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Investment Technology Group Reports Second Quarter 2008 Results

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NEW YORK--(BUSINESS WIRE)--July 31, 2008--Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based trading services and transaction research, today announced that for the second quarter ended June 30, 2008, net income was $25.7 million, down five percent from net income of $27.2 million in the second quarter of 2007. Earnings were $0.58 per diluted share, down three percent versus earnings of $0.60 per diluted share in the second quarter of last year. ITG's total revenue for the second quarter of 2008 was $180.4 million, three percent greater than total revenue of $175.7 million for the second quarter of 2007. Pre-tax margins in the second quarter were 24.4 percent in 2008, down from 26.5 percent realized in 2007.

"ITG's second quarter revenues showed continued strength despite the softening of the US equities market in April and May," said Bob Gasser, ITG's Chief Executive Officer and President. "We have been successful in our efforts to drive more volume through our systems and increase the penetration of our product lines. By design, the trading continuum approach to our product suite has allowed us to diversify our revenue streams over time to include recurring revenues and additional asset classes. This portfolio approach provides us with opportunities for ongoing US growth."

ITG's non-US revenues were $48.7 million in the second quarter of 2008, a 15 percent increase over revenues of $42.1 million in the second quarter of 2007. Non-US pre-tax income decreased to $4.0 million in the second quarter of 2008 from $5.8 million in the second quarter of 2007.

"Although major international market indices were down double digits, our non-US business delivered solid revenues in the second quarter and we remain confident about our future growth in Asia, Canada and Europe," said Mr. Gasser. "We are encouraged by the secular trends in these regions, particularly the further fragmentation of European market structure, and believe that our global product offering is particularly well positioned in an increasingly electronic marketplace."

Year to Date Results

For the six months ended June 30, 2008, revenues increased 12 percent from the prior year period to $384.6 million, net income increased 13 percent to $58.7 million and diluted earnings per share increased 15 percent to $1.33.

Conference Call

ITG has scheduled a conference call today at 11:00 a.m. ET to discuss second quarter results. Those wishing to listen to the call should dial 1-866-770-7120 and enter the pass code 92490563 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 57236827. 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, 2007, 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 (unaudited)
               (In thousands, except per share amounts)

                                     Three Months    Six Months Ended
                                     Ended June 30,       June 30,
                                   ----------------- -----------------
                                       2008     2007     2008     2007
                                   -------- -------- -------- --------
Revenues:
  Commissions                      $153,217 $148,838 $329,444 $292,751
  Recurring                          22,285   20,951   43,930   40,133
  Other                               4,855    5,862   11,261   11,695
                                   -------- -------- -------- --------
   Total revenues                   180,357  175,651  384,635  344,579
                                   -------- -------- -------- --------

Expenses:
  Compensation and employee
   benefits                          58,482   59,630  126,110  118,145
  Transaction processing             24,333   24,330   48,682   49,656
  Occupancy and equipment            14,655   11,220   27,755   22,440
  Telecommunications and data
   processing services               12,438    9,900   25,188   19,034
  Other general and administrative   24,636   21,353   49,821   40,959
  Interest expense                    1,743    2,664    3,956    5,449
                                   -------- -------- -------- --------
   Total expenses                   136,287  129,097  281,512  255,683
                                   -------- -------- -------- --------
Income before income tax expense     44,070   46,554  103,123   88,896
Income tax expense                   18,330   19,343   44,395   36,975
                                   -------- -------- -------- --------
Net income                         $ 25,740 $ 27,211 $ 58,728 $ 51,921
                                   ======== ======== ======== ========

Earnings per share:
Basic                              $   0.59 $   0.61 $   1.34 $   1.17
                                   ======== ======== ======== ========
Diluted                            $   0.58 $   0.60 $   1.33 $   1.16
                                   ======== ======== ======== ========

Basic weighted average number of
 common shares outstanding           43,705   44,338   43,667   44,207
Diluted weighted average number of
 common shares outstanding           44,256   45,047   44,252   44,940
                  INVESTMENT TECHNOLOGY GROUP, INC.
            Consolidated Statements of Financial Condition
                 (In thousands, except share amounts)

                                        June 30,      December 31,
                                          2008            2007
                                      ------------- -----------------
                                       (unaudited)
Assets
Cash and cash equivalents                $  290,888        $  183,757
Cash restricted or segregated under
 regulations and other                       60,630            71,300
Deposits with clearing organizations         29,852            43,284
Securities owned, at fair value               9,345             8,022
Receivables from brokers, dealers and
 clearing organizations                   1,182,081           551,059
Receivables from customers                1,136,728           676,522
Premises and equipment, net                  48,205            45,886
Capitalized software, net                    60,716            50,892
Goodwill                                    422,597           422,774
Other intangibles, net                       29,946            31,318
Deferred taxes                                3,281             2,282
Other assets                                 11,071            13,791
                                      ------------- -----------------
Total assets                             $3,285,340        $2,100,887
                                      ============= =================

Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses    $  199,366        $  186,463
Short-term bank loans                        45,000           101,400
Payables to brokers, dealers and
 clearing organizations                     732,491           497,124
Payables to customers                     1,409,182           457,105
Securities sold, not yet purchased,
 at fair value                                  326               859
Income taxes payable                         18,199            18,320
Deferred taxes                                2,245             2,821
Long term debt                              113,500           132,500
                                      ------------- -----------------
  Total liabilities                       2,520,309         1,396,592
                                      ------------- -----------------

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;
 51,540,282 and 51,503,221 shares
 issued at June 30, 2008 and December
 31, 2007, respectively, and;
 43,569,322 and 43,462,885 shares
 outstanding at June 30, 2008 and
 December 31, 2007, respectively                515               515
Additional paid-in capital                  214,769           210,071
Retained earnings                           710,405           651,677
Common stock held in treasury, at
 cost; 7,970,960 and 8,040,336 shares
 at June 30, 2008 and December 31,
 2007, respectively                        (181,292)         (177,928)
Accumulated other comprehensive
 income (net of tax)                         20,634            19,960
                                      ------------- -----------------
  Total stockholders' equity                765,031           704,295
                                      ------------- -----------------
Total liabilities and stockholders'
 equity                                  $3,285,340        $2,100,887
                                      ============= =================

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

SOURCE: Investment Technology Group, Inc.

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