UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

Commission File Number 0-23644

 

 

INVESTMENT TECHNOLOGY GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ý   No o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined by Exchange Act Rule 12b-2)

 

Yes ý   No o

 

As of April 27 2004, the Registrant had 43,833,671 shares of common stock, $0.01 par value, outstanding.

 

 

QUARTERLY REPORT ON FORM 10-Q

 

TABLE OF CONTENTS

 

PART I. - Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Financial Condition: March 26, 2004 (unaudited) and December 31, 2003
	Condensed Consolidated Statements of Income (unaudited): Three Months Ended March 26, 2004 and March 28, 2003
	Condensed Consolidated Statement of Changes in Stockholders’ Equity (unaudited): Three Months Ended March 26, 2004
	Condensed Consolidated Statements of Cash Flows (unaudited): Three Months Ended March 26, 2004 and March 28, 2003
	Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2.	Management’s Discussion and Analysis of Financial Condition and  Results of Operations
Item 3.	Quantitative and Qualitative Disclosure About Market Risk
Item 4.	Controls and Procedures
PART II. - Other Information
Item 1.	Legal Proceedings
Item 2.	Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits and Reports on Form 8-K
	Signature

 

QuantEX, ITG ACE, TCA, ITG/Opt, ResRisk, SmartServer, Investment Technology Group and ITG are registered trademarks of the Investment Technology Group, Inc. companies. POSIT is a registered service mark of the POSIT Joint Venture. TriAct is a trademark of the POSIT Joint Venture. Triton, SPI SmartServer,  ITG WebAccess, ITG PRIME, Hoenig, and AlterNet are trademarks of the Investment Technology Group, Inc. companies.

 

2

 

FORWARD-LOOKING STATEMENTS

 

In addition to the historical information contained throughout this Quarterly Report on Form 10-Q, there are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements regarding our expected future financial position, results of operations, cash flows, dividends, financing plans, business strategies, competitive positions, plans and objectives of management for future operations, and concerning securities markets and economic trends are forward-looking statements. Although we believe our expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements herein include, among others, the actions of both current and potential new competitors, rapid changes in technology, fluctuations in market trading volumes, financial market volatility, evolving industry regulations, risk of errors or malfunctions in our systems or technology, cash flows into or redemptions from equity funds, effects of inflation, customer trading patterns, the success of our new products and services offerings as well as general economic and business conditions, internationally or nationally, securities, credit and financial market conditions, and adverse changes or volatility in interest rates. Certain of these factors, and other factors, are more fully discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Issues and Uncertainties - in our annual report on Form 10-K for the year ended December 31, 2003, which you are encouraged to read.  Our 2003 Annual Report to Shareholders and Form 10-K are also available through our website at http:/ /www.itginc.com/investor.

 

3

 

PART I. -           FINANCIAL INFORMATION

 

Item 1.           Financial Statements

 

INVESTMENT TECHNOLOGY GROUP, INC.

Condensed Consolidated Statements of Financial Condition

(In thousands, except share amounts)

 

		March 26, 2004			December 31, 2003
		(unaudited)
Assets
Cash and cash equivalents		$	208,215		$	239,013
Cash restricted or segregated		12,073			11,892
Securities owned, at fair value		50,943			24,174
Receivables from brokers, dealers and other, net		1,078,556			219,860
Investments in limited partnerships		20,479			19,529
Premises and equipment, net		24,124			25,088
Capitalized software, net		6,480			6,575
Goodwill		77,124			77,143
Other Intangibles		4,543			4,747
Deferred taxes		13,462			12,147
Other assets		10,099			9,680
Total assets		$	1,506,098		$	649,848
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued expenses		$	88,667		$	82,554
Payables to brokers, dealers and other		1,041,290			187,764
Software royalties payable		3,710			4,209
Securities sold, not yet purchased, at fair value		268			1,264
Income taxes payable		16,403			12,754
Total liabilities		1,150,338			288,545
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, par value $0.01; shares authorized: 1,000,000; shares issued: none		—			—
Common stock, par value $0.01; shares authorized: 100,000,000; shares issued: 51,295,502 and 51,262,743 at March 26, 2004 and December 31, 2003, respectively and 43,803,748 and 44,740,279 shares outstanding at March 26, 2004 and December 31, 2003, respectively		513			513
Additional paid-in capital		158,180			157,319
Retained earnings		342,232			333,978
Common stock held in treasury, at cost; shares: 7,491,754 and 6,522,464 at March 26, 2004 and December 31, 2003, respectively		(153,119		)	(138,641		)
Accumulated other comprehensive income:
Currency translation adjustment		7,954			8,134
Total stockholders’ equity		355,760			361,303
Total liabilities and stockholders’ equity		$	1,506,098		$	649,848

 

See accompanying unaudited notes to condensed consolidated financial statements.

 

4

 

INVESTMENT TECHNOLOGY GROUP, INC.

Condensed Consolidated Statements of Income (unaudited)

 (In thousands, except per share amounts)

 

		Three Months Ended
		March 26, 2004			March 28, 2003
Revenues:
Commissions:
POSIT		$	26,480		$	24,720
Electronic Trading Desk		27,084			27,332
Client Site Trading Products		20,945			18,996
Other		3,063			2,463
Total revenues		77,572			73,511
Expenses:
Compensation and employee benefits		29,172			28,768
Transaction processing		11,580			10,094
Software royalties		3,816			3,116
Occupancy and equipment		7,341			7,662
Telecommunications and data processing services		4,637			4,490
Other general and administrative		7,179			7,140
Total expenses		63,725			61,270
Income before income tax expense		13,847