e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal
year ended: December 31,
2010
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or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission File Number:
000-51003
Calamos Asset Management,
Inc.
(Exact name of Registrant as
specified in its charter)
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Delaware
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32-0122554
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2020 Calamos Court,
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60563
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Naperville, Illinois
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(Zip Code)
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(Address of principal executive
offices)
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Registrants telephone number, including area code:
630-245-7200
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Name of each exchange on which registered
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Class A Common Stock, $0.01 par value
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The NASDAQ Stock Market LLC
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o No þ
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. o Yes No þ
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. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes o No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. þ
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):
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Large
accelerated
filer o
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Accelerated
filer þ
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
The aggregate market value of common stock held by
non-affiliates (assuming that all directors and executive
officers are affiliates) on June 30, 2010, the last
business day of the registrants most recently completed
second fiscal quarter, was $182.5 million.
At March 1, 2011, there were 20,124,701 shares of
Class A common stock and 100 shares of Class B
common stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Part III Portions of the definitive proxy
statement for our Annual Meeting of Shareholders on or about
June 3, 2011, as specifically described herein.
PART I
Unless the context otherwise requires, references to
we, us, our and
our company refer to Calamos Asset
Management, Inc., a Delaware corporation incorporated on
July 23, 2004, and its consolidated subsidiaries, including
Calamos Holdings LLC and the operating company subsidiaries of
Calamos Holdings LLC.
Calamos Advisors refers to Calamos Advisors
LLC, a Delaware limited liability company, an investment advisor
registered with the U.S. Securities and Exchange Commission
(SEC) and wholly-owned subsidiary of Calamos Holdings LLC.
Calamos Advisors acts as an investment advisor in managing our
separate accounts and mutual funds;
Calamos Family Partners refers to Calamos
Family Partners, Inc., a Delaware corporation, and our
predecessor holding company. Calamos Family Partners is a
private firm owned by members of the Calamos family and owns all
the outstanding shares of our Class B common stock;
Calamos Global Funds and Offshore
Funds refer to Calamos Global Funds PLC, an
Ireland-domiciled open-end umbrella company consisting of
Undertakings for Collective Investment in Transferable
Securities (UCITS), which are registered in the Republic of
Ireland;
Calamos Financial Services refers to Calamos
Financial Services LLC, a Delaware limited liability company and
broker-dealer registered under the Securities Exchange Act of
1934, as amended, and a wholly-owned subsidiary of Calamos
Holdings LLC. Calamos Financial Services acts as the sole
distributor of our family of open-end mutual funds; and
Calamos Interests refers to Calamos Family
Partners and John P. Calamos, Sr., our Chairman of the
Board, chief executive officer and co-chief investment officer.
Mr. Calamos also holds the controlling interest in Calamos
Family Partners.
The other wholly-owned operating company subsidiaries of Calamos
Holdings LLC are Calamos Partners LLC, a registered investment
advisor that provides investment management services primarily
related to alternative investment products, and Calamos Wealth
Management LLC, a registered investment advisor that provides
wealth management services, including asset allocation and
investment advisory services, to high net worth individuals,
family offices and private foundations. Calamos Property
Management LLC is also a subsidiary of Calamos Holdings LLC and
was established to provide real estate investment services.
Calamos International LLP, ultimately a majority-owned
subsidiary of Calamos Holdings LLC, is a registered investment
advisor with the Financial Services Authority and distributor of
the Offshore Funds and company products globally.
The assets under management and other financial data presented
in this report with respect to the mutual funds that we manage
include the Calamos Growth and Income Portfolio, which is a
portfolio of the Calamos Advisors Trust, a registered open-end
investment company. However, references to the terms
mutual funds and open-end
funds in this report do not otherwise include this
portfolio.
Overview
Calamos Asset Management, Inc. is the sole manager of Calamos
Holdings LLC, which owns and manages our operating companies.
For more than 30 years, we have provided investment
advisory services to institutions and individuals, managing
$35.4 billion in client assets at December 31, 2010.
Throughout our history, we have based our investment philosophy
around a single belief; that the key to consistent, long-term
success is achieving an optimal balance between enhancing return
and managing risk. We have consistently applied our investment
philosophy and a proprietary process centered on risk management
across a range of U.S. and global investment strategies.
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The graphic below illustrates our holding company structure and
ownership as of December 31, 2010. Collectively we transact
business under the group trade name Calamos Investments.
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(1)
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Represents combined economic
interest of Calamos Family Partners, Inc. and John P. Calamos,
Sr. who is also a member of Calamos Holdings LLC.
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Our company began as a boutique investment manager, with an
emphasis on strategies that sought to maximize the potential of
convertible securities to manage risk and build wealth. Today,
we offer strategies to fulfill a range of asset allocation
goals. The breadth of our investment strategies represents a
logical expansion of our core investment discipline and
proprietary resources. Because our investment process begins
with a comprehensive understanding of a company and the relative
attractiveness of the securities within its capital structure,
we have been able to selectively expand our capabilities across
many strategies. Each portfolio benefits from the research and
insights of our entire investment team and the accumulated
knowledge we have amassed over the decades.
As more fully described in the Investment Strategies
section below, our strategies include equity, low-volatility
equity, convertible, alternative, enhanced fixed income, total
return and fixed income. We believe a disciplined adherence to
our investment philosophy and process has enabled us to deliver
superior risk-adjusted returns over the long term.
We seek institutional and individual clients with long-term
investment horizons. We make our range of investment strategies
and services available to these clients, directly and through
intermediaries, by offering an array of investment products
designed to suit their investment needs, such as open-end funds,
closed-end funds, institutional managed accounts and separate
accounts. We plan to continue to introduce new investment
strategies and supporting services that will provide the
opportunity for attractive risk-adjusted returns.
We believe our investment performance, broad range of investment
strategies, diverse product offerings, emphasis on sales and
client service efforts have allowed us to help our clients
create wealth over full market cycles, which, in turn, grew our
assets under management and revenues throughout the years.
Differentiated by a one-team,
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one-process approach, ours is a culture of innovation, global
perspective, and clear alignment with our clients
interests. Over the decades, we have consistently demonstrated
strength in developing strategies that capitalize on the
opportunities of the changing investment landscape.
In 2010, we experienced notable growth in assets under
management, driven primarily by market appreciation and
investment performance. The year began with continued volatility
in the equity markets, but ended with notable appreciation for
the major indexes. The U.S. convertible market saw limited
issuance driven by the low-interest rate environment and the
spreads in the fixed-income market were suppressed. The global
economy showed signs of recovery as trade levels rebounded to
levels prior to the 2008 crisis. Our company experienced
positive net flows in the fourth quarter of the year, reflecting
industry trends into equities overall. We believe that our
discipline and investment approach were key components to our
strategies solid performance in 2010.
We provide additional information about Calamos Asset
Management, Inc. in the Investor Relations section of our
website at
http://investors.calamos.com.
This information includes corporate governance documents, press
releases, investor presentations, SEC filings and assets under
management reports, among others. We encourage you to visit and
review our website.
Business
Strategy
Our business strategy is designed to ensure we maintain focus on
our investment philosophy and continue to seek ways to enhance
it, given current conditions in the economy and markets. We
apply a team approach to investment research and portfolio
management, which allows us to significantly leverage our
investment talent. While each of our strategies reflects
distinct risk-reward parameters, all are managed according to
our time-tested investment process and leverage the expertise of
our fully integrated investment team.
Our goal is to continue to grow our business and diversify the
assets we manage by investment strategy, product, service and
type of client within our core competencies. We have selectively
created complementary investment products over the years in
order to take advantage of market opportunities for attractive
risk-adjusted returns. Key to executing this strategy is our
emphasis on building our capabilities in order to support
growth, improve client responsiveness and position our business
for long-term expansion. In 2010, we continued to improve the
caliber and scope of our capabilities in portfolio management,
marketing and other functions.
We have been, and will continue to be, guided by the following
principles:
Maintain
Superior Investment Performance
Our strategy is to maintain our performance by consistently
applying our investment philosophy and process, while actively
managing our strategies to maintain a stable balance of risk and
reward over the full course of a market cycle. We are equally
mindful of protecting our clients assets during changing
market conditions. Accordingly, we have chosen to close, and may
continue to close, products to new investments or discontinue
products during periods when we do not believe satisfactory
risk-adjusted returns can be achieved for our clients.
In 2010, we made the decision to limit purchases into the
Calamos Convertible Fund, in order to seek to protect investor
performance based upon our view of current and prospective
market conditions in the U.S. convertible market. In
addition, we made the decision to liquidate the
Multi-Fund Blend, which was a fund of funds, allowing
shareholders the ability to transfer assets separately into the
three component funds or to redeem their shares outright. This
decision was driven by issues of efficiency and scale for
shareholders in that fund.
Focus
on Clients, With an Emphasis on Serving Long-Term
Investors
We believe that managing our clients assets is an honor
and a responsibility. Client service is crucial to our ongoing
success. In all our activities, our goal is to have our
clients best interests in mind and to work diligently and
professionally to exceed client expectations in performance and
service. We strongly believe that the success of our company is
a by-product of our success in helping clients achieve their
investment objectives. In particular, we seek to attract,
develop and maintain long-term client relationships by providing
excellent client service, including educating investors about
our investment philosophy and process.
4
Selectively
Expand Our Investment Strategies
Since the introduction of our first convertible strategy in
1977, we have continued to strategically expand our product
offerings. In 1988, we introduced our first low-volatility
equity strategy and in 1990, developed our first equity
strategy. In subsequent years, we broadened our investment
offerings within our core competencies to include high yield,
global, international, total return and enhanced fixed income
investment strategies. Each expansion has leveraged our core
competency in investment research and portfolio management,
which is based on our expertise. More recently, our product
introductions have included an emerging markets growth fund and
four Ireland-domiciled UCITS Funds. We will continue to expand
our investment strategies selectively in areas where we
determine we can produce attractive risk-adjusted returns over
the long term. In 2010, we launched the Calamos Discovery Growth
Fund, a small-/mid-cap growth fund which we believe is a natural
extension of our core competencies. Through such strategic
expansion efforts, we believe we can enhance our ability to
increase assets under management and revenues.
Expand
Our Client Base
Over recent years, as part of our strategic initiatives, we have
increased our focus on the institutional business through
additions to staff in direct institutional sales, consultant
relations, client relationship management and
non-U.S. sales.
These efforts have enhanced both our global business development
as well as client service and retention efforts.
We distribute the Calamos open-end funds and managed accounts
primarily through financial intermediaries. We have developed an
extensive network of third-party financial intermediaries, and
our products are structured to meet their needs and those of
their clients. Our sales professionals are located across the
United States and in Europe, and they act in a consultative role
to provide our clients with insight. We intend to grow our
intermediary business through selective relationships. The
company also manages five closed-end funds which are traded on
the New York Stock Exchange, and operates a wealth
management division which serves high net worth individuals and
select organizations. The development of these business segments
is strategic and includes the continued delivery of a high level
of client service and solid relative investment performance.
Capitalize
on Our Recognized and Respected Brand
We believe that brand awareness is essential in expanding our
client base and adding value. In 2010, we restructured our
marketing team and increased its resources. This allowed us to
better utilize integrated online and offline marketing campaigns
targeted to specific client segments. Our focus is to continue
to highlight the uniqueness of our investment process, our
investment strategies, and our global investment research, and
ultimately expand our position in the market as a global growth
manager.
In 2010, many of our funds and strategies were recognized for
producing solid long-term performance and risk management by
companies such as Morningstar and Kiplingers Personal
Finance. Furthermore, in November 2010, Calamos Asset
Management was named one of the most trustworthy companies in
America by Forbes (The Most Trustworthy Companies
in America, November 8, 2010).
Our co-chief investment officers, John P. Calamos, Sr. and
Nick P. Calamos, have written books on investments in
convertible securities and are recognized investment experts.
They frequently discussed their investment insights on networks
such as CNBC, Bloomberg and Canadas BNN throughout 2010
and were also featured in publications such as Fortune,
Forbes, Financial Advisor, Crains Chicago Business and
Fund Action, among others. John P. Calamos, Sr.
also presented at multiple industry and financial services
conferences this past year, and he was named one of the most
influential people of 2010 in the industry by Mutual
Fund Wire (100 Most Influential People in the 40 Act
Industry, December 10, 2010). In addition, both John
P. Calamos, Sr. and Nick P. Calamos hosted online webinars
in 2010 to discuss our investment strategies in this
increasingly popular format. We believe we have been able to
strengthen the Calamos brand and awareness of our investment
philosophy through all of these activities.
We also raised brand awareness through strategic sponsorships.
In 2010, we sponsored the Milken Institute Global Conference.
Nick P. Calamos participated in a panel discussion hosted by
CNBCs Maria Bartiromo during the highly esteemed
conference, as well. The company also took part in numerous
trade shows and other industry activities in 2010.
5
Investment
Philosophy
We believe that a successful investment philosophy must be
consistent and long-term oriented. Our investment philosophy is
based on our views about the longer-term trends and economic
conditions that affect financial markets. We assume there will
always be unforeseen events that will continually test
conventional wisdom. We believe we can achieve favorable
investment results over extended periods of time based on our
experience in many market environments, our continued study of
economics and financial markets, and our application of a sound
investment process that can manage the volatility and risk
associated with financial markets. Because of this philosophy,
our investment process is focused on risk management. The
creation of wealth for our clients over the long term is not
solely about producing returns, but about managing risk, which
we define as the potential for loss and the variability of
investment returns.
While seeking to achieve strong returns, we focus first on
managing risk. We offer a variety of investment strategies that
represent distinct balances, or profiles, of risk and reward. We
believe that diversification is critical to managing risk and
moderating the impact of volatile markets. Our objective is to
maintain the consistency of each strategys risk and reward
profile, whether managing a conservative or an aggressive
strategy.
We make decisions on individual securities in the context of our
perspective on macroeconomic themes in the U.S. and across
the globe. While the market may not always follow the same
pattern every economic cycle, history provides a valuable
context for evaluating the risks and opportunities of the
current investment environment. Our investment decision-makers
have decades of experience managing through many market cycles.
Investment
Management
Our investment management team is guided, above all else, by the
long-term interests of our clients. This dedication to client
service extends across our organization and informs the
day-to-day
decision making of every individual within the firm.
We employ a team approach to portfolio management and draw on
the experience and expertise of 66 investment professionals
focused on portfolio management, research, trading, portfolio
administration and developing analytical models. Our investment
team is comprised of our co-heads of research and investments,
senior strategy/sector analysts, senior sector analysts,
intermediate analysts and junior analysts. The team is led by
our Co-Chief Investment Officers John P. Calamos, Sr. and
Nick P. Calamos. While
day-to-day
management of the portfolios is a team effort, the co-heads of
research and investments and senior strategy analysts, along
with our
co-chief
investment officers, have primary and supervisory responsibility
for the portfolios and work with team members to develop and
execute the portfolios investment program. This team
approach allows for valuable contributions from numerous
analysts within our company and creates a synergy of expertise
that can be applied across many different investment strategies.
We also believe that pooling the expertise of our analysts
provides for more consistent investment performance over the
long term and provides for significant leverage of our
investment talent. Members of our investment team participate in
a career track system that helps institutionalize our investment
process by immersing many analysts and other team members in our
investment philosophy and process from early in their careers.
Additionally, key members of the investment team participate in
the long-term component of our incentive compensation plan.
Through this plan, investment team members can share in the
overall success of our company.
Investment
Process
Our investment process combines our insights about economic
conditions and broader investment themes with our analysis of
individual securities. We use a proprietary, integrated research
and monitoring process that leverages our years of experience
and application, as well as long-standing principles and current
academic research. Risk management is integrated fully
throughout all aspects of our investment approach. Our process
relies on qualitative research and also employs a variety of
quantitative tools.
Our investment process incorporates top-down analysis of the
global macroeconomic environment, sectors and (as appropriate)
regions and countries. We also identify long-term secular themes
that we believe will influence opportunities for decades to
come. Our experience has shown that these secular themes provide
a powerful tailwind to select companies, particularly during
periods of slower economic growth and less hospitable business
environments. Our top-down analysis is paired with our
comprehensive security research. We first determine the
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intrinsic value of a company, and then utilize quantitative and
qualitative inputs to value the various securities within its
capital structure. We believe the thorough understanding of a
company from both a debt and equity security perspective allows
us to gain a truer understanding of a companys
potential and its risks. The key steps in this
process are:
Assess Business Value. We analyze businesses
as would a buyer of the entire company, analyzing financial
statements to determine an economic enterprise value.
Assess Security Value. Once we understand the
value of a business, our investment team focuses on individual
security values within its capital structure.
Assess Investment Opportunities. By
understanding all aspects of a companys capital structure,
we seek to identify opportunities across asset classes (where
applicable), as well as investment strategies.
Assess the Opportunitys Role in the
Portfolio. Using risk management and portfolio
construction techniques, we determine whether an individual
security has a place in our investment portfolios and strategies.
Investment security selection results from the intersection of
top-down and
bottom-up
analysis. These securities are vetted more extensively within
the context of the overall portfolio. Continual monitoring and
risk management analysis is intended to ensure that each
portfolio maintains appropriate diversification and risk/reward
characteristics.
Client
Relationships
Our first institutional account mandate was initiated in 1981
for a pension fund account. In the late 1980s, we became one of
the first participants in the broker-sponsored managed account
business. In 2002, we launched the first of our five closed-end
funds. As we have done in the past, we continue to strive to
expand our presence in distribution channels that best deliver
our strategies to long-term investors in order to grow our
client base, assets under management and revenues. In recent
years, we have placed greater emphasis on institutional
investors, including private pension funds, public funds,
endowment funds, banks and insurance companies; 401(k)
platforms, broker consultants, broker-dealers, registered
investment advisers, financial planners and other channels for
mutual funds and managed account products; and family offices,
private foundations and high net worth investors.
In 2010, as part of our ongoing efforts to expand our
distribution opportunities and client base, we have maintained
our focus on the institutional market and retirement platform
opportunities, and selectively increased the number of
intermediaries that distribute Calamos products globally.
Intermediary
In 2010, we continued to focus on our significant strategic
partnerships with national and large regional broker-dealers
domestically. Our efforts include focusing key resources and
personnel on a targeted set of opportunities, including
fee-based mutual fund platforms and separately managed accounts
in the four major wire houses.
While maintaining our support of national broker-dealers, we
have also continued to increase our marketing efforts in both
the independent broker-dealer and registered investment adviser
channels in the U.S. There has also been an initiative to
increase our internal resources to support the external sales
team. We enhanced our portfolio specialist support for
intermediary businesses and made improvements to this client
service channel in order to provide our intermediary partners
with an institutional level of service.
Defined contribution plans continue to be a significant segment
of the U.S. intermediary market and mutual fund sales. We
view the defined contribution industry as a strong target
market, given our focus on risk management and outperformance
over full and multiple market cycles. To this end, we enhanced
our efforts with the addition and redeployment of several
associates to this segment of the market in 2010.
We believe certain maturing products, including international
growth, global equity, and evolving world growth, provide
opportunities for this channel. We also believe that our
low-volatility equity strategies, both U.S. and global,
will continue to serve the needs of the intermediary channel as
volatility in the financial markets can be difficult to predict.
We continue to align the incentives of our sales teams to
emphasize client service and client retention.
Client accounts held at our top ten financial intermediaries
represented approximately 58% of our assets under management as
of December 31, 2010.
7
Institutional
In 2010, the institutional channel continued to become a larger
part of our overall business as we grew our institutional client
base and assets under management with positive net sales. The
greatest interest was in our low-volatility strategies,
particularly Global Opportunities. These strategies have fit the
needs of many institutional investors in reducing volatility
through their equity allocations. Low-volatility strategies have
gained prominence with institutional investors and our long and
successful track records in this space have allowed us to
continue to enhance our institutional brand. In addition, we
have seen significant interest build in our growth equity
strategies, particularly International Growth, which attained
its 5-year
track record during the year. This milestone has provided
additional support to the strong performance numbers of the
strategy since its inception.
In 2011, we believe search activity within equity allocations is
likely to increase, and believe our growth equity strategies
stand to benefit. We also believe our suite of international,
global and emerging market strategies are well-positioned for
growth as
U.S.-based
institutional investors continue to reduce their home country
bias. In addition, we have been very encouraged by the level of
interest shown by
non-U.S. clients
in our investment strategies and expect this part of our
business to grow in 2011.
Wealth
Management
At December 31, 2010, we had approximately 600 wealth
management clients representing approximately $876 million
of assets under management, which are reported in their
respective underlying investment products. We provide wealth
management services, including asset allocation, to high net
worth individuals, family offices and private foundations. Our
wealth management group offers customized asset allocation
advice under the guidance of our investment management team. Our
individualized services include offering managed portfolios of
mutual funds and separate accounts in both taxable and
tax-deferred accounts; developing and executing
multi-generational investment policies, asset management and
income distribution plans; managing retirement, profit sharing
and deferred compensation plans; providing asset allocation and
investment management for foundations and endowments; and
integrating alternative investments into a comprehensive
financial plan. Additionally, our wealth strategy professionals
are available to consult with clients on a wide variety of
issues associated with the accumulation, preservation and
transfer of family wealth.
Global
In 2007, we established Calamos Global Funds PLC, an
Ireland-based UCITS platform. In 2009, the company established
an office in London, where we serve international intermediary
and institutional channels worldwide. We have enhanced home
office support and service of the European sales team, clients
and prospects. We continue to build the brand globally in both
intermediary and institutional business channels, including
efforts to increase investment mandates through large
distributors, investment consultants and institutional clients,
such as sovereign wealth funds, in Canada, Asia and Australia,
in addition to Europe.
8
Investment
Strategies
The following table describes our investment strategies and
corresponding assets under management at December 31, 2010:
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STRATEGY (in millions)
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Equity
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$
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12,846
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Strategies that seek capital appreciation by investing in a
range of global companies of various market capitalization under
both growth and value disciplines
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Convertible
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7,540
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Strategies that pursue equity market upside with less potential
downside than an all-equity portfolio, by investing primarily in
convertible securities
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Low-volatility Equity
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6,949
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Strategies that pursue equity market upside with less potential
downside than an all-equity portfolio, by investing in dynamic
blend of convertible securities, equities and high yield
securities, globally
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Enhanced Fixed Income
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2,960
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Closed-end portfolios that pursue high current income, from
income and capital gains, investing primarily in high yield
corporate bonds and convertible securities
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Total Return
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2,343
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Closed-end portfolios that pursue current income, with increased
emphasis on capital appreciation, by investing primarily in high
yield corporate bonds, convertible securities and equities
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Alternative
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2,200
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Strategies that invest in non-traditional strategies, including
market neutral and convertible arbitrage, among others
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Fixed Income
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576
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Strategies that invest in U.S. investment-grade bond market,
international and high-yield securities, U.S. Government Agency
obligations and repurchase agreements collateralized by U.S.
Government Agency obligations.
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Total
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$
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35,414
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Investment
Products
We market our investment strategies to our clients through a
variety of products designed to suit their individual investment
needs. We currently offer four types of investment products that
fall into the categories of investment companies and separate
accounts.
Investment
Companies
Investment companies are pools of funds collected from many
investors and include open-end mutual funds and closed-end funds
registered under the Investment Company Act of 1940, as amended,
as well as our Offshore Funds. We include the Offshore Funds in
open-end funds for reporting purposes.
Open-End
Mutual Funds
At December 31, 2010, we had $22.0 billion of assets
under management in open-end funds, representing approximately
62% of our total assets under management. Open-end funds are
continually offered and are not listed on an exchange. Open-end
funds issue new shares for purchase, unless they are closed to
new investors, and redeem shares from those shareholders who
sell. The share price for purchases and redemptions of open-end
funds is determined by each funds net asset value, which
is calculated at the end of each business day.
We introduced our first open-end fund, the Calamos Convertible
Fund, in 1985. We have since expanded our open-end fund products
and services to invest in securities worldwide and to include
equity, low-volatility equity, high yield, alternative, and
fixed income strategies that we believe offer attractive
risk-adjusted return potential. In recent years, much of our
expansion efforts have been focused on global opportunities. In
2007, we introduced a global equity fund; and in 2008, we
introduced an emerging markets growth fund. Additionally, in
2007, we established Calamos Global Funds PLC, an
Ireland-domiciled UCITS, which are also referred to as Offshore
Funds.
We believe that in order to protect investor performance it is
necessary to make the decision to limit purchases to certain
strategies, or even to close certain strategies as circumstances
merit. In October 2008, we reopened our
9
convertible fund, which had been closed since 2003 based on our
analysis of the supply and demand trends in the convertible
market. In 2008, the broad sell-off in the convertible markets
created what we believed to be unprecedented opportunities for
long-term investors. The fund was very successful following its
reopening, and experienced inflows which significantly increased
the size of the fund. In 2010, we instituted a soft
close of the Convertible Fund to limit inflows into this
fund and to seek to protect our current investors and the
investment performance of the fund given its increased size and
the conditions in the U.S. convertible securities market.
In addition, we made the decision to liquidate the
Multi-Fund Blend Fund. This decision was driven by issues
of efficiency and scale for shareholders in that fund.
In January 2011, the company instituted a hard close
of the Convertible Fund with very limited exceptions on new
purchases to further limit inflows and allow for the investment
teams continued execution of the funds investment
strategy. At the same time, the company announced the soft
close of the Market Neutral Income Fund, which limited
some new purchases for the same reason.
As of year-end 2010, we acted as the investment advisor to 14
open-end funds and four Offshore Funds offered to customers
primarily through financial intermediaries. We expanded the
number of our Offshore Funds offered in 2011, adding an emerging
markets product. We expect to continue to seek opportunities to
expand and develop the investment strategies offered in our
open-end fund products as we see opportunities and seek to meet
investor demand.
Calamos Advisors manages the strategies of each of the open-end
funds with the goal of achieving higher returns than their
respective benchmarks over the long term. Some of the funds also
aim to achieve a reduced risk profile, as well. To do so, our
investment team focuses on maintaining each strategys
distinct balance between risk and return throughout the full
course of the market cycle.
10
Open-end
Mutual Funds
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Assets Under
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Management at
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December 31, 2010
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Year of
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(in millions)
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Inception
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U.S. Domiciled Mutual Funds
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Equity
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Growth Fund
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$
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9,005
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1990
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Value Fund
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59
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2002
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Blue Chip
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65
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2003
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International Growth Fund
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332
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2005
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Multi-Fund Blend*
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2006
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Global Equity Fund
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57
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2007
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Evolving World Growth Fund
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136
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2008
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Discovery Growth Fund
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24
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2010
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Low-volatility Equity
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Growth and Income
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4,218
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1988
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Global Growth and Income
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1,593
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1996
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Convertible
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Convertible
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3,526
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1985
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Alternative
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Market Neutral Income Fund
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2,180
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1990
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High Yield
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High Yield Fund
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287
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1999
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Fixed Income
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Total Return Bond Fund
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218
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2007
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Offshore Funds
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Equity
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Growth Fund
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182
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2007
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Global Equity Fund
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36
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2007
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Low-volatility Equity
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U.S. Opportunities Fund
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41
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2007
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Global Opportunities Fund
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90
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2007
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Total
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$
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22,049
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* |
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A fund comprised of the following three Calamos funds invested I
shares: Growth Fund, Global Growth and Income Fund, and Value
Fund. Assets are reflected in the underlying funds. |
Closed-End
Funds
At December 31, 2010, we had $5.3 billion of assets
under management in closed-end funds, representing approximately
15% of our total assets under management. Closed-end funds
typically sell a finite number of shares to investors through
underwritten public offerings, unlike open-end funds, which
continually offer new shares to investors. After the public
offerings, investors buy and sell those shares to other
investors through an exchange or broker-dealer market.
We introduced our first closed-end fund, Calamos Convertible
Opportunities and Income Fund (NYSE: CHI), in 2002. With this
fund, we were among the first managers to combine different
asset classes in a single closed-end offering, seeking to
enhance returns and limit risk. We have since expanded our
closed-end fund products and currently act as the investment
advisor to five closed-end funds, each of which trades on the
New York Stock Exchange.
11
Each of the Calamos closed-end funds employs leverage in its
capital structure. With leverage, we seek to generate additional
dividend potential for the common shareholders based on
historical differences between short-term and long-term taxable
interest rates. Leverage involves borrowing at shorter-term
rates and investing the proceeds over a longer-term, which
typically provides for higher returns. We continually assess our
use of leverage because certain market conditions are not
conducive to executing this strategy. We currently believe that
leverage strategies are accretive to the common shareholders of
our closed-end funds.
Calamos closed-end funds can be grouped into two broad
categories: 1) enhanced fixed income portfolios
positioned to pursue high current income, from income and
capital gains; and 2) total return portfolios
positioned to seek current income, with increased emphasis on
capital appreciation. Funds in both groups seek to provide a
competitive stream of monthly dividends and invest in a variety
of asset classes.
Closed-end
Funds
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Assets Under
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Management at
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December 31, 2010
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Year of
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(in millions)
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Inception
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Enhanced Fixed Income
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Convertible Opportunities and Income Fund
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$
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1,004
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2002
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Convertible and High Income Fund
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1,197
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2003
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Global Dynamic Income Fund
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759
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2007
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Total Return
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Strategic Total Return Fund
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2,191
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2004
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Global Total Return Fund
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152
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2005
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Total
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$
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5,303
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Separate
Accounts
Separate accounts are individual portfolios of securities
managed to meet clients unique needs and include
institutional accounts and managed accounts.
Institutional
Accounts
At December 31, 2010, we had $5.6 billion of assets
under management in institutional accounts, representing
approximately 16% of our total assets under management.
Institutional accounts are separately managed accounts for
certain investors, such as corporate pension funds, public
funds, endowment funds and
not-for-profit
institutions, offered through consultants, broker-dealer
intermediaries and directly by us. We have approximately 315
institutional accounts, including commingled funds and
sub-advised
relationships.
Our first institutional account mandate was initiated in 1981
for a pension fund account. Since initially offering convertible
investment strategies to institutions, we have broadened our
mandates to include a variety of investment strategies in other
asset classes, such as equity and high yield. We reopened select
convertible strategies to new investors in 2008, having
identified significant opportunities that we believe are
advantageous for both new and existing investors. We also see
considerable opportunity for our global and
U.S. low-volatility equity and equity strategies.
In recent years, our business development team has targeted
institutional consultants and plan sponsors, and focused on
educating institutional prospects about our investment process
and performance. Our institutional marketing efforts center on
identifying potential new investors, developing relationships
with institutional consultants and providing ongoing client
service to existing institutional accounts. We focus on growing
our institutional business through equity and fixed income
mandates, managed under both domestic and global objectives.
12
Institutional
Accounts
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Assets Under
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Management at
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December 31, 2010
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(in millions)
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Equity
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$
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1,263
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Low-volatility Equity
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667
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Convertible
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3,538
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Alternative
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20
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Fixed Income
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71
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Total*
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$
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5,559
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* |
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Total institutional assets under management do not include
assets serviced through mutual funds. |
Managed
Accounts
At December 31, 2010, we had $2.5 billion of assets
under management in managed accounts, representing approximately
7% of our total assets under management. Our nearly 7,500
managed accounts are individual portfolios of securities offered
primarily through 12 national and regional broker-dealer
platforms. We first introduced managed accounts through a
broker-dealer sponsored platform in 1989. Since initially
offering convertible investment strategies to our managed
account customers, we have broadened our mandates to include
equity, enhanced fixed income and low-volatility equity
investment strategies.
Managed
Accounts
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Assets Under
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Management at
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December 31, 2010
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(in millions)
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Equity
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$
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1,687
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Low-volatility Equity
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340
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Convertible
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476
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Total
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$
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2,503
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During 2010, the company undertook an initiative to increase the
account minimums for select convertible-based separately managed
accounts. This program included smaller-sized accounts that had
been closed since 2003. The minimum investment on these accounts
was raised to $750,000 in order to seek to protect the
investment performance for these accounts. This initiative
resulted in some account liquidations, some transfers into
Calamos mutual funds, while other account balances were
increased to meet the new account minimums. The project was
completed in 2010 and resulted in approximately
$1.3 billion in net outflows in Managed Accounts.
