Calamos Asset Management 10Q 2008 Q3 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: September 30, 2008


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

(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. þYes oNo

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


Large accelerated filero		Accelerated filerþ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller Reporting Companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYes þNo

At October 31, 2008, the company had 19,497,687 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 1A. Risk Factors
Item 6. Exhibits
SIGNATURES
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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 assets
Cash and cash equivalents	$	77,843		$	108,441
Receivables:
Affiliates and affiliated funds		20,731			27,641
Customers		9,424			11,699
Investment securities		480,281			535,476
Partnership investments and offshore funds		343,556			353,004
Prepaid expenses		3,728			3,139
Deferred tax assets, net		15,187			6,926
Other assets		3,291			2,206

Total current assets		954,041			1,048,532

Non-current assets
Deferred tax assets, net		79,144			83,358
Deferred sales commissions		22,570			34,076
Property and equipment, net of accumulated depreciation ($29,510 at 9/30/08 and $21,841 at 12/31/07)		45,254			48,420
Other non-current assets		2,641			3,286

Total non-current assets		149,609			169,140

Total assets		1,103,650			1,217,672


LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities
Accounts payable:
Brokers		15,661			19,950
Affiliates and affiliated funds		795			372
Accrued compensation and benefits		9,908			26,462
Interest payable		8,363			12,636
Accrued expenses and other current liabilities	��	5,975			9,257

Total current liabilities		40,702			68,677

Long-term liabilities
Long-term debt		525,000			525,000
Other long-term liabilities		9,988			8,876

Total long-term liabilities		534,988			533,876

Total liabilities		575,690			602,553


Minority interest in partnership investments and offshore funds		113,976			49,177
Minority interest in Calamos Holdings LLC		249,026			352,205

Stockholders’ 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			233
Class B Common Stock, $0.01 par value; authorized 1,000 shares; issued and outstanding 100 shares		0			0
Additional paid-in capital		206,629			198,924
Retained earnings		65,152			70,102
Accumulated other comprehensive income (loss)		(11,843	)		5,081
Treasury 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			213,737

Total liabilities, minority interest and stockholders’ equity	$	1,103,650		$	1,217,672

See accompanying notes to consolidated financial statements.

-2-

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 Ended
	September 30,						September 30,
	2008			2007			2008			2007
Revenues:
Investment management fees	$	71,479		$	82,209		$	227,202		$	238,997
Distribution and underwriting fees		29,446			35,252			94,734			106,993
Other		882			1,023			2,802			2,961

Total revenues		101,807			118,484			324,738			348,951


Expenses:
Employee compensation and benefits		16,547			22,912			60,001			66,190
Distribution and underwriting expense		21,922			26,246			70,955			76,469
Amortization of deferred sales commissions		6,002			6,064			18,088			21,220
Marketing and sales promotion		3,527			3,861			9,598			37,074
General and administrative		9,698			9,962			28,445			27,472

Total operating expenses		57,696			69,045			187,087			228,425

Operating income		44,111			49,439			137,651			120,526


Non-operating income (loss):
Net interest income (expense)		(7,634	)		(1,356	)		(22,556	)		2,133
Investment and other income (loss)		(71,010	)		6,729			(93,829	)		14,499
Minority 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	)		12,297

Income (loss) before minority interest in Calamos Holdings LLC and income taxes		(6,874	)		52,746			62,194			132,823
Minority interest in Calamos Holdings LLC		(5,681	)		40,863			48,904			101,938

Income (loss) before income taxes		(1,193	)		11,883			13,290			30,885
Income taxes		(394	)		4,756			11,744			12,419

Net income (loss)	$	(799	)	$	7,127		$	1,546		$	18,466


Earnings (loss) per share
Basic	$	(0.04	)	$	0.33		$	0.08		$	0.81

Diluted	$	(0.05	)	$	0.32		$	0.06		$	0.79


Weighted average shares outstanding
Basic		19,453,173			21,851,112			19,842,888			22,668,669

Diluted		96,829,687			99,320,380			97,160,244			100,093,296


Cash dividends per share	$	0.11		$	0.11		$	0.33		$	0.33

See accompanying notes to consolidated financial statements.

-3-

CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Nine Months Ended September 30, 2008
(in thousands)
(unaudited)


			Additional						Accumulated Other
	Common		Paid-in			Retained			Comprehensive			Treasury
	Stock		Capital			Earnings			Income (Loss)			Stock			Total
Balance at December 31, 2007	$	233	$	198,924		$	70,102		$	5,081		$	(60,603	)	$	213,737


Net income		—		—			1,546			—			—			1,546
Changes 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			—			—			—			27,469
Capital contribution		—		13,762			—			—			—			13,762
Cumulative 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			—			—			—			1,119
Dividend equivalent accrued under stock incentive plans, net of minority interest		—		—			23			—			—			23
Dividends declared		—		—			(6,519	)		—			—			(6,519	)

Balance at September 30, 2008	$	235	$	206,629		$	65,152		$	(11,843	)	$	(95,215	)	$	164,958

See accompanying notes to consolidated financial statements.

-4-

CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2008 and 2007
(in thousands)
(unaudited)


	2008			2007
Cash and cash equivalents at beginning of year	$	108,441		$	328,841


Cash flows from operating activities:

Net income		1,546			18,466
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest in Calamos Holdings LLC		48,904			101,938
Minority interest in partnership investments and offshore funds		(40,928	)		4,335
Amortization of deferred sales commissions		18,088			21,220
Other depreciation and amortization		8,000			6,708
Unrealized 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			4,707
Stock-based compensation		5,441			5,209
Employee 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			731
Customers		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	)		20,205

Net cash provided by operating activities		121,553			155,111


Cash 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		—			372,963
Capital contribution received		31,317			—
Deferred tax benefit on vesting under stock incentive plans		192			209
Repurchase 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	)		249,058


Net increase (decrease) in cash		(30,598	)		151,065

Cash and cash equivalents at end of period	$	77,843		$	479,906

See accompanying notes to consolidated financial statements.

-5-

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 and institutional investors through open-end funds, closed-end funds, separate accounts, offshore funds and partnerships. 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 September 30, 2008 and for the three and nine months ended September 30, 2008 and 2007 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 September 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 (collectively, the Calamos Interests) combined 78.7% and 78.3% interest in Holdings at September 30, 2008 and 2007, respectively, is represented as minority interest in the Company’s financial statements. The Company generated a loss before minority interest in Calamos Holdings LLC and income taxes of $6.9 million and generated income of $62.2 million for the three and nine months ended September 30, 2008, which included approximately $254,300 and $761,900, respectively, of investment income earned on cash, cash equivalents and investments held solely by CAM during the same periods. This portion of CAM’s investment income is not reduced by any minority interests.

