Restructuring charges dent ITG earnings

Net income for the second quarter of 2010 was $7.5 million, or $0.17 per diluted share on revenues of $155.3 million. Excluding the impacts of a $5.4 million (pre- and post-tax) non-cash write-off of goodwill attributable to ITG's Australian operations and $2.3 million (pre- and post-tax) of restructuring charges, primarily related to the previously announced closing of ITG's onshore Japanese operations, pro forma operating net income was $15.3 million, or $0.35 per diluted share. For the second quarter of 2009, net income was $20.3 million, or $0.46 per diluted share, on revenues of $168.0 million.

On a sequential basis, while net income was lower than the $8.4 million earned during the first quarter of 2010, pro forma operating net income of $15.3 million exceeded the $11.9 million of pro forma operating net income earned during the first quarter. Revenues for the second quarter were 6% higher than the $146.7 million generated during the first quarter, boosted by an increase in U.S. trading volumes.

ITG's non-U.S. revenues were $47.2 million in the second quarter of 2010, a 3% increase over $46.0 million in the second quarter of 2009. Non-U.S. operations incurred a net loss of $6.8 million inclusive of the Australian goodwill write-off and the restructuring charge to close ITG's onshore Japanese operations. Excluding the impacts of these items, pro forma operating net income from non-U.S. operations was $1.1 million during the second quarter of 2010, compared to net income of $2.2 million during the second quarter of 2009.

"Despite what continues to be a challenging environment for our asset management clients, ITG derived strong benefit during the second quarter from our improved operating efficiency," said Bob Gasser, ITG's Chief Executive Officer and President. "Growth in our U.S. trading volumes and continued strong performance in Canada led to an improvement over the first quarter in pro forma operating earnings, demonstrating the leverage we'vage we've gained in our business model over the past several quarters. We will continue to focus on capital efficiency and operating discipline while going after a bigger piece of the client wallet through investments in new products and service offerings."

During the second quarter of 2010, ITG repurchased 903,900 shares of its common stock under its authorized share repurchase program, bringing year-to-date repurchases to 1.5 million shares. In July 2010, ITG's Board of Directors authorized the repurchase of an additional 4.0 million shares, bringing the total number of shares currently available for repurchase under ITG's share repurchase program to 4.6 million shares.

"We are very pleased with the Board's approval of this new authorization as it demonstrates confidence in the value of ITG's platform and franchise, as well as an ongoing commitment to increase stockholder value," said Steve Vigliotti, ITG's Chief Financial Officer.

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.