8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 14, 2008
GLG Partners, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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001-33217
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20-5009693 |
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer |
of incorporation)
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File Number)
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Identification No.) |
399 Park Avenue, 38th Floor
New York, New York 10022
(Address of principal executive offices)
Registrants telephone number, including area code: (212) 224-7200
N/A
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
Item 2.02. Results of Operations and Financial Condition.
The discussion under Item 4.02 of this Current Report on Form 8-K with respect to the impact
of certain restatements of the previously reported results of operations and financial condition of
GLG Partners, Inc. and its consolidated subsidiaries (the Company) as of and for the years ended
December 31, 2007 and 2006 is incorporated by reference into this Item 2.02.
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
(a) Subsequent to the filing of its Annual Report on Form 10-K for the year ended December
31, 2007 (the Form 10-K), the Company was advised by Ernst & Young, LLP, its independent
registered public accounting firm (E&Y), of revised guidance regarding the accounting treatment
of limited partner profit share allocated to participants in the Companys limited partner profit
share arrangement. As a result, on April 15, 2008, the Company determined that certain combined
and consolidated financial statements of the Company as of and for the years ended December 31,
2007 and 2006 included in the Form 10-K did not properly account for limited partner profit share
as an operating expense. The Company believes that the appropriate manner in which to correct this
error is to restate these financial statements.
Management has discussed this matter with the Companys Audit Committee and with E&Y, which concurred with the Companys conclusion to restate its combined and
consolidated financial statements as of and for the years ended December 31, 2007 and 2006. The
Company intends to file an amended Form 10-K (the Form 10-K/A) as soon as practicable to reflect
the restatement. Until the Form 10-K/A is filed to reflect the changes described in this Current
Report, the combined and consolidated financial statements of the Company as of and for the years
ended December 31, 2007 and 2006 included in the Form 10-K should not be relied upon.
This restatement has no cash impact on the Company and does not impact the non-GAAP adjusted
net income measure used by management (described below).
Under the Companys prior accounting treatment reflected in the Companys combined and
consolidated financial statements as of and for the years ended December 31, 2007 and 2006 included
in the Form 10-K, distributions to limited partners were accounted for as equity distributions and
recognized within the statement of members equity for periods prior to November 2, 2007 (the date
the acquisition of GLG Partners LP and certain affiliated entities (the Acquisition) was
completed) and within minority interests in the statement of income for periods beginning on or
after the Acquisition. As a result of the Acquisition and related reorganization creating a
consolidated group, the limited partner interests are no longer considered to be equity interests
and, therefore, it is more appropriate to include distributions to the limited partners as an operating
expense rather than minority interest. For periods both before and after the Acquisition, the
Company had recognized distributions on an as declared basis. The
Company has restated its combined and consolidated financial
statements as of and for the years ended December 31, 2007 and
2006 to reflect these amounts as limited partner profit share within operating expenses,
matching the period in which the related revenues are accrued and services provided. Under the
Companys prior accounting treatment, the substantial majority
of these amounts would have been
recognized in the first quarter of the following fiscal year when these amounts
were actually declared.
While under the Companys prior accounting treatment, limited partner profit share was not
presented as an operating expense, the Company believed that it was more appropriate to treat
limited partner profit share as expense when considering business performance because it reflects
the cost of the services provided to the Company by the participants in the limited partner profit
share arrangement. As a result, the Company presented the measure non-GAAP comprehensive limited
partner profit share,
2
compensation and benefits, or non-GAAP PSCB, which is a non-GAAP financial measure which
added limited partner profit share to employee compensation expense, and deducted
Acquisition-related share-based and other compensation and costs recognized in respect of (a) the
Companys equity participation plan, (b) the Companys restricted stock plan and (c) the agreement
among the principals and trustees of GLG Partners LP from employee compensation expense
(collectively, the Acquisition-related compensation expense), to show the total cost of the
services provided to the Company by both participants in the limited partner profit share
arrangement and employees in relation to services rendered during the periods under consideration.
The Companys revised presentation of limited partner profit share as an operating expense has no
impact on the measure non-GAAP PSCB when compared to the Companys presentation of non-GAAP PSCB
prior to the restatement of the Companys combined and consolidated financial statements, because
all amounts related to the limited partner profit share previously included as a non-GAAP
adjustment to GAAP compensation and benefits are now included in GAAP operating expenses as limited
partner profit share. See the tables below for a reconciliation of GAAP compensation, benefits and
profit share to non-GAAP PSCB.
