e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

June 30, 2006

- OR -


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 000-51003

CALAMOS ASSET MANAGEMENT, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)		32-0122554 (I.R.S. Employer Identification No.)


2020 Calamos Court, Naperville, Illinois (Address of Principal Executive Offices)		60563 (Zip Code)

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

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

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


Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o

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

At August 1, 2006, the company had 23,161,898 shares of Class A common stock and 100 shares of Class B common stock outstanding.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II — OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits
	SIGNATURES

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CALAMOS ASSET MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data)


	June 30,		December 31,
	2006		2005
	(unaudited)
ASSETS:
Current assets
Cash and cash equivalents	$	254,661	$	210,469
Receivables:
Affiliates and affiliated funds		25,486		24,670
Customers		10,717		9,806
Investment securities		131,065		128,265
Investment in partnerships		89,089		79,956
Prepaid expenses		2,715		2,342
Deferred tax asset, net		7,808		7,846
Other		95		195

Total current assets		521,636		463,549

Non-current assets
Deferred tax asset, net		96,533		101,280
Deferred sales commissions		59,805		58,390
Property and equipment, net of accumulated depreciation ($9,637 at 6/30/06 and $6,357 at 12/31/05)		43,078		40,547
Other non-current assets		1,672		1,711

Total non-current assets		201,088		201,928

Total assets		722,724		665,477


LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities
Accounts payable:
Brokers		20,588		18,485
Affiliates and affiliated funds		231		93
Accrued compensation and benefits		12,565		19,131
Accrued expenses and other current liabilities		6,865		11,025

Total current liabilities		40,249		48,734

Long-term liabilities
Long-term debt		150,000		150,000
Other long-term liabilities		7,049		6,726

Total long-term liabilities		157,049		156,726

Total liabilities		197,298		205,460

Minority interest in investment in partnerships		50,545		44,453
Minority interest in Calamos Holdings LLC		274,710		229,430
Stockholders’ equity:
Class A Common Stock, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 23,161,898 shares at 6/30/06 and 23,000,000 shares at 12/31/05		232		230
Class B Common Stock, $0.01 par value. Authorized 1,000 shares; issued and outstanding 100 shares		0		0
Additional paid-in capital		157,105		156,274
Retained earnings		39,583		26,698
Accumulated other comprehensive income		3,251		2,932

Total stockholders’ equity		200,171		186,134

Total liabilities, minority interest and stockholders’ equity	$	722,724	$	665,477

See accompanying notes to consolidated financial statements.

-2-

CALAMOS ASSET MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended June 30, 2006 and 2005
(in thousands, except share data)
(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Revenues:
Investment management fees	$	84,328		$	67,430		$	165,807		$	133,270
Distribution and underwriting fees		38,997			30,764			77,137			61,389
Other		1,028			878			2,027			1,734

Total revenues		124,353			99,072			244,971			196,393

Expenses:
Employee compensation and benefits		18,287			14,860			37,293			29,781
Distribution and underwriting expense		25,864			18,693			50,829			36,364
Amortization of deferred sales commissions		8,123			8,028			15,863			15,904
Marketing and sales promotion		4,493			3,068			7,601			6,536
General and administrative		7,639			5,676			14,813			10,072

Total expenses		64,406			50,325			126,399			98,657

Operating income		59,947			48,747			118,572			97,736

Other income (expense):
Net interest income (expense)		820			(1,116	)		1,182			(2,287	)
Investment and other income		(7,927	)		6,198			4,004			2,383
Minority interest in partnership investments		5,171			(3,178	)		(1,091	)		(1,028	)

Total other income (expense), net		(1,936	)		1,904			4,095			(932	)

Income before minority interest in Calamos Holdings LLC and income taxes		58,011			50,651			122,667			96,804
Minority interest in Calamos Holdings LLC		44,486			38,980			94,109			74,515

Income before income taxes		13,525			11,671			28,558			22,289
Income taxes		5,424			4,669			11,452			8,916

Net income	$	8,101		$	7,002		$	17,106		$	13,373


Earnings per share
Basic	$	0.35		$	0.30		$	0.74		$	0.58

Diluted	$	0.34		$	0.30		$	0.73		$	0.58

Weighted average shares outstanding
Basic		23,161,998			23,000,100			23,161,998			23,000,100

Diluted		100,845,107			100,557,047			100,823,214			100,577,064

Cash dividends per share	$	0.09		$	0.07		$	0.18		$	0.14

See accompanying notes to consolidated financial statements.

