Calamos Asset Management (CLMS) 10-Q 2007 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED: June 30, 2007

- 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	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
2020 Calamos Court, Naperville, Illinois	60563
(Address of Principal Executive Offices)	(Zip Code)

(630) 245-7200
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.þ Yeso No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filero           Accelerated filerþ           Non-accelerated filero

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).o Yesþ No

At July 25, 2007, the company had 22,536,282 shares of Class A common stock and 100 shares of Class B common stock outstanding.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II — OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits
	SIGNATURES
Management Services and Resources Agreement
Amendment No.1 to Employment Agreement with Nick P. Calamos
Amendment No.1 to Employment Agreement with Patrick H. Dudasik
Amendment No.1 to Employment Agreement with James S. Hamman, Jr.
Certification
Certification
Section 906 Certification
Section 906 Certification

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data)

	June 30,			December 31,
	2007			2006
	(unaudited)
ASSETS:
Current assets
Cash and cash equivalents	$	147,604		$	328,841
Receivables:
Affiliates and affiliated funds		24,912			26,569
Customers		9,132			10,218
Investment securities		312,654			143,112
Partnership securities		138,218			86,409
Prepaid expenses		2,658			2,383
Deferred tax assets, net		6,212			7,375
Other assets		4,164			67
Total current assets		645,554			604,974
Non-current assets
Deferred tax assets, net		88,477			91,865
Deferred sales commissions		40,207			49,891
Property and equipment, net of accumulated depreciation ($17,113 at 6/30/07 and $13,233 at 12/31/06)		44,731			43,615
Other non-current assets		1,418			1,443
Total non-current assets		174,833			186,814
Total assets		820,387			791,788
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities
Accounts payable:
Brokers		20,881			20,969
Affiliates and affiliated funds		443			264
Accrued compensation and benefits		12,654			22,722
Accrued expenses and other current liabilities		33,923			6,890
Total current liabilities		67,901			50,845
	��
Long-term liabilities
Long-term debt		150,000			150,000
Other long-term liabilities		8,332			8,003
Total long-term liabilities		158,332			158,003
Total liabilities		226,233			208,848
Minority interest in partnership investments		50,549			48,850
Minority interest in Calamos Holdings LLC		341,070			319,513
Stockholders’ equity:
Class A Common Stock, $0.01 par value. Authorized 600,000,000 shares; 23,324,082 shares issued and 22,536,282 shares outstanding at 6/30/07; 23,161,898 shares issued and outstanding at 12/31/06		233			232
Class B Common Stock, $0.01 par value. Authorized 1,000 shares; issued and outstanding 100 shares		0			0
Additional paid-in capital		156,292			157,724
Retained earnings		58,457			52,261
Accumulated other comprehensive income		6,393			4,360
Treasury stock, at cost; 787,800 shares		(18,840	)		—
Total stockholders’ equity		202,535			214,577
Total liabilities, minority interest and stockholders’ equity	$	820,387		$	791,788

See accompanying notes to consolidated financial statements.

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CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended June 30, 2007 and 2006
(in thousands, except share data)
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Revenues:
Investment management fees	$	78,313		$	84,328		$	156,788		$	165,807
Distribution and underwriting fees		35,560			38,997			71,741			77,137
Other		894			1,028			1,938			2,027
Total revenues		114,767			124,353			230,467			244,971
Expenses:
Employee compensation and benefits		22,512			18,287			43,278			37,293
Distribution and underwriting expense		25,196			25,864			50,223			50,829
Amortization of deferred sales commissions		7,278			8,123			15,156			15,863
Marketing and sales promotion		29,731			4,487			33,213			7,710
General and administrative		9,118			7,645			17,510			14,704
Total operating expenses		93,835			64,406			159,380			126,399
Operating income		20,932			59,947			71,087			118,572
Other income (expense):
Net interest income (expense)		1,495			820			3,489			1,182
Investment and other income		7,378			(7,927	)		7,770			4,004
Minority interest in partnership investments		(3,020	)		5,171			(2,269	)		(1,091	)
Total other income (expense), net		5,853			(1,936	)		8,990			4,095
Income before minority interest in Calamos Holdings LLC and income taxes		26,785			58,011			80,077			122,667
Minority interest in Calamos Holdings LLC		20,367			44,486			61,075			94,109
Income before income taxes		6,418			13,525			19,002			28,558
Income taxes		2,613			5,424			7,663			11,452
Net income	$	3,805		$	8,101		$	11,339		$	17,106
Earnings per share						��
Basic	$	0.17		$	0.35		$	0.49		$	0.74
Diluted	$	0.16		$	0.34		$	0.48		$	0.73
Weighted average shares outstanding
Basic		22,846,901			23,161,998			23,084,223			23,161,998
Diluted		100,289,411			100,845,107			100,525,789			100,823,214
Cash dividends per share	$	0.11		$	0.09		$	0.22		$	0.18

See accompanying notes to consolidated financial statements.

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CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Six Months Ended June 30, 2007
(in thousands)
(unaudited)

									Accumulated
			Additional						Other
	Common		Paid-in			Retained			Comprehensive			Treasury
	Stock		Capital			Earnings			Income			Stock			Total
Balance at December 31, 2006	$	232	$	157,724		$	52,261		$	4,360		$	—		$	214,577
Net income		—		—			11,339			—			—			11,339
Changes in unrealized gains on available-for-sale securities, net of minority interest and income taxes		—		—			—			2,233			—			2,233
Total comprehensive income																13,572
Issuance of common stock (162,184 Class A common shares)		1		(1	)		—			—			—			—
Purchase of common stock (787,800 Class A common shares)		—		—			—			—			(18,840	)		(18,840	)
Cumulative impact of changes in ownership of Calamos Holdings LLC		—		(2,231	)		7			(200	)		—			(2,424	)
Compensation expense recognized under stock incentive plans, net of minority interest		—		800			—			—			—			800
Dividend equivalent accrued under stock incentive plans, net of minority interest		—		—			(72	)		—			—			(72	)
Dividends declared		—		—			(5,078	)		—			—			(5,078	)
Balance at June 30, 2007	$	233	$	156,292		$	58,457		$	6,393		$	(18,840	)	$	202,535

See accompanying notes to consolidated financial statements.