Calamos Partners LLC, a subsidiary of Holdings, is the general partner of Calamos Market Neutral Opportunities Fund LP and was the general partner of Calamos Equity Opportunities Fund LP, private investment partnerships that are primarily comprised of highly liquid marketable securities. Substantially all the activities of these partnerships (collectively, the Partnerships) are conducted on behalf of the Company and its related parties, therefore, the Company consolidates the financial results of the Partnerships into its results. During the second quarter of 2008, Calamos Equity Opportunities Fund LP was liquidated.

In the fourth quarter of 2007, the Company established Calamos Global Funds PLC (Offshore Funds), which is comprised of four Ireland-based offshore mutual funds. The Offshore Funds are majority-owned by the Company, therefore, the Company consolidates the financial results of the Offshore Funds into its results.

The assets and liabilities of the Partnerships and Offshore Funds are presented on a net basis as partnership investments and offshore funds in the consolidated statements of financial condition, and the total income (loss) is included in investment and other income (loss) in the consolidated statements of operations. Partnerships and Offshore Funds are presented on a net basis in order to provide more transparency to the financial position and results of the core operations of the Company. The underlying assets and liabilities that are being consolidated are described in note 4. The minority interests are presented as minority interest in partnership investments and offshore funds in the respective financial statements.

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.

-6-

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

(3) Investment Securities

The following table provides a summary of investment securities owned as of September 30, 2008 and December 31, 2007. Other investment securities consist of treasury bonds and common stock. As a registered broker-dealer, Calamos Financial Services LLC is required to mark to market all investment securities it owns (CFS Securities) and record all market fluctuations through current earnings. As such, unrealized gains and losses on these securities are included in investment and other income (loss) in the consolidated statements of operations.


	September 30, 2008
(in thousands)	Available-for-Sale		CFS Securities		Total Securities
Mutual Funds
Equity	$	268,773	$	43,443	$	312,216
Balanced		47,751		585		48,336
Fixed income		115,631		—		115,631
High yield		3,105		—		3,105
Other		217		192		409

Total mutual funds		435,477		44,220		479,697
Other investment securities		422		162		584

	$	435,899	$	44,382	$	480,281


	December 31, 2007
(in thousands)	Available-for-Sale		CFS Securities		Total Securities
Mutual Funds
Equity	$	322,344	$	3,095	$	325,439
Balanced		90,049		722		90,771
Fixed income		114,439		—		114,439
High yield		3,663		—		3,663
Other		245		227		472

Total mutual funds		530,740		4,044		534,784

Other investment securities		430		262		692

	$	531,170	$	4,306	$	535,476

Of the $479.7 million and $534.8 million investments in mutual funds at September 30, 2008 and December 31, 2007, respectively, $335.0 million and $364.3 million was invested in affiliated mutual funds.

During the second quarter of 2008, the Company sold $113.3 million of investment securities and, based on a specific identification of the cost basis, realized a gain of $20.7 million. The proceeds were reinvested in investment securities during July 2008. The following table provides a summary of changes in and results from certain investment activities for the three and nine months ended September 30, 2008 and 2007.

-7-

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


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2008			2007		2008			2007
Available-for-sale securities:
Proceeds from sale	$	—		$	—	$	113,329		$	—

Realized gains		—			—		20,234			—

Unrealized gains (losses)		(60,651	)		17,996		(105,254	)		34,053

Gains reclassified out of accumulated other comprehensive income into earnings		—			—		20,234			—


CFS securities:
Unrealized gains (losses)		(8,982	)		378		(9,935	)		736

The cumulative net unrealized gains (losses) on available-for-sale securities consisted of the following as of September 30, 2008 and December 31, 2007:


	September 30,			December 31,
(in thousands)	2008			2007

Total cumulative unrealized gains on available-for-sale securities with net gains:
Mutual Funds
Equity	$	419		$	39,461
Balanced		—			5,860
Fixed income		174			1,022
Other		—			5

Total mutual funds		593			46,348

Other investment securities		245			297

Total gains		838			46,645

Total cumulative unrealized losses on available-for-sale securities with net losses:
Mutual Funds
Equity		(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

The Company periodically evaluates its available-for-sale investments for other-than-temporary declines in value. Other-than-temporary declines in value may exist when the fair value of an investment security has been below the carrying value for an extended period of time. If an other-than-temporary decline in value is determined to exist, the unrealized investment loss, net of tax is recognized as a charge to net income in the period in which the other-than-temporary decline in value occurs, as well as an accompanying permanent adjustment to accumulated other comprehensive income (loss). At September 30, 2008, the Company believes all unrealized losses to be only temporary and due to temporary market conditions.

-8-

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

(4) Partnership Investments and Offshore Funds

Presented below are the underlying assets and liabilities of the Partnerships and the Offshore Funds that the Company reports on a net basis and the investments accounted for under the equity method, collectively presented as partnership investments and offshore funds in its consolidated statements of financial condition as of September 30, 2008 and December 31, 2007.


	September 30,			December 31,
(in thousands)	2008			2007

Calamos Equity Opportunities Fund LP:
Securities owned	$	—		$	111,142
Securities sold but not yet purchased		—			(24,838	)
Accrued expenses and other current liabilities		—			(1,478	)
Other current assets		—			20

Calamos Equity Opportunities Fund LP securities, net		—			84,846

Calamos Market Neutral Opportunities Fund LP:
Securities owned		62,786			81,361
Securities sold but not yet purchased		(14,087	)		(22,372	)
Accrued expenses and other current liabilities		(3,759	)		(5,178	)
Other current assets		5,364			1,028

Calamos Market Neutral Opportunities Fund LP securities, net		50,304			54,839

Calamos Global Funds PLC:
Securities owned		250,480			200,196
Other current assets		19,748			5,107
Accrued expenses and other liabilities		(5,322	)		(2,045	)

Calamos Global Funds PLC		264,906			203,258

Investment in other partnerships		28,346			10,061

Partnership investments and offshore funds	$	343,556		$	353,004

During the second quarter of 2008, the Company liquidated Calamos Equity Opportunities Fund LP with total proceeds of $29.3 million. The Company recorded losses of $18.9 million for the nine months ended September 30, 2008, which were offset by the minority interests’ portion of $10.8 million. As of December 31, 2007, the Company had a net interest of $37.2 million (43.9%) in Calamos Equity Opportunities Fund LP. The minority interests owned 56.1% of Calamos Equity Opportunities Fund LP at December 31, 2007 and are presented in the consolidated statements of financial condition as minority interest in partnership investments and offshore funds.

As of September 30, 2008 and December 31, 2007, the Company had a net interest of $48.9 million (97.2%) and $53.3 million (97.2%) in Calamos Market Neutral Opportunities Fund LP, respectively. The minority interests owned 2.8% of Calamos Market Neutral Opportunities Fund LP at September 30, 2008 and December 31, 2007 and are presented in the consolidated statements of financial condition as minority interest in partnership investments and offshore funds.

As of September 30, 2008 and December 31, 2007, the Company had a net interest of $152.3 million (57.5%) and $203.3 million (100%) in Calamos Global Funds PLC, respectively. The minority interests owned 42.5% at September 30, 2008, and are presented in the consolidated statements of financial condition as minority interest in partnership investments and offshore funds.

