##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number: 001-33217
 GLG PARTNERS, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    20-5009693
(I.R.S. Employer Identification No.)
 399 Park Avenue, 38th Floor
New York, New York 10022
 (212) 224-7200
 þ o
  Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
   
    
    our financial performance;
    
    market conditions for the funds we manage, which we refer to as the GLG Funds;
    
    performance of GLG Funds, the related performance fees and the associated impacts on
revenues, net income, cash flows and fund inflows and outflows;
    
    the cost of retaining our key investment and other personnel or the loss of such key
personnel;
    
    risks associated with the expansion of our business in size and geographically;
    
    operational risk;
    
    litigation and regulatory enforcement risks, including the diversion of management time and
attention and the additional costs and demands on our resources; and
    
    risks associated with the use of leverage, investment in derivatives, availability of
credit, interest rates and currency fluctuations,




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##### 



GLG PARTNERS, INC.
INDEX
 PAGEPART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited):Condensed Consolidated Balance Sheets  June 30, 2008 and December 31, 2007
    
    
    2Condensed Consolidated and Combined Statements of Operations  Three and
Six Months Ended June 30, 2008 and June 30, 2007
    
    
    3Condensed Consolidated Statements of Stockholders Equity  Six Months
Ended June 30, 2008
    
    
    4Condensed Consolidated and Combined Statements of Cash Flows  Six Months
Ended June 30, 2008 and June 30, 2007
    
    
    5Notes to Condensed Consolidated and Combined Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    16Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 4.
    
    Controls and Procedures
    
    
    42PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    43Item 1A.
    
    Risk Factors
    
    
    43Item 2.
    
    Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    43Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    44Item 6.
    
    Exhibits
    
    
    45Signature
    
    
    46EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-31.3: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATIONEX-32.3: CERTIFICATION
  1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 GLG PARTNERS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(US dollars in thousands, except share and per share amounts)
 As of
    
    
    As ofJune 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent AssetsCash and cash equivalents
    
    $
    285,449
    
    
    $
    429,422Restricted cash
    
    
    24,231
    
    
    
    24,066Fees receivable
    
    
    129,058
    
    
    
    389,777Prepaid expenses and other assets
    
    
    37,666
    
    
    
    35,685Total Current Assets
    
    
    476,404
    
    
    
    878,950Non-Current AssetsInvestments at fair value
    
    
    92,117
    
    
    
    96,108Goodwill
    
    
    587
    
    
    
    Property and equipment
    
    
    11,873
    
    
    
    9,079Total Non-Current Assets
    
    
    104,577
    
    
    
    105,187Total Assets
    
    $
    580,981
    
    
    $
    984,137LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesRebates and sub-administration fees payable
    
    $
    28,275
    
    
    $
    25,543Accrued compensation, benefits and profit share
    
    
    168,633
    
    
    
    467,887Income taxes payable
    
    
    24,501
    
    
    
    37,464Distributions payable
    
    
    113,088
    
    
    
    78,093Accounts payable and other accruals
    
    
    35,086
    
    
    
    33,288Other liabilities
    
    
    26,870
    
    
    
    16,092Total Current Liabilities
    
    
    396,453
    
    
    
    658,367Non-Current LiabilitiesLoan payable
    
    
    535,000
    
    
    
    570,000Minority interest
    
    
    
    
    
    
    1,911Total Non-Current Liabilities
    
    
    535,000
    
    
    
    571,911Total Liabilities
    
    
    931,453
    
    
    
    1,230,278Stockholders EquityStockholders EquityCommon stock, $.0001 par value; 1,000,000,000
authorized, 245,680,752 issued and
outstanding (Dec. 31, 2007: 244,730,988 issued
and outstanding), including 25,382,500 (Dec.
31, 2007: 25,382,500) shares of Treasury stock
held by a subsidiary
    
    
    25
    
    
    
    24Series A voting preferred stock, $.0001 par
value; 150,000,000 authorized, 58,904,993
issued and outstanding (Dec. 31, 2007: 58,904,993 issued and outstanding)
    
    
    6
    
    
    
    6Additional paid in capital
    
    
    925,890
    
    
    
    575,589Treasury stock
    
    
    (347,740
    )
    
    
    (347,740
    )Accumulated other comprehensive income
    
    
    (1,395
    )
    
    
    3,477Accumulated deficit
    
    
    (927,258
    )
    
    
    (477,497
    )Total Stockholders Equity
    
    
    (350,472
    )
    
    
    (246,141
    )Total Liabilities and Stockholders Equity
    
    $
    580,981
    
    
    $
    984,137
  2




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##### Table of Contents



GLG PARTNERS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
STATEMENTS OF OPERATIONS
(US dollars in thousands, except per share amounts)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net revenues and other incomeManagement fees, net
    
    $
    90,600
    
    
    $
    62,991
    
    
    $
    189,356
    
    
    $
    120,334Performance fees, net
    
    
    78,194
    
    
    
    340,512
    
    
    
    82,929
    
    
    
    343,032Administration fees, net
    
    
    20,449
    
    
    
    14,036
    
    
    
    42,697
    
    
    
    26,680Other income/(loss)
    
    
    (433
    )
    
    
    471
    
    
    
    5,208
    
    
    
    970Total net revenues and other income
    
    
    188,810
    
    
    
    418,010
    
    
    
    320,190
    
    
    
    491,016ExpensesEmployee compensation and benefits
    
    
    (180,577
    )
    
    
    (56,518
    )
    
    
    (468,512
    )
    
    
    (81,566
    )Limited partner profit share
    
    
    (56,126
    )
    
    
    (184,047
    )
    
    
    (81,230
    )
    
    
    (190,500
    )Compensation, benefits and profit share
    
    
    (236,703
    )
    
    
    (240,565
    )
    
    
    (549,742
    )
    
    
    (272,066
    )General, administrative and other
    
    
    (30,230
    )
    
    
    (27,979
    )
    
    
    (60,533
    )
    
    
    (53,743
    )Total expenses
    
    
    (266,933
    )
    
    
    (268,544
    )
    
    
    (610,275
    )
    
    
    (325,809
    )(Loss)/income from operations
    
    
    (78,123
    )
    
    
    149,466
    
    
    
    (290,085
    )
    
    
    165,207Interest income
    
    
    1,555
    
    
    
    372
    
    
    
    4,641
    
    
    
    2,051Interest expense
    
    
    (5,637
    )
    
    
    (201
    )
    
    
    (12,766
    )
    
    
    (404
    )(Loss)/income before income taxes
    
    
    (82,205
    )
    
    
    149,637
    
    
    
    (298,210
    )
    
    
    166,854Income taxes
    
    
    (3,296
    )
    