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CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2007 and 2006
(in thousands)
(unaudited)

	2007			2006
Cash and cash equivalents at beginning of year	$	328,841		$	210,469
Cash flows from operating activities:
Net income		11,339			17,106
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest in partnership investments		2,269			1,091
Minority interest in Calamos Holdings LLC		61,075			94,109
Amortization of deferred sales commissions		15,156			15,863
Other depreciation and amortization		4,024			3,424
Unrealized depreciation (appreciation) on CFS securities and partnership securities		(5,305	)		(1,965	)
Deferred taxes		3,290			4,556
Stock-based compensation		3,478			3,107
Employee taxes paid on vesting under stock incentive plans		(1,853	)		(2,255	)
(Increase) decrease in assets:
Accounts receivable:
Affiliates and affiliated mutual funds		1,600			(898	)
Customers		1,086			(911	)
Deferred sales commissions		(5,472	)		(17,278	)
Other assets		(4,875	)		(765	)
Increase (decrease) in liabilities:
Accounts payable		91			2,241
Accrued compensation and benefits and deferred compensation		(10,068	)		(6,566	)
Other liabilities and accrued expenses		27,650			(4,254	)
Net cash provided by operating activities		103,485			106,605
Cash flows used in investing activities:
Net additions to property and equipment		(4,997	)		(5,812	)
Net purchases of investment securities		(153,102	)		(728	)
Net changes in partnership securities		(47,375	)		(838	)
Net cash used in investing activities		(205,474	)		(7,378	)
Cash flows used in financing activities:
Deferred tax benefit on vesting under stock incentive plans		(209	)		(289	)
Purchase of common stock		(18,840	)		—
Cash distributions paid to minority shareholders		(55,121	)		(50,577	)
Cash dividends paid to common shareholders		(5,078	)		(4,169	)
Net cash used in financing activities		(79,248	)		(55,035	)
Net increase (decrease) in cash		(181,237	)		44,192
Cash and cash equivalents at end of period	$	147,604		$	254,661

See accompanying notes to consolidated financial statements.

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CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Organization and Description of Business

Calamos Asset Management, Inc. (CAM), together with its subsidiaries (the Company), primarily provides investment advisory services to individuals, to institutional investors and to a family of open-end and closed-end funds. CAM operates and controls all of the business and affairs of Calamos Holdings LLC (Holdings) and, as a result of this control, consolidates the financial results of Holdings with its own financial results.

(2) Basis of Presentation

The consolidated financial statements as of June 30, 2007 and for the three and six months ended June 30, 2007 and 2006 have not been audited by the Company’s independent registered public accounting firm. In the opinion of management, these statements contain all adjustments, including those of a normal recurring nature, necessary for fair presentation of the financial condition and results of operations. The results for the interim periods ended June 30 are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts for the prior year have been reclassified to conform to the current year’s presentation.

Calamos Family Partners, Inc.’s (CFP) and John P. Calamos, Sr.’s combined 77.4% and 76.9% interest in Holdings at June 30, 2007 and 2006, respectively, is represented as minority interest in the Company’s financial statements. Income before minority interest in Calamos Holdings LLC and income taxes, which was $26.8 million and $80.1 million for the three and six months ended June 30, 2007, respectively, included approximately $289,900 and $543,400 of investment income earned during the same periods on cash and cash equivalents held solely by CAM. This portion of CAM’s investment income is not reduced by any minority interests.

During the first quarter of 2007, Calamos Market Neutral Opportunities Fund LP was established as a private investment partnership that is primarily comprised of highly liquid marketable securities. Calamos Partners LLC, a subsidiary of Holdings, is the general partner. As of June 30, 2007, the Company had a net interest of $51.3 million (99.0%) in this partnership. Additionally, as of June 30, 2007 and December 31, 2006, the Company had a net interest of $36.4 million (42.1%) and $33.9 million (41.0%) in Calamos Equity Opportunities Fund LP, respectively.

Because substantially all the activities of these partnerships (collectively, the Partnerships) are conducted on behalf of the Company and its related parties, the Company consolidates the financial results of the Partnerships into its results. The assets and liabilities of the Partnerships are presented as partnership securities in the consolidated statements of financial condition, and the total income of the Partnerships is presented as investment and other income in the consolidated statements of operations. The combined minority interests are presented as minority interest in partnership investments in the respective financial statements. The Company carries these investments at fair value.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from these estimates.

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CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(3) Partnership Securities

Partnership securities, as presented below, represent the net assets of the Partnerships, and while these items are presented on a net basis in the Company’s financial statements, they are presented as assets and liabilities on the underlying financial statements of the Partnerships.

	June 30,			December 31,
(in thousands)	2007			2006
Calamos Equity Opportunities Fund LP:
Securities owned	$	112,737		$	110,956
Securities sold but not yet purchased		(25,789	)		(24,104	)
Accrued expenses and other current liabilities		(566	)		(4,190	)
Other current assets		22			71
Calamos Equity Opportunities Fund LP securities, net		86,404			82,733
Calamos Market Neutral Opportunities Fund LP:
Securities owned		73,519			—
Securities sold but not yet purchased		(20,672	)		—
Accrued expenses and other current liabilities		(1,364	)		—
Other current assets		331			—
Calamos Market Neutral Opportunities Fund LP securities, net		51,814			—
Investment in Calamos Multi-Strategy, L.P.		—			3,676
Partnership securities	$	138,218		$	86,409

During the first quarter of 2007, the Company liquidated its investment in Calamos Multi-Strategy, L.P.