-3-

CALAMOS ASSET MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Six Months Ended June 30, 2006
(in thousands, except share data)
(unaudited)


			Additional					Accumulated Other
	Common		Paid-in		Retained			Comprehensive
	Stock		Capital		Earnings			Income		Total
Balance at December 31, 2005	$	230	$	156,274	$	26,698		$	2,932	$	186,134

Net income		—		—		17,106			—		17,106
Changes in unrealized gains on available-for-sale securities, net of minority interest and income taxes		—		—		—			305		305

Total comprehensive income											17,411

Issuance of common stock under stock incentive plans (161,898 Class A common shares)		2		113		—			14		129
Compensation expense recognized under stock incentive plans, net of minority interest		—		718		—			—		718
Dividend equivalent accrued under stock incentive plans, net of minority interest		—		—		(52	)		—		(52	)
Dividends declared		—		—		(4,169	)		—		(4,169	)

Balance at June 30, 2006	$	232	$	157,105	$	39,583		$	3,251	$	200,171

See accompanying notes to consolidated financial statements.

-4-

CALAMOS ASSET MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2006 and 2005
(in thousands)
(unaudited)


	2006			2005
Cash and cash equivalents at beginning of year	$	210,469		$	149,768


Cash flows from operating activities:
Net income		17,106			13,373
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest in partnership investments		1,091			1,028
Minority interest in Calamos Holdings LLC		94,109			74,515
Amortization of deferred sales commissions		15,863			15,904
Other depreciation and amortization		3,424			1,536
Unrealized depreciation (appreciation) on investment securities		56			(1,645	)
Unrealized depreciation (appreciation) on partnership investments		(2,021	)		94
Management fee received in partnership units		(70	)		(77	)
Deferred taxes		4,556			3,704
Stock-based compensation		3,107			2,093
Employee taxes paid on vesting under stock incentive plans		(2,255	)		—
(Increase) decrease in assets:
Accounts receivable:
Affiliates and affiliated mutual funds		(816	)		165
Customers		(911	)		(1,344	)
Deferred sales commissions		(17,278	)		(16,740	)
Other assets		(764	)		25
Increase (decrease) in liabilities:
Accounts payable		2,241			1,674
Accrued compensation and benefits		(6,566	)		98
Other liabilities and accrued expenses		(3,063	)		2,208

Net cash provided by operating activities		107,809			96,611


Cash flows used in investing activities:
Net additions to property and equipment		(5,812	)		(31,566	)
Net purchases of securities and partnership investments		(2,770	)		(26,610	)

Net cash used in investing activities		(8,582	)		(58,176	)


Cash flows used in financing activities:
Deferred tax benefit on vesting under stock incentive plans		(289	)		—
Cash distributions paid to minority shareholders		(50,577	)		(41,785	)
Cash dividends paid to common shareholders		(4,169	)		(3,220	)

Net cash used in financing activities		(55,035	)		(45,005	)

Net increase (decrease) in cash		44,192			(6,570	)

Cash and cash equivalents at end of period	$	254,661		$	143,198

See accompanying notes to consolidated financial statements.

-5-

CALAMOS ASSET MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Organization and Description of Business

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

(2) Basis of Presentation

The consolidated financial statements as of June 30, 2006 and for the three and six months ended June 30, 2006 and 2005 have not been audited by the Company’s independent registered public accounting firm. In the opinion of management, such information contains all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial condition and results of operations. The results for the interim periods ended June 30 are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts for the prior year have been reclassified to conform to the current year’s presentation.