Competitive
Environment
We compete in all aspects of our business with a large number of
investment management firms, commercial banks, broker-dealers
and insurance companies. We compete principally on the basis of
investment performance; quality of client service; brand
recognition and business reputation; continuity of client
relationships and assets under management; continuity of our
selling arrangements with financial intermediaries; the range of
products offered; the level of fees and commissions charged for
services; the level of expenses paid to financial intermediaries
for administration and distribution; and financial strength.
The following factors, among others, serve to increase our
competitive risks: the financial strength and more comprehensive
line of products and services provided by our competitors;
consolidation within the investment management industry, which
is increasing the size and strength of certain competitors;
relatively few barriers to entry, which may increase the number
of competitors; and the recruiting of our investment
professionals and other employees from us. These and other
factors could reduce our earnings and revenues and may have a
materially adverse effect on our business.
13
Technology
and Intellectual Property
We consider technology to be a competitive advantage in our
investment process. Our investment approach demands tailored
outputs for all aspects of the investment process, including
risk management, security analysis and trade processing. As a
result, our use of in-house developed and third-party technology
and software enables customization of systems across our
company. Our quantitative investment tools, including our
proprietary Calamos Corporate System, or CCS, continue to be
enhanced by our research development team, which reports to our
chief operating officer investments and information
technology. Our internal investment-related systems are geared
to the principles that guide our investment process, allowing
for a more seamless integration of security analysis, trade
processing, accounting and portfolio administration of our
nearly 8,000 accounts at December 31, 2010. In other areas
of our business, where competitive advantages do not exist, such
as trade order processing and portfolio accounting, we look to
leverage third-party applications or service providers for cost
efficiency.
Trademarks, service marks and brand name recognition are
important to our business. We have rights to the trade and
service marks under which our products are offered in connection
with financial analysis and consultation, financial portfolio
management and financial investment. We have registered certain
marks in the United States, France, Germany, Ireland,
Switzerland and the United Kingdom, and will continue to do so
as new marks are developed or acquired. We have taken, and will
continue to take, action to protect our interest in these marks.
Regulatory
Environment
Our domestic and global lines of business are subject to
extensive regulation. In the United States regulations exist at
both the federal and state level, as well as by self-regulatory
organizations. These laws and regulations are primarily intended
to protect investment advisory clients and shareholders of
registered investment companies. Agencies that regulate
investment advisors have broad administrative powers, including
the power to limit, restrict or prohibit an investment advisor
from carrying on its business in the event that it fails to
comply with such laws and regulations. Possible sanctions that
may be imposed include the suspension of individual employees,
limitations on engaging in certain lines of business for
specified periods of time, revocation of registrations, censures
and fines. Calamos Global Funds PLC, a UCITS, advised by Calamos
Advisors is subject to the Irish Financial Services Regulatory
Authority.
Calamos Advisors, Calamos Partners LLC and Calamos Wealth
Management LLC are registered as investment advisors with the
Securities and Exchange Commission, or SEC. As registered
advisors, they are subject to the requirements of the Investment
Advisers Act, SEC regulations, and examination by the SECs
staff. The Investment Advisers Act imposes substantive
regulation on virtually all aspects of their business and its
relationship with its clients. Requirements include fiduciary
duties to clients, engaging in transactions with clients,
maintaining an effective compliance program, performance fees,
solicitation arrangements, conflicts of interest, advertising,
and recordkeeping, reporting and disclosure requirements.
Calamos Asset Management, Inc. is not an investment company;
however, the mutual funds Calamos Advisors manages are
registered with the SEC under the Investment Company Act. The
Investment Company Act imposes additional obligations, including
detailed operational requirements for both the funds and their
advisor. Moreover, an investment advisors contract with a
registered fund may be terminated by the fund on not more than
60 days notice, and is subject to annual renewal by
the funds board after an initial two-year term. The SEC is
authorized to institute proceedings and impose sanctions for
violations of the Investment Advisers Act and the Investment
Company Act, ranging from fines and censures to termination of
an investment advisors registration. The failure of
Calamos Advisors, Calamos Partners LLC, Calamos Wealth
Management LLC or the registered funds advised by Calamos
Advisors to comply with the requirements of the SEC could have a
material adverse effect on us.
Calamos International LLP is a registered investment advisor
with the Financial Services Authority, or FSA. The FSAs
rules govern Calamos Internationals capital resource
requirements, senior management arrangements, business conduct,
client interaction and internal controls. Similar to United
States regulations, violations of these rules may result in a
range of disciplinary actions against the firm. Calamos
International LLP must also comply with the Capital Requirements
Directive, which sets forth regulatory capital requirements, and
the Markets in Financial Instruments Directive rules, which
regulate the investment services throughout the European
Economic Area.
14
We are also subject to the federal and state laws affecting
corporate governance, including the Sarbanes-Oxley Act of 2002
and rules promulgated by the SEC. In addition, Calamos Asset
Management, Inc. is subject to the rules of NASDAQ, including
the corporate governance listing standards approved by the SEC.
In addition to being subject to the oversight and regulations of
the SEC, Calamos Financial Services as a broker-dealer is
subject to periodic examination by the Financial Industry
Regulatory Authority or FINRA. FINRA regulations cover all
aspects of its business, including sales practices, the minimum
net capital, recordkeeping and the conduct of directors,
officers and employees. Violation of applicable regulations can
result in the revocation of broker-dealer licenses, the
imposition of censure or fines and the suspension or expulsion
of a firm, its officers or employees.
Calamos Advisors and Calamos Wealth Management LLC are subject
to the Employee Retirement Income Security Act of 1974, as
amended, or ERISA, with respect to benefit plan clients. ERISA
and applicable provisions of the Internal Revenue Code of 1986,
as amended, impose certain duties on persons who are fiduciaries
under ERISA, prohibit certain transactions involving ERISA plan
clients and provide monetary penalties for violations of these
prohibitions. Failure to comply with these requirements could
have a material adverse effect on our business.
Employees
At December 31, 2010 and 2009, we had 318 and
316 full-time employees, respectively.
SEC
Filings
Our SEC filings are available through the Investor Relations
section of our website at
http://investors.calamos.com.
We encourage our readers to view our SEC filings as well as
other important information, including corporate governance
documents, press releases, investor presentations, assets under
management reports and other documents, on our website.
15
Risks
Related to Our Industry
A
general or prolonged decline in the prices of securities may
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 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 our assets under
management. Accordingly, a general or prolonged decline in the
prices of securities usually has caused our revenues and net
income to decline due to (i) the value of our assets under
management decreasing, and\or (ii) clients withdrawing
funds in favor of investments they perceive to offer greater
opportunity or lower risk. The securities markets have recently
been and may continue to be highly volatile and securities
prices may increase or decrease for many reasons beyond our
control, including economic and political events and acts of
terrorism.
Changes
in laws, regulations or governmental policies due to the state
of the economy 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 which directly
affects our cost of doing business. 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. Most of the regulations to which we
are subject are not designed to protect our stockholders. Due in
part to the credit and investment banking crises of 2008 as well
as high profile investment and trading scandals, the
U.S. government and federal agencies have increased
interest and oversight of the financial and investment industry.
Additional laws and regulations to strengthen controls, such as
the
Dodd-Frank
Act and proposed changes such as those to
Rule 12b-1
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.
The
asset management business is intensely
competitive.
We are subject to competition in all aspects of our business
from asset management firms, mutual fund companies, commercial
banks and thrift institutions, insurance companies, hedge funds,
exchange traded funds, brokerage and investment banking firms,
and other financial institutions including multinational firms
and subsidiaries of diversified conglomerates.
Many of our competitors have substantially greater resources
than us and may offer a broader range of financial products and
services across more markets. Some financial institutions
operate in a more favorable regulatory environment and have
proprietary products and distribution channels which may provide
certain competitive advantages to them and their investment
products. We compete primarily based on the investment
performance of the investment portfolios offered, the scope and
quality of investment advice and client service. We believe that
competition within the investment management industry has and
will continue to increase as a result of the state of the
economy, the failure of financial institutions and consolidation
and acquisition activity. Most of our investment portfolios have
sales or redemption fees, which means that investors may be more
willing to invest assets in competing funds without such fees.
If current or potential customers decide to use one of our
competitors, we could face a significant decline in market
share, assets under management, revenues, and net income.
Although we are moving to a more variable cost structure, some
of our expenses remain fixed, especially over shorter periods of
time, and other expenses may not decrease in proportion to any
decrease in revenues.
16
To the
extent we are forced to compete on the basis of price, we may
not be able to maintain our current fee structure.
The investment management industry has relatively low barriers
to entry and to the extent we are forced to compete on the basis
of price, we may not be able to maintain our current fee
structure. In recent years, there has been a trend toward lower
fees in the investment management industry. In order to maintain
our fee structure in a competitive environment, we must be able
to continue to provide clients with investment returns and
service that make investors willing to pay our fees. In
addition, the board of trustees of each mutual fund managed by
Calamos Advisors must make certain findings as to the
reasonableness of its fees. We cannot guarantee investment
returns and services that will allow us to maintain our current
fee structure. Fee reductions on existing or future business
could have an adverse effect on our revenues and results of
operations.
We
derive a substantial portion of our revenues from contracts that
may be terminated on short notice.
We derive a substantial portion of our revenues from investment
management agreements with mutual funds that are generally
terminable by the funds board of trustees or a vote of the
majority of the funds outstanding voting securities on not
more than 60 days written notice. After an initial
term, each funds investment management agreement must be
approved and renewed annually by the independent members of such
funds board of trustees and, in certain cases, by its
stockholders. These investment management agreements may be
terminated or not renewed for any number of reasons, including
investment performance, advisory fee rates and financial market
performance. Further, we may not be able to replace terminated
or non-renewed agreements on favorable terms. The decrease in
revenues that could result from any such termination could have
a material adverse effect on our business.
Investors
in the open-end funds can redeem their investments in these
funds at any time without prior notice, which could adversely
affect our earnings.
Open-end fund investors may redeem their investments in those
funds at any time without prior notice. In a declining stock
market, the pace of mutual fund redemptions could accelerate.
Poor performance relative to other asset management firms tends
to result in decreased purchases and increased redemptions of
mutual fund shares. The redemption of investments in mutual
funds managed by Calamos Advisors may adversely affect our
revenues, which are substantially dependent upon the assets
under management in our funds.
Risks
Related to Our Business
The
loss of key executives could have a material adverse effect on
our business.
We are dependent on the efforts of our key executives; in
particular: John P. Calamos, Sr., our chairman, chief
executive officer and co-chief investment officer, and Nick P.
Calamos, our president of investments and co-chief investment
officer. These executives have been responsible for determining
the strategic direction of our business, are integral to our
brand and the positive business reputation we earned and, having
overseen the management of all of our investment portfolios and
the research teams responsible for each of our portfolio
strategies, have been responsible for the historically strong
long-term investment performance that allows us to compete
successfully. Although we have employment agreements with John
P. Calamos, Sr. and Nick P. Calamos, we cannot assure you
that they will continue to act in their positions with us. We do
not carry key man insurance on these key executives
and the loss of the services of either executive may have a
material adverse effect on our business.
Our
ownership structure is not consistently understood and this may
cause investor confusion and missed business
opportunities.
Our ownership structure is not consistently understood within
the financial community, including by current and potential
investors and clients. Our market capitalization is often listed
by reporting agents based only on common shares, which only
reflects a percentage of the ownership of our business and does
not give consideration to the Calamos Interests ownership in
Calamos Holdings LLC. As of December 31, 2010, the Calamos
Interests owned approximately 78.3% of Calamos Holdings LLC as
well as all of our Class B common stock which represents
more than 97.5% of the combined voting power of all classes of
our voting stock. The total consolidated market capitalization
of the business, therefore, is often significantly understated.
Potential misperceptions by investors and potential clients as
to the value of our business may result in missed business
opportunities that could
17
have a negative effect on our operating results and stock price.
For this reason, Calamos Asset Management, Inc. is evaluating
ways to create a greater degree of clarity regarding our total
market capitalization.
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 consultants, 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
assets under management and ultimately our earnings.
As of December 31, 2010, 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, there has been a
consolidation of and elimination of some financial service
companies in recent years. 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 effect on our
business.
We
derive a substantial portion of our revenues from a limited
number of our products.
As of December 31, 2010, 25% of our assets under management
were concentrated in the Calamos Growth Fund and 28% of our
investment management fees were attributable to that fund. As a
result, our operating results are particularly exposed to the
performance of that fund and our ability to minimize redemptions
from and maintain assets under management in that fund. If a
significant amount of investments are withdrawn from the fund
for any reason, our revenues would decline and our operating
results would be adversely affected. Further, given the size and
prominence of the Growth Fund within our company, the
performance of the Growth Fund may also indirectly affect the
net purchases and redemptions in our other products, which in
turn may negatively affect our operating results.
We are
dependent on Calamos Holdings LLC to distribute cash to us in
amounts sufficient to pay our tax liabilities and other
expenses.
Our ownership in Calamos Holdings LLC is our primary asset and
we have limited independent means of generating revenues.
Calamos Holdings LLC is treated as a partnership for
U.S. federal income tax purposes and, as such, is not
itself subject to U.S. federal income tax. Instead, its
taxable income is allocated on a pro rata basis to its members.
Accordingly, we incur income taxes on our proportionate share of
any net taxable income of Calamos Holdings LLC, and also incur
expenses related to our operations. As the sole manager, we
caused and in the future intend to cause Calamos Holdings LLC to
distribute cash to its members to the extent necessary to cover
their tax liabilities, if any. To the extent we need funds to
pay such taxes, or for any other purpose, and Calamos Holdings
LLC is unable to provide such funds, it could have a material
adverse effect on our business, financial condition or results
of operations.
18
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 currently has $125 million of
aggregate principal amount of senior unsecured notes
outstanding. Note purchase agreements between Calamos Holdings
LLC and its note holders govern the terms of the unsecured
notes. Under these agreements, Calamos Holdings LLC must
maintain certain consolidated net worth, leverage and interest
coverage ratios. The note purchase agreements also contain other
covenants that, among other provisions, restrict the ability of
Calamos Holdings LLCs subsidiaries to incur debt and
restrict the ability of Calamos Holdings LLC or its subsidiaries
to make distributions, create liens and to merge or to
consolidate, or sell or convey all or substantially all of
Calamos Holdings LLCs assets. The inability of Calamos
Holdings LLC to maintain compliance with any of its financial
covenants could lead to an event of default and result in
various remedies to the note holders including the acceleration
of all the notes outstanding and the payment of a make whole
amount. In such an event, our liquidity and results from
operations would be negatively impacted.
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, programs 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, inclusive of staff reductions, to
streamline our infrastructure and reduce capital expenditures.
Independent of market conditions, we also may modify our
business plan, affecting our revenues and net income.
We
intend to pay regular dividends to our stockholders, but our
ability to do so is subject to the discretion of our board of
directors and may be limited by our holding company structure
and any applicable laws.
To date, we have paid a cash dividend each quarter and intend to
continue to pay dividends on a quarterly basis. However, in the
past we have reduced our dividend due to the effect of market
conditions on our business. Our board of directors has and in
the future may, in its discretion, increase or decrease the
level of dividends. Further, our board of directors has
discretion to discontinue the payment of dividends entirely. The
ability of Calamos Holdings LLC to make distributions is subject
to its: operating results, cash requirements, financial
condition, and compliance with covenants and financial ratios
related to existing or future indebtedness, as well as any
applicable laws. If, as a consequence of these various
limitations and restrictions, we are unable to generate
sufficient distributions from our business, we may need to
reduce or eliminate the payment of dividends on our shares.
A
change of control of our company would automatically terminate
our investment management agreements with our clients, unless
our separate account clients consent and, in the case of fund
clients, the funds boards of trustees and shareholders
voted to continue the agreements. A change of control could also
prevent us for a two-year period from increasing the investment
advisory fees we are able to charge our mutual fund
clients.
Under the Investment Company Act, an investment management
agreement with a fund must provide for its automatic termination
in the event of its assignment. The funds board and
shareholders must vote to continue the agreement following its
assignment, the cost of which ordinarily would be borne by us.
Under the Investment Advisers Act, a clients investment
management agreement may not be assigned by the
investment advisor without the clients consent. An
investment management agreement is considered under both acts to
be assigned to another party when a controlling block of the
advisors securities is transferred. In our case, an
assignment of our investment management agreements may occur if,
among other things, we sell or issue a certain number of
additional common shares in the future. We cannot be certain
that our clients will consent to assignments of our investment
management agreements or approve new agreements with us if a
change of control occurs. Under the Investment Company Act, if a
funds investment advisor engages in a transaction that
results in the assignment of its investment management agreement
with the fund, the advisor may not impose an unfair
burden on that fund as a result of the transaction for a
two-year period after the transaction is completed. The term
unfair burden has
19
been interpreted to include certain increases in investment
advisory fees. This restriction may discourage potential
purchasers from acquiring a controlling interest in our company.
We
require specialized technology to operate our business and would
be adversely affected if this technology became inoperative or
obsolete.
Our business is dependent on highly specialized technology to
support our business functions, including: securities analysis,
securities trading, portfolio management, customer service,
accounting and internal financial processes and controls and
regulatory compliance and reporting.
All of our technology systems may be vulnerable to disability or
failures due to hacking, viruses, natural disasters, power
failures, acts of war or terrorism, and other causes. Some of
our software is licensed from and supported by outside vendors
upon whom we rely to prevent operating system failure. A
suspension or termination of these licenses or the related
support, upgrades and maintenance could cause system delays or
interruption. Also, our back office operations have been and our
middle office operations are in the process of being outsourced
to third-party service providers who rely on technology systems
as well. If any of these systems fail and cannot be recovered in
a timely way, we would be unable to fulfill critical business
functions, which could lead to a loss of customers and harm to
our reputation. Technological breakdowns could also interfere
with our ability to comply with financial reporting and other
regulatory requirements, exposing us to disciplinary action and
to liability to our customers.
In addition, our continued success depends on our ability to
adopt new or adapt existing technologies to meet client,
industry and regulatory demands. We might be required to make
significant capital expenditures to maintain competitive
technology. If we are unable to upgrade our technology in a
timely fashion, we might lose customers and fail to maintain
regulatory compliance, which could affect our results of
operations and severely damage our reputation.
Damage
to our reputation could adversely affect our
business.
We have developed our reputation through excellent client
services, strong long-term risk-adjusted investment performance,
comprehensive product offerings, superior distribution and a
stalwart brand image. The Calamos name and brand are valuable
assets and any damage to either could hamper our ability to
attract and retain clients and employees, thereby having a
material adverse effect on our revenues and net income. Risks to
our reputation may range from regulatory issues to
unsubstantiated accusations. Managing such matters may be
expensive, time-consuming and difficult.
Improper
disclosure of personal data could result in liability and harm
our reputation.
We and our service providers store and process personal client
information. It is possible that the security controls, training
and other processes over personal data may not prevent the
improper disclosure of client information. Such disclosure could
harm our reputation as well and subject us to liability,
resulting in increased costs or loss of revenue.
The
disparity in the voting rights among the classes of shares may
have a potential adverse effect on the price of our Class A
common stock.
Shares of our Class A common stock and Class B common
stock entitle the respective holders to identical rights, except
that each share of our Class A common stock entitles its
holder to one vote on all matters to be voted on by stockholders
generally while each share of Class B common stock entitles
its holder to a greater number of votes. The difference in
voting rights could adversely affect the value of our
Class A common stock to the extent that investors view, or
any potential future purchaser of our company views, the
superior voting rights of the Class B common stock to be
detrimental to the value of the Class A common stock.
Future
sales of our Class A common stock in the public market
could lower our stock price, and any additional capital raised
by us through the sale of equity or convertible securities may
dilute our stockholders ownership in us.
We may sell additional shares of Class A common stock in
subsequent public offerings or issue convertible debt
securities. The Calamos Interests own approximately 78.3% of
Calamos Holdings LLC and can exchange all or
20
portions of their ownership interests in Calamos Holdings LLC
for shares of our Class A common stock. Subject to certain
selling restrictions, the Calamos Interests could sell any or
all of those shares. We cannot predict the size of future
issuances of our Class A common stock or the effect, if
any, on the market price of our Class A common stock. Sales
or distributions of substantial amounts of our Class A
common stock (including shares issued in connection with an
acquisition), or the perception that such sales could occur, may
cause the market price of our Class A common stock to
decline.
Control
by Calamos family members of a majority of the combined voting
power of our common stock.
As of December 31, 2010, the Calamos Interests owned
approximately 78.3% of Calamos Holdings LLC and all of our
Class B common stock, representing more than 97.5% of the
combined voting power of all classes of our voting stock.
Pursuant to the terms of our second amended and restated
certificate of incorporation, Calamos Family Partners, Inc.
retains a majority of the combined voting power of our common
stock until its ownership interest in Calamos Holdings LLC falls
below 15%, at which time all outstanding shares of our
Class B common stock automatically will convert into shares
of our Class A common stock. Accordingly, as long as
Calamos Family Partners, Inc. maintains the requisite ownership
interests in our common stock and in Calamos Holdings LLC, it
will continue to have the ability to elect all of the members of
our board of directors and thereby control our management and
affairs, including determinations with respect to acquisitions,
dispositions, borrowings, issuances of common stock or other
securities, and the declaration and payment of dividends on our
common stock. In addition, it will continue to be able to
determine the outcome of all matters requiring stockholder
approval on a combined class vote basis, and will continue to be
able to cause or prevent a change of control of our company or a
change in the composition of our board of directors. The
concentration of ownership could deprive Class A
stockholders of an opportunity to receive a premium for their
common stock as part of a sale of our company and might
ultimately negatively affect the market price of our
Class A common stock. Despite this control, each of our
agreements entered into with Calamos Family Partners, Inc. and
its affiliates since our initial public offering have been
approved in accordance with the Conflict of Interests Policy
contained in our second amended and restated certificate of
incorporation.
Our
investment income may be negatively affected by fluctuation in
our corporate investment portfolio resulting in a material
adverse effect on our company.
A substantial portion of our assets are invested in Calamos
products which are subject to market risk. Prior to the use of
derivatives, our non-operating investment income was more
susceptible to a decline by the: realization of losses upon
disposition of corporate investments (as occurred in 2008),
market appreciation and\or depreciation of corporate investments
and market conditions. Fluctuations in investment income are
expected to occur in the future but to a lesser magnitude with
the use of derivatives. Tangentially, our capital loss
carryforwards resulting from losses generated from the sale of
investment securities provide deferred tax assets, which are
intangible assets with realization dependent on our ability to
generate capital gains from securities owned within our
corporate investment portfolio. If market conditions deteriorate
and securities valuations are depressed for prolonged periods of
time, the recoverability of these deferred tax assets may be
adversely affected and become impaired. The occurrence of an
impairment may require a material non-cash charge to our
earnings.
Insurance
coverage may be inadequate or not cover legal and regulatory
proceedings.
In addition to civil litigation and arbitration, we are subject
to regulatory inquiries and examinations which could result in
substantial penalties and awards against us if the outcome is
adverse. These types of proceedings have increased in the
financial services industry and there does not appear to be any
immediate reversal. We maintain insurance coverage in amounts
and terms we believe appropriate for such matters although we
cannot be certain that there will be adequate coverage, if at
all; nor can we be certain that coverage will always be
available. Finally, insurance premiums may rise for
substantially the same coverage amounts and terms which will
result in higher expenses and reduce our net income.
Expansion
into international markets may increase operational, regulatory
and other risks.
As we increase our international presence and expand our product
offerings and international business activities, we face
increased operational, regulatory, compliance, reputation and
foreign exchange rate risks. The failure of the Companys
systems of internal control to properly mitigate such additional
risks, or of our operating
21
infrastructure to support such international expansion could
result in operational failures and regulatory fines or sanctions.
Our
ability to operate our company effectively could be impaired if
we are unable to attract and retain qualified
personnel.
Our investment management business depends on the expertise of
our personnel and their ability to work together as an effective
team. Our future success depends, to a substantial degree, on
our ability to attract and retain qualified personnel.
Competition for employees with the necessary qualifications is
intense and we may not be successful in our efforts to recruit
and retain the required personnel. We cannot guarantee that our
compensation methods will allow us to recruit and retain the
required personnel we need. We may be required to increase
compensation, which would decrease our net income. The inability
to recruit and retain qualified personnel could affect our
ability to provide an acceptable level of service to our
existing or future clients, which could have a material adverse
effect on our business.
Catastrophic
and unpredictable events could have a material adverse effect on
our business.
A terrorist attack, war, power failure, cyber-attack, natural
disaster, significant adverse climate change or other
catastrophic or unpredictable event could adversely affect our
future revenues, expenses and earnings by: interrupting our
normal business operations; sustaining employee casualties,
including loss of our key executives; requiring substantial
expenditures and expenses to repair, replace and restore normal
business operations; and reducing investor confidence.
We have a disaster recovery plan to address catastrophic and
unpredictable events but we cannot be assured that this plan
will be sufficient in responding to or ameliorating the effects
of all disaster scenarios. If our employees or vendors that we
rely upon for support in a catastrophic event are unable to
respond adequately or in a timely manner, we may lose clients
resulting in a decrease in assets under management with a
material adverse effect on revenues and net income.
Changes
in tax laws and regulations as well as exposure to additional
income tax liabilities could have a material adverse effect on
our business.
We are subject to income taxes as well as non-income based taxes
in both the United States and the United Kingdom. As such
we are subject to ongoing tax audits and the tax authorities may
disagree with certain positions taken and assess additional
taxes. We regularly evaluate the likely outcomes of these audits
in order to determine the appropriateness of our tax provision
and the related valuations of our deferred income tax assets.
However, there can be no guarantee that we will accurately
predict the outcomes of these audits which could have a material
adverse impact on our net income, financial condition or
liquidity. Changes in tax laws or tax rulings could materially
impact our effective tax rate and the related valuations of our
deferred income tax assets. Calamos Holdings LLC made an
election under section 754 of the Internal Revenue Code of
1986, as amended (a section 754 election). As a
result of the section 754 election, Calamos Holdings LLC
increased the companys proportionate share of the tax
basis of the assets of Calamos Holdings LLC to reflect the
purchase price paid by the company for its interest in Calamos
Holdings LLC. The Internal Revenue Service completed its audit
of Calamos Holdings LLC for its 2004 through 2006 tax years and
has proposed certain adjustments not related to the
section 754 election. We anticipate that this audit and the
2004 through 2006 tax years will ultimately be closed without an
adjustment to the 754 election.
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Item 1B.
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Unresolved
Staff Comments
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None.
Our principal executive offices are located at 2020 Calamos
Court, Naperville, Illinois 60563, where we occupy approximately
153,000 square feet of space under lease agreements with
subsidiaries of Calamos Property Holdings LLC, which is owned by
the stockholders of Calamos Family Partners, Inc. We have
approximately 58,000 square feet of additional office space
at different locations in Naperville, Illinois under separate
lease agreements with subsidiaries of Calamos Property Holdings
LLC.
22
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Item 3.
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Legal
Proceedings
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As previously reported, the Company and Calamos Advisors LLC, an
indirect subsidiary, were named as defendants in a class action
complaint filed on July 15, 2010 (Christopher Brown et al.
v John P. Calamos, Sr. et al.,
No. 10-CV-04422
(N.D. Ill.)) by a putative common shareholder of the Calamos
Convertible Opportunities and Income Fund (CHI). This action was
voluntarily dismissed by plaintiff in the U.S. District
Court and re-filed in the Circuit Court of Cook County, Illinois
on September 13, 2010 (Christopher Brown et al. v John P.
Calamos, Sr. et al., Civil Action No. 10CH39590).
Other defendants include CHI, current and former trustees of
CHI, John P. Calamos, Sr., Weston W. Marsh, John E. Neal,
William R. Rybak, Stephen B. Timbers, David D. Tripple, Joe F.
Hanauer, and unspecified defendants John and Jane Does 1-100.
The plaintiff alleges that the Company and Calamos Advisors
aided and abetted the individual defendants alleged
breaches of fiduciary duty and were unjustly enriched in
connection with the redemption of auction rate preferred
securities of CHI. As to the Company and Calamos Advisors, the
plaintiff is seeking: (i) declaratory judgments that the
Company and Calamos Advisors aided and abetted the individual
defendants alleged breaches of fiduciary duty and were
unjustly enriched; (ii) an injunction against the Company
and Calamos Advisors serving as advisor or otherwise earning
fees for services to CHI; (iii) an unspecified amount of
monetary relief plus interest; (iv) an award of
attorneys fees and expenses; and (v) such other and
further relief, including punitive damages, as may be available
to the plaintiff and the class that plaintiff seeks to
represent. On October 13, 2010, the defendants removed this
action from the Circuit Court of Cook County, Illinois to the
U.S. District Court for the Northern District of Illinois
(Christopher Brown et al. v John P. Calamos, Sr. et al.,
No. 10-CV-06558
(N.D. Ill.)) and also moved to dismiss the complaint. The case
is currently awaiting decision on plaintiffs motion to
remand it to the Circuit Court of Cook County.
The Company and Calamos Advisors LLC were named as defendants in
a class action complaint filed on September 14, 2010
(Russell Bourrienne et al. v John P. Calamos, Sr. et al.,
No. 10-CV-5833
(N.D. Ill.)) by a putative common shareholder of the Calamos
Convertible Opportunities and Income Fund (CHI). This action was
voluntarily dismissed by plaintiff in the U.S. District
Court and re-filed in Circuit Court of Cook County, Illinois on
October 18, 2010 (Russell Bourrienne et al. v John P.
Calamos, Sr. et al., No. 10CH45119 ). Other defendants
include current and former trustees of CHI, John P.
Calamos, Sr., Weston W. Marsh, John E. Neal, William R.
Rybak, Stephen B. Timbers, David D. Tripple, Joe F. Hanauer and
unspecified defendants John and Jane Does
1-100. The
plaintiff alleges that the Company and Calamos Advisors aided
and abetted the individual defendants alleged breaches of
fiduciary duty and were unjustly enriched in connection with the
redemption of auction rate preferred securities of CHI. As to
the Company and Calamos Advisors, the plaintiff is seeking:
(i) declaratory judgments that the Company and Calamos
Advisors aided and abetted the individual defendants
alleged breaches of fiduciary duty and were unjustly enriched;
(ii) an injunction against serving as advisor or otherwise
earning fees for services to CHI; (iii) an unspecified
amount of monetary relief plus interest; (iv) an award of
attorneys fees and expenses; and (v) such other and
further relief, including punitive damages, as may be available
to the plaintiff and the class that plaintiff seeks to
represent. On November 12, 2010, the defendants removed
this action from the Circuit Court of Cook County, Illinois to
the U.S. District Court for the Northern District of
Illinois (Russell Bourrienne et al. v John P. Calamos, Sr.
et al.,
No. 10-CV-07295
(N.D. Ill.)). Defendants have also moved to dismiss the
complaint.
The Company and Calamos Advisors LLC were named as defendants in
a class action complaint filed on August 13, 2010 (Rutgers
Casualty Insurance Company et al. v John P. Calamos, Sr. et
al.,
No. 10-CV-5106
(N.D. Ill.)) by a putative common shareholder of the
Calamos Convertible and High Income Fund (CHY). This action was
voluntarily dismissed by plaintiff in the U.S. District
Court and re-filed in Circuit Court of Cook County, Illinois on
December 22, 2010 (Rutgers Casualty Insurance Company et
al. v John P. Calamos, Sr. et al., No. 10CH53998 ).
Other defendants include CHY, current and former trustees of
CHY, John P. Calamos, Sr., Nick P. Calamos, Weston W.
Marsh, John E. Neal, William R. Rybak, Stephen B. Timbers, David
D. Tripple, Joe F. Hanauer and unspecified defendants John and
Jane Does 1-100. The plaintiff alleges that the Company and
Calamos Advisors aided and abetted the individual
defendants alleged breaches of fiduciary duty and were
unjustly enriched in connection with the redemption of auction
rate preferred securities of CHY. As to the Company and Calamos
Advisors, the plaintiff is seeking: (i) declaratory
judgments that the Company and Calamos Advisors aided and
abetted the individual defendants alleged breaches of
fiduciary duty and were unjustly enriched; (ii) an
injunction against serving as advisor or otherwise earning fees
for services to CHY; (iii) an unspecified amount of
monetary relief plus interest; (iv) an award of
attorneys fees and expenses; and (v) such other and
further relief, including
23
punitive damages, as may be available to the plaintiff and the
class that plaintiff seeks to represent. On January 21,
2011, the defendants removed this action from the Circuit Court
of Cook County, Illinois to the U.S. District Court for the
Northern District of Illinois (Rutgers Casualty Insurance
Company et al. v John P. Calamos, Sr. et al.,
No. 11-CV-00462
(N.D. Ill.)). Defendants have also moved to dismiss the
complaint.