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CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(4) Earnings Per Share

The following table reflects the calculation of basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands, except per share data)	2007		2006		2007		2006
Earnings per share – basic
Earnings available to common shareholders	$	3,805	$	8,101	$	11,339	$	17,106
Weighted average shares outstanding		22,847		23,162		23,084		23,162
Earnings per share – basic	$	0.17	$	0.35	$	0.49	$	0.74
Earnings per share – diluted
Income before minority interest in Calamos
Holdings LLC and income taxes	$	26,785	$	58,011	$	80,077	$	122,667
Less: Impact of income taxes		10,906		23,262		32,295		49,189
Earnings available to common shareholders	$	15,879	$	34,749	$	47,782	$	73,478
Weighted average shares outstanding		22,847		23,162		23,084		23,162
Conversion of membership units for common stock		77,000		77,000		77,000		77,000
Dilutive impact of restricted stock units		387		539		376		514
Dilutive impact of stock options		55		144		66		147
Weighted average diluted shares outstanding		100,289		100,845		100,526		100,823
Earnings per share – diluted	$	0.16	$	0.34	$	0.48	$	0.73

Diluted shares outstanding for the three and six months ended June 30, 2007 and 2006 are calculated (a) assuming CFP and John P. Calamos, Sr. exchanged all of their membership units in Holdings for shares of the Company’s Class A common stock on a one-for-one basis and (b) including the effect of outstanding restricted stock unit and stock option awards. An effective tax rate of 40.7% and 40.3% was applied to income before minority interest in Calamos Holdings LLC and income taxes in calculating diluted earnings available to common shareholders for the three and six months ended June 30, 2007, respectively. An effective tax rate of 40.1% was applied to income before minority interest in Calamos Holdings LLC and income taxes in calculating diluted earnings available to common shareholders for the periods ended June 30, 2006.

The Company uses the treasury stock method to reflect the dilutive effect of unvested restricted stock units (RSUs) and unexercised stock options on diluted earnings per share. Under the treasury stock method, if the average market price of common stock increases above the option’s exercise price, the proceeds that would be assumed to be realized from the exercise of the option would be assumed to be used to acquire outstanding shares of common stock. However, pursuant to the Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Standard (SFAS) No. 123(R),Share-Based Payment(SFAS 123(R)), the awards may be anti-dilutive even when the market price of the underlying stock exceeds the related exercise price. This result is possible because compensation cost, attributed to future services, not yet recognized is included as a component of the assumed proceeds upon exercise. As such, the dilutive effect of such options and RSUs would result in the addition of a net number of shares to the weighted average number of shares used in the calculation of diluted earnings per share. For the three and six months ended June 30, 2007, stock options for 1,434,011 shares and RSUs for 381,570 shares were excluded from the computation of diluted earnings per share, as they were anti-dilutive. For the three and six months ended June 30, 2006, stock options for 663,328 shares were excluded from the computation of diluted earnings per share, as they were anti-dilutive. No RSUs were anti-dilutive during the three and six months ended June 30, 2006.

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CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(5) Incentive Compensation Plan

Certain employees of the Company participate in an incentive compensation plan, which includes stock options and RSUs. The Company may use treasury shares, issue new shares or purchase shares of CAM’s Class A common stock as part of its share repurchase program upon the exercise of stock options and upon conversion of RSUs. The Company’s Annual Report on Form 10-K for the year ended December 31, 2006 provides details of this plan and its provisions.

For the six months ended June 30, 2007, the Company granted 769,407 shares of stock options and 256,469 shares of RSUs. There were forfeitures of 17,812 shares of stock options and 17,557 shares of RSUs during the six months ended June 30, 2007. The weighted average fair value of stock options at the date of grant for the six months ended June 30, 2007 was $10.70, which was estimated on the date of grant using the Black-Scholes option-pricing model. The assumptions used were a dividend yield of 1.67%, expected volatility of 35%, a risk-free interest rate of 4.7% and an expected life of 7.5 years.

During the first quarter of 2007, 231,249 shares of RSUs were exercised, of which 162,184 RSUs, net of units withheld for taxes, were converted, on a one-for-one basis, for shares of CAM’s Class A common stock. The total intrinsic value and the fair value of the converted shares was $4.4 million. The total tax benefit realized in connection with the exercise of the RSUs during the three months ended March 31, 2007 was $588,000, as the Company receives tax benefits based upon the portion of Holdings’ income that it recognizes.

Expense recorded in connection with the RSUs and stock options was $3.5 million during the six months ended June 30, 2007 of which $788,000, net of minority interest, was credited as additional paid-in capital. Expense recorded in connection with the RSUs and stock options was $3.1 million during the six months ended June 30, 2006 of which $718,000, net of minority interest, was credited as additional paid-in capital. The amount of deferred tax asset created was $315,000 and $287,000 during the six months ended June 30, 2007 and 2006, respectively, as the Company receives tax benefits based upon the portion of Holdings’ income that it recognizes. At June 30, 2007, approximately $26.9 million of total unrecognized compensation expense related to nonvested stock option and RSU awards is expected to be recognized over a weighted-average period of 4.3 years.

(6) Income Taxes

Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48 (FIN 48),Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.At June 30, 2007, the Company had no unrecognized tax benefits and it does not anticipate any unrecognized tax benefits arising in the next 12 months that would result in a material change to its financial position. As such, the Company recognized no liability for unrecognized tax benefits in connection with the adoption of FIN 48. A reconciliation is not provided, as the beginning and ending amounts of unrecognized benefits are zero with no interim additions, reductions or settlements.

While the Company does not have any accrued interest or penalties related to uncertain tax positions at June 30, 2007, any future interest or penalties will be recognized in income tax expense when determined.

The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years before 2004. The Internal Revenue Service (IRS) commenced its examination of the Company’s U.S. income tax return for 2004 in the first quarter of 2007. The IRS has not proposed any adjustments to the Company’s tax return as filed.

(7) Common Stock Repurchase

In October 2006, the Board of Directors authorized the Company to purchase up to 2 million shares of Class A common stock. During the second quarter of 2007, the Company repurchased 787,800 shares at an aggregated cost of $18.8 million. At June 30, 2007, approximately 1.2 million additional shares remain available for repurchase under this program.

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CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(8) Minority Interest in Calamos Holdings LLC

Minority interest in Calamos Holdings LLC represents CFP’s and John P. Calamos, Sr.’s combined ownership interest of 77.4% in Holdings at June 30, 2007, and is derived by multiplying the historical equity of Holdings by their aggregate ownership percentage for the periods presented. Issuances and repurchases of CAM’s common stock result in changes to CAM’s ownership percentage and to the minority interests’ ownership percentage of Holdings. The Company’s corresponding changes to stockholders’ equity are reflected in the statements of changes in stockholders’ equity. Income, which is reflected in retained earnings, is allocated to minority interests based on the average ownership interest during the period in which the income is earned.

