##### 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: September 30, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 Commission File Number: 000-51003
 CALAMOS ASSET MANAGEMENT, INC.
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
    
    32-0122554(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 2020 Calamos Court, Naperville, Illinois
    
    60563(Address of Principal Executive Offices)
    
    (Zip Code)
 (630) 245-7200
 
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    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  PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 6. ExhibitsSIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data)
 September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETS:Current assetsCash and cash equivalents
    
    $
    77,843
    
    
    $
    108,441Receivables:Affiliates and affiliated funds
    
    
    20,731
    
    
    
    27,641Customers
    
    
    9,424
    
    
    
    11,699Investment securities
    
    
    480,281
    
    
    
    535,476Partnership investments and offshore funds
    
    
    343,556
    
    
    
    353,004Prepaid expenses
    
    
    3,728
    
    
    
    3,139Deferred tax assets, net
    
    
    15,187
    
    
    
    6,926Other assets
    
    
    3,291
    
    
    
    2,206Total current assets
    
    
    954,041
    
    
    
    1,048,532Non-current assetsDeferred tax assets, net
    
    
    79,144
    
    
    
    83,358Deferred sales commissions
    
    
    22,570
    
    
    
    34,076Property and equipment, net of accumulated depreciation ($29,510
at 9/30/08 and $21,841 at 12/31/07)
    
    
    45,254
    
    
    
    48,420Other non-current assets
    
    
    2,641
    
    
    
    3,286Total non-current assets
    
    
    149,609
    
    
    
    169,140Total assets
    
    
    1,103,650
    
    
    
    1,217,672LIABILITIES AND STOCKHOLDERS EQUITY:Current liabilitiesAccounts payable:Brokers
    
    
    15,661
    
    
    
    19,950Affiliates and affiliated funds
    
    
    795
    
    
    
    372Accrued compensation and benefits
    
    
    9,908
    
    
    
    26,462Interest payable
    
    
    8,363
    
    
    
    12,636Accrued expenses and other current liabilities
    
    
    5,975
    
    
    
    9,257Total current liabilities
    
    
    40,702
    
    
    
    68,677Long-term liabilitiesLong-term debt
    
    
    525,000
    
    
    
    525,000Other long-term liabilities
    
    
    9,988
    
    
    
    8,876Total long-term liabilities
    
    
    534,988
    
    
    
    533,876Total liabilities
    
    
    575,690
    
    
    
    602,553Minority interest in partnership investments and offshore funds
    
    
    113,976
    
    
    
    49,177Minority interest in Calamos Holdings LLC
    
    
    249,026
    
    
    
    352,205Stockholders equity:Class A Common Stock, $0.01 par value; authorized 600,000,000 shares;
23,453,073 shares issued and 19,453,073 shares outstanding at
September 30, 2008; 23,324,082 shares issued and 20,871,982 shares
outstanding at December 31, 2007
    
    
    235
    
    
    
    233Class B Common Stock, $0.01 par value; authorized 1,000 shares; issued
and outstanding 100 shares
    
    
    0
    
    
    
    0Additional paid-in capital
    
    
    206,629
    
    
    
    198,924Retained earnings
    
    
    65,152
    
    
    
    70,102Accumulated other comprehensive income (loss)
    
    
    (11,843
    )
    
    
    5,081Treasury stock at cost; 4,000,000 shares at September 30, 2008 and
2,452,100 shares at December 31, 2007
    
    
    (95,215
    )
    
    
    (60,603
    )Total stockholders equity
    
    
    164,958
    
    
    
    213,737Total liabilities, minority interest and stockholders equity
    
    $
    1,103,650
    
    
    $
    1,217,672
  -2-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended September 30, 2008 and 2007
(in thousands, except share data)
(unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Investment management fees
    
    $
    71,479
    
    
    $
    82,209
    
    
    $
    227,202
    
    
    $
    238,997Distribution and underwriting fees
    
    
    29,446
    
    
    
    35,252
    
    
    
    94,734
    
    
    
    106,993Other
    
    
    882
    
    
    
    1,023
    
    
    
    2,802
    
    
    
    2,961Total revenues
    
    
    101,807
    
    
    
    118,484
    
    
    
    324,738
    
    
    
    348,951Expenses:Employee compensation and benefits
    
    
    16,547
    
    
    
    22,912
    
    
    
    60,001
    
    
    
    66,190Distribution and underwriting expense
    
    
    21,922
    
    
    
    26,246
    
    
    
    70,955
    
    
    
    76,469Amortization of deferred sales commissions
    
    
    6,002
    
    
    
    6,064
    
    
    
    18,088
    
    
    
    21,220Marketing and sales promotion
    
    
    3,527
    
    
    
    3,861
    
    
    
    9,598
    
    
    
    37,074General and administrative
    
    
    9,698
    
    
    
    9,962
    
    
    
    28,445
    
    
    
    27,472Total operating expenses
    
    
    57,696
    
    
    
    69,045
    
    
    
    187,087
    
    
    
    228,425Operating income
    
    
    44,111
    
    
    
