September 24, 2004
Mail-Stop 0408
Via facsimile and U.S. Mail
Mr. James S. Hamman, Jr.
Executive Vice-President, General Counsel and Secretary
Calamos Asset Management, Inc.
1111 E. Warrenville Road
Naperville, Illinois 60563
Re: Calamos Asset Management, Inc.
Amendment No. 1 to Form S-1
File No. 333-117847
Filed September13, 2004
Dear Mr. Hamman:
We have reviewed your filing and have the following comments. Where
indicated, we think you should revise your document in response to
these comments. If you disagree, we will consider your explanation as
to why our comment is inapplicable or a revision is unnecessary.
Please be as detailed as necessary in your explanation. In some of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
The purpose of our review process is to assist you in your compliance
with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in
these respects. We welcome any questions you may have about our
comments or on any other aspect of our review. Feel free to call us
at the telephone numbers listed at the end of this letter.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to be
certain that they have provided all information investors require for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have
made.
Notwithstanding our comments, in the event the company requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy and
accuracy of the disclosure in the filing; and
* the company may not assert this action as defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
In addition, please be advised that the Division of Enforcement
has access to all information you provide to the staff of the Division
of Corporation Finance in connection with our review of your filing or
in response to our comments on your filing.
We will consider a written request for acceleration of the effective
date of the registration statement as a confirmation of the fact that
those requesting acceleration are aware of their respective
responsibilities under the Securities Act of 1933 and the Securities
Exchange Act of 1934 as they relate to the proposed public offering of
the securities specified in the above registration statement. We will
act on the request and, pursuant to delegated authority, grant
acceleration of the effective date.
General
1. The Company`s failure to include key information in this amendment,
such as the number of shares being sold, a pricing range for their
sale, the percentage of the Company being sold, the cost to terminate
EAU Plan, no final management services agreement, no future employment
agreements with the senior managers and twenty-two missing exhibits
may result in the staff requiring significant time after the filing of
the next amendment to provide you with our comments, and we may have
significant comments and there may be many of them pertaining to any
part of the registration statement.
2. The current disclosures do not appear to address the distribution
of current profits. Please revise the summary to indicate under
"Reorganization" how it will be determined who is entitled to the
current profits, i.e., profits in the year in which the reorganization
occurs.
Summary
Our Company
3. Revise the narrative after the penultimate paragraph to indicate
the Company initiated paying supplemental compensation payments to
selling agents and the date when that activity began. In addition,
disclose the aggregate compensation paid to selling agents in the
years ended December 31, 2001, December 31, 2003 and the period ending
June 30, 2004 as well as the portion that was supplemental
compensation during each of these periods.
Reorganization
4. With regard to your previous response number 9, please reconcile
your answer that the Calamos Family Partners will not derive any
revenues from the Company with the disclosure that the Company will
lease the future headquarters from Calamos Family Partners as well as
the yet to be filed Exhibit 10.9 (Management Services Agreement). If
Calamos Family Partners will derive future revenues from the Company,
provide disclosures of the nature and expected dollar amounts of such
revenues.
The Offering
Use of Proceeds
5. We note your response that the Company plans to spend $30 million
for equipping the new headquarters prior to moving in mid-2005.
Please advise us why this is not a partial use of the proceeds from
this offering. In addition, please disclose the other expected
working capital uses.
Related to Our Industry
Our business and operations ...
6. Revise the first narrative to use the penultimate sentence in the
first paragraph as the caption. In addition, delete the broad
discussion of how the Company is regulated to instead discuss the
various material proposed or recently enacted regulations that have or
could materially effect the business model of the Company. In
addition, the Company`s response did not address the question as to
whether or not any clients or company personnel "engaged in" any late
trading or market timing activities. If so, please advise us of the
details.
Our profit margins ...
7. Revise to use the second sentence as the caption. In addition,
disclose the Company`s fee structure as it compares to others in the
industry.
12b-1 fees
8. Revise to disclose that if 12b-1 fees are eliminated the Company
would have to write-off its deferred sales commissions and recognize
an expense of $58.6 million at June 30, 2004.
Soft dollars
9. Noting the Company has eliminated the risk factor, and with a view
towards adding another risk factor, supplementally advise the staff if
the Company has any arrangements or has steered any business to
brokerage firms for promoting its funds as part of deals known in the
industry as "revenue sharing" or "shelf space". If so, advise us as to
the brokerages involved and the amount of commissions received by each
brokerage. In addition, advise us if the funds disclosed these type
arrangements with their clients and, if so, provide us with a sample
of such disclosure.
Third-party distribution
10. Supplementally advise the staff if any of the referred to "third-
party vendors" are brokerage firms or selling agents used by the
Company.
Use of Proceeds
11. Revise to include the information requested by Comment 4 above.
MD&A.
Year ended 12/31 03
12. The explanation for the increase in net purchases discloses no
changes in the compensation (fees and commissions) paid to attract
those purchases. If true, indicate no changes in the compensation
rates occurred from the year ended 12/31/02 or otherwise disclose any
such changes.
13. Revise to make similar disclosures in the "Revenue" and "Operating
Expenses" sections that follow.
Year ended 12/31/02
14. Make disclosures in the appropriate sections consistent with
comments 11-12.
Liquidity and Capital Resources
15. Revise the second paragraph on page 56. We note the paragraph is
referring to amortization, not cash flows or the balance sheet. Revise
accordingly.