    
    (25,031
    )
    
    
    (9,496
    )
    
    
    (28,286
    )(Loss)/income before minority interests
    
    
    (85,501
    )
    
    
    124,606
    
    
    
    (307,706
    )
    
    
    138,568Minority interests:Share of income
    
    
    
    
    
    
    (195
    )
    
    
    
    
    
    
    (406
    )Exchangeable Shares dividend (note 8)
    
    
    (2,945
    )
    
    
    
    
    
    
    (2,945
    )
    
    
    Cumulative dividends
    
    
    (5,169
    )
    
    
    
    
    
    
    (9,298
    )
    
    
    Net (loss)/income attributable to common stockholders
    
    $
    (93,615
    )
    
    $
    124,411
    
    
    $
    (319,949
    )
    
    $
    138,162Net (loss)/income per share  basic
    
    $
    (0.44
    )
    
    $
    0.92
    
    
    $
    (1.51
    )
    
    $
    1.02Weighted average common stock outstanding  basic
(in thousands)
    
    
    211,454
    
    
    
    135,712
    
    
    
    211,327
    
    
    
    135,712Net (loss)/income per share  diluted
    
    $
    (0.44
    )
    
    $
    0.64
    
    
    $
    (1.51
    )
    
    $
    0.71Weighted average common stock outstanding  diluted
(in thousands)
    
    
    211,454
    
    
    
    194,617
    
    
    
    211,327
    
    
    
    194,617
  3




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GLG PARTNERS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY
(US dollars in thousands)
 AccumulatedAdditional
    
    
    Other
    
    
    
    
    
    
    TotalPreferred
    
    
    Common
    
    
    Treasury
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Accumulated
    
    
    StockholdersStock
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Income/(Loss)
    
    
    Deficit
    
    
    EquityBalance as of January 1, 2008
    
    $
    6
    
    
    $
    24
    
    
    $
    (347,740
    )
    
    $
    575,589
    
    
    $
    3,477
    
    
    $
    (477,497
    )
    
    $
    (246,141
    )Comprehensive income:Net loss attributable to common
stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (319,949
    )
    
    
    (319,949
    )Unrealized losses on available for
sale equity investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,944
    )
    
    
    
    
    
    
    (3,944
    )Fair value movements on cash flow
hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (794
    )
    
    
    
    
    
    
    (794
    )Foreign currency translation
(zero tax applicable)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (134
    )
    
    
    
    
    
    
    (134
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (324,821
    )Recapitalization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (308
    )
    
    
    
    
    
    
    
    
    
    
    (308
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    389,518
    
    
    
    
    
    
    
    
    
    
    
    389,518Warrant exercises
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    2,567
    
    
    
    
    
    
    
    
    
    
    
    2,568Warrants repurchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,582
    )
    
    
    
    
    
    
    
    
    
    
    (37,582
    )Shares repurchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,987
    )
    
    
    
    
    
    
    
    
    
    
    (3,987
    )Capital contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    93Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,812
    )
    
    
    (11,812
    )Distributions to
former GLG owners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118,000
    )
    
    
    (118,000
    )Balance as of June 30, 2008
    
    $
    6
    
    
    $
    25
    
    
    $
    (347,740
    )
    
    $
    925,890
    
    
    $
    (1,395
    )
    
    $
    (927,258
    )
    
    $
    (350,472
    )
  4




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##### Table of Contents



GLG PARTNERS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
STATEMENTS OF CASH FLOWS
(US dollars in thousands)
 Six months ended June 30,2008
    
    
    2007Cash Flows From Operating ActivitiesNet (loss)/income attributable to common stockholders
    
    $
    (319,949
    )
    
    $
    138,162Adjustments to reconcile net (loss)/income attributable to common
stockholders to net cash provided by operating activities:Minority interests
    
    
    
    
    
    
    406Depreciation
    
    
    1,215
    
    
    
    855Foreign exchange gains on investments
    
    
    46
    
    
    
    48Share based compensation
    
    
    389,946
    
    
    
    Cash flows due to change in:Fees receivable
    
    
    260,719
    
    
    
    (128,194
    )Prepaid expenses and other assets
    
    
    (1,981
    )
    
    
    (1,474
    )Rebates and sub-administration fees payable
    
    
    2,732
    
    
    
    7,001Accrued compensation, benefits and profit share
    
    
    (299,254
    )
    
    
    (72,349
    )Income taxes payable
    
    
    (12,963
    )
    
    
    4,036Distributions payable
    
    
    12,289
    
    
    
    61,383Accounts payable and other accruals
    
    
    1,798
    
    
    
    (3,328
    )Other liabilities
    
    
    9,985
    
    
    
    (1,446
    )Net cash provided by operating activities
    
    
    44,583
    
    
    
    5,100Cash Flows From Investing ActivitiesInvestment in subsidiary
    
    
    (2,500
    )
    
    
    Transfer to restricted cash
    
    
    (165
    )
    
    
    Purchase of property and equipment
    
    
    (4,009
    )
    
    
    (3,714
    )Net cash used in investing activities
    
    
    (6,674
    )
    
    
    (3,714
    )Cash Flows From Financing ActivitiesLoan repayment
    
    
    (35,000
    )
    
    
    Warrant exercises
    
    
    2,568
    
    
    
    Warrant repurchases
    
    
    (37,582
    )
    
    
    Share repurchases
    
    
    (3,987
    )
    
    
    Capital contributions
    
    
    93
    
    
    
    (2
    )Dividends paid
    
    
    (7,532
    )
    
    
    Acquisition related transaction costs
    
    
    (308
    )
    
    
    Distributions to
former GLG owners
    
    
    (100,000
    )
    
    
    (145,069
    )Net cash used in financing activities
    
    
    (181,748
    )
    
    
    (145,071
    )Net decrease in cash and cash equivalents
    
    
    (143,839
    )
    
    
    (143,685
    )Effect of foreign currency translation on cash
    
    
    (134
    )
    
    
    805Cash and cash equivalents at beginning of period
    
    
    429,422
    
    
    
    273,148Cash and cash equivalents at end of period
    
    $
    285,449
    
    
    $
    130,268
  5




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS
(US Dollars in thousands, except share and per share amounts)
 1. ORGANIZATION AND BASIS OF PRESENTATION
        2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of combination and consolidation
  Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited
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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 Partners Have Certain
Rights
 Minority Interests in Consolidated Subsidiaries
  GLG Holdings Inc. and GLG Inc.
  Consolidation of Variable Interest Entities
   FA Sub 2 Limited Exchangeable Shares
    7




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
  Revenue Recognition
  Accounting for Management Fees Based on a Formula
  Reporting Revenue Gross as a Principal versus Net as an Agent
    
    
    management fees are charged at the investee fund level, except in the case of (1) an
investment by the GLG Emerging Markets Fund in the GLG Emerging Markets (Special Assets)
Fund where management fees are charged only at the investing fund level and (2) the GLG
Multi Strategy Fund where fees are charged at both the investee and investing fund levels;
    
    performance fees are charged at the investee fund level, except in the case of (1) an
investment by the GLG Emerging Markets Fund in the GLG Emerging Markets (Special Assets) Fund where
performance fees are charged only at the investing fund level and (2) the GLG Global Aggressive
Fund where fees are charged at both the investee and investing fund levels, to the extent, if any, that the
 8




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 performance fee charged at the investing fund is greater than the performance fee charged at the investee fund
level; and
    
    administration fees are charged at both the investing and investee fund levels.
  Employee Compensation and Benefits
  
    
    Base compensation  contractual compensation paid to employees in the form of base
salary, which is expensed as incurred.
    