A rollforward of minority interest for the six months ended June 30, 2007 is presented below:

(in thousands)
Minority interest at December 31, 2006	$	319,513
Issuance of common stock under stock incentive plans		(520	)
Purchase of common stock		2,723
Income allocated to minority interests		61,075
Compensation expense recognized under stock incentive plans		2,677
Shares withheld for taxes paid on vesting under stock incentive plans		(1,422	)
Changes in unrealized gains on available-for-sale securities		12,379
Dividend equivalent accrued under stock incentive plans		(234	)
Dividends declared		(55,121	)
Minority interest at June 30, 2007	$	341,070

The table below represents CAM’s unconsolidated statement of financial condition as of June 30, 2007 and December 31, 2006. Upon consolidation, CAM’s investment in subsidiaries is eliminated in its entirety. The remaining net assets after giving effect to this elimination, as well as the interest earned from the cash and cash equivalents, are not subject to any reduction for minority interest.

	June 30,		December 31,
(in thousands)	2007		2006
Cash and equivalents	$	23,654	$	18,796
Current deferred tax assets, net		6,212		7,375
Other current assets		3,146		432
Total current assets		33,012		26,603
Non-current deferred tax assets, net		88,478		91,865
Investment in subsidiaries		418,399		435,208
Total non-current assets		506,877		527,073
Total assets		539,889		553,676
Total current liabilities		52		—
Total stockholders’ equity		539,837		553,676
Total liabilities, minority interest and stockholders’ equity	$	539,889	$	553,676

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CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(9) Recently Issued Accounting Pronouncements

In September 2006, the FASB issued SFAS 157,Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and requires additional disclosure regarding fair value measurements. SFAS 157 is effective for the Company beginning January 1, 2008. The Company is currently evaluating the impact, if any, that the adoption of SFAS 157 will have on its financial statements.

In February 2007, the FASB issued SFAS 159,The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115, which permits the option to measure certain financial instruments and other items at fair value. SFAS 159 is effective for the Company beginning January 1, 2008. The Company is currently analyzing the option of adopting SFAS 159 and the impact, if any, that it would have on its financial statements.

(10) Subsequent Event

In July 2007, Holdings completed a private debt offering of $375 million aggregate principal amount of senior unsecured notes, consisting of $197 million of 6.33% notes due July 15, 2014, $85 million of 6.52% notes due July 15, 2017 and $93 million of 6.67% notes due July 15, 2019. The aggregate average interest rate on the notes is 6.49% over the life of the notes. Under the note purchase agreement governing the terms of these notes, Holdings must maintain certain consolidated net worth, leverage and interest coverage ratios. The note purchase agreement also contains other covenants that, among other things, restrict the ability of Holdings’ subsidiaries to incur debt and restrict the ability of Holdings or its subsidiaries to create liens and to merge or consolidate, or sell or convey all or substantially all of Holdings’ assets.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We provide investment advisory services to institutions and individuals, managing $43.8 billion in client assets at June 30, 2007. Our operating results fluctuate primarily due to changes in the total value and composition of our assets under management. The value and composition of our assets under management are, and will continue to be, influenced by a variety of factors, including purchases and redemptions of shares of mutual funds and separate accounts that we manage, fluctuations in the financial markets around the world that result in appreciation or depreciation of assets under management and our introduction of new investment strategies and products.

The value and composition of our assets under management and our ability to continue to attract clients depend on a variety of factors, including the education of our clients about our investment philosophy, the delivery of best-in-class service, the relative investment performance of our investment products as compared to competing offerings and market indices, the competitive conditions in the mutual fund, asset management and broader financial services sectors, investor sentiment and confidence, and our decision to open or close products and strategies when deemed to be in the best interests of our clients.

We market our investment strategies to our clients through a variety of products designed to suit their investment needs. We currently offer five types of mutual fund and separate account investment products. The following table details our assets under management at June 30, 2007 and 2006.

	June 30,
(in millions)	2007		2006
Mutual Funds
Open-end funds	$	25,996	$	28,087
Closed-end funds		7,290		6,130
Total mutual funds		33,286		34,217
Separate Accounts
Institutional accounts		4,710		5,460
Managed accounts		5,677		6,038
Alternative investments		138		97
Total separate accounts		10,525		11,595
Total assets under management	$	43,811	$	45,812

Our revenues are substantially comprised of investment management fees earned under contracts with the mutual funds and separate accounts that we manage. Our revenues are also comprised of distribution and underwriting fees, including asset-based distributions and/or service fees received pursuant to Rule 12b-1 plans. Investment management fees and distribution and underwriting fees may fluctuate based on a number of factors, including the total value and composition of our assets under management, market appreciation or depreciation and the level of net purchases and redemptions, which represent the sum of new client investments, additional funding from existing clients, withdrawals of assets from and termination of client accounts and purchases and redemptions of mutual fund shares. The mix of assets under management among our investment products also has an impact on our revenues, as some products carry different fees than others.

Our largest operating expenses are typically related to the distribution of mutual funds, including Rule 12b-1 payments and the amortization of deferred sales commissions for open-end mutual funds, as well as to employee compensation and benefits expense, which includes salaries, incentive compensation and related benefits costs. Operating expenses may fluctuate due to a number of factors, including changes in distribution expense as a result of fluctuations in mutual fund sales and market appreciation or depreciation, variations in staffing and compensation, marketing-related expenses that include supplemental distribution payments, and depreciation and amortization relating to capital expenditures incurred to maintain and enhance our administrative and operating services infrastructure.

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Operating Results

Second Quarter and Six Months Ended June 30, 2007 Compared to Second Quarter and Six Months Ended June 30, 2006

Assets Under Management

Assets under management decreased by $2.0 billion, or 4%, to $43.8 billion at June 30, 2007 from $45.8 billion at June 30, 2006. At June 30, 2007, our assets under management consisted of 76% mutual funds and 24% separate accounts, as compared to 75% mutual funds and 25% separate accounts at June 30, 2006.