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

Calamos Family Partners, Inc.’s (CFP) and John P. Calamos, Sr.’s combined 76.9% and 77% interest in Holdings at June 30, 2006 and 2005, respectively, is represented as minority interest in the Company’s financial statements. Income before minority interest in Calamos Holdings LLC and income taxes, which was $58.0 million and $122.7 million for the three and six months ended June 30, 2006, respectively, included approximately $144,000 and $250,700 of investment income earned on cash and cash equivalents held solely by CAM during the same periods. This portion of CAM’s investment income is not reduced by any minority interests; therefore, the resulting minority interest is less than 76.9% for the three and six months ended June 30, 2006.

(3) Earnings Per Share

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


	Three Months Ended				Six Months Ended
(in thousands, except per share data)	June 30,				June 30,
	2006		2005		2006		2005
Earnings per share — basic
Earnings available to common shareholders	$	8,101	$	7,002	$	17,106	$	13,373
Weighted average shares outstanding		23,162		23,000		23,162		23,000

Earnings per share — basic	$	0.35	$	0.30	$	0.74	$	0.58

-6-

CALAMOS ASSET MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Three Months Ended				Six Months Ended
(in thousands, except per share data)	June 30,				June 30,
	2006		2005		2006		2005
Earnings per share — diluted
Income before minority interest in Calamos Holdings LLC and income taxes	$	58,011	$	50,651	$	122,667	$	96,804
Less: Impact of income taxes		23,262		20,260		49,189		38,722

Earnings available to common shareholders	$	34,749	$	30,391	$	73,478	$	58,082

Weighted average shares outstanding		23,162		23,000		23,162		23,000
Conversion of membership units for common stock		77,000		77,000		77,000		77,000
Dilutive impact of restricted stock units		539		547		514		546
Dilutive impact of stock options		144		10		147		31

Weighted average shares and potential dilutive shares outstanding		100,845		100,557		100,823		100,577

Earnings per share — diluted	$	0.34	$	0.30	$	0.73	$	0.58

Diluted shares outstanding for the three and six months ended June 30, 2006 and 2005 are calculated (a) assuming CFP and John P. Calamos, Sr. exchanged all of their membership units in Holdings for shares of the Company’s Class A common stock on a one-for-one basis and (b) including the effect of outstanding restricted stock unit and stock option awards. An effective tax rate of 40.1% and 40.0% was applied to income before minority interest in Calamos Holdings LLC and income taxes in calculating diluted earnings available to common shareholders for the periods ended June 30, 2006 and 2005, respectively.

The Company uses the treasury stock method to reflect the dilutive effect of unvested restricted stock units (RSUs) and unexercised stock options on diluted earnings per share. Under the treasury stock method, if the average market price of common stock increases above the option’s exercise price, the proceeds that would be assumed to be realized from the exercise of the option would be assumed to be used to acquire outstanding shares of common stock. However, pursuant to the Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Standard (SFAS) No. 123(R), Share-Based Payment (SFAS 123(R)), the awards may be anti-dilutive even when the market price of the underlying stock exceeds the related exercise price. This result is possible because compensation cost attributed to future services and not yet recognized is included as a component of the assumed proceeds upon exercise. As such, the dilutive effect of such options and RSUs would result in the addition of a net number of shares to the weighted average number of shares used in the calculation of diluted earnings per share. For the three and six months ended June 30, 2006, stock options for 663,328 shares were excluded from the computation of diluted earnings per share, as these shares were anti-dilutive. No RSUs were anti-dilutive during the three and six months ended June 30, 2006. For the three and six months ended June 30, 2005, stock options for 293,500 shares and RSUs for 97,000 shares were excluded from the computation of diluted earnings per share, as these shares were anti-dilutive.

-7-

CALAMOS ASSET MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(4) Incentive Compensation Plan

Certain employees of the Company participate in an incentive compensation plan, which includes stock options and RSUs. The Company intends to issue new shares of CAM’s Class A common stock upon the exercise of stock options or upon conversion of RSUs. The Annual Report on Form 10-K for the year ended December 31, 2005 provides details of this plan and its provisions.

On January 1, 2006, the Company adopted SFAS 123(R), Share-Based Payment, which requires public registrants to recognize the cost of stock-based compensation in their financial statements based on the grant-date fair value of the award. The Company adopted the fair value recognition provisions of SFAS 123 effective January 1, 2004 and elected to recognize compensation expense based upon the grant-date fair value. The provisions of SFAS 123(R) are similar, but not identical, to the fair value recognition that the Company has used since the beginning of 2004. The effects of this change do not have a material impact on the Company’s financial statements.