The Company and Calamos Advisors believe that these lawsuits are
without merit and intend to defend themselves vigorously against
these allegations.
In the normal course of business, we may be party to various
legal proceedings from time to time. Currently, there are no
other legal proceedings that management believes would have a
materially adverse effect on our consolidated financial position
or results of operations.
[Reserved]
24
PART II
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Item 5.
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Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
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Our Class A common stock ($0.01 par value) trades on
the NASDAQ Global Select Market under the symbol
CLMS. There is no public market for our Class B
common stock ($0.01 par value).
The high and low trade price information for Class A common
stock and dividends per share for each class of common stock for
2010 and 2009 were:
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Market Price Range
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Cash Dividends
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2010
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2009
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per Share
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High
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Low
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High
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Low
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2010
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2009
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First Quarter
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$
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15.33
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$
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11.55
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$
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8.26
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$
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2.74
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$
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0.075
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$
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0.055
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Second Quarter
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$
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14.82
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$
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8.64
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$
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15.47
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$
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4.53
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$
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0.075
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$
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0.055
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Third Quarter
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$
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11.91
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$
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8.45
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$
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15.01
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$
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10.75
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$
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0.075
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$
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0.055
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Fourth Quarter
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$
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14.26
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$
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11.01
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$
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14.32
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$
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9.90
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$
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0.075
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$
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0.055
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On March 1, 2011, there were approximately 61 holders of
record of our outstanding Class A common stock and one
holder of record of our outstanding Class B common stock.
Shares of our Class A common stock are primarily held in
street name through various brokers.
Calamos Asset Management, Inc. expects to declare and pay
quarterly cash dividends during 2011.
Equity
Compensation Plan Information
As of December 31, 2010
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Number of securities
|
|
|
|
|
|
|
|
|
|
remaining available
|
|
|
|
|
|
|
|
|
|
for future issuance
|
|
|
|
Number of securities
|
|
|
Weighted-average
|
|
|
under equity
|
|
|
|
to be issued upon
|
|
|
exercise price of
|
|
|
compensation plans
|
|
|
|
exercise of
|
|
|
outstanding
|
|
|
(excluding
|
|
|
|
outstanding options,
|
|
|
options, warrants
|
|
|
securities reflected
|
|
|
|
warrants and rights
|
|
|
and rights
|
|
|
in column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
2,411,866
|
|
|
$
|
23.17
|
|
|
|
N/A(1
|
)
|
Restricted stock units
|
|
|
1,628,920
|
|
|
|
|
|
|
|
N/A(1
|
)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,040,786
|
|
|
$
|
13.83
|
|
|
|
5,016,897
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
A combined total of 10,000,000 shares of Calamos Asset
Management, Inc.s Class A common stock may be issued
under its incentive compensation plan. During the years ended
December 31, 2010, 2009 and 2008, 273,734 shares,
170,896 shares and 173,605 shares, respectively, were
converted. |
25
The following graph compares the percentage change in cumulative
shareholder return on our companys common stock with the
Standard & Poors 500 Index and SNL Asset Manager
Index since December 31, 2005 (assuming a $100 investment
on December 31, 2005, and the reinvestment of any
dividends).
Performance
Graph
Total
Return Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ending
|
|
Index
|
|
12/31/05
|
|
|
12/31/06
|
|
|
12/31/07
|
|
|
12/31/08
|
|
|
12/31/09
|
|
|
12/31/10
|
|
Calamos Asset Management, Inc.
|
|
|
100.00
|
|
|
|
86.33
|
|
|
|
97.40
|
|
|
|
24.79
|
|
|
|
39.49
|
|
|
|
49.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SNL Asset Manager
|
|
|
100.00
|
|
|
|
115.97
|
|
|
|
132.01
|
|
|
|
62.74
|
|
|
|
101.78
|
|
|
|
117.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S&P 500
|
|
|
100.00
|
|
|
|
115.79
|
|
|
|
122.16
|
|
|
|
76.96
|
|
|
|
97.33
|
|
|
|
111.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Information
Calamos Asset Management, Inc. (CAM) owns two groups of assets:
a) CAMs 21.7% ownership interest in Calamos Holdings
LLC and b) assets other than its interest in Calamos
Holdings LLC (Other Assets), comprised of cash equivalents,
current income tax receivables and net deferred income tax
assets with a combined book value of $122.4 million.
Because CAM controls the operations of Calamos Holdings LLC, CAM
presents the entire operations of Calamos Holdings LLC with its
own in the consolidated financial statements. The Calamos
Interests 78.3% ownership in Calamos Holdings LLC is
presented as non-controlling interest in the consolidated
financial statements. Prior to March 1, 2009, in addition
to the approximately 20 million outstanding Class A
common shares, we added 77 million shares to CAMs
diluted shares outstanding to reflect Calamos Interests
78.3% ownership in Calamos Holdings LLC. The diluted share count
provided a reasonable proxy for the number of shares used in
determining the market capitalization of the fully consolidated
company.
Effective March 1, 2009, CAM
de-unitized
its ownership structure and as a result, Calamos Interests
ownership in Calamos Holdings LLC is no longer reflected in the
diluted share count presented in CAMs financial
statements. Therefore, the determination of the market
capitalization of the fully consolidated business cannot be
easily determined as the product of share price and weighted
average number of shares. There is a divergence within the
financial community on how to calculate CAMs market
capitalization with some basing it solely on the outstanding
share count of CAMs Class A common stock and others
grossing-up
CAMs outstanding Class A shares by its 21.7%
ownership in Calamos Holdings LLC. The following illustration
and accompanying table highlight the uniqueness of CAMs
ownership structure in determining the fully consolidated market
capitalization. This illustration is based on the closing price
of CAMs Class A common stock of $14.00 on
December 31, 2010.
As previously stated, in addition to the approximate 21.7%
ownership in Calamos Holdings LLC, CAM owns certain Other
Assets. These assets include cash equivalents and current income
tax receivables with a combined
26
book value of $46.7 million, which approximates fair value,
as well as net deferred tax assets with a book value of
$75.7 million. The most significant deferred tax asset
relates to an election made under section 754 of the
Internal Revenue Code following CAMs initial public
offering that expires in 2019 and allows CAM to reduce future
income tax payments by approximately $8.0 million annually.
The net present value of the net deferred tax assets would be
approximately $48.0 million if a hypothetical 12% discount
rate were applied over the remaining life of the assets. Using
this assumption, Other Assets would collectively have a
discounted present value of approximately $94.7 million, or
$4.75 per share. Assuming CAMs stock price fully reflects
the Other Assets discounted present value of $4.75 per
share, it can be inferred that CAMs remaining stock price
of $9.25 ($14.00 $4.75) would be attributable to
CAMs 21.7% ownership interest in Calamos Holdings LLC.
With these assumptions, the market capitalization associated
with CAMs ownership in Calamos Holdings LLC can be
estimated by multiplying the CAMs share price attributable
to Calamos Holdings LLC ($9.25) by the number of CAMs
Class A common shares outstanding (19.9 million) to
yield an estimated market capitalization of $184.5 million
as of December 31, 2010. This result, however, must be
divided by CAMs 21.7% ownership of Calamos Holdings LLC to
determine the total implied market capitalization of Calamos
Holdings LLC of $850.1 million. Adding the discounted
present value of CAMs Other Assets ($94.7 million) to
the market capitalization of Calamos Holdings LLC indicates that
the fully consolidated market capitalization of CAM would be
approximately $944.8 million as of December 31, 2010.
The above example assumes that CAMs stock price reflects
the entire discounted present value of the Other Assets. If,
however, no value were ascribed to the Other Assets, the fully
consolidated market capitalization of CAM would be estimated at
$1.3 billion as presented in the following table.
The following calculations summarize two ends of the spectrum in
determining the fully consolidated market capitalization of CAM
as described above: no recognition of value attributable to
CAMs Other Assets and full recognition of the discounted
present value of the Other Assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No Recognition of CAMs
|
|
|
Full Recognition of CAMs
|
|
|
|
Other Assets
|
|
|
Other Assets
|
|
|
|
Ownership in
|
|
|
Other
|
|
|
Ownership in
|
|
|
Other
|
|
(in thousands, except share data)
|
|
Holdings
|
|
|
Assets
|
|
|
Holdings
|
|
|
Assets
|
|
|
Divide:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discounted value of CAMs Other Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
94,722
|
|
Class A shares outstanding at December 31, 2010
|
|
|
|
|
|
|
19,942,317
|
|
|
|
|
|
|
|
19,942,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discounted value per share of CAMs Other Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4.75
|
|
Multiply:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price attributed to assets
|
|
$
|
14.00
|
|
|
|
|
|
|
$
|
9.25
|
|
|
$
|
4.75
|
|
Class A shares outstanding at December 31, 2010
|
|
|
19,942,317
|
|
|
|
19,942,317
|
|
|
|
19,942,317
|
|
|
|
19,942,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market capitalization of outstanding shares
|
|
$
|
279,192
|
|
|
|
|
|
|
$
|
184,466
|
|
|
$
|
94,722
|
|
Divide by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAMs percentage ownership
|
|
|
21.7
|
%
|
|
|
100
|
%
|
|
|
21.7
|
%
|
|
|
100
|
%
|
Market capitalization associated with CAMs assets
|
|
$
|
1,286,599
|
|
|
|
|
|
|
$
|
850,073
|
|
|
$
|
94,722
|
|
|
|
|
|
|
|
|
|
|
|
Fully consolidated market capitalization
|
|
$1,286,599
|
|
$944,795
|
|
|
|
|
|
Similarly, our Board of Directors may be required to determine
the fair values of CAMs assets. This requirement would be
necessitated should the Calamos Interests choose to exchange
their ownership interest in Calamos Holdings LLC for shares of
CAMs Class A common stock (the Exchange). Effective
March 1, 2009, the Exchange provisions as set forth in
CAMs Schedule 14C filed with the Securities and
Exchange Commission on January 12, 2009 require that the
Exchange be based on a fair value approach. Assuming that our
Board of Directors used the market price of CAMs
Class A share common stock as the basis for determining
fair value, the
27
following table presents a likely range of the number of CAM
shares of Class A common stock that the Calamos Interests
would have received upon Exchange at December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
No Recognition of CAMs
|
|
|
Full Recognition of CAMs
|
|
|
|
Other Assets
|
|
|
Other Assets
|
|
(in thousands, except share data)
|
|
|
|
|
|
|
|
Market capitalization associated with CAMs investment in
Calamos Holdings (see table above)
|
|
$
|
1,286,599
|
|
|
$
|
850,073
|
|
Multiply by:
|
|
|
|
|
|
|
|
|
Calamos Interests ownership in Calamos Holdings
LLC(1)
|
|
|
78.3
|
%
|
|
|
78.3
|
%
|
|
|
|
|
|
|
|
|
|
Calamos Interests value exchanged for Class A common
stock
|
|
$
|
1,007,052
|
|
|
|
665,391
|
|
Divide by:
|
|
|
|
|
|
|
|
|
Share price of CAM Class A common stock
|
|
$
|
14.00
|
|
|
$
|
14.00
|
|
|
|
|
|
|
|
|
|
|
Shares issued to the Calamos Interests upon Exchange
|
|
|
71,932,296
|
|
|
|
47,527,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The ownership percentage presented in the table has been
approximated for presentation purposes yet the values presented
are derived from the precise ownership percentage. |
28
|
|
Item 6.
|
Selected
Financial Data
|
The selected financial data presented below has been derived in
part from, and should be read in conjunction with, the
consolidated financial statements and Item 7.
Managements Discussion and Analysis of Financial Condition
and Results of Operations included in this
Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
(in thousands, except share data)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fees
|
|
$
|
238,308
|
|
|
$
|
200,790
|
|
|
$
|
274,174
|
|
|
$
|
325,395
|
|
|
$
|
329,383
|
|
Distribution and underwriting fees
|
|
|
84,753
|
|
|
|
78,430
|
|
|
|
114,023
|
|
|
|
143,994
|
|
|
|
151,760
|
|
Other
|
|
|
2,978
|
|
|
|
2,518
|
|
|
|
3,392
|
|
|
|
4,088
|
|
|
|
4,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
326,039
|
|
|
|
281,738
|
|
|
|
391,589
|
|
|
|
473,477
|
|
|
|
485,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
75,292
|
|
|
|
67,413
|
|
|
|
74,483
|
|
|
|
91,039
|
|
|
|
73,382
|
|
Distribution expenses
|
|
|
66,493
|
|
|
|
59,491
|
|
|
|
84,884
|
|
|
|
104,227
|
|
|
|
100,935
|
|
Amortization of deferred sales commissions
|
|
|
9,206
|
|
|
|
12,201
|
|
|
|
23,417
|
|
|
|
27,249
|
|
|
|
32,924
|
|
Marketing and sales promotion
|
|
|
13,775
|
|
|
|
10,762
|
|
|
|
11,908
|
|
|
|
40,833
|
|
|
|
15,631
|
|
General and administrative
|
|
|
34,772
|
|
|
|
33,813
|
|
|
|
37,800
|
|
|
|
37,036
|
|
|
|
31,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
199,538
|
|
|
|
183,680
|
|
|
|
232,492
|
|
|
|
300,384
|
|
|
|
254,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
126,501
|
|
|
|
98,058
|
|
|
|
159,097
|
|
|
|
173,093
|
|
|
|
231,028
|
|
Non-operating income (loss)
|
|
|
21,662
|
|
|
|
(4,910
|
)
|
|
|
(364,055
|
)
|
|
|
31,499
|
|
|
|
12,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax provision (benefit)
|
|
|
148,163
|
|
|
|
93,148
|
|
|
|
(204,958
|
)
|
|
|
204,592
|
|
|
|
243,435
|
|
Income tax provision (benefit)
|
|
|
12,375
|
|
|
|
7,879
|
|
|
|
(3,787
|
)
|
|
|
18,666
|
|
|
|
22,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
135,788
|
|
|
|
85,269
|
|
|
|
(201,171
|
)
|
|
|
185,926
|
|
|
|
220,665
|
|
Net (income) loss attributable to non-controlling interest in
Calamos Holdings LLC
|
|
|
(115,788
|
)
|
|
|
(72,509
|
)
|
|
|
104,494
|
|
|
|
(156,583
|
)
|
|
|
(186,631
|
)
|
Net (income) loss attributable to non-controlling interest in
partnership investments
|
|
|
(72
|
)
|
|
|
(336
|
)
|
|
|
72,156
|
|
|
|
(1,598
|
)
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Calamos Asset Management,
Inc.
|
|
$
|
19,928
|
|
|
$
|
12,424
|
|
|
$
|
(24,521
|
)
|
|
$
|
27,745
|
|
|
$
|
34,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.00
|
|
|
$
|
0.63
|
|
|
$
|
(1.24
|
)
|
|
$
|
1.24
|
|
|
$
|
1.47
|
|
Diluted(1)
|
|
$
|
0.99
|
|
|
$
|
0.62
|
|
|
$
|
(1.24
|
)
|
|
$
|
1.22
|
|
|
$
|
1.45
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,884,847
|
|
|
|
19,626,233
|
|
|
|
19,752,972
|
|
|
|
22,297,170
|
|
|
|
23,161,998
|
|
Diluted(1)
|
|
|
20,187,992
|
|
|
|
19,954,124
|
|
|
|
97,449,228
|
|
|
|
99,760,872
|
|
|
|
100,805,030
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Balance Sheet Data (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
82,870
|
|
|
$
|
145,431
|
|
|
$
|
59,425
|
|
|
$
|
108,441
|
|
|
$
|
328,841
|
|
Investment
securities(2)
|
|
|
314,215
|
|
|
|
207,886
|
|
|
|
173,155
|
|
|
|
535,476
|
|
|
|
142,675
|
|
Partnership investments,
net(2)
|
|
|
41,678
|
|
|
|
37,549
|
|
|
|
28,471
|
|
|
|
353,004
|
|
|
|
86,846
|
|
Total assets
|
|
|
589,246
|
|
|
|
557,078
|
|
|
|
475,873
|
|
|
|
1,217,672
|
|
|
|
791,788
|
|
Long-term debt, including current portion
|
|
|
125,000
|
|
|
|
125,000
|
|
|
|
125,000
|
|
|
|
525,000
|
|
|
|
150,000
|
|
Total liabilities
|
|
|
185,854
|
|
|
|
177,252
|
|
|
|
164,826
|
|
|
|
602,553
|
|
|
|
208,848
|
|
Calamos Asset Management, Inc. stockholders equity
|
|
|
183,016
|
|
|
|
165,314
|
|
|
|
150,773
|
|
|
|
213,737
|
|
|
|
214,577
|
|
Non-controlling interests
|
|
|
220,376
|
|
|
|
214,512
|
|
|
|
160,274
|
|
|
|
401,382
|
|
|
|
368,363
|
|
Total stockholders equity
|
|
|
403,392
|
|
|
|
379,826
|
|
|
|
311,047
|
|
|
|
615,119
|
|
|
|
582,940
|
|
Assets Under Management (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
|
27,352
|
|
|
|
24,480
|
|
|
|
17,498
|
|
|
|
34,835
|
|
|
|
33,704
|
|
Separate accounts
|
|
|
8,062
|
|
|
|
8,234
|
|
|
|
6,542
|
|
|
|
11,373
|
|
|
|
11,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets under management
|
|
$
|
35,414
|
|
|
$
|
32,714
|
|
|
$
|
24,040
|
|
|
$
|
46,208
|
|
|
$
|
44,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Diluted shares outstanding for the periods 2006 through 2008 are
calculated (a) assuming the Calamos Interests exchanged all
of their membership units in Calamos Holdings LLC for shares of
Calamos Asset Management, Inc.s Class A common stock
on a
one-for-one
basis and (b) including the effect of outstanding
restricted stock unit and options awards. Because the company
generated a loss in 2008, diluted per share results equal basic
per share results as the economic impact of the Calamos
Interests exchange and effect for the stock based
compensation results in anti-dilution. In 2009, the ownership
structure was
de-unitized
and the exchange, described above, is now based on a fair value
approach which results in the same or fewer shares of
Class A common stock being issued at the time of exchange.
The effects of the exchange are anti-dilutive and are therefore
excluded from the calculation of diluted weighted average shares
outstanding for 2009 and 2010. |
|
(2) |
|
In 2007, we established Calamos Global Funds PLC, also referred
to as Offshore Funds. As of December 31, 2007, the Company
wholly-owned the Offshore Funds, which were consolidated with
the Companys results and reported within partnership
investments, net. In December 2008, the Company sold a portion
of its investment in the Offshore Funds that required the
Company to de-consolidate the offshore funds from its results as
it was no longer the majority owner. Accordingly, as of
December 31, 2008, the Company began recording its
investment in Offshore Funds at the net asset value of its
investment and classified this investment as an
available-for-sale
security in investment securities in the consolidated statement
of financial condition. |
30
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
We provide investment advisory services to institutions and
individuals, managing $35.4 billion in client assets at
December 31, 2010 through a variety of investment products
designed to suit their investment needs.
Assets
Under Management
Our operating results fluctuate primarily due to changes in the
total value and composition of our assets under management and
with our ability to manage variable expenses. The following
table details our assets under management, based on the four
types of investment product types we offer in the mutual fund
and separate account categories, at December 31, 2010, 2009
and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
Open-end funds
|
|
$
|
22,049
|
|
|
$
|
19,531
|
|
|
$
|
13,594
|
|
Closed-end funds
|
|
|
5,303
|
|
|
|
4,949
|
|
|
|
3,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds
|
|
|
27,352
|
|
|
|
24,480
|
|
|
|
17,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separate Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional accounts
|
|
|
5,559
|
|
|
|
4,619
|
|
|
|
3,483
|
|
Managed accounts
|
|
|
2,503
|
|
|
|
3,615
|
|
|
|
3,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total separate accounts
|
|
|
8,062
|
|
|
|
8,234
|
|
|
|
6,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets under management
|
|
$
|
35,414
|
|
|
$
|
32,714
|
|
|
$
|
24,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In order to increase our assets under management and expand our
business, we must develop and market investment products and
strategies that suit the investment needs of our target
clients investors seeking superior, risk-adjusted
returns over the long term. The value and composition of our
assets under management and our ability to continue to attract
and retain clients will depend on a variety of factors,
including, among others:
|
|
|
|
|
purchases and redemptions of shares of the open-end funds and
other investment products;
|
|
|
|
the amount of distributed and reinvested capital gains and
income;
|
|
|
|
fluctuations in the global financial markets and the valuations
of securities that result in appreciation or depreciation of
assets under management;
|
|
|
|
the use of leverage within the closed-end funds;
|
|
|
|
our ability to educate our target clients about our investment
philosophy and provide them with
best-in-class
service;
|
|
|
|
the relative investment performance and volatility 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 introduction of new investment strategies and products, and
our decision to close strategies when deemed in the best
interests of our clients.
|
Investment
Products
Investment
Companies
Investment companies include registered open-end mutual funds
and registered closed-end funds.
Open-End Mutual Funds. Open-end funds are
continually offered and are not listed on an exchange. Open-end
funds issue new shares for purchase and redeem shares from those
shareholders who sell. The share price for
31
purchases and redemptions of open-end funds is determined by
each funds net asset value, which is calculated at the end
of each business day. Assets under management in open-end funds
vary as a result of both market appreciation and depreciation
and the level of new purchases or redemptions of shares of a
fund. Investment management fees, including performance-based
fees, are our principal source of revenue from open-end mutual
funds and are primarily derived from assets under management. We
offer several share classes in each open-end fund to provide
investors with alternatives to pay for commissions, distribution
and service fees. Since 2007 our open-end funds have included
our Dublin, Ireland- based Calamos Global Funds PLC, also
referred to as Offshore Funds.
Closed-End Funds. Closed-end funds typically
sell a finite number of shares to investors through underwritten
public offerings. After the public offerings, investors buy
closed-end fund shares from, and sell those shares to, other
investors through an exchange or broker-dealer market. All of
the closed-end funds that we manage currently use leverage which
increases their total assets. Assets under management in
closed-end funds vary due to the amount of assets raised in
underwritten public offerings, the amount of leverage utilized
and market appreciation or depreciation. Our revenues from
closed-end funds are derived from the investment management fees
on the assets that we manage. In addition, in a typical
underwritten public offering, investors are charged a 4.5%
commission by the selling firms. We do not receive or pay
commissions in connection with sales of closed-end fund shares,
although we may pay asset-based distribution and service fees,
as well as one-time distribution and service fees to
underwriters for underwriting public offerings of closed-end
funds.
Separate
Accounts
Separate accounts include institutional accounts and managed
accounts for high net worth investors. Fund flows into and out
of such accounts, which we refer to as purchases and
redemptions, affect our level of assets under management. Assets
under management from these accounts also vary as a result of
market appreciation and depreciation. Our revenues from separate
accounts are derived from investment management fees that we
charge, including performance-based fees where applicable.
Provided below is a brief differentiation of these accounts:
|
|
|
|
|
Institutional accounts are separately managed accounts
for institutional investors, such as public and private pension
funds, public funds, endowment funds and private investment
funds. Institutional accounts also include
sub-advised
portfolios, such as registered investment companies, where we
act as investment advisor but for which we have limited or no
distribution responsibilities. Institutional accounts are
typically offered directly by us through institutional
consultants and through national and regional broker-dealers.
|
|
|
|
Managed accounts are separately managed accounts for high
net worth investors offered primarily through national and
regional broker-dealers.
|
Revenues
Our revenues are substantially comprised of investment
management fees earned under contracts with the mutual funds and
separate accounts managed by us. The distribution of assets
under management among our investment products also will have an
impact on our investment management fees, as some products carry
different fees than others. Investment management fees may
fluctuate based on a number of factors, including the following:
|
|
|
|
|
total value and composition of our assets under management;
|
|
|
|
the amount of capital gain and income distributions;
|
|
|
|
market appreciation or depreciation;
|
|
|
|
the use of leverage within our products;
|
|
|
|
relative investment performance and volatility of our investment
products and strategies compared to benchmarks and competitors;
|
|
|
|
level of net purchases and redemptions, which represent the sum
of new client assets, additional funding from existing clients,
withdrawals of assets from and termination of client accounts,
and purchases and redemptions of mutual fund shares;
|
32
|
|
|
|
|
a determination by the independent trustees of the mutual funds
to terminate or significantly alter the funds investment
management agreements with us; and
|
|
|
|
increased competition.
|
Our revenues also are comprised of distribution and underwriting
fees. Asset-based distribution
and/or
service fees received pursuant to
Rule 12b-1
plans, discussed below, are a significant component of
distribution and underwriting fees. Distribution and
underwriting fees may fluctuate based on a number of factors,
including the following:
|
|
|
|
|
total value of our assets under management;
|
|
|
|
total composition of our assets under management by share class;
|
|
|
|
market appreciation or depreciation; and
|
|
|
|
the level of purchases and redemptions.
|
Investment
Management Fees
Investment management fees that we receive from mutual funds for
which we act as investment advisor are computed monthly on an
average daily net asset value basis. Investment management fees
that we earn on separate accounts for which we act as investment
advisor are generally computed quarterly, either in advance or
in arrears, based on the assets under management at the
beginning or end of the quarterly period. We recognize the
revenues derived from these fees over the period during which we
render investment advisory services.
Distribution
and Underwriting Fees
Distribution and underwriting fees include (1) asset-based
distribution
and/or
service fees received pursuant to
Rule 12b-1
plans, (2) front-end sales charges and (3) contingent
deferred sales charges.
Rule 12b-1
distribution
and/or
service fees are asset-based fees that the open-end funds pay us
over time pursuant to distribution plans adopted under
provisions of
Rule 12b-1
of the Investment Company Act. These fees are typically
calculated as a percentage of average daily net assets under
management in specific share classes of the open-end funds.
These fees fluctuate with both the level of average daily net
assets under management and the relative mix of assets among
share classes.
Rule 12b-1
fees are generally offset by distribution and service expenses
paid during the period, as well as the amortization of deferred
sales commissions that were previously paid by us to third
parties.
We earn front-end sales charges on the sale of Class A
shares of open-end funds, which provide for a sales charge at
the time of investment. We retain a portion of the applicable
sales charge and record as underwriting revenue only the portion
that we retain. We retain the entire sales charge earned on
accounts where Calamos Financial Services acts as the
broker-dealer. Sales charges are waived on sales to shareholders
or intermediaries that exceed specified minimum dollar amounts
and other specified conditions. Sales charges fluctuate with
both the level of Class A share sales and the mix of
Class A shares offered with and without a sales charge.
Contingent deferred sales charges are earned on redemptions of
Class B shares within six years of purchase and on
redemptions of Class C shares within one year of purchase.
Contingent deferred sales charges fluctuate primarily based on
the length of the investment in Class B and Class C
shares. Waivers of contingent deferred sales charges apply under
certain circumstances.
Other
Revenues
Other revenues consist primarily of portfolio accounting fees,
which are contractual payments calculated as a percentage of
combined assets of the mutual funds for financial accounting
services, such as establishing expense accruals and performing
tax calculations. The fees were calculated based on the average
daily assets of the open-end and closed-end funds.
33
Operating
Expenses
Our operating expenses consist of employee compensation and
benefits, distribution expenses, amortization of deferred sales
commissions, marketing and sales promotion expenses, and general
and administrative expenses. These expenses fluctuate due to a
number of factors, including but not limited to, the following:
|
|
|
|
|
variations in the level of total compensation expense due to,
among other things, incentive compensation, changes in our
employee count and mix and competitive factors;
|
|
|
|
changes in distribution expense and amortization of the deferred
sales commissions as a result of fluctuations in mutual fund
sales and level of redemptions;
|
|
|
|
market appreciation or depreciation of assets under management
which will directly impact distribution expenses;
|
|
|
|
the amount of
Rule 12b-1
distribution
and/or
service fees that we receive, as well as our continued ability
to receive those fees in the future, which would affect the
amortization expenses associated with the receipt of these fees;
|
|
|
|
changes in the level of our marketing and promotion expenses in
response to market conditions, including our efforts to further
penetrate and support new and existing distribution channels and
clients; and
|
|
|
|
expenses and capital costs, such as technology assets,
professional services, depreciation, and research and
development, incurred to maintain and enhance our administrative
and operating services infrastructure.
|
We have and will continue to adjust the level of expenses
relative to business income and continue to seek opportunities
to implement a more variable cost structure.
Employee
Compensation and Benefits
Employee compensation and benefits expense includes salaries,
incentive compensation and related benefits costs. Employee
compensation and benefits are benchmarked against the
competitive market landscape, including industry compensation
standards. In order to attract and retain qualified personnel,
we must maintain competitive employee compensation and benefits.
In normal circumstances, we expect to experience a general rise
in employee compensation and benefits expenses over the long
term.
We use a fair value method in recording compensation expense for
restricted stock units and stock options granted under our
incentive stock plan. Under the fair value method, compensation
expense is measured at the grant date based on the estimated
fair value of the award and is recognized as an expense over the
vesting period. Fair value is determined on the date granted
using the Black-Scholes option pricing model for the stock
options and is determined by the market value of the underlying
stock for restricted stock units.
Distribution
Expenses
Distribution expenses include payments that we make to
broker-dealers and other intermediaries for selling,
underwriting, servicing and administering mutual funds. This
expense is influenced by new mutual funds sales, levels of
redemptions and market appreciation or depreciation of assets
under management in these products. This expense is comprised of
Rule 12b-1
distribution
and/or
service fee payments to the selling firms.
Amortization
of Deferred Sales Commissions
As discussed above, we pay commissions to selling firms upon the
sale of Class B and C shares of open-end funds. As we pay
these commissions, we create a deferred sales commission asset
on our balance sheet. We amortize these assets over either the
average remaining lives of the assets or the period in which we
receive related asset-based distribution
and/or
service fees pursuant to
Rule 12b-1
plans. Amortization expenses generally offset the
Rule 12b-1
fees we receive from the funds shareholders over this same
period. In addition, because
Rule 12b-1
fees cease upon the redemption of open-end fund shares,
amortization expenses are accelerated when shares are redeemed,
resulting in an increase in amortization expense and a reduction
of the deferred sales commission asset.
34
Because we discontinued the sale of Class B shares during
2009, the deferred sales commission assets related to these
shares are no longer replenished by new sales. In conjunction
with this decision, we evaluated the estimated remaining lives
on the portion of the deferred sales commission assets related
to Class B mutual fund shares and, as a result of this
evaluation, extended the estimated remaining lives of these
assets. The impact of this change in estimate reduced
amortization expense beginning in the year ended
December 31, 2009.
Other
Operating Expenses
Other operating expenses include marketing and sales promotion
expenses and general and administrative expenses. Marketing and
sales promotion expenses generally vary based on the type and
level of marketing, educational, sales or other programs in
operation and include closed-end fund marketing costs and
ongoing and one-time payments to broker-dealers. In addition, as
the open-end mutual funds that we manage have grown in size and
recognition over time and in normal circumstances, we have
become subject to supplemental compensation payments to
third-party selling agents, which are a component of marketing
and sales promotion expense. We expect supplemental compensation
payments to fluctuate with changes in assets under management.
In connection with closed-end funds, we make fee payments to
certain underwriters for distribution, consulting
and/or
support services rendered during or after the offering period of
each closed-end fund. These fees are based on contractual
agreements with underwriting firms and may be paid over time
based on the average daily net assets of such funds or at the
close of the offering period based on the amount of assets
raised during the offering.
General and administrative expenses primarily include
occupancy-related costs, depreciation and professional and
business services. These expenses generally increase and
decrease in relative proportion to the number of employees
retained by us and the overall size and scale of our business
operations. Given our continued efforts to make these costs more
variable, such as outsourcing our middle and back-office
functions, we expect to see an increase in professional services
related expenses. This increase is likely to be offset by a
decrease in fixed compensation expenses.
