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

February 3, 2010

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 February 3, 2010 Investment Technology Group, Inc. issued a press release announcing financial results for the quarter ended December 31, 2009.  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

(d) Exhibits

99.1 Press release issued by Investment Technology Group, Inc. on February 3, 2010.

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:  February 3, 2010	By:	/s/ Steven R. Vigliotti
		Steven R. Vigliotti
		Chief Financial Officer and Duly Authorized Signatory of Registrant

2

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release by Investment Technology Group, Inc., dated as of February 3, 2010.

3

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Investment Technology Group Reports

Fourth Quarter 2009 Results

NEW YORK, February 3, 2010 — Investment Technology Group, Inc. (NYSE: ITG), a leading agency broker and financial technology firm, today announced that for the quarter ended December 31, 2009, it incurred a net loss of $7.8 million, or $0.18 per diluted share, compared to net income of $28.7 million, or $0.66 per diluted share for the quarter ended December 31, 2008.  Excluding restructuring charges, fourth quarter pro forma operating net income was $8.6 million, or $0.19 per diluted share, compared to pro forma operating net income of $29.6 million, or $0.68 per diluted share, in the fourth quarter of 2008. ITG’s revenues for the fourth quarter of 2009 were $151.0 million compared to $190.1 million for the fourth quarter of 2008.

Included in the fourth quarter of 2009 operating results were after-tax expenses of $3.5 million, or $0.08 per diluted share, in employee separation costs unrelated to the restructuring plan.  This compares to after-tax expenses of $3.1 million, or $0.07 per diluted share, in the fourth quarter of 2008 related to employee separation costs and write downs of capitalized costs pertaining to discontinued non-core products.

“The fall in volatility, combined with continued weakness in the equity asset management business, resulted in lower institutional trading volumes. However, our fourth quarter restructuring has improved our cost structure and sharpened our business focus, positioning us to benefit as trading conditions and market volumes improve,” said Bob Gasser, ITG’s Chief Executive Officer and President.

ITG’s non-US revenues increased to $47.6 million in the fourth quarter of 2009, compared to $46.0 million in the fourth quarter of 2008.  The net loss from non-US operations was $6.2 million during the fourth quarter of 2009, which included $3.3 million of after-tax restructuring charges, compared to non-US net income of $0.7 million in the fourth quarter of 2008.

“Our European business continues to gain market share and drive down transaction processing costs, and in Canada the core business remains strong,” said Mr. Gasser.  “In the Asia Pacific region, the continued downturn in overall market activity impacted our margins, but we believe our investments in the region will benefit us when market conditions improve.”

For the full year, ITG’s revenues were $633.1 million compared to $763.0 million in the prior year.  Net income was $42.8 million, or $0.97 per diluted share in 2009 compared to net income of $114.6 million, or $2.61 per diluted share in 2008.  Pro forma operating net income for the year was $59.2 million, or $1.34 per diluted share, compared to pro forma operating net income of $115.5 million, or $2.63 per diluted share in 2008.  ITG’s non-US revenues were $175.7 million for the full year compared to $191.7 million for 2008.  The full year non-US net loss was $5.9 million, which included $3.3 million of restructuring charges, compared to non-US net income of $4.6 million for 2008. 

The discussion above includes pro forma operating net income and related per share amounts which are non-GAAP financial measures that are described in the attached tables along with a reconciliation of these non-GAAP financial measures.

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 800-299-7928 and enter the pass code 89562833 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 website 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 75045575. The replay will be available starting approximately two hours after the completion of the conference call.

ABOUT ITG

Investment Technology Group, Inc., is an independent agency broker and financial technology firm that partners with asset managers globally to improve performance throughout the investment process. A leader in electronic trading since launching the POSIT® crossing network in 1987, ITG takes a consultative approach in delivering the highest quality institutional liquidity and market-leading execution services, measurement tools, and proprietary data. Asset managers rely on ITG’s independence, experience, and intellectual capital 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. The forward-looking statements included herein represent ITG’s views as of the date of this release. ITG undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law.

ITG Contact:

J.T. Farley

(212) 444-6259

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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,
	2009 (unaudited)			2008 (unaudited)		2009 (unaudited)		2008 (audited)
Revenues:
Commissions and fees (1)	$	124,885		$	163,362	$	531,998	$	654,889
Recurring	22,193			22,103		87,483		87,991
Other	3,921			4,605		13,588		20,103
Total revenues	150,999			190,070		633,069		762,983
Expenses:
Compensation and employee benefits	59,685			62,473		235,518		256,511
Transaction processing	23,568			21,975		95,618		95,078
Occupancy and equipment	15,254			15,075		59,950		57,816
Telecommunications and data processing services	13,497			14,029		54,549		53,243
Other general and administrative	22,323			28,019		83,028		97,556
Restructuring charges	25,444			—		25,444		—
Interest expense	291			1,660		2,511		7,253
Total expenses	160,062			143,231		556,618		567,457
(Loss) income before income tax (benefit) expense	(9,063		)	46,839		76,451		195,526
Income tax (benefit) expense	(1,270		)	18,096		33,617		80,884
Net (loss) income	$	(7,793	)	$	28,743	$	42,834	$	114,642
(Loss) earnings per share:
Basic	$	(0.18	)	$	0.67	$	0.98	$	2.64
Diluted	$	(0.18	)	$	0.66	$	0.97	$	2.61
Basic weighted average number of common shares outstanding	43,716			43,221		43,538		43,503
Diluted weighted average number of common shares outstanding	43,716			43,498		44,018		43,987

