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TriZetto Reports Fourth Quarter 2002 Intangible Asset Impairment Charges

No Effect on Revenue, EBITDA, Pro Forma Earnings

NEWPORT BEACH, Calif. – April 1, 2003 – The TriZetto® Group, Inc. (Nasdaq:TZIX) filed its 2002 Annual Report on Form 10-K yesterday with the Securities and Exchange Commission. The financial statements included in TriZetto's Form 10-K include intangible asset impairment charges totaling $131.0 million in the fourth quarter of 2002. Summary financial statements reflecting the impairment charges are attached to this news release.

The impairment charges have no effect on TriZetto's revenue, cash flow, earnings before interest, taxes, depreciation and amortization (EBITDA), or pro forma earnings. (For definitions of EBITDA and pro forma earnings, see attached financial statements.)

During the fourth quarter of 2002, TriZetto performed its annual test of impairment in accordance with Financial Accounting Standard (FAS) 142 and determined that its goodwill was not impaired. After the end of the fourth quarter, TriZetto's market capitalization decreased to less than its book value for a sustained period. On February 4, 2003, the company announced the possibility of intangible asset impairment charges in its fourth quarter 2002 earnings release.

As a result of its lower market capitalization, in February TriZetto retained an independent valuation firm to re-evaluate the company's goodwill in accordance with FAS 142. Based on this valuation, TriZetto found that its goodwill was impaired and should be written down. In connection with the goodwill valuation, TriZetto performed a separate FAS 144 valuation analysis and found that certain other acquisition-related intangible assets were impaired. Other intangible assets include: completed technology, trade names, customer lists and consulting contracts.

Most of the impairment charges relate to older versions of technology and customer lists obtained through the acquisitions of Resource Information Management Systems, Inc. and Erisco Managed Care Technologies, completed in the fourth quarter of 2000. None of the technology for the company's market-leading enterprise software, Facets, was impaired.

Of the total impairment charges of $131.0 million, $97.5 million is related to goodwill. After the charge against goodwill, $37.6 million of goodwill remains on the balance sheet as of December 31, 2002. The remainder of the $131.0 million charge, or $33.5 million, relates to other identifiable intangibles. These intangibles are currently being amortized on the company's income statement. As a result of the write-down, the amortization of acquisition-related intangibles is expected to be as follows:

For the years ending December 31,  
2003 $ 10,740
2004 $ 3,620
2005 $ 2,038
Total $ 16,398

In its financial guidance issued on January 14, 2003, TriZetto estimated that amortization of acquisition-related intangibles would be $24.9 million in 2003. After the impairment charge, the new estimate for amortization in 2003 is $10.7 million. Based upon this reduction in amortization of $14.2 million, TriZetto's 2003 guidance for net income has changed. Previously the company expected a net loss of $9 - $11 million or $0.18 - $0.22 per diluted share. Results are now expected to range from a net loss of $1.7 million to net income of $0.4 million, or ($0.03) - $0.01 per diluted share. Guidance for pro forma earnings (which exclude acquisition-related amortization) remains unchanged.

TriZetto's previous and revised guidance for the first quarter of 2003 and full year 2003 is detailed in an attachment to this news release.

NOTE: All changes to guidance relate to the $33.5 million impairment charge against intangible assets; no changes in guidance are being made as a result of changes in revenue, operating expenses or operations in general.

Conference Call Today

TriZetto will host a 30-minute conference call at 11:00 a.m. Eastern Time today to answer questions about the impairment charges and revised guidance. To participate in the call, dial 1-888-322-8512, pass code TZIX, a few minutes before the call is to begin.

About TriZetto

The TriZetto Group, Inc. offers a broad portfolio of healthcare information technology (IT) products and services that can be delivered individually or combined to create a comprehensive solution.

The company provides:

  • leading proprietary and third-party software, including e-business applications;
  • outsourced services, such as software hosting, transaction processing and IT department operations; and
  • strategic and implementation consulting.

TriZetto is focused on three healthcare markets: payers, benefit administrators and physician groups. Its nearly 500 customers represent approximately 40 percent of the U.S. insured population. Headquartered in Newport Beach, Calif., TriZetto can be reached at (949) 719-2200 or www.trizetto.com.

Important Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include statements about future net revenues, profits, and financial results, the market for TriZetto's services, future service offerings, client and partner relationships, and TriZetto's operational capabilities.

Actual results may differ materially from those stated in any forward-looking statements based on a number of factors, including the effectiveness of TriZetto's implementation of its business plan, the market's acceptance of TriZetto's services, risks associated with management of growth, reliance on third parties to supply key components of TriZetto's services, attraction and retention of employees, variability of quarterly operating results, competitive factors, risks associated with acquisitions, changes in demand for third party products or solutions, which form the basis of TriZetto's service offerings, financial stability of our customers, the ability of TriZetto to meet its contractual obligations to customers, changes in government laws and regulations and risks associated with rapidly changing technology, as well as the other risks identified in TriZetto's Form 10-K and other SEC filings.

CONTACTS:

The TriZetto Group, Inc.
Anna Marie Dunlap (Investor Relations)
949-719-2236
am.dunlap@trizetto.com

The TriZetto Group, Inc.
Margie McCarthy (Media Relations)
303-495-7225
margie.mccarthy@trizetto.com


Information
For more detailed information, please call 1-800-569-1222.

Further Information:

Financial Results
(315KB PDF)

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