Impact of
Distribution and Underwriting Activities
In order to gather assets under management, we engage in
distribution and underwriting activities, principally with
respect to our family of open-end mutual funds. Generally
accepted accounting principles require that we present
distribution fees earned by us as revenues and distribution fees
paid to selling firms and the amortization of deferred sales
commissions as expenses in the consolidated statements of
operations. However, when analyzing our business, we consider
the result of these distribution activities as a net amount of
revenue as they are typically a result of a single open-end
mutual fund share purchase. Hence, the result of presenting this
information in accordance with generally accepted accounting
principles is a reduction to our overall operating margin, as
the margin on distribution activities is generally lower than
the margins on our core investment management business. The
following table summarizes the net distribution fee margin for
the years ended December 31, 2010 and 2009:
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
Distribution and underwriting fees
|
|
$
|
84,753
|
|
|
$
|
78,430
|
|
Distribution expenses
|
|
|
(66,493
|
)
|
|
|
(59,491
|
)
|
Amortization of deferred sales commissions
|
|
|
(9,206
|
)
|
|
|
(12,201
|
)
|
|
|
|
|
|
|
|
|
|
Net distribution fees
|
|
$
|
9,054
|
|
|
$
|
6,738
|
|
|
|
|
|
|
|
|
|
|
Net distribution fee margin
|
|
|
11
|
%
|
|
|
9
|
%
|
Net distribution fee margin varies by share class because each
share class has different distribution and underwriting
activities, which are described below.
Class A shares represented $11.1 billion of our
assets under management as of December 31, 2010. These
shares provide for a front-end sales charge at the time of
investment. The sales charge is equal to a maximum of 4.75% of
the amount invested. We retain an underwriting fee representing
a portion of this sales charge and pay any remaining amounts to
the selling firm. We retained underwriting fees of
$1.5 million for the year ended December 31, 2010. We
receive
Rule 12b-1
distribution and service fees on Class A shares at a rate
of 0.25% of Class A share assets under management and
record these fees as distribution and underwriting fee revenue.
These
35
fees are generally offset by a 0.25% fee paid to third-party
selling agents that is recorded as a distribution expense. For
the year ended December 31, 2010, we received Class A
share
Rule 12b-1
fees of $25.7 million. For the same period, we made
Class A share
Rule 12b-1
payments to selling firms of $24.7 million.
The distribution fee margin that we earn on Class A shares
is largely driven by the distribution fees that we earn as
broker of record and by the portion of front-end sales charges
that we retain, which fluctuate with both the total Class A
share sales and the mix of Class A share sales with and
without a sales charge. The percentage of Class A share
sales made without a sales charge has been increasing. If this
trend continues, we expect that our Class A share net
distribution fee margin will decrease.
Class B shares represented $1.0 billion of our
assets under management as of December 31, 2010. During the
second quarter of 2009 we discontinued the sale of Class B
open-end mutual funds. Prior to us closing this share class to
new sales, investors in Class B shares did not pay a sales
charge at the time of investment; instead, we paid an upfront
commission equal to 4.0% of the amount invested directly to the
selling firm when the investment was made. This advanced payment
was capitalized as a deferred sales commission asset when paid
and is amortized on a straight-line basis over eight years
unless a redemption occurs. Upon redemption, we write-off the
remaining asset by increasing amortization expense. If the
investor redeems shares within the first six years of
investment, we receive a contingent deferred sales charge of
between 5.0% (during the first year) declining to 1.0% (during
the sixth year) based upon the lesser of the redemption price or
purchase price. For the year ended December 31, 2010, we
received Class B share contingent deferred sales charge
payments of $1.5 million.
We receive
Rule 12b-1
fees on Class B shares at the rate of 1.0% of Class B
share assets under management (consisting of a 0.75%
distribution fee and a 0.25% service fee) and record these fees
as distribution and underwriting fee revenue. We make
Rule 12b-1
service fee payments to the selling firm at a rate of 0.25% of
Class B share assets under management and record these
payments as a distribution expense. We retain a 0.75%
distribution fee to help us recover the upfront commissions that
we paid to the selling firm.
Rule 12b-1
payments continue for eight years, at which point Class B
shares automatically convert into Class A shares. For the
year ended December 31, 2010, we received Class B
share
Rule 12b-1
fees of $10.7 million. For the same period, we made
Class B share
Rule 12b-1
payments to selling firms of $2.7 million.
The net distribution fee margin that we earn on Class B
shares is primarily the result of the difference between the
annual 0.75% distribution fee revenue that we receive on the
average Class B share assets under management and the
amortization of the 4.0% upfront commission over the life of the
asset. This differential creates a component of net distribution
fee margin unique to Class B shares that will remain
constant before giving consideration to redemption activity or
market appreciation or depreciation. Further, the net
distribution fee margin on Class B shares fluctuates due to
the appreciation or depreciation of the underlying assets.
Class C shares represented $4.7 billion of our
assets under management as of December 31, 2010. Investors
in Class C shares do not pay a sales charge at the time of
investment; instead, we pay an upfront commission equal to 1.0%
of the amount invested directly to the selling firm when the
investment is made. This advanced payment is capitalized as a
deferred sales commission asset when paid and is amortized on a
straight-line basis over 12 months. For the year ended
December 31, 2010, we made commission payments to selling
firms of $5.0 million. If the investor redeems Class C
shares within one year of investment, we receive from the
proceeds of the sale a contingent deferred sales charge payment
equal to 1.0% of the lesser of the redemption price or purchase
price. For the year ended December 31, 2010, we received
Class C share contingent deferred sales charge payments of
$0.4 million.
We receive
Rule 12b-1
fees on Class C shares at the rate of 1.0% of Class C
share assets under management (consisting of a 0.75%
distribution fee and a 0.25% service fee) and record these fees
as distribution and underwriting fee revenue. We make
Class C share
Rule 12b-1
distribution and service fee payments to the selling firm
beginning in the second year following the sale at the rate of
1.0% of Class C share assets under management and record
these payments as a distribution expense. For the year ended
December 31, 2010 we received Class C share
12b-1 fees
of $44.6 million. For the same period, we made Class C
share
Rule 12b-1
payments to selling firms of $38.6 million.
The first years
Rule 12b-1
fees help us to recoup the upfront commission we paid to the
selling firm, resulting in a net distribution fee margin on
Class C shares that is generally zero, before giving
consideration to market
36
appreciation or depreciation. However, during the first
12 months following the sale of Class C shares, this
margin will fluctuate due to the appreciation or depreciation of
Class C share assets. Appreciation or depreciation of the
assets from the time of sale will result in a corresponding
increase or decrease in the distribution fee revenues. We expect
our distribution fee margin to increase as the underlying
Class C share assets appreciate and to decrease as these
assets depreciate and as the percentage of assets older than
12 months grows.
Class I shares represented $4.9 billion of our
assets under management as of December 31, 2010. These
shares do not provide for a front-end sales charge or
Rule 12b-1
fees and are generally offered to individual and institutional
investors making initial investments of $1 million or more;
therefore, no distribution fee margin exists for this share
class.
Class R shares are available for purchase through
certain tax-exempt retirement plans held in plan level or
omnibus accounts and represented $34.4 million of our
assets under management as of December 31, 2010. Investors
in Class R shares do not pay a front-end sales charge at
the time of investment. We receive
Rule 12b-1
fees on Class R shares at a rate of 0.50% of Class R
share assets under management and record these fees as
distribution and underwriting fee revenue. These fees are
generally offset by a 0.50% fee paid to third party selling
agents that is recorded as a distribution expense. For the year
ended December 31, 2010, the Class R share
12b-1 fees
that we received and the Class R share
Rule 12b-1
payments that we made to selling firms were insignificant.
Offshore Funds represented $349.1 million of our
assets under management as of December 31, 2010. Offshore
Funds do not provide for a front-end sales charge or
Rule 12b-1
fees. Offshore Funds are generally offered to individual and
institutional investors that are domiciled or that have
citizenship outside the U.S. These funds are comprised of
various share classes with distribution fees that differ from
the investment company share classes described above.
Distribution fees received from the Offshore Funds vary by share
class and may be negotiated with distribution partners. These
fees received from the Offshore Funds are recorded as
distribution and underwriting fee revenue while the payments
made to third party selling firms recorded as distribution
expenses. For the year ended December 31, 2010, the
Offshore Fund distribution fees received and paid were
immaterial.
The net distribution fee margin varies by share class so the mix
of sales and assets by share class affects the overall net
distribution fee margin. For 2010, the Class B share margin
is significantly greater than the Class A, Class C and
Class R shares due to the reduction in amortization expense
associated with the change in the estimated remaining lives of
the Class B deferred sales commissions. The reduction in
amortization contributed to the increased net distribution
margin year over year. We expect this increase to be temporary
as the age of the assets under management increases and as the
Class C shares, with lower margins, continue to represent a
larger percentage of our asset base.
Non-operating
Income (Loss)
Non-operating income (loss) primarily represents net investment
gains or losses from a portion of our investment portfolio and
from the limited partnerships that we consolidate, net of
non-controlling interest in those partnerships. Capital gain
distributions, dividends and net interest income or expense are
also reported as components of non-operating income (loss).
Non-controlling
Interest
Non-controlling
Interest in Calamos Holdings LLC
As sole manager of Calamos Holdings LLC, we consolidate the
financial results of Calamos Holdings LLC with our own results.
Outstanding shares of our Class A common stock represent
21.7%, 21.5% and 21.3% of the ownership of Calamos Holdings LLC
for the years ended December 31, 2010, 2009 and 2008,
respectively. We reflect Calamos Family Partners, Inc. and John
P. Calamos, Sr.s collective ownership of 78.3%, 78.5%
and 78.7% in Calamos Holdings LLC as of December 31, 2010,
2009 and 2008, respectively, as a non-controlling interest in
our consolidated statements of financial condition, operations
and changes in stockholders equity.
Non-controlling interest in Calamos Holdings LLC is derived by
multiplying the historical equity of Calamos Holdings LLC by
Calamos Family Partners, Inc. and John P.
Calamos, Sr.s collective ownership percentage for the
periods presented. Issuances and repurchases of our Class A
common stock may result in changes to Calamos Asset
37
Management, Inc.s ownership percentage and to the
non-controlling interests ownership percentage of Calamos
Holdings LLC. The corresponding changes in ownership are
reflected in the consolidated statements of changes in
stockholders equity.
Income is allocated to non-controlling interests based on the
average ownership interest during the period in which the income
is earned. As a result, our income (loss) before income tax
provision (benefit), excluding Calamos Family Partners, Inc. and
John P. Calamos, Sr.s non-controlling interest,
represent 21.7%, 21.5% and 21.3% of Calamos Holdings LLCs
net income for the years ended December 31, 2010, 2009 and
2008, respectively. Income (loss) before income tax provision
(benefit) includes investment and dividend income earned on cash
and cash equivalents and investments held solely by Calamos
Asset Management, Inc. during the same period. This investment
income is not reduced by any non-controlling interest;
therefore, the resulting non-controlling interest as presented
in the statement of operations differs slightly than their
corresponding ownership percentage.
Non-controlling
Interest in Partnership Investments and Offshore
Funds
Calamos Partners LLC is the general partner of Calamos Market
Neutral Opportunities Fund LP, a private investment
partnership comprised of exchange traded investment securities.
At December 31, 2010, we and our affiliates had 91.6% and
2.7% interests in Calamos Market Neutral Opportunities
Fund LP (94.3% combined). At December 31, 2009, we and
our affiliates had 91.5% and 2.8% interests in Calamos Market
Neutral Opportunities Fund LP (94.3% combined). Calamos
Partners LLC was also the general partner of Calamos Equity
Opportunities Fund LP, a private investment partnership,
until the partnership was liquidated during the second quarter
of 2008. We consolidated the financial results of these
partnerships into our results. The combined interests of the
investments in these partnerships not owned by us are presented
as non-controlling interest in partnership investments in our
consolidated financial statements.
In the fourth quarter of 2007, we established Calamos Global
Funds PLC, which is comprised of four Ireland-based offshore
mutual funds. Until December 2008, we owned a majority of the
Offshore Funds and consolidated its results into ours. However,
we no longer own a majority of the Offshore Funds, and
therefore, we no longer consolidate the financial results of the
Offshore Funds into our results.
As we launch new products, we and our affiliates may invest in
these entities, which may require the consolidation of these
entities into our results as well. We expect the consolidation
of these new entities to be temporary until new customers invest
in the products and our resulting ownership percentage decreases.
Income
Taxes
For the years ended December 31, 2010, 2009 and 2008, our
effective tax rate was 37.3%, 37.8% and 37.3%, respectively. The
2008 tax rate does not give effect to the one-time charge to
income resulting from the revaluation of our net deferred tax
asset to reflect the decrease in our Illinois statutory tax rate.
Operating
Results
Year
Ended December 31, 2010 Compared to Year Ended
December 31, 2009
Assets
Under Management
Assets under management increased by $2.7 billion, or 8%,
to $35.4 billion at December 31, 2010 from
$32.7 billion at December 31, 2009. Average assets
under management increased by $4.9 billion, or 18%, to
$32.2 billion for the year ended December 31, 2010
from $27.4 billion for the year ended December 31,
2009. At
38
December 31, 2010 and 2009, our assets under management
consisted of 77% and 75% mutual funds and 23% and 25%
institutional and managed accounts, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
Change
|
|
(in millions)
|
|
2010
|
|
|
2009
|
|
|
Amount
|
|
|
Percent
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management
|
|
$
|
24,480
|
|
|
$
|
17,498
|
|
|
$
|
6,982
|
|
|
|
40
|
%
|
Net purchases (redemptions)
|
|
|
(23
|
)
|
|
|
527
|
|
|
|
(550
|
)
|
|
|
*
|
|
Market appreciation
|
|
|
2,895
|
|
|
|
6,455
|
|
|
|
(3,560
|
)
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending assets under management
|
|
|
27,352
|
|
|
|
24,480
|
|
|
|
2,872
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets under management
|
|
|
24,739
|
|
|
|
20,248
|
|
|
|
4,491
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management
|
|
|
4,619
|
|
|
|
3,498
|
|
|
|
1,121
|
|
|
|
32
|
|
Net purchases (redemptions)
|
|
|
154
|
|
|
|
(111
|
)
|
|
|
265
|
|
|
|
*
|
|
Market appreciation
|
|
|
786
|
|
|
|
1,232
|
|
|
|
(446
|
)
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending assets under management
|
|
|
5,559
|
|
|
|
4,619
|
|
|
|
940
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets under management
|
|
|
4,932
|
|
|
|
3,930
|
|
|
|
1,002
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management
|
|
|
3,615
|
|
|
|
3,044
|
|
|
|
571
|
|
|
|
19
|
|
Net redemptions
|
|
|
(1,530
|
)
|
|
|
(527
|
)
|
|
|
(1,003
|
)
|
|
|
*
|
|
Market appreciation
|
|
|
418
|
|
|
|
1,098
|
|
|
|
(680
|
)
|
|
|
(62
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending assets under management
|
|
|
2,503
|
|
|
|
3,615
|
|
|
|
(1,112
|
)
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets under management
|
|
|
2,578
|
|
|
|
3,181
|
|
|
|
(603
|
)
|
|
|
(19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets Under Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management
|
|
|
32,714
|
|
|
|
24,040
|
|
|
|
8,674
|
|
|
|
36
|
|
Net redemptions
|
|
|
(1,399
|
)
|
|
|
(111
|
)
|
|
|
(1,288
|
)
|
|
|
*
|
|
Market appreciation
|
|
|
4,099
|
|
|
|
8,785
|
|
|
|
(4,686
|
)
|
|
|
(53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending assets under management
|
|
|
35,414
|
|
|
|
32,714
|
|
|
|
2,700
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets under management
|
|
$
|
32,249
|
|
|
$
|
27,359
|
|
|
$
|
4,890
|
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in security valuations positively impacted our
mutual fund assets under management by $2.9 billion during
2010 and by $6.5 billion during 2009. Net sales in our
mutual funds were basically flat in 2010 and represent an
unfavorable change of $550 million from net purchases of
$527 million in 2009. The decrease in net sales is almost
entirely attributable to the slowing of net sales into our
Convertible Fund during the year which remained positive but
decreased by $1.7 billion. We attracted net sales from
investors into 12 of our 14 open-end mutual funds during 2010,
including each of our offshore funds. Inflows were strongest in
our alternative, convertible and fixed income strategies, as
well as our global strategies which recorded
year-over-year
increases in net sales of nearly $700 million. However,
these inflows were not sufficient to overcome the net outflows
sustained from our Growth Fund, which in light of its strong
investment performance we believe is a reflection of
investors negative sentiment toward domestic equity
strategies throughout most of 2010.
Separate accounts, which represent managed accounts for both
institutions and individuals, had combined net redemptions of
$1.4 billion during 2010, compared to net redemptions of
$638 million during the prior year. The net outflows from
our managed accounts in 2010 were primarily due to
$1.3 billion in net redemptions as a result of our decision
in the first quarter of 2010 to increase the account minimums
for our convertible-based strategies on separately-managed
account platforms. This effort was completed in the second
quarter of 2010, and we expect no further redemptions as a
result of this strategic initiative. The managed account
outflows were partially offset by net inflows of
$154 million within our institutional accounts during 2010
which increased by $265 million when
39
compared to $111 million of outflows in the prior year.
Institutional accounts generally have long and varying lead
times before funding occurs which creates fluctuations in sales
volumes and limits predictability of sales volumes. Separate
accounts were favorably impacted by market appreciation of
$1.2 billion during 2010, compared to market appreciation
of $2.3 billion during 2009.
Financial
Review
Revenues
Total revenues increased by $44.3 million, or 16%, to
$326.0 million for the year ended December 31, 2010
from $281.7 million for the prior year. The increase was
primarily due to higher investment management fees and
distribution and underwriting fees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
Amount
|
|
|
Percent
|
|
|
Investment management fees
|
|
$
|
238,308
|
|
|
$
|
200,790
|
|
|
$
|
37,518
|
|
|
|
19
|
%
|
Distribution and underwriting fees
|
|
|
84,753
|
|
|
|
78,430
|
|
|
|
6,323
|
|
|
|
8
|
|
Other
|
|
|
2,978
|
|
|
|
2,518
|
|
|
|
460
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
326,039
|
|
|
$
|
281,738
|
|
|
$
|
44,301
|
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fees for the year ended December 31,
2010 increased 19% as our average assets under management across
all products increased by $4.9 billion, or 18%, during the
year. Investment management fees from open-end funds increased
by 23% to $151.0 million for the year ended
December 31, 2010 from $123.0 million for the prior
year, driven by a 24% increase in open-end fund average assets
under management. Investment management fees from our closed-end
funds increased by 17% to $45.1 million for the year ended
December 31, 2010 from $38.5 million for the prior
year period, due to a 16% increase in closed-end fund average
assets under management. Investment management fees from our
separately managed accounts increased by 7% to
$42.2 million for the year ended December 31, 2010
from $39.3 million in the prior year, in line with the
changes in average assets for these accounts. The investment
management fee rate that we earned for the year ended
December 31, 2010 was 0.74% and relatively constant when
compared to the 2009 rate of 0.73%.
Despite the fact that our average open-end mutual fund assets
increased by 24% when compared to the prior year, our
distribution and underwriting fees increased by only 8%, or
$6.3 million to $84.8 million for the year ended
December 31, 2010. The improvement in fees is mostly
attributed to a $7.6 million increase in asset-based
distribution fees. However, that rate of growth in fees is
limited by the composition of the mutual fund assets by share
class. As more mutual fund investors have chosen to compensate
their financial advisors through fee based models, we have seen
an increase demand for and a shift in assets toward our
Class I shares. Because we do not collect distribution fees
from class I shares, our distribution revenue has decreased
with this shift in assets. This shift in assets has had no
adverse effect to the operating results of the company because
our distribution expenses have decreased proportionately with
the decrease in revenues.
When compared to the prior year, the increase in distribution
and underwriting fees was further limited by a $1.2 billion
decrease in redemption based fees, or contingent deferred sales
charges. The fee rate that we earn on Class B share
redemptions decreases as the average age of the Class B
share increases and expires after 6 years. Because we have
closed Class B shares to new purchases, the average age of
the Class B shares will continue to increase over time and
will result in a decrease in the contingent deferred sales
charge rate that we receive.
Other revenue principally reflects asset-based portfolio
accounting fees, which increased by nearly 20% to
$2.8 million from the prior year. These fees will generally
rise and fall with the changes in average mutual fund assets
that we manage.
40
Operating
Expenses
Operating expenses rose by 9% to $199.5 million for the
year ended December 31, 2010 from $183.7 million for
the prior year. This change reflects increases in employee
compensation and benefits expenses, distribution expenses and
marketing and sales promotion expenses that were partially
offset by a decrease in amortization of deferred sales
commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
Amount
|
|
|
Percent
|
|
|
Employee compensation and benefits
|
|
$
|
75,292
|
|
|
$
|
67,413
|
|
|
$
|
7,879
|
|
|
|
12
|
%
|
Distribution expenses
|
|
|
66,493
|
|
|
|
59,491
|
|
|
|
7,002
|
|
|
|
12
|
|
Amortization of deferred sales commissions
|
|
|
9,206
|
|
|
|
12,201
|
|
|
|
(2,995
|
)
|
|
|
(25
|
)
|
Marketing and sales promotion
|
|
|
13,775
|
|
|
|
10,762
|
|
|
|
3,013
|
|
|
|
28
|
|
General and administrative
|
|
|
34,772
|
|
|
|
33,813
|
|
|
|
959
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
199,538
|
|
|
$
|
183,680
|
|
|
$
|
15,858
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits expense increased by
$7.9 million, or 12%, for the year ended December 31,
2010 when compared to 2009. The largest component of this change
is attributable to an increase in annual performance-related
incentive compensation accruals, as well as sales-based
incentive compensation payments. Though we have not meaningfully
increased the number of associates that we employ, we have
reduced staffing levels of our middle- and back-office
operations teams and have increased staffing levels within our
sales and marketing teams to focus on expanding our distribution
and marketing capabilities. These sales-oriented individuals are
generally more highly compensated, leading to increases in
salary expenses and sales-based incentive compensation.
Distribution expenses generally represent a pass-through to
financial intermediaries of
Rule 12b-1
distribution and service fees that we earn from the family of
funds that we manage and distribute. These expenses are directly
related to changes in average open-end fund assets under
management of Class A, B and C shares and to the proportion
of Class C share assets less than one year old. For the
year ended December 31, 2010, distribution expenses
increased by $7.0 million, or 12%, when compared to the
prior year. This change is due to an increase in the average
assets under management of Class A and Class C shares
and an increase in the average Class C shares assets older
than one year. Although the
Rule 12b-1
fee rates we paid to broker-dealers and other intermediaries in
2010 did not change from the rates paid in the prior year, we
experienced a material shift of average mutual fund assets to
Class I shares, which do not include a distribution
expense. As a result of this increase in Class I share
mutual fund assets, distribution expenses did not grow at a rate
commensurate with our average mutual fund assets under
management.
Amortization of deferred sales commissions typically change with
the level of new mutual fund sales of Class B and C share
and with Class B share redemptions. During the second
quarter of 2009, we discontinued the sales of Class B
mutual fund shares, and as a result, the deferred sales
commission assets are no longer replenished by new sales. In
connection with this discontinuation of Class B shares
sales, we adjusted the estimated lives of these assets, thus
extending the period over which the remaining amortization
expense will be recorded and reducing the periodic amortization
expense recognized prospectively. We expect that amortization
expense associated with Class B share deferred sales
commissions will continue to decrease as the remaining
Class B share assets convert to Class A shares over
time.
The increase in marketing and sales promotion of
$3.0 million for the year ended December 31, 2010, is
largely the result of supplemental distribution payments to
brokers, which are directly related to the changes in average
assets under management of our open-end mutual funds. Throughout
2010, we increased spending to support a series of targeted
marketing and advertising campaigns to build awareness about our
investment strategies. We also enhanced our focus on
e-business,
magnifying our digital presence to support our sales and client
service efforts.
For the year ended December 31, 2010, general and
administrative expense increased by $1.0 million. Many
offsetting factors gave rise to the net increase in expense
during 2010. As expected, professional service fees continued
their upward trend in support of our initiative to outsource our
middle- and back-office operations
41
functions. This outsourcing initiative also required us to make
a $0.7 million non-recurring, license-termination expense.
We expect this trend to continue until this outsourcing
initiative is completed. Additionally, in support of expanding
our international distribution efforts, travel related expenses
have modestly increased during 2010 as compared to 2009. The
impact of these items has been tempered by a reduction in
depreciation expenses of more than $2.0 million as certain
equipment placed in service to accommodate our move into our
headquarters has been fully depreciated.
Non-Operating
Activities, Net of Non-controlling Interest in Partnership
Investments
Non-operating income (loss), net of non-controlling interest in
partnership investments increased income by $21.6 million
for the year ended December 31, 2010, compared to a
reduction of $5.2 million for the prior year.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
Change
|
|
|
Interest income
|
|
$
|
379
|
|
|
$
|
737
|
|
|
$
|
(358
|
)
|
Interest expense
|
|
|
(7,801
|
)
|
|
|
(7,801
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
(7,422
|
)
|
|
|
(7,064
|
)
|
|
|
(358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
28,686
|
|
|
|
1,921
|
|
|
|
26,765
|
|
Miscellaneous other income
|
|
|
398
|
|
|
|
233
|
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income
|
|
|
29,084
|
|
|
|
2,154
|
|
|
|
26,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (loss)
|
|
|
21,662
|
|
|
|
(4,910
|
)
|
|
|
26,572
|
|
Net income attributable to non-controlling interest in
partnership investments
|
|
|
(72
|
)
|
|
|
(336
|
)
|
|
|
264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (loss), net of non-controlling interest in
partnership investments
|
|
$
|
21,590
|
|
|
$
|
(5,246
|
)
|
|
$
|
26,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in our cash and cash equivalents, in conjunction
with near-zero interest yields, led to our interest income
decreasing by nearly 50% to $0.4 million for the year ended
December 31, 2010. Interest expense remained flat year over
year as our debt level remained constant.
Investment income for 2010 was $28.7 million compared to
$1.9 million in the year ended December 31, 2009. The
majority of investment income reflects realized gains on the
sale of investment securities generated as a part of a tax
harvesting strategy to better utilize tax loss carry-forwards
that was implemented during 2010.
Net income attributable to non-controlling interest in
partnership investments represents the portion of income
attributable to the other partners ownership in the
partnership that we refer to as non-controlling interests.
42
The following table provides a summary of the returns that we
generated from our corporate investment portfolio. This table
combines the investment income as reported in our statement of
operations with the change in fair value of our investment
securities that are recorded in accumulated other comprehensive
income, a component of stockholders equity, for the twelve
months ended December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2010
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Non-Operating
|
|
|
Comprehensive
|
|
|
|
|
(in thousands)
|
|
Income, net
|
|
|
Income
|
|
|
Total
|
|
|
Mutual funds and common stock
|
|
$
|
34,489
|
|
|
$
|
8,581
|
|
|
$
|
43,070
|
|
Partnership investments
|
|
|
4,144
|
|
|
|
|
|
|
|
4,144
|
|
Equity option contracts
|
|
|
(9,947
|
)
|
|
|
|
|
|
|
(9,947
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
28,686
|
|
|
|
8,581
|
|
|
|
37,267
|
|
Non-controlling interest in partnership investments
|
|
|
(72
|
)
|
|
|
|
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment portfolio results
|
|
$
|
28,614
|
|
|
|
|
|
|
$
|
37,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Non-controlling interest in
|
|
|
|
|
|
|
|
|
|
|
|
|
Calamos Holdings LLC
|
|
|
|
|
|
|
(6,317
|
)
|
|
|
|
|
Change in AOCI due to stock issuance
|
|
|
|
|
|
|
77
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
(862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in accumulated other comprehensive income
|
|
|
|
|
|
$
|
1,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our investment portfolio returned $37.2 million, or 12.3%,
for the full year 2010. These results primarily reflect realized
and unrealized gains from investment securities, partially
offset by net realized and unrealized gains and losses on equity
option contracts used to hedge market value fluctuations in the
corporate investment portfolio.
Income
Tax Provision
Our effective tax rate was 37.3% for the year ended
December 31, 2010 and is materially consistent with the
2009 rate.
Net
Income
Net income was $19.9 million for 2010 compared to
$12.4 million for 2009.
Year
Ended December 31, 2009 Compared to Year Ended
December 31, 2008
Assets
Under Management
Assets under management increased by $8.7 billion, or 36%,
to $32.7 billion at December 31, 2009 from
$24.0 billion at December 31, 2008. Average assets
under management decreased by $9.7 billion, or 26%, to
$27.4 billion for the year ended December 31, 2009
from $37.1 billion for the year ended December 31,
2008. At
43
December 31, 2009 and 2008, our assets under management
consisted of 75% and 73% mutual funds and 25% and 27%
institutional and managed accounts, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
Change
|
|
(in millions)
|
|
2009
|
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management
|
|
$
|
17,498
|
|
|
$
|
34,835
|
|
|
$
|
(17,337
|
)
|
|
|
(50
|
)%
|
Net purchases (redemptions)
|
|
|
527
|
|
|
|
(3,859
|
)
|
|
|
4,386
|
|
|
|
*
|
|
Market appreciation (depreciation)
|
|
|
6,455
|
|
|
|
(13,478
|
)
|
|
|
19,933
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending assets under management
|
|
|
24,480
|
|
|
|
17,498
|
|
|
|
6,982
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets under management
|
|
|
20,248
|
|
|
|
27,569
|
|
|
|
(7,321
|
)
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management
|
|
|
3,498
|
|
|
|
5,333
|
|
|
|
(1,835
|
)
|
|
|
(34
|
)
|
Net purchases (redemptions)
|
|
|
(111
|
)
|
|
|
152
|
|
|
|
(263
|
)
|
|
|
*
|
|
Market appreciation (depreciation)
|
|
|
1,232
|
|
|
|
(1,987
|
)
|
|
|
3,219
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending assets under management
|
|
|
4,619
|
|
|
|
3,498
|
|
|
|
1,121
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets under management
|
|
|
3,930
|
|
|
|
4,719
|
|
|
|
(789
|
)
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management
|
|
|
3,044
|
|
|
|
6,040
|
|
|
|
(2,996
|
)
|
|
|
(50
|
)
|
Net redemptions
|
|
|
(527
|
)
|
|
|
(813
|
)
|
|
|
286
|
|
|
|
35
|
|
Market appreciation (depreciation)
|
|
|
1,098
|
|
|
|
(2,183
|
)
|
|
|
3,281
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending assets under management
|
|
|
3,615
|
|
|
|
3,044
|
|
|
|
571
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets under management
|
|
|
3,181
|
|
|
|
4,778
|
|
|
|
(1,597
|
)
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets Under Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning assets under management
|
|
|
24,040
|
|
|
|
46,208
|
|
|
|
(22,168
|
)
|
|
|
(48
|
)
|
Net redemptions
|
|
|
(111
|
)
|
|
|
(4,520
|
)
|
|
|
4,409
|
|
|
|
98
|
|
Market appreciation (depreciation)
|
|
|
8,785
|
|
|
|
(17,648
|
)
|
|
|
26,433
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending assets under management
|
|
|
32,714
|
|
|
|
24,040
|
|
|
|
8,674
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets under management
|
|
$
|
27,359
|
|
|
$
|
37,066
|
|
|
$
|
(9,707
|
)
|
|
|
(26
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual fund net purchases were $0.5 billion in 2009, a
favorable change of $4.4 billion from $3.9 billion of
net redemptions in 2008. Market appreciation was
$6.5 billion in 2009 compared to $13.5 billion in
depreciation for 2008 reflecting the positive changes in market
conditions in 2009 versus 2008.
Our open-end funds had $0.5 billion of net purchases during
2009. In the fourth quarter of 2008, we re-opened our
Convertible Fund for the first time since 2003. Immediately
following the re-opening, the Convertible Fund started
generating significant net purchases and continued to generate
net purchases throughout 2009. Additionally, we generated net
purchases in 10 of our 17 mutual funds during 2009. The largest
contributors to the increase were the Convertible, Total Return
Bond, Market Neutral and High Yield Funds, as investors
continued to gravitate towards lower-risk and fixed income
investment strategies. Market appreciation of $6.5 billion
was the main driver of asset growth in 2009, while market
depreciation of $13.5 billion drove assets down in 2008.
