities at a younger age and stay with us for a longer period of time compared to facilities that only offer a single level of service. We understand the needs and desires of our residents. We seek to offer a high-quality residential environment that is physically, mentally and emotionally stimulating. We understand that seniors today value their independence and want well-appointed communities and larger apartment units with amenities like kitchens and walk-in closets. They also appreciate the services we offer, including meals, housekeeping, linen service, transportation and an extensive range of activities. Our average monthly rent of $2,050 makes our communities affordable to a large portion of the senior population and their families. With a national platform of 43 communities in 20 states, we have developed Regional Operating Centers that provide oversight of our communities and assistance in operations and marketing. At the community level, our management works closely with the residents’ council to tailor the activities, meals and social programs specifically for the residents in that location. We have been focused on communities with more than 100 units located in strong markets. Our newly built communities range from 120 to 154 units, allowing us to have a professional on-site staff. In assessing locations, we analyze not only the population of people between 75 and 85 years old, but also consider the 45- to 59-year- old population. The presence of this group indicates that adult children are living nearby, which is important to our residents and to the success of the community. Industry Dynamics While it is our attention to detail and the genuine response to our residents’ needs that make each of our communities successful, it is the industry dynamics that make our long-term strategy so compelling. The demographic that we serve, people aged 75 years or older, is the fastest growing segment of our nation’s population, with the 85+ age group expected to grow nearly 40 percent this decade. We believe that this will drive the demand for senior living communities for many years to come. In fact, the National Investment Center projects that the capital demand for private-pay senior living communities, such as ours, will increase by $67 billion between 2000 and 2010. Supply and demand for senior living facilities is stabiliz- ing. In the five-year period starting in 1997, approximately 245,000 new senior living units were constructed, with construction peaking in 1999. Construction has slowed considerably, with 75 percent fewer new units constructed in 2002 than in 1999. The majority of this new construction was for assisted living facilities, rather than for the independent living communities, which is our focus. Therefore, we believe that the demand for our properties should increase faster than the industry average. We continue to see consolidation in the industry. Within this consolidation we see significant opportunity to leverage our strengths. With our experienced, successful 16 17 Our outlook can be summarized in one word — promising. management team, we intend to pursue management contracts for other portfolios. Additionally, our region- al and national presence, combined with our financial strength, will permit us to make specific opportunistic acquisitions. There are a large number of senior living facilities that are currently individually or privately owned that would be complementary to our regional structure. acquisition and development opportunities. Finally, we will continue our financial control, seeking further ways to strengthen our balance sheet and improve our performance. To our shareholders, our Board of Directors, management team and employees, as well as to our residents and their families, thank you for your continued support. Our Outlook Sincerely, Our outlook can be summarized in one word – promising. We have a successful, profitable long-term strategy that is supported by strong industry dynamics. We have a national platform of 43 properties in 20 states managed and operated by one of the most experienced teams in the industry. We have strengthened our financial standing by improving our balance sheet and enhancing our operating performance in one of the most challenging industry environments in recent history. In 2003 we will continue the strategies and discipline that have made us successful thus far. We will continue to look for growth opportunities that fit within our objectives – through management contracts or selective James A. Stroud, Chairman of the Board Lawrence A. Cohen, Chief Executive Officer G e o g r a p h i c a l locat i o ns At the end of 2002, Capital Senior Living owned interests in 43 properties in 20 states. 