	Three Months Ended June 30,												Six Months Ended June 30,
							Change												Change
($ in millions)	2007			2006			Amount			Percent			2007			2006			Amount			Percent
Mutual Funds
Beginning assets under management	$	32,086		$	35,392		$	(3,306	)		9	%	$	33,704		$	32,244		$	1,460			5	%
Net purchases (redemptions)		(766	)		654			(1,420	)		*			(2,718	)		2,047			(4,765	)		*
Market appreciation (depreciation)		1,966			(1,829	)		3,795			*			2,300			(74	)		2,374			*
Ending assets under management		33,286			34,217			(931	)		3			33,286			34,217			(931	)		3
Average assets under management		32,979			34,948			(1,969	)		6			32,995			34,603			(1,608	)		5
Separate Accounts
Beginning assets under management		10,464			12,209			(1,745	)		14			11,021			11,561			(540	)		5
Net purchases (redemptions)		(540	)		(124	)		(416	)		*			(1,219	)		(71	)		(1,148	)		*
Market appreciation (depreciation)		601			(490	)		1,091			*			723			105			618			*
Ending assets under management		10,525			11,595			(1,070	)		9			10,525			11,595			(1,070	)		9
Average assets under management		10,565			11,985			(1,420	)		12			10,696			11,968			(1,272	)		11
Total Assets Under Management
Beginning assets under management		42,550			47,601			(5,051	)		11			44,725			43,805			920			2
Net purchases (redemptions)		(1,306	)		530			(1,836	)		*			(3,937	)		1,976			(5,913	)		*
Market appreciation (depreciation)		2,567			(2,319	)		4,886			*			3,023			31			2,992			*
Ending assets under management		43,811			45,812			(2,001	)		4			43,811			45,812			(2,001	)		4
Average assets under management	$	43,544		$	46,933		$	(3,389	)		7	%	$	43,692		$	46,571		$	(2,879	)		6	%

* Not meaningful.

Mutual funds had net redemptions of $766 million during the second quarter of 2007, a decrease of $1.4 billion from $654 million of net purchases in the prior-year quarter. Mutual funds had net redemptions of $2.7 billion during the six months ended June 30, 2007, a decrease of $4.8 billion from $2.1 billion of net purchases in the same period of the prior year. These decreases were primarily due to lower purchases and higher redemptions of our Growth Fund and our Growth and Income Fund, each of which comprise a significant percentage of our total assets under management. We believe that the decreases in net flows are attributable to the short-term underperformance of our Growth Fund and our Growth and Income Fund during 2006. However, during the second quarter of 2007, we continued to experience net purchases in a number of our mutual funds, primarily our Market Neutral Income Fund, Global Growth and Income Fund and International Growth Fund, as well as our Calamos Global Dynamic Fund (CHW), which had an initial public offering of $840 million during the second quarter. Also during the second quarter, we seeded aggregate investments of $80 million in our Calamos Total Return Bond Fund and Calamos Government Money Market Fund.

Separate accounts had net redemptions of $540 million and $1.2 billion during the second quarter and year-to-date periods ended June 30, 2007, respectively, primarily due to separate account outflows in our equity and convertible strategies. The decreases in net flows were principally due to outflows in our growth strategy, driven by short-term underperformance. Our convertible strategies remain closed to new investors.

Results of Operations

Overview

Results of operations for the three and six months ended June 30, 2007 were significantly impacted by two one-time marketing and sales promotion expenses that management believes will benefit our longer-term financial performance. First, we incurred a one-time expense of $19.5 million, or 12 cents per diluted share, by terminating our remaining two additional compensation agreements that required us to make recurring payments of approximately $2.6 million annually based on the assets of Calamos Convertible Opportunities and Income Fund and Calamos Strategic Total Return Fund. Terminating these agreements is

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expected to have a positive annualized after-tax impact of approximately 1.5 cents per diluted share. Second, we incurred a $6.9 million, or 4 cents per diluted share, one-time structuring fee related to CHW.

Management considers results adjusted for these one-time expenses, as presented below, to provide a better indication of the company’s operations. These adjusted items are considered “non-GAAP financial measures” as defined by Regulation S-K of the Securities and Exchange Commission. In evaluating operating performance, management considers operating expense, operating income and net income, each calculated in accordance with accounting principles generally accepted in the United States (GAAP), and each item on an as-adjusted basis, which constitute non-GAAP financial measures. Items presented on an as-adjusted basis exclude the impact of terminating the two closed-end fund additional compensation agreements and the CHW closed-end fund structuring fees. As these one-time items are not expected to impact future periods, management believes that excluding these items better enables it to evaluate the company’s operating performance relative to the prior periods. Management considers these non-GAAP financial measures when evaluating the performance of the company and believes the presentation of these amounts provides the reader with information necessary to analyze the company’s operations for the periods compared. Reconciliation of these measurements to the most directly comparable GAAP financial measures for the three and six months ended June 30, 2007 and 2006 are provided in the table below and should be carefully evaluated by the reader:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
($ in thousands)	2007		2006		2007		2006
Operating expenses	$	93,835	$	64,406	$	159,380	$	126,399
Termination of closed-end fund compensation agreements		19,500		—		19,500		—
Closed-end fund structuring fees		6,904		—		6,904		—
Operating expenses, as adjusted	$	67,431	$	64,406	$	132,976	$	126,399
Operating income	$	20,932	$	59,947	$	71,087	$	118,572
Termination of closed-end fund compensation agreements		19,500		—		19,500		—
Closed-end fund structuring fees		6,904		—		6,904		—
Operating income, as adjusted	$	47,336	$	59,947	$	97,491	$	118,572
Net income	$	3,805	$	8,101	$	11,339	$	17,106
Termination of closed-end fund compensation agreements		2,634		—		2,634		—
Closed-end fund structuring fees		933		—		933		—
Net income, as adjusted	$	7,372	$	8,101	$	14,906	$	17,106

Operating Income

Operating income was $20.9 million and $71.1 million for the three and six months ended June 30, 2007, respectively, compared to $59.9 million and $118.6 million for the prior-year periods.

Operating income, as adjusted for the one-time marketing and sales promotion expense was $47.3 million and $97.5 million for the second quarter and first half of 2007, respectively, compared to $59.9 million and $118.6 million for the year-earlier periods.

Revenues

Total revenues decreased by $9.6 million, or 8%, to $114.8 million for the three months ended June 30, 2007 from $124.4 million for the prior year. For the six months ended June 30, 2007, total revenues decreased by $14.5 million, or 6%, to $230.5 million from $245.0 million for the prior year. These decreases were primarily due to lower investment management fees and distribution and underwriting fees.

