##### 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:
 March 31, 2006
 - 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
(State or Other Jurisdiction of
Incorporation or Organization)
    
    32-0122554
(I.R.S. Employer
Identification No.)
 2020 Calamos Court, Naperville, Illinois
(Address of Principal Executive Offices)
    
    60563
(Zip Code)
 (630) 245-7200
 
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer 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 6. ExhibitsCertification of Principal Executive OfficerCertification of Principal Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer    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)
 March 31,
    
    December 31,2006
    
    2005(unaudited)ASSETS:Current assetsCash and cash equivalents
    
    $
    213,520
    
    
    $
    210,469Receivables:Affiliates and affiliated funds
    
    
    26,983
    
    
    
    24,670Customers
    
    
    11,747
    
    
    
    9,806Investment securities
    
    
    136,875
    
    
    
    128,265Investment in partnerships
    
    
    92,535
    
    
    
    79,956Prepaid expenses
    
    
    2,864
    
    
    
    2,342Deferred tax asset, net
    
    
    8,958
    
    
    
    7,846Other
    
    
    113
    
    
    
    195Total current assets
    
    
    493,595
    
    
    
    463,549Non-current assetsDeferred tax asset, net
    
    
    97,008
    
    
    
    101,280Deferred sales commissions
    
    
    60,097
    
    
    
    58,390Property and equipment, net of accumulated depreciation ($7,938 at
3/31/06 and $6,357 at 12/31/05)
    
    
    42,580
    
    
    
    40,547Other non-current assets
    
    
    1,771
    
    
    
    1,711Total non-current assets
    
    
    201,456
    
    
    
    201,928Total assets
    
    
    695,051
    
    
    
    665,477LIABILITIES AND STOCKHOLDERS EQUITY:Current liabilitiesAccounts payable:Brokers
    
    
    20,283
    
    
    
    18,485Affiliates and affiliated funds
    
    
    97
    
    
    
    93Accrued compensation and benefits
    
    
    7,140
    
    
    
    19,131Accrued expenses and other current liabilities
    
    
    11,976
    
    
    
    11,025Total current liabilities
    
    
    39,496
    
    
    
    48,734Long-term liabilitiesLong-term debt
    
    
    150,000
    
    
    
    150,000Other long-term liabilities
    
    
    6,713
    
    
    
    6,726Total long-term liabilities
    
    
    156,713
    
    
    
    156,726Total liabilities
    
    
    196,209
    
    
    
    205,460Minority interest in investment in partnerships
    
    
    50,716
    
    
    
    44,453Minority interest in Calamos Holdings LLC
    
    
    253,400
    
    
    
    229,430Stockholders equity:Class A Common Stock, $0.01 par value. Authorized 600,000,000 shares;
issued and outstanding 23,161,898 shares at 3/31/06 and 23,000,000
shares at 12/31/05
    
    
    232
    
    
    
    230Class B Common Stock, $0.01 par value. Authorized 1,000 shares; issued
and outstanding 100 shares
    
    
    0
    
    
    
    0Additional paid-in capital
    
    
    156,807
    
    
    
    156,274Retained earnings
    
    
    33,593
    
    
    
    26,698Accumulated other comprehensive income
    
    
    4,094
    
    
    
    2,932Total stockholders equity
    
    
    194,726
    
    
    
    186,134Total liabilities, minority interest and stockholders equity
    
    $
    695,051
    
    
    $
    665,477
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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2006 and 2005
(in thousands, except share data)
(unaudited)
 2006
    
    2005Revenues:Investment management fees
    
    $
    81,479
    
    
    $
    65,840Distribution and underwriting fees
    
    
    38,140
    
    
    
    30,625Other
    
    
    1,144
    
    
    
    856Total revenues
    
    
    120,763
    
    
    
    97,321Expenses:Employee compensation and benefits
    
    
    19,006
    
    
    
    14,921Distribution and underwriting expense
    
    
    24,965
    
    
    
    17,671Amortization of deferred sales commissions
    
    
    7,740
    
    
    
    7,876Marketing and sales promotion
    
    
    3,108
    
    
    
    3,468General and administrative
    
    
    7,174
    
    
    
    4,396Total expenses
    
    
    61,993
    
    
    
    48,332Operating income
    
    
    58,770
    
    
    
    48,989Other income (expense):Net interest income (expense)
    
    
    362
    
    
    
    (1,171
    )Investment and other income
    
    
    11,786
    
    
    
    (3,815
    )Minority interest in partnership investments
    
    
    (6,262
    )
    
    
    2,150Total other income (expense), net
    
    
    5,886
    
    
    
    (2,836
    )Income before minority interest in Calamos Holdings LLC
and income taxes
    
    
    64,656
    
    
    
    46,153Minority interest in Calamos Holdings LLC
    
    
    49,623
    
    
    
