The current cost-reduction is primarily due to the strategic decisions related to the separation of Instinet, the Institutional Broker and INET, and the company's ongoing efforts to streamline its operations.
As part of this cost-reduction, Instinet Group will record a charge of $60 million in the fourth quarter of 2003. The charge is related to the reduction of Instinet Group's workforce by approximately 185 employees (or approximately 15% of full-time employees), expected to be substantially completed by July 2004, and the consolidation of the company's office space, which accounts for a significant portion of the charge.
"This cost-reduction is part of our previously announced plan to reorganize and streamline our company and empower our businesses to better serve their distinct customers," said Edward J. Nicoll, Instinet Group's chief executive officer.
The latest cost reduction is in addition to previous cost reductions, which reduced annual operating costs by approximately $160 million between the fourth quarter of 2002 and the third quarter of 2003.
The company also announced it will record a $22 million charge in the fourth quarter of 2003 for the impairment of intangible assets, related primarily to certain Island technology assets that were capitalized in 2002 as part of the company's acquisition of Island ECN. The impairment charge is based on the application of annual impairment tests prescribed by current accounting standards (FAS 142).
