8-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

January 29, 2009
Date of Report (Date of earliest event reported)

INVESTMENT TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware	001-32722	95-2848406
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(I.R.S. Employer Identification No.)

380 Madison Avenue
New York, New York 10017
(Address of principal executive offices)

(212) 588-4000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communication pursuant to Rule 425 under the Securities Act (17. CFR 230.425)

oSoliciting material pursuant to Rule 14a-2 under the Exchange Act (17. CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17. CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17. CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On January 29, 2009 Investment Technology Group, Inc. issued a press release announcing financial results for the quarter ended December 31, 2008.  A copy of this press release is attached hereto as Exhibit 99.1.

The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

(c)	Exhibits
	99.1 Press release issued by Investment Technology Group, Inc. on January 29, 2009.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INVESTMENT TECHNOLOGY GROUP, INC.
			(Registrant)
Date:     January 29, 2009	By:	/s/ Howard C. Naphtali
		Howard C. Naphtali
		Chief Financial Officer and
		Duly Authorized Signatory of Registrant

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release by Investment Technology Group, Inc., dated as of January 29, 2009.

4

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Investment Technology Group Reports Record 2008 Earnings

NEW YORK, NY, January 29, 2009 – Investment Technology Group, Inc. (NYSE: ITG), a leading agency broker and financial technology firm, today announced that for the year ended December 31, 2008, revenues were a record $763.0 million, net income was a record $114.6 million, and diluted earnings per share were a record $2.61. Compared to 2007, revenues increased 4 percent, net income grew 3 percent and diluted earnings per share increased 5 percent.  Pre-tax operating margins were 25.8 percent in both 2008 and 2007.

For the fourth quarter ended December 31, 2008, net income was $28.7 million, down 4 percent from net income of $30.0 million in the fourth quarter of 2007. Earnings were $0.66 per diluted share, a decrease of 3 percent versus earnings of $0.68 per diluted share in the fourth quarter of last year. ITG’s total revenue for the fourth quarter of 2008 was $190.1 million, 3 percent less than total revenue of $196.6 million for the fourth quarter of 2007. Included in the quarter’s operating results were pre-tax charges of $5.3 million related to severance costs and write-downs of capitalized costs pertaining to discontinued non-core products. Net income for the fourth quarter also included a non-operating charge of $0.9 million after-tax, or approximately $0.02 per diluted share of earnings, representing the unrealized loss on NYSE Euronext, Inc., common stock at December 31, 2008. Pre-tax operating margins in the fourth quarter were 25.4 percent in 2008, compared to 25.7 percent in 2007.

“ITG’s strong 2008 performance yielded record earnings despite an extremely challenging year for the markets. Our agency model, diverse product suite, and solid balance sheet became even more important to our clients as a result of a significant shift in market structure,” said Bob Gasser, ITG’s Chief Executive Officer and President. “ITG’s core strength is the intellectual capital and dedication of its employees, who deserve our thanks for these impressive results.”

For the full year, non-US revenues were $191.7 million, representing 4 percent growth over revenues of $185.0 million in 2007. Non-US pre-tax income was $14.5 million versus $22.9 million in 2007.  ITG’s non-US revenues were $46.0 million in the fourth quarter of 2008, a 19 percent decrease from $57.1 million in the fourth quarter of 2007, due to currency impact of the strengthening US dollar. Non-US pre-tax income decreased to $2.5 million in the fourth quarter of 2008 from $7.2 million in the fourth quarter of 2007.

“ITG has built a strong foundation for its international businesses and is well-prepared to weather the uncertain outlook for global markets in 2009,” said Mr. Gasser.  “We are confident that our long term global investment strategies mirror our clients’ needs in the increasingly electronic markets in Europe, Asia Pacific, and Canada and the seismic changes in the competitive landscape.”

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 1-866-804-6927 and enter the pass code 84031197 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 50801788. The replay will be available starting approximately two hours after the completion of the conference call.

ABOUT  ITG

Investment Technology Group, Inc., is a specialized agency brokerage and financial technology firm that partners with asset managers globally to provide innovative solutions spanning the investment continuum. A leader in electronic trading since launching POSIT in 1987, ITG’s integrated approach now includes a range of products from portfolio management and pre-trade analysis to trade execution and post-trade evaluation. Asset managers rely on ITG’s independence, experience, and agility to help mitigate risk, improve performance and navigate increasingly complex markets.  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, 2007, and other documents filed with the Securities and Exchange Commission and available on the company’s web site.