A summary of stock option activity for the six months ended June 30, 2006 is as follows:


				Weighted
	Number of Shares			Average Exercise Price
Outstanding at beginning of period		1,009,967		$	21.35
Granted		387,780			35.43
Forfeited		(62,101	)		24.83
Exercised		—			—

Outstanding at end of period		1,335,646			25.27

At June 30, 2006, the Company had 1,335,646 stock options outstanding with a weighted average remaining contractual life of 9.0 years and an aggregate intrinsic value of $5.0 million. No stock options granted under this plan have become exercisable as of June 30, 2006.

The weighted average fair value of stock options at the date of grant for the six months ended June 30, 2006 and 2005 was $14.33 and $11.25, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:


	2006			2005
Dividend yield		1.02	%		0.97	%
Expected volatility		33	%		33	%
Risk-free interest rate		4.6	%		3.9	%
Expected life	7.5 years			7.5 years

-8-

CALAMOS ASSET MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of RSU activity for the six months ended June 30, 2006 is as follows:


				Weighted
				Average Fair
	Number			Value of RSUs
	of Shares			Granted
Outstanding at beginning of period		1,414,862		$	18.79
Granted		129,260			35.43
Forfeited		(20,968	)		24.74
Exercised		(233,599	)		18.00

Outstanding at end of period		1,289,555			20.50

At June 30, 2006, the Company had 1,289,555 RSUs outstanding with a weighted average remaining contractual life of 4.1 years and an aggregate intrinsic value of $37.4 million. The weighted average fair value of RSUs at the date of grant for the six months ended June 30, 2006 and 2005 was $35.43 and $28.76, respectively. The aggregate intrinsic value and the fair value of RSUs exercised and vested during the six months ended June 30, 2006 was $7.3 million.

In connection with the 233,599 shares exercised during the first quarter of 2006, 161,898 RSUs were converted, on a one-for-one basis, into shares of CAM’s Class A common stock, while the remaining 71,701 RSUs were withheld to meet employee withholding tax obligations of $2.3 million. The total intrinsic value and the fair value of the converted shares was $5.1 million. This conversion changed CAM’s ownership in Holdings to 23.1%. RSUs are granted with no strike price and, therefore, the Company receives no proceeds when the RSUs are exercised. Because RSUs are typically settled with newly issued shares, there is no cash used by the Company to settle awards. The total tax benefit realized by CAM in connection with the exercise of the RSUs during the six months ended June 30, 2006 was $676,000. No RSUs were exercised and vested during the six months ended June 30, 2005.

Expense recorded in connection with the RSUs and stock options was $3.1 million during the six months ended June 30, 2006 of which $718,000, net of minority interest, was credited as additional paid-in capital. Expense recorded in connection with the RSUs and stock options was $2.1 million during the six months ended June 30, 2005 of which $482,000, net of minority interest, was credited as additional paid-in capital. The amount of deferred tax asset created was $287,000 and $193,000 during the six months ended June 30, 2006 and 2005, respectively. At June 30, 2006, approximately $21.7 million of total unrecognized compensation expense related to nonvested stock option and RSU awards is expected to be recognized over a weighted-average period of 4.5 years.

(5) Recently Issued Accounting Pronouncements

In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, which seeks to reduce diversity in practice that is associated with certain aspects of measurement and recognition when accounting for income taxes. FIN 48 clarifies the accounting and disclosure for uncertainty in tax positions. FIN 48 is effective for the Company beginning January 1, 2007. We are currently evaluating the impact, if any, that the adoption of FIN 48 will have on our financial statements.

-9-

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

We provide investment advisory services to institutions and individuals, managing $45.8 billion in client assets at June 30, 2006. Our operating results fluctuate primarily due to changes in the total value and composition of our assets under management. The value and composition of our assets under management are, and will continue to be, influenced by a variety of factors including purchases and redemptions of shares of the open-end funds and other investment products that we manage, fluctuations in the financial markets around the world that result in appreciation or depreciation of assets under management and our introduction of new investment strategies and products.