(1) ITG has changed the revenues 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)

	December 31, 2009 (unaudited)			December 31, 2008 (audited)
Assets
Cash and cash equivalents	$	330,879		$	352,960
Cash restricted or segregated under regulations and other	95,787			73,218
Deposits with clearing organizations	14,891			43,241
Securities owned, at fair value	6,768			6,399
Receivables from brokers, dealers and clearing organizations	364,436			328,528
Receivables from customers	298,342			300,158
Premises and equipment, net	41,437			48,321
Capitalized software, net	68,913			62,821
Goodwill	425,301			423,896
Other intangibles, net	27,263			31,094
Income taxes receivable	13,897			—
Deferred taxes	2,910			2,591
Other assets	12,279			12,226
Total assets	$	1,703,103		$	1,685,453
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	209,496		$	221,582
Short-term bank loans	—			24,900
Payables to brokers, dealers and clearing organizations	248,664			232,527
Payables to customers	299,200			287,515
Securities sold, not yet purchased, at fair value	31			2,479
Income taxes payable	14,113			25,646
Deferred taxes	16,999			8,924
Long term debt	46,900			94,500
Total liabilities	835,403			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 Dec. 31, 2009 and Dec. 31, 2008, respectively, and 43,790,436 and 43,244,184 shares outstanding at Dec. 31, 2009 and Dec. 31, 2008, respectively	517			516
Additional paid-in capital	233,374			219,830
Retained earnings	809,153			766,319
Common stock held in treasury, at cost; 7,891,717 and 8,338,122 shares at Dec. 31, 2009 and Dec. 31, 2008, respectively	(182,743		)	(193,206		)
Accumulated other comprehensive income (loss) (net of tax)	7,399			(6,079		)
Total stockholders’ equity	867,700			787,380
Total liabilities and stockholders’ equity	$	1,703,103		$	1,685,453

INVESTMENT TECHNOLOGY GROUP, INC.

Reconciliation of US GAAP Results to Pro Forma Operating Results

In evaluating ITG’s financial performance, management reviews pro forma operating results, which exclude non-operating or one-time charges.  Pro forma operating net income and related per share amounts are non-GAAP (generally accepted accounting principles) performance measures that ITG believes are useful to assist investors in gaining an understanding of the trends and operating results for ITG’s core businesses.  Pro forma operating net income and related earnings per share should be viewed in addition to, and not in lieu of, reported results under US GAAP.

The following is a reconciliation of the most directly comparable US GAAP results to the pro forma operating results for the periods presented (in thousands except per share amounts):

	Three Months Ended December 31,						Year Ended December 31,
	2009			2008			2009			2008
	(unaudited)			(unaudited)			(unaudited)			(audited)
Total revenues	$	150,999		$	190,070		$	633,069		$	762,983
Total expenses	160,062			143,231			556,618			567,457
Less:
Unrealized loss on NYSE Euronext common stock (1)	—			(1,519		)	—			(1,519		)
Restructuring charges (2)	(25,444		)	—			(25,444		)	—
Pro forma operating expenses	134,618			141,712			531,174			565,938
(Loss) income before income tax (benefit) expense	(9,063		)	46,839			76,451			195,526
Effect of pro forma adjustment	25,444			1,519			25,444			1,519
Pro forma pre-tax operating income	16,381			48,358			101,895			197,045
Income tax (benefit) expense	(1,270		)	18,096			33,617			80,884
Tax effect of pro forma adjustment	9,101			621			9,101			621
Pro forma operating income tax expense	7,831			18,717			42,718			81,505
Net (loss) income	(7,793		)	28,743			42,834			114,642
Net effect of pro forma adjustment	16,343			898			16,343			898
Pro forma operating net income	$	8,550		$	29,641		$	59,177		$	115,540
Diluted (loss) earnings per share	$	(0.18	)	$	0.66		$	0.97		$	2.61
Net effect of pro forma adjustment	0.37			0.02			0.37			0.02
Pro forma diluted operating earnings per share	$	0.19		$	0.68		$	1.34		$	2.63

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 ITG 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 it determined the impairment was other-than-temporary.  Upon receipt of these shares in 2006, ITG had recorded non-operating revenues totaling $7.9 million, reflecting a gain of $6.9 million and dividend income of approximately $1.0 million.

(2)In the fourth quarter of 2009 management committed to a restructuring plan focused primarily on US operations to position ITG for long-term profitable growth.  Restructuring charges include employee severance arrangements, costs related to the consolidation of leased facilities and write-offs of capitalized software and certain intangible assets due primarily to changes in product priorities.