Investor and Media Relations Contact:

Maureen Murphy

(212) 444-6323

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

	Three Months Ended December 31,				Year Ended December 31,
	2008		2007		2008		2007
	(unaudited)		(unaudited)		(unaudited)
Revenues:
Commissions	$	163,362	$	167,378	$	654,889	$	621,830
Recurring	22,103		21,836		87,991		83,091
Other	4,605		7,371		20,103		26,078
Total revenues	190,070		196,585		762,983		730,999
Expenses:
Compensation and employee benefits	62,473		63,823		256,511		248,203
Transaction processing	21,975		33,159		95,078		112,003
Occupancy and equipment	15,075		12,991		57,816		47,344
Telecommunications and data processing services	14,029		11,165		53,243		41,136
Other general and administrative	28,019		22,419		97,556		83,002
Interest expense	1,660		2,415		7,253		10,443
Total expenses	143,231		145,972		567,457		542,131
Income before income tax expense	46,839		50,613		195,526		188,868
Income tax expense	18,096		20,607		80,884		77,761
Net income	$	28,743	$	30,006	$	114,642	$	111,107
Earnings per share:
Basic	$	0.67	$	0.69	$	2.64	$	2.52
Diluted	$	0.66	$	0.68	$	2.61	$	2.48
Basic weighted average number of common shares outstanding	43,221		43,659		43,503		44,042
Diluted weighted average number of common shares outstanding	43,498		44,351		43,987		44,784

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

	December 31, 2008			December 31, 2007
	(unaudited)
Assets
Cash and cash equivalents	$	352,960		$	183,757
Cash restricted or segregated under regulations and other	73,218			71,300
Deposits with clearing organizations	43,241			43,284
Securities owned, at fair value	6,399			8,022
Receivables from brokers, dealers and clearing organizations	328,528			551,059
Receivables from customers	300,158			676,522
Premises and equipment, net	48,321			45,886
Capitalized software, net	62,821			50,892
Goodwill	423,896			422,774
Other intangibles, net	31,094			31,318
Deferred taxes	2,591			2,282
Other assets	12,226			13,791
Total assets	$	1,685,453		$	2,100,887
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	221,582		$	186,463
Short-term bank loans	24,900			101,400
Payables to brokers, dealers and clearing organizations	232,527			497,124
Payables to customers	287,515			457,105
Securities sold, not yet purchased, at fair value	2,479			859
Income taxes payable	25,646			18,320
Deferred taxes	8,924			2,821
Long term debt	94,500			132,500
Total liabilities	898,073			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; 51,582,306 and 51,503,221 shares issued at December 31, 2008 and 2007, respectively and 43,244,184 and 43,462,885 shares outstanding at December 31, 2007 and 2006, respectively	516			515
Additional paid-in capital	219,830			210,071
Retained earnings	766,319			651,677
Common stock held in treasury, at cost; 8,338,122 and 8,040,336 shares at December 31, 2008 and 2007, respectively	(193,206		)	(177,928		)
Accumulated other comprehensive income (net of tax)	(6,079		)	19,960
Total stockholders’ equity	787,380			704,295
Total liabilities and stockholders’ equity	$	1,685,453		$	2,100,887

INVESTMENT TECHNOLOGY GROUP, INC.

Reconciliation of US GAAP Results to Pro Forma Operating Results

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 31,					Year Ended December 31,
	2008			2007		2008			2007
	(unaudited)			(unaudited)		(unaudited)
Total revenues	$	190,070		$	196,585	$	762,983		$	730,999
Total expenses	143,231			145,972		567,457			542,131
Less:
Unrealized loss on NYSE Euronext common stock (1)	(1,519		)	—		(1,519		)	—
Pro forma operating expenses	141,712			145,972		565,938			542,131
Income before income tax expense	46,839			50,613		195,526			188,868
Effect of pro forma adjustment	1,519			—		1,519			—
Pro forma pre-tax operating income	48,358			50,613		197,045			188,868
Income tax expense	18,096			20,607		80,884			77,761
Tax effect of pro forma adjustment	621			—		621			—
Pro forma operating income tax expense	18,717			20,607		81,505			77,761
Net income	28,743			30,006		114,642			111,107
Net effect of pro forma adjustment	898			—		898			—
Pro forma operating net income	$	29,641		$	30,006	$	115,540		$	111,107
Diluted earnings per share	$	0.66		$	0.68	$	2.61		$	2.48
Net effect of pro forma adjustment	0.02			—		0.02			—
Pro forma diluted operating earnings per share	$	0.68		$	0.68	$	2.63		$	2.48

Notes:

(1)The unrealized loss recorded in the fourth quarter of 2008 pertains to the 55,440 shares of common stock in NYSE Euronext, Inc. that the Company received in March 2006 as consideration in connection with the merger between the NYSE and Archipelago Holdings, Inc.  ITG recorded the write-down to reflect the December 31, 2008 fair market value of these shares at $1.5 million as the Company determined the impairment was other-than-temporary.  Upon receipt of these shares in 2006, the Company had recorded non-operating revenues totaling $7.9 million, reflecting a gain of $6.9 million and dividend income of approximately $1.0 million.