Separate accounts, which represent managed accounts for both
institutions and individuals, had net redemptions of
$638 million in 2009, a slight improvement when compared to
$661 million in net redemptions during 2008. We believe
that the net redemptions during 2009 were primarily due to a
reduction in investors appetite to assume risk, leading to
a shift away from equity strategies. In addition, convertible
strategies remained closed to new investors through our managed
accounts. Market appreciation of $2.3 billion in 2009
contributed to the growth
44
in assets under management for the period while market
depreciation of $4.2 billion in 2008 added to the net
redemptions.
One-Time
Items
Results of operations for 2008 were impacted by a significant
one-time expense. Developments in the Illinois tax statutes
resulted in modifications to the Companys state tax
apportionment methodology that lowered the Companys
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 $0.34 per
diluted share, in the second quarter of 2008 to revalue our net
deferred tax assets to reflect the new statutory income tax rate.
We consider results adjusted for this one-time expense, as
presented below, to provide a better indication of our
operations. This adjusted item is considered a non-GAAP
financial measure as defined by the rules of the
Securities and Exchange Commission. In evaluating operating
performance, we consider operating expenses, operating income,
operating margin, net income and diluted earnings per share,
each calculated in accordance with accounting principles
generally accepted in the United States (GAAP), and each item on
an as-adjusted basis, which constitute non-GAAP financial
measures. Items presented on an as-adjusted basis exclude the
impact of the revaluation of the net deferred tax assets in the
second quarter of 2008. As this one-time item is not expected to
recur, we believe that excluding this item better enables us to
evaluate our operating performance relative to the prior
periods. We consider these non-GAAP financial measures when
evaluating our performance and believe the presentation of these
amounts provides the reader with information necessary to
analyze our operations for the periods compared. Reconciliations
of these measurements from the most directly comparable GAAP
financial measures for the twelve months ended December 31,
2008 is provided in the table below and should be carefully
evaluated by the reader:
|
|
|
|
|
($ in thousands)
|
|
2008
|
|
|
Net loss
|
|
$
|
(24,521
|
)
|
Net deferred tax assets revaluation
|
|
|
6,771
|
|
|
|
|
|
|
Net loss, as adjusted
|
|
$
|
(17,750
|
)
|
|
|
|
|
|
Diluted loss per share
|
|
$
|
(1.24
|
)
|
Net deferred tax assets revaluation
|
|
|
0.34
|
|
|
|
|
|
|
Diluted loss per share, as adjusted
|
|
$
|
(0.90
|
)
|
|
|
|
|
|
Financial
Review
Revenues
Total revenues decreased by $109.9 million, or 28%, to
$281.7 million for the year ended December 31, 2009
from $391.6 million for the prior year. The decrease was
primarily due to lower investment management fees and
distribution and underwriting fees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
(in thousands)
|
|
2009
|
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
Investment management fees
|
|
$
|
200,790
|
|
|
$
|
274,174
|
|
|
$
|
(73,384
|
)
|
|
|
(27
|
)%
|
Distribution and underwriting fees
|
|
|
78,430
|
|
|
|
114,023
|
|
|
|
(35,593
|
)
|
|
|
(31
|
)
|
Other
|
|
|
2,518
|
|
|
|
3,392
|
|
|
|
(874
|
)
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
281,738
|
|
|
$
|
391,589
|
|
|
$
|
(109,851
|
)
|
|
|
(28
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared to the prior year, investment management fees decreased
27% in 2009 primarily due to a $9.7 billion, or 26%,
decrease in average assets under management across all products.
Investment management fees from open-end funds decreased to
$123.0 million for the year ended December 31, 2009
from $165.6 million for the prior year, primarily due to
decreases in open-end fund average assets under management of
$5.5 billion, or 26%, for 2009 compared to the prior year.
Investment management fees from our institutional and managed
45
accounts decreased to $39.3 million from $54.0 million
primarily due to an approximate $2.4 billion decrease in
average assets under management. Investment management fees from
our closed-end funds decreased to $38.5 million for 2009
from $54.5 million for 2008 as a result of a
$1.8 billion decrease in closed-end fund average assets
under management. Investment management fees, in total, as a
percentage of average assets under management were 0.73% and
0.74% for the years ended December 31, 2009 and 2008,
respectively.
Distribution and underwriting fees decreased to
$78.4 million for the year ended December 31, 2009
from $114.0 million for the year ended December 31,
2008. The decrease was primarily due to a $33.3 million
decrease in distribution fees resulting from a 26% decrease in
open-end fund average assets under management and a
$2.2 million decrease in contingent deferred sales charge
fees, which change with the levels of Class B and
Class C share redemptions.
Operating
Expenses
Operating expenses decreased to $183.7 million, or 21%, for
the year ended December 31, 2009 from $232.5 million
for the prior year. This change was primarily due to reduced
employee compensation and benefits, distribution expense, and
reduced amortization of deferred sales commission.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
(in thousands)
|
|
2009
|
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
Employee compensation and benefits
|
|
$
|
67,413
|
|
|
$
|
74,483
|
|
|
$
|
(7,070
|
)
|
|
|
(9
|
)%
|
Distribution expense
|
|
|
59,491
|
|
|
|
84,884
|
|
|
|
(25,393
|
)
|
|
|
(30
|
)
|
Amortization of deferred sales commissions
|
|
|
12,201
|
|
|
|
23,417
|
|
|
|
(11,216
|
)
|
|
|
(48
|
)
|
Marketing and sales promotion
|
|
|
10,762
|
|
|
|
11,908
|
|
|
|
(1,146
|
)
|
|
|
(10
|
)
|
General and administrative
|
|
|
33,813
|
|
|
|
37,800
|
|
|
|
(3,987
|
)
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
183,680
|
|
|
$
|
232,492
|
|
|
$
|
(48,812
|
)
|
|
|
(21
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As part of the Company-wide cost containment efforts that began
in 2008, employee compensation and benefits expense decreased by
$7.0 million for the year ended December 31, 2009 when
compared to the prior year primarily reflecting the full-year
impact of the reduction in staffing levels that occurred
throughout 2008 and early 2009. Salary, severance pay and
related benefit expenses decreased by $12.5 million from
2008 to 2009, which was partially offset by a $5.5 million
increase in performance-related incentive compensation, which
remain significantly below potential payout levels.
Distribution expense decreased by $25.4 million for 2009
when compared to the prior year, primarily due to a decrease of
$25.5 million in
Rule 12b-1
expenses resulting from lower average open-end funds under
management of $5.5 billion, or 26%. Also contributing to
the lower expenses was a reduction in average Class C share
assets older than one year. Class C share assets do not
generate distribution expense in the first year following their
sale because we retain the
Rule 12b-1
fees during that first year to offset the upfront commissions
that we pay. However, Class C share assets do generate a
distribution expense in subsequent years, as we pass along the
Rule 12b-1
fees to the selling firms. Although the
Rule 12b-1
fee rates we paid to broker-dealers and other intermediaries in
2009 did not change from the rates paid in the prior year, we
expect distribution expense to vary with the change in open-end
fund assets under management and with the age of the
Class C share assets.
Amortization of deferred sales commissions decreased
$11.2 million for the twelve months ended December 31,
2009 when compared to the prior-year period resulting from the
Companys decision in the second quarter of 2009 to
discontinue the sale of Class B mutual funds. As a result
of our decision to discontinue Class B share sales, the
deferred sales commission assets will cease to be replenished by
new sales and, therefore, we evaluated the estimated useful
lives of the remaining assets. Based on this analysis, we
extended the lives, or period over which we will amortize the
remaining expense, effectively reducing the expense recorded in
each period. The impact of this change reduced the amortization
of deferred sales commissions by approximately $1.7 million
on a quarterly basis.
Marketing and sales promotion expense decreased by
$1.1 million for the year ended December 31, 2009,
when compared to the year ended December 31, 2008 primarily
due to a decrease of $1.3 million in supplemental
46
distribution payments to intermediaries. These fees are mostly
calculated based on assets under management and the decrease
correlates with the lower average assets under management for
2009 when compared to 2008.
General and administrative expense decreased by
$4.0 million for the year ended December 31, 2009,
when compared to the prior-year period. The overall decline in
these expenses reflects our continued focus on expense control
initiated in 2008 and mostly represents reduced expenses for
occupancy, professional services, and travel and entertainment.
The impact of our move towards a variable cost structure,
specifically the outsourcing of the middle and back-office
functions, will be more fully realized in future periods. We
expect that these increases in general and administrative
expenses will be generally reflected as reductions in employee
compensation and benefits expenses.
Non-Operating
Income (Loss)
Non-operating income (loss) reduced income by $5.2 million
for the year ended December 31, 2009, compared to a
reduction of $291.9 million for the prior year.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
Interest income
|
|
$
|
737
|
|
|
$
|
2,334
|
|
|
$
|
(1,597
|
)
|
Interest expense
|
|
|
(7,801
|
)
|
|
|
(32,010
|
)
|
|
|
24,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
(7,064
|
)
|
|
|
(29,676
|
)
|
|
|
22,612
|
|
Investment income (loss)
|
|
|
1,921
|
|
|
|
(295,793
|
)
|
|
|
297,714
|
|
Miscellaneous other income (loss)
|
|
|
233
|
|
|
|
(1,088
|
)
|
|
|
1,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income (loss)
|
|
|
2,154
|
|
|
|
(296,881
|
)
|
|
|
299,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguishment costs
|
|
|
|
|
|
|
(37,498
|
)
|
|
|
37,498
|
|
Non-operating loss
|
|
|
(4,910
|
)
|
|
|
(364,055
|
)
|
|
|
359,145
|
|
Net (income) loss attributable to non-controlling interest in
partnership investments
|
|
|
(336
|
)
|
|
|
72,156
|
|
|
|
(72,492
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating loss
|
|
$
|
(5,246
|
)
|
|
$
|
(291,899
|
)
|
|
$
|
286,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income decreased $1.6 million for the twelve
months ended December 31, 2009, when compared to the
prior-year period, principally a result of lower interest rates
throughout 2009 as compared to 2008. Interest expense decreased
$24.2 million for the year ended December 31, 2009 due
to the prepayment at the end of 2008 of $400 million of
debt to the current level of $125 million. To fund this
prepayment, we sold securities in our investment portfolio
during 2008 recognizing approximately $179 million in
realized losses and incurred a $34.9 million make-whole
payment, which is included in debt extinguishment costs.
Investment results improved for the year ended December 31,
2009, as compared to the prior year, primarily due to the broad
market rebound in 2009. Investment income (loss) primarily
includes capital gain distributions, realized gains and losses,
dividend income and unrealized gains and losses. Investment
income of $1.9 million for 2009 was $297.7 million
greater than the $295.8 million investment loss suffered in
2008.
Net (income) loss attributable to non-controlling interest in
partnership investments represents the corresponding
non-controlling interests portion of the changes in market
value from our consolidated partnership investments.
47
The following table provides a summary of our investment
portfolio returns, combining the investment income (loss)
portion of our non-operating results with the change in fair
value of certain of our investment securities recorded in
accumulated other comprehensive income (loss), a component of
stockholders equity, for the twelve months ended
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2009
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Non-Operating
|
|
|
Comprehensive
|
|
|
|
|
(in thousands)
|
|
Income, net
|
|
|
Income
|
|
|
Total
|
|
|
Mutual funds and common stock
|
|
$
|
14,484
|
|
|
$
|
34,778
|
|
|
$
|
49,262
|
|
Partnership investments
|
|
|
9,110
|
|
|
|
|
|
|
|
9,110
|
|
Equity option contracts
|
|
|
(21,673
|
)
|
|
|
|
|
|
|
(21,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
1,921
|
|
|
|
34,778
|
|
|
|
36,699
|
|
Non-controlling interest in partnership investments
|
|
|
(336
|
)
|
|
|
|
|
|
|
(336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment portfolio results
|
|
$
|
1,585
|
|
|
|
|
|
|
$
|
36,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Non-controlling interest in
|
|
|
|
|
|
|
|
|
|
|
|
|
Calamos Holdings LLC
|
|
|
|
|
|
|
(27,715
|
)
|
|
|
|
|
Change in AOCI due to stock issuance
|
|
|
|
|
|
|
13
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
(2,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in accumulated other comprehensive income
|
|
|
|
|
|
$
|
4,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our investment portfolio returned $36.4 million, or 16.4%
for the full year 2009. These results primarily reflect net
unrealized gains in investment securities, partially offset by
net realized and unrealized gains and losses on equity option
contracts used to hedge market value fluctuations in the
corporate investment portfolio.
Income
Tax Provision (Benefit)
Our effective tax rate was 37.8% for the year ended
December 31, 2009 and is consistent with the 2008 rate, as
adjusted.
Net
Income (loss)
Net income was $12.4 million for 2009 compared to net loss
of $24.5 million and net loss, as adjusted, of
$17.8 million for 2008.
Liquidity
and Capital Resources
We manage our liquidity position to ensure adequate resources
are available to fund ongoing operations of the business,
provide seed capital for new funds and invest in other corporate
strategic initiatives. Our principal sources of liquidity are
cash flows from operating activities and our corporate
investment portfolio, which is comprised of cash and cash
equivalents, investment securities, derivatives and partnership
investments. Investment securities are principally comprised of
company-managed mutual funds. In addition, the individual
securities held within our partnership investments are typically
highly liquid.
Our working capital requirements historically have been met
through cash generated by 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, as well as to support future growth.
Further, we expect that cash on hand and through cash generated
by operations will be sufficient to meet our liquidity needs.
48
The following table summarizes our principal sources of
liquidity as of December 31, 2010 and December 31,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
82,870
|
|
|
$
|
145,431
|
|
|
|
|
|
Investment securities
|
|
|
314,215
|
|
|
|
207,886
|
|
|
|
|
|
Derivatives, net
|
|
|
(1,892
|
)
|
|
|
(1,730
|
)
|
|
|
|
|
Partnership investments, net of non-controlling interests
|
|
|
39,981
|
|
|
|
35,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total corporate investment portfolio
|
|
$
|
435,174
|
|
|
$
|
387,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To mitigate the impact that market declines may have on the
value of our investment portfolio, we continue to execute hedge
strategies, specifically an equity option collar that is
comprised primarily of selling index-based call options and
purchasing index-based put options. This hedge continued to
provide the stability to our portfolio value and to ensure
compliance with debt covenants as intended. We expect to
continue to use hedge strategies to protect our portfolio value
as we believe appropriate.
Calamos Holdings LLC is the borrower of our $125 million in
outstanding debt, including both current and long-term portions.
We were in compliance with all financial covenants at
December 31, 2010 and 2009. In January 2011,
Standard & Poors reaffirmed its investment-grade
BBB+ rating.
The following is a summary of covenant compliance as of
December 31, 2010 with the terms and covenants having the
same meanings set forth under our amended note purchase
agreements:
|
|
|
|
|
|
|
|
|
Results as of
|
Covenant
|
|
Requirement
|
|
December 31, 2010
|
|
EBITDA/interest expense
|
|
Not less than 3.0
|
|
18.39
|
Debt/EBITDA
|
|
Not more than 3.0
|
|
0.87
|
Investment coverage ratio
|
|
Not less than 1.175
|
|
3.07
|
Net worth
|
|
Not less than $160 million
|
|
$279 million
|
The following table summarizes key data relating to our
liquidity and capital resources:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
(in thousands)
|
|
2010
|
|
2009
|
|
Statements of financial condition data:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
82,870
|
|
|
$
|
145,431
|
|
Receivables
|
|
|
29,671
|
|
|
|
26,489
|
|
Investment securities and derivatives, net
|
|
|
312,323
|
|
|
|
206,156
|
|
Partnership investments, net
|
|
|
39,981
|
|
|
|
35,924
|
|
Deferred tax assets, net
|
|
|
75,717
|
|
|
|
86,256
|
|
Deferred sales commissions
|
|
|
8,515
|
|
|
|
12,705
|
|
Long-term debt, including current portion
|
|
|
125,000
|
|
|
|
125,000
|
|
The deferred tax assets above include an annual reduction of
approximately $8.0 million in future income taxes owed by
us through 2019. This reduction results from our election under
Section 754 of the Internal Revenue Code, whereby we
stepped up the tax basis in certain intangible assets to their
fair market value. These assets are amortized over fifteen years
on Calamos Asset Management, Inc.s tax return. As a
result, this cash savings will accrue solely for the benefit of
the shareholders of our common stock.
49
Cash flows for the years ended December 31, 2010, 2009 and
2008 are shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
2009
|
|
2008
|
|
Cash flow data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
144,767
|
|
|
$
|
140,631
|
|
|
$
|
125,228
|
|
Net cash provided by (used in) investing activities
|
|
|
(79,861
|
)
|
|
|
2,517
|
|
|
|
323,296
|
|
Net cash used in financing activities
|
|
|
(127,467
|
)
|
|
|
(57,142
|
)
|
|
|
(497,540
|
)
|
Operating activities have consistently generated strong cash
flows. Operating activities provided cash of
$144.8 million, $140.6 million and $125.2 million
for the years ended December 31, 2010, 2009 and 2008,
respectively. These net cash flows are primarily attributed to
net income of the company and are mostly generated by core
business activities.
Net cash used in investing activities for the year ended
December 31, 2010 totaled $79.9 million. The net cash
used in investing activities during 2010 was primarily comprised
of additional investments in company-sponsored mutual funds of
$64.0 million to help expand our product offering coupled
with our net purchases of derivatives of $9.8 million. The
increase in purchases and sales of investment securities is
directly related to the execution of our tax harvesting
strategy, whereby we sell and repurchase the identical
investment securities to realize capital gains. These capital
gains offset our capital loss carryforward, and utilize a
portion of our related deferred tax assets, which together were
created in the fourth quarter of 2008 when we realized capital
losses upon the sale of investment securities. For the year
ended December 31, 2009, investing activities provided net
cash of $2.5 million. Sales of investment securities
partially offset by net negative cash flows from related
investment hedging activities and purchases of investment
securities comprised the majority of this net inflow. For the
year ended December 31, 2008, net cash provided by
investing activities was $323.3 million, principally
comprised of investments sold during the fourth quarter 2008 of
$379 million to fund the prepayment of our debt. Net
changes in partnership investments during the 2008 primarily
represent the liquidation of the Calamos Equity Opportunities
Fund LP, the reduction in our investment in Calamos Market
Neutral Opportunities Fund LP and unrealized depreciation
of the underlying securities held by the partnerships.
Net cash used in financing activities was $127.5 million
for the year ended December 31, 2010 and largely represents
pro rata income tax and equity distributions paid by Calamos
Holdings LLC to Calamos Asset Management, Inc. and to our
non-controlling interests, in the amount of $33.8 million
and $121.4 million, respectively. Distributions from
Calamos Holdings LLC to Calamos Asset Management, Inc. are
eliminated upon consolidation and are not reflected in the net
cash flows used in financing activities. The increase in net
cash used in financing activities principally reflects:
1) increases in tax distribution driven by growing net
income attributable to our non-controlling interests,
2) special pro rata equity distributions of approximately
$70.0 million, and 3) an increase in our regular
quarterly dividend from 5.5 cents per share throughout 2009 to
7.5 cents per share during 2010. Net cash used in financing
activities totaled $57.1 million for the year ended
December 31, 2009, largely due to equity and tax
distributions to non-controlling interest owners, as well as
dividends paid to common shareholders. The distributions in 2009
were to non-controlling interests of $52.7 million, which
includes distributions for their tax liabilities of
$21.2 million, as well as dividends paid to common
shareholders of $4.3 million. Net cash used in financing
activities was $497.5 million for the twelve months ended
December 31, 2008. During the fourth quarter of 2008, we
prepaid $400 million in aggregate principal of our
outstanding debt. Further, we made distributions to
non-controlling interests of $86.8 million, including
distributions for their tax liabilities of $57.1 million,
as well as dividends paid to common shareholders of
$7.6 million.
50
Contractual
Obligations
The following table contains supplemental information regarding
our total contractual cash obligations as of December 31,
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
More than
|
|
(in thousands)
|
|
Total
|
|
|
1 Year
|
|
|
1-3 Years
|
|
|
3-5 Years
|
|
|
5 Years
|
|
|
Long-term debt obligations, including
interest(1)
|
|
$
|
161,956
|
|
|
$
|
39,701
|
|
|
$
|
11,908
|
|
|
$
|
55,146
|
|
|
$
|
55,201
|
|
Operating lease
obligations(2)
|
|
|
66,912
|
|
|
|
4,841
|
|
|
|
9,266
|
|
|
|
8,759
|
|
|
|
44,046
|
|
Other long-term
obligations(3)
|
|
|
821
|
|
|
|
243
|
|
|
|
385
|
|
|
|
169
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
229,689
|
|
|
$
|
44,785
|
|
|
$
|
21,559
|
|
|
$
|
64,074
|
|
|
$
|
99,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Companys senior unsecured notes, which aggregate to
$125 million, have series maturing in 2011, 2014, 2017 and
2019. |
|
(2) |
|
In accordance with generally accepted accounting principles in
the United States, these obligations are not reflected in the
accompanying consolidated statements of financial condition. |
|
(3) |
|
Other long-term obligations principally represent commitments
under the incentive compensation plan. These obligations are
included in other long-term liabilities in the accompanying
consolidated statements of financial condition. |
In the ordinary course of business, the company enters into
contracts or purchase obligations with third parties whereby the
third parties provide services to or on behalf of the company.
Purchase obligations include executory contracts, which are
either non-cancelable or cancelable with a penalty. At
December 31, 2010, the companys obligations primarily
include standard service contracts for portfolio, market data
and office related services. Purchase obligations are recorded
in the companys financial statements when services are
provided. Due to the uncertainty of timing and amounts that will
ultimately be paid, the amounts have been excluded from the
table above.
Critical
Accounting Policies and Estimates
The preparation of our consolidated financial statements in
accordance with accounting principles generally accepted in the
United States requires management to make estimates and
judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosure of
contingent assets and liabilities. We base our estimates on
historical experience and on various other assumptions that are
believed to be reasonable under current circumstances, the
results of which form the basis for making judgments about the
carrying value of assets and liabilities that are not readily
available from other sources. We evaluate our estimates on an
ongoing basis. Actual results may differ from these estimates
under different assumptions or conditions.
Accounting policies are an integral part of our consolidated
financial statements. A thorough understanding of these
accounting policies is essential when reviewing our reported
results of operations and our financial position. Management
believes that the critical accounting policies and estimates
discussed below involve additional management judgment due to
the sensitivity of the methods and assumptions used.
Deferred
Sales Commissions
Deferred sales commissions represent amounts advanced by us to
the selling firm upon sale of Class B and Class C
shares of open-end funds. Deferred sales commissions are
amortized on a straight-line basis over the period in which
12b-1 fees
are received. Annually, we estimate the average remaining life
of the Class B share deferred sales commissions to
determine the period over which to amortize the remaining
Class B share assets on a straight-line basis. Because
12b-1 fees
cease upon redemption of shares, amortization expense is
accelerated when shares are redeemed, resulting in the reduction
of the deferred sales commission asset. These redemptions result
in an amortization period not to exceed 12 months for
Class C shares and 96 months (eight years) for
Class B shares.
51
We evaluate the carrying value of our deferred sales commissions
for impairment on an annual basis. Significant assumptions
utilized by us to estimate future average assets under
management include expected future market performance and
redemption rates. Estimates of undiscounted future cash flows
and the remaining life of the deferred sales commission asset
are made from these assumptions. Market performance assumptions
are selected using expected average market returns based on
long-term market index benchmarks for each asset class held
within the fund. As of our most recent analysis, we used average
market return assumptions ranging from 7% to 9% based on asset
class. If the average market returns are higher than estimated,
undiscounted cash flows would be greater than those estimated,
while lower actual returns on average would generate
undiscounted future cash flows less than those estimated. Future
redemption assumptions were determined by using the average
annual redemption rates that each fund experienced over the
prior
24-month
period. For Class B shares and Class C shares, we used
average historical redemption rates of 26% and 24%,
respectively. An increase in the actual rate of redemptions
would decrease the undiscounted future cash flows, while a
decrease in the actual rate of redemptions would increase
undiscounted cash flows. These assumptions are reviewed and
updated annually, or when events or changes in circumstances
occur that could significantly increase the risk of impairment
of the asset.
If we determine that the deferred sales commission asset is not
recoverable, an impairment condition would exist and a loss
would be measured as the amount by which the recorded amount of
the asset exceeds its estimated fair value. If the carrying
value of the deferred sales commission asset exceeds the
undiscounted cash flow, the asset is written down to fair value
based on discounted cash flows. Impairment adjustments are
recognized in the consolidated statements of operations as a
component of amortization of deferred sales commissions. As of
each reporting period presented, we determined that no
impairment of the deferred commission asset existed, but due to
the volatility of the capital markets and the changes in
redemption rates, we are unable to predict whether or when
future impairment of the deferred sales commission asset might
occur.
Compensation
Plans
We have an incentive compensation plan that provides for grants
of restricted stock unit awards, or RSUs, and stock option
awards for certain employees. RSUs are convertible on a
one-for-one
basis into shares of our common stock. We estimate the fair
value of the stock options as of the grant date using the
Black-Scholes option-pricing model, and recognize the cost of
stock based compensation based on the grant-date fair value of
the award. Further, we estimate the number of forfeited awards
at the grant date. Actual forfeitures may vary from our
assumptions, which will result in modifications to future
expenses.
Income
Tax Provision (Benefit)
Management judgment is required in developing our provision for
income taxes, including the determination of deferred tax assets
and liabilities and any valuation allowances that might be
required against deferred tax assets. As of December 31,
2010, we have not recorded a valuation allowance on deferred tax
assets, which principally related to our
step-up in
tax basis to fair market value for our intangible assets under
our election to be made under Section 754 of the Internal
Revenue Code and to our net capital loss carryforward. In the
event that sufficient taxable income of the same character does
not result in future years, among other things, a valuation
allowance for certain of our deferred tax assets may be
required. Because the determination of our annual income tax
provision (benefit) is subject to judgments and estimates, it is
likely that the actual results will vary from those recorded in
our financial statements. Hence, we recognize additions to and
reductions in income tax expense during a reporting period that
pertain to prior period provisions as our estimated liabilities
are revised and our actual tax returns and tax audits are
completed.
Recently
Issued Accounting Pronouncements
We have reviewed all newly issued accounting pronouncements that
are applicable to our business and to the preparation of our
consolidated financial statements, including those not yet
required to be adopted. We do not believe any such
pronouncements will have a material effect on the Companys
financial position or results of operations. All relevant
accounting standards updates have been adopted and are reflected
in the financial statements contained herein.
52
Forward-Looking
Information
From time to time, information or statements provided by us or
on our behalf, including those within this Annual Report on
Form 10-K,
may contain certain forward-looking statements relating to
future events and financial performance, strategies,
expectations and competitive environment, and regulations. These
forward-looking statements may 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; market capitalization;
managements goals and objectives; and other similar
expressions concerning matters that are not historical facts.
Words such as anticipate, assume,
believe, continue, could,
estimate, expect, future,
intend, may, opportunity,
potential, predict, seek,
should, trend, will,
would, 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
managements 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: 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;
unsatisfactory service levels by third party vendors; 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; realization of deferred income tax assets;
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; fluctuation in foreign
currency exchange rates with respect to our global operations
and business; changes in accounting estimates; 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; fluctuation 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, products
and programs; our ability to educate our clients about our
investment philosophy and provide them with
best-in-class
service; the relative investment performance of our 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;
our decision to open or close products and strategies; and our
ability to execute on our strategic plan to expand the business.
Item 1A of this report discusses some of these and other
important factors in detail under the caption Risk
Factors.
Forward-looking statements speak only as of the date the
statements are made. Readers should not place undue reliance on
any forward-looking statements. We assume no obligation to
update forward-looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting
forward-looking information, except to the extent required by
applicable securities laws.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Securities
Price Sensitivity
Our exposure to market risk is directly related to our role as
investment advisors for the mutual funds and separate accounts
we manage. A significant majority of our operating revenue is
derived from investment advisory,
53
distribution and portfolio accounting agreements with the mutual
funds and separate accounts. Under these agreements, the fees we
receive are typically based on the market value of the assets
under management. Accordingly, a decline in the prices of
securities generally may cause our revenue and income to decline
by causing the value of the assets we manage to decrease or by
causing our clients to withdraw funds in favor of investments
that they perceive as offering greater opportunity or lower risk.
In addition, a decline in the prices of securities may present
market conditions that could preclude us from increasing assets
under management and prevent us from realizing higher fee
revenue associated with such growth.
We are also subject to market risk, in the form of equity price
risk, due to a decline in the prices of our investments in
certain investment securities, partnership investments and
derivatives. We own investment securities primarily comprised of
products we manage.
The following table provides a sensitivity analysis of changes
in fair value of our investment securities and partnership
investments assuming a 10% increase or decrease in the
individual price of each instruments as of December 31,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Value Assuming
|
|
|
|
Carrying
|
|
|
10%
|
|
|
10%
|
|
(in thousands)
|
|
Value
|
|
|
Increase
|
|
|
Decrease
|
|
|
Available-for-sale
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
$
|
310,251
|
|
|
$
|
341,276
|
|
|
$
|
279,226
|
|
CFS securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
|
3,838
|
|
|
|
4,222
|
|
|
|
3,454
|
|
Common stock
|
|
|
126
|
|
|
|
139
|
|
|
|
113
|
|
Derivative contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Puts (assets)
|
|
|
4,026
|
|
|
|
4,429
|
|
|
|
3,623
|
|
Calls (liabilities)
|
|
|
(5,918
|
)
|
|
|
(6,510
|
)
|
|
|
(5,326
|
)
|
Partnership investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnerships
|
|
|
39,980
|
|
|
|
43,978
|
|
|
|
35,982
|
|
In order to reduce the volatility in fair value of the Calamos
corporate investment portfolio, we use exchange traded equity
option contracts as an economic hedge against price changes.
These major equity market index exchange-traded put and call
option contracts are used specifically for hedging the equity
price risk of our portfolio. The derivative assets and
liabilities seen on our consolidated statements of financial
condition are part of a single strategy to minimize the downside
risk in the hedged portfolio, while allowing participation in a
portion of an appreciating market. We do not enter into
derivative instruments for speculative purposes.
At December 31, 2010 we had index exchange-traded put and
call option contracts with aggregate market values of
$4.0 million and $5.9 million, respectively. A 10%
adverse change in the option prices would result in a decrease
of approximately $0.4 million in our put option contracts
and an increase in our call option liabilities of approximately
$0.6 million.
Interest
Rate Sensitivity
At December 31, 2010, we had an aggregate of
$125 million of outstanding debt, including both current
and long-term portions, which consisted of senior unsecured
notes of $32.9 million of 5.24% notes due
April 29, 2011, $46.1 million of 6.33% notes due
July 15, 2014, $22.1 million of 6.52% notes due
July 15, 2017 and $23.9 million of 6.67% notes
due July 15, 2019. As these notes have fixed interest
rates, we do not believe that they have any interest rate risk.
Other
Market Risks
Due to the nature of our business, we believe that we do not
face any material credit risk, inflation, interest rate or
foreign currency rate risk.
54
|
|
ITEM 8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
55
Report of
Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Calamos Asset Management, Inc.
We have audited the accompanying consolidated statements of
financial condition of Calamos Asset Management, Inc. and
subsidiaries (the Company) as of December 31, 2010 and
2009, and the related consolidated statements of operations,
changes in stockholders equity, and cash flows for the
years then ended December 31, 2010. These financial
statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Calamos Asset Management, Inc. and subsidiaries as
of December 31, 2010 and 2009, and the results of their
operations and their cash flows for the years then ended
December 31, 2010, in conformity with U.S. generally
accepted accounting principles.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Calamos Asset Management, Inc.s and subsidiaries
internal control over financial reporting as of
December 31, 2010, based on criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated March 4, 2011 expressed an
unqualified opinion on the effectiveness of the Companys
internal control over financial reporting.
/s/ McGladrey &
Pullen, LLP
Chicago, IL
March 4, 2011
F-1
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Calamos Asset Management, Inc.:
We have audited the accompanying consolidated statement of
operations, changes in stockholders equity, and cash flows
of Calamos Asset Management, Inc. (the Company) for the year
ended December 31, 2008. The Companys management is
responsible for these consolidated financial statements. Our
responsibility is to express an opinion on these consolidated
financial statements.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. Our audit of the consolidated
financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit also
included performing such other procedures as we considered
necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the results
of operations and cash flows for the year ended
December 31, 2008 of Calamos Asset Management, Inc., in
conformity with U.S. generally accepted accounting
principles.
