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Investment Technology Group Reports Third Quarter 2006 EPS of $0.49

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NEW YORK--(BUSINESS WIRE)--Nov. 2, 2006--Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based trading services and transaction research, today announced that for the third quarter ended September 30, 2006, net income was $21.6 million, 39 percent higher than net income of $15.6 million in the third quarter of 2005. Earnings were $0.49 per diluted share, an increase of 32 percent versus earnings of $0.37 per diluted share in the third quarter of last year. ITG's total revenues for the third quarter of 2006 were $146.6 million, 43 percent higher than total revenues of $102.2 million for the third quarter of 2005, and include $17.0 million pertaining to the acquisitions of Macgregor and Plexus.

"ITG continued to increase its US market share in the third quarter," said Robert Gasser, ITG's Chief Executive Officer and President. "We saw strength in POSIT(R) and growth in direct market access and algorithmic trading products, which we expect will continue as clients seek tools to help them navigate a very complex marketplace."

ITG's International revenues were $28.8 million in the third quarter of 2006, 29 percent higher than revenues of $22.4 million in the third quarter of 2005. There was a $0.5 million charge in the third quarter of 2006 due to a management reorganization in ITG's Asia Pacific region. International pre-tax operating income, exclusive of this restructuring charge, increased from $0.8 million in the third quarter of 2005 to $1.4 million in the third quarter of 2006.

"ITG sees strong growth potential in Europe and Asia and we are focused on positioning the organization for expansion, which includes globalizing the product line and rolling out new products in the next few quarters," said Mr. Gasser.

Year to date Results

For the nine months ended September 30, 2006, revenues increased 51 percent from the prior year period to $446.4 million, net income increased 64 percent to $75.9 million and diluted earnings per share increased 56 percent to $1.72.

Conference Call

ITG has scheduled a conference call today at 11:00 a.m. ET to discuss third quarter results. Those wishing to listen to the call should dial 1-866-270-6057 and enter the pass code 40529272 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 49716391. The replay will be available starting approximately two hours after the completion of the conference call.

About ITG

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, 2005, and other documents filed with the Securities and Exchange Commission and available on the company's web site.

Click Here for Financial Information INVESTMENT TECHNOLOGY GROUP, INC. Consolidated Statements of Income (unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 2006 2005 2006 2005 --------- -------- --------- --------- Revenues: Commissions $121,787 $96,817 $365,269 $280,038 Recurring 19,067 2,533 54,937 7,306 Other 5,712 2,881 26,161 8,731 --------- -------- --------- --------- Total revenues 146,566 102,231 446,367 296,075 --------- -------- --------- --------- Expenses: Compensation and employee benefits 53,005 36,546 155,731 107,858 Transaction processing 20,391 14,852 57,972 43,149 Occupancy and equipment 9,655 6,995 27,724 21,468 Telecommunications and data processing services 8,006 5,039 22,603 14,839 Other general and administrative 16,797 10,997 46,052 31,238 Interest expense 3,098 -- 9,278 -- --------- -------- --------- --------- Total expenses 110,952 74,429 319,360 218,552 --------- -------- --------- --------- Income before income tax expense 35,614 27,802 127,007 77,523 Income tax expense 14,005 12,210 51,139 31,255 --------- -------- --------- --------- Net income $ 21,609 $15,592 $ 75,868 $ 46,268 ========= ======== ========= ========= Earnings per share: Basic $ 0.50 $ 0.37 $ 1.75 $ 1.10 ========= ======== ========= ========= Diluted $ 0.49 $ 0.37 $ 1.72 $ 1.10 ========= ======== ========= ========= Basic weighted average number of common shares outstanding 43,436 42,101 43,249 42,051 Diluted weighted average number of common shares outstanding 44,397 42,369 44,178 42,197
                  INVESTMENT TECHNOLOGY GROUP, INC.
            Consolidated Statements of Financial Condition
                 (In thousands, except share amounts)

                                            September 30, December 31,
                                                 2006         2005
                                            ------------- ------------
                                             (unaudited)
Assets
Cash and cash equivalents                    $   281,659   $  261,044
Cash restricted or segregated under
 regulations and other                            23,746        7,007
Securities owned, at fair value                    7,679        6,017
Receivables from brokers, dealers and
 other, net                                    1,219,628      485,012
Investments                                        9,279       10,628
Premises and equipment, net                       28,901       22,292
Capitalized software, net                         26,311       12,780
Goodwill                                         400,402      176,773
Other intangibles, net                            29,952       12,173
Deferred taxes                                    12,427        7,972
Other assets                                      12,197       14,636
                                            ------------- ------------
Total assets                                 $ 2,052,181   $1,016,334
                                            ============= ============

Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses        $   163,991   $  109,442
Payables to brokers, dealers and other         1,137,355      435,141
Securities sold, not yet purchased, at fair
 value                                             1,276           91
Income taxes payable                               7,470        9,354
Long term debt                                   168,000           --
                                            ------------- ------------
  Total liabilities                            1,478,092      554,028
                                            ------------- ------------

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; 51,443,560 and
 51,390,027 shares issued at September 30,
 2006 and December 31, 2005, respectively
 and 43,567,086 and 42,773,651 shares
 outstanding at September 30, 2006 and
 December 31, 2005, respectively                     514          514
Additional paid-in capital                       192,794      175,600
Retained earnings                                518,515      442,647
Common stock held in treasury, at cost;
 7,876,474 and 8,616,376 shares at
 September 30, 2006 and December 31, 2005,
 respectively                                   (148,761)    (162,735)
Accumulated other comprehensive income (net
 of tax)                                          11,027        6,280
                                            ------------- ------------
Total stockholders' equity                       574,089      462,306
                                            ------------- ------------
Total liabilities and stockholders' equity   $ 2,052,181   $1,016,334
                                            ============= ============
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CONTACT: Investment Technology Group, Inc.
Investor and Media Relations:
Alicia Curran, 212-444-6130

SOURCE: Investment Technology Group, Inc.

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