In addition, the Company assesses the underlying performance of its business based on the
non-GAAP measure adjusted net income, which adjusts for the difference between GAAP compensation,
benefits and profit share expense and non-GAAP PSCB as discussed above. The Companys revised
presentation of limited partner profit share as an operating expense has no impact on the measure
non-GAAP adjusted net income when compared to the Companys presentation of non-GAAP adjusted net
income prior to the restatement of the Companys combined and consolidated financial statements
because all amounts related to the limited partner profit share previously included as a non-GAAP
adjustment to GAAP compensation and benefits are now included in GAAP operating expenses as limited
partner profit share. Adjusted net income is not a measure of financial performance under GAAP and
should not be considered as an alternative to GAAP net income as an indicator of the Companys
operating performance or any other measures of performance derived in accordance with GAAP. See
the tables below for a reconciliation of adjusted net income to net income for the periods
presented.
The total effect of the restatement for the error on the Companys combined and consolidated
statements of operations was:
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a reduction in net income before minority interests of $401.0 million from net
income before minority interests of $59.3 million to a net loss before minority
interests of $341.7 million for the year ended December 31, 2007 and a reduction in net
income before minority interests of $201.5 million from $359.5 million to $158.1
million for the year ended December 31, 2006; |
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a decrease in share of losses by minority interests of $2.1 million for the year
ended December 31, 2007; |
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a reduction in net income attributable to common stockholders of $403.1 million and
$201.5 million for the years ended December 31, 2007 and 2006, respectively; and |
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a net loss per share of $2.11 for the year ended December 31, 2007 and net
income per share of $1.16 for the year ended December 31, 2006. |
The
effect on the balance sheet was:
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an increase in accrued compensation and benefits payable of
$359.2 million and $186.8 million as of December 31,
2007 and 2006, respectively; and |
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a reduction in minority interests of $21.2 million as of
December 31, 2007. |
The effect on the
statement of stockholders equity was:
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a reduction in opening retained earnings for the year ended
December 31, 2007 of $186.8 million; |
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the elimination of distributions to limited partners of $218.1 million
and $14.7 million for the years ended December 31, 2007 and 2006,
respectively; and |
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a reduction in the amount charged to accumulated income in respect
of the issuance of common stock and recapitalization on Acquisition of $33.8 million
for the year ended December 31, 2007. |
The Company expects that the adjustments referred to in this Item
4.02 will not affect the
3
Companys current cash position or financial condition. A more detailed summary of the
statements of income and balance sheets changes is set forth below.
Statement
of Operations Information
For the Years Ended
December 31, 2007 and 2006
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2007 |
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2006 |
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As Reported |
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As Restated |
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As Reported |
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As Restated |
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(Dollars in Thousands) |
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Total Net Revenues and Other Income |
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$ |
1,040,118 |
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$ |
1,040,118 |
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$ |
620,866 |
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$ |
620,866 |
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Expenses |
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Employee compensation and
benefits |
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(810,212 |
) |
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(810,212 |
) |
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(168,386 |
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(168,386 |
) |
Limited partner profit share |
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(401,000 |
) |
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(201,450 |
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Employee
compensation and
benefits /
Compensation, benefits
and profit share |
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(810,212 |
) |
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(1,211,212 |
) |
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(168,386 |
) |
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(369,836 |
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General, administrative and
other |
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(108,926 |
) |
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(108,926 |
) |
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(68,404 |
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(68,404 |
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Total expenses |
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(919,138 |
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(1,320,138 |
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(236,790 |
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(438,240 |
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Net Interest Income |
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2,350 |
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2,350 |
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4,657 |
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4,657 |
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Income Taxes |
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(64,000 |
) |
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(64,000 |
) |
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(29,225 |
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(29,225 |
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Net Income (Loss) Before Minority
Interests |
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59,330 |
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(341,670 |
) |
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359,508 |
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158,058 |
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Minority Interests |
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Share of losses (income) |
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36,015 |
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33,885 |
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(182 |
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(182 |
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Cumulative dividends on
exchangeable shares |
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(2,723 |
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(2,723 |
) |
