EX-99.1 2 a09-32491_1ex99d1.htm EX-99.1

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

Investment Technology Group Reports

Third Quarter 2009 Results

 

NEW YORK, NY, October 29, 2009 – Investment Technology Group, Inc. (NYSE: ITG), a leading agency broker and financial technology firm, today announced that for the third quarter ended September 30, 2009, net income was $17.5 million, or $0.40 per diluted share, versus net income of $27.2 million and earnings of $0.62 per diluted share in the third quarter of 2008. ITG’s revenues for the third quarter of 2009 were $158.4 million versus $188.3 million for the third quarter of 2008. Pre-tax margins in the third quarter of 2009 were 17.7 percent compared to 24.2 percent in the third quarter of 2008.

 

“The third quarter saw mutual fund flows directed largely towards international funds and index funds, with flows to our core active domestic clients turning negative in August,” said Bob Gasser, ITG’s Chief Executive Officer and President.  “While this made for a challenging environment, we are confident that the market will see a recovery in these fund flows and that we will benefit from the strong operating leverage of our platform.  We continue to manage costs aggressively while investing selectively in markets and products that hold promise for our top and bottom lines with the return of improved market conditions.”

 

ITG’s non-US revenues were $43.8 million in the third quarter of 2009 versus $47.2 million in the third quarter of 2008. Non-US operations posted net income of $0.2 million in the third quarter of 2009, compared to $0.6 million of net income in the third quarter of 2008.

 

“Our European business benefited from product parity with North America as well as declining transaction processing costs, and we are well positioned to benefit from additional market recovery.  In Europe, ITG posted its second consecutive quarter of revenue growth and profitability,” said Mr. Gasser.  “While our core client business in Canada remains strong, revenues were pressured by declining market volumes and a rapidly changing market structure.  In the Asia Pacific region, better stock price performance did not correlate with higher turnover across the region, yet we did grow our revenue and gain market share.  We continue to invest heavily in people, products and relationships as we position the firm for a greater role in the Asia Pacific markets.”

 


 

Year to Date results

 

For the nine months ended September 30, 2009, revenues were $482.1 million compared to $572.9 million in the prior year period.  Net income was $50.6 million and diluted earnings per share were $1.15 in the first nine months of 2009 versus net income of $85.9 million and diluted earnings per share of $1.95 in the first nine months of 2008.

 

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 800-295-3991 and enter the pass code 79761413 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 888-286-8010 and entering the pass code 48014893. 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 region. For more information on ITG, please visit www.itg.com.

 

In addition to historical information, this press release may contain “forward-looking” statements that reflect management’s expectations for the future.  A variety of important factors could cause results to differ materially from such statements.  These factors are noted throughout ITG’s 2008 Annual Report, on its Form 10-K, and on its Form 10-Qs and include, but are not limited to, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, changes in commission pricing, evolving industry regulations, errors or malfunctions in our systems or technology, rapid changes in technology, cash flows into or redemptions from equity funds, effects of inflation, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate companies we have acquired, changes in tax policy or accounting rules, fluctuations in foreign exchange rates, adverse

 


 

changes or volatility in interest rates, as well as general economic, business, credit and financial market conditions, internationally or nationally.

 

ITG Contact:

J.T. Farley

(212) 444-6259

 

###

 


 

INVESTMENT TECHNOLOGY GROUP, INC.

Consolidated Statements of Income (unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

Revenues:

 

 

 

 

 

 

 

 

 

Commissions and fees (1)

 

$

132,069

 

$

162,083

 

$

407,113

 

$

491,527

 

Recurring

 

22,145

 

21,958

 

65,290

 

65,888

 

Other

 

4,224

 

4,237

 

9,667

 

15,498

 

Total revenues

 

158,438

 

188,278

 

482,070

 

572,913

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

56,758

 

64,640

 

175,833

 

194,038

 

Transaction processing

 

24,204

 

24,421

 

72,050

 

73,103

 

Occupancy and equipment

 

14,958

 

14,986

 

44,696

 

42,741

 

Telecommunications and data processing services

 

13,770

 

14,026

 

41,052

 

39,214

 

Other general and administrative

 

20,307

 

23,004

 

60,705

 

69,537

 

Interest expense

 

407

 

1,637

 

2,220

 

5,593

 

Total expenses

 

130,404

 

142,714

 

396,556

 

424,226

 

Income before income tax expense

 

28,034

 

45,564

 

85,514

 

148,687

 

Income tax expense

 

10,556

 

18,393

 

34,887

 

62,788

 

Net income

 

$

17,478

 

$

27,171

 

$

50,627

 

$

85,899

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.40

 

$

0.63

 

$

1.16

 

$

1.97

 

Diluted

 

$

0.40

 

$

0.62

 

$

1.15

 

$

1.95

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of common shares outstanding

 

43,627

 

43,463

 

43,479

 

43,598

 

Diluted weighted average number of common shares outstanding

 

44,126

 

43,869

 

43,859

 

44,122

 

 

(1) We have changed the income caption commissions revenues to commissions and fee revenues to better reflect the commission equivalent fees earned on spread based trades.

 


 

INVESTMENT TECHNOLOGY GROUP, INC.

Consolidated Statements of Financial Condition

(In thousands, except share amounts)

 

 

 

September 30,
2009

 

December 31,
2008

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

354,050

 

$

352,960

 

Cash restricted or segregated under regulations and other

 

92,962

 

73,218

 

Deposits with clearing organizations

 

21,253

 

43,241

 

Securities owned, at fair value

 

6,736

 

6,399

 

Receivables from brokers, dealers and clearing organizations

 

590,138

 

328,528

 

Receivables from customers

 

857,125

 

300,158

 

Premises and equipment, net

 

40,577

 

48,321

 

Capitalized software, net

 

72,059

 

62,821

 

Goodwill

 

425,598

 

423,896

 

Other intangibles, net

 

29,047

 

31,094

 

Deferred taxes

 

6,455

 

2,591

 

Other assets

 

14,023

 

12,226

 

Total assets

 

$

2,510,023

 

$

1,685,453

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

 

$

221,591

 

$

221,582

 

Short-term bank loans

 

—

 

24,900

 

Payables to brokers, dealers and clearing organizations

 

854,382

 

232,527

 

Payables to customers

 

476,899

 

287,515

 

Securities sold, not yet purchased, at fair value

 

49

 

2,479

 

Income taxes payable

 

9,313

 

25,646

 

Deferred taxes

 

19,890

 

8,924

 

Long term debt

 

58,800

 

94,500

 

Total liabilities

 

1,640,924

 

898,073

 

 

 

 

 

 

 

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; 51,682,153 and 51,582,306 shares issued at September 30, 2009 and December 31, 2008, respectively, and 43,683,428 and 43,244,184 shares outstanding at September 30, 2009 and December 31, 2008, respectively

 

517

 

516

 

Additional paid-in capital

 

230,234

 

219,830

 

Retained earnings

 

816,946

 

766,319

 

Common stock held in treasury, at cost; 7,998,725 and 8,338,122 shares at September 30, 2009 and December 31, 2008, respectively

 

(185,204

)

(193,206

)

Accumulated other comprehensive income (net of tax)

 

6,606

 

(6,079

)

Total stockholders’ equity

 

869,099

 

787,380

 

Total liabilities and stockholders’ equity

 

$

2,510,023

 

$

1,685,453