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Investment Technology Group Reports First Quarter 2007 Results

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NEW YORK--(BUSINESS WIRE)--May 3, 2007--Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based trading services and transaction research, today announced that for the first quarter ended March 31, 2007, ITG's total revenues were $168.9 million, 16 percent higher than total revenue of $146.2 million for the first quarter of 2006. ITG's net income was $24.7 million, compared to net income of $26.4 million in the first quarter of 2006, when ITG had a one-time after-tax gain of $4.9 million. Earnings were $0.55 per diluted share, versus earnings of $0.60 per diluted share in the first quarter of last year.

Excluding the impact of non-recurring items in last year's results related to our previous ownership of two NYSE seats which were converted to NYSE Group stock, first quarter 2007 operating revenues of $168.9 million increased by 22 percent from first quarter 2006 operating revenues of $138.5 million. ITG's operating net income was $24.7 million, compared to operating net income of $21.5 million in the first quarter of 2006. In the first quarter of 2007, diluted operating earnings per share of $0.55 increased 12 percent versus operating earnings of $0.49 per diluted share in the first quarter of last year. Pro-forma pre-tax operating margins in the first quarter of 2007 were 25 percent, down from 26 percent in the first quarter of 2006.

"ITG continued to see revenue growth across all business lines in the first quarter of 2007," said Bob Gasser, ITG's Chief Executive Officer and President. "Our globalization strategy continues to be a key strategic priority for ITG and we saw strong positive momentum in our non-U.S. revenue growth in the first quarter of 2007."

ITG's non-U.S. revenues were a record $37.4 million in the first quarter of 2007, 34 percent higher than revenues of $28.0 million in the first quarter of 2006. Non-U.S. pre-tax income increased from $2.9 million in the first quarter of 2006 to $4.1 million in the first quarter of 2007.

"ITG's non-U.S. business had record revenues in the first quarter of 2007 as we continued the rollout of our Triton execution management system, broadened our base of regional algorithmic trading strategies, and introduced continuous matching in Europe. In advance of MiFID, ITG also built on its commanding position in the global transaction cost analysis market," said Mr. Gasser.

Conference Call

ITG has scheduled a conference call today at 11:00 a.m. ET to discuss first quarter results. Those wishing to listen to the call should dial 1-866-202-0886 and enter the pass code 32547847 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 http://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 16168227. The replay will be available starting approximately two hours after the completion of the conference call.

About Investment Technology Group

Investment Technology Group, Inc. (NYSE:ITG), is a specialized agency brokerage and technology firm that partners with clients globally to provide innovative solutions spanning the entire investment process. A pioneer in electronic trading, ITG has a unique approach that combines pre-trade analysis, order management, trade execution, and post-trade evaluation to provide clients with continuous improvements in trading and cost efficiency. The firm is headquartered in New York with offices in North America, Europe and the Asia Pacific regions. For more information on ITG, please 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 ------------------- March 31, March 31, 2007 2006 Revenues: Commissions $143,513 $117,578 Recurring 19,182 17,664 Other 6,233 11,000 --------- --------- Total revenues 168,928 146,242 --------- --------- Expenses: Compensation and employee benefits 58,515 51,977 Transaction processing 25,326 17,843 Occupancy and equipment 11,220 8,483 Telecommunications and data processing services 9,134 6,895 Other general and administrative 19,606 13,908 Interest expense 2,785 3,023 --------- --------- Total expenses 126,586 102,129 --------- --------- Income before income tax expense 42,342 44,113 Income tax expense 17,632 17,706 --------- --------- Net income $ 24,710 $ 26,407 ========= ========= Earnings per share: Basic $ 0.56 $ 0.61 ========= ========= Diluted $ 0.55 $ 0.60 ========= ========= Basic weighted average number of common shares outstanding 44,074 43,001 Diluted weighted average number of common shares outstanding 44,838 43,733
                  INVESTMENT TECHNOLOGY GROUP, INC.
            Consolidated Statements of Financial Condition
                 (In thousands, except share amounts)