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

We market our investment strategies to our clients through a variety of products designed to suit their investment needs. We currently offer six types of mutual fund and separate account investment products. The following table details our assets under management at June 30, 2006 and 2005.


(in millions)	June 30,
	2006		2005
Mutual Funds
Open-end funds	$	27,707	$	22,432
Closed-end funds		6,130		5,901

Total mutual funds		33,837		28,333


Separate Accounts
Institutional accounts		4,366		3,678
Managed accounts		6,739		6,844
Private client accounts		773		578
Alternative investments		97		79

Total separate accounts		11,975		11,179


Total assets under management	$	45,812	$	39,512

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

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

-10-

Operating Results

Second Quarter and Six Months Ended June 30, 2006 Compared to Second Quarter and Six Months Ended June 30, 2005

Assets Under Management

Assets under management increased by $6.3 billion, or 16%, to $45.8 billion at June 30, 2006 from $39.5 billion at June 30, 2005. At June 30, 2006, our assets under management consisted of 74% mutual funds and 26% separate accounts, as compared to 72% mutual funds and 28% separate accounts at June 30, 2005.


($ in millions)	Three Months Ended June 30,											Six Months Ended June 30,
						Change												Change
	2006			2005		Amount			Percent			2006			2005			Amount			Percent
Mutual Funds
Beginning assets under management	$	35,014		$	27,366	$	7,648			28	%	$	31,898		$	26,951		$	4,947			18	%
Net purchases		647			582		65			11			2,015			2,133			(118	)		6
Market appreciation (depreciation)		(1,824	)		385		(2,209	)		574			(76	)		(751	)		675			90

Ending assets under management		33,837			28,333		5,504			19			33,837			28,333			5,504			19

Average assets under management		34,566			27,443		7,123			26			34,230			27,265			6,965			26

Separate Accounts
Beginning assets under management		12,587			10,880		1,707			16			11,907			11,024			883			8
Net purchases (redemptions)		(111	)		27		(138	)		511			(39	)		430			(469	)		109
Market appreciation (depreciation)		(501	)		272		(773	)		284			107			(275	)		382			139

Ending assets under management		11,975			11,179		796			7			11,975			11,179			796			7

Average assets under management		12,367			10,854		1,513			14			12,341			10,871			1,470			14

Total Assets Under Management
Beginning assets under management		47,601			38,246		9,355			24			43,805			37,975			5,830			15
Net purchases		536			609		(73	)		12			1,976			2,563			(587	)		23
Market appreciation (depreciation)		(2,325	)		657		(2,982	)		454			31			(1,026	)		1,057			103

Ending assets under management		45,812			39,512		6,300			16			45,812			39,512			6,300			16

Average assets under management	$	46,933		$	38,297	$	8,636			23	%	$	46,571		$	38,136		$	8,435			22	%

Mutual fund net purchases were $647 million for the second quarter and $2.0 billion for the six months ended June 30, 2006, compared to $582 million and $2.1 billion for the prior-year periods. The decrease in mutual fund net purchases for the six months ended June 30, 2006 was due to higher open-end fund redemptions which increased with the growth in assets under management. The decrease was partially offset by the completion of a secondary public offering of the Calamos Convertible and High Income Fund during the second quarter of 2006. During the second quarter and six months ended June 30, 2006, net inflows were led by the Growth Fund, Growth and Income Fund, and Market Neutral Income Fund, which had $570 million and $1.8 billion of aggregate net inflows during these periods, respectively.

Separate accounts had net redemptions of $111 million in the second quarter and of $39 million for the six months ended June 30, 2006, compared to net purchases of $27 million and $430 million for the prior year-periods. During the six months ended June 30, 2006, separate account outflows in our convertible and balanced strategies, which remain closed to new investors, were largely offset by inflows in our equity strategies, primarily through our international sub-advised relationships.

-11-

Revenues

Total revenues increased by $25.3 million, or 26%, to $124.4 million for the three months ended June 30, 2006 from $99.1 million for the prior year. For the six months ended June 30, 2006, total revenues increased by $48.6 million, or 25%, to $245.0 million from the prior year’s six-month period. These increases were primarily due to higher investment management fees and distribution and underwriting fees.