As of September 30, 2008 and December 31, 2007, the Company held non-controlling interests in certain other partnerships, and therefore, accounted for these investments using the equity method. These investments are presented collectively as investment in other partnerships in the table above.

-9-

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

(5) Fair Value Measurements

Effective January 1, 2008, the Company adopted the provisions of the Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Standards (SFAS) No. 157,Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and requires additional disclosure regarding fair value measurement. The implementation of SFAS 157 had no effect on the Company’s financial position or results of operations.

SFAS No. 157 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1 — observable inputs such as quoted prices in active markets; Level 2 — inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3 — unobservable inputs in which there is little or no market data, and require the reporting entity to develop its own assumptions. At September 30, 2008, the Company did not have any positions in Level 3 securities. For assets recorded at fair value, the Company uses a market approach.

The following provides the hierarchy of inputs used to derive the fair value of the Company’s investment securities, securities owned by the Partnership Investments and by the Offshore Funds and securities sold but not yet purchased as of September 30, 2008. Foreign currency contracts are included in securities owned by partnership investments and offshore funds on a net basis where the right of offset exists. There was no net impact of these positions at September 30, 2008.


				Fair Value Measurements at Reporting Date Using
				Quoted Prices in			Significant
				Active Markets			Other		Significant
				for Identical			Observable		Unobservable
(in thousands)	September 30,			Assets			Inputs		Inputs
Description	2008			(Level 1)			(Level 2)		(Level 3)

Investment securities (note 3)	$	480,281		$	480,281		$	—	$	—
Securities owned by Partnership
Investments 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

Minority interest in Calamos Holdings LLC represents the Calamos Interests’ aggregate ownership interest of 78.7% in Holdings at September 30, 2008 and December 31, 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 consolidated statements of changes in stockholders’ equity. Income 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 nine months ended September 30, 2008 is presented below:


(in thousands)
Minority interest at December 31, 2007	$	352,205
Income allocated to minority interests		48,904
Changes 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		50,853
Cumulative impact of changes in ownership of Calamos Holdings LLC units		(29	)
Compensation expense recognized under stock incentive plans		4,322
Dividend equivalent accrued under stock incentive plans		85
Tax distributions		(55,484	)
Equity distributions		(25,410	)

Minority interest at September 30, 2008	$	249,026

-10-

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

(7) Earnings (Loss) Per Share

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


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands, except per share data)	2008			2007		2008		2007
Earnings (loss) per share — basic
Earnings (loss) available to common shareholders	$	(799	)	$	7,127	$	1,546	$	18,466
Weighted average shares outstanding		19,453			21,851		19,843		22,669

Earnings (loss) per share — basic	$	(0.04	)	$	0.33	$	0.08	$	0.81


Earnings (loss) per share — diluted
Income (loss) before minority interest in Calamos Holdings LLC and income taxes	$	(6,874	)	$	52,746	$	62,194	$	132,823
Less: Impact of revaluation of net deferred tax assets		—			—		32,888		—
Less: Impact of income taxes		(2,270	)		21,109		23,260		53,408

Earnings (loss) available to common shareholders	$	(4,604	)	$	31,637	$	6,046	$	79,415

Weighted average shares outstanding		19,453			21,851		19,843		22,669
Conversion of membership units for common stock		77,019			77,000		77,006		77,000
Dilutive impact of restricted stock units		358			397		311		357
Dilutive impact of stock options		—			72		—		67

Weighted average diluted shares outstanding		96,830			99,320		97,160		100,093

Earnings (loss) per share — diluted	$	(0.05	)	$	0.32	$	0.06	$	0.79

Diluted shares outstanding for the three and nine months ended September 30, 2008 and 2007 are calculated (a) assuming that Calamos Interests exchanged all of their membership units in Holdings for shares of the Company’s Class A common stock on a one-for-one basis at the beginning of each period presented and (b) including the effect of outstanding restricted stock unit and stock option awards. In calculating diluted earnings per share, the Company assumes that the net deferred tax assets will increase at a rate commensurate with the Company’s increased ownership of Holdings at the time of Calamos Interests’ exchange. As a result of the reduction of the Company’s statutory income tax rate during the second quarter of 2008 (see note 10), the net deferred tax assets would decrease by $32.9 million for the nine months ended September 30, 2008. Additionally, an effective tax rate of 33.0% and 37.4% was applied to income before minority interest in Calamos Holdings LLC and income taxes for the three and nine months ended September 30, 2008. An effective tax rate of 40.0% and 40.2% was applied to income before minority interest in Calamos Holdings LLC and income taxes for the three and nine months ended September 30, 2007.

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 SFAS No. 123(R),Share-Based Payment, 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 and not yet recognized is included as a component of the assumed proceeds upon exercise. 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. The following table shows the number of shares of stock options and RSUs which were excluded from the computation of diluted earnings per share as they were anti-dilutive.

-11-

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008		2007
Restricted stock units		44,083		—		248,168		331,140
Stock options		2,681,026		1,282,721		2,681,026		1,282,721

Total		2,725,109		1,282,721		2,929,194		1,613,861

(8) Stock Based Compensation

Under the Company’s incentive compensation plan, certain employees of the Company receive stock based compensation comprised of stock options and RSUs. Historically, RSUs have been settled with newly issued shares so that no cash was used by the Company to settle awards; however, the Company may use treasury shares. The Company’s Annual Report on Form 10-K for the year ended December 31, 2007 provides details of this plan and its provisions.

For the nine months ended September 30, 2008, the Company granted 1,076,166 stock options and 358,722 RSUs. There were forfeitures of 208,725 stock options and 85,340 RSUs during the nine months ended September 30, 2008. The weighted average fair value of stock options at the date of grant for the nine months ended September 30, 2008 was $6.66, which was estimated on the date of grant using the Black-Scholes option-pricing model. The assumptions used were dividend yields of 2.27%, 2.19% and 2.10%, expected volatility of 35%, risk-free interest rates of 3.3%, 4.4% and 4.7%, and an expected life of 7.5 years.

During the first nine months of 2008, 188,321 RSUs were exercised and, after 59,330 RSUs were withheld for taxes, 128,991 RSUs were converted for an equal number of shares of CAM’s Class A common stock. The total intrinsic value and the fair value of the converted shares was $3.7 million. The total tax benefit realized in connection with the exercise of the RSUs during the nine months ended September 30, 2008 was $445,000, as the Company receives tax benefits based only upon the portion of Holdings’ income that it recognizes.

During the nine months ended September 30, 2008, expense recorded in connection with the RSUs and stock options was $5.4 million of which $1.1 million, after giving effect to the minority interests, was credited as additional paid-in capital. During the nine months ended September 30, 2007, expense recorded in connection with the RSUs and stock options was $5.2 million of which $1.2 million, after giving effect to the minority interests, was credited as additional paid-in capital. The amount of deferred tax asset created was $414,000 and $473,000 during the nine months ended September 30, 2008 and 2007, respectively. At September 30, 2008, approximately $24.7 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 4.1 years.