    Variable compensation  payments that arise from the contractual entitlements of
personnel to a fixed percentage of certain variable fee revenues attributable to such
personnel with respect to GLG Funds and managed accounts. Variable compensation expense is
recognized at the same time as the underlying fee revenue is crystallized, which may be
monthly or semi-annually (on June 30 and December 31), depending on the fee revenue source.
    
    Discretionary compensation  payments that are determined by the Companys management
in its sole discretion and are generally linked to performance. In determining such
payments, the Companys management considers, among other factors, the ratio of total
discretionary compensation to total revenues; however, this ratio may vary between periods
and, in particular, significant discretionary bonuses may still be paid in a period of low
performance for retention and incentivization purposes. This discretionary compensation is
paid to employees in the form of a discretionary cash bonus. Discretionary compensation is
generally declared and paid following the end of each calendar year. However, the notional
discretionary compensation charge is adjusted monthly based on the year-to-date
profitability and revenues recognized on a year-to-date basis. As the majority of funds
crystallize their performance fees at June 30 and December 31, the majority of
discretionary compensation expense crystallizes at year end and is typically paid in
January following the year end.
 Limited Partner Profit Share
  9




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 Share-Based Payment
  Derivatives and Hedging
 Accounting for Derivative Instruments and Hedging Activities
   
 Recent Accounting Pronouncements
 Disclosures about Derivative Instruments and
Hedging Activities an amendment of FASB Statement No. 133
 Fair Value Measurements
 10




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 Accounting for
Leases
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Net Income per share of Common Stock
 Earnings Per Share
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net (loss)/income applicable to common stockholders
    
    $
    (93,615
    )
    
    $
    124,411
    
    
    $
    (319,949
    )
    
    $
    138,162Weighted-average common stock outstanding (in thousands)  basic
    
    
    211,454
    
    
    
    135,712
    
    
    
    211,327
    
    
    
    135,712Net (loss)/income per share applicable to common stockholders  basic
    
    $
    (0.44
    )
    
    $
    0.92
    
    
    $
    (1.51
    )
    
    $
    1.02Weighted-average common stock outstanding (in thousands)  diluted
    
    
    211,454
    
    
    
    194,617
    
    
    
    211,327
    
    
    
    194,617Net (loss)/income per share applicable to common stockholders  diluted
    
    $
    (0.44
    )
    
    $
    0.64
    
    
    $
    (1.51
    )
    
    $
    0.71Reconciliation of weighted-average common stock outstanding  basic to
weighted-average common stock outstanding  diluted:Weighted-average common stock outstanding  basic (in thousands)
    
    
    211,454
    
    
    
    135,712
    
    
    
    211,327
    
    
    
    135,712FA Sub 2 Limited Exchangeable Shares
    
    
    
    
    
    
    58,905
    
    
    
    
    
    
    
    58,905Weighted-average common stock outstanding  diluted (in thousands)
    
    
    211,454
    
    
    
    194,617
    
    
    
    211,327
    
    
    
    194,617
 11




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##### Table of Contents



GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Common stock held in Treasury
    
    
    25,382
    
    
    
    25,382
    
    
    
    25,382
    
    
    
    25,382FA Sub 2 Limited Exchangeable Shares
    
    
    58,905
    
    
    
    
    
    
    
    58,905
    
    
    
    Common stock awarded in connection
with share-based compensation
arrangements
    
    
    8,882
    
    
    
    6,397
    
    
    
    8,882
    
    
    
    6,397Public stockholders warrants
    
    
    32,985
    
    
    
    
    
    
    
    32,985
    
    
    
    Co-investment warrants
    
    
    5,000
    
    
    
    
    
    
    
    5,000
    
    
    
    Sponsors warrants
    
    
    4,500
    
    
    
    
    
    
    
    4,500
    
    
    
    135,654
    
    
    
    31,779
    
    
    
    135,654
    
    
    
    31,779
  3. COMMITMENTS AND CONTINGENCIES
  
  Indemnifications
  4. INCOME TAXES
  12




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##### Table of Contents



GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
  5. FAIR VALUES OF FINANCIAL INSTRUMENTS
  
    
    Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for
identical assets or liabilities in active markets. A quoted price in an active market
provides the most reliable evidence of fair value and shall be used to measure fair value
whenever available.
    
    Level 2: Inputs to the valuation methodology include quoted prices for similar assets
or liabilities in active markets; inputs to the valuation methodology include quoted prices
for identical or similar assets or liabilities in markets that are not active; or inputs to
the valuation methodology that are derived principally from or can be corroborated by
observable market data by correlation or other means.
    
    Level 3: Inputs to the valuation methodology are unobservable and significant to the
fair value measurement. Level 3 assets and liabilities include financial instruments whose
value is determined using discounted cash flow methodologies, as well as instruments for
which the determination of fair value requires significant management judgment or
estimation.
   Fair Value MeasurementsQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    Balance
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsAvailable for sale investments
    
    $
    92,117
    
    
    
    
    
    
    $
    92,117
    
    
    
    Other liabilities (financial derivatives)
    
    $
    (1,210
    )
    
    
    
    
    
    $
    (1,210
    )
    
    
    
 6. SHARE BASED COMPENSATION
   13




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
  7. DERIVATIVE FINANCIAL INSTRUMENTS
  Three months endedJune 30, 2008Balance SheetFair Value of Derivative Financial Instruments  designated in a cash flow hedge relationship
    
    $
    (1,210
    )Total Fair Value of Derivative Financial Instruments (included in Other Liabilities)
    
    
    (1,210
    )Fair values are allocated as follows:Statement of Changes in Equity:Loss recorded in other comprehensive income in period   cash flow hedges
    