	Three Months Ended June 30,										Six Months Ended June 30,
					Change										Change
($ in thousands)	2007		2006		Amount			Percent			2007		2006		Amount			Percent
Investment management fees	$	78,313	$	84,328	$	(6,015	)		7	%	$	156,788	$	165,807	$	(9,019	)		5	%
Distribution and underwriting fees		35,560		38,997		(3,437	)		9			71,741		77,137		(5,396	)		7
Other		894		1,028		(134	)		13			1,938		2,027		(89	)		4
Total revenues	$	114,767	$	124,353	$	(9,586	)		8	%	$	230,467	$	244,971	$	(14,504	)		6	%

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Investment management fees decreased for the three and six months ended June 30, 2007 primarily due to decreases in average assets under management of $3.4 billion and $2.9 billion for the second quarter and first half of 2007, respectively. The decline in investment management fees was due primarily to a decrease in open-end fund investment management fees, which were $49.9 million and $100.1 million for the three and six months ended June 30, 2007, respectively, compared to $54.8 million and $107.6 million for the prior-year periods, as a result of a $2.4 billion and $1.9 billion decrease in open-end fund average assets under management for the same periods of the prior year. Conversely, closed-end fund investment management fees increased to $13.9 million and $27.3 million for the three and six months ended June 30, 2007, respectively, from $13.0 million and $25.8 million for the prior-year periods as a result of an increase in closed-end fund average assets under management of $402 million and $337 million for the second quarter and first half of 2007 when compared to prior-year periods. Beginning in July 2007 and over the next five years, we expect our closed-end fund investment management fee revenue to increase as the fee waivers on our Convertible Opportunities and Income Fund and our Convertible and High Income Fund expire. Investment management fees from separate accounts decreased to $14.5 million and $29.4 million for the three and six months ended June 30, 2007, respectively, from $16.6 million and $32.4 million for the prior-year periods as a result of a decrease in separate accounts average assets under management of $1.4 billion and $1.3 billion when compared to the year-earlier periods. Investment management fees as a percentage of average assets under management were 0.72% for the three and six months ended June 30, 2007 and 2006.

Distribution and underwriting fees decreased by $3.4 million and $5.4 million for the three and six months ended June 30, 2007, respectively, compared to the second quarter and first half of 2006, due to a $2.4 billion and $1.9 billion decrease in open-end fund average assets under management when compared to the year-earlier periods, and to a decrease in underwriter commissions that resulted from lower Class A share sales.

Operating Expenses

Operating expenses increased to $93.8 million and $159.4 million for the three and six months ended June 30, 2007, respectively, from $64.4 million and $126.4 million for the same periods in the prior year. These increases were primarily due to two significant one-time marketing and sales promotion charges, as well as higher employee compensation and benefits and general and administrative expenses.

Operating expenses, as adjusted for one-time marketing and sales promotion expenses increased to $67.4 million and $133.0 million for the second quarter and first half of 2007, respectively, from $64.4 million and $126.4 million for the prior-year periods.

	Three Months Ended June 30,										Six Months Ended June 30,
					Change										Change
($ in thousands)	2007		2006		Amount			Percent			2007		2006		Amount			Percent
Employee compensation and benefits	$	22,512	$	18,287	$	4,225			23	%	$	43,278	$	37,293	$	5,985			16	%
Distribution and underwriting expense		25,196		25,864		(668	)		3			50,223		50,829		(606	)		1
Amortization of deferred sales commissions		7,278		8,123		(845	)		10			15,156		15,863		(707	)		4
Marketing and sales promotion		29,731		4,487		25,244			563			33,213		7,710		25,503			331
General and administrative		9,118		7,645		1,473			19			17,510		14,704		2,806			19
Total operating expenses	$	93,835	$	64,406	$	29,429			46	%	$	159,380	$	126,399	$	32,981			26	%

Employee compensation and benefits expense increased by $4.2 million and $6.0 million for the three and six months ended June 30, 2007, respectively, when compared to the prior-year periods. This increase largely reflects the impact of staff additions to support the following initiatives: expand our wealth management and institutional sales; diversify our product offering by adding complementary fixed income and cash management strategies; and strengthen our information technology infrastructure.

Distribution and underwriting expense decreased $0.7 million and $0.6 million for the three and six months ended June 30, 2007 when compared to the prior-year periods. These expenses decreased by $1.5 million for the second quarter of 2007 when compared to the prior-year period due to decreases in average open-end fund assets under management, partially offset by increases of $0.9 million due to the growth in the Class C share assets older than one year. These expenses decreased by $2.0 million for the first half of 2007 when compared to the prior-year period due to decreases in average open-end fund assets under management, partially offset by increases of $1.6 million due to the growth in the Class C share assets older than one year. Although the Rule 12b-1 fee rates we paid to broker-dealers and other intermediaries in the three and six months ended June 30, 2007 did not change from the rates paid in the prior year, we expect distribution expense to vary with the change in open-end mutual funds assets under management and with the age of the Class C share assets.

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Marketing and sales promotion expense increased by $25.2 million and $25.5 million for the three and six months ended June 30, 2007, respectively, primarily due to two one-time expenses totaling $26.4 million that we believe will have a positive impact on our future performance. Conversely, supplemental distribution payments to third party selling agents decreased by $1.2 million and $0.9 million when compared to the same periods of the prior year primarily due to lower assets under management and lower sales. During the second quarter of 2007, we incurred a one-time expense of $19.5 million by terminating our remaining two agreements that required annual payments based on the assets of two closed-end funds. Also during the second quarter of 2007, we incurred a one-time $6.9 million structuring fee in connection with the CHW initial public offering.

General and administrative expense increased by $1.5 million and $2.8 million for the three and six months ended June 30, 2007, respectively, of which $0.4 million and $0.9 million, respectively, was attributable to occupancy, depreciation and business services related to supporting additional staff. Further, increases of $0.4 million and $0.8 million for the same periods, respectively, were attributable to professional services, including our decision to outsource certain facility-related functions, which were historically reflected in employee compensation and benefits expense. Also, travel and entertainment expenses increased $0.4 million and $0.5 million for the same periods, respectively, principally related to increased sales efforts of CHW.