-12-

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

(9) Non-Operating Income (Loss)

Non-operating income (loss) was comprised of the following for the three and nine months ended September 30, 2008 and 2007:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2008			2007			2008			2007
Interest income	$	519		$	5,975		$	1,859		$	13,537
Interest expense		(8,153	)		(7,331	)		(24,415	)		(11,404	)

Net interest income (expense)		(7,634	)		(1,356	)		(22,556	)		2,133

Capital gains and dividend income		1,763			863			26,241			1,543
Unrealized appreciation (depreciation)		(73,006	)		5,733			(120,792	)		12,229
Miscellaneous other income		233			133			722			727

Investment and other income (loss)		(71,010	)		6,729			(93,829	)		14,499

Minority interest in partnership investments		27,659			(2,066	)		40,928			(4,335	)

Non-operating income (loss)	$	(50,985	)	$	3,307		$	(75,457	)	$	12,297

Non-operating income (loss), after giving effect to income taxes, reduced diluted earnings per share by $0.35 and $0.49 during the three and nine months ended September 30, 2008, respectively. Non-operating income (loss), after giving effect to income taxes, added $0.02 and $0.07 to diluted earnings per share during the three and nine months ended September 30, 2007.

(10) Income Taxes

The provision for income taxes for the three and nine months ended September 30, 2008 and 2007 consist of the following:


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2008			2007		2008			2007
Current:
Federal	$	2,289		$	2,358	$	5,361		$	5,891
State		207			562		484			1,403

Total current income taxes		2,496			2,920		5,845			7,294

Deferred:
Federal		(2,653	)		1,483		(802	)		4,140
State		(237	)		353		6,701			985

Total deferred income taxes		(2,890	)		1,836		5,899			5,125


Total income taxes	$	(394	)	$	4,756	$	11,744		$	12,419

-13-

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

Deferred income taxes reflect the expected future tax consequences of temporary differences between carrying amounts and tax bases of the Company’s assets and liabilities. The significant components of deferred income taxes at September 30, 2008 and December 31, 2007 are as follows:


	September 30,		December 31,
(in thousands)	2008		2007
Deferred tax assets:
Intangible assets	$	81,816	$	97,290
Unrealized net holding losses on investments of available-for-sale securities		6,794		—
Other		7,807		984

Total deferred tax assets		96,417		98,274


Deferred tax liabilities:
Unrealized net holding gains on investments of available-for-sale securities		—		3,191
Deferred sales commission		1,295		2,808
Other		791		1,991

Total deferred tax liabilities		2,086		7,990


Net deferred tax assets	$	94,331	$	90,284

Deferred tax assets and liabilities are reflected on the Company’s consolidated statements of financial condition as a net deferred tax asset. The current and non-current portions of the net deferred tax asset were $15.2 million and $79.1 million, respectively, at September 30, 2008 and $6.9 million and $83.4 million at December 31, 2007.

The following table reconciles the statutory federal income tax rate to the effective income tax rate for the three and nine months ended September 30, 2008 and 2007, respectively.


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2008			2007			2008			2007
Statutory 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

In 2007, the Board of Directors authorized the Company to repurchase up to 2 million shares of Class A common stock, all of which have been repurchased as of June 30, 2008. During 2008, the Company repurchased 1,547,900 shares at an aggregated cost of $34.6 million. In order to provide CAM with cash to repurchase shares, CAM sold membership units to Holdings equal to the number of shares of Class A common stock that it repurchased, thus reducing CAM’s ownership in Holdings. The net impact of these transactions is presented in the consolidated statements of changes in stockholders’ equity.

During the third quarter of 2008, CAM contributed $33.3 million of investment securities to Holdings in exchange for 1,858,113 membership units and the Calamos Interests contributed $31.3 million of investment securities to Holdings in exchange for 1,747,628 membership units. The consolidated impact of the $64.6 million capital contribution was an increase of $13.8 million in additional paid-in capital and an increase of $50.9 million in minority interest in Holdings. The net effect of these contributions increased CAM’s ownership in Holdings by 1.1%. CAM did not issue shares of its Class A common stock in connection with these contributions. As a result, the membership units owned exceeds the shares of CAM Class A common stock outstanding.

-14-

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

(12) Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS 141(R),Business Combinations, which establishes requirements for how the acquirer in a business combination recognizes, measures and discloses identified assets and goodwill acquired, liabilities assumed, and any noncontrolling interests. SFAS 141(R) is effective for the Company for any business combination with an acquisition date that is on or after January 1, 2009. The Company is currently evaluating the impact, if any, that the adoption of SFAS 141(R) will have on its financial statements.

In December 2007, the FASB issued SFAS 160,Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51, which establishes accounting and reporting requirements for noncontrolling interest, which the Company currently refers to as minority interest. SFAS 160 would require noncontrolling interest to be reported as a component of equity on the consolidated statements of financial position and the amount of net income attributable to noncontrolling interest to be identified on the consolidated statements of income. SFAS 160 is effective for the Company beginning January 1, 2009. The Company is currently evaluating the impact, if any, that the adoption of SFAS 160 will have on its financial statements.

In March 2008, the FASB issued SFAS 161,Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133, which requires additional disclosures for derivative instruments and hedging activities. SFAS 161 is effective for the Company beginning January 1, 2009. The Company is currently evaluating the impact, if any, that the adoption of SFAS 161 will have on its financial statements.

-15-

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

We provide investment advisory services to institutions and individuals, managing $33.3 billion in client assets at September 30, 2008. 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.

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 September 30, 2008 and 2007.


	September 30,
(in millions)	2008		2007
Mutual Funds
Open-end funds	$	19,110	$	28,000
Closed-end funds		5,738		7,677

Total mutual funds		24,848		35,677


Separate Accounts
Institutional accounts		4,221		4,896
Managed accounts		4,210		6,028
Alternative investments		50		145

Total separate accounts		8,481		11,069

Total assets under management	$	33,329	$	46,746

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.

Given recent market events and the current environment, we expect downward pressure in the value of our assets under management and in the corresponding revenues.

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.

-16-

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

Assets under management decreased by $13.4 billion, or 29%, to $33.3 billion at September 30, 2008 from $46.7 billion at September 30, 2007. At September 30, 2008, our assets under management consisted of 75% mutual funds and 25% separate accounts, compared to 76% mutual funds and 24% separate accounts at September 30, 2007.


($ in millions)	Three Months Ended September 30,												Nine Months Ended September 30,
							Change												Change
	2008			2007			Amount			Percent			2008			2007			Amount			Percent
Mutual Funds
Beginning 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			21
Market 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 Accounts
Beginning assets under management		10,517			10,525			(8	)		(0	)		11,373			11,021			352			3
Net 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 Management
Beginning assets under management		41,210			43,811			(2,601	)		(6	)		46,208			44,725			1,483			3
Net purchases (redemptions)		(1,371	)		374			(1,745	)		*			(1,913	)		(3,562	)		1,649			46
Market 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.