18 1 Elderly population growth 75+ . 6 2 3 0 . 7 2 6 . 6 1 . 9 7 1 . 5 8 1 millions . 3 2 2 6 . 9 1 2000 2005 2010 2015 2020 2025 2030 Resident mix Independent Living 86% Requiring Assistance 14% Elderly population growth 85+ 9 . 8 4 . 7 4 . 6 7 . 6 8 . 5 9 . 4 2 . 4 millions 2000 2005 2010 2015 2020 2025 2030 financial review SOURCE: U.S. CENSUS BUREAU 21 Report of Ernst & Young LLP, Independent Auditors The Board of Directors and Shareholders Capital Senior Living Corporation We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheets of Capital Senior Living Corporation at December 31, 2002 and 2001, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2002 (not presented separately herein) and in our report dated February 14, 2003, except for Note 3, as to which the date is March 25, 2003, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly stated in all material respects in relation to the consolidated financial statements from which it has been derived. Dallas, Texas February 14, 2003 except for Note 3 (not contained herein), as to which the date is March 25, 2003 1 Consolidated Balance Sheets Capital Senior Living Corporation I n t h o u s a n d s Assets Current assets: D e ce m b e r 3 1 , 2 0 0 2 2 0 0 1 Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in limited partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Federal and state income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes receivable from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in limited partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets held for sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities and Shareholders’ Equity Current liabilities: Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current portion of notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes payable, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest in consolidated partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commitments and contingencies Shareholders’ equity: Preferred stock, $.01 par value: $ 11,768 4,490 1,461 218 – 1,171 399 1,164 20,671 153,544 7,106 513 86,470 1,238 4,131 4,578 $ 278,251 $ 2,322 4,638 9,715 1,023 17,698 7 1,194 140,385 686 $ 9,975 2,100 1,438 – 5,774 1,145 2,770 1,218 24,420 196,821 7,540 366 65,092 1,827 4,924 7,092 $ 308,082 $ 2,814 3,589 25,594 1,144 33,141 507 1,750 156,755 2,385 Authorized shares – 15,000; no shares issued or outstanding . . . . . . . . . . . . . . . . . . – – Common stock, $.01 par value: Authorized shares – 65,000 Issued and outstanding shares – 19,737 and 19,717 in 2002 and 2001, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 91,990 26,094 118,281 $ 278,251 197 91,935 21,412 113,544 $ 308,082 24 Consolidated Statements of Income Capital Senior Living Corporation I n t h o u s a n d s , e x ce p t p e r s h a r e d a t a Revenues: Ye a r E n d e d D e ce m b e r 3 1 , 2 0 0 2 2 0 0 1 2 0 0 0 Resident and health care revenue . . . . . . . . . . . . . . . . . . . . . . . Rental and lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unaffiliated management services revenue . . . . . . . . . . . . . . . . Affiliated management services revenue . . . . . . . . . . . . . . . . . . Unaffiliated development fees . . . . . . . . . . . . . . . . . . . . . . . . . Affiliated development fees . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,574 37 1,069 2,062 – 740 61,482 Expenses: Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General and administrative expenses . . . . . . . . . . . . . . . . . . . . Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income (expense): Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity in the gains (losses) of affiliates. . . . . . . . . . . . . . . . . . . Gain (loss) on sale of properties . . . . . . . . . . . . . . . . . . . . . . . . Income before income taxes, minority interest in consolidated partnership and extraordinary charge . . . . . . . Provision for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before minority interest in consolidated partnership and extraordinary charge . . . . . . . . . Minority interest in consolidated partnership . . . . . . . . . . . . . . . Income before extraordinary charge . . . . . . . . . . . . . . . . . . . . . . Extraordinary charge, net of minority interest and income tax benefit of $187 and $94, respectively. . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Per share data: Basic earnings per share: Income before extraordinary charge . . . . . . . . . . . . . . . . . . . Extraordinary charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per share: Income before extraordinary charge . . . . . . . . . . . . . . . . . . . Extraordinary charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average shares outstanding – basic . . . . . . . . . . . . . . Weighted average shares outstanding – diluted . . . . . . . . . . . . 32,851 11,557 267 5,846 50,521 10,961 5,968 (10,749) 69 1,876 8,125 (3,015) 5,110 (428) 4,682 – 4,682 0.24 – 0.24 0.24 – 0.24 19,726 19,917 $ $ $ $ $ $ $ $ 62,807 3,619 1,971 1,743 – 403 70,543 37,214 12,002 967 7,088 57,271 13,272 5,914 (14,888) (451) 2,550 6,397 (1,871) 4,526 (1,617) 2,909 (153) 2,756 0.15 (0.01) 0.14 0.15 (0.01) 0.14 19,717 19,734 $ $ $ $ $ $ $ $ 49,185 4,603 2,271 1,040 563 1,992 59,654 29,530 11,116 4,318 5,186 50,150 9,504 5,981 (11,980) – (350) 3,155 (763) 2,392 (1,153) 1,239 – $ 1,239 $ $ $ $ $ $ 0.06 – 0.06 0.06 – 0.06 19,717 19,724 25 Consolidated Statements of Cash Flows Capital Senior Living Corporation I n t h o u s a n d s Ye a r E n d e d D e ce m b e r 3 1 , 2 0 0 2 2 0 0 1 2 0 0 0 Operating Activities Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Adjustments to reconcile net income to net cash provided by operating activities: 4,682 $ 2,756 $ 1,239 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of deferred financing charges . . . . . . . . . . . . . Minority interest in consolidated partnership. . . . . . . . . . . . Deferred income from affiliates . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income taxes (benefit) . . . . . . . . . . . . . . . . . . . . . . Equity in the (gains) losses of affiliates . . . . . . . . . . . . . . . . . (Gain) loss on sale of properties . . . . . . . . . . . . . . . . . . . . . . Writedown of assets held for sale . . . . . . . . . . . . . . . . . . . . . Provision for bad debts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Extraordinary charge, net of minority interest and income tax benefit of $187 and 94, respectively . . . . . . . . . . . . . . Non cash compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in operating assets and liabilities, net of acquisitions: Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable from affiliates. . . . . . . . . . . . . . . . . Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Federal and state income taxes receivable/payable . . . . . Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by operating activities. . . . . . . . . . Investing Activities Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash paid for acquisitions, net of cash acquired of $2,060 in 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sale of assets to BRE/CSL. . . . . . . . . . . . . . . . . . . Advances to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from (investments in) limited partnerships . . . . . . . . . . Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . . . 5,846 – 867 428 (556) (500) 2,805 (69) (1,876) 863 267 – 14 (290) (218) – 54 896 (492) 1,332 (20) (121) 13,912 (2,199) – 5,187 7,287 (22,441) 7,335 (4,831) 6,890 198 891 1,617 (491) 507 (230) 451 (2,550) – 967 153 – 816 – 570 717 (633) (867) 363 2,677 132 14,934 (2,138) – 4,787 – (17,700) (1,251) (16,302) 5,094 92 495 1,153 456 – 346 – 350 – 4,318 – – (955) – (570) (1,427) 191 1,395 1,067 2,307 101 15,652 (3,121) (102,014) 4,504 – (14,158) 2,597 (112,192) 26 Consolidated Statements of Cash Flows ( c o n t i n u e d ) Capital Senior Living Corporation I n t h o u s a n d s Ye a r E n d e d D e ce m b e r 3 1 , 2 0 0 2 2 0 0 1 2 0 0 0 Financing Activities 4,823 Proceeds from notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,823) Repayments of notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,390) Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Cash proceeds from the exercise of stock options . . . . . . . . . . . . (2,127) Distributions to minority partners . . . . . . . . . . . . . . . . . . . . . . . (806) Deferred financing charges paid . . . . . . . . . . . . . . . . . . . . . . . . . (7,288) Net cash (used in) provided by financing activities . . . . . . . . . . . 1,793 Increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . 9,975 Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . $ 11,768 Supplemental Disclosures Cash paid during the year for: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,308 2,374 3,207 (6,119) (1,000) – (7,617) (3) (11,532) (12,900) 22,875 9,975 13,931 744 $ $ $ 125,248 (30,033) (1,100) – (3,958) (3,730) 86,427 (10,113) 32,988 22,875 10,609 619 $ $ $ 27 Consolidated Statements of Shareholders’ Equity Capital Senior Living Corporation I n t h o u s a n d s Co m m o n S to c k S h a r e s A m o u n t Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance at January 1, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,717 – Balance at December 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 19,717 – Balance at December 31, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 19,717 20 – – Balance at December 31, 2002 . . . . . . . . . . . . . . . . . . . . . . . . 