Other Income (Expense), Net

Other income (expense), net was a net income of $5.9 million for the three months ended June 30, 2007 as compared to a net expense of $1.9 million for the three months ended June 30, 2006. Other income (expense), net was a net income of $9.0 million for the six months ended June 30, 2007 as compared to a net income of $4.1 million for the six months ended June 30, 2006.

	Three Months Ended June 30,									Six Months Ended June 30,
($ in thousands)	2007			2006			Change			2007			2006			Change
Net interest income (expense)	$	1,495		$	820		$	675		$	3,489		$	1,182		$	2,307
Investment and other income		7,378			(7,927	)		15,305			7,770			4,004			3,766
Minority interest in partnership investments		(3,020	)		5,171			(8,191	)		(2,269	)		(1,091	)		(1,178	)
Total other income (expense), net	$	5,853		$	(1,936	)	$	7,789		$	8,990		$	4,095		$	4,895

The changes in net interest income (expense) of $0.7 million and $2.3 million for the three and six months ended June 30, 2007, respectively, were solely due to increases in interest income on cash and cash equivalents as interest expense remained constant at $2.0 million and $4.1 million for the three and six months ended June 30, 2007 and 2006.

Investment and other income increased by $15.3 million and $3.8 million for the second quarter and first half of 2007, respectively, primarily due to favorable changes of $15.7 million and $3.7 million in the market value of the consolidated partnership securities and the Calamos Financial Services securities that we own. The $8.2 million and $1.2 million changes in minority interest in partnership investments represent the corresponding minority interests portion of the changes in market value from our consolidated partnerships.

Further, the unrealized gains and losses on a significant portion of our investment securities are not recorded as changes in net income; rather, these unrealized gains and losses are recognized as changes to accumulated other comprehensive income, a component of stockholders’ equity. These unrealized gains and losses are only recognized in our consolidated statements of operations when they are realized, which occurs upon the sale of the securities and upon the receipt of capital gains distributions, which typically occur during the fourth quarter of the calendar year. For the three and six months ended June 30, 2007, net unrealized gains generated by our investment securities were $12.7 million and $16.1 million, respectively, of which $1.8 million and $2.2 million, net of minority interest and taxes, respectively, were recognized as increases to accumulated other comprehensive income. For the second quarter of 2006, net unrealized losses generated by our investment securities were $6.1 million, of which $0.8 million, net of minority interest and taxes, was recognized as a decrease to accumulated other comprehensive income. For the first half of 2006, net unrealized gains generated by our investment securities were $2.1 million, of which $0.3 million, net of minority interest and taxes, was recognized as an increase to accumulated other comprehensive income.

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Income Taxes

Income taxes as a percentage of income before income taxes was 40.7% and 40.3% for the three and six months ended June 30, 2007, compared to 40.1% for the three and six months ended June 30, 2006. The increased effective tax rates for the 2007 periods were primarily a result of lower pretax income which caused the permanent non-deductible expenses for income tax purposes per the Internal Revenue Code to be a greater percentage of pretax income.

Net Income

Net income was $3.8 million and $11.3 million for the three and six months ended June 30, 2007, respectively, compared to $8.1 million and $17.1 million for the prior-year periods.

Net income, as adjusted for the one-time marketing and sales promotion expenses, was $7.4 million and $14.9 million for the second quarter and first half of 2007, respectively, compared to $8.1 million and $17.1 million for the year-earlier periods.

Liquidity and Capital Resources

Our current financial condition is highly liquid, with the majority of our assets representing our corporate investment portfolio, which is comprised of cash and cash equivalents, investment securities and partnership securities. We anticipate utilizing our cash and cash equivalent balances to develop and invest in our products as opportunities arise, to invest in property and equipment for our facility, to support our operations and to acquire shares under our share repurchase program. Investment securities are principally comprised of company-sponsored mutual funds. In addition, the underlying partnership securities are typically comprised of highly liquid exchange-traded securities. Our working capital requirements historically have been met through cash generated by our operations and long-term debt. We believe these resources will be sufficient over the foreseeable future to meet our requirements with respect to the foregoing activities and to support future growth.

The following tables summarize key statements of financial condition data relating to our liquidity and capital resources.

	June 30,		December 31,
(in thousands)	2007		2006
Statements of financial condition data:
Cash and cash equivalents	$	147,604	$	328,841
Receivables		34,044		36,787
Investment securities		312,654		143,112
Partnership securities		138,218		86,409
Deferred tax assets, net		94,689		99,240
Deferred sales commissions		40,207		49,891
Long-term debt		150,000		150,000

Cash flows for the six months ended June 30, 2007 and 2006 are shown below:

	June 30,
(in thousands)	2007			2006
Cash flow data:
Net cash provided by operating activities	$	103,485		$	106,605
Net cash used in investing activities		(205,474	)		(7,378	)
Net cash used in financing activities		(79,248	)		(55,035	)

Net cash provided by operating activities was $103.5 million for the six months ended June 30, 2007 and was primarily comprised of income before minority interest and income taxes of $80.1 million and net changes in working capital.

The payment of deferred sales commissions by us to financial intermediaries who sell Class B and C shares of our open-end funds was $5.5 million for the six months ended June 30, 2007. We expect that the payment of deferred sales commissions will vary in proportion to future sales of Class B and C shares of open-end funds and that these commissions will continue to be funded by cash flows from operations.

Net cash used in investing activities was $205.5 million for the six months ended June 30, 2007 and was primarily comprised of investments of $200.5 million in products managed by us. During the first half of 2007, we made investments into Calamos Market Neutral Opportunities Fund LP of $50 million, the Calamos Global Equity Fund of $30 million and the Calamos Total

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Return Bond Fund of $30 million. Additionally, we invested $90 million largely in fixed income securities with maturities of less than 365 days. We anticipate increasing the future level of investments in our products as opportunities arise.

Net cash used by financing activities was $79.2 million for the six months ended June 30, 2007 and was primarily comprised of distributions to minority shareholders of $55.1 million, including distributions for their tax liabilities of $38.2 million, as well as dividends paid to common shareholders of $5.1 million. Additionally, the Company repurchased 787,800 shares at an aggregated cost of $18.8 million during the second quarter of 2007.

