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Investment Technology Group Reports 2007 Results

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Significant Strength in Non-US Earnings

NEW YORK--(BUSINESS WIRE)--Jan. 31, 2008--Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based trading services and transaction research, today announced that for the fourth quarter ended December 31, 2007, net income was $30.0 million, up 36 percent from net income of $22.1 million in the fourth quarter of 2006, which included an after-tax restructuring charge of $0.6 million. Earnings were $0.68 per diluted share, an increase of 39 percent versus earnings of $0.49 per diluted share in the fourth quarter of last year. ITG's total revenue for the fourth quarter of 2007 was $196.6 million, 28 percent greater than total revenue of $153.1 million for the fourth quarter of 2006. Pre-tax operating margins in the fourth quarter were 25.7 percent in 2007 and 23.4 percent in 2006. For the full year 2007, pre-tax operating margins were 25.8 percent, compared to 25.6 percent in 2006.

"In 2007, ITG executed aggressively on its strategies for product globalization, asset class diversification and technology innovation, providing clients with solutions for a complex and interconnected global marketplace," said Bob Gasser, ITG's Chief Executive Officer and President. "In the US, ITG focused on integrating derivatives capabilities and leveraging its strong product distribution chain to increase client penetration."

ITG's non-US revenues were a record $57.1 million in the fourth quarter of 2007, a 72 percent increase over revenues of $33.2 million in the fourth quarter of 2006. Non-US pre-tax operating income more than doubled to $7.2 million in the fourth quarter of 2007 from $3.4 million in the fourth quarter of 2006, and the contribution to pro forma diluted operating earnings per share more than doubled to $0.11 from $0.05 in 2006.

For the year ended December 31, 2007, revenues were $731.0 million, net income was $111.1 million, and diluted earnings per share were $2.48. In 2007, pro forma operating revenues increased 25 percent, pro forma operating net income increased 22 percent and pro forma diluted operating earnings per share increased 21 percent. For the full year, pro forma non-US operating revenues were $185.0 million, representing 57 percent growth over pro forma operating revenues of $118.1 million in 2006. ITG's pro forma non-US operating net income was $13.6 million versus $4.8 million in 2006, while its contribution to pro forma diluted operating earnings per share increased to $0.30 in 2007 from $0.11 in 2006.

"ITG's Canadian operating revenues showed continued strength in 2007, increasing 50 percent over 2006," said Mr. Gasser. "In addition, ITG's European revenues grew 67 percent over 2006 as we continued to expand our product line in the region."

Conference Call

ITG has scheduled a conference call today at 11:00 a.m. ET to discuss fourth quarter results. Those wishing to listen to the call should dial 1-800-510-9836 and enter the pass code 31660661 at least 10 minutes prior to the start of the call to ensure connection. The conference call and webcast will also be accessible through ITG's web site at www.itg.com. For those unable to listen to the live broadcast of the call, a replay will be available for one week by dialing 1-888-286-8010 and entering the pass code 76404213. The replay will be available starting approximately two hours after the completion of the conference call.

About ITG

Investment Technology Group, Inc. (ITG), is a specialized brokerage firm that partners with clients globally to provide innovative solutions spanning the entire trading process. A pioneer in electronic trading, ITG has a unique approach that combines pre-trade, order management, trade execution, and post-trade tools to provide continuous improvements in trading and cost efficiency. The firm is headquartered in New York and maintains offices in North America, Europe and the Asia Pacific regions. For additional information, visit www.itg.com.

In addition to historical information, this press release may contain "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995, that reflect management's expectations for the future. A variety of important factors could cause results to differ materially from such statements. These factors include the company's ability to achieve expected future levels of sales; the actions of both current and potential new competitors; rapid changes in technology; financial market volatility; general economic conditions in the United States and elsewhere; evolving industry regulation; cash flows into or redemption from equity funds; effects of inflation; customer trading patterns; and new products and services. These and other risks are described in greater detail in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and other documents filed with the Securities and Exchange Commission and available on the company's web site.