    
    (1,162
    )Loss reclassified from other comprehensive income to income
    
    
    368Total loss carried forward in Other Comprehensive Income
    
    
    (794
    )Statement of Operations:Reduction in Management Fees
    
    
    (148
    )Reduction in Performance Fees
    
    
    (220
    )Total losses reclassified to income
    
    
    (368
    )Reduction in Other income (excluded from effectiveness assessment)
    
    
    (48
    )Total impact on Statement of Operations
    
    
    (416
    )Total impact on Comprehensive Income
    
    $
    (1,210
    )
 8. SHAREHOLDERS EQUITY
  Six months endedJune 30, 2008Number of sharesCommon stock outstanding at December 31, 2007
    
    
    244,730,988Warrants exercised
    
    
    2,147,939Shares repurchased
    
    
    (344,355
    )Stock awarded under LTIP arrangements
    
    
    958,680Stock forfeited and cancelled under share-based compensation arrangements
    
    
    (267,000
    )Cancellation and replacement of stock previously issued under
share-based compensation arrangements with equivalent restricted stock
obligations
    
    
    (1,545,500
    )Common stock outstanding at June 30, 2008
    
    
    245,680,752
   14




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##### Table of Contents



GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
   15




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  General
 Our Business
     
    
    $976,107,300 in cash;
    
    $23,892,700 in promissory notes in lieu of all of the cash consideration payable to
electing GLG Shareowners;
    
    230,000,000 shares of our common stock, par value $0.0001 per share which consists
of:
 
    
    138,095,007 shares of our common stock, including 10,000,000 shares of
our common stock issued for the benefit of our employees, service providers and
certain key personnel under our 2007 Restricted Stock Plan (the Restricted Stock
Plan);
    
    33,000,000 shares of our common stock payable by us upon exercise of
certain put or call rights with respect to 33,000,000 ordinary shares issued by FA
Sub 1 Limited to certain GLG Shareowners. Each of the ordinary shares issued by FA
Sub 1 Limited to these GLG Shareowners has been put by the holder to us in exchange
for one share of our common stock; and
 16




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##### Table of Contents




    
    58,904,993 shares of our common stock to be issued upon the exchange of
58,904,993 Exchangeable Shares (the Exchangeable Shares) issued by FA Sub 2
Limited to certain GLG Shareowners. Each Exchangeable Share is exchangeable at any
time at the election of the holder for one share of our common stock; and
 
    
    58,904,993 shares of our Series A preferred stock, par value $0.0001 per share
issued with the corresponding Exchangeable Shares which carry only voting rights and
nominal economic rights and which will automatically be redeemed on a share-for-share
basis as Exchangeable Shares are exchanged for shares of our Common Stock.
    Factors Affecting Our Business
  
    
    Assets under management.Our revenues from management and
administration fees are directly linked to AUM. As a result, our future performance
will depend on, among other things, our ability both to retain AUM and to grow AUM
from existing and new products.
    
    Fund performance.Our revenues from performance fees are linked to the
performance of the GLG Funds and accounts we manage. Performance also affects AUM
because it influences investors decisions to invest assets in, or withdraw assets
from, the GLG Funds and accounts managed by us.
    
    Personnel, systems, controls and infrastructure.We depend on our
ability to attract, retain and motivate leading investment and other professionals.
Our business requires significant investment in our fund management platform,
including infrastructure and back-office personnel. We have in the past paid, and
expect to continue in the future to pay, these professionals significant
compensation and a share of our profits.
    
    Fee rates.Our management and administration fee revenues are linked
to the fee rates we charge the GLG Funds and accounts we manage as a percentage of
their AUM. Our performance fees are linked to the rates we charge the GLG Funds and
accounts we manage as a percentage of their performance-driven asset growth,
subject to high water marks, whereby performance fees are earned by us only to
the extent that the net asset value of a GLG Fund at the end of a measurement
period exceeds the highest net asset value on a preceding measurement period end
for which we earned performance fees, and further subject, in some cases, to
performance hurdles.
 17




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Critical Accounting Policies
    Combination and Consolidation Criteria
    Revenue Recognition
 Performance Fees
  18




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Compensation and Limited Partner Profit Share
   Equity-Based Compensation
  19




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
    
    The size of the awards to employees, service providers and key personnel under
the equity participation plan and LTIP was considered to be a substantial retention
incentive;
    
    Incentives for the awards to employees, service providers and key personnel
under the equity participation plan and LTIP were considered sufficiently large
that a zero percent forfeiture rate was estimated, subject to review as actual
forfeitures occur;
    
    Disincentives for forfeiture related to the agreement among principals and
trustees were considered to be so punitive that the probability of forfeiture was
estimated as zero; and
    
    For awards under the Restricted Stock Plan, we used different forfeiture rates
for individual employees, service providers and key personnel.
  20




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Income Tax
  e.g
  Net Revenues
   Management Fees
  21




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Product
    
    General range of gross fee rates (% of AUM)Single-manager alternative strategy funds
    
    1.50%  2.50%*Long-only funds
    
    0.75%  2.25%Internal FoHF
    
    0.25%  1.00% (at the investing fund level)External FoHF
    
    1.50%  1.95%
 
 *
    
    When one of the single-manager alternative strategy funds or internal FoHFs managed by us
invests in an underlying single-manager alternative strategy fund managed by us, management
fees are charged at the investee fund level, except in the case of (1) an investment by the
GLG Emerging Markets Fund in the GLG Emerging Markets (Special Assets) Fund where fees are
charged only at the investing fund level and (2) the GLG Multi Strategy Fund where fees are
charged at both the investee and investing fund levels.   Performance Fees
   Product
    
    General range of gross fee rates (% of investment gains)Single-manager alternative strategy funds
    
    20%  30%*Long-only funds
    
    20% (may be subject to performance hurdle)Internal FoHF
    
    0%  20% (at the investing fund level)External FoHF
    
    5%  10% (may be subject to performance hurdle)
 
 *
    
    When one of the single-manager alternative strategy funds or internal FoHFs
managed by us invests in an underlying single-manager alternative strategy fund
managed by us, performance fees are charged at the investee fund level, except in
the case of an investment by the GLG Emerging Markets Fund in the GLG Emerging
Markets (Special Assets) Fund where performance fees are charged only at the
investing fund level. In addition, performance fees are charged at both the
investee and investing fund levels on the GLG Global Aggressive Fund, to the
extent, if any, that the performance fee charged at the investing fund level is
greater than the performance fee charged at the investee fund level. 22




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Administration Fees
   Fees on Managed Accounts
  Expenses
 Compensation, Benefits and Limited Partner Profit Share
    23




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##### Table of Contents




    
    Base compensation contractual compensation paid to employees in the form of base
salary, which is expensed as incurred.
    
