UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 2004
Capital Senior Living Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-13445 75-2678809
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
14160 Dallas Parkway, Suite 300, Dallas, Texas 75254
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 770-5600
Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following exhibit to this Current Report on Form 8-K is not being
filed but is being furnished pursuant to Item 9 below:
99.1 Press Release dated August 2, 2004
Item 9. Regulation FD Disclosure.
On August 2, 2004, Capital Senior Living Corporation announced that it
had entered into a definitive purchase agreement with The Covenant Group of
Texas, Inc. ("Covenant") to acquire all of the outstanding stock of Covenant's
wholly owned subsidiary, CGI Management, Inc. A copy of the press release is
filed as Exhibit 99.1 to this current report on Form 8-K. This information shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such a filing. The
press release contains and may implicate, forward-looking statements regarding
the registrant and includes cautionary statements identifying important factors
that could cause actual results to differ materially from those anticipated.
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 hereunto duly authorized.
CAPITAL SENIOR LIVING CORPORATION
Date: August 2, 2004 By: /s/ David R. Brickman
Name: David R. Brickman
Title: Vice President and General Counsel
INDEX TO EXHIBITS
Exhibit No. Exhibit Name
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99.1 Press Release dated August 2, 2004
Exhibit 99.1
For Immediate Release Contact: Ralph A. Beattie
972/770-5600
CAPITAL SENIOR LIVING CORPORATION
TO ACQUIRE CGI MANAGEMENT; WILL EXPAND RESIDENT CAPACITY TO NEARLY 9,000
o Acquisition expected to be immediately accretive to earnings
o Strategic alliance formed to pursue development and management opportunities
DALLAS - (BUSINESS WIRE) - August 2, 2004 - Capital Senior Living Corporation
("Capital") (NYSE:CSU), one of the country's largest operators of senior living
communities, today announced it has signed a definitive purchase agreement with
The Covenant Group of Texas, Inc. ("TCG") to acquire all of the outstanding
stock of Covenant's wholly owned subsidiary, CGI Management, Inc. ("CGIM"), a
Fort Worth, Texas based company which operates 16 senior independent and
assisted living communities, including seven senior living communities owned by
TCG. At the closing of Capital's purchase of CGIM's stock, Capital will receive
the exclusive right and option through July 2009 to purchase the seven senior
living communities owned by TCG. Capital will also receive the right of first
refusal to acquire the seven communities owned by TCG for a period of 15 years.
In acquiring CGI Management, Capital will assume management of 16 operating
properties, with a resident capacity of 2,070, including the seven properties
owned by TCG for which Capital will have options to purchase and rights of first
refusal. CGI Management employs approximately 500 employees.
Capital will pay approximately $2.5 million in cash at closing, subject to
various adjustments set forth in the purchase agreement, to acquire all of the
outstanding stock of CGI Management. Capital will also pay three installments of
$366,667 on the first, third and fifth anniversaries of the closing subject to
reduction if the management fees earned from the nine third party owned
communities with various terms are terminated and not replaced by substitute
agreements during the period, and certain other adjustments. The management
agreements on the TCG owned communities are for a 15-year term.
The stock purchase is expected to close in the third quarter of 2004, subject to
receipt of required approvals and other closing conditions. Capital will use
cash on hand to acquire CGI Management.
"Capital Senior Living and CGI Management hold in common many shared values and
a commitment to providing quality housing and services to seniors," said James
A.
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CAPITAL/Page 2
Stroud, Chairman of Capital. "Our new combined organization will remain
dedicated to enriching the daily lives of our senior residents by providing an
environment that stimulates them physically, mentally, and emotionally."
"Our two companies have tremendous similarities and our operations complement
each other geographically and philosophically," said Gary Staats, President of
The Covenant Group of Texas. "Of equal significance is the strategic alliance
that is created between Capital and TCG in an effort to better serve
organizations desiring an expanded mission to include senior housing."
The CGI Management portfolio includes 16 properties located in four states
(Texas, Oklahoma, Arkansas and Mississippi) with a resident capacity of 2,070.
Approximately 79 percent of the portfolio is independent living and 21 percent
is assisted living, with 95 percent of the revenues from private pay sources.
Capital estimates that the transaction will be accretive on a cash basis and
GAAP basis. The Company anticipates annual management fee revenue of
approximately $1.6 million and annual incremental expenses of approximately $0.6
million.
Capital and TCG will also form a strategic alliance to jointly pursue
development and management opportunities for not for profit owners. TCG's
leadership as a successful senior living developer for tax-exempt owners will be
complemented by Capital's proven track record as a national operator of senior
living communities. The strategic alliance is expected to provide Capital with a
platform for additional external growth through longterm management contracts.
"The acquisition of CGI Management will accelerate Capital's business plan to
grow through acquisitions and additional management assignments," stated
Lawrence A. Cohen, Chief Executive Officer. "The two organizations share many
similarities that will advance a successful integration upon closing the
transaction. We are optimistic our integration plan will be successful and will
benefit our residents, family members, employees and shareholders."
2Q04 CONFERENCE CALL INFORMATION
The Company will host a conference call with senior management to discuss the
Company's second quarter 2004 financial results. The call will be held on
Thursday, August 5, 2004 at 11:00 am Eastern Time.
The call-in number is 913-981-5510. No confirmation number is required. A link
to a simultaneous webcast of the teleconference will be available at
www.capitalsenior.com through Windows Media Player or RealPlayer.
For the convenience of the Company's shareholders and the public, the conference
call will be recorded and available for replay starting August 5, 2004 at 2:00
pm Eastern Time, until August 12, 2004 at 8:00 pm Eastern Time. To access the
conference call replay, call 719-457-0820, confirmation code 514175. The
conference call will also be made available for playback via the Company's
corporate website, www.capitalsenior.com, and will be available until the next
earnings release date.
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CAPITAL/Page 3
ABOUT THE COMPANY
Capital Senior Living Corporation is one of the nation's largest operators of
residential communities for senior adults. The Company's operating philosophy
emphasizes a continuum of care, which integrates independent living, assisted
living and home care services, to provide residents the opportunity to age in
place.
The Company currently operates 42 senior living communities in 20 states with an
aggregate capacity of approximately 6,900 residents, including 41 senior living
communities which the Company owns or in which the Company has an ownership
interest, and one community it manages for a third party. In the communities
operated by the Company, 86 percent of residents live independently and 14
percent of residents require assistance with activities of daily living.
The forward-looking statements in this release are subject to certain risks and
uncertainties that could cause results to differ materially, including, but not
without limitation to, the Company's ability to find suitable acquisition
properties at favorable terms, financing, licensing, business conditions, risks
of downturns in economic conditions generally, satisfaction of closing
conditions such as those pertaining to licensure, availability of insurance at
commercially reasonable rates, and changes in accounting principles and
interpretations among others, and other risks and factors identified from time
to time in our reports filed with the Securities and Exchange Commission.
Contact Ralph A. Beattie, Chief Financial Officer, at 972-770-5600, Matt Hayden,
Hayden Communications, Inc. at 858-456-4533, or Gary Staats, The Covenant Group
of Texas, Inc., at 817-446-4792 for more information.
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