                                               March 31,  December 31,
                                                 2007       2006 (1)
                                              ----------- ------------
                                              (unaudited)
Assets
Cash and cash equivalents                       $312,678     $321,298
Cash restricted or segregated under
 regulations and other                            15,013       13,610
Securities owned, at fair value                    7,560        6,540
Receivables from brokers, dealers and other,
 net                                           1,194,887      590,060
Investments                                        8,463        9,299
Premises and equipment, net                       36,146       34,740
Capitalized software, net                         37,843       32,203
Goodwill                                         405,786      405,754
Other intangibles, net                            28,780       29,366
Deferred taxes                                     2,116        7,426
Other assets                                      11,515       12,016
                                              ----------- ------------
Total assets                                  $2,060,787   $1,462,312
                                              =========== ============

Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses           $140,159     $152,049
Payables to brokers, dealers and other         1,106,707      533,045
Securities sold, not yet purchased, at fair
 value                                             1,805          137
Income taxes payable                               9,399        8,147
Deferred taxes                                       658           --
Long term debt                                   153,800      160,900
                                              ----------- ------------
  Total liabilities                            1,412,528      854,278
                                              ----------- ------------

Commitments and contingencies
Stockholders' Equity

Preferred stock, par value $0.01; 1,000,000
 shares authorized; no shares issued or
 outstanding                                          --           --
Common stock, par value $0.01; 100,000,000
 shares authorized; 51,472,053 and 51,443,560
 shares issued at March 31, 2007 and December
 31, 2006, respectively and 44,303,669 and
 43,809,993 shares outstanding at March 31,
 2007 and December 31, 2006, respectively            515          514
Additional paid-in capital                       204,261      198,419
Retained earnings                                565,280      540,570
Common stock held in treasury, at cost;
 7,168,384 and 7,633,567 shares at March 31,
 2007 and December 31, 2006, respectively       (135,387)    (144,173)
Accumulated other comprehensive income (net
 of tax)                                          13,590       12,704
                                              ----------- ------------
Total stockholders' equity                       648,259      608,034
                                              ----------- ------------
Total liabilities and stockholders' equity    $2,060,787   $1,462,312
                                              =========== ============

(1) Certain payables to brokers for clearance and execution costs
 included in accounts payable and accrued expense at December 31, 2006
 were reclassified to payables to brokers, dealers and other for
 comparability.
                  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-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
                                                 ---------------------
                                                 March 31,  March 31,
                                                    2007       2006
                                                 ---------- ----------

Total Revenues                                    $168,928   $146,242
  Less:
  Non-recurring revenue (1)                             --     (7,777)
                                                 ---------- ----------
Pro forma operating revenues                       168,928    138,465
                                                 ---------- ----------

                                                 ---------- ----------
Total Expenses                                     126,586    102,129
                                                 ---------- ----------

Income before income tax expense                    42,342     44,113
  Effect of pro forma adjustments                       --     (7,777)
                                                 ---------- ----------
Pro forma operating income before income tax
 expense                                            42,342     36,336
                                                 ---------- ----------

Income tax expense                                  17,632     17,706
  Tax effect of pro forma adjustments                   --     (2,892)
                                                 ---------- ----------
Pro forma operating income tax expense              17,632     14,814
                                                 ---------- ----------

Net income                                          24,710     26,407
  Net effect of pro forma adjustments                   --     (4,885)
                                                 ---------- ----------
Pro forma operating net income                    $ 24,710   $ 21,522
                                                 ---------- ----------

Diluted earnings per share                        $   0.55   $   0.60
  Net effect of pro forma adjustments                   --      (0.11)
                                                 ---------- ----------
Pro forma diluted operating earnings per share    $   0.55   $   0.49
                                                 ---------- ----------

Note:
----------------------------------------------------------------------
(1) 2006 non-recurring revenues are comprised of an unrealized gain of
 approximately $6.8 million and dividends approximating $1.0 million
 related to our ownership of two memberships on the New York Stock
 Exchange ("NYSE"). As part of their merger, the NYSE and Archipelago
 Holdings, Inc. ("Archipelago") were combined under a new holding
 company named NYSE Group, Inc. Each NYSE member received compensation
 consisting of cash and restricted shares of NYSE Group, Inc. common
 stock. Accordingly, consideration received for our memberships
 consisted of 157,202 restricted shares of NYSE Group, Inc. common
 stock, and approximately $1.0 million in cash and dividends, which
 was recorded as dividend income.
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CONTACT: Investment Technology Group, Inc.
Alicia Curran, 212-444-6130

SOURCE: Investment Technology Group, Inc.

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