    49,439
    
    
    
    137,651
    
    
    
    120,526Non-operating income (loss):Net interest income (expense)
    
    
    (7,634
    )
    
    
    (1,356
    )
    
    
    (22,556
    )
    
    
    2,133Investment and other income (loss)
    
    
    (71,010
    )
    
    
    6,729
    
    
    
    (93,829
    )
    
    
    14,499Minority interest in partnership
investments and offshore funds
    
    
    27,659
    
    
    
    (2,066
    )
    
    
    40,928
    
    
    
    (4,335
    )Total non-operating income (loss)
    
    
    (50,985
    )
    
    
    3,307
    
    
    
    (75,457
    )
    
    
    12,297Income (loss) before minority interest in
Calamos Holdings LLC and income taxes
    
    
    (6,874
    )
    
    
    52,746
    
    
    
    62,194
    
    
    
    132,823Minority interest in Calamos Holdings LLC
    
    
    (5,681
    )
    
    
    40,863
    
    
    
    48,904
    
    
    
    101,938Income (loss) before income taxes
    
    
    (1,193
    )
    
    
    11,883
    
    
    
    13,290
    
    
    
    30,885Income taxes
    
    
    (394
    )
    
    
    4,756
    
    
    
    11,744
    
    
    
    12,419Net income (loss)
    
    $
    (799
    )
    
    $
    7,127
    
    
    $
    1,546
    
    
    $
    18,466Earnings (loss) per shareBasic
    
    $
    (0.04
    )
    
    $
    0.33
    
    
    $
    0.08
    
    
    $
    0.81Diluted
    
    $
    (0.05
    )
    
    $
    0.32
    
    
    $
    0.06
    
    
    $
    0.79Weighted average shares outstandingBasic
    
    
    19,453,173
    
    
    
    21,851,112
    
    
    
    19,842,888
    
    
    
    22,668,669Diluted
    
    
    96,829,687
    
    
    
    99,320,380
    
    
    
    97,160,244
    
    
    
    100,093,296Cash dividends per share
    
    $
    0.11
    
    
    $
    0.11
    
    
    $
    0.33
    
    
    $
    0.33
  -3-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
Nine Months Ended September 30, 2008
(in thousands)
(unaudited)
 Additional
    
    
    
    
    
    
    Accumulated OtherCommon
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    TotalBalance at December 31, 2007
    
    $
    233
    
    
    $
    198,924
    
    
    $
    70,102
    
    
    $
    5,081
    
    
    $
    (60,603
    )
    
    $
    213,737Net income
    
    
    
    
    
    
    
    
    
    
    1,546
    
    
    
    
    
    
    
    
    
    
    
    1,546Changes in unrealized gains
(losses) on available-for-sale
securities, net of minority interest
and income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,691
    )
    
    
    
    
    
    
    (13,691
    )Less: reclassification adjustment
for realized gains on available-for-sale securities included in net
income, net of minority interest
and income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,569
    )
    
    
    
    
    
    
    (2,569
    )Total comprehensive
income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,714
    )Issuance of common stock (128,991
Class A common shares)
    
    
    2
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase of common stock
(1,547,900 Class A common shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,612
    )
    
    
    (34,612
    )Sale of membership units to Calamos
Holdings LLC (1,547,900 units)
    
    
    
    
    
    
    27,469
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,469Capital contribution
    
    
    
    
    
    
    13,762
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,762Cumulative impact of changes in
ownership of Calamos Holdings LLC
    
    
    
    
    
    
    (34,643
    )
    
    
    
    
    
    
    (664
    )
    
    
    
    
    
    
    (35,307
    )Compensation expense recognized
under stock incentive plans, net of
minority interest
    
    
    
    
    
    
    1,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,119Dividend equivalent accrued under
stock incentive plans, net of
minority interest
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    23Dividends declared
    
    
    
    
    
    
    
    
    
    
    (6,519
    )
    
    
    
    
    
    
    
    
    
    
    (6,519
    )Balance at September 30, 2008
    
    $
    235
    
    
    $
    206,629
    
    
    $
    65,152
    
    
    $
    (11,843
    )
    
    $
    (95,215
    )
    
    $
    164,958
  -4-




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CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2008 and 2007
(in thousands)
(unaudited)
 2008
    
    
    2007Cash and cash equivalents at beginning of year
    
    $
    108,441
    
    
    $
    328,841Cash flows from operating activities:Net income
    
    
    1,546
    
    
    
    18,466Adjustments to reconcile net income to net cash provided by
operating activities:Minority interest in Calamos Holdings LLC
    
    
    48,904
    
    
    
    101,938Minority interest in partnership investments and offshore funds
    
    
    (40,928
    )
    
    
    4,335Amortization of deferred sales commissions
    
    
    18,088
    
    
    
    21,220Other depreciation and amortization
    
    
    8,000
    
    
    
    6,708Unrealized depreciation (appreciation) on CFS securities,
partnership investments and offshore funds
    
    
    122,678
    
    
    
    (10,347
    )Net realized gain on sale of investment securities
    
    
    (20,663
    )
    