In July 2007, Holdings completed a private debt offering of $375 million aggregate principal amount of senior unsecured notes, consisting of $197 million of 6.33% notes due July 15, 2014, $85 million of 6.52% notes due July 15, 2017 and $93 million of 6.67% notes due July 15, 2019. The aggregate average interest rate on the notes is 6.49% over the life of the notes. Under the note purchase agreement governing the terms of these notes, Holdings must maintain certain consolidated net worth, leverage and interest coverage ratios. The note purchase agreement also contains other covenants that, among other things, restrict the ability of Holdings’ subsidiaries to incur debt and restrict the ability of Holdings or its subsidiaries to create liens and to merge or consolidate, or sell or convey all or substantially all of Holdings’ assets.

We expect our cash and liquidity requirements will be met with the cash on hand and through cash generated by operations. Further, we have access to capital via debt and equity capital markets that may assist in satisfying our capital requirements.

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued SFAS 157,Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and requires additional disclosure regarding fair value measurements. SFAS 157 is effective for the Company beginning January 1, 2008. We are currently evaluating the impact, if any, that the adoption of SFAS 157 will have on our financial statements.

In February 2007, the FASB issued SFAS 159,The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115, which permits the option to measure certain financial instruments and other items at fair value. SFAS 159 is effective for the Company beginning January 1, 2008. We are currently analyzing the option of adopting SFAS 159 and the impact, if any, that it would have on our financial statements.

Critical Accounting Policies

Our significant accounting policies are described in note 3 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2006. A discussion of critical accounting policies is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2006. There were no significant changes in our critical accounting policies during the six months ended June 30, 2007.

Forward-Looking Information

From time to time, information or statements provided by us or on our behalf, including those within this Quarterly Report on Form 10-Q, may contain certain forward-looking statements relating to future events, future financial performance, strategies, expectations and competitive environment, and regulations. These forward-looking statements include, without limitation, statements regarding proposed new products; results of operations or liquidity; projections, predictions, expectations, estimates or forecasts of our business, financial and operating results and future economic performance; and management’s goals and objectives and other similar expressions concerning matters that are not historical facts.

Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such

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differences include, but are not limited to: adverse changes in applicable laws or regulations; downward fee pressures and increased industry competition; risks inherent to the investment management business; the loss of revenues due to contract terminations and redemptions; our ownership structure; general declines in the prices of securities; catastrophic or unpredictable events; the loss of key executives; the unavailability of third-party retail distribution channels; increased costs of and timing of payments related to distribution; failure to recruit and retain qualified personnel; a loss of assets, and thus revenues; fluctuation in the level of our expenses; poor performance of our largest funds; damage to our reputation; the extent and timing of any share repurchases; and our holding company structure. Further, the value and composition of our assets under management are, and will continue to be, influenced by a variety of factors including, among other things: purchases and redemptions of shares of the open-end funds and other investment products; fluctuations in the financial markets around the world that result in appreciation or depreciation of assets under management; our introduction of new investment strategies and products; our ability to educate our clients about our investment philosophy and provide them with best-in-class service; the relative investment performance of our investment products as compared to competing offerings and market indices; competitive conditions in the mutual fund, asset management and broader financial services sectors; investor sentiment and confidence; and our decision to open or close products and strategies when deemed to be in the best interests of our clients. Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2006 discusses some of these and other important factors in detail under the caption “Risk Factors.”

Forward-looking statements speak only as of the date the statements are made. Readers should not place undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

An analysis of our market risk was included in our Annual Report on Form 10-K for the year ended December 31, 2006. There were no material changes to the Company’s market risk during the six months ended June 30, 2007.

Item 4. Controls and Procedures

Our management, including our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2007, and has concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during our second quarter of 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of business, we may be subject to various legal proceedings from time to time. Currently, there are no material legal proceedings pending against us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On October 19, 2006, the Board of Directors authorized the company to purchase up to 2.0 million shares of Class A common stock. During the quarter, the Company repurchased shares under this program as follows:

					(c)		(d)
					Total Number of		Maximum Number
					Shares Purchased as		of Shares that May
	(a)		(b)		Part of Publicly		be Purchased
	Total Number of		Average Price Paid		Announced Plans or		Under the Plans or
	Shares Purchased		Per Share		Programs		Programs
April 1 – April 30, 2007		—	$	—		—		2,000,000
May 1 – May 31, 2007		787,800		23.91		787,800		1,212,200
June 1 – June 30, 2007		—		—		—		1,212,200
Total		787,800	$	23.91		787,800		1,212,200

Item 4. Submission of Matters to a Vote of Security Holders

At the annual meeting of stockholders on May 25, 2007, John P. Calamos, Sr., Nick P. Calamos, G. Bradford Bulkley, Mitchell S. Feiger, Richard W. Gilbert and Arthur L. Knight were elected as directors of the Company with terms expiring at the annual meeting of stockholders in 2008. The results of the votes were as follows:

	Class A Shares		Class B Shares		Class A Shares		Class B Shares
Election of:	“For”		“For”		“Withheld”		“Withheld”
John P. Calamos, Sr.		n/a		768,000,000		n/a		0
Nick P. Calamos		n/a		768,000,000		n/a		0
G. Bradford Bulkley		20,120,020		768,000,000		498,936		0
Mitchell S. Feiger		20,119,096		768,000,000		499,860		0
Richard W. Gilbert		20,120,116		768,000,000		498,840		0
Arthur L. Knight		20,119,616		768,000,000		499,340		0

Stockholders at the meeting also ratified KPMG LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2007 by a combined Class A and Class B stockholder vote of 788,553,562 shares “for,” 21,756 shares “against” and 43,638 “abstaining.”

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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).
3(iii)	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 January 23, 2007).
3(iv)	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).
10.1	Management Services and Resources Agreement by and among the Registrant, Calamos Family Partners, Inc. and Calamos Property Holdings LLC.
10.2	Amendment Number 1 to Employment Agreement between the Registrant and Nick P. Calamos.
10.3	Amendment Number 1 to Employment Agreement between the Registrant and Patrick H. Dudasik.
10.4	Amendment Number 1 to Employment Agreement between the Registrant and James S. Hamman, Jr.
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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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 thereunto duly authorized.

	CALAMOS ASSET MANAGEMENT, INC.                          (Registrant)
Date: August 8, 2007	By:	/s/ Patrick H. Dudasik
		Patrick H. Dudasik
		Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer

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