($ in thousands)	Three Months Ended June 30,									Six Months Ended June 30,
					Change									Change
	2006		2005		Amount		Percent			2006		2005		Amount		Percent
Investment management fees	$	84,328	$	67,430	$	16,898		25	%	$	165,807	$	133,270	$	32,537		24	%
Distribution and underwriting fees		38,997		30,764		8,233		27			77,137		61,389		15,748		26
Other		1,028		878		150		17			2,027		1,734		293		17

Total revenues	$	124,353	$	99,072	$	25,281		26	%	$	244,971	$	196,393	$	48,578		25	%

Investment management fees increased for the three and six months ended June 30, 2006 primarily due to increases in average assets under management of $8.6 billion and $8.4 billion for the second quarter and first six months of 2006, respectively. The overall growth in investment management fees was due primarily to an increase in mutual fund investment management fees, which increased to $67.0 million and $132.0 million for the three and six months ended June 30, 2006 from $53.5 million and $105.6 million for the prior-year periods. Open-end fund investment management fees increased to $54.0 million and $106.2 million for the second quarter and six months ended June 30, 2006, respectively, from $41.2 million and $81.0 million for the same periods of the prior year primarily due to increases in open-end fund average assets under management of $6.8 billion and $6.7 billion for the second quarter and six months ended June 30, 2006 compared to the prior year. Closed-end fund investment management fees increased to $13.0 million and $25.8 million for the three and six months ended June 30, 2006, respectively, from $12.3 million and $24.7 million in the prior year as a result of increases in closed-end fund average assets under management of $0.3 billion and $0.2 billion for the second quarter and first half of 2006 when compared to the prior-year periods. Investment management fees as a percentage of average assets under management were 0.72% for the three and six months ended June 30, 2006 compared to 0.70% for the prior-year periods, representing the increase in assets in our equity strategies which generally carry higher fees.

Distribution and underwriting fees increased by $8.2 million and $15.7 million for the three and six months ended June 30, 2006, respectively, from the same periods of the prior year, primarily due to increases in open-end fund average assets under management of $6.8 billion and $6.7 billion for the three and six months ended June 30, 2006 compared to the prior-year periods.

Operating Expenses

Operating expenses increased to $64.4 million and $126.4 million for the second quarter and six months ended June 30, 2006, respectively, from $50.3 million and $98.7 million for the same periods in the prior year. These increases were primarily due to higher distribution and underwriting, employee compensation and benefits, and general and administrative expenses.


($ in thousands)	Three Months Ended June 30,									Six Months Ended June 30,
					Change									Change
	2006		2005		Amount		Percent			2006		2005		Amount			Percent
Employee compensation and benefits	$	18,287	$	14,860	$	3,427		23	%	$	37,293	$	29,781	$	7,512			25	%
Distribution and underwriting expense		25,864		18,693		7,171		38			50,829		36,364		14,465			40
Amortization of deferred sales commissions		8,123		8,028		95		1			15,863		15,904		(41	)		—
Marketing and sales promotion		4,493		3,068		1,425		46			7,601		6,536		1,065			16
General and administrative		7,639		5,676		1,963		35			14,813		10,072		4,741			47

Total operating expenses	$	64,406	$	50,325	$	14,081		28	%	$	126,399	$	98,657	$	27,742			28	%

Employee compensation and benefits expense increased by $3.4 million and $7.5 million for the three and six months ended June 30, 2006, respectively, when compared to the prior-year periods largely due to higher salary and benefits expense as we continued to expand our staffing levels to build our institutional sales efforts, to internalize mutual fund client services and to expand our staff in order to support our public company requirements.

Distribution and underwriting expense increased by $7.2 million and $14.5 million in the second quarter and first half of 2006, respectively, primarily due to increases of $4.3 million and $8.7 million resulting from the growth in the Class C share assets older than one year and to increases of $2.8 million and $5.7 million resulting from the growth of average open-end fund assets under management. Class C share assets do not generate distribution expense in the first year following their sale because we

-12-

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 pay 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 the three and six months ended June 30, 2006 did not change from the rates paid in the prior year, we expect distribution expense to increase to the extent our open-end mutual fund assets under management continue to grow.