    Variable compensation payments that arise from the contractual entitlements of
personnel to a fixed percentage of certain variable fee revenues attributable to such
personnel with respect to GLG Funds and managed accounts. Variable compensation expense
is recognized at the same time as the underlying fee revenue is crystallized, which may
be monthly or semi-annually (on June 30 and December 31), depending on the fee revenue
source.
    
    Discretionary compensation payments that are determined by the Companys
management in its sole discretion and are generally linked to performance. In
determining such payments, the Companys management considers, among other factors, the
ratio of total discretionary compensation to total revenues; however, this ratio may
vary between periods and, in particular, significant discretionary bonuses may still be
paid in a period of low performance for retention and incentivization purposes. This
discretionary compensation is paid to employees in the form of a discretionary cash
bonus. Discretionary compensation is generally declared and paid following the end of
each calendar year. However, the notional discretionary compensation charge is adjusted
monthly based on the year-to-date profitability and revenues recognized on a
year-to-date basis. As the majority of the GLG Funds crystallize their performance fees
at June 30 and December 31, the majority of discretionary compensation expense
crystallizes at year end and is typically paid in January following the year end.
    
    Limited partner profit share distributions of limited partner profit share under
the limited partner profit share arrangement described below.
  24




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Allocation of Profit Shares to Individual Members of LLPs
   Acquisition-Related Compensation Expense
    25




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##### Table of Contents



General and Administrative
  Assessing Business Performance
       26




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Assets Under Management
 June 30, 2008 Compared to March 31, 2008, December 31, 2007 and June 30, 2007
 Change in AUM between June 30, 2008, March 31, 2008, December 31, 2007 and June 30, 2007
(U.S. Dollars in millions)
 As of June
    
    
    As of Mar
    
    
    3-Month
    
    
    As of Dec
    
    
    6-Month
    
    
    As of June
    
    
    12-Month30, 2008
    
    
    31, 2008
    
    
    Change
    
    
    31, 2007
    
    
    Change
    
    
    30, 2007
    
    
    ChangeAlternative strategy
    
    $
    17,772
    
    
    $
    19,267
    
    
    $
    (1,495
    )
    
    $
    18,833
    
    
    $
    (1,061
    )
    
    $
    12,826
    
    
    $
    4,946Long-only
    
    
    4,684
    
    
    
    4,254
    
    
    
    430
    
    
    
    4,774
    
    
    
    (90
    )
    
    
    4,432
    
    
    
    252Internal FoHF
    
    
    2,191
    
    
    
    2,233
    
    
    
    (42
    )
    
    
    2,318
    
    
    
    (127
    )
    
    
    1,627
    
    
    
    564External FoHF
    
    
    691
    
    
    
    651
    
    
    
    41
    
    
    
    598
    
    
    
    93
    
    
    
    599
    
    
    
    93Gross fund-based AUM
    
    
    25,337
    
    
    
    26,404
    
    
    
    (1,066
    )
    
    
    26,523
    
    
    
    (1,185
    )
    
    
    19,485
    
    
    
    5,853Managed accounts
    
    
    2,110
    
    
    
    2,385
    
    
    
    (275
    )
    
    
    2,357
    
    
    
    (247
    )
    
    
    1,843
    
    
    
    267Cash and other holdings
    
    
    448
    
    
    
    347
    
    
    
    101
    
    
    
    206
    
    
    
    242
    
    
    
    194
    
    
    
    254Gross AUM
    
    
    27,895
    
    
    
    29,136
    
    
    
    (1,240
    )
    
    
    29,086
    
    
    
    (1,190
    )
    
    
    21,522
    
    
    
    6,374Less:
internal FoHF investments in GLG Funds
    
    
    (2,047
    )
    
    
    (2,217
    )
    
    
    170
    
    
    
    (2,331
    )
    
    
    284
    
    
    
    (1,642
    )
    
    
    (405
    )Less: external FoHF investments in GLG Funds
    
    
    (50
    )
    
    
    (51
    )
    
    
    1
    
    
    
    (53
    )
    
    
    3
    
    
    
    (56
    )
    
    
    6Less:
alternative strategy investments in GLG Funds
    
    
    (2,130
    )
    
    
    (2,221
    )
    
    
    91
    
    
    
    (2,090
    )
    
    
    (40
    )
    
    
    (1,239
    )
    
    
    (891
    )Net AUM
    
    $
    23,668
    
    
    $
    24,646
    
    
    $
    (977
    )
    
    $
    24,612
    
    
    $
    (943
    )
    
    $
    18,585
    
    
    $
    5,085Quarterly average gross AUM
    
    $
    28,516
    
    
    $
    29,111
    
    
    
    
    
    
    $
    26,339
    
    
    
    
    
    
    $
    20,089Quarterly average net AUM
    
    
    24,157
    
    
    
    24,629
    
    
    
    
    
    
    
    22,539
    
    
    
    
    
    
    
    17,335Opening net AUM
    
    $
    24,646
    
    
    $
    24,612
    
    
    
    
    
    
    $
    20,466
    
    
    
    
    
    
    $
    16,085Inflows
(net of redemptions)
    
    
    (629
    )
    
    
    767
    
    
    
    
    
    
    
    2,927
    
    
    
    
    
    
    
    1,509Net
performance (gains net of losses and fees)
    
    
    (269
    )
    
    
    (1,549
    )
    
    
    
    
    
    
    986
    
    
    
    
    
    
    
    848Currency translation impact
    
    
    (80
    )
    
    
    816
    
    
    
    
    
    
    
    233
    
    
    
    
    
    
    
    143Closing net AUM
    
    $
    23,668
    
    
    $
    24,646
    
    
    
    
    
    
    $
    24,612
    
    
    
    
    
    
    $
    18,585
  
    
    A general decrease in demand for our fund and managed account products, which
resulted in outflows (net of subscriptions) of $0.6 billion, primarily attributable to:
 
    
    Negative performance during the three months ended June 30, 2008,
resulting in performance losses (net of gains) of $0.3 billion;
 27




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
    
    Overall pause in the industry given the current market conditions; and
    
    The announcement in April 2008 of the pending departure of the
portfolio manager of the GLG Emerging Markets Fund and three other emerging markets
funds.
    
    Strengthening of the U.S. dollar against other currencies in which our
funds and accounts are denominated, resulting in a minimal negative foreign
exchange impact of $0.1 billion during the three months ended June 30, 2008.
   
    
    A general decrease in demand for our fund and managed account products, which
resulted in minimal overall inflows (net of redemptions) of $0.1 billion, primarily
attributable to:
 
    
    Negative performance during the six months ended June 30, 2008,
resulting in performance losses (net of gains) of $1.8 billion;
    
    Overall pause in the industry given the current market conditions; and
    
    The announcement in April 2008 of the pending departure of the
portfolio manager of the GLG Emerging Markets Fund and three other emerging markets
funds.
    