    
    Deferred taxes
    
    
    5,536
    
    
    
    4,707Stock-based compensation
    
    
    5,441
    
    
    
    5,209Employee taxes paid on vesting under stock incentive plans
    
    
    (1,715
    )
    
    
    (1,853
    )(Increase) decrease in assets:Accounts receivable:Affiliates and affiliated mutual funds
    
    
    6,910
    
    
    
    731Customers
    
    
    2,275
    
    
    
    (779
    )Deferred sales commissions
    
    
    (6,582
    )
    
    
    (7,798
    )Other assets
    
    
    (1,627
    )
    
    
    (1,128
    )Increase (decrease) in liabilities:Accounts payable
    
    
    (3,866
    )
    
    
    (2,069
    )Accrued compensation and benefits
    
    
    (16,554
    )
    
    
    (4,434
    )Other liabilities and accrued expenses
    
    
    (5,890
    )
    
    
    20,205Net cash provided by operating activities
    
    
    121,553
    
    
    
    155,111Cash flows used in investing activities:Net additions to property and equipment
    
    
    (4,503
    )
    
    
    (8,214
    )Net purchases of investment securities
    
    
    (59,994
    )
    
    
    (192,591
    )Net changes in partnership investments and offshore funds
    
    
    2,862
    
    
    
    (52,299
    )Net cash used in investing activities
    
    
    (61,635
    )
    
    
    (253,104
    )Cash flows provided by (used in) financing activities:Net proceeds from issuance of debt
    
    
    
    
    
    
    372,963Capital contribution received
    
    
    31,317
    
    
    
    Deferred tax benefit on vesting under stock incentive plans
    
    
    192
    
    
    
    209Repurchase of common stock
    
    
    (34,612
    )
    
    
    (48,055
    )Cash dividends paid to minority shareholders
    
    
    (80,894
    )
    
    
    (68,597
    )Cash dividends paid to common shareholders
    
    
    (6,519
    )
    
    
    (7,462
    )Net cash provided by (used in) financing activities
    
    
    (90,516
    )
    
    
    249,058Net increase (decrease) in cash
    
    
    (30,598
    )
    
    
    151,065Cash and cash equivalents at end of period
    
    $
    77,843
    
    
    $
    479,906
  -5-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 (1) Organization and Description of Business
  (2) Basis of Presentation
       -6-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (3) Investment Securities
  September 30, 2008(in thousands)
    
    Available-for-Sale
    
    
    CFS Securities
    
    
    Total SecuritiesMutual FundsEquity
    
    $
    268,773
    
    
    $
    43,443
    
    
    $
    312,216Balanced
    
    
    47,751
    
    
    
    585
    
    
    
    48,336Fixed income
    
    
    115,631
    
    
    
    
    
    
    
    115,631High yield
    
    
    3,105
    
    
    
    
    
    
    
    3,105Other
    
    
    217
    
    
    
    192
    
    
    
    409Total mutual funds
    
    
    435,477
    
    
    
    44,220
    
    
    
    479,697Other investment securities
    
    
    422
    
    
    
    162
    
    
    
    584$
    435,899
    
    
    $
    44,382
    
    
    $
    480,281
 December 31, 2007(in thousands)
    
    Available-for-Sale
    
    
    CFS Securities
    
    
    Total SecuritiesMutual FundsEquity
    
    $
    322,344
    
    
    $
    3,095
    
    
    $
    325,439Balanced
    
    
    90,049
    
    
    
    722
    
    
    
    90,771Fixed income
    
    
    114,439
    
    
    
    
    
    
    
    114,439High yield
    
    
    3,663
    
    
    
    
    
    
    
    3,663Other
    
    
    245
    
    
    
    227
    
    
    
    472Total mutual funds
    
    
    530,740
    
    
    
    4,044
    
    
    
    534,784Other investment securities
    
    
    430
    
    
    
    262
    
    
    
    692$
    531,170
    
    
    $
    4,306
    
    
    $
    535,476
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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Available-for-sale securities:Proceeds from sale
    
    $
    
    
    
    $
    
    
    
    $
    113,329
    
    
    $
    Realized gains
    
    
    
    
    
    
    
    
    
    
    20,234
    
    
    
    Unrealized gains (losses)
    
    
    (60,651
    )
    
    
    17,996
    
    
    
    (105,254
    )
    
    
    34,053Gains reclassified out of accumulated
other comprehensive income into earnings
    
    
    
    
    
    
    
    
    
    
    20,234
    
    
    
    CFS securities:Unrealized gains (losses)
    
    
    (8,982
    )
    
    
    378
    
    
    
    (9,935
    )
    
    
    736
  September 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Total cumulative unrealized gains on available-for-sale securities
with net gains:Mutual FundsEquity
    
    $
    419
    
    
    $
    39,461Balanced
    
    
    
    
    
    
    5,860Fixed income
    
    
    174
    
    
    
    1,022Other
    
    
    
    
    
    
    5Total mutual funds
    
    
    593
    
    
    
    46,348Other investment securities
    
    
    245
    
    
    