Chicago, Illinois
March 13, 2009
F-2
Report of
Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Calamos Asset Management, Inc.
We have audited Calamos Asset Management, Inc.s and
subsidiaries (the Company) internal control over financial
reporting as of December 31, 2010, based on criteria
established in Internal Control Integrated
Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Companys
management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting
included in the accompanying Managements Report on
Internal Control over Financial Reporting. Our responsibility is
to express an opinion on the Companys internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our
opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (a) pertain to the
maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the
assets of the company; (b) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance
with authorizations of management and directors of the company;
and (c) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use,
or disposition of the companys assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Calamos Asset Management Inc. and subsidiaries
maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2010, based on
criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated statements of financial condition of Calamos Asset
Management, Inc. and subsidiaries as of December 31, 2010
and 2009, and the related consolidated statements of operations,
changes in stockholders equity, and cash flows for the
years then ended December 31, 2010 and our report dated
March 4, 2011 expressed an unqualified opinion.
/s/ McGladrey &
Pullen, LLP
Chicago, IL
March 4, 2011
F-3
MANAGEMENTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Calamos Asset Management, Inc. and its
subsidiaries (the Company) is responsible for establishing and
maintaining adequate internal control over financial reporting,
as defined in
Rule 13a-15(f)
and
15d-15(f) of
the Securities Exchange Act of 1934, as amended. The
Companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of its
consolidated financial statements for external purposes in
accordance with U.S. generally accepted accounting
principles.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of the chief
executive officer and the chief financial officer, management
assessed the effectiveness of the Companys internal
control over financial reporting as of December 31, 2010
based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on this
assessment, management concluded that the Companys
internal control over financial reporting was effective as of
December 31, 2010.
The effectiveness of internal control over financial reporting
as of December 31, 2010, has been audited by
McGladrey & Pullen, LLP, an independent registered
public accounting firm, as stated in their report which is
included herein.
|
|
|
/s/ John
P. Calamos,
Sr. John
P. Calamos, Sr.
Chairman, Chief Executive Officer and Co-Chief Investment Officer
|
|
/s/ Cristina
Wasiak Cristina
Wasiak
Senior Vice President,
Chief Financial Officer
|
March 4, 2011
F-4
CALAMOS
ASSET MANAGEMENT, INC.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
(in thousands, except share data)
|
|
2010
|
|
|
2009
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
82,870
|
|
|
$
|
145,431
|
|
Receivables:
|
|
|
|
|
|
|
|
|
Affiliates and affiliated funds
|
|
|
19,320
|
|
|
|
17,174
|
|
Customers
|
|
|
10,351
|
|
|
|
9,315
|
|
Investment securities
|
|
|
314,215
|
|
|
|
207,886
|
|
Derivative assets
|
|
|
4,026
|
|
|
|
1,720
|
|
Partnership investments, net
|
|
|
41,678
|
|
|
|
37,549
|
|
Prepaid expenses
|
|
|
3,087
|
|
|
|
2,741
|
|
Deferred tax assets, net
|
|
|
8,757
|
|
|
|
9,610
|
|
Other current assets
|
|
|
1,481
|
|
|
|
2,133
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
485,785
|
|
|
|
433,559
|
|
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
|
66,960
|
|
|
|
76,646
|
|
Deferred sales commissions
|
|
|
8,515
|
|
|
|
12,705
|
|
Property and equipment, net
|
|
|
26,745
|
|
|
|
32,912
|
|
Other non-current assets
|
|
|
1,241
|
|
|
|
1,256
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
103,461
|
|
|
|
123,519
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
589,246
|
|
|
$
|
557,078
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Distribution fees payable
|
|
$
|
16,560
|
|
|
$
|
16,102
|
|
Accrued compensation and benefits
|
|
|
21,411
|
|
|
|
15,768
|
|
Current portion of long-term debt
|
|
|
32,885
|
|
|
|
|
|
Interest payable
|
|
|
3,026
|
|
|
|
3,026
|
|
Derivative liabilities
|
|
|
5,918
|
|
|
|
3,450
|
|
Accrued expenses and other current liabilities
|
|
|
3,906
|
|
|
|
3,711
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
83,706
|
|
|
|
42,057
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
92,115
|
|
|
|
125,000
|
|
Deferred rent
|
|
|
9,456
|
|
|
|
9,419
|
|
Other long-term liabilities
|
|
|
577
|
|
|
|
776
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
102,148
|
|
|
|
135,195
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
185,854
|
|
|
|
177,252
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Class A Common Stock, $0.01 par value; authorized
600,000,000 shares; 23,942,317 shares issued and
19,942,317 shares outstanding at December 31, 2010;
23,668,583 shares issued and 19,668,583 shares
outstanding at December 31, 2009
|
|
|
239
|
|
|
|
237
|
|
Class B Common Stock, $0.01 par value; authorized
1,000 shares; 100 shares issued and outstanding at
December 31, 2010 and December 31, 2009
|
|
|
0
|
|
|
|
0
|
|
Additional paid-in capital
|
|
|
212,256
|
|
|
|
209,895
|
|
Retained earnings
|
|
|
59,895
|
|
|
|
46,035
|
|
Accumulated other comprehensive income
|
|
|
5,841
|
|
|
|
4,362
|
|
Treasury stock at cost; 4,000,000 shares at
December 31, 2010 and December 31, 2009
|
|
|
(95,215
|
)
|
|
|
(95,215
|
)
|
|
|
|
|
|
|
|
|
|
Calamos Asset Management, Inc. stockholders equity
|
|
|
183,016
|
|
|
|
165,314
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest in Calamos Holdings LLC
|
|
|
218,679
|
|
|
|
212,887
|
|
Non-controlling interest in partnership investments
|
|
|
1,697
|
|
|
|
1,625
|
|
|
|
|
|
|
|
|
|
|
Total non-controlling interest
|
|
|
220,376
|
|
|
|
214,512
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
403,392
|
|
|
|
379,826
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
589,246
|
|
|
$
|
557,078
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-5
CALAMOS
ASSET MANAGEMENT, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
(in thousands, except share data)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fees
|
|
$
|
238,308
|
|
|
$
|
200,790
|
|
|
$
|
274,174
|
|
Distribution and underwriting fees
|
|
|
84,753
|
|
|
|
78,430
|
|
|
|
114,023
|
|
Other
|
|
|
2,978
|
|
|
|
2,518
|
|
|
|
3,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
326,039
|
|
|
|
281,738
|
|
|
|
391,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
75,292
|
|
|
|
67,413
|
|
|
|
74,483
|
|
Distribution expenses
|
|
|
66,493
|
|
|
|
59,491
|
|
|
|
84,884
|
|
Amortization of deferred sales commissions
|
|
|
9,206
|
|
|
|
12,201
|
|
|
|
23,417
|
|
Marketing and sales promotion
|
|
|
13,775
|
|
|
|
10,762
|
|
|
|
11,908
|
|
General and administrative
|
|
|
34,772
|
|
|
|
33,813
|
|
|
|
37,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
199,538
|
|
|
|
183,680
|
|
|
|
232,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
126,501
|
|
|
|
98,058
|
|
|
|
159,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
(7,422
|
)
|
|
|
(7,064
|
)
|
|
|
(29,676
|
)
|
Investment and other income (loss)
|
|
|
29,084
|
|
|
|
2,154
|
|
|
|
(296,881
|
)
|
Debt extinguishment costs
|
|
|
|
|
|
|
|
|
|
|
(37,498
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-operating income (loss)
|
|
|
21,662
|
|
|
|
(4,910
|
)
|
|
|
(364,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
148,163
|
|
|
|
93,148
|
|
|
|
(204,958
|
)
|
Income tax provision (benefit)
|
|
|
12,375
|
|
|
|
7,879
|
|
|
|
(3,787
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
135,788
|
|
|
|
85,269
|
|
|
|
(201,171
|
)
|
Net (income) loss attributable to non-controlling interest in
Calamos Holdings LLC
|
|
|
(115,788
|
)
|
|
|
(72,509
|
)
|
|
|
104,494
|
|
Net (income) loss attributable to non-controlling interest in
partnership investments
|
|
|
(72
|
)
|
|
|
(336
|
)
|
|
|
72,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Calamos Asset Management,
Inc.
|
|
$
|
19,928
|
|
|
$
|
12,424
|
|
|
$
|
(24,521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.00
|
|
|
$
|
0.63
|
|
|
$
|
(1.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.99
|
|
|
$
|
0.62
|
|
|
$
|
(1.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,884,847
|
|
|
|
19,626,233
|
|
|
|
19,752,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
20,187,992
|
|
|
|
19,954,124
|
|
|
|
97,449,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.30
|
|
|
$
|
0.22
|
|
|
$
|
0.385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-6
CALAMOS
ASSET MANAGEMENT, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Calamos Asset Management, Inc. Stockholders
|
|
|
controlling
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Interest in
|
|
|
controlling
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
Calamos
|
|
|
Interest in
|
|
|
|
|
|
|
Common
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Holdings
|
|
|
Partnership
|
|
|
|
|
(in thousands)
|
|
Stock
|
|
|
Capital
|
|
|
Earnings
|
|
|
Income (Loss)
|
|
|
Stock
|
|
|
LLC
|
|
|
Investments
|
|
|
Total
|
|
|
Balance at Dec. 31, 2007
|
|
$
|
233
|
|
|
$
|
198,924
|
|
|
$
|
70,102
|
|
|
$
|
5,081
|
|
|
$
|
(60,603
|
)
|
|
$
|
352,205
|
|
|
$
|
49,177
|
|
|
$
|
615,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
(24,521
|
)
|
|
|
|
|
|
|
|
|
|
|
(104,494
|
)
|
|
|
(72,156
|
)
|
|
|
(201,171
|
)
|
Changes in unrealized losses on
available-for-sale
securities, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,502
|
)
|
|
|
|
|
|
|
(147,028
|
)
|
|
|
|
|
|
|
(171,530
|
)
|
Reclassification adjustment for realized losses on
available-for-sale
securities included in income, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,014
|
|
|
|
|
|
|
|
116,999
|
|
|
|
|
|
|
|
137,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(235,688
|
)
|
Issuance of common stock (173,605 Class A common shares)
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common stock (1,547,900 Class A common shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,612
|
)
|
|
|
|
|
|
|
|
|
|
|
(34,612
|
)
|
Sale of Calamos Holdings LLC membership units
(1,547,900 units)
|
|
|
|
|
|
|
27,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,469
|
)
|
|
|
|
|
|
|
|
|
Capital contribution
|
|
|
|
|
|
|
13,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,853
|
|
|
|
|
|
|
|
64,615
|
|
Net purchase of non-controlling interest in partnership
investments and Offshore Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,304
|
|
|
|
145,304
|
|
De-consolidation of non-controlling interests in partnership
investments and Offshore Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(121,036
|
)
|
|
|
(121,036
|
)
|
Cumulative impact of changes in ownership of Calamos Holdings LLC
|
|
|
|
|
|
|
(33,781
|
)
|
|
|
|
|
|
|
(694
|
)
|
|
|
|
|
|
|
(989
|
)
|
|
|
|
|
|
|
(35,464
|
)
|
Compensation expense recognized under stock incentive plans
|
|
|
|
|
|
|
1,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,627
|
|
|
|
|
|
|
|
7,099
|
|
Dividend equivalent accrued under stock incentive plans
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
79
|
|
|
|
|
|
|
|
99
|
|
Distribution to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(86,798
|
)
|
|
|
|
|
|
|
(86,798
|
)
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
(7,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Dec. 31, 2008
|
|
$
|
235
|
|
|
$
|
207,844
|
|
|
$
|
38,010
|
|
|
$
|
(101
|
)
|
|
$
|
(95,215
|
)
|
|
$
|
158,985
|
|
|
$
|
1,289
|
|
|
$
|
311,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
12,424
|
|
|
|
|
|
|
|
|
|
|
|
72,509
|
|
|
|
336
|
|
|
|
85,269
|
|
Changes in unrealized losses on
available-for-sale
securities, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,951
|
|
|
|
|
|
|
|
27,717
|
|
|
|
|
|
|
|
32,668
|
|
Reclassification of unrealized loss on securities contributed to
Calamos Holdings LLC
|
|
|
|
|
|
|
501
|
|
|
|
|
|
|
|
(501
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,937
|
|
Issuance of common stock (170,896 Class A common shares)
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative impact of changes in ownership of Calamos Holdings LLC
|
|
|
|
|
|
|
(303
|
)
|
|
|
(2
|
)
|
|
|
13
|
|
|
|
|
|
|
|
(153
|
)
|
|
|
|
|
|
|
(445
|
)
|
Compensation expense recognized under stock incentive plans
|
|
|
|
|
|
|
1,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,795
|
|
|
|
|
|
|
|
8,650
|
|
Dividend equivalent accrued under stock incentive plans
|
|
|
|
|
|
|
|
|
|
|
(79
|
)
|
|
|
|
|
|
|
|
|
|
|
(293
|
)
|
|
|
|
|
|
|
(372
|
)
|
Distribution to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52,673
|
)
|
|
|
|
|
|
|
(52,673
|
)
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
(4,318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Dec. 31, 2009
|
|
$
|
237
|
|
|
$
|
209,895
|
|
|
$
|
46,035
|
|
|
$
|
4,362
|
|
|
$
|
(95,215
|
)
|
|
$
|
212,887
|
|
|
$
|
1,625
|
|
|
$
|
379,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
19,928
|
|
|
|
|
|
|
|
|
|
|
|
115,788
|
|
|
|
72
|
|
|
|
135,788
|
|
Changes in unrealized gains on
available-for-sale
securities, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,880
|
|
|
|
|
|
|
|
23,378
|
|
|
|
|
|
|
|
27,258
|
|
Reclassification adjustment for realized gains on
available-for-sale
securities included in income, net of income tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,478
|
)
|
|
|
|
|
|
|
(17,060
|
)
|
|
|
|
|
|
|
(19,538
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,508
|
|
Issuance of common stock (273,734 Class A common shares)
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative impact of changes in ownership of Calamos Holdings LLC
|
|
|
|
|
|
|
388
|
|
|
|
(3
|
)
|
|
|
77
|
|
|
|
|
|
|
|
(1,652
|
)
|
|
|
|
|
|
|
(1,190
|
)
|
Compensation expense recognized under stock incentive plans
|
|
|
|
|
|
|
1,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,141
|
|
|
|
|
|
|
|
9,116
|
|
Dividend equivalent accrued under stock incentive plans
|
|
|
|
|
|
|
|
|
|
|
(104
|
)
|
|
|
|
|
|
|
|
|
|
|
(376
|
)
|
|
|
|
|
|
|
(480
|
)
|
Distribution to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(121,427
|
)
|
|
|
|
|
|
|
(121,427
|
)
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
(5,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Dec. 31, 2010
|
|
$
|
239
|
|
|
$
|
212,256
|
|
|
$
|
59,895
|
|
|
$
|
5,841
|
|
|
$
|
(95,215
|
)
|
|
$
|
218,679
|
|
|
$
|
1,697
|
|
|
$
|
403,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-7
CALAMOS
ASSET MANAGEMENT, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Cash and cash equivalents at beginning of period
|
|
$
|
145,431
|
|
|
$
|
59,425
|
|
|
$
|
108,441
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
135,788
|
|
|
|
85,269
|
|
|
|
(201,171
|
)
|
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of deferred sales commissions
|
|
|
9,206
|
|
|
|
12,201
|
|
|
|
23,417
|
|
Other depreciation and amortization
|
|
|
7,778
|
|
|
|
10,281
|
|
|
|
12,222
|
|
Loss on write-off of property and equipment
|
|
|
238
|
|
|
|
|
|
|
|
2,031
|
|
Deferred rent
|
|
|
72
|
|
|
|
202
|
|
|
|
1,776
|
|
Change in unrealized (gains) losses on CFS securities,
derivative assets, derivative liabilities and partnership
investments, net
|
|
|
(1,808
|
)
|
|
|
(22,848
|
)
|
|
|
158,636
|
|
Net realized (gain) loss on sale of investment securities,
derivative assets and derivative liabilities
|
|
|
(22,018
|
)
|
|
|
25,810
|
|
|
|
172,413
|
|
Deferred taxes
|
|
|
9,598
|
|
|
|
6,586
|
|
|
|
(2,610
|
)
|
Stock based compensation
|
|
|
9,116
|
|
|
|
8,650
|
|
|
|
7,099
|
|
Employee taxes paid on vesting under stock incentive plans
|
|
|
(1,128
|
)
|
|
|
(293
|
)
|
|
|
(1,796
|
)
|
(Increase) decrease in assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates and affiliated funds, net
|
|
|
(2,146
|
)
|
|
|
(3,987
|
)
|
|
|
14,454
|
|
Customers
|
|
|
(1,036
|
)
|
|
|
(2,453
|
)
|
|
|
4,837
|
|
Deferred sales commissions
|
|
|
(5,016
|
)
|
|
|
(6,493
|
)
|
|
|
(7,755
|
)
|
Other assets
|
|
|
461
|
|
|
|
19,153
|
|
|
|
(19,401
|
)
|
Increase (decrease) in liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution fees payable
|
|
|
458
|
|
|
|
3,674
|
|
|
|
(10,374
|
)
|
Accrued compensation and benefits
|
|
|
5,608
|
|
|
|
5,349
|
|
|
|
(16,043
|
)
|
Accrued expenses and other liabilities
|
|
|
(404
|
)
|
|
|
(470
|
)
|
|
|
(12,507
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
144,767
|
|
|
|
140,631
|
|
|
|
125,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net additions to property and equipment
|
|
|
(1,972
|
)
|
|
|
(2,011
|
)
|
|
|
(4,616
|
)
|
Purchases of investment securities
|
|
|
(425,553
|
)
|
|
|
(4,472
|
)
|
|
|
(176,977
|
)
|
Proceeds from sale of investment securities
|
|
|
357,903
|
|
|
|
15,073
|
|
|
|
370,344
|
|
Net (purchases) sales of derivatives
|
|
|
(9,785
|
)
|
|
|
(5,655
|
)
|
|
|
9,897
|
|
Net changes in partnership investments
|
|
|
(454
|
)
|
|
|
(418
|
)
|
|
|
124,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(79,861
|
)
|
|
|
2,517
|
|
|
|
323,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of debt
|
|
|
|
|
|
|
|
|
|
|
(400,000
|
)
|
Capital contribution received
|
|
|
|
|
|
|
|
|
|
|
31,317
|
|
(Excess tax liability) deferred tax benefit on vesting under
stock incentive plans
|
|
|
(79
|
)
|
|
|
(151
|
)
|
|
|
144
|
|
Repurchase of common stock
|
|
|
|
|
|
|
|
|
|
|
(34,612
|
)
|
Equity distributions paid to non-controlling interests
|
|
|
(76,418
|
)
|
|
|
(31,523
|
)
|
|
|
(29,741
|
)
|
Tax distributions paid to non-controlling interests
|
|
|
(45,009
|
)
|
|
|
(21,150
|
)
|
|
|
(57,057
|
)
|
Cash dividends paid to common stockholders
|
|
|
(5,961
|
)
|
|
|
(4,318
|
)
|
|
|
(7,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(127,467
|
)
|
|
|
(57,142
|
)
|
|
|
(497,540
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(62,561
|
)
|
|
|
86,006
|
|
|
|
(49,016
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
82,870
|
|
|
$
|
145,431
|
|
|
$
|
59,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
2,706
|
|
|
$
|
469
|
|
|
$
|
11,807
|
|
Interest
|
|
$
|
7,677
|
|
|
$
|
7,677
|
|
|
$
|
41,077
|
|
See accompanying notes to consolidated financial statements.
F-8
CALAMOS
ASSET MANAGEMENT, INC.
|
|
(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 (the Funds), closed-end funds (the
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. Management operates these
activities as one operating segment.
Calamos Advisors LLC (CAL), a Delaware limited liability company
and registered investment advisor, Calamos Financial Services
LLC (CFS), a Delaware limited liability company and registered
broker-dealer, Calamos Partners LLC (CPL), a Delaware limited
liability company and registered investment advisor, and Calamos
Wealth Management LLC, a Delaware limited liability company and
registered investment advisor, are wholly-owned subsidiaries of
Holdings. Calamos International LLP, ultimately a majority-owned
subsidiary of Calamos Holdings LLC, is a registered investment
advisor with the Financial Services Authority and distributor of
the Offshore Funds and Company products globally.
The Calamos Interests refers to the combined
interests of Calamos Family Partners, Inc. (CFP), a Delaware
corporation, and John P. Calamos, Sr., the chairman, chief
executive officer and co-chief investment officer of CAM.
|
|
(2)
|
Summary
of Significant Accounting Policies
|
Basis
of Presentation
The consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United
States of America, which require the use of estimates and
assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities. Management believes the
accounting estimates are appropriate and reasonably stated;
however, due to the inherent uncertainties in making estimates,
actual amounts could differ from these estimates.
Certain comparative amounts for prior periods have been
reclassified to conform to the current years presentation.
Principles
of Consolidation
The Company consolidates investments in which the Companys
ownership exceeds 50% or the Company operates and controls the
business and affairs of the entity. As such, the consolidated
financial statements include the financial statements of CAM,
Holdings and Holdings wholly- and majority-owned
subsidiaries, and Calamos Market Neutral Opportunities
Fund LP, a 92% owned affiliate. Additionally, the Company
consolidated the financial results of Calamos Global Funds PLC
and Calamos Equity Opportunities Fund LP for a portion of
the periods presented, as discussed below. All significant
intercompany balances and transactions have been eliminated.
The Calamos Interests combined 78.3% and 78.5% interest in
Holdings at December 31, 2010 and 2009, respectively, is
represented as a non-controlling interest in Calamos Holdings
LLC in the Companys consolidated financial statements.
Non-controlling interest in Holdings is derived by multiplying
the historical equity of Holdings by the Calamos Interests
aggregate ownership percentage for the periods presented.
Issuances and repurchases of CAMs common stock may result
in changes in CAMs ownership percentage and to the
non-controlling interests ownership percentage of Holdings
with resulting changes reflected in the consolidated statements
of changes in stockholders equity. Income is allocated
based on the average ownership interest during the period in
which the income is earned.
F-9
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CAM owns certain assets to which common stockholders have
exclusive economic rights. At December 31, 2010, these
assets include cash and cash equivalents of $45.3 million,
net deferred tax assets of $75.7 million and net current
income taxes receivable of $1.4 million that are reported
together with Holdings consolidated assets in the
consolidated statements of financial condition. Additionally,
net income before income taxes, of $148.2 million and
$93.1 million for the years ended December 31, 2010
and 2009, respectively, each included approximately
$0.1 million of interest income on cash and cash
equivalents held solely by CAM. This portion of CAMs
income is not reduced by any non-controlling interests.
CPL is the general partner of Calamos Market Neutral
Opportunities Fund LP (the Partnership), a private
investment partnership that is primarily comprised of liquid
investment securities. Substantially all the activities of the
Partnership are conducted on behalf of the Company and its
related parties; therefore, the Company consolidates the
financial results of the Partnership into its results. CPL was
also the general partner of Calamos Equity Opportunities
Fund LP, a private investment partnership, until the
partnership was liquidated during the second quarter of 2008. Up
to that point, the Company consolidated the financial results of
the partnership into its results. Both partnerships are
collectively referred to as the Partnership Investments.
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. Until December 2008, the
Offshore Funds were majority-owned by the Company and, as a
result, the Company consolidated the results of the Offshore
Funds with its own results. During December 2008, the Offshore
Funds were no longer majority-owned by the Company; therefore,
the Company deconsolidated the financial results of the Offshore
Funds from its own results. Beginning in December 2008, the
Companys investment in the Offshore Funds is classified as
an
available-for-sale
security and is reported as investment securities in the
consolidated statements of financial condition. Unrealized gains
and losses attributable to the Offshore Funds are excluded from
earnings and are reported, net of income tax, as a separate
component of stockholders equity until realized.
The assets and liabilities of the Partnership Investments are
presented on a net basis as partnership investments in the
consolidated statements of financial condition. The net income
or loss of the Partnership Investments and Offshore Funds, when
consolidated, is included in investment and other income (loss)
in the consolidated statements of operations. The change in
Partnership Investments and Offshore Funds, when consolidated,
is included in the net changes in partnership investments in the
consolidated statements of cash flows. Partnership Investments
and Offshore Funds are presented on a net basis in order to
provide more clarity 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 6. The non-controlling interests of the Partnership
Investments and of the Offshore Funds, when consolidated, are
presented as non-controlling interest in partnership investments
in the respective consolidated financial statements.
The Company holds non-controlling interests in certain other
partnership investments that are included in partnership
investments, net in the consolidated statements of financial
condition. These other partnership investments are accounted for
under the equity method.
Financial
Instruments
All highly liquid financial instruments with maturities of three
months or less from date of purchase, consisting primarily of
investments in money market funds, commercial paper and
U.S. government securities, are considered cash equivalents.
The fair value of long-term debt, which has a total carrying
value of $125.0 million at December 31, 2010 and 2009,
was approximately $141.4 million and $137.4 million at
December 31, 2010 and 2009, respectively. Fair value
estimates are calculated using discounted cash flows based on
the Companys incremental borrowing rates for the debt and
market prices for similar bonds at the measurement date. This
method of assessing fair value may differ from the actual amount
realized.
F-10
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The carrying value of all other financial instruments
approximates fair value due to the short maturities of these
financial instruments.
Receivables
from Customers
Receivables from customers represent balances arising from
contractual investment advisory services provided to separate
account customers. During each of the periods presented, bad
debt expense and allowance for doubtful accounts were not
material.
Investment
Securities
The Company carries its investment securities at fair value. For
a substantial majority of the Companys investments, fair
values are determined based upon quoted prices in active
markets. If quoted market prices are not available, the Company
uses matrix, model or other similar pricing methods to determine
fair value. Investment securities transactions are recorded on a
trade date basis.
With the exception of the securities held by CFS, investment
securities are classified as
available-for-sale
as the Company does not intend to permanently dispose of these
securities in the near term. Unrealized gains and losses on
available-for-sale
securities are excluded from earnings and are reported, net of
income tax, as a separate component of stockholders equity
until realized.
Realized gains and losses from the sale of
available-for-sale
securities are determined on a specific identification basis and
are included in investment and other income (loss) in the
consolidated statements of operations.
As a registered broker-dealer, CFS is required to carry all
investment securities it owns (CFS Securities) at fair value and
record all changes in the value of its securities in current
earnings. As such, both realized and unrealized gains and losses
on these securities are included in investment and other income
(loss) in the consolidated statements of operations.
On a quarterly basis, the Company conducts reviews to assess
whether
other-than-temporary
impairment exists on its
available-for-sale
investment securities.
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 in the consolidated
statements of operations 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.
Derivative
Assets and Liabilities
From time to time the Company enters into derivative contracts
to mitigate the negative impact that changes in security prices
may have on the investment portfolio. The Company does not
measure effectiveness or meet the criteria for hedge accounting
and, therefore, records the changes in the fair value of these
instruments in investment and other income (loss) in the
consolidated statements of operations. The Company classifies
derivative securities owned as derivative assets and derivative
liabilities in the consolidated statements of financial
condition.
Property
and Equipment
Property and equipment are recorded at cost less accumulated
depreciation and amortization. Depreciation and amortization is
provided on a straight-line basis over the estimated useful
lives of the assets, ranging from three to twenty years.
Leasehold improvements are amortized over the shorter of their
estimated useful lives or the remaining term of the lease.
F-11
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Internally
Developed Software
Certain internal and external development costs incurred in
connection with developing or obtaining software for internal
use are capitalized. These capitalized costs are included in
property and equipment, net on the consolidated statements of
financial condition and are amortized using the straight-line
method over their estimated useful lives. On a quarterly basis,
the Company conducts reviews to assess whether an impairment of
these assets exists. Impairments of these assets, if any, are
recognized in the consolidated statements of operations in the
period in which the impairment occurs.
Compensation
Plans
The Company has an incentive stock plan that provides for
certain employees of the company to receive stock based
compensation in the form of restricted stock units (RSUs) and
stock options. RSUs are convertible on a
one-for-one
basis into shares of the Companys common stock. Stock
option awards are based on shares of the Companys common
stock. The Company estimates the fair value of the options as of
the grant date using the Black-Scholes option-pricing model.
Stock based compensation expense is recognized based on the
grant-date fair value of the award. The Company records
compensation expense on a straight-line basis over the service
period.
Revenue
Recognition
The Company earns investment management fees by providing
services pursuant to the terms of the underlying advisory
contract. Fees are based on a contractual investment advisory
fee applied to the assets in each portfolio. Any fees collected
in advance are deferred and recognized over the period earned.
Performance-based advisory fees from certain separate accounts
are recognized annually upon completion of the contract year and
based upon either (1) the positive difference between the
investment returns on a clients portfolio compared to a
benchmark index or (2) the absolute percentage of gain in
the clients account. Performance-based advisory fees from
the Funds are recognized monthly when earned and are based upon
the differences between the investment returns of the respective
fund compared to a benchmark index.
Distribution and underwriting fees consist primarily of
Rule 12b-1
distribution
and/or
service fees from the Funds, contingent deferred sales charges
(CDSC) on the redemption of Fund shares and sales charges earned
on mutual fund shares. Distribution service fees are accrued
monthly as services are performed and are based on the average
daily assets of the Funds. CDSC fees are recorded on a trade
date basis when earned, and sales charges are recorded on the
settlement date.
Net
Interest Expense
Net interest expense represents interest expense incurred on
debt net of interest income generated from cash and cash
equivalents. Interest income is recognized when earned, and
interest expense is recorded when incurred.
Investment
and Other Income (Loss)
Investment and other income (loss) is primarily comprised of:
realized gains (losses) from all investment securities and
partnership investments; unrealized gains (losses) on CFS
Securities, Partnership Investments and Offshore Funds when
consolidated; and dividend income. Dividend income is recognized
on the record date.
Deferred
Sales Commissions
Deferred sales commissions are amounts advanced by the Company
on the sale of Class B and Class C shares of the
Funds. Deferred sales commissions are amortized on a
straight-line basis over the period in which
12b-1 fees
are received, not to exceed 12 months for Class C
shares and 96 months (8 years) for Class B
shares. Because
12b-1 fees
cease upon redemption of shares, amortization expense is
accelerated when shares are redeemed, resulting in the reduction
of the deferred sales commission asset. During 2009, the Company
discontinued the sale of Class B
F-12
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
shares; however, the consolidated statements of financial
condition continue to reflect the unamortized deferred sales
commissions related to this share class.
The Company performs an impairment analysis annually, whereby it
compares the carrying value of the deferred sales commission
asset to the undiscounted cash flow expected to be generated by
the asset over its remaining useful life to determine whether
impairment has occurred. If the carrying value of the asset
exceeds the undiscounted cash flow, the asset is written down to
fair value based on discounted cash flows. Impairment
adjustments are recognized in the consolidated statements of
operations as a component of amortization of deferred sales
commissions. As of each reporting period presented, the Company
determined that no impairment of the deferred sales commission
asset existed.
Separately, the Company periodically reviews the average
remaining lives of these assets and adjusts the periodic
amortization expense accordingly, resulting in an increase or
decrease to the amortization of deferred sales commissions that
is reported in the consolidated statements of operations.
During the second quarter of 2009, the Company changed the
estimated remaining lives on the portion of its deferred sales
commission assets related to Class B mutual fund shares.
This change in estimate extended the expected lives of these
assets and reduced the quarterly amortization of deferred sales
commissions by approximately $1.7 million at that time.
Foreign
Currency
Foreign currency balances are revalued into U.S. dollars,
which is our functional currency, at prevailing exchange rates
on the reporting date. Revenues earned and expenses incurred in
foreign currency are revalued at average exchange rates during
the reporting period. Gains and losses arising from the
revaluation of account balances denominated in foreign
currencies are recognized in investment and other income on the
Consolidated Statement of Operations.
Income
Taxes
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to the temporary
differences between the financial statement carrying amount of
existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered
or settled. Although valuation allowances may be established to
reduce the amounts expected to be realized, there were no
deferred tax asset valuation allowances at December 31,
2010 or 2009.
