Operating Profitability Impacted by Weaker Institutional Trading Volumes

NEW YORK, Feb. 1, 2012 /PRNewswire/ -- ITG (NYSE: ITG), a leading agency research broker and financial technology firm, today reported results for the fourth quarter ended December 31, 2011.

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Fourth quarter 2011 highlights included:

• GAAP net loss of $3.7 million, or $0.09 per diluted share, compared to GAAP net income of $1.8 million, or $0.04 per diluted share in the fourth quarter of 2010.  The GAAP net loss for the fourth quarter of 2011 included (i) a restructuring charge related to lease consolidations and employee separation costs of $6.8 million, or $0.10 per diluted share after taxes; and (ii) a non-cash impairment charge attributable to a minority investment of $4.3 million, or $0.06 per diluted share after taxes.  GAAP net income for the fourth quarter of 2010 included charges related to the Majestic acquisition and office closings of $4.2 million, or $0.07 per diluted share after taxes.
• Adjusted net income for the fourth quarter of 2011 of $2.7 million, or $0.07 per diluted share, compared to adjusted net income in the fourth quarter of 2010 of $4.7 million, or $0.11 per diluted share.  
• Revenues of $129.9 million, compared to $138.3 million in the fourth quarter of 2010.  
• Expenses of $136.3 million, compared to $135.2 million in the fourth quarter of 2010.  
• Adjusted expenses of $125.2 million, compared to $131.0 million in the fourth quarter of 2010.
• Average daily trading volume in the U.S. of 182 million shares, up 6% from the fourth quarter of 2010.  POSIT® average daily U.S. volume was 86.4 million shares, up 14% from the fourth quarter of 2010.
• The repurchase of 1,009,700 shares of common stock under ITG's authorized share repurchase program for a total of $10.7 million. Repurchases since the first quarter of 2010 have totaled $89.2 million or 6.1 million shares, resulting in a decrease in shares outstanding, net of new issuances, of more than 10%.  

The results of ITG's U.S. operations during the fourth quarter of 2011 were negatively impacted by reduced levels of trading activity by institutional investors. Sell-side client volume represented 44% of total U.S. volumes, up from 41% in the third quarter of 2011.  Revenues from U.S. operations were $83.1 million in the fourth quarter of 2011, down 7% from $89.6 million in the fourth quarter of 2010.  ITG's U.S. operations incurred a GAAP net loss of $6.4 million and adjusted net income of $0.3 million in the fourth quarter of 2011, compared to a GAAP net loss of $1.1 million and adjusted net income of $2.3 million in the fourth quarter of 2010.  

ITG's International revenues were $46.8 million in the fourth quarter of 2011, a 4% decrease over $48.8 million in the fourth quarter of 2010. ITG's International operations posted GAAP net income of $2.7 million and adjusted net income of $2.4 million in the fourth quarter of 2011, compared to GAAP net income of $2.9 million and adjusted net income of $2.5 million in the fourth quarter of 2010.      

"Low levels of trading activity by institutional investors in the U.S. and weaker turnover in both Europe and Asia Pacific pressured our revenues in the fourth quarter," said Bob Gasser, ITG's Chief Executive Officer and President.  "Despite these headwinds, we continued to selectively build out the ITG Investment Research platform, maintained a disciplined approach to cost management and returned cash to shareholders via share buybacks in excess of our level of operating earnings."

Full Year 2011 Results

For the full year 2011, revenues were $572.0 million, GAAP net loss was $179.8 million, or $4.42 per diluted share and adjusted net income was $28.6 million, or $0.69 per diluted share. For the full year 2010, revenues were $570.8 million, GAAP net income was $24.0 million, or $0.55 per diluted share, in 2010 and adjusted net income was $38.1 million, or $0.88 per diluted share.  

The discussion above includes adjusted expenses and adjusted 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 to GAAP results.

Conference Call

ITG has scheduled a conference call today at 11:00 am ET to discuss fourth quarter results.  Those wishing to listen to the call should dial 1-866-831-6234 (1-617-213-8854 outside the US) and enter the passcode 38122132 at least 10 minutes prior to the start of the call to ensure connection.  The webcast and accompanying slideshow presentation can be downloaded from 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 (1-617-801-6888 outside the US) and entering the passcode 69282617. The replay will be available starting approximately two hours after the completion of the conference call.

About ITG

ITG is an independent research and execution broker that partners with global portfolio managers and traders to provide unique data-driven insights throughout the investment process. From investment decision through settlement, ITG helps clients understand market trends, improve performance, mitigate risk and navigate increasingly complex markets. ITG is headquartered in New York with offices in North America, Europe, and Asia Pacific. For more information, 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.  Certain of these factors are noted throughout ITG's 2010 Annual Report on Form 10-K, and its Form 10-Qs and include, but are not limited to, general economic, business, credit and financial market conditions, internationally and nationally, financial market volatility, fluctuations in market trading volumes, effects of inflation, adverse changes or volatility in interest rates, fluctuations in foreign exchange rates, evolving industry regulations, changes in tax policy or accounting rules, the actions of both current and potential new competitors, changes in commission pricing, potential impairment charges related to goodwill and other long-lived assets, rapid changes in technology, errors or malfunctions in our systems or technology, cash flows into or redemptions from equity mutual funds, ability to meet liquidity requirements related to the clearing of our customers' trades, 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 acquired companies, our ability to attract and retain talented employees and our ability to achieve cost savings from our cost reduction plans. 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 Media/Investor Contact:
J.T. Farley
1-212-444-6259
corpcomm@itg.com