    297Total gains
    
    
    838
    
    
    
    46,645Total cumulative unrealized losses on available-for-sale securities
with net losses:Mutual FundsEquity
    
    
    (72,175
    )
    
    
    (7,073
    )Balanced
    
    
    (12,895
    )
    
    
    (17
    )Fixed income
    
    
    (1,351
    )
    
    
    (334
    )High yield
    
    
    (902
    )
    
    
    (272
    )Other
    
    
    (26
    )
    
    
    Total mutual funds    
    
    (87,349
    )
    
    
    (7,696
    )Other investment securities
    
    
    
    
    
    
    (475
    )Total losses
    
    
    (87,349
    )
    
    
    (8,171
    )Total cumulative net unrealized gains (losses) on available-for-sale securities
    
    $
    (86,511
    )
    
    $
    38,474
  -8-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (4) Partnership Investments and Offshore Funds
  September 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Calamos Equity Opportunities Fund LP:Securities owned
    
    $
    
    
    
    $
    111,142Securities sold but not yet purchased
    
    
    
    
    
    
    (24,838
    )Accrued expenses and other current liabilities
    
    
    
    
    
    
    (1,478
    )Other current assets
    
    
    
    
    
    
    20Calamos Equity Opportunities Fund LP securities, net
    
    
    
    
    
    
    84,846Calamos Market Neutral Opportunities Fund LP:Securities owned
    
    
    62,786
    
    
    
    81,361Securities sold but not yet purchased
    
    
    (14,087
    )
    
    
    (22,372
    )Accrued expenses and other current liabilities
    
    
    (3,759
    )
    
    
    (5,178
    )Other current assets
    
    
    5,364
    
    
    
    1,028Calamos Market Neutral Opportunities Fund LP securities, net
    
    
    50,304
    
    
    
    54,839Calamos Global Funds PLC:Securities owned
    
    
    250,480
    
    
    
    200,196Other current assets
    
    
    19,748
    
    
    
    5,107Accrued expenses and other liabilities
    
    
    (5,322
    )
    
    
    (2,045
    )Calamos Global Funds PLC
    
    
    264,906
    
    
    
    203,258Investment in other partnerships
    
    
    28,346
    
    
    
    10,061Partnership investments and offshore funds
    
    $
    343,556
    
    
    $
    353,004
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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (5) Fair Value Measurements
 Fair Value Measurements,
   Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    Unobservable(in thousands)
    
    September 30,
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investment securities (note 3)
    
    $
    480,281
    
    
    $
    480,281
    
    
    $
    
    
    
    $
    Securities owned by PartnershipInvestments and Offshore Funds (note 4)
    
    
    313,266
    
    
    
    253,089
    
    
    
    60,177
    
    
    
    Securities sold but not yet purchased (note 4)
    
    
    (14,087
    )
    
    
    (14,087
    )
    
    
    
    
    
    
    Total
    
    $
    779,460
    
    
    $
    719,283
    
    
    $
    60,177
    
    
    $
    
 (6) Minority Interest in Calamos Holdings LLC
  (in thousands)Minority interest at December 31, 2007
    
    $
    352,205Income allocated to minority interests
    
    
    48,904Changes in unrealized gains (losses) on available-for-sale securities
    
    
    (82,796
    )Reclassification adjustment for realized gains on sale of available-for-sale securities
    
    
    (16,155
    )Sale of membership units to Calamos Holdings LLC
    
    
    (27,469
    )Capital contribution
    
    
    50,853Cumulative impact of changes in ownership of Calamos Holdings LLC units
    
    
    (29
    )Compensation expense recognized under stock incentive plans
    
    
    4,322Dividend equivalent accrued under stock incentive plans
    
    
    85Tax distributions
    
    
    (55,484
    )Equity distributions
    
    
    (25,410
    )Minority interest at September 30, 2008
    
    $
    249,026
 -10-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (7) Earnings (Loss) Per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Earnings (loss) per share  basicEarnings (loss) available to common
shareholders
    
    $
    (799
    )
    
    $
    7,127
    
    
    $
    1,546
    
    
    $
    18,466Weighted average shares outstanding
    
    
    19,453
    
    
    
    21,851
    
    
    
    19,843
    
    
    
    22,669Earnings (loss) per share  basic
    
    $
    (0.04
    )
    
    $
    0.33
    
    
    $
    0.08
    
    
    $
    0.81Earnings (loss) per share  dilutedIncome (loss) before minority interest in
Calamos Holdings LLC and income taxes
    
    $
    (6,874
    )
    
    $
    52,746
    
    
    $
    62,194
    
    
    $
    132,823Less: Impact of revaluation of net deferred
tax assets
    
    
    
    
    
    
    
    
    
    
    32,888
    
    
    
    Less: Impact of income taxes
    
    
    (2,270
    )
    
    
    21,109
    
    
    
    23,260
    
    
    
    53,408Earnings (loss) available to common
shareholders
    
    $
    (4,604
    )
    
    $
    31,637
    
    
    $
    6,046
    
    
    $
    79,415Weighted average shares outstanding
    
    
    19,453
    
    
    