Mutual funds had net redemptions of $1.0 billion during the third quarter of 2008 compared to net purchases of $511 million in the third quarter of 2007. This decrease in net flows was primarily due to higher redemptions of our Growth Fund and to the issuance of preferred shares of Calamos Global Dynamic Income Fund (CHW) during the third quarter of 2007. Mutual funds had market depreciation of $4.8 billion during the third quarter of 2008 compared to market appreciation of $1.9 billion during the three months ended September 30, 2007.

Mutual funds had net redemptions of $1.7 billion and $2.2 billion during the first nine months of 2008 and 2007, respectively. The improvement in net flows from the prior-year period was due to higher sales and lower redemptions of our Growth Fund, partially offset by a reduction in net sales in the closed-end funds, primarily due to the initial public offering and preferred share issuance of CHW, which raised nearly $1.2 billion during 2007. Mutual funds had market depreciation of $8.2 billion during the nine months ended September 30, 2008 compared to market appreciation of $4.2 billion during the 2007 period.

Separate accounts had net redemptions of $360 million and $171 million during the third quarter and year-to-date period ended September 30, 2008, respectively, compared to net redemptions of $137 million and $1.4 billion during the prior-year periods due to an increase in redemptions for managed accounts. The decrease in net redemptions for the nine months ended September 30, 2008, compared to the prior year period, was primarily due to an increase in sales and a decrease in redemptions for institutional accounts. Separate accounts had market depreciation of $1.7 billion and $2.7 billion during the three and nine months ended September 30, 2008, respectively, compared to market appreciation of $681 million and $1.4 billion during the 2007 periods.

-17-

Impact of One-Time Items

Results of operations for the nine months ended September 30, 2008 and 2007 were significantly impacted by certain one-time expenses. In 2008, developments in the Illinois tax statutes resulted in modifications to the Company’s state tax apportionment methodology that lowered the Company’s statutory income tax rate from 40 percent to 37 percent. While we view this to be beneficial for the long term by reducing income taxes, we recorded a one-time, non-cash income tax expense of $6.8 million, or $0.34 per diluted share, in the second quarter of 2008 to revalue our net deferred tax assets to reflect the new statutory income tax rate. The 2007 year-to-date period was impacted by two one-time marketing and sales promotion expenses. During the second quarter of 2007, 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. Additionally, we incurred a $6.9 million, or 4 cents per diluted share, one-time structuring fee related to the launch of the Calamos Global Dynamic Income Fund (CHW) during the second quarter of 2007.

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 expenses, operating income, operating income per diluted share, net of income taxes, operating margin, net income and diluted earnings per share, 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 the revaluation of the net deferred tax assets in the second quarter of 2008 and the impact of terminating the two closed-end fund additional compensation agreements and the CHW closed-end fund structuring fees in the second quarter of 2007. As these one-time items are not expected to recur, 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. Reconciliations of these measurements from the most directly comparable GAAP financial measures for the nine months ended September 30, 2008 and 2007 are provided in the table below and should be carefully evaluated by the reader:


	Nine Months Ended
	September 30,
($ in thousands)	2008			2007
Operating expenses	$	187,087		$	228,425
Termination of closed-end fund compensation agreements		—			19,500
Closed-end fund structuring fees		—			6,904

Operating expenses, as adjusted	$	187,087		$	202,021


Operating income	$	137,651		$	120,526
Termination of closed-end fund compensation agreements		—			19,500
Closed-end fund structuring fees		—			6,904

Operating income, as adjusted	$	137,651		$	146,930


Operating income per diluted share, net of income taxes	$	0.89		$	0.72
Termination of closed-end fund compensation agreements		—			0.11
Closed-end fund structuring fees		—			0.04

Operating income per diluted share, net of income taxes, as adjusted	$	0.89		$	0.87


Operating margin		42.4	%		34.5	%
Termination of closed-end fund compensation agreements		—			5.6
Closed-end fund structuring fees		—			2.0

Operating margin, as adjusted		42.4	%		42.1	%


Net income	$	1,546		$	18,466
Termination of closed-end fund compensation agreements		—			2,634
Closed-end fund structuring fees		—			933
Net deferred tax assets revaluation		6,771			—

Net income, as adjusted	$	8,317		$	22,033


Diluted earnings per share	$	0.06		$	0.79
Termination of closed-end fund compensation agreements		—			0.12
Closed-end fund structuring fees		—			0.04
Net deferred tax assets revaluation		0.34			—

Diluted earnings per share, as adjusted	$	0.40		$	0.95

-18-

Financial Overview

Operating income was $44.1 million and $137.7 million for the three and nine months ended September 30, 2008, respectively, compared with $49.4 million and $120.5 million for the same periods a year ago. Operating margin was 43.3% and 42.4% for the third quarter and first nine months of 2008 compared to 41.7% and 34.5% for the year-earlier periods. Operating income, after giving effect to income taxes, contributed $0.30 and $0.89 per diluted share in the third quarter and first nine months of 2008 versus $0.30 and $0.72 in the prior-year periods.

Operating income, as adjusted, was $137.7 million for the nine months ended September 30, 2008, compared with $146.9 million for the same period a year ago. Operating margin, as adjusted, was 42.4% for the first nine months of 2008 and 42.1% for the year-earlier period. Operating income, after giving effect to income taxes, as adjusted, contributed $0.89 per diluted share in the first nine months of 2008 versus $0.87 in the prior-year period.

Non-operating income (loss) reduced income by $51.0 million and $75.5 million for the three and nine months ended September 30, 2008, respectively. Non-operating income (loss) added $3.3 million and $12.3 million to income for the three and nine months ended September 30, 2007, respectively. Changes in non-operating income (loss) were due primarily to current year unrealized market depreciation of our investments in consolidated partnerships and offshore funds, partially offset by realized gains from the sale of available-for-sale securities during the second quarter of 2008. Non-operating income (loss), after giving effect to income taxes, reduced income by $0.35 per diluted share and $0.49 per diluted share for third quarter and first nine months of 2008 versus adding $0.02 and $0.07 per diluted share in the prior-year periods.

Revenues

Total revenues decreased by $16.7 million, or 14%, to $101.8 million for the three months ended September 30, 2008 from $118.5 million for the prior year. For the nine months ended September 30, 2008, total revenues decreased by $24.2 million, or 7%, to $324.7 million from $349.0 million for the prior year. These decreases were primarily due to lower investment management fees and distribution and underwriting fees.