Marketing and sales promotion expense increased by $1.4 million and $1.1 million for the three and six months ended June 30, 2006, respectively, when compared to the prior-year periods, due to an increase in supplemental compensation payments and partially offset by cost savings recognized through efficiencies in our fulfillment process. The increase in supplemental payments is largely attributable to the increase in average mutual fund assets under management. We expect that marketing and sales promotion expense will fluctuate with changes in the number of customers and with changes in mutual fund assets under management.

General and administrative expense increased by $2.0 million and $4.7 million in the second quarter and first half of 2006, respectively, compared to prior-year periods primarily due to increases of $1.2 million and $1.9 million in depreciation expense and $0.3 million and $1.5 million in occupancy-related costs for those periods. The increases in depreciation expense and occupancy costs were primarily due to occupying our new headquarters. The increase in depreciation expense was due to the depreciation of new assets placed in service in our new headquarters. We expect that our depreciation expense for the remainder of 2006 will continue to be higher than the comparable periods of 2005.

Other Income (Expense), Net

Other income (expense), net was a net expense of $1.9 million for the three months ended June 30, 2006 as compared to a net income of $1.9 million for the three months ended June 30, 2005. Other income (expense), net was a net income of $4.1 million for the six months ended June 30, 2006 as compared to a net expense of $0.9 million for the prior-year period.


($ in thousands)	Three Months Ended June 30,									Six Months Ended June 30,
	2006			2005			Change			2006			2005			Change
Net interest income (expense)	$	820		$	(1,116	)	$	1,936		$	1,182		$	(2,287	)	$	3,469
Investment and other income		(7,927	)		6,198			(14,125	)		4,004			2,383			1,621
Minority interest in partnership investments		5,171			(3,178	)		8,349			(1,091	)		(1,028	)		(63	)

Total other income (expense), net	$	(1,936	)	$	1,904		$	(3,840	)	$	4,095		$	(932	)	$	5,027

The changes in net interest income (expense) of $1.9 million and $3.5 million for the quarter and year-to-date periods were solely due to increases in interest income on cash and cash equivalents. Interest expense was $2.0 million and $4.1 million for the three and six months ended June 30, 2006 and 2005.

Investment and other income, which is principally comprised of market depreciation of $8.7 million and market appreciation of $2.8 million for the three and six months ended June 30, 2006, respectively, changed when compared to the same prior-year periods primarily due to market fluctuations. The changes in minority interest in partnership investments represent the corresponding minority interest portion of the market appreciation and depreciation from our consolidated partnerships.

Income Taxes

Income taxes as a percentage of income before income taxes was 40.1% for the three and six months ended June 30, 2006 compared to 40.0% for the prior year periods.

Liquidity and Capital Resources

Our current financial condition is highly liquid, with the majority of our assets in our corporate investment portfolio, which is comprised of cash and cash equivalents, investment securities and investments in partnerships. We anticipate utilizing our cash and cash equivalents balances to make investments in our products as opportunities arise, to invest in property and equipment for our facility and to support our operations. Investment securities are principally comprised of company-sponsored mutual funds and investments in partnerships are typically comprised of highly liquid exchange-traded securities. Our working capital requirements historically have been met through cash generated by our operations and long-term debt.

-13-

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


(in thousands)	June 30,		December 31,
	2006		2005
Statements of financial condition data:
Cash and cash equivalents	$	254,661	$	210,469
Receivables		36,203		34,476
Investment securities		131,065		128,265
Investment in partnerships		89,089		79,956
Deferred tax asset		104,341		109,126
Deferred sales commissions		59,805		58,390
Long-term debt		150,000		150,000

Cash flows for the six months ended June 30, 2006 and 2005 are summarized below:


(in thousands)	June 30,
	2006			2005
Cash flow data:
Net cash provided by operating activities	$	107,809		$	96,611
Net cash used in investing activities		(8,582	)		(58,176	)
Net cash used in financing activities		(55,035	)		(45,005	)

Net cash provided by operating activities was $107.8 million for the six months ended June 30, 2006 and was primarily comprised of income before minority interest and income taxes of $122.7 million and net changes in working capital.