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Net Income (Loss) Attributable to
Common Stockholders |
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$ |
92,622 |
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$ |
(310,508 |
) |
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$ |
359,326 |
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$ |
157,876 |
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Non-GAAP Expenses
For the Years Ended
December 31, 2007 and 2006
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2007 |
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2006 |
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As Reported |
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As Restated |
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As Reported |
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As Restated |
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(Dollars in Thousands) |
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Non-GAAP Expenses |
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GAAP employee
compensation and
benefits /
Compensation,
benefits and
profit share |
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$ |
(810,212 |
) |
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$ |
(1,211,212 |
) |
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$ |
(168,386 |
) |
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$ |
(369,836 |
) |
Add back: Acquisition-related
share-based and
other compensation
and costs |
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639,077 |
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639,077 |
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Deduct: Limited
partner profit
share |
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(401,000 |
) |
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(201,450 |
) |
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Non-GAAP PSCB |
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(572,135 |
) |
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(572,135 |
) |
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(369,836 |
) |
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(369,836 |
) |
GAAP General,
Administrative and
Other |
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(108,926 |
) |
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(108,926 |
) |
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(68,404 |
) |
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(68,404 |
) |
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Non-GAAP Total Expenses |
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$ |
(681,061 |
) |
|
$ |
(681,061 |
) |
|
$ |
(438,240 |
) |
|
$ |
(438,240 |
) |
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4
Non-GAAP Adjusted Net Income
For the Years Ended
December 31, 2007 and 2006
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2007 |
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2006 |
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As Reported |
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As Restated |
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As Reported |
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As Restated |
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(Dollars in Thousands) |
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GAAP Net Income (Loss) |
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$ |
59,330 |
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$ |
(341,670 |
) |
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$ |
359,508 |
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$ |
158,058 |
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Add back: |
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Acquisition-related
share-based and other
compensation and costs |
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639,077 |
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639,077 |
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Deduct: Limited partner
profit share |
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(401,000 |
) |
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(201,450 |
) |
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Deduct: Cumulative dividends |
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(2,723 |
) |
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(2,723 |
) |
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Non-GAAP Adjusted Net Income |
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$ |
294,684 |
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$ |
294,684 |
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$ |
158,058 |
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$ |
158,058 |
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Balance Sheet Information
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As of December 31, 2007 |
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As of December 31, 2006 |
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As Reported |
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As Restated |
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As Reported |
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As Restated |
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(Dollars in thousands) |
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Total Assets |
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$ |
984,137 |
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$ |
984,137 |
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$ |
557,377 |
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$ |
557,377 |
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Current Liabilities |
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Accrued compensation and
benefits |
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108,679 |
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467,887 |
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102,507 |
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289,301 |
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Other current liabilities |
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190,480 |
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190,480 |
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|
78,366 |
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78,366 |
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Total Current Liabilities |
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299,159 |
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|
658,367 |
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180,873 |
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|
367,667 |
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Total Non-Current Liabilities |
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593,099 |
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571,911 |
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|
14,552 |
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|
14,552 |
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Total Liabilities |
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892,258 |
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1,230,278 |
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|
195,425 |
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|
382,219 |
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Total Stockholders Equity (Deficit) |
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91,879 |
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(246,141 |
) |
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361,952 |
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175,158 |