($ in thousands)	Three Months Ended September 30,										Nine Months Ended September 30,
					Change										Change
	2008		2007		Amount			Percent			2008		2007		Amount			Percent
Investment 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	)%

Investment management fees decreased $10.7 million for the three months ended September 30, 2008 when compared to the same period in 2007. Investment management fees from open-end funds decreased $7.9 million to $43.2 million as a result of a decrease in open-end funds average assets under management of $4.2 billion when compared to the year-earlier period. Closed-end fund investment management fees decreased $1.5 million to $14.4 million for third quarter of 2008 when compared to the prior-year period as a result of a decrease in closed-end fund average assets under management of $744 million, or 10%. Investment management fees from separate accounts decreased $1.3 million for the three months ended September 30, 2008 compared to the prior-year period as a result of a decrease in separate accounts average assets under management of $872 million. Investment management fees as a percentage of average assets under management were 0.74% for the three months ended September 30, 2008 and 2007.

Investment management fees decreased $11.8 million for the nine months ended September 30, 2008 when compared to the same period in 2007. Investment management fees from open-end funds decreased $13.0 million to $138.2 million as a result of a decrease in open-end funds average assets under management of $2.8 billion when compared to the year-earlier period. Closed-end fund investment management fees increased $1.9 million to $45.1 million for first nine months of 2008 when compared to the prior-year period as a result of an increase in closed-end fund average assets under management of $105 million. Closed-end fund average assets under management were favorably impacted by our $1.2 billion Calamos Global Dynamic Income Fund (CHW) launched late in the second quarter of 2007. Investment management fees from separate accounts decreased $0.7 million for the nine months ended September 30, 2008 from the prior-year period as a result of a decrease in separate accounts average assets under management of $325 million. Investment management fees as a percentage of average assets under management were 0.74% and 0.72% for the nine months ended September 30, 2008 and 2007, respectively.

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Distribution and underwriting fees decreased by $5.8 million, or 16%, to $29.4 million for the three months ended September 30, 2008 from $35.3 million for the third quarter of 2007. Distribution and underwriting fees decreased by $12.3 million, or 11%, to $94.7 million for the nine months ended September 30, 2008 from $107.0 million for the first nine months of 2007. The decrease for the third quarter was primarily due to a $5.5 million decrease in distribution fees as a result of a 16% decrease in open-end fund average assets under management. The decrease for the year-to-date period was mainly due to a $9.5 million decrease in distribution fees as a result of a 10% decrease in open-end fund average assets under management and a $2.6 million decrease in contingent deferred sales charges as a result of a decrease in redemptions.

As noted above, our revenues are primarily driven by assets under management, which have been negatively affected by unprecedented market conditions. As a result of these conditions, we expect to continue to experience downward pressure on our revenues.

Operating Expenses

Operating expenses decreased to $57.7 million and $187.1 million for the three and nine months ended September 30, 2008, respectively, from $69.0 million and $228.4 million for the same periods in the prior year.

Operating expenses, as adjusted for one-time marketing and sales promotion expenses decreased to $187.1 million for the first nine months of 2008 from $202.0 million for the prior-year period.


($ in thousands)	Three Months Ended September 30,										Nine Months Ended September 30,
					Change										Change
	2008		2007		Amount			Percent			2008		2007		Amount			Percent
Employee 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			4

Total operating expenses	$	57,696	$	69,045	$	(11,349	)		(16	)%	$	187,087	$	228,425	$	(41,338	)		(18	)%

Employee compensation and benefits expense decreased by $6.4 million and $6.2 million for the three and nine months ended September 30, 2008 compared to the prior-year periods primarily due to a reduction in incentive compensation expense as a result of the impact that the recent global market developments have had on our business, as well as our industry. The decrease in the quarter periods was further driven by transition payments made in 2007 for two former executive officers and the effects of cost containment efforts taken by us in the first quarter of 2008.

Distribution and underwriting expense decreased by $4.3 million and $5.5 million for the third quarter and first nine months of 2008 when compared to the prior-year periods primarily due to the decline in average open-end fund assets under management and to lower 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 nine months ended September 30, 2008 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.

Amortization of deferred sales commissions decreased $3.1 million for the nine months ended September 30, 2008, when compared to the first nine months of 2007 due to lower Class C share sales and lower Class B share redemptions, which typically result in the acceleration of amortization expense.

Marketing and sales promotion expense decreased by $0.3 million and $27.5 million for the third quarter and first nine months of 2008, when compared to the prior-year periods. While both periods were impacted by lower corporate branding efforts, the year-to-date decrease was primarily due to the $26.4 million one-time marketing and sales promotion expenses that occurred in the second quarter of 2007.

General and administrative expense decreased by $0.3 million and increased by $1.0 million for the three and nine months ended September 30, 2008 compared to the 2007 periods. The decrease for the quarterly periods was primarily due to lower professional services partially offset by higher occupancy-related costs. The increase for the year-to-date periods was primarily attributable to increases in occupancy-related costs and depreciation.

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In response to the impact that unprecedented market conditions have had on our assets under management and the resulting downward pressure on our revenues, management has begun to take certain expense control measures. These expense control measures are intended to right-size our operations to reflect the decrease in our asset base while still positioning the company for future growth. Our expense control effort is focused on streamlining our infrastructure with the objective of transforming fixed expenses into variable expenses, in part through possible outsourcing opportunities in technology and operations, which would also allow us to reduce capital expenditures. A reduction-in-force is part of our overall expense control strategy, including a recent reduction of 31 information technology associates. A substantial portion of the reduction was related to suspending certain information technology projects.

By continuing to position the company for future growth we believe we are able to take advantage of future growth opportunities as the financial markets stabilize. Our efforts are focused on reviewing and rationalizing our product offerings to realign our capabilities with market opportunities, and include the recent re-opening of our convertible strategy to new investors. Additionally, we are reviewing our use of current sales and marketing resources and will consider realigning these resources to take advantage of those market opportunities.

Non-Operating Activities

Non-operating income (loss) reduced income by $51.0 million for the three months ended September 30, 2008 compared to adding $3.3 million of income for the three months ended September 30, 2007. Non-operating income (loss) reduced income by $75.5 million for the nine months ended September 30, 2008 compared to adding $12.3 million of income for the nine months ended September 30, 2007.


	Three Months Ended September 30,									Nine Months Ended September 30,
($ in thousands)	2008			2007			Change			2008			2007			Change
Interest 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			24,698
Unrealized 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	)		45,263

Non-operating income (loss)	$	(50,985	)	$	3,307		$	(54,292	)	$	(75,457	)	$	12,297		$	(87,754	)

Interest income decreased $5.5 million and $11.7 million for the third quarter and first nine months of 2008, respectively, when compared to the prior-year periods, primarily due to lower cash and cash equivalents balances and to lower interest rates earned. Interest expense increased $0.8 million and $13.0 million for the three and nine months ended September 30, 2008, respectively, when compared to 2007 due to the private debt offering that closed during the third quarter of 2007.

Capital gains and dividend income increased $24.7 million for the first nine months of 2008, when compared to the prior-year period, primarily due to $20.7 million of gains recognized upon the sale of $113.3 million of our investment securities during the second quarter of 2008.