    21,851
    
    
    
    19,843
    
    
    
    22,669Conversion of membership units for common
stock
    
    
    77,019
    
    
    
    77,000
    
    
    
    77,006
    
    
    
    77,000Dilutive impact of restricted stock units
    
    
    358
    
    
    
    397
    
    
    
    311
    
    
    
    357Dilutive impact of stock options
    
    
    
    
    
    
    72
    
    
    
    
    
    
    
    67Weighted average diluted shares outstanding
    
    
    96,830
    
    
    
    99,320
    
    
    
    97,160
    
    
    
    100,093Earnings (loss) per share  diluted
    
    $
    (0.05
    )
    
    $
    0.32
    
    
    $
    0.06
    
    
    $
    0.79
  Share-Based Payment
 -11-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Restricted stock units
    
    
    44,083
    
    
    
    
    
    
    
    248,168
    
    
    
    331,140Stock options
    
    
    2,681,026
    
    
    
    1,282,721
    
    
    
    2,681,026
    
    
    
    1,282,721Total
    
    
    2,725,109
    
    
    
    1,282,721
    
    
    
    2,929,194
    
    
    
    1,613,861
 (8) Stock Based Compensation
     -12-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (9) Non-Operating Income (Loss)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Interest income
    
    $
    519
    
    
    $
    5,975
    
    
    $
    1,859
    
    
    $
    13,537Interest expense
    
    
    (8,153
    )
    
    
    (7,331
    )
    
    
    (24,415
    )
    
    
    (11,404
    )Net interest income (expense)
    
    
    (7,634
    )
    
    
    (1,356
    )
    
    
    (22,556
    )
    
    
    2,133Capital gains and dividend income
    
    
    1,763
    
    
    
    863
    
    
    
    26,241
    
    
    
    1,543Unrealized appreciation (depreciation)
    
    
    (73,006
    )
    
    
    5,733
    
    
    
    (120,792
    )
    
    
    12,229Miscellaneous other income
    
    
    233
    
    
    
    133
    
    
    
    722
    
    
    
    727Investment and other income (loss)
    
    
    (71,010
    )
    
    
    6,729
    
    
    
    (93,829
    )
    
    
    14,499Minority interest in partnership investments
    
    
    27,659
    
    
    
    (2,066
    )
    
    
    40,928
    
    
    
    (4,335
    )Non-operating income (loss)
    
    $
    (50,985
    )
    
    $
    3,307
    
    
    $
    (75,457
    )
    
    $
    12,297
  (10) Income Taxes
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Current:Federal
    
    $
    2,289
    
    
    $
    2,358
    
    
    $
    5,361
    
    
    $
    5,891State
    
    
    207
    
    
    
    562
    
    
    
    484
    
    
    
    1,403Total current income taxes
    
    
    2,496
    
    
    
    2,920
    
    
    
    5,845
    
    
    
    7,294Deferred:Federal
    
    
    (2,653
    )
    
    
    1,483
    
    
    
    (802
    )
    
    
    4,140State
    
    
    (237
    )
    
    
    353
    
    
    
    6,701
    
    
    
    985Total deferred income taxes
    
    
    (2,890
    )
    
    
    1,836
    
    
    
    5,899
    
    
    
    5,125Total income taxes
    
    $
    (394
    )
    
    $
    4,756
    
    
    $
    11,744
    
    
    $
    12,419
 -13-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  September 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Deferred tax assets:Intangible assets
    
    $
    81,816
    
    
    $
    97,290Unrealized
net holding losses on investments of available-for-sale
securities
    
    
    6,794
    
    
    
    Other
    
    
    7,807
    
    
    
    984Total deferred tax assets
    
    
    96,417
    
    
    
    98,274Deferred tax liabilities:Unrealized
net holding gains on investments of available-for-sale
securities
    
    
    
    
    
    
    3,191Deferred sales commission
    
    
    1,295
    
    
    
    2,808Other
    
    
    791
    
    
    
    1,991Total deferred tax liabilities
    
    
    2,086
    
    
    
    7,990Net deferred tax assets
    
    $
    94,331
    
    
    $
    90,284
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Statutory U.S. federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal tax benefits
    
    
    2.0
    %
    
    
    5.0
    %
    
    
    2.0
    %
    
    
    5.0
    %Other non-deductible items
    
    
    (4.0
    )%
    
    
    
    %
    
    
    0.4
    %
    
    
    0.2
    %Effective income tax rate
    
    
    33.0
    %
    
    
    40.0
    %
    
    
    37.4
    %
    
    
    40.2
    %
 (11) Common Stock Repurchase and Capital Contribution
   -14-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (12) Recently Issued Accounting Pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133
 -15-




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
   September 30,(in millions)
    
    2008
    
    
    2007Mutual FundsOpen-end funds
    
    $
    19,110
    
    
    $
    28,000Closed-end funds
    
    
    5,738
    
    
    
    7,677Total mutual funds
    
    
    24,848
    
    
    
    35,677Separate AccountsInstitutional accounts
    
    
    4,221
    
    
    