    
    A general increase in demand for our fund and managed account products, which
resulted in overall inflows (net of redemptions) of $4.7 billion, primarily
attributable to:
 
    
    Continued interest in our established investment fund products; and
    
    Investor demand for our new investment funds launched since June 30,
2007;
    
    Weakening of the U.S. dollar against other currencies in which our
funds and accounts are denominated, resulting in net foreign exchange movements of
$1.5 billion during the twelve months ended June 30, 2008.
  28




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Results of Operations
 Combined and Consolidated GAAP Statement of Operations Information
(U.S. Dollars in thousands)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net revenues and other incomeManagement fees, net
    
    $
    90,600
    
    
    $
    62,991
    
    
    $
    189,356
    
    
    $
    120,334Performance fees, net
    
    
    78,194
    
    
    
    340,512
    
    
    
    82,929
    
    
    
    343,032Administration fees, net
    
    
    20,449
    
    
    
    14,036
    
    
    
    42,697
    
    
    
    26,680Other (loss) / income
    
    
    (433
    )
    
    
    471
    
    
    
    5,208
    
    
    
    970Total net revenues and other income
    
    
    188,810
    
    
    
    418,010
    
    
    
    320,190
    
    
    
    491,016ExpensesEmployee compensation and benefits
    
    
    (180,577
    )
    
    
    (56,518
    )
    
    
    (468,512
    )
    
    
    (81,566
    )Limited partner profit share
    
    
    (56,126
    )
    
    
    (184,047
    )
    
    
    (81,230
    )
    
    
    (190,500
    )Compensation, benefits and profit share
    
    
    (236,703
    )
    
    
    (240,565
    )
    
    
    (549,742
    )
    
    
    (272,066
    )General, administrative and other
    
    
    (30,230
    )
    
    
    (27,979
    )
    
    
    (60,533
    )
    
    
    (53,743
    )Total expenses
    
    
    (266,933
    )
    
    
    (268,544
    )
    
    
    (610,275
    )
    
    
    (325,809
    )(Loss) / income from operations
    
    
    (78,123
    )
    
    
    149,466
    
    
    
    (290,085
    )
    
    
    165,207Net interest (expense) / income
    
    
    (4,082
    )
    
    
    171
    
    
    
    (8,125
    )
    
    
    1,647(Loss) / income before income taxes
    
    
    (82,205
    )
    
    
    149,637
    
    
    
    (298,210
    )
    
    
    166,854Income taxes
    
    
    (3,296
    )
    
    
    (25,031
    )
    
    
    (9,496
    )
    
    
    (28,286
    )(Loss) / income before minority interests
    
    
    (85,501
    )
    
    
    124,606
    
    
    
    (307,706
    )
    
    
    138,568Minority interests:Share of income
    
    
    
    
    
    
    (195
    )
    
    
    
    
    
    
    (406
    )Exchangeable Shares dividends
    
    
    (2,945
    )
    
    
    
    
    
    
    (2,945
    )
    
    
    Cumulative dividends on Exchangeable
Shares
    
    
    (5,169
    )
    
    
    
    
    
    
    (9,298
    )
    
    
    Net (loss) / income attributable to common
stockholders
    
    $
    (93,615
    )
    
    $
    124,411
    
    
    $
    (319,949
    )
    
    $
    138,162
 29




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Net Revenues and Other Income
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Change in GAAP Net Revenues and Other Income between
Three Months Ended June 30, 2008 and Three Months Ended June 30, 2007
(U.S. Dollars in thousands)
 Three Months Ended June 30,2008
    
    
    2007
    
    
    ChangeNet revenues and other incomeManagement fees, net
    
    $
    90,600
    
    
    $
    62,991
    
    
    $
    27,609Performance fees, net
    
    
    78,194
    
    
    
    340,512
    
    
    
    (262,318
    )Administration fees, net
    
    
    20,449
    
    
    
    14,036
    
    
    
    6,413Other (loss) / income
    
    
    (433
    )
    
    
    471
    
    
    
    (904
    )Total net revenues and other income
    
    $
    188,810
    
    
    $
    418,010
    
    
    $
    (229,200
    )Key ratios*Management fees / average net AUM, annualized
    
    
    1.50
    %
    
    
    1.45
    %Administration fees / average net AUM, annualized
    
    
    0.34
    %
    
    
    0.32
    %
 
 *
    
    The ratios of total revenues and other income to average net AUM for the three month
periods on an annualized basis are not meaningful because the performance fees that
crystallized in June of each year relate to the first half of the year.    
    
    a 39.4% higher quarterly average net AUM balance between the periods
which, at constant net management fee yield, resulted in an increase in management
fees of $24.8 million, or 89.8% of the total increase in management fees; and
    
    an increase in the annualized net management fee yield from 1.45% to
1.50%, reflecting higher management fees per unit of AUM, which, when applied to
the increased net AUM base, resulted in an increase in management fees of $2.8
million, or 10.2% of the total increase in management fees.
  
    
    a lower percentage of the GLG Funds generating significant positive
performance; and
    
    a higher percentage of the GLG Funds unable to meet their respective
performance hurdle rates or high water marks since performance fees last
crystallized, even if they generated positive performance during the quarter.
 30




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
    
    a 39.4% higher quarterly average net AUM balance between the periods
which, at constant administration fee yield, resulted in an increase in
administration fees of $5.5 million, or 86.1% of the total increase in
administration fees; and
    
    an increase in the annualized net administration fee yield from 0.32%
to 0.34% which, when applied to the increased net AUM base, resulted in an increase
in administration fees of $0.9 million, or 13.9% of the total increase in
administration fees.
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Change in GAAP Net Revenues and Other Income between
Six Months Ended June 30, 2008 and Six Months Ended June 30, 2007
(U.S. Dollars in thousands)
 Six Months Ended June 30,2008
    
    
    2007
    
    
    ChangeNet revenues and other incomeManagement fees, net
    
    $
    189,356
    
    
    $
    120,334
    
    
    $
    69,022Performance fees, net
    
    
    82,929
    
    
    
    343,032
    
    
    
    (260,103
    )Administration fees, net
    
    
    42,697
    
    
    
    26,680
    
    
    
    16,017Other income
    
    
    5,208
    
    
    
    970
    
    
    
    4,238Total net revenues and other income
    
    $
    320,190
    
    
    $
    491,016
    
    
    $
    (170,826
    )Key ratiosTotal net
revenues and other income / average net AUM, annualized
    