The changes in unrealized appreciation (depreciation) and in minority interest in partnership investments and offshore funds for the third quarter and first nine months of 2008, when compared to the prior-year periods, were primarily due to fluctuations in the market values of our investments in consolidated partnerships and offshore funds. Because our ownership in the offshore funds represents more than 50% of the funds’ assets, we are required to consolidate these portfolios with our financial results. This consolidation may no longer be required once our investment represents less than 50% of the relevant funds’ total assets and at that point future market appreciation and depreciation would be included as a component of stockholders’ equity.

Changes in the market values of certain investment securities are not recorded to net income; rather, they are recorded as changes to accumulated other comprehensive income (loss), a component of stockholders’ equity. These market value fluctuations are only recognized in our consolidated statements of operations upon the sale of the securities and upon the receipt of capital gains distributions, which typically occur during the fourth quarter of each year. During the three and nine months ended September 30, 2008, mark-to-market adjustments on these securities were $60.7 million and $105.3 million, respectively, of which $7.8 million and $13.7 million, net of minority interest and income taxes were recorded as decreases to accumulated other comprehensive income. During the three and nine months ended September 30, 2007, mark-to-market

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adjustments on these securities were $18.0 million and $34.1 million, respectively, of which $2.3 million and $4.5 million, net of minority interest and income taxes were recorded as increases to accumulated other comprehensive income.

Income Taxes

In 2008, developments in the Illinois tax statutes resulted in modifications to the Company’s state tax apportionment methodology that lowered the Company’s statutory income tax rate from 40 percent to 37 percent. In the second quarter of 2008, we recorded a one-time, non-cash income tax expense of $6.8 million, or $0.34 per diluted share, to revalue our net deferred tax assets to reflect the new statutory income tax rate. Because deferred tax assets represent the estimated future benefits attributed to temporary differences and are based on the current enacted tax laws, a decrease in tax rates decreases the value of the deferred tax assets and increases the current period income tax expense. Conversely, an increase in tax rates increases the value of the deferred tax assets and decreases the current period income tax expense.

Net Income (Loss)

Net income (loss) was $(0.8) million and $1.5 million for the three and nine months ended September 30, 2008, respectively, compared to $7.1 million and $18.5 million for the same periods in the prior year.

Net income, as adjusted, was $8.3 million for the nine months ended September 30, 2008, compared to $22.0 million for the same period in the prior year.

Liquidity and Capital Resources

Our current financial condition remains highly liquid. Our corporate investment portfolio, which is comprised of cash and cash equivalents, investment securities, partnership investments and offshore funds, makes up a significant majority of our assets. 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 and to support our operations. Investment securities and offshore funds are principally comprised of company-sponsored mutual funds. In addition, the underlying partnership investments are typically comprised of highly liquid exchange-traded securities. Our working capital requirements historically have been met through cash generated by our operations. We believe cash generated from operations will be sufficient over the foreseeable future to meet our working capital requirements with respect to the foregoing activities and to support future growth. The Company maintains sufficient liquidity to meet all of its obligations.

As is customary, we are subject to various financial covenants under our note purchase agreements including maintaining certain net worth and EBITDA levels. We were in compliance with our financial covenants at September 30, 2008, however the unprecedented declines in the financial markets and the resulting decline in the value of our assets under management and investment portfolio have put pressure on these covenants. Consequently, management has initiated discussions with its noteholders to request amendments of these measures. If an event of default were to occur with respect to any of these financial covenants, we would seek an amendment from the noteholders. While we believe it to be unlikely, in the case we were not successful in obtaining an amendment, this could result in various remedies to the noteholders including the acceleration of all notes outstanding and the payment of a make-whole amount. We believe we have adequate resources to repay these amounts if there were an acceleration but this would negatively impact our liquidity.

Calamos Asset Management, Inc. and Calamos Family Partners, Inc. made capital contributions to Calamos Holdings LLC during the third quarter of 2008 that helped offset shares repurchased under our Class A common stock repurchase plan. Further, in early October, we initiated a series of hedges to help protect the value of our portfolio. Additionally, we reduced our dividend in October as a result of a decline in assets under management and income, as well as to conserve capital.

The following table presents a summary of certain items from our statements of financial condition that provide liquidity or are significant uses of capital resources.

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(in thousands)	September 30,		December 31,
	2008		2007
Statements of financial condition data:
Cash and cash equivalents	$	77,843	$	108,441
Receivables		30,155		39,340
Investment securities		480,281		535,476
Partnership investments and offshore funds		343,556		353,004
Deferred sales commissions		22,570		34,076
Property and equipment, net of accumulated depreciation		45,254		48,420
Long-term debt		525,000		525,000

Cash flows for the nine months ended September 30, 2008 and 2007 are shown below:


(in thousands)	September 30,
	2008			2007
Cash flow data:
Net cash provided by operating activities	$	121,553		$	155,111
Net cash used in investing activities		(61,635	)		(253,104	)
Net cash provided by (used in) financing activities		(90,516	)		249,058

Net cash provided by operating activities was $121.6 million for the nine months ended September 30, 2008 and was primarily comprised of operating income of $137.7 million partially offset by 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 $6.6 million for the nine months ended September 30, 2008. 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.

For the nine months ended September 30, 2008, net cash used in investing activities was $61.6 million and was primarily a $25 million investment in each of the new Calamos 130/30 Equity Fund, the new Calamos Evolving World Growth Fund and a partnership investment, partially offset by the $29.3 million received from the liquidation of Calamos Equity Opportunities Fund LP. The proceeds of $113.3 million from the sale of our investment securities during the second quarter of 2008 were reinvested in investment securities during July 2008, resulting in no net impact to cash flows for the year-to-date period.

Net cash used by financing activities was $90.5 million for the nine months ended September 30, 2008 and was comprised of distributions to minority shareholders of $80.9 million, including distributions for their tax liabilities of $55.5 million, as well as dividends paid to common shareholders of $6.5 million. Additionally, the Company repurchased 1,547,900 shares of its Class A common stock at an aggregated cost of $34.6 million during the first half of 2008. As previously discussed, during the third quarter of 2008, we received a capital contribution of $31.3 million from Calamos Family Partners, Inc.

We expect our cash and liquidity requirements will be met with the cash on hand, the sale of investment securities and through cash generated by operations.

Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS 141(R),Business Combinations, which establishes requirements for how the acquirer in a business combination recognizes, measures and discloses identified assets and goodwill acquired, liabilities assumed, and any noncontrolling interests. SFAS 141(R) is effective for us for any business combination with an acquisition date that is on or after January 1, 2009. We are currently evaluating the impact, if any, that the adoption of SFAS 141(R) will have on our financial statements.

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identified on the consolidated statements of income. SFAS 160 is effective for us beginning January 1, 2009. We are currently evaluating the impact, if any, that the adoption of SFAS 160 will have on our financial statements.

In March 2008, the FASB issued SFAS 161,Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133, which requires additional disclosures for derivative instruments and hedging activities. SFAS 161 is effective for us beginning January 1, 2009. We are currently evaluating the impact, if any, that the adoption of SFAS 161 will have on our financial statements.