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Total Liabilities and Stockholders
Equity |
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$ |
984,137 |
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$ |
984,137 |
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$ |
557,377 |
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$ |
557,377 |
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Cash Flow Information
For
the Years Ended
December 31, 2007 and 2006
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2007 |
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2006 |
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As Reported |
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As Restated |
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As Reported |
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As Restated |
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(Dollars in Thousands) |
Net Cash
Provided by Operating Activities |
|
$ |
376,272 |
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$ |
376,272 |
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$ |
204,539 |
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$ |
204,539 |
|
Net Cash
Used in Investing Activities
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(124,888 |
) |
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(124,888 |
) |
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|
(4,704 |
) |
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|
(4,704 |
) |
Net Cash
Used in Financing Activities |
|
|
(95,437 |
) |
|
|
(95,437 |
) |
|
|
(164,792 |
) |
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|
(164,792 |
) |
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Key Ratios
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2007 |
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2006 |
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As Reported |
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As Restated |
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As Reported |
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As Restated |
|
Compensation, benefits
and profit
share
/total GAAP
net
revenues
and other
income |
|
|
77.9 |
% |
|
|
116.5 |
% |
|
|
27.1 |
% |
|
|
59.6 |
% |
General,
administrative and
other/total
GAAP net
revenues
and other
income |
|
|
10.5 |
% |
|
|
10.5 |
% |
|
|
11.0 |
% |
|
|
11.0 |
% |
|
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Total
Expenses/Total GAAP
Net Revenues and
Other Income |
|
|
88.4 |
% |
|
|
127.0 |
% |
|
|
38.1 |
% |
|
|
70.6 |
% |
|
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5
Key Ratios (Based on Non-GAAP Measures)
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2007 |
|
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2006 |
|
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|
As Reported |
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As Restated |
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As Reported |
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As Restated |
|
Non-GAAP
PSCB/total
GAAP net
revenues and
other income |
|
|
55.0 |
% |
|
|
55.0 |
% |
|
|
59.6 |
% |
|
|
59.6 |
% |
General,
administrative and
other/total
GAAP net
revenues and
other income |
|
|
10.5 |
% |
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|
10.5 |
% |
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|
11.0 |
% |
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|
11.0 |
% |
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Non-GAAP Total
Expenses/Total GAAP
Net Revenues and
Other Income |
|
|
65.5 |
% |
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65.5 |
% |
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|
70.6 |
% |
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70.6 |
% |
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The Company provides the above non-GAAP financial measures to enable investors, securities
analysts and other interested parties to perform additional financial analysis of the Companys
personnel-related costs and its earnings from operations and because the Company believes that they
will be helpful to investors in understanding all components of personnel-related costs of the
Companys business. The Companys management believes that non-GAAP financial measures also
enhance comparisons of the Companys core results of operations with historical periods. In
particular, the Company believes that the non-GAAP adjusted net income measure better represents
profits available for distribution to stockholders than does GAAP net income.
The Companys management also prepares forecasts for future periods on a basis consistent with
these non-GAAP financial measures. Under the Companys credit facility, the Company and its
subsidiaries are required to maintain compliance with certain financial covenants based on adjusted
earnings before interest expense, provision for income taxes, depreciation and amortization, or
adjusted EBITDA, which is calculated based on the non-GAAP adjusted net income measure, further
adjusted to add back interest expense, provision for income taxes, depreciation and amortization.
Non-GAAP adjusted net income has certain limitations in that it may overcompensate for certain
costs and expenditures related to the Companys business and may not be indicative of the cash
flows from operations as determined in accordance with GAAP.
Investors should consider these non-GAAP financial measures in addition to, and not as a
substitute for, or superior to, measures of performance prepared in accordance with GAAP. The
non-GAAP financial measures presented by the Company may be different from financial measures used
by other companies.
Item 7.01. Regulation FD Disclosure.
On April 15, 2008, the Company made available on its website (www.glgpartners.com) an investor
presentation regarding the restatement of the Companys combined and consolidated financial
statements as of and for the years ended December 31, 2007 and 2006 described under Item 4.02 of
this Current Report on Form 8-K, a copy of which is attached as Exhibit 99.1 and incorporated
herein by reference.
6
Item 8.01. Other Events.
On April 14, 2008, Greg Coffey, portfolio manager for the GLG Emerging Markets Fund, the GLG
Emerging Markets Special Situations Fund, the GLG Emerging Currency and Fixed Income Fund and the
GLG Emerging Equity Fund managed by the Company, resigned from his positions with the Companys GLG
Partners LP subsidiary and certain affiliated entities (collectively, GLG). On
April 15, 2008, Mr. Coffey withdrew his resignation.
Mr. Coffey and GLG are in discussions concerning a range of options for the future.
Item 9.01. Financial Statements and Exhibits
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(d)
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Exhibits. |
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99.1 Investor Presentation Regarding the Restatement of Financial Statements. |
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GLG PARTNERS, INC.
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By: |
/s/ Alejandro San Miguel
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Alejandro San Miguel |
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General Counsel and Corporate Secretary |
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Date:
April 15, 2008
EXHIBIT INDEX
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Exhibit |
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Number |
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Description |
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99.1
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Investor Presentation Regarding the Restatement of
Financial Statements. |