ITG Reports 2004 Results

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NEW YORK, NY, January 27, 2005 - Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based equity trading services, today announced that for the fourth quarter ended December 31, 2004, revenues were $89.6 million, net income was $12.9 million and diluted earnings per share were $0.31.

To ensure a clear understanding of these financial results, we are separately identifying certain non-recurring items including an unrealized gain on securities owned, recoveries against previous investment write-downs, employee severance, and the cessation of onshore Japanese business development activities. Excluding these items, fourth quarter 2004 revenues were $87.6 million with net income of $12.5 million and earnings per share of $0.30.

Comparing the fourth quarter of 2003 versus the fourth quarter of 2004, revenues increased 4%, net income increased 3% and earnings per share increased 15%. Excluding non-recurring charges in both fourth quarter periods, revenues increased 1%, net income increased 2% and earnings per share increased 15%.

For the year ended December 31, 2004, ITG's total revenues were $334.5 million, net income was $41.2 million, and diluted earnings per share were $0.96. On a year over year basis, revenues were substantially unchanged, net income decreased by 2% and diluted earnings per share were up 8%. Excluding non-recurring items, revenues decreased 2% and net income decreased 4% while earnings per share increased 4%.

"In light of the fierce competitive environment, our quarterly results were solid," said Ray Killian, ITG's Chairman, President and Chief Executive Officer. "Since my return to the CEO position, we've made significant progress in setting a new course for ITG. I am confident that we are positioning ITG to take advantage of the fundamental changes evolving within our industry."

ITG's International business recorded revenues for the fourth quarter of $19.7 million, which represents 10% growth over the fourth quarter of 2003. For the full year, International revenues were $74.6 million, representing 24% growth over 2003. Excluding non-recurring items, International reported a $524,000 pre-tax profit for the fourth quarter (including minimal unfavorable impact from foreign currency losses) versus a $563,000 pre-tax profit in 2003 (which included currency gains of $330,000). For the year, International's pre-tax results improved by $5.8 million over 2003.

"Our International business continues to show positive momentum with every region reporting strong growth for the year as our business model continues to gain strength," said Mr. Killian.

In the U.S., ITG's trading volume for the fourth quarter of 2004 was 5.6 billion shares (averaging 87 million shares per trading day) compared to 5.3 billion shares in the fourth quarter of 2003 (averaging 80 million shares per trading day) and 5.3 billion in the third quarter of 2004 (averaging 79 million shares per trading day).

For the company overall, revenues per trading day in the fourth quarter of 2004 versus the fourth quarter of 2003 increased 60% for Client-Site Trading Products, and fell 22% for POSIT and 11% for the Electronic Trading Desk. For the year, revenues per trading day increased 32% for Client-Site Trading Products and decreased 20% for POSIT and 9% for the Electronic Trading Desk.

For ITG overall, excluding non-recurring items, pre-tax margins for the fourth quarter were 19.4%, down from 22.0% in the third quarter and down from 23.4% in the prior year's fourth quarter. For the year, ITG's overall pre-tax margins, excluding non-recurring items, declined to 19.4% from 21.6% in 2003. The effective tax rate for 2004 was 37.6%.

A full reconciliation of non-recurring items is included in the table entitled "Reconciliation of U.S. G.A.A.P. Results to Pro-Forma Results" and in the Investor Relations Section of ITG's Web site.

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 1-800-289-0496 at least 10 minutes prior to the start of the call to ensure connection. A listen-only webcast will also be available on ITG's website at For those unable to listen to the live broadcast of the call, a replay will be available for one week by dialing 1-888-203-1112 and entering the pass code 675967. A replay will be available for two weeks on ITG's website. Both methods of listening to the replay will be available starting approximately two hours after the completion of the conference call.

About ITG

ITG is headquartered in New York with offices in Boston, Los Angeles, Dublin, Hong Kong, London, Melbourne, Sydney, Tel Aviv and Toronto. As a leading provider of technology-based equity-trading services and transaction research to institutional investors and brokers, ITG helps clients to access liquidity, execute trades more efficiently, and make better trading decisions. ITG generates superior trading results for its clients through three lines of business. POSIT, the world's largest equity matching system, allows clients to trade confidentially. The Electronic Trading Desk is recognized as one of the leading program trading operations in the U.S. ITG's leading-edge Client-Site Trading Products allow users to implement their own trading strategies by providing direct electronic access to most sources of market liquidity. For additional information, visit

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, 2003 and other documents filed with the Securities and Exchange Commission and available on the company's web site.

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Howard C. Naphtali
Chief Financial Officer
(212) 444-6160

Maureen Murphy
Senior Vice President
(212) 444-6323

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