    4,896Managed accounts
    
    
    4,210
    
    
    
    6,028Alternative investments
    
    
    50
    
    
    
    145Total separate accounts
    
    
    8,481
    
    
    
    11,069Total assets under management
    
    $
    33,329
    
    
    $
    46,746
    -16-




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##### Table of Contents



Operating Results
 Third Quarter and Nine Months Ended September 30, 2008 Compared to Third Quarter and Nine Months
Ended September 30, 2007
 Assets Under Management
  ($ in millions)
    
    Three Months Ended September 30,
    
    
    Nine Months Ended September 30,Change
    
    
    
    
    
    
    
    
    
    
    Change2008
    
    
    2007
    
    
    Amount
    
    
    Percent
    
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentMutual FundsBeginning assets under management
    
    $
    30,693
    
    
    $
    33,286
    
    
    $
    (2,593
    )
    
    
    (8
    )%
    
    $
    34,835
    
    
    $
    33,704
    
    
    $
    1,131
    
    
    
    3
    %Net purchases (redemptions)
    
    
    (1,011
    )
    
    
    511
    
    
    
    (1,522
    )
    
    
    *
    
    
    
    (1,742
    )
    
    
    (2,206
    )
    
    
    464
    
    
    
    21Market appreciation (depreciation)
    
    
    (4,834
    )
    
    
    1,880
    
    
    
    (6,714
    )
    
    
    *
    
    
    
    (8,245
    )
    
    
    4,179
    
    
    
    (12,424
    )
    
    
    *Ending assets under management
    
    
    24,848
    
    
    
    35,677
    
    
    
    (10,829
    )
    
    
    (30
    )
    
    
    24,848
    
    
    
    35,677
    
    
    
    (10,829
    )
    
    
    (30
    )Average assets under management
    
    
    28,649
    
    
    
    33,572
    
    
    
    (4,923
    )
    
    
    (15
    )
    
    
    30,714
    
    
    
    33,402
    
    
    
    (2,688
    )
    
    
    (8
    )Separate AccountsBeginning assets under management
    
    
    10,517
    
    
    
    10,525
    
    
    
    (8
    )
    
    
    (0
    )
    
    
    11,373
    
    
    
    11,021
    
    
    
    352
    
    
    
    3Net purchases (redemptions)
    
    
    (360
    )
    
    
    (137
    )
    
    
    (223
    )
    
    
    (163
    )
    
    
    (171
    )
    
    
    (1,356
    )
    
    
    1,185
    
    
    
    (87
    )Market appreciation (depreciation)
    
    
    (1,676
    )
    
    
    681
    
    
    
    (2,357
    )
    
    
    *
    
    
    
    (2,721
    )
    
    
    1,404
    
    
    
    (4,125
    )
    
    
    *Ending assets under management
    
    
    8,481
    
    
    
    11,069
    
    
    
    (2,588
    )
    
    
    (23
    )
    
    
    8,481
    
    
    
    11,069
    
    
    
    (2,588
    )
    
    
    (23
    )Average assets under management
    
    
    9,767
    
    
    
    10,639
    
    
    
    (872
    )
    
    
    (8
    )
    
    
    10,365
    
    
    
    10,690
    
    
    
    (325
    )
    
    
    (3
    )Total Assets Under ManagementBeginning assets under management
    
    
    41,210
    
    
    
    43,811
    
    
    
    (2,601
    )
    
    
    (6
    )
    
    
    46,208
    
    
    
    44,725
    
    
    
    1,483
    
    
    
    3Net purchases (redemptions)
    
    
    (1,371
    )
    
    
    374
    
    
    
    (1,745
    )
    
    
    *
    
    
    
    (1,913
    )
    
    
    (3,562
    )
    
    
    1,649
    
    
    
    46Market appreciation (depreciation)
    
    
    (6,510
    )
    
    
    2,561
    
    
    
    (9,071
    )
    
    
    *
    
    
    
    (10,966
    )
    
    
    5,583
    
    
    
    (16,549
    )
    
    
    *Ending assets under management
    
    
    33,329
    
    
    
    46,746
    
    
    
    (13,417
    )
    
    
    (29
    )
    
    
    33,329
    
    
    
    46,746
    
    
    
    (13,417
    )
    
    
    (29
    )Average assets under management
    
    $
    38,416
    
    
    $
    44,211
    
    
    $
    (5,795
    )
    
    
    (13
    )%
    
    $
    41,079
    
    
    $
    44,092
    
    
    $
    (3,013
    )
    
    
    (7
    )%
 
 *
    
    Not meaningful.    -17-




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##### Table of Contents



Impact of One-Time Items
   Nine Months EndedSeptember 30,($ in thousands)
    
    2008
    
    
    2007Operating expenses
    
    $
    187,087
    
    
    $
    228,425Termination of closed-end fund compensation agreements
    
    
    
    
    
    
    19,500Closed-end fund structuring fees
    
    
    
    
    