    35,535Income before income taxes
    
    
    15,033
    
    
    
    10,618Income taxes
    
    
    6,028
    
    
    
    4,247Net income
    
    $
    9,005
    
    
    $
    6,371Earnings per shareBasic
    
    $
    0.39
    
    
    $
    0.28Diluted
    
    $
    0.38
    
    
    $
    0.28Weighted average shares outstandingBasic
    
    
    23,161,998
    
    
    
    23,000,100Diluted
    
    
    100,973,155
    
    
    
    100,598,485
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CALAMOS ASSET MANAGEMENT, INC.
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
Three Months Ended March 31, 2006
(in thousands)
(unaudited)
 AccumulatedAdditional
    
    
    
    
    
    OtherCommon
    
    Paid-in
    
    Retained
    
    ComprehensiveStock
    
    Capital
    
    Earnings
    
    Income
    
    TotalBalance at December 31, 2005
    
    $
    230
    
    
    $
    156,274
    
    
    $
    26,698
    
    
    $
    2,932
    
    
    $
    186,134Net income
    
    
    
    
    
    
    
    
    
    
    9,005
    
    
    
    
    
    
    
    9,005Changes in unrealized gains on
available-for-sale securities, net of minority
interest and
income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,146
    
    
    
    1,146Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,151Issuance of common stock under stock
incentive plans (161,898 Class A
common shares)
    
    
    2
    
    
    
    119
    
    
    
    
    
    
    
    16
    
    
    
    137Compensation expense recognized under
stock incentive plans, net of minority
interest
    
    
    
    
    
    
    414
    
    
    
    
    
    
    
    
    
    
    
    414Dividend equivalent accrued under stock
incentive plans, net of minority interest
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    (25
    )Dividends declared
    
    
    
    
    
    
    
    
    
    
    (2,085
    )
    
    
    
    
    
    
    (2,085
    )Balance at March 31, 2006
    
    $
    232
    
    
    $
    156,807
    
    
    $
    33,593
    
    
    $
    4,094
    
    
    $
    194,726
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CALAMOS
ASSET MANAGEMENT, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2006 and 2005
(in thousands)
(unaudited)
 2006
    
    2005Cash and cash equivalents at beginning of year
    
    $
    210,469
    
    
    $
    149,768Cash flows from operating activities:Net income
    
    
    9,005
    
    
    
    6,371Adjustments to reconcile net income to net cash provided by
operating activities:Minority interest in partnership investments
    
    
    6,262
    
    
    
    (2,150
    )Minority interest in Calamos Holdings LLC
    
    
    49,623
    
    
    
    35,535Amortization of deferred sales commissions
    
    
    7,740
    
    
    
    7,876Other depreciation and amortization
    
    
    1,653
    
    
    
    962Unrealized depreciation (appreciation) on investment securities
    
    
    (234
    )
    
    
    3,761Unrealized depreciation (appreciation) on partnership investments
    
    
    (10,898
    )
    
    
    91Management fee received in partnership units
    
    
    (40
    )
    
    
    (40
    )Stock-based compensation
    
    
    1,788
    
    
    
    997Deferred taxes
    
    
    2,672
    
    
    
    1,625Increase in assets:Accounts receivable:Affiliates and affiliated mutual funds
    
    
    (2,313
    )
    
    
    (1,240
    )Customers
    
    
    (1,941
    )
    
    
    (463
    )Deferred sales commissions
    
    
    (9,447
    )
    
    
    (10,143
    )Other assets
    
    
    (3,214
    )
    
    
    (1,036
    )Increase (decrease) in liabilities:Accounts payable
    
    
    1,802
    
    
    
    1,631Accrued compensation and benefits
    
    
    (11,991
    )
    
    
    (4,384
    )Other liabilities and accrued expenses
    
    
    1,521
    
    
    
    2,386Net cash provided by operating activities
    
    
    41,988
    
    
    
    41,779Cash flows used in investing activities:Net additions to property and equipment
    
    
    (3,615
    )
    
    
    (11,120
    )Net purchases of securities and partnership investments
    
    
    (1,763
    )
    
    
    (25,493
    )Net cash used in investing activities
    
    
    (5,378
    )
    
    
    (36,613
    )Cash flows used in financing activities:Deferred tax benefit on vesting under stock incentive plans
    
    
    (289
    )
    
    
    Cash distributions paid to minority shareholders
    
    
    (31,185
    )
    
    
    (22,904
    )Cash dividends paid to common shareholders
    
    
    (2,085
    )
    
    
    (1,610
    )Net cash used in financing activities
    
    
    (33,559
    )
    
    
    (24,514
    )Net increase (decrease) in cash
    
    
    3,051
    
    
    