    
    2.63
    %
    
    
    5.91
    %Management fees / average net AUM, annualized
    
    
    1.56
    %
    
    
    1.45
    %Administration fees / average net AUM, annualized
    
    
    0.35
    %
    
    
    0.32
    %
    
    
    a 46.4% higher quarterly average net AUM balance between the periods
which, at constant net management fee yield, resulted in an increase in management
fees of $55.8 million, or 80.8% of the total increase in management fees; and
 31




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##### Table of Contents




    
    an increase in the annualized net management fee yield from 1.45% to
1.56%, reflecting higher management fees per unit of AUM, which, when applied to
the increased net AUM base, resulted in an increase in management fees of $13.2
million, or 19.2% of the total increase in management fees. The higher annualized
net management fee yield was attributable primarily to investors participating in
GLG Funds and managed accounts with higher management fee rates.
  
    
    a lower percentage of the GLG Funds generating significant positive
performance; and
    
    a higher percentage of the GLG Funds unable to meet their respective
high water marks since performance fees last crystallized, even if they generated
positive performance during the six month period.
  
    
    a 46.4% higher quarterly average net AUM balance between the periods
which, at constant administration fee yield, resulted in an increase in
administration fees of $12.4 million, or 77.2% of the total increase in
administration fees; and
    
    an increase in the annualized net administration fee yield from 0.32%
to 0.35% which, when applied to the increased net AUM base, resulted in an increase
in administration fees of $3.6 million, or 22.8% of the total increase in
administration fees. The higher annualized net administration fee yield was
attributable primarily to investors participating in GLG Funds and managed accounts
with higher net administration fee rates.
  Expenses
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Change in GAAP Expenses between Three Months Ended June 30, 2008 and
Three Months Ended June 30, 2007
(U.S. Dollars in thousands)
 Three Months Ended June 30,2008
    
    
    2007
    
    
    ChangeExpensesEmployee compensation and benefits
    
    $
    (180,577
    )
    
    $
    (56,518
    )
    
    $
    (124,059
    )Limited partner profit share
    
    
    (56,126
    )
    
    
    (184,047
    )
    
    
    127,921Compensation, benefits and profit share
    
    
    (236,703
    )
    
    
    (240,565
    )
    
    
    3,862General, administrative and other
    
    
    (30,230
    )
    
    
    (27,979
    )
    
    
    (2,251
    )Total expenses
    
    $
    (266,933
    )
    
    $
    (268,544
    )
    
    $
    1,611Key ratiosCompensation, benefits and profit share / total
GAAP net revenues and other income
    
    
    125.4
    %
    
    
    57.6
    %
    
    
    67.8
    %General, administrative and other / total GAAP net
revenue and other income
    
    
    16.0
    %
    
    
    6.7
    %
    
    
    9.3
    %Total expenses / total GAAP net revenue and other income
    
    
    141.4
    %
    
    
    64.3
    %
    
    
    77.1
    %
 32




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##### Table of Contents




    
    Lower discretionary bonus accruals and limited partner profit share
(see  Non-GAAP Expense Measures discussed below) due to the performance of
certain GLG Funds; and
    
    Impact of reversing certain accrued compensation expense related to
personnel who have resigned and forfeited their share and cash awards during the
period;
  
    
    An increase in compensation attributable to the growth in our headcount
as our operations grew; and
    
    An increase of $139 million in share-based compensation related to
share awards made after November 2007 for which there was no charge in the
corresponding period in 2007.
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Change in GAAP Expenses between Six Months Ended June 30, 2008 and
Six Months Ended June 30, 2007
(U.S. Dollars in thousands)
 Six Months Ended June 30,2008
    
    
    2007
    
    
    ChangeExpensesEmployee compensation and benefits
    
    $
    (468,512
    )
    
    $
    (81,566
    )
    
    $
    (386,946
    )Limited partner profit share
    
    
    (81,230
    )
    
    
    (190,500
    )
    
    
    109,270Compensation, benefits and profit share
    
    
    (549,742
    )
    
    
    (272,066
    )
    
    
    (277,676
    )General, administrative and other
    
    
    (60,533
    )
    
    
    (53,743
    )
    
    
    (6,790
    )Total expenses
    
    $
    (610,275
    )
    
    $
    (325,809
    )
    
    $
    (284,466
    )Key ratiosCompensation, benefits and profit share / total
GAAP net revenues and other income
    
    
    171.7
    %
    
    
    55.4
    %
    
    
    116.3
    %General, administrative and other / total GAAP net
revenue and other income
    
    
    18.9
    %
    
    
    10.9
    %
    
    
    8.0
    %Total expenses / total GAAP net revenue and other income
    
    
    190.6
    %
    
    
    66.3
    %
    
    
    124.3
    %
  
    
    An increase in compensation attributable to the growth in our headcount
as our operations grew; and
    
    Acquisition-related compensation expense of $400.5 million for which
there was no charge in the corresponding period in 2007.
 33




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Non-GAAP Expense Measures
  Change in Non-GAAP Expenses between Three Months Ended June 30, 2008 and June 30, 2007
(U.S. Dollars in thousands)
 Three Months Ended June 30,2008
    
    
    2007
    
    
    ChangeNon-GAAP expensesGAAP compensation, benefits and profit share
    
    $
    (236,703
    )
    
    $
    (240,565
    )
    
    $
    3,862Add back: Acquisition-related compensation expense
    
    
    140,348
    
    
    
    
    
    
    
    140,348Non-GAAP CBP
    
    
    (96,355
    )
    
    
    (240,565
    )
    
    
    144,210GAAP general, administrative and other
    
    
    (30,230
    )
    
    
    (27,979
    )
    
    
    (2,251
    )Non-GAAP total expenses
    
    $
    (126,585
    )
    
    $
    (268,544
    )
    
    $
    141,959Key ratios (based on non-GAAP measures)Non-GAAP CBP / total GAAP net revenues and other income
    
    
    51.0
    %
    
    
    57.6
    %
    
    
    (6.6
    )%General, administrative and other / total GAAP net
revenues and other income
    
    
    16.0
    %
    
    
    6.7
    %
    
    
    9.3
    %Non-GAAP total expenses / total GAAP net revenues and
other income
    
    
    67.0
    %
    
    
    64.3
    %
    
    
    2.7
    %
  34




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##### Table of Contents



Change in Non-GAAP Expenses between Six Months Ended June 30, 2008 and June 30, 2007
(U.S. Dollars in thousands)
 Six Months Ended June 30,2008
    
    
    2007
    
    
    ChangeNon-GAAP expensesGAAP compensation, benefits and profit share
    
    $
    (549,742
    )
    
    $
    (272,066
    )
    
    $
    (277,676
    )Add back: Acquisition-related compensation expense
    
    
    400,503
    
    
    