    
    6,904Operating expenses, as adjusted
    
    $
    187,087
    
    
    $
    202,021Operating income
    
    $
    137,651
    
    
    $
    120,526Termination of closed-end fund compensation agreements
    
    
    
    
    
    
    19,500Closed-end fund structuring fees
    
    
    
    
    
    
    6,904Operating income, as adjusted
    
    $
    137,651
    
    
    $
    146,930Operating income per diluted share, net of income taxes
    
    $
    0.89
    
    
    $
    0.72Termination of closed-end fund compensation agreements
    
    
    
    
    
    
    0.11Closed-end fund structuring fees
    
    
    
    
    
    
    0.04Operating income per diluted share, net of income taxes, as adjusted
    
    $
    0.89
    
    
    $
    0.87Operating margin
    
    
    42.4
    %
    
    
    34.5
    %Termination of closed-end fund compensation agreements
    
    
    
    
    
    
    5.6Closed-end fund structuring fees
    
    
    
    
    
    
    2.0Operating margin, as adjusted
    
    
    42.4
    %
    
    
    42.1
    %Net income
    
    $
    1,546
    
    
    $
    18,466Termination of closed-end fund compensation agreements
    
    
    
    
    
    
    2,634Closed-end fund structuring fees
    
    
    
    
    
    
    933Net deferred tax assets revaluation
    
    
    6,771
    
    
    
    Net income, as adjusted
    
    $
    8,317
    
    
    $
    22,033Diluted earnings per share
    
    $
    0.06
    
    
    $
    0.79Termination of closed-end fund compensation agreements
    
    
    
    
    
    
    0.12Closed-end fund structuring fees
    
    
    
    
    
    
    0.04Net deferred tax assets revaluation
    
    
    0.34
    
    
    
    Diluted earnings per share, as adjusted
    
    $
    0.40
    
    
    $
    0.95
 -18-




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##### Table of Contents



Financial Overview
    Revenues
  ($ in thousands)
    
    Three Months Ended September 30,
    
    
    Nine Months Ended September 30,Change
    
    
    
    
    
    
    
    
    
    
    Change2008
    
    
    2007
    
    
    Amount
    
    
    Percent
    
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentInvestment management fees
    
    $
    71,479
    
    
    $
    82,209
    
    
    $
    (10,730
    )
    
    
    (13
    )%
    
    $
    227,202
    
    
    $
    238,997
    
    
    $
    (11,795
    )
    
    
    (5
    )%Distribution and
underwriting fees
    
    
    29,446
    
    
    
    35,252
    
    
    
    (5,806
    )
    
    
    (16
    )
    
    
    94,734
    
    
    
    106,993
    
    
    
    (12,259
    )
    
    
    (11
    )Other
    
    
    882
    
    
    
    1,023
    
    
    
    (141
    )
    
    
    (14
    )
    
    
    2,802
    
    
    
    2,961
    
    
    
    (159
    )
    
    
    (5
    )Total revenues
    
    $
    101,807
    
    
    $
    118,484
    
    
    $
    (16,677
    )
    
    
    (14
    )%
    
    $
    324,738
    
    
    $
    348,951
    
    
    $
    (24,213
    )
    
    
    (7
    )%
   -19-




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##### Table of Contents



Operating Expenses
   ($ in thousands)
    
    Three Months Ended September 30,
    
    
    Nine Months Ended September 30,Change
    
    
    
    
    
    
    
    
    
    
    Change2008
    
    
    2007
    
    
    Amount
    
    
    Percent
    
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentEmployee compensation and benefits
    
    $
    16,547
    
    
    $
    22,912
    
    
    $
    (6,365
    )
    
    
    (28
    )%
    
    $
    60,001
    
    
    $
    66,190
    
    
    $
    (6,189
    )
    
    
    (9
    )%Distribution and underwriting
expense
    
    
    21,922
    
    
    
    26,246
    
    
    
    (4,324
    )
    
    
    (16
    )
    
    
    70,955
    
    
    
    76,469
    
    
    
    (5,514
    )
    
    
    (7
    )Amortization of deferred sales
commissions
    
    
    6,002
    
    
    
    6,064
    
    
    
    (62
    )
    
    
    (1
    )
    
    
    18,088
    
    
    
    21,220
    
    
    
    (3,132
    )
    
    
    (15
    )Marketing and sales promotion
    
    
    3,527
    
    
    
    3,861
    
    
    
    (334
    )
    
    
    (9
    )
    
    
    9,598
    
    
    
    37,074
    
    
    
    (27,476
    )
    
    
    (74
    )General and administrative
    
    
    9,698
    
    
    
    9,962
    
    
    
    (264
    )
    
    
    (3
    )
    
    
    28,445
    
    
    
    27,472
    
    
    
    973
    
    
    
    4Total operating expenses
    
    $
    57,696
    
    
    $
    69,045
    
    
    $
    (11,349
    )
    
    
    (16
    )%
    
    $
    187,087
    
    
    $
    228,425
    
    
    $
    (41,338
    )
    
    
    (18
    )%
      -20-




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##### Table of Contents



Non-Operating Activities
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,($ in thousands)
    