    (19,348
    )Cash and cash equivalents at end of period
    
    $
    213,520
    
    
    $
    130,420
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CALAMOS ASSET MANAGEMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 (1) Organization and Description of Business
  (2) Basis of Presentation
    (3) Cash and Cash Equivalents
  (4) Earnings Per Share
  Three Months Ended(in thousands, except per share data)
    
    March 31,2006
    
    2005Earnings per share  basicEarnings available to common shareholders
    
    $
    9,005
    
    
    $
    6,371Weighted average shares outstanding
    
    
    23,162
    
    
    
    23,000Earnings per share  basic
    
    $
    0.39
    
    
    $
    0.28
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CALAMOS ASSET MANAGEMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Three Months Ended(in thousands except per share data)
    
    March 31,2006
    
    2005Earnings per share  dilutedIncome before minority interest in Calamos
Holdings LLC and income taxes
    
    $
    64,656
    
    
    $
    46,153Less: Impact of income taxes
    
    
    25,927
    
    
    
    18,461Earnings available to common shareholders
    
    $
    38,729
    
    
    $
    27,692Weighted average shares outstanding
    
    
    23,162
    
    
    
    23,000Conversion of membership units for common stock
    
    
    77,000
    
    
    
    77,000Dilutive impact of restricted stock units
    
    
    660
    
    
    
    547Dilutive impact of stock options
    
    
    151
    
    
    
    51Weighted average shares and potential dilutive
shares outstanding
    
    
    100,973
    
    
    
    100,598Earnings per share  dilutive
    
    $
    0.38
    
    
    $
    0.28
  Share-Based Payment
 -7-




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CALAMOS ASSET MANAGEMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (5) Incentive Compensation Plan
  Share-Based Payment
  WeightedNumber
    
    Averageof Shares
    
    Exercise PriceOutstanding at beginning of period
    
    
    1,009,967
    
    
    $
    21.35Granted
    
    
    387,780
    
    
    
    35.43Forfeited
    
    
    (54,067
    )
    
    
    25.19Exercised
    
    
    
    
    
    
    Outstanding at end of period
    
    
    1,343,680
    
    
    
    25.26
   2006
    
    2005Dividend yield
    
    
    1.02
    %
    
    
    0.97
    %Expected volatility
    
    
    33
    %
    
    
    33
    %Risk-free interest rate
    
    
    4.6
    %
    
    
    3.9
    %Expected life
    
    7.5 years
    
    7.5 years
 -8-




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##### Table of Contents



CALAMOS ASSET MANAGEMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  WeightedAverage FairNumber
    
    Value of RSUsof Shares
    
    GrantedOutstanding at beginning of
period
    
    
    1,414,862
    
    
    $
    18.79Granted
    
    
    129,260
    
    
    
    35.43Forfeited
    
    
    (18,790
    )
    
    
    24.89Exercised
    
    
    (233,599
    )
    
    
    18.00Outstanding at end of period
    
    
    1,291,733
    
    
    
    20.51
    (6) New Accounting Pronouncements
 Accounting Changes and Error Corrections
 -9-




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    (in millions)
    
    March 31,2006
    
    2005Mutual FundsOpen-end funds
    
    $
    28,838
    
    
    $
    21,482Closed-end funds
    
    
    6,176
    
    
    
    5,884Total mutual funds
    
    
    35,014
    
    
    
    27,366Separate AccountsInstitutional accounts
    
    
    4,647
    
    
    
    3,347Managed accounts
    
    
    7,032
    
    
    
    6,911Private client accounts
    
    
    808
    
    
    
    549Alternative investments
    
    
    100
    
    
    
    73Total separate accounts
    
    
    12,587
    
    
    
    10,880Total assets under management
    
    $
    47,601
    
    
    $
    38,246
   -10-




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Operating Results
 Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005
 Assets Under Management
  Three Months Ended(in millions)
    
    March 31,
    
    Change2006
    
    2005
    
    Amount
    
    PercentMutual FundsBeginning assets under management
    
    $
    31,898
    
    
    $
    26,951
    
    
    $
    4,947
    
    
    
    18
    %Net purchases
    
    
    1,368
    
    
    
    1,551
    
    
    
    (183
    )
    
    
    12Market appreciation (depreciation)
    
    
    1,748
    
    
    
    (1,136
    )
    
    
    2,884
    
    
    
    254Ending assets under management
    
    
    35,014
    
    
    
    27,366
    
    
    
    7,648
    
    
    
    28Average assets under management
    
    
    33,889
    
    
    
    27,157
    
    
    
    6,732
    
    
    
    25Separate AccountsBeginning assets under management
    
    
    11,907
    
    
    
    11,024
    
    
    
    883
    
    
    
    8Net purchases
    
    
    72
    
    
    
    403
    
    
    
    (331
    )
    
    
    82Market appreciation (depreciation)
    
    
    608
    
    
    