Future interest or penalties related to uncertain tax positions
are recognized in income tax provision (benefit) when
determined. The Company did not record any accrued interest or
penalties related to uncertain tax positions through
December 31, 2010.
Earnings
(Loss) Per Share
Basic earnings (loss) per share is computed by dividing net
income (loss) attributable to Calamos Asset Management, Inc. by
the weighted average number of shares of Class A and
Class B common stock outstanding during each year. Shares
issued or repurchased during the year are weighted for the
portion of the year that they were outstanding. Diluted earnings
(loss) per share reflects the potential dilution that would
occur if RSUs and stock options granted to participants of our
incentive compensation plan were exercised and if the Calamos
Interests exchanged all of their ownership interest in Holdings
and their Class B common stock for shares of Class A
common stock. Diluted shares which result in anti-dilution are
excluded from the diluted earnings (loss) per share calculation
and are detailed in Note 15.
F-13
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(3)
|
Related-Party
Transactions
|
CAL provides investment management and portfolio accounting
services to the Funds and the Closed-End Funds. CFS acts as the
sole distributor of the Funds. The Company earns management,
distribution and portfolio accounting fees for these services
that are accrued and settled monthly. The table below summarizes
the total fees earned from affiliates identified above during
the years ended December 31, 2010, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Investment management fees from:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Funds
|
|
$
|
150,963
|
|
|
$
|
122,956
|
|
|
$
|
165,638
|
|
The Closed-End Funds
|
|
|
45,149
|
|
|
|
38,540
|
|
|
|
54,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
196,112
|
|
|
$
|
161,496
|
|
|
$
|
220,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution fees from the Funds
|
|
$
|
81,277
|
|
|
$
|
73,686
|
|
|
$
|
106,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio accounting fees from:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Funds
|
|
$
|
2,232
|
|
|
$
|
1,846
|
|
|
$
|
2,516
|
|
The Closed-End Funds
|
|
|
571
|
|
|
|
497
|
|
|
|
701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
2,803
|
|
|
$
|
2,343
|
|
|
$
|
3,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dragon Leasing Corporation (Dragon) is an affiliated company
controlled by a principal of the Company. Prior to February
2009, CAL was party to a non-exclusive aircraft lease agreement
with Dragon whereby CAL had use of an airplane for business
travel. Under this agreement CAL agreed to pay for maintenance
and transportation services which are reflected in general and
administrative expenses in the consolidated statements of
operations. The table below summarizes total service fees
incurred during the years ended December 31, 2009 and 2008
and the net payable balance as of December 31, 2008. No
services fees were incurred during 2010.
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2009
|
|
|
2008
|
|
|
General and administrative
|
|
$
|
135
|
|
|
$
|
1,042
|
|
|
|
|
|
|
|
|
|
|
Net payable to Dragon
|
|
|
|
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
Holdings is party to a lease with 1111 Warrenville Road LLC, a
subsidiary of Calamos Property Holdings LLC (CPH). In January
2011, Holdings and 1111 Warrenville Road LLC amended the lease
in order to extend the term for two years with automatic one
year renewals and to increase the base rent accordingly. Rent
under the lease commenced in August 2005 and will end on
December 31, 2012. Annual base rent and operating expense
payments were approximately $851,000 for the year ended
December 31, 2010 with base rent increasing 3% annually.
For the years ended December 31, 2009 and 2008, rent and
operating expense payments were approximately $822,000 and
$805,000, respectively.
Holdings is party to a
20-year
lease with 2020 Calamos Court LLC, a subsidiary of CPH, with
respect to the corporate headquarters constructed for the
Companys occupancy. Rent under the lease commenced in
April 2005 and will end on May 31, 2025. Annual base rent
payments were approximately $3.3 million for the year ended
December 31, 2010 and will increase 3% annually for the
remaining term of the lease. For the years ended
December 31, 2009 and 2008, annual base rent payments were
approximately $3.2 million and $3.1 million,
respectively. Holdings may not terminate the lease unless a
casualty, condemnation or material temporary taking affects all
or a substantial portion of the leased premises. 2020 Calamos
Court LLC may only terminate the lease upon specified events of
default, which are subject to applicable grace periods.
Holdings is party to an agreement with Primacy Business Center
LLC (Primacy), a subsidiary of CFP, where office space at the
Companys corporate headquarters is subleased to Primacy.
During 2010, 2009 and 2008, Holdings recognized sublease rental
income of approximately $558,000, $366,000 and $818,000,
respectively,
F-14
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
which is classified as other income and included in investment
and other income (loss) in the consolidated statements of
operations.
Holdings is party to a
20-year
lease with 2020 Calamos Court Annex LLC, a subsidiary of
CPH, with respect to the cafeteria in the Companys
corporate headquarters. Rent under the lease commenced in
December 2005 and will end on May 31, 2025. Annual base
rent and operating expenses were approximately $310,000 for the
years ended December 31, 2010 with base rent increasing 3%
annually. For the years ended December 31, 2009 and 2008,
rent and operating expense payments were approximately $283,000
and $280,000, respectively.
Holdings is party to an agreement with CF Restaurant Enterprises
LLC (CFRE), a subsidiary of CFP, where CFRE provides lunch and
food services to Holdings. Holdings guarantees minimum daily
revenues and CFRE agrees that certain quantities and
combinations of food and beverage will be available at a
predetermined price. During 2010, 2009 and 2008, Holdings
incurred expense of $823,000, $815,000 and $980,000,
respectively, related to this agreement which is reported with
general and administrative expense in the consolidated
statements of operations.
Holdings is party to a 7.5 year lease with CityGate Centre
I LLC, a subsidiary of CPH, with respect to office space. Rent
payments under the lease commenced in May 2008 and will end on
April 30, 2015. Annual base rent and operating expenses
were $862,000, $858,000 and $588,000 for the year ended
December 31, 2010, 2009 and 2008, respectively. Base rents
increase 2.5% annually. Holdings has been granted two options to
extend the term of the lease for five years each, and has a
right of first offer to lease additional contiguous space in the
building.
CFP, CPH and Dragon have each entered into agreements with CAM,
whereby the parties provide to each other certain services and
resources, including furnishing office space and equipment,
providing insurance coverage, overseeing the administration of
their businesses and providing personnel to perform certain
management and administrative services. These agreements have a
term of one year and are renewable annually. The agreements are
terminable on 30 days notice by either party. In accordance
with the terms of the agreements, the parties have agreed to pay
each other an amount equal to the direct
out-of-pocket
expenses paid or incurred plus an allocation of indirect
expenses, such as employee compensation and benefits.
The following table summarizes fees that have been recorded as
expense allocations during the twelve months ended
December 31, 2010, 2009 and 2008 and the net receivable
balance as of December 31, 2010, 2009 and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Expense allocated from the Company to Dragon
|
|
$
|
40
|
|
|
$
|
55
|
|
|
$
|
54
|
|
Expense allocated from the Company to CFP
|
|
|
369
|
|
|
|
579
|
|
|
|
2,011
|
|
Expense allocated from the Company to CPH
|
|
|
746
|
|
|
|
962
|
|
|
|
431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses allocated from the Company to affiliates
|
|
|
1,155
|
|
|
|
1,596
|
|
|
|
2,496
|
|
Expense allocated from CPH to the Company
|
|
|
173
|
|
|
|
975
|
|
|
|
1,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expense allocated from the Company to affiliates
|
|
$
|
982
|
|
|
$
|
621
|
|
|
$
|
843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net receivable for management services from Dragon
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net receivable for management services from CFP
|
|
$
|
15
|
|
|
$
|
17
|
|
|
$
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net receivable for management services from CPH
|
|
$
|
57
|
|
|
$
|
50
|
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a result of the control exercised by CFP, none of our
agreements with CFP and other companies controlled by them are
deemed to be negotiated on arms length terms.
However, any such agreements since our initial public offering
have been approved in accordance with the Conflict of Interests
Policy contained in our Second Amended and Restated Certificate
of Incorporation.
F-15
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(4)
|
Investment
Securities
|
The following table provides a summary of investment securities
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
December 31, 2010
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Available-for-sale
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$
|
129,280
|
|
|
$
|
32,483
|
|
|
$
|
(3
|
)
|
|
$
|
161,760
|
|
Fixed income
|
|
|
89,712
|
|
|
|
18
|
|
|
|
(425
|
)
|
|
|
89,305
|
|
Low-volatility equity
|
|
|
45,219
|
|
|
|
12,580
|
|
|
|
(1
|
)
|
|
|
57,798
|
|
Other
|
|
|
1,579
|
|
|
|
51
|
|
|
|
(242
|
)
|
|
|
1,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
available-for-sale
securities
|
|
$
|
265,790
|
|
|
$
|
45,132
|
|
|
$
|
(671
|
)
|
|
$
|
310,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFS securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$
|
3,004
|
|
|
$
|
834
|
|
|
$
|
|
|
|
$
|
3,838
|
|
Common Stock
|
|
|
56
|
|
|
|
70
|
|
|
|
|
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total CFS securities
|
|
$
|
3,060
|
|
|
$
|
904
|
|
|
$
|
|
|
|
$
|
3,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
314,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
December 31, 2009
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Available-for-sale
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$
|
46,042
|
|
|
$
|
21,965
|
|
|
$
|
(26
|
)
|
|
$
|
67,981
|
|
Fixed income
|
|
|
75,343
|
|
|
|
6,565
|
|
|
|
|
|
|
|
81,908
|
|
Low-volatility equity
|
|
|
21,091
|
|
|
|
7,668
|
|
|
|
(23
|
)
|
|
|
28,736
|
|
Other
|
|
|
1,486
|
|
|
|
2
|
|
|
|
(270
|
)
|
|
|
1,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
available-for-sale
securities
|
|
$
|
143,962
|
|
|
$
|
36,200
|
|
|
$
|
(319
|
)
|
|
$
|
179,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFS securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$
|
25,353
|
|
|
$
|
2,585
|
|
|
$
|
|
|
|
$
|
27,938
|
|
Common Stock
|
|
|
56
|
|
|
|
49
|
|
|
|
|
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total CFS securities
|
|
$
|
25,409
|
|
|
$
|
2,634
|
|
|
$
|
|
|
|
$
|
28,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
207,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Of the $314.1 million and $207.8 million investments
in mutual funds at December 31, 2010 and 2009,
respectively, $270.9 million and $169.5 million were
invested in affiliated mutual funds.
The aggregate fair value of
available-for-sale
investment securities that were in an unrealized loss position
at December 31, 2010 and 2009 was $83.1 million and
$1.5 million, respectively. The cumulative losses on
securities that had been in a continuous loss position for
12 months or longer were immaterial as of the end of each
reporting period.
F-16
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At December 31, 2010 and 2009, the Company believes that
the unrealized losses attributed to its mutual fund investments
are only temporary in nature, as these losses are a result of
short-term declines in the net asset value of the funds.
Additionally, unrealized losses exist for only a small portion
of the overall
available-for-sale
investment securities. Further, the Company has the intent and
ability to hold these securities for a period of time sufficient
to allow for recovery of the market value.
During 2010 the Company sold $357.9 million of investment
securities and, based on the specific identification of the cost
basis, realized $28.0 million in gross capital gains.
During 2008, the Company sold $368.2 million of investment
securities and, based on the specific identification of the cost
basis, realized gross gains of $21.0 million and gross
losses of $155.2 million. No sales were executed in2009.
The following table provides a summary of changes in investment
securities for the years ended December 31, 2010, 2009 and
2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Available-for-sale
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses)
|
|
$
|
29,869
|
|
|
$
|
34,778
|
|
|
$
|
(724
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) reclassified out of accumulated other
comprehensive income to earnings
|
|
$
|
21,289
|
|
|
|
|
|
|
$
|
(148,729
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFS securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses)
|
|
$
|
855
|
|
|
$
|
9,808
|
|
|
$
|
(17,680
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
Derivative
Assets and Liabilities
|
In order to reduce the volatility equity markets have on the
fair value of the Companys corporate investment portfolio
and to ensure compliance with its debt covenants, the Company
uses exchange traded equity option contracts as an economic
hedge of price changes in its investment securities portfolio.
The Companys investment securities, totaling
$314.2 million at December 31, 2010, consist primarily
of positions in several Calamos equity, fixed income and
low-volatility equity mutual funds. The equity price risk in the
investment portfolio is hedged using exchange-traded put and
call option contracts on several major equity market indices
that correlate most closely with the change in value of the
portfolio being hedged. The use of both purchased put and sold
call options is part of a hedge overlay strategy to minimize
downside risk in the hedged portfolio, while participating in a
portion of an appreciating market. The Company may adjust its
hedge position in response to movement and volatility in prices
and changes in the composition of the hedged portfolio, but
generally is not actively buying and selling contracts.
The fair value of purchased puts and sold call contracts is
reported in derivative assets and derivative liabilities,
respectively, in the consolidated statements of financial
condition. Net gains and losses on these contracts are reported
in investment and other income (loss) in the consolidated
statements of operations with net losses of $9.9 million
and $21.7 million for the years ended December 31,
2010 and 2009, respectively. The Company is using these
derivatives for risk management purposes but has not designated
the contracts as hedges for accounting purposes.
F-17
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(6)
|
Partnership
Investments
|
Presented below are the underlying assets and liabilities of the
Partnerships that the Company reports on a net basis, as well as
the Companys investments in other partnerships accounted
for under the equity method. These investments are presented
collectively as partnership investments, net in its consolidated
statements of financial condition as of December 31, 2010
and 2009.
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
Calamos Market Neutral Opportunities Fund LP:
|
|
|
|
|
|
|
|
|
Deposits with broker
|
|
$
|
11,128
|
|
|
$
|
8,008
|
|
Securities owned
|
|
|
16,365
|
|
|
|
21,976
|
|
Securities sold but not yet purchased
|
|
|
(7,175
|
)
|
|
|
(10,934
|
)
|
Accrued expenses and other current liabilities
|
|
|
(62
|
)
|
|
|
(112
|
)
|
Other current assets
|
|
|
69
|
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
Calamos Market Neutral Opportunities Fund LP, net
|
|
|
20,325
|
|
|
|
19,152
|
|
Investment in other partnerships
|
|
|
21,353
|
|
|
|
18,397
|
|
|
|
|
|
|
|
|
|
|
Partnership investments, net
|
|
$
|
41,678
|
|
|
$
|
37,549
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010 and December 31, 2009, the
Company held a controlling interest of $18.6 million
(91.6%) and $17.5 million (91.5%), respectively, in Calamos
Market Neutral Opportunities Fund LP. The non-controlling
interest totaled 8.4% and 8.5% of Calamos Market Neutral
Opportunities Fund LP at December 31, 2010 and
December 31, 2009, respectively. The non-controlling
interest is presented in the consolidated statements of
financial condition as non-controlling interest in partnership
investments. During 2008, the Company sold $30.0 million of
its investment in the partnership and realized a loss of
$6.1 million, which is included in investments and other
income (loss) in the consolidated statements of operations.
Prior to second quarter of 2008, the Company held a partnership
investment in the Calamos Equity Opportunities Fund LP.
During the second quarter of 2008, the Company liquidated
Calamos Equity Opportunities Fund LP and received total
proceeds of $29.3 million. The Company recorded losses of
$18.9 million for the year ended December 31, 2008,
which were offset by the non-controlling interests portion
of $10.8 million. These losses are included in investment
and other income (loss) in the consolidated statements of
operations.
In December 2008, the Company sold $81.9 million of its
investment in the Offshore Funds and, based on a specific
identification of the cost basis, realized a loss of
$56.1 million, which is included in investments and other
income (loss) in the consolidated statements of operations.
Following this sale, the Company is no longer the majority owner
of the Offshore Funds. As a result, as of December 31, 2008
the Companys investment in Offshore Funds is classified as
an
available-for-sale
security in investment securities in the consolidated statement
of financial condition.
As of December 31, 2010 and 2009, 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.
In February 2011, Calamos Market Neutral Opportunities
Fund LP with total assets of $20.4 million was
dissolved. In connection with the dissolution, the Company
realized capital gains of $1.4 million, net of
non-controlling interests.
F-18
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(7)
|
Fair
Value Measurements
|
The Company utilizes 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
for identical assets and liabilities in active markets;
Level 2 inputs, other than the quoted prices in
active markets, that are observable either directly or
indirectly (including quoted prices of similar securities,
interest rates, credit risk, etc.); and Level 3
unobservable inputs in which there is little or no market data,
and require the reporting entity to develop its own assumptions.
For each period presented, the Company did not have any assets
or liabilities measured at fair value using Level 3
measurements.
Investments are presented in the consolidated financial
statements at fair value in accordance with accounting
principles generally accepted in the United States of America.
Investments in mutual funds are stated at fair value based on
end of day published net asset values of shares owned by the
Company. Investments in securities traded on a national
securities exchange are stated at the last reported sales price
on the day of valuation. Other securities, including
derivatives, traded in the
over-the-counter
market and listed securities for which no sale was reported on
that date are stated at the last quoted bid price. However,
short sales positions and call options written are reported at
the last quoted asked price. Convertible bonds and other
securities for which quotations are not readily available are
valued at fair value based on observable inputs such as market
prices for similar instruments as validated by third party
pricing agencies and the Companys prime broker.
F-19
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following tables provide the hierarchy of inputs used to
derive the fair value of the Companys assets and
liabilities at fair value as of December 31, 2010 and
December 31, 2009. Foreign currency contracts are presented
on a net basis where the right of offset exists, and had no
impact for either period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
|
|
|
|
Markets for
|
|
|
Other
|
|
|
|
|
|
|
Identical Assets
|
|
|
Observable
|
|
(in thousands)
|
|
December 31,
|
|
|
and Liabilities
|
|
|
Inputs
|
|
Description
|
|
2010
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
35,392
|
|
|
$
|
35,392
|
|
|
$
|
|
|
Investment securities (Note 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
165,598
|
|
|
|
165,598
|
|
|
|
|
|
Fixed income
|
|
|
89,305
|
|
|
|
89,305
|
|
|
|
|
|
Low-volatility equity
|
|
|
57,798
|
|
|
|
57,798
|
|
|
|
|
|
Other
|
|
|
1,388
|
|
|
|
1,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds
|
|
|
314,089
|
|
|
|
314,089
|
|
|
|
|
|
Common stock
|
|
|
126
|
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
314,215
|
|
|
|
314,215
|
|
|
|
|
|
Derivative assets (Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded put option contracts
|
|
|
4,026
|
|
|
|
4,026
|
|
|
|
|
|
Derivative liabilities (Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded call option contracts
|
|
|
(5,918
|
)
|
|
|
(5,918
|
)
|
|
|
|
|
Securities and derivatives owned by the Partnership (Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible bonds
|
|
|
16,140
|
|
|
|
|
|
|
|
16,140
|
|
Purchased options
|
|
|
145
|
|
|
|
145
|
|
|
|
|
|
Common stocks
|
|
|
80
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,365
|
|
|
|
225
|
|
|
|
16,140
|
|
Securities sold but not yet purchased of the Partnership
(Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stocks
|
|
|
(7,165
|
)
|
|
|
(7,165
|
)
|
|
|
|
|
Exchange-traded call option contracts
|
|
|
(10
|
)
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,175
|
)
|
|
|
(7,175
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
356,905
|
|
|
$
|
340,765
|
|
|
$
|
16,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-20
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
|
|
|
|
Markets for
|
|
|
Other
|
|
|
|
|
|
|
Identical Assets
|
|
|
Observable
|
|
(in thousands)
|
|
December 31,
|
|
|
and Liabilities
|
|
|
Inputs
|
|
Description
|
|
2009
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
99,966
|
|
|
$
|
99,966
|
|
|
$
|
|
|
Investment securities (Note 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
95,919
|
|
|
|
95,919
|
|
|
|
|
|
Fixed income
|
|
|
81,908
|
|
|
|
81,908
|
|
|
|
|
|
Low-volatility equity
|
|
|
28,736
|
|
|
|
28,736
|
|
|
|
|
|
Other
|
|
|
1,218
|
|
|
|
1,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds
|
|
|
207,781
|
|
|
|
207,781
|
|
|
|
|
|
Common stock
|
|
|
105
|
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
207,886
|
|
|
|
207,886
|
|
|
|
|
|
Derivative assets (Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded put option contracts
|
|
|
1,720
|
|
|
|
1,720
|
|
|
|
|
|
Derivative liabilities (Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded call option contracts
|
|
|
(3,450
|
)
|
|
|
(3,450
|
)
|
|
|
|
|
Securities and derivatives owned by the Partnership (Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stocks
|
|
|
532
|
|
|
|
532
|
|
|
|
|
|
Convertible preferred stocks
|
|
|
1,767
|
|
|
|
660
|
|
|
|
1,107
|
|
Purchased options
|
|
|
179
|
|
|
|
179
|
|
|
|
|
|
Convertible bonds
|
|
|
18,798
|
|
|
|
|
|
|
|
18,798
|
|
Corporate bonds
|
|
|
700
|
|
|
|
|
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,976
|
|
|
|
1,371
|
|
|
|
20,605
|
|
Securities sold but not yet purchased of the Partnership
(Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stocks
|
|
|
(10,893
|
)
|
|
|
(10,893
|
)
|
|
|
|
|
Exchange-traded call option contracts
|
|
|
(41
|
)
|
|
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,934
|
)
|
|
|
(10,934
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
317,164
|
|
|
$
|
296,559
|
|
|
$
|
20,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-21
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(8)
|
Property
and Equipment
|
At December 31, 2010 and 2009, property and equipment and
related accumulated depreciation were as follows:
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
Furniture, fixtures, and equipment
|
|
|
|
|
|
|
|
|
Cost
|
|
$
|
74,257
|
|
|
$
|
73,086
|
|
Accumulated depreciation and amortization
|
|
|
47,512
|
|
|
|
40,174
|
|
|
|
|
|
|
|
|
|
|
Furniture, fixtures, and equipment, net
|
|
$
|
26,745
|
|
|
$
|
32,912
|
|
|
|
|
|
|
|
|
|
|
(9) Long-term
Debt
In April 2004, Holdings issued $150 million aggregate
principal amount of 5.24% senior unsecured notes due
April 29, 2011 to various note purchasers in a private
placement. In July 2007, Holdings completed a private debt
offering of $375 million aggregate principal senior
unsecured notes, with three series consisting of
$197 million of 6.33% notes due July 15, 2014,
$85 million of 6.52% notes due July 15, 2017 and
$93 million of 6.67% notes due July 15, 2019.
In December 2008, the Company prepaid $400 million of its
outstanding long-term debt and negotiated modifications to its
debt covenants. In connection with this prepayment, the Company
recorded $37.5 million of debt extinguishment costs in the
consolidated statements of operations that was comprised of
make-whole payments of $34.9 million, unamortized debt
offering costs of $1.8 million and other expenses of
$0.8 million.
Under the amended note purchase agreements governing the terms
of these notes, Holdings must maintain certain consolidated net
worth in addition to leverage, investment and interest coverage
ratios. The amended note purchase agreements also contain other
covenants that, among other things, restrict the ability of
Holdings subsidiaries to incur debt and restrict the
ability of Holdings or its subsidiaries to create liens and to
merge or consolidate, or sell or convey all or substantially all
of Holdings assets and places certain limitations on
distributions and redemptions of equity interests. As of
December 31, 2010 and 2009, the Company was in compliance
with all covenants.
The table below summarizes the long-term debt balance at
December 31, 2010 and 2009.
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
Senior unsecured notes
|
|
|
|
|
|
|
|
|
5.24% notes due April 29, 2011
|
|
$
|
32,885
|
|
|
$
|
32,885
|
|
6.33% notes due July 15, 2014
|
|
|
46,160
|
|
|
|
46,160
|
|
6.52% notes due July 15, 2017
|
|
|
22,100
|
|
|
|
22,100
|
|
6.67% notes due July 15, 2019
|
|
|
23,855
|
|
|
|
23,855
|
|
|
|
|
|
|
|
|
|
|
Total senior unsecured notes
|
|
|
125,000
|
|
|
|
125,000
|
|
Less current portion of long-term debt
|
|
|
(32,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
92,115
|
|
|
$
|
125,000
|
|
|
|
|
|
|
|
|
|
|
The weighted average interest rate on the notes is 6.14% over
the remaining life of the notes.
F-22
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
All shares of Class A Common Stock and Class B Common
Stock are identical and entitle the holders to the same rights
and privileges, except that the holders of Class B Voting
Common Stock possess super-voting rights in the Company, unless
otherwise required by law.
The Company contributes to a defined contribution profit sharing
plan (the PSP Plan) covering substantially all employees.
Contributions to the PSP Plan are at the discretion of the
Company and include discretionary profit sharing and matching
components. For the years ended December 31, 2010, 2009 and
2008, the Company recorded expense for the contributions to the
PSP Plan in the amounts of $3.8 million, $3.6 million
and $3.1 million, respectively. This expense is included in
employee compensation and benefits on the consolidated
statements of operations.
|
|
(12)
|
Stock
Based Compensation
|
Certain employees of the Company receive stock based
compensation comprised of RSUs and stock options under the
Companys incentive compensation plan, which is designed to
retain key employees. A total of 10,000,000 shares of
CAMs common stock may be granted under the plan.
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 also use treasury shares or issue new shares
upon the exercise of stock options and upon conversion of RSUs.
RSUs entitle each recipient to receive a share of Class A
common stock and a dividend equivalent to the actual dividends
declared on CAMs Class A common stock. RSUs are
granted with no strike price and, therefore, the Company
receives no proceeds when the RSUs vest. These awards, including
accrued dividends, vest at the end of the restriction period,
generally not to exceed six years after the grant date, and are
expensed on a straight line basis over this period. During 2010
and 2009, 529,161 and 705,224 restricted stock units with an
estimated fair value of
F-23
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
$6.7 million and $5.8 million, respectively, were
awarded to employees of the Company in accordance with the
provisions of the plan. A summary of the RSU activity follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Number
|
|
|
Average Fair
|
|
|
|
Of
|
|
|
Value of RSUs
|
|
|
|
Shares
|
|
|
Granted
|
|
|
Outstanding at December 31, 2007
|
|
|
1,046,270
|
|
|
|
22.82
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
358,722
|
|
|
|
19.92
|
|
Forfeited
|
|
|
(115,707
|
)
|
|
|
22.81
|
|
Exercised upon vesting
|
|
|
(246,204
|
)
|
|
|
18.00
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
1,043,081
|
|
|
|
22.96
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
705,224
|
|
|
|
8.21
|
|
Forfeited
|
|
|
(24,951
|
)
|
|
|
17.58
|
|
Exercised upon vesting
|
|
|
(203,693
|
)
|
|
|
19.51
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
1,519,661
|
|
|
|
16.67
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
529,161
|
|
|
|
12.69
|
|
Forfeited
|
|
|
(52,370
|
)
|
|
|
14.48
|
|
Exercised upon vesting
|
|
|
(367,532
|
)
|
|
|
15.94
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2010
|
|
|
1,628,920
|
|
|
|
15.61
|
|
|
|
|
|
|
|
|
|
|
Converted during the year ended December 31:
|
|
|
|
|
|
|
|
|
2008
|
|
|
173,605
|
|
|
|
18.00
|
|
2009
|
|
|
170,896
|
|
|
|
19.51
|
|
2010
|
|
|
273,734
|
|
|
|
15.94
|
|
At December 31, 2010, the Company had 1,628,920 RSUs
outstanding with a weighted average remaining contractual life
of 3.7 years and an aggregate intrinsic value of
$22.8 million. The weighted average fair value of RSUs at
the date of grant for the years ended December 31, 2010 and
2009 was $12.69 and $8.21 per share, respectively. The aggregate
intrinsic value and the fair value of RSUs that vested and were
exercised during 2010 and 2009 was $4.4 million and
$1.6 million, respectively.
During 2010, 367,532 RSUs were exercised and, after
93,798 units were withheld for taxes, 273,734 RSUs were
converted, on a
one-for-one
basis, for shares of CAMs Class A common stock. The
total intrinsic value and the fair value of the converted shares
was $3.3 million. The total tax benefit realized in
connection with the exercise of the RSUs during 2010 was
$389,000, as the Company receives tax benefits equal to the fair
value of CAMs common stock on the exercise date, less the
amount attributable to the non-controlling interest. During
2009, 203,693 RSUs were exercised and, after 32,797 units
were withheld for taxes, 170,896 RSUs were converted, on a
one-for-one
basis, for shares of CAMs Class A common stock. The
total intrinsic value and the fair value of the converted shares
was $1.5 million. The total tax benefit realized in
connection with the exercise of the RSUs during 2009 was
$164,000. During 2008, 246,204 RSUs were exercised and, after
72,599 units were withheld for taxes, 173,605 RSUs were
converted, on a
one-for-one
basis, into shares of CAMs Class A common stock. The
total intrinsic value and the fair value of the converted shares
was $4.0 million. The total tax benefit realized in
connection with the exercise of the RSUs during 2008 was
$527,000.
Stock options entitle each recipient to purchase a share of
Class A common stock in exchange for the stated exercise
price upon vesting of each award. Under the plan, the exercise
price of each option, which has a
10-year
life, equals the market price of the Companys stock on the
date of grant. No new awards were granted during the years ended
December 31, 2010 and 2009; however, during 2008, 1,076,166
stock options with an estimated fair
F-24
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
value of $7.2 million were awarded to employees of the
Company in accordance with the provisions of the plan. The
weighted average fair value of options at the date of grant for
the year ended December 31, 2008 was $6.66 per option.
These awards vest at the end of the restriction period,
generally between four and six years after the grant date. The
fair value of the award is expensed on a straight line basis
over the vesting period.
The fair value of each option granted during 2008 is estimated
on the date of grant using the Black-Scholes option-pricing
model with the following assumptions:
|
|
|
Dividend yield
|
|
2.10% - 2.27%
|
Expected volatility
|
|
35%
|
Risk-free interest rate
|
|
3.3% -4.7%
|
Expected life
|
|
7.5 years
|
In May 2009, the stockholders of the Company approved an
amendment to the Corporations Incentive Compensation Plan
to allow for a stock option exchange program (the Program)
designed to provide eligible employees an opportunity to
exchange certain outstanding underwater stock options for a
lesser amount of new options to be granted for a lower exercise
price. The number of new stock options was determined using an
exchange ratio designed to result in a fair value of the new
stock options being approximately equal to the fair value of the
stock options that were surrendered for exchange. The Company
did not incur any incremental expense from the exchange program
since the fair value of the new awards did not exceed the fair
value of the awards surrendered. The Program expired on
July 23, 2009 whereby 264,547 eligible stock options were
tendered in exchange for 197,712 new options (net exchange of
66,835 options). The exercise price of the new stock options was
$17.80, which is 120% of the closing price of the Companys
Class A common stock as of the exchange date.
Summarized information on the Companys outstanding stock
options at December 31, 2010 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
Average
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
Range of
|
|
Number
|
|
|
Remaining
|
|
|
Average
|
|
|
Number
|
|
|
Average
|
|
Exercise
|
|
of
|
|
|
Contractual
|
|
|
Option
|
|
|
of
|
|
|
Option
|
|
Prices
|
|
Shares
|
|
|
Life
|
|
|
Price
|
|
|
Shares
|
|
|
Price
|
|
|
$17.80
|
|
|
186,178
|
|
|
|
5.9 years
|
|
|
$
|
17.80
|
|
|
|
16,228
|
|
|
$
|
17.80
|
|
$18.00-$29.11
|
|
|
1,963,089
|
|
|
|
5.7 years
|
|
|
|
22.04
|
|
|
|
675,430
|
|
|
|
20.64
|
|
$35.43
|
|
|
262,599
|
|
|
|
5.1 years
|
|
|
|
35.43
|
|
|
|
87,533
|
|
|
|
35.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,411,866
|
|
|
|
5.7 years
|
|
|
|
23.17
|
|
|
|
779,191
|
|
|
$
|
22.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The outstanding options do not have an intrinsic value as the
exercise price exceeded the market value in all cases.