Critical Accounting Policies

Our significant accounting policies are summarized in note 2 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2007. 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, 2007. There were no significant changes in our significant accounting policies or critical accounting policies during the nine months ended September 30, 2008.

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 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; the inability to maintain compliance with financial covenants; the performance of our investment portfolio; our ownership and organizational structure; general and prolonged declines in the prices of securities; significant changes in market conditions and the economy that require a modification to our business plan; catastrophic or unpredictable events; the loss of key executives; the unavailability, consolidation and elimination 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; and the extent and timing of any share repurchases. 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 both the underlying value and liquidity of the financial markets around the world that result in appreciation or depreciation of assets under management; mutual fund capital gain distributions; our ability to access capital markets; 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 this report and Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2007 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

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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, 2007. There were no material changes to the Company’s market risk during the nine months ended September 30, 2008.

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 September 30, 2008, 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 third quarter that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

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 1A. Risk Factors

Business Risks

Set forth below are material changes and additions to the risk factors previously disclosed in our Form 10-K. We caution the reader that the following business risks and those risks described elsewhere in this report and our other SEC filings, could cause our actual results to differ materially from expectations stated in our forward-looking statements.

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.

Our business is subject to extensive regulation. In the United States regulations exist primarily at the federal level, including regulation by the SEC under the Investment Company Act of 1940, as amended, and the Investment Advisers Act of 1940, as amended, by the Department of Labor under the Employee Retirement Income Security Act of 1974, as amended, or ERISA, as well as regulation by the Financial Industry Regulatory Authority, or FINRA and state regulators. Calamos Asset Management is not an investment company however the mutual funds managed by Calamos Advisors are registered with the SEC as investment companies under the Investment Company Act. The Investment Advisers Act imposes numerous obligations on investment advisors, including record-keeping, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities. The Investment Company Act imposes similar obligations, as well as additional detailed operational requirements, on registered investment companies and investment advisors. Industry regulations are designed to protect our clients and investors in our funds and other third parties who deal with us and to ensure the integrity of the financial markets. They are not designed to protect our stockholders. The increased potential of changes in laws or regulations or in governmental policies due to the state of the economy and 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. Further, our failure to comply with applicable laws or regulations could result in fines, censure, suspensions of personnel or other sanctions, including revocation of our registration as an investment advisor or broker-dealer.

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A general or prolonged decline in the prices of securities would lead to a decline in our assets under management, revenues and earnings.

Substantially all of our revenues are determined by the amount of our assets under management. Under our investment advisory contracts with our clients, the investment management fee we receive is typically based on the market value of assets under management. In addition, we receive asset-based distribution and/or service fees with respect to the open-end funds managed by Calamos Advisors over time pursuant to distribution plans adopted under provisions of Rule 12b-1 under the Investment Company Act. Rule 12b-1 fees typically are based on the market value of assets under management and represented approximately 28% of our revenues for the nine months ended September 30, 2008, and for each year ended December 31, 2007, 2006 and 2005. Accordingly, a general or prolonged decline in the prices of securities generally may cause our revenues and net income to decline by either causing the value of our assets under management to decrease, which would result in lower investment advisory and Rule 12b-1 fees, or causing our clients to withdraw funds in favor of investments they perceive to offer greater opportunity or lower risk, which would also result in lower fees. The securities markets are highly volatile and securities prices may increase or decrease for many reasons beyond our control, including economic and political events and acts of terrorism. If a general or prolonged decline in securities prices caused our revenues to decline, it could have a material adverse effect on our earnings.

Risks Related to Our Business

We depend on third-party distribution channels to market our investment products and access our client base.

The potential investor base for mutual funds and separate accounts is limited, and our ability to distribute mutual funds and access clients for separate accounts is highly dependent on access to the retail distribution systems and client bases of national and regional securities firms, banks, insurance companies, defined contribution plan administrators and other intermediaries, which generally offer competing internally and externally managed investment products. For open-end funds, such intermediaries are paid for their services to fund shareholders, in part, through Rule 12b-1 fees and/or upfront commission payments by us, for which we receive Rule 12b-1 payments in the future. Those future payments allow us to pay or help us recover payments to selling firms. Access to such distribution systems and client bases is substantially dependent upon our ability to charge Rule 12b-1 fees to our funds. Our institutional separate account business depends on referrals from financial planners and other professional advisors, as well as from our existing clients. We cannot assure you that these channels and client bases will continue to be accessible to us. The inability to have such access could have a material adverse effect on our earnings.

As of September 30, 2008, a majority of our assets under management were attributable to accounts that we accessed through third-party intermediaries. These intermediaries generally may terminate their relationships with us on short notice. While we continue to diversify and add new distribution channels for mutual funds and managed accounts and a significant portion of the growth in our assets under management in recent years has been accessed through intermediaries, the unprecedented market conditions have resulted in a consolidation of and elimination of some financial service companies. The loss of any of the distribution channels afforded by these intermediaries, and the inability to access clients through new distribution channels, could decrease our assets under management and adversely affect our results of operations and growth potential. In addition, in the case of managed accounts offered through intermediaries to their customers, such intermediaries may reduce the fees that they remit to us as part of the arrangements they have with us. A substantial reduction in fees received from third-party intermediaries could have a material adverse affect on our business.

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.

Calamos Holdings LLC issued $375 million and $150 million of aggregate principal amount of senior unsecured notes in July 2007 and April 2004, respectively. Note purchase agreements between Calamos Holdings and the noteholders govern the terms of the unsecured notes. Under these agreements, Calamos Holdings LLC must maintain certain consolidated net worth, leverage and interest ratios. The note purchase agreements also contain other covenants that, among other provisions, restricts the ability of Calamos Holdings’ subsidiaries to incur debt and restrict the ability of Calamos Holdings or its subsidiaries to create liens and to merge or to consolidate, or sell or convey all or substantially all of Calamos Holdings’ assets. The inability for Calamos Holdings to maintain compliance with any of these covenants could lead to an event of default and result in various remedies to the noteholders including the acceleration of all the notes outstanding and the payment of a make whole amount. In such an event, our liquidity would be negatively impacted.

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Significant changes in market conditions and the economy may require a modification to our business plan.

Our revenues are primarily driven by assets under management and declines in the financial markets will directly and negatively affect our investment advisory fee revenues as well as our non-operating income and net income. As such, significant changes in market conditions and the economy may require a modification to our business plan. Modification to our business plan may include: the reopening or elimination of product offerings or efforts, realignment of sales and marketing resources to adapt to changing market demand and the changing competitive landscape, and the implementation of expense control measures to streamline our infrastructure and reduce capital expenditures.

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.

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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: November 7, 2008	By:	/s/ Cristina Wasiak
		Cristina Wasiak
		Senior Vice President, Chief Financial Officer and Treasurer

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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

Calamos Asset Management (CLMS) Inactive 10-Q2008 Q3 Quarterly report

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