19,737 Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non cash compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 197 – 197 – 197 – – – $ 197 A d d i t i o n a l Pa i d - I n Ca p i t a l $ 91,935 – 91,935 – 91,935 41 14 – $ 91,990 R e t a i n e d E a r n i n g s $ 17,417 1,239 18,656 2,756 21,412 – – 4,682 $ 26,094 To t a l $ 109,549 1,239 110,788 2,756 113,544 41 14 4,682 $ 118,281 28 Company Management LAWRENCE A. COHEN Chief Executive Officer JAMES A. STROUD Chairman of the Company KEITH N. JOHANNESSEN President and Chief Operating Officer RALPH A. BEATTIE Executive Vice President and Chief Financial Officer ROB L. GOODPASTER Vice President, National Marketing DAVID W. BEATHARD Vice President, Operations GLEN H. CAMPBELL Vice President, Development DAVID R. BRICKMAN Vice President and General Counsel PAUL T. LEE Vice President, Finance JERRY D. LEE Corporate Controller ROBERT F. HOLLISTER Property Controller Board of Directors JAMES A. STROUD1 Chairman of the Board, Capital Senior Living Corporation Dallas, Texas LAWRENCE A. COHEN1 Vice Chairman of the Board, Capital Senior Living Corporation New York, New York KEITH N. JOHANNESSEN Capital Senior Living Corporation Dallas, Texas GORDON I. GOLDSTEIN, M.D.2,3 Former Chairman, Dallas Anesthesiology Associates Dallas, Texas CRAIG F. HARTBERG3 Retired First Vice President, Bank One, Texas, N.A. Dallas, Texas JAMES A. MOORE1,2,3 President, Moore Diversified Services, Inc. Fort Worth, Texas VICTOR W. NEE, PH.D.2 Professor Emeritus, Department of Aerospace and Mechanical Engineering, University of Notre Dame South Bend, Indiana 1 Member of the Board’s Executive Committee 2 Member of the Board’s Compensation Committee 3 Member of the Board’s Audit Committee 29 Corporate Information Regional Information Form 10-K CORPORATE HEADQUARTERS EASTERN REGIONAL OFFICE 14160 Dallas Parkway, Suite 300 186 Old Stagecoach Road Dallas, Texas 75254 (972) 770-5600 (972) 770-5666 fax main@capitalsenior.com NEW YORK OFFICE 300 Park Avenue, Suite 1700 New York, New York 10022 (212) 551-1770 (212) 551-1774 fax CORPORATE WEB SITE www.capitalsenior.com Shareholder Information Ridgefield, Connecticut 06877 (203) 894-9406 (203) 894-9407 fax SOUTHEASTERN REGIONAL OFFICE 6061 Palmetto Circle North Boca Raton, Florida 33433 (561) 417-8579 (561) 417-8376 fax MIDWESTERN REGIONAL OFFICE 2820 South 80th Omaha, Nebraska 68124 (402) 926-2884 (402) 926-2891 fax STOCK EXCHANGE LISTING WESTERN REGIONAL OFFICE Capital Senior Living Corporation Common 5757 Cypress Avenue Stock is listed on the New York Stock Exchange Carmichael, California 95608 (916) 480-0634 (916) 486-4375 fax SOUTHWESTERN REGIONAL OFFICE 14160 Dallas Parkway, Suite 300 Dallas, Texas 75254 (972) 770-5600 (972) 770-5666 fax main@capitalsenior.com and trades under the symbol CSU. TRANSFER AGENT AND REGISTRAR Mellon Investor Services LLC 85 Challenger Road Ridgefield Park, New Jersey 07660 (800) 635-9270 www.melloninvestor.com AUDITORS Ernst & Young LLP 2121 San Jacinto, Suite 1500 Dallas, Texas 75201 (214) 969-8000 A copy of Capital Senior Living Corporation’s 2002 annual report to the SEC on Form 10-K is available without charge upon written request to the Investor Relations Department at corpo- rate headquarters. It can also be found on the Company’s web site, www.capitalsenior.com. Annual Shareholders Meeting May 22, 2003 at 10 a.m. Central Time AmeriSuites Hotel 5229 Spring Valley Road Dallas, Texas 75254 (972) 716-2001 Profile Capital Senior Living Corporation is committed to providing quality housing and services based on the highest standards of excellence in the industry. Our goal is to enrich the daily lives of our senior residents by providing an environment that stimulates them physically, mentally, and emotionally. Therefore, each community offers a relaxed atmosphere of warmth and caring that promotes companionship among residents and staff. Each commu- nity’s employees are personally committed to serving residents and treating them with dignity and respect. 30 CCaappiittaall SSeenniioorr LLiivviinngg CCoorrppoorraattiioonn 14160 Dallas Parkway, Suite 300 Dallas, Texas 75254 (972) 770-5600 fax (972) 770-5666 www.capitalsenior.com