    (547
    )
    
    
    1,155
    
    
    
    211Ending assets under management
    
    
    12,587
    
    
    
    10,880
    
    
    
    1,707
    
    
    
    16Average assets under management
    
    
    12,377
    
    
    
    10,891
    
    
    
    1,486
    
    
    
    14Total Assets Under ManagementBeginning assets under management
    
    
    43,805
    
    
    
    37,975
    
    
    
    5,830
    
    
    
    15Net purchases
    
    
    1,440
    
    
    
    1,954
    
    
    
    (514
    )
    
    
    26Market appreciation (depreciation)
    
    
    2,356
    
    
    
    (1,683
    )
    
    
    4,039
    
    
    
    240Ending assets under management
    
    
    47,601
    
    
    
    38,246
    
    
    
    9,355
    
    
    
    24Average assets under management
    
    $
    46,266
    
    
    $
    38,048
    
    
    $
    8,218
    
    
    
    22
    %
   -11-




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##### Table of Contents



Revenues
  (in thousands)
    
    Three Months Ended March 31,
    
    Change2006
    
    2005
    
    Amount
    
    PercentInvestment management fees
    
    $
    81,479
    
    
    $
    65,840
    
    
    $
    15,639
    
    
    
    24
    %Distribution and underwriting fees
    
    
    38,140
    
    
    
    30,625
    
    
    
    7,515
    
    
    
    25
    %Other
    
    
    1,144
    
    
    
    856
    
    
    
    288
    
    
    
    34
    %Total revenues
    
    $
    120,763
    
    
    $
    97,321
    
    
    $
    23,442
    
    
    
    24
    %
   Operating Expenses
  (in thousands)
    
    Three Months Ended March 31,
    
    Change2006
    
    2005
    
    Amount
    
    PercentEmployee compensation and benefits
    
    $
    19,006
    
    
    $
    14,921
    
    
    $
    4,085
    
    
    
    27
    %Distribution and underwriting expense
    
    
    24,965
    
    
    
    17,671
    
    
    
    7,294
    
    
    
    41
    %Amortization of deferred sales
commissions
    
    
    7,740
    
    
    
    7,876
    
    
    
    (136
    )
    
    
    2
    %Marketing and sales promotion
    
    
    3,108
    
    
    
    3,468
    
    
    
    (360
    )
    
    
    10
    %General and administrative
    
    
    7,174
    
    
    
    4,396
    
    
    
    2,778
    
    
    
    63
    %Total operating expenses
    
    $
    61,993
    
    
    $
    48,332
    
    
    $
    13,661
    
    
    
    28
    %
   -12-




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Other Income (Expense), Net
  (in thousands)
    
    Three Months Ended March 31,
    
    Change2006
    
    2005
    
    Amount
    
    PercentNet interest income (expense)
    
    $
    362
    
    
    $
    (1,171
    )
    
    $
    1,533
    
    
    
    *Investment and other income
    
    
    11,786
    
    
    
    (3,815
    )
    
    
    15,601
    
    
    
    *Minority interest in partnership
investments
    
    
    (6,262
    )
    
    
    2,150
    
    
    
    (8,412
    )
    
    
    *Total other income (expense), net
    
    $
    5,886
    
    
    $
    (2,836
    )
    
    $
    8,722
    
    
    
    *
 
 *
    
    Not meaningful.  Income Taxes
  Liquidity and Capital Resources
  -13-




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##### Table of Contents



(in thousands)
    
    March 31,
    
    December 31,2006
    
    2005Statements of financial condition data:Cash and cash equivalents
    
    $
    213,520
    
    
    $
    210,469Receivables
    
    
    38,730
    
    
    
    34,476Investment securities
    
    
    136,875
    
    
    
    128,265Investment in partnerships
    
    
    92,535
    
    
    
    79,956Deferred tax asset
    
    
    105,966
    
    
    
    109,126Deferred sales commissions
    
    
    60,097
    
    
    
    58,390Long-term debt
    
    
    150,000
    
    
    
    150,000
  (in thousands)
    
    March 31,2006
    
    2005Cash flow data:Net cash provided by operating activities
    
    $
    41,988
    
    
    $
    41,779Net cash used in investing activities
    
    
    (5,378
    )
    
    
    (36,613
    )Net cash used in financing activities
    
    
    (33,559
    )
    
    
    (24,514
    )
      Critical Accounting Policies
  -14-




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##### Table of Contents



Forward-Looking Information
   Risk
Factors
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   -15-




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 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 April 26, 2005).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.
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##### Table of Contents



SIGNATURES
  CALAMOS ASSET MANAGEMENT, INC.(Registrant)Date: May 4, 2006
    By:
    /s/ Patrick H. DudasikPatrick H. DudasikExecutive Vice President, Chief Financial
Officer and Treasurer -17-