16. Noting the cash used for construction payments in the third
paragraph on page 56, supplementally advise the staff of the
arrangement for the new headquarters, such as, how much is owed to
complete, when will it be complete, who will pay the remaining costs,
will the Company then lease the building and what will be the costs to
the Company.
Business
Business Strategy
17. Supplementally advise us if the funds` reports to holders disclose
that the funds engage in portfolio hedging activities and, if so,
provide us with an example of such disclosure.
Certain U.S. Federal Tax Considerations for Non-U.S. Holders - page
101
18. We continue to believe that if you have tax information for non-
U.S. holders, you should balance this section with a comparable
section for U.S. holders.
Underwriting
19. Revise to disclose the present intentions of those participating
in the Directed Share program as to how many shares they intend to
purchase.
Accounting Comments
General
20. Please include a signed and currently dated accountants` consent
in further pre-effective amendments.
Summary Historical and Pro Forma Consolidated Financial and Other Data
- - page 9
21. In your response to our prior comments 64 and 67 related to pro
forma earnings per share you state that disclosures had been revised
pursuant to our comments. We note that the requested disclosures are
incomplete and accordingly reissue our prior comments.
Notes to Pro Forma Consolidated Financial Statements - page 36
22. We continue to await your presentation of pro forma financial
information based upon factually supportable adjustments as required
by Rule 11-02 of Regulation S-X. We may have further comments.
23. We note your response to our prior comment 70. Please revise note
(3) to explain how you determined the amounts of each of the
adjustments directly attributable to the Real Estate Distribution that
are factually supportable and expected to have a continuing impact.
Explain why you expect to reduce employee compensation and benefits as
a result of the Real Estate Distribution.
24. We note your response to our prior comment 73 and the revised
disclosure on page 36. Supplementally explain to us how you determined
the "recharacterization of compensation in the form of equity
distributions to owners" in the amount of $1.6 million to be (i)
directly attributable to the transaction, (ii) expected to have a
continuing impact on your operating results, and (iii) factually
supportable.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Investment Products - Mutual Funds - page 41
25. For each class of shares of the open-end funds, please revise to
separately disclose Rule 12b-1 distribution fee and shareholder
service fee percentages received by you and paid to third-party
selling agents.
26. We note that you make annual payments of 1% of Class C share
assets under management to third party selling agents. Given that
distribution fees are capped at 0.75% of assets under management,
describe the services that the third-party selling agents are
performing on a continuing basis that entitles them to participate in
the shareholder service fee.
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
Operating Expenses - page 52
27. We note your revised disclosures on page 52 that Class C shares do
not generate a distribution expense in the first year. Please revise
to explain how you account for the retained Rule 12b-1 fees and
upfront paid sales commissions in the first year.
28. Please revise to individually quantify and comprehensively discuss
the impact of growth of open-end fund assets under management and the
aging of Class C shares on the 183% increase in distribution expense.
Recently Issued Accounting Pronouncements - page 60
29. We note your revised disclosures and responses to our prior
comments 83-86.Your reliance on redemption rights to not consolidate
Calamos Multi-Strategy, L.P. prior to the amendment of the limited
partnership agreement in 2004does not appear to meet the "important
rights" criteria specified in paragraph 9 of SOP 78-9. Please revise
to specify the 2004 amendment date and consolidate the results of
Calamos Multi-Strategy, L.P. for all periods prior to this amendment
date, or advise us.
Note 2 - Summary of Accounting Policies- Revenue Recognition - page F-
9
30. We note your revised disclosures in response to our prior comment
99. Supplementally confirm that the recorded Rule 12b-1 fee revenue
does not materially differ from the actual receipt of Rule 12b-1 fees
and your current accounting complies with the guidance provided in
EITF 85-24.
31. Supplementally tell us how you determined that gross revenue
recognition is appropriate for each component of the Rule 12b-1 fees,
i.e. distribution fees and shareholder service fees. Tell us who you
believe the customer is in each arrangement and explain how you made
this determination.
- Investments in Partnerships - page F-9
32. We note your revised disclosure in response to our prior comment
88. Please revise to describe how you accounted for the sale of your
investment in Calamos Hedge Fund, L.P.
33. Please revise footnote 1 to also identify non-corporate entities
that are included in your consolidated financial statements.
Other Comments
34. Several of your responses regarding Investment Company issues have
been forwarded to the Division of Investment Management for their
review. If there are additional comments, we will forward those to you
upon our receipt.
35. With regard to the issue of "naked shorts" as discussed in the
Underwriting section and your response that naked shorts may be used
to "facilitate an orderly distribution by creating buying power",
supplementally advise us how the use of naked shorts accomplishes
this. In addition, advise us if your underwriters have previously sold
naked shorts in an IPO and, if so, provide us with an
explanation/illustration as to how that supported the price. We may
have further comment.
Closing Comment
As appropriate, please amend your registration statement in response
to these comments. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we may
have additional comments after reviewing your amendment and responses
to our comments.
We direct your attention to Rules 460 and 461 regarding requesting
acceleration of a registration statement. Please allow adequate time
after the filing of any amendment for further review before submitting
a request for acceleration. Please provide this request at least two
business days in advance of the requested effective date.
Any questions regarding the accounting comments may be directed
to Angela Jackson at (202) 942-2865 or Amit Pande at (202) 942-2952.
All other questions may be directed to Michael Clampitt at (202) 942-
1772 or to me at (202) 942-2889.
Sincerely,
William Friar
Senior Financial Analyst
Calamos Asset Management, Inc.
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