                  INVESTMENT TECHNOLOGY GROUP, INC.
                  Consolidated Statements of Income
               (In thousands, except per share amounts)

                            Three Months Ended    Year Ended December
                                December 31,               31,
                          ----------------------- --------------------
                             2007        2006        2007       2006
                          (unaudited) (unaudited) (unaudited)
                          ----------- ----------- ----------- --------
Revenues:
  Commissions             $   166,959 $   129,420 $   620,267 $494,689
  Recurring                    21,836      18,723      83,091   73,660
  Other                         7,790       4,974      27,641   31,135
                          ----------- ----------- ----------- --------
   Total revenues             196,585     153,117     730,999  599,484
                          ----------- ----------- ----------- --------

Expenses:
  Compensation and
   employee benefits           62,518      55,689     243,469  211,420
  Transaction processing       33,159      22,732     112,003   80,704
  Occupancy and equipment      12,991      10,572      47,344   38,296
  Telecommunications and
   data processing
   services                    11,165       7,806      41,136   30,409
  Other general and
   administrative              23,724      18,419      87,736   64,471
  Interest expense              2,415       2,942      10,443   12,220
                          ----------- ----------- ----------- --------
   Total expenses             145,972     118,160     542,131  437,520
                          ----------- ----------- ----------- --------
Income before income tax
 expense                       50,613      34,957     188,868  161,964
Income tax expense             20,607      12,902      77,761   64,041
                          ----------- ----------- ----------- --------
Net income                $    30,006 $    22,055 $   111,107 $ 97,923
                          =========== =========== =========== ========

Earnings per share:
Basic                     $      0.69 $      0.51 $      2.52 $   2.26
                          =========== =========== =========== ========
Diluted                   $      0.68 $      0.49 $      2.48 $   2.21
                          =========== =========== =========== ========

Basic weighted average
 number of common shares
 outstanding                   43,659      43,649      44,042   43,350
Diluted weighted average
 number of common shares
 outstanding                   44,351      44,554      44,784   44,289
                  INVESTMENT TECHNOLOGY GROUP, INC.
            Consolidated Statements of Financial Condition
                 (In thousands, except share amounts)

                                                 December   December
                                                    31,         31,
                                                   2007      2006 (1)
                                                ----------- ----------
                                                (unaudited)
Assets
Cash and cash equivalents                       $   183,757 $  321,298
Cash restricted or segregated under regulations
 and other                                           71,300     13,610
Deposits with clearing organizations                 43,284         --
Securities owned, at fair value                       8,022      6,540
Receivables from brokers, dealers and clearing
 organizations                                      550,379    216,355
Receivables from customers                          677,202    373,705
Premises and equipment, net                          45,886     34,740
Capitalized software, net                            50,892     32,203
Goodwill                                            422,774    405,754
Other intangibles, net                               31,318     29,366
Deferred taxes                                        2,282      7,426
Other assets                                         13,791     21,315
                                                ----------- ----------
Total assets                                    $ 2,100,887 $1,462,312
                                                =========== ==========

Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses           $   186,463 $  152,049
Short-term bank loans                               101,400         --
Payables to brokers, dealers and clearing
 organizations                                      497,124    147,825
Payables to customers                               457,105    385,220
Securities sold, not yet purchased, at fair
 value                                                  859        137
Income taxes payable                                 18,320      8,147
Deferred taxes                                        2,821         --
Long term debt                                      132,500    160,900
                                                ----------- ----------
  Total liabilities                               1,396,592    854,278
                                                ----------- ----------

Commitments and contingencies

Stockholders' Equity:
Preferred stock, $0.01 par value; 1,000,000
 shares authorized; no shares issued or
 outstanding                                             --         --
Common stock, $0.01 par value; 100,000,000
 shares authorized; 51,503,221 and 51,443,560
 shares issued at December 31, 2007 and 2006,
 respectively and 43,462,885 and 43,809,993
 shares outstanding at December 31, 2007 and
 2006, respectively                                     515        514
Additional paid-in capital                          210,071    198,419
Retained earnings                                   651,677    540,570
Common stock held in treasury, at cost;
 8,040,336 and 7,633,567 shares at December 31,
 2007 and 2006, respectively                      (177,928)  (144,173)
Accumulated other comprehensive income (net of
 tax)                                                19,960     12,704
                                                ----------- ----------
  Total stockholders' equity                        704,295    608,034
                                                ----------- ----------
Total liabilities and stockholders' equity      $ 2,100,887 $1,462,312
                                                =========== ==========

(1) Certain reclassifications and format changes have been made to prior period amounts to conform to the current period presentation, as a result of ITG Inc. commencing self-clearing of equity trades in May 2007. Receivables previously included in receivables from brokers, dealers and others are now divided among the following two accounts: (i) receivables from brokers, dealers and clearing organizations and (ii) receivables from customers. Similarly, payables previously included in payables to brokers, dealers and others are now divided among the following two accounts: (i) payables to brokers, dealers and clearing organizations and (ii) payables to customers. Additionally, certain payables to brokers for clearance and execution costs previously included in accounts payable and accrued expense were reclassified to payables to brokers, dealers and clearing organizations.