    2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeInterest income
    
    $
    519
    
    
    $
    5,975
    
    
    $
    (5,456
    )
    
    $
    1,859
    
    
    $
    13,537
    
    
    $
    (11,678
    )Interest expense
    
    
    (8,153
    )
    
    
    (7,331
    )
    
    
    (822
    )
    
    
    (24,415
    )
    
    
    (11,404
    )
    
    
    (13,011
    )Net interest income (expense)
    
    
    (7,634
    )
    
    
    (1,356
    )
    
    
    (6,278
    )
    
    
    (22,556
    )
    
    
    2,133
    
    
    
    (24,689
    )Capital gains and dividend income
    
    
    1,763
    
    
    
    863
    
    
    
    900
    
    
    
    26,241
    
    
    
    1,543
    
    
    
    24,698Unrealized appreciation (depreciation)
    
    
    (73,006
    )
    
    
    5,733
    
    
    
    (78,739
    )
    
    
    (120,792
    )
    
    
    12,229
    
    
    
    (133,021
    )Miscellaneous other income
    
    
    233
    
    
    
    133
    
    
    
    100
    
    
    
    722
    
    
    
    727
    
    
    
    (5
    )Investment and other income (loss)
    
    
    (71,010
    )
    
    
    6,729
    
    
    
    (77,739
    )
    
    
    (93,829
    )
    
    
    14,499
    
    
    
    (108,328
    )Minority interest in partnership investments
and offshore funds
    
    
    27,659
    
    
    
    (2,066
    )
    
    
    29,725
    
    
    
    40,928
    
    
    
    (4,335
    )
    
    
    45,263Non-operating income (loss)
    
    $
    (50,985
    )
    
    $
    3,307
    
    
    $
    (54,292
    )
    
    $
    (75,457
    )
    
    $
    12,297
    
    
    $
    (87,754
    )
     -21-




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Income Taxes
  Net Income (Loss)
   Liquidity and Capital Resources
     -22-




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##### Table of Contents



(in thousands)
    
    September 30,
    
    
    December 31,2008
    
    
    2007Statements of financial condition data:Cash and cash equivalents
    
    $
    77,843
    
    
    $
    108,441Receivables
    
    
    30,155
    
    
    
    39,340Investment securities
    
    
    480,281
    
    
    
    535,476Partnership investments and offshore funds
    
    
    343,556
    
    
    
    353,004Deferred sales commissions
    
    
    22,570
    
    
    
    34,076Property and equipment, net of accumulated depreciation
    
    
    45,254
    
    
    
    48,420Long-term debt
    
    
    525,000
    
    
    
    525,000
  (in thousands)
    
    September 30,2008
    
    
    2007Cash flow data:Net cash provided by operating activities
    
    $
    121,553
    
    
    $
    155,111Net cash used in investing activities
    
    
    (61,635
    )
    
    
    (253,104
    )Net cash provided by (used in) financing activities
    
    
    (90,516
    )
    
    
    249,058
      Recently Issued Accounting Pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 -23-




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133
 Critical Accounting Policies
  Forward-Looking Information
   Risk Factors
  -24-




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 Business Risks
  Risks Related to Our Industry
 The increased potential of changes in laws or regulations or in governmental policies due to the
state of the economy and the current political climate could limit the sources and amounts of our
revenues, increase our costs of doing business, decrease our profitability and materially and
adversely affect our business.
  -25-




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##### Table of Contents



A general or prolonged decline in the prices of securities would lead to a decline in our assets
under management, revenues and earnings.
  Risks Related to Our Business
 We depend on third-party distribution channels to market our investment products and access our
client base.
   Risks Related to the Company
 The inability for Calamos Holdings LLC to maintain compliance with its financial covenants could
have a material adverse effect on our Company.
  -26-




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##### Table of Contents



Significant changes in market conditions and the economy may require a modification to our business
plan.
  
 Item 6. Exhibits
 3(i)
    
    
    Amended and Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to the Registrants Current Report
on Form 8-K filed with the Securities and Exchange Commission on November 2,
2004).3(ii)
    
    
    Amended and Restated By-Laws of the Registrant (incorporated by reference to
Exhibit 3.2 to the Registrants Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 8, 2007).4.1
    
    
    Stockholders Agreement among John P. Calamos, Sr., Nick P. Calamos and John
P. Calamos, Jr., certain trusts controlled by them, Calamos Family Partners,
Inc. and the Registrant (incorporated by reference to Exhibit 4.1 to the
Registrants Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on December 3, 2004).4.2
    
    
    Registration Rights Agreement between Calamos Family Partners, Inc., John P.
Calamos, Sr. and the Registrant (incorporated by reference to Exhibit 4.2 to
the Registrants Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on December 3, 2004).31.1
    
    
    Certification pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.31.2
    
    
    Certification pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.32.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 -27-




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##### Table of Contents



SIGNATURES
  CALAMOS ASSET MANAGEMENT, INC. 
(Registrant)Date: November 7, 2008
    By:
    /s/ Cristina WasiakCristina WasiakSenior Vice President,
Chief Financial Officer and Treasurer -28-