    
    
    
    
    400,503Non-GAAP CBP
    
    
    (149,239
    )
    
    
    (272,066
    )
    
    
    122,827GAAP general, administrative and other
    
    
    (60,533
    )
    
    
    (53,743
    )
    
    
    (6,790
    )Non-GAAP total expenses
    
    $
    (209,772
    )
    
    $
    (325,809
    )
    
    $
    116,037Key ratios (based on non-GAAP measures)Non-GAAP CBP / total GAAP net revenues and other income
    
    
    46.6
    %
    
    
    55.4
    %
    
    
    (8.8
    )%General, administrative and other / total GAAP net
revenues and other income
    
    
    18.9
    %
    
    
    10.9
    %
    
    
    8.0
    %Non-GAAP total expenses / total GAAP net revenues and
other income
    
    
    65.5
    %
    
    
    66.3
    %
    
    
    (0.8
    )%
  Net Interest Income
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Change in Net Interest Income / (Expense) between
Three Months Ended June 30, 2008 and Three Months Ended June 30, 2007
(U.S. Dollars in thousands)
 Three Months Ended June 30,2008
    
    
    2007
    
    
    ChangeInterest income
    
    $
    1,555
    
    
    $
    372
    
    
    $
    1,183Interest expense
    
    
    (5,637
    )
    
    
    (201
    )
    
    
    (5,436
    )Net interest income / (expense)
    
    $
    (4,082
    )
    
    $
    171
    
    
    $
    (4,253
    )
  35




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##### Table of Contents



Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Change in Net Interest Income / (Expense) between
Six Months Ended June 30, 2008 and Six Months Ended June 30, 2007
(U.S. Dollars in thousands)
 Six Months Ended June 30,2008
    
    
    2007
    
    
    ChangeInterest income
    
    $
    4,641
    
    
    $
    2,051
    
    
    $
    2,590Interest expense
    
    
    (12,766
    )
    
    
    (404
    )
    
    
    (12,362
    )Net interest income / (expense)
    
    $
    (8,125
    )
    
    $
    1,647
    
    
    $
    (9,772
    )
  Income Tax
   Minority Interests
  
    
    cumulative dividends to holders of Exchangeable Shares reflecting our
estimate of the net taxable income of FA Sub 2 Limited allocable to such holders
multiplied by an assumed tax rate; and
    
    dividends to holders of the Exchangeable Shares reflecting a dividend
equivalent to dividends paid to common stockholders.
  36




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##### Table of Contents



Adjusted Net Income
  Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Change in Non-GAAP Adjusted Net Income between Three Months Ended June 30, 2008 and
Three Months Ended June 30, 2007
(U.S. Dollars in thousands)
 Three Months Ended June 30,2008
    
    
    2007
    
    
    ChangeDerivation of non-GAAP adjusted net incomeGAAP net (loss)/income before minority interest
    
    $
    (85,501
    )
    
    $
    124,606
    
    
    $
    (210,107
    )Add: Acquisition-related compensation expense
    
    
    140,348
    
    
    
    
    
    
    
    140,348Deduct: tax effect of Acquisition-related
compensation expense
    
    
    (5,457
    )
    
    
    
    
    
    
    (5,457
    )Deduct: cumulative dividends
    
    
    (5,169
    )
    
    
    
    
    
    
    (5,169
    )Non-GAAP adjusted net income
    
    $
    44,221
    
    
    $
    124,606
    
    
    $
    (80,385
    )
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Change in Non-GAAP Adjusted Net Income between Six Months Ended June 30, 2008 and
Six Months Ended June 30, 2007
(U.S. Dollars in thousands)
 Six Months Ended June 30,2008
    
    
    2007
    
    
    ChangeDerivation of non-GAAP adjusted net incomeGAAP net (loss)/income before minority interest
    
    $
    (307,706
    )
    
    $
    138,568
    
    
    $
    (446,274
    )Add: Acquisition-related compensation expense
    
    
    400,503
    
    
    
    
    
    
    
    400,503Deduct: tax effect of Acquisition-related
compensation expense
    
    
    (5,457
    )
    
    
    
    
    
    
    (5,457
    )Deduct: cumulative dividends
    
    
    (9,298
    )
    
    
    
    
    
    
    (9,298
    )Non-GAAP adjusted net income
    
    $
    78,042
    
    
    $
    138,568
    
    
    $
    (60,526
    )
  Liquidity and Capital Resources
  37




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##### Table of Contents



Operating Activities
  Investing Activities
   Financing Activities
  38




---



##### Table of Contents



Off-Balance Sheet Arrangements
  39




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
     Impact on Management Fees
  Impact on Performance Fees
  Impact on Administration Fees
  40




---



##### Table of Contents



Market Risk
  Exchange Rate Risk
    Interest Rate Risk
  41




---



##### Table of Contents



Item 4. Controls and Procedures
     42




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Share and Warrant Repurchases
   43




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
   Votes
    
    VotesFor
    
    WithheldNoam Gottesman
    
    
    221,095,353
    
    
    
    10,552,480Ian Ashken
    
    
    230,542,245
    
    
    
    1,105,588Nicolas Berggruen
    
    
    219,092,734
    
    
    
    12,555,099Martin Franklin
    
    
    221,553,844
    
    
    
    10,093,989James Hauslein
    
    
    230,540,045
    
    
    
    1,107,788William Lauder
    
    
    230,542,245
    
    
    
    1,105,588Paul Myners
    
    
    230,065,425
    
    
    
    1,582,408Emmanuel Roman
    
    
    221,100,153
    
    
    
    10,547,680Peter Weinberg
    
    
    220,404,895
    
    
    
    11,242,938
  For
    
    Against
    
    Abstain231,333,640
    
    
    314,193
    
    
    
    0
 44




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##### Table of Contents



Item 6. Exhibits
 Exhibit No.
    
    Description31.1
    
    Certification of Periodic Report by the Co-Chief
Executive Officer Pursuant to Rule 13a-15(e) or 15d-15(e)
of the Exchange Act.31.2
    
    Certification of Periodic Report by the Co-Chief
Executive Officer Pursuant to Rule 13a-15(e) or 15d-15(e)
of the Exchange Act.31.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.32.1
    
    Certification of Periodic Report by the Co-Chief
Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification of Periodic Report by the Co-Chief
Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.
 45




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##### Table of Contents



SIGNATURE
  GLG PARTNERS, INC.
(Registrant)Date: August 8, 2008
    By
    /s/ Noam GottesmanName:
    Noam GottesmanTitle:
    Chairman of the Board and Co-Chief
Executive Officer 46




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.31.2
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.31.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.32.1
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350.32.2
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350.32.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350.
 47