F-25
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A summary of the stock option activity follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Number
|
|
|
Average
|
|
|
|
Of
|
|
|
Exercise
|
|
|
|
Shares
|
|
|
Price
|
|
|
Outstanding at December 31, 2007
|
|
|
1,813,585
|
|
|
$
|
26.35
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1,076,166
|
|
|
|
19.92
|
|
Forfeited
|
|
|
(301,425
|
)
|
|
|
23.54
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
2,588,326
|
|
|
|
24.01
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
Stock options exchanged, net
|
|
|
(66,835
|
)
|
|
|
28.60
|
|
Forfeited
|
|
|
(51,210
|
)
|
|
|
21.18
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
2,470,281
|
|
|
|
23.08
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(58,415
|
)
|
|
|
19.43
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2010
|
|
|
2,411,866
|
|
|
|
23.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31:
|
|
|
|
|
|
|
|
|
2008
|
|
|
173,655
|
|
|
|
18.00
|
|
2009
|
|
|
425,426
|
|
|
|
20.09
|
|
2010
|
|
|
779,191
|
|
|
|
22.24
|
|
During the year ended December 31, 2010, compensation
expense recorded in connection with the RSUs and stock options
was $9.1 million of which $2.0 million was credited as
additional paid-in capital. For the year ended December 31,
2009, compensation expense recorded in connection with the RSUs
and stock options was $8.6 million of which
$1.9 million was credited as additional paid-in capital.
For the year ended December 31, 2008, compensation expense
recorded in connection with the RSUs and stock options was
$7.1 million of which $1.5 million was credited as
additional paid-in capital. The amount of deferred tax asset
created was $731,000, $686,000 and $545,000 during the years
ended December 31, 2010, 2009 and 2008, respectively. At
December 31, 2010, approximately $17.5 million of
total unrecognized compensation expense related to unvested
stock option and RSU awards is expected to be recognized over a
weighted-average service period of 3.3 years.
F-26
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(13)
|
Non-Operating
Income (Loss)
|
Non-operating income (loss) was comprised of the following
components for the years ended December 31, 2010, 2009 and
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Interest income
|
|
$
|
379
|
|
|
$
|
737
|
|
|
$
|
2,334
|
|
Interest expense
|
|
|
(7,801
|
)
|
|
|
(7,801
|
)
|
|
|
(32,010
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
(7,422
|
)
|
|
|
(7,064
|
)
|
|
|
(29,676
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income (loss)
|
|
|
28,686
|
|
|
|
1,921
|
|
|
|
(295,793
|
)
|
Miscellaneous other income (loss)
|
|
|
398
|
|
|
|
233
|
|
|
|
(1,088
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income (loss)
|
|
|
29,084
|
|
|
|
2,154
|
|
|
|
(296,881
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguishment costs
|
|
|
|
|
|
|
|
|
|
|
(37,498
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (loss)
|
|
$
|
21,662
|
|
|
$
|
(4,910
|
)
|
|
$
|
(364,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The income tax provision (benefit) for the years ended
December 31, 2010, 2009 and 2008 consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
1,946
|
|
|
$
|
773
|
|
|
$
|
(1,090
|
)
|
State:
|
|
|
|
|
|
|
|
|
|
|
|
|
CAM portion
|
|
|
314
|
|
|
|
189
|
|
|
|
(355
|
)
|
Calamos Interests portion
|
|
|
517
|
|
|
|
331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current income taxes
|
|
|
2,777
|
|
|
|
1,293
|
|
|
|
(1,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
8,861
|
|
|
|
6,059
|
|
|
|
(8,444
|
)
|
State
|
|
|
737
|
|
|
|
527
|
|
|
|
6,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred income taxes
|
|
|
9,598
|
|
|
|
6,586
|
|
|
|
(2,342
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax provision (benefit)
|
|
$
|
12,375
|
|
|
$
|
7,879
|
|
|
$
|
(3,787
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings is subject to certain income-based state taxes;
therefore, income tax provision (benefit) reflects not only the
portion attributed to CAM stockholders but also a portion of
income tax provision (benefit) attributable to non-controlling
interests.
In 2008, developments in the Illinois tax statutes resulted in
modifications to the Companys state tax apportionment
methodology that lowered the Companys statutory income tax
rate from 40 percent to 37 percent. In the second
quarter of 2008, the Company recorded a one-time, non-cash
income tax expense of $6.8 million to revalue its net
deferred tax assets to reflect the new statutory income tax rate.
The Company files income tax returns in federal, states and
foreign tax jurisdictions. The Company is no longer subject to
U.S. federal, state and local examinations by tax
authorities for years before 2004. The Internal Revenue Service
(IRS) completed its examination of the Companys
U.S. income tax returns for years 2004, 2005 and 2006 in
the third quarter of 2008. The IRS proposed adjustments that
increased Holdings taxable income by $1.3 million
(plus additional amounts asserted by the IRS as interest and
penalties), approximately 23% of which
F-27
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
were attributed to CAM. Holdings proposed penalties are
currently under appeal. The proposed IRS adjustments
attributable to CAM were agreed upon and recorded as a current
tax expense in 2009.
The IRS completed its examination of the Companys
U.S. income tax returns for 2008 in the third quarter of
2010. The IRS proposed adjustments that increased Holdings
taxable income by $0.6 million (plus interest asserted by
the IRS), approximately 21% of which were attributed to CAM. The
proposed IRS adjustments attributable to CAM were agreed upon
and recorded as a current tax expense in 2010.
The following table reconciles the statutory federal income tax
rate to the effective income tax rate for the years ended
December 31, 2010, 2009 and 2008, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Statutory U.S. federal income tax rate
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
|
|
35.0
|
%
|
Effect of higher tax rates in carryback period
|
|
|
|
|
|
|
|
|
|
|
0.6
|
%
|
State income taxes, net of federal tax benefits
|
|
|
1.9
|
%
|
|
|
2.0
|
%
|
|
|
2.0
|
%
|
Other non-deductible items
|
|
|
0.3
|
%
|
|
|
0.4
|
%
|
|
|
(0.3
|
)%
|
Holdings state income taxes
|
|
|
2.0
|
%
|
|
|
1.5
|
%
|
|
|
|
|
Impact on net deferred tax assets from change in statutory
income tax rate
|
|
|
0.8
|
%
|
|
|
0.9
|
%
|
|
|
(23.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax rate
|
|
|
39.0
|
%
|
|
|
38.8
|
%
|
|
|
13.4
|
%
|
Calamos Interests state income taxes
|
|
|
(1.7
|
)%
|
|
|
(1.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAM effective income tax rate
|
|
|
37.3
|
%
|
|
|
37.8
|
%
|
|
|
13.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes reflect the expected future tax
consequences of temporary differences between carrying amounts
and tax bases of the Companys assets and liabilities. The
significant components of deferred income taxes at
December 31, 2010 and 2009 are as follows:
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
2010
|
|
|
2009
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
$
|
66,116
|
|
|
$
|
74,030
|
|
Capital loss carryforward
|
|
|
11,058
|
|
|
|
12,202
|
|
Other
|
|
|
3,412
|
|
|
|
3,992
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
80,586
|
|
|
|
90,224
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Unrealized net holding gains on investments of
available-for-sale
securities
|
|
|
3,571
|
|
|
|
2,709
|
|
Deferred sales commission
|
|
|
706
|
|
|
|
916
|
|
Other
|
|
|
592
|
|
|
|
344
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
4,869
|
|
|
|
3,969
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
75,717
|
|
|
$
|
86,255
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets and liabilities are reflected on the
Companys consolidated statements of financial condition as
net deferred tax assets. The current and non-current portions of
the net deferred tax asset were $8.8 million and
$67.0 million, respectively, at December 31, 2010 and
$9.6 million and $76.7 million at December 31,
2009.
In November 2004, the Company recorded a net deferred income tax
asset of $119.9 million as a result of the purchase of
20,000,000 membership units from CFP, whereby the Company made
an election under Section 754 of the Internal Revenue Code
to mark to current market value all assets that it purchased.
However, the assets acquired
F-28
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
in connection with the purchase of the 3,000,000 membership
units directly from Holdings do not qualify for
mark-to-market
treatment under Section 754. Most of the assets receiving
the
stepped-up
basis for tax purposes are in the form of intangible assets,
such as management contracts, distribution contracts and
intellectual property. These intangible assets will generally be
amortized over 15 years, and this amortization will create
a future tax benefit of approximately $8.0 million per
year, expiring in fiscal year 2019.
As of December 31, 2010, the capital loss carryforward was
$29.9 million, of which $24.1 million will expire in
2013 and $5.8 million will expire in 2014, if not used
before the expiration dates. The Company believes that all
deferred income tax assets will be realized; therefore, no
valuation allowances have been established.
At December 31, 2010, the Company had no material
unrecognized tax benefits and it does not anticipate any
unrecognized tax benefits arising in the next 12 months
that would result in a material change to its financial
position. A reconciliation is not provided, as the beginning and
ending amounts of unrecognized benefits are zero with no interim
additions, reductions or settlements.
|
|
(15)
|
Earnings
(Loss) Per Share
|
The following table reflects the calculation of basic and
diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Earnings (loss) per share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) available to common shareholders
|
|
|
19,928
|
|
|
|
12,424
|
|
|
$
|
(24,521
|
)
|
Weighted average shares outstanding
|
|
|
19,885
|
|
|
|
19,626
|
|
|
|
19,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share basic
|
|
$
|
1.00
|
|
|
$
|
0.63
|
|
|
$
|
(1.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
|
|
|
|
|
|
$
|
(204,958
|
)
|
Non-controlling interest in partnership investments
|
|
|
|
|
|
|
|
|
|
|
72,156
|
|
Less: Impact of revaluation of net deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
32,888
|
|
Less: Impact of income taxes
|
|
|
|
|
|
|
|
|
|
|
(49,535
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) available to common shareholders
|
|
$
|
19,928
|
|
|
$
|
12,424
|
|
|
$
|
(116,155
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
19,885
|
|
|
|
19,626
|
|
|
|
19,753
|
|
Exchange of Calamos Interests ownership for common stock
|
|
|
|
|
|
|
|
|
|
|
77,444
|
|
Dilutive impact of restricted stock units
|
|
|
303
|
|
|
|
328
|
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
20,188
|
|
|
|
19,954
|
|
|
|
97,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share diluted
|
|
$
|
0.99
|
|
|
$
|
0.62
|
|
|
$
|
(1.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding for 2010, 2009 and 2008 are
calculated (a) assuming that Calamos Interests exchanged
all of their ownership interest in Holdings and their CAM
Class B common stock for shares of CAMs Class A
common stock (the Exchange) and (b) including the effect of
outstanding dilutive equity incentive compensation awards. The
number of diluted shares outstanding for 2008 presented above
reflects the economic impact that (a) and (b) would
have on the Companys diluted shares outstanding. Because
the Company generated a loss in 2008, the economic impact of the
Calamos Interests Exchange and the effect of stock based
compensation would have been anti-dilutive; therefore, the
number of shares used in calculating diluted per share results
was 19.8 million, in effect the weighted average basic
shares outstanding. For 2010 and 2009, the impact of the
Exchange was anti-dilutive and, therefore, is excluded from the
calculation of diluted earnings (loss) per share.
The Company uses the treasury stock method to reflect the
dilutive effect of unvested RSUs and unexercised stock options
on diluted earnings per share. Under the treasury stock method,
if the average market price of common
F-29
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
stock increases above the options exercise price, the
proceeds that would be assumed to be realized from the exercise
of the option would be used to acquire outstanding shares of
common stock. However, the awards may be anti-dilutive even when
the market price of the underlying stock exceeds the
options exercise price. This result is possible because
compensation cost attributed to future services but not yet
recognized is included as a component of the assumed proceeds
upon exercise. The dilutive effect of such options and RSUs
would increase the weighted average number of shares used in the
calculation of diluted earnings per share.
Effective March 1, 2009, the Company amended its
certificate of incorporation requiring that the Exchange be
based on a fair value approach (details of the amendment are set
forth in the Companys Schedule 14C filed with the
Securities and Exchange Commission on January 12, 2009).
The amendment results in the same or fewer shares of
Class A common stock being issued at the time of the
Exchange. As a result, the effects of the Exchange are
anti-dilutive and are therefore excluded from the calculation of
diluted earnings per share for the years ended December 31,
2010 and 2009.
The shares issued upon Exchange as presented below are estimated
solely on the formula as described in the Schedule 14C that
does not necessarily reflect all inputs used in a fair
valuation. It is critical to note that this formula does not
incorporate certain economic factors and as such, in the event
of an actual Exchange, the majority of the Companys
independent directors may determine the fair market value of
CAMs net assets and its ownership in Holdings. For
example, discounts and\or premiums for control and marketability
as well as a different discount rate for future cash flows may
be applied. Therefore, the directors valuation may result
in the actual number of shares being materially different from
the shares presented below. Further, based upon currently
available information, we believe it is extremely remote that
any Exchange would transpire without a fair market valuation of
CAMs net assets.
The following table shows the number of shares which were
excluded from the computation of diluted earnings per share as
they were anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Exchange of Calamos Interests ownership in Holdings for
shares of Class A common stock
|
|
|
47,527,952
|
|
|
|
47,923,822
|
|
|
|
77,444,069
|
|
Restricted stock units
|
|
|
49,418
|
|
|
|
897,064
|
|
|
|
755,876
|
|
Stock options
|
|
|
2,411,866
|
|
|
|
2,472,381
|
|
|
|
2,588,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
49,989,236
|
|
|
|
51,293,267
|
|
|
|
80,788,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The maximum number of shares of Class A common stock that
could be issued to the Calamos Interests upon exchange is
71,932,296 at December 31, 2010.
|
|
(16)
|
Commitments
and Contingencies
|
In the normal course of business, the Company enters into
agreements that include indemnities in favor of third parties,
such as engagement letters with advisors and consultants,
distribution agreements and service agreements. In accordance
with the Companys by-laws, the Company has also agreed to
indemnify its directors, officers, employees and agents in
certain cases. Certain agreements do not contain any limits on
the Companys liability and, therefore, it is not possible
to estimate the Companys potential liability under these
indemnities. In certain cases, the Company may have recourse
against third parties with respect to these indemnities.
Further, the Company maintains insurance policies that may
provide coverage against certain claims under these indemnities.
The Company is from time to time involved in litigation relating
to claims arising in the normal course of business. Management
believes that all current claims made are without merit and the
Company intends to defend against them vigorously. Management
believes that the ultimate resolution of such claims will not
materially affect the Companys business, financial
position or results of operations and that the likelihood of a
material adverse impact is remote.
The Company leases office space and computer equipment under
long-term operating leases expiring at various dates through
fiscal year 2025. Lease expenses for years ended
December 31, 2010, 2009 and 2008 were
F-30
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
$4.9 million in each respective year. At December 31,
2010, the Companys aggregate future minimum payments for
operating leases having initial or non-cancelable terms greater
than one year were payable as follows:
|
|
|
|
|
|
|
Minimum
|
|
(in thousands)
|
|
Payments
|
|
|
Year ended December 31:
|
|
|
|
|
2011
|
|
$
|
4,840
|
|
2012
|
|
|
4,848
|
|
2013
|
|
|
4,418
|
|
2014
|
|
|
4,538
|
|
2015
|
|
|
4,222
|
|
Thereafter
|
|
|
44,046
|
|
|
|
|
|
|
Total minimum lease payments
|
|
$
|
66,912
|
|
|
|
|
|
|
|
|
(17)
|
Regulatory
and Net Capital Requirements
|
As a broker-dealer, CFS is subject to the Securities and
Exchange Commissions Uniform Net Capital Rule
(Rule 15c3-1),
which requires the maintenance of minimum net capital, as
defined, and requires that the ratio of aggregate indebtedness
to net capital (net capital ratio), as defined, shall not exceed
15 to 1. As of December 31, 2010 and 2009, the net capital,
the excess of the required net capital and the net capital ratio
were as follows:
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
2010
|
|
|
2009
|
|
|
Net capital
|
|
$
|
9,698
|
|
|
$
|
37,926
|
|
Excess of required net capital
|
|
$
|
8,527
|
|
|
$
|
36,823
|
|
Net capital ratio
|
|
|
1.81 : 1.0
|
|
|
|
0.44 : 1.0
|
|
CFS is not required to compute the Reserve Requirements under
Exhibit A of
Rule 15c3-3(k)(2)(i)
or to include Information Relating to the Possession or Control
Requirements under
Rule 15c3-3,
because the Registrant operates primarily with the purpose of
distributing mutual fund shares and does not hold customer funds
or safekeep customer securities.
(18)Concentration
Risk
For the years ended December 31, 2010, 2009 and 2008, the
percentage of revenues derived from services provided to two
Company-sponsored mutual funds, the Calamos Growth Fund and the
Calamos Growth and Income Fund, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Calamos Growth Fund
|
|
|
31
|
%
|
|
|
34
|
%
|
|
|
40
|
%
|
Calamos Growth and Income Fund
|
|
|
14
|
%
|
|
|
15
|
%
|
|
|
16
|
%
|
F-31
CALAMOS
ASSET MANAGEMENT, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(19)
|
Quarterly
Financial Information (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the Quarter Ended
|
|
(in thousands, except
|
|
2009
|
|
|
2010
|
|
share data)
|
|
March 31
|
|
|
June 30
|
|
|
Sept. 30
|
|
|
Dec. 31
|
|
|
March 31
|
|
|
June 30
|
|
|
Sept. 30
|
|
|
Dec. 31
|
|
|
Assets under management (in millions)
|
|
$
|
23,469
|
|
|
$
|
27,032
|
|
|
$
|
30,543
|
|
|
$
|
32,714
|
|
|
$
|
32,963
|
|
|
$
|
29,913
|
|
|
$
|
32,564
|
|
|
$
|
35,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
59,569
|
|
|
|
67,079
|
|
|
|
73,798
|
|
|
|
81,292
|
|
|
|
81,130
|
|
|
|
80,466
|
|
|
|
78,419
|
|
|
|
86,024
|
|
Total operating expenses
|
|
|
46,379
|
|
|
|
45,695
|
|
|
|
46,424
|
|
|
|
45,182
|
|
|
|
50,612
|
|
|
|
50,811
|
|
|
|
47,808
|
|
|
|
50,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
13,190
|
|
|
|
21,384
|
|
|
|
27,374
|
|
|
|
36,110
|
|
|
|
30,518
|
|
|
|
29,655
|
|
|
|
30,611
|
|
|
|
35,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3,352
|
|
|
$
|
1,787
|
|
|
$
|
2,590
|
|
|
$
|
4,695
|
|
|
$
|
4,811
|
|
|
$
|
4,670
|
|
|
$
|
4,693
|
|
|
$
|
5,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.17
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.23
|
|
|
$
|
0.24
|
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding
|
|
|
19,751,288
|
|
|
|
19,990,070
|
|
|
|
20,090,555
|
|
|
|
20,080,566
|
|
|
|
20,122,940
|
|
|
|
20,201,608
|
|
|
|
20,143,747
|
|
|
|
20,428,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20)
|
Recently
Issued Accounting Pronouncements
|
Accounting
Standards Adopted During Fiscal Year 2010
In June 2009, the Financial Accounting Standards Board (FASB)
issued a new statement which modifies the analysis required to
determine whether a companys variable interest(s) give it
a controlling financial interest in a variable interest entity
(VIE). This analysis identifies the primary beneficiary of a VIE
as the enterprise that has both the power to direct the
activities of a VIE and the obligation to absorb significant
losses or the right to receive significant benefits of the VIE.
This statement was subsequently codified in December 2009 under
Accounting Standards Update (ASU)
No. 2009-17
and is effective for fiscal years beginning after
November 15, 2009. In February 2010, the FASB issued ASU
No. 2010-10,
Consolidation, Amendments for Certain Investment Funds, that
defers the implementation of ASU
2009-17 for
a reporting entitys interest in an entity (1) that
has all the attributes of an investment company or (2) for
which it is industry practice to apply measurement principles
for financial reporting purposes that are consistent with those
followed by investment companies. The Company analyzed the
entities in which it holds an investment interest and determined
that the entities meet the criteria for deferral under ASU
No. 2010-10.
As such, the Company has applied ASU
No. 2010-10
during 2010, which had no impact on the Companys financial
statements.
In February 2010, the FASB issued ASU
No. 2010-09,
Subsequent Events, Amendments to Certain Recognition and
Disclosure Requirements, which allows Securities and Exchange
Commission (SEC) filers to evaluate events that occur after the
balance sheet date through the date the financial statements are
issued, however, SEC filers are no longer required to disclose
the date through which subsequent events have been evaluated.
The update was effective upon issuance and, accordingly, the
Company adopted the update during the first quarter 2010.
In February 2010, the FASB issued ASU
No. 2010-08,
Technical Corrections to Various Topics, which eliminate the
various inconsistencies and outdated provisions within Generally
Accepted Accounting Principles. The update is primarily
effective for the first reporting period (including interim
periods) beginning after the issuance of the update. The Company
adopted the update, which had no impact on the Companys
financial statements.
In January 2010, the FASB issued ASU
No. 2010-06,
Fair Value Measurements and Disclosures, which requires
additional disclosures related to (1) transfers in and out
of Levels 1 and 2 and the reasons for the transfers,
(2) the valuation techniques and inputs used, (3) the
different classes of assets and liabilities measured at fair
value and (4) the Level 3 reconciliation, specifically
separately presenting purchases, sales, issuances and
settlements. The update is effective for interim and annual
reporting periods beginning after December 15, 2009, except
for the disclosures about purchases, sales, issuances, and
settlements in the roll forward of activity in Level 3 fair
value measurements. Those disclosures are effective for fiscal
years beginning after December 15, 2010. Early adoption is
permitted. The Company adopted the update during the first
quarter 2010, which had no impact on the Companys
disclosures within the financial statements.
F-32
|
|
Item 9.
|
Changes
in and Disagreements With Accountants on Accounting and
Financial Disclosure
|
None
|
|
Item 9A.
|
Controls
and Procedures
|
As of the end of the period covered by this Annual Report on
Form 10-K,
an evaluation was carried out under the supervision and with the
participation of our management, including our chief executive
officer and chief financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures
(as defined in
Rule 13a-15(e)
and
15d-15(e)
under the Securities Exchange Act of 1934) (the Exchange Act).
Based upon that evaluation, the chief executive officer and
chief accounting officer concluded that the design and operation
of these disclosure controls and procedures were effective to
ensure that information required to be disclosed by the Company
in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange
Commissions rules and forms.
No significant changes were made in our internal control over
financial reporting during the Companys fourth quarter
that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over
financial reporting.
Managements Report on Internal Control Over Financial
Reporting and McGladrey & Pullen, LLPs Report of
Independent Registered Public Accounting Firm are included in
Item 8 of Part II, Financial Statements and
Supplementary Data, of this Annual Report on
Form 10-K.
|
|
Item 9B.
|
Other
Information
|
None
PART III
|
|
Item 10.
|
Directors
and Executive Officers of the Registrant
|
|
|
|
Executive Management
|
|
Directors
|
|
|
|
|
John P. Calamos, Sr.
Chairman, Chief Executive Officer
and Co-Chief Investment Officer
|
|
John P. Calamos, Sr.
Chairman, Chief Executive Officer
and Co-Chief Investment Officer
|
|
|
|
Nick P. Calamos
President of Investments
and Co-Chief Investment Officer
|
|
Nick P. Calamos
President of Investments
and Co-Chief Investment Officer
|
|
|
|
James J. Boyne
President of Distribution and
Operations, Secretary
|
|
G. Bradford Bulkley
Founder
Bulkley Capital, L.P.
|
|
|
|
Gary J. Felsten
Senior Vice President
and Director of Human Resources
|
|
Mitchell S. Feiger
President and Chief Executive Officer
MB Financial, Inc.
|
|
|
|
Cristina Wasiak
Senior Vice President
and Chief Financial Officer
|
|
Richard W. Gilbert
President
Gilbert Communications, Inc.
|
|
|
|
Randall T. Zipfel
Senior Vice President
and Chief Operating Officer
Investments and IT
|
|
Arthur L. Knight
Private Investor and Business Consultant
Former President and Chief Executive
Officer
Morgan Products, Ltd.
|
II-1
Additional information regarding the Directors and Executive
Officers of the Company and compliance with Section 16(a)
of the Securities Exchange Act of 1934 is incorporated herein by
reference from our definitive proxy statement for our 2011
Annual Meeting of Stockholders (the Proxy Statement).
The company has adopted a Code of Business Conduct and Ethics
(the Code of Conduct) that applies to our principal executive
officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions.
The company posts its periodic filings as well as other
important communications and documents on the Investor Relations
section of our website at
(http://investors.calamos.com).
We encourage shareholders and investors to visit our website and
review such filings, communications and documents. The Code of
Conduct is posted on our website and is also available in print
free of charge to any shareholder who requests a copy.
Interested parties may address a written request for a printed
copy of the Code of Conduct to: Secretary, Calamos Asset
Management, Inc., 2020 Calamos Court, Naperville, IL 60563. We
intend to satisfy the disclosure requirement regarding any
amendment to, or a waiver of, a provision of the Code of Conduct
by posting such information on our website.
|
|
Item 11.
|
Executive
Compensation
|
Information required for this Item is incorporated herein by
reference to the registrants proxy statement for its
annual meeting of stockholders on or about June 3, 2011.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
Information required for this Item is incorporated herein by
reference to the registrants proxy statement for its
annual meeting of stockholders on or about June 3, 2011.
|
|
Item 13.
|
Certain
Relationships and Related Transactions
|
Information required for this Item is incorporated herein by
reference to the registrants proxy statement for its
annual meeting of stockholders on or about June 3, 2011.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
Information required for this Item is incorporated herein by
reference to the registrants proxy statement for its
annual meeting of stockholders on or about June 3, 2011.
II-2
PART IV
|
|
Item 15.
|
Exhibits and
Financial Statement Schedules
|
(a) The following documents are filed as part of this
report.
1. Financial Statements: See Item 8 of Part II.
2. Financial Statement Schedules: None.
3. List of Exhibits:
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
3(i)
|
|
|
Second Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3(i) to
the Registrants Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 13, 2009).
|
|
3(ii)
|
|
|
Second Amended and Restated By-laws of the Registrant
(incorporated by reference to Exhibit 3(ii) to the
Registrants Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 13, 2009).
|
|
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
Registrants 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 Registrants Quarterly
Report on
Form 10-Q
filed with the Securities and Exchange Commission on
December 3, 2004).
|
|
4.3
|
|
|
Note Purchase Agreement, dated as of July 13, 2007, by and
among Calamos Holdings LLC and various institutional investors
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
July 18, 2007).
|
|
4.4
|
|
|
Waiver and First Amendment to 2007 Note Purchase Agreement,
dated as of December 22, 2008, between Calamos Holdings LLC
and various institutional investors (incorporated by reference
to Exhibit 4.5 to the Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
December 29, 2008).
|
|
4.5
|
|
|
Note Purchase Agreement, dated as of April 29, 2004,
between Calamos Holdings LLC and various institutional investors
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
December 29, 2008).
|
|
4.6
|
|
|
Amendment No. 1 to Note Purchase Agreement dated as of
October 15, 2004 (incorporated by reference to
Exhibit 4.2 to the Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
December 29, 2008).
|
|
4.7
|
|
|
Waiver and Second Amendment to 2004 Note Purchase Agreement,
dated as of December 22, 2008, between Calamos Holdings LLC
and various institutional investors (incorporated by reference
to Exhibit 4.4 to the Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
December 29, 2008).
|
|
10.1
|
|
|
Employment Agreement between the Registrant and John P. Calamos,
Sr. (incorporated by reference to Exhibit 10.1 to the
Registrants Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
December 3, 2004).
|
|
10.2
|
|
|
Employment Agreement between the Registrant and Nick P. Calamos
(incorporated by reference to Exhibit 10.2 to the
Registrants Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
December 3, 2004).
|
|
10.3
|
|
|
Amendment Number 1 to Employment Agreement between the
Registrant and Nick P. Calamos (incorporated by reference to
Exhibit 10.2 to the Registrants Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
August 9, 2007).
|
II-3
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10.4
|
|
|
Omnibus Amendment Relating to Code Section 409A
(incorporated by reference to Exhibit 10.5 to the
Registrants Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 13, 2009).
|
|
10.5
|
|
|
Calamos Asset Management, Inc. Incentive Compensation Plan as
amended effective May 22, 2009 (incorporated by reference
to Exhibit 10.1 to the Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
May 27, 2009).
|
|
10.6
|
|
|
Form of Equity Award Statement (incorporated by reference to
Exhibit 10.7 to the Registrants Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 13, 2009).
|
|
10.7
|
|
|
Form of Non-Employee Equity Award Statement (incorporated by
reference to Exhibit 10.7 to the Registrants Annual
Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 13, 2009).
|
|
10.8
|
|
|
Contribution Agreement between the Registrant and Calamos
Holdings LLC (incorporated by reference to Exhibit 10.9 to
the Registrants Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
December 3, 2004).
|
|
10.9
|
|
|
Tax Indemnity Agreement among the Registrant, Calamos Family
Partners, Inc. and Calamos Holdings LLC (incorporated by
reference to Exhibit 10.10 to the Registrants
Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
December 3, 2004).
|
|
10.10
|
|
|
Fourth Amended and Restated Limited Liability Company Agreement
of Calamos Holdings LLC by and among Calamos Family Partners,
Inc., John P. Calamos, Sr. and the Registrant (incorporated by
reference to Exhibit 10.11 to the Registrants Annual
Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 9, 2010).
|
|
10.11
|
|
|
Management Services and Resources Agreement by and among the
Registrant, Calamos Family Partners, Inc. and Calamos Property
Holdings LLC (incorporated by reference to Exhibit 10.1 to
the Registrants Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
August 9, 2007).
|
|
10.12
|
|
|
Lease Agreement between 2020 Calamos Court LLC and Calamos
Holdings LLC (formerly with Calamos Holdings, Inc. (incorporated
by reference to Exhibit 10 to the Registrants
Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
November 10, 2005).
|
|
10.13
|
|
|
Lease Agreement between CityGate Centre I LLC and Calamos
Holdings LLC (incorporated by reference to Exhibit 99.1 to
the Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
November 20, 2007).
|
|
21.1
|
|
|
Subsidiaries of the Company.
|
|
23.1
|
|
|
Consent of Independent Registered Public Accounting Firm,
McGladrey & Pullen, LLP.
|
|
23.2
|
|
|
Consent of Independent Registered Public Accounting Firm, KPMG
LLP.
|
|
31.1
|
|
|
Certification of Principal Executive Officer pursuant to
Rule 13a-14(a).
|
|
31.2
|
|
|
Certification of Principal Financial Officer pursuant to
Rule 13a-14(a).
|
|
32.1
|
|
|
Certification of Principal Executive Officer pursuant to
18 U.S.C. Section 1350.
|
|
32.2
|
|
|
Certification of Principal Financial Officer pursuant to
18 U.S.C. Section 1350.
|
Upon written request by a stockholder to our Secretary at 2020
Calamos Court, Naperville, Illinois 60563, any exhibit shall be
available at a reasonable charge (which will be limited to our
reasonable expenses in furnishing such exhibits).
II-4
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on March 4, 2011.
CALAMOS ASSET MANAGEMENT, INC.
Name: Cristina Wasiak
|
|
|
|
Title:
|
Senior Vice President,
|
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons in
the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
P. Calamos, Sr.
John
P. Calamos, Sr.
|
|
Chairman of the Board, Chief Executive Officer and Co-Chief
Investment Officer (Principal Executive Officer)
|
|
March 4, 2011
|
|
|
|
|
|
/s/ Cristina
Wasiak
Cristina
Wasiak
|
|
Senior Vice President, Chief Financial Officer (Principal
Financial Officer)
|
|
March 4, 2011
|
|
|
|
|
|
/s/ Nick
P. Calamos
Nick
P. Calamos
|
|
President of Investments and Co-Chief Investment Officer,
Director
|
|
March 4, 2011
|
|
|
|
|
|
/s/ G.
Bradford Bulkley
G.
Bradford Bulkley
|
|
Director
|
|
March 4, 2011
|
|
|
|
|
|
/s/ Mitchell
S. Feiger
Mitchell
S. Feiger
|
|
Director
|
|
March 4, 2011
|
|
|
|
|
|
/s/ Richard
W. Gilbert
Richard
W. Gilbert
|
|
Director
|
|
March 4, 2011
|
|
|
|
|
|
/s/ Arthur
L. Knight
Arthur
L. Knight
|
|
Director
|
|
March 4, 2011
|
II-5