INVESTMENT TECHNOLOGY GROUP, INC.

Reconciliation of US GAAP Results to Pro Forma Operating Results (unaudited)

In evaluating the Company's financial performance, management reviews results from operations which excludes non-operating or one-time charges. Pro forma earnings per share is a non-U.S. GAAP (generally accepted accounting principles) performance measure, but the Company believes that it is useful to assist investors in gaining an understanding of the trends and operating results for the Company's core businesses. Pro forma earnings per share should be viewed in addition to, and not in lieu of, the Company's reported results under US GAAP.

The following is a reconciliation of US GAAP results to pro forma results for the periods presented (in thousands except per share amounts):

                                     Three Months
                                    Ended December      Year Ended
                                          31,           December 31,
                                   ----------------- -----------------
                                     2007     2006     2007     2006
                                   ----------------- -----------------

Total revenues                     $196,585 $153,117 $730,999 $599,484
   Less:
   Non-operating revenue (1)             --       --       -- (13,230)
                                   ----------------- -----------------
Pro forma operating revenues        196,585  153,117  730,999  586,254
                                   ----------------- -----------------

Total expenses                      145,972  118,160  542,131  437,520
   Less:
   Non-operating expense (2)             --    (917)       --  (1,421)
                                   ----------------- -----------------
Pro forma operating expenses        145,972  117,243  542,131  436,099
                                   ----------------- -----------------

Income before income tax expense     50,613   34,957  188,868  161,964
  Effect of pro forma adjustments        --      917       -- (11,809)
                                   ----------------- -----------------
Pro forma pre-tax operating income   50,613   35,874  188,868  150,155
                                   ----------------- -----------------

Income tax expense                   20,607   12,902   77,761   64,041
   Tax effect of pro forma
    adjustments                          --      275       --  (4,684)
                                   ----------------- -----------------
Pro forma pre-tax operating income   20,607   13,177   77,761   59,357
                                   ----------------- -----------------

Net income                           30,006   22,055  111,107   97,923
    Net effect of pro forma
     adjustments                         --      642       --  (7,125)
                                   ----------------- -----------------
Pro forma operating net income     $ 30,006 $ 22,697 $111,107 $ 90,798
                                   ----------------- -----------------

Diluted earnings per share         $   0.68 $   0.49 $   2.48 $   2.21
  Net effect of pro forma
   adjustments                           --     0.02       --   (0.16)
                                   ----------------- -----------------
Pro forma diluted operating
 earnings per share                $   0.68 $   0.51 $   2.48 $   2.05
                                   ----------------- -----------------
Notes:
(1)In 2006, non-operating revenues relate to:
    a) our ownership of two memberships on the New York Stock Exchange
     ("NYSE") that as part of their merger with Archipelago Holdings,
     Inc. ("Archipelago") were combined under a new holding company
     named NYSE Group, Inc. in which each NYSE member received
     compensation consisting of cash and restricted shares of NYSE
     Group, Inc. common stock. Accordingly, consideration received for
     our memberships in First Quarter 2006 consisted of 157,202
     restricted shares of NYSE Group, Inc. common stock resulting in
     gains of approximately $6.9 million and approximately $1.0
     million in cash and dividends, which was recorded as dividend
     income. In Second Quarter 2006, we were able to sell a portion of
     the shares received and recorded an additional gain of
     approximately $80,000, and
    b)our sale in Second Quarter 2006 of our remaining interests in a
     Canadian joint venture that we entered into in 2004 with IRESS
     Market Technology Limited ("IRESS"), to IRESS resulting in a gain
     of $5.4 million.
(2)We recorded a management restructuring charge in our Asia Pacific
    Region of $0.9 million in the fourth quarter and $0.5 million in
    the third quarter for a total of $1.4 million for the year ended
    December 31, 2006.

CONTACT: Investor and Media Relations:
for Investment Technology Group
Alicia Curran, 212-444-6130

SOURCE: Investment Technology Group, Inc.

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