The payment of deferred sales commissions by us to financial intermediaries who sell Class B and C shares of our open-end funds is a significant use of our operating cash flows. Use of cash for deferred sales commissions was $17.3 million for the six months ended June 30, 2006. We expect that the payment of deferred sales commissions will vary in proportion to future sales of Class B and C shares of open-end funds and that these commissions will continue to be funded by cash flows from operations.

Net cash used in investing activities was $8.6 million for the six months ended June 30, 2006 and was primarily comprised of our $5.8 million investment in property and equipment as we continue our initial build-out of our new office facility. We expect to make investments in property and equipment as needed to support future staff additions.

Net cash used by financing activities was $55.0 million for the six months ended June 30, 2006 and was primarily comprised of distributions to minority shareholders of $50.6 million, including distributions for their tax liabilities of $36.7 million, as well as dividends paid to common shareholders of $4.2 million.

We expect our cash and liquidity requirements will be met with the cash on hand and through cash generated by operations. We intend to satisfy our capital requirements over the next 12 months through these sources of liquidity.

Recently Issued Accounting Pronouncements

Critical Accounting Policies

Our significant accounting policies are described in note 3 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2005. A discussion of critical accounting policies is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on

-14-

Form 10-K for the year ended December 31, 2005. There were no significant changes in our critical accounting policies during the six months ended June 30, 2006.

Forward-Looking Information

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

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

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: adverse changes in applicable laws or regulations; downward fee pressures and increased industry competition; risks inherent to the investment management business; the loss of revenues due to contract terminations and redemptions; our ownership structure; general declines in the prices of securities; catastrophic or unpredictable events; the loss of key executives; the unavailability of third-party retail distribution channels; increased costs of distribution; failure to recruit and retain qualified personnel; a loss of assets, and thus revenues, if our largest funds perform poorly; damage to our reputation; and our holding company structure. Further, the value and composition of our assets under management are, and will continue to be, influenced by a variety of factors including, among other things: purchases and redemptions of shares of the open-end funds and other investment products; fluctuations in the financial markets around the world that result in appreciation or depreciation of assets under management; our introduction of new investment strategies and products; our ability to educate our clients about our investment philosophy and provide them with best-in-class service; the relative investment performance of our investment products as compared to competing offerings and market indices; competitive conditions in the mutual fund, asset management and broader financial services sectors; investor sentiment and confidence; and our decision to open or close products and strategies when deemed to be in the best interests of our clients. Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2005 discusses some of these and other important factors in detail under the caption “Risk Factors.”

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

An analysis of our market risk was included in our Annual Report on Form 10-K for the year ended December 31, 2005. There were no material changes to the Company’s market risk during the six months ended June 30, 2006.

Item 4. Controls and Procedures

Our management, including our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2006, and has concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

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

-15-

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

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

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

At the annual meeting of stockholders on June 1, 2006, John P. Calamos, Sr., Nick P. Calamos, G. Bradford Bulkley, Richard W. Gilbert and Arthur L. Knight were elected as directors of the Company with terms expiring at the annual meeting of stockholders in 2007. The results of the votes were as follows:


	Class A Shares	Class B Shares	Class A Shares	Class B Shares
Election of:	"For"	"For"	"Withheld"	"Withheld"

John P. Calamos, Sr.	n/a	768,001,000	n/a	0
Nick P. Calamos	n/a	768,001,000	n/a	0
G. Bradford Bulkley	20,520,395	768,001,000	792,132	0
Richard W. Gilbert	18,375,930	768,001,000	2,936,597	0
Arthur L. Knight	20,440,216	768,001,000	872,311	0

Stockholders at the meeting also ratified KPMG LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2006 by a combined Class A and Class B stockholder vote of 789,178,731 shares “for,” 119,872 shares “against” and 14,924 “abstaining.”

Item 6. Exhibits


3(i)				Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the
				Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 2, 2004).
3(ii)				Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Current
				Report on Form 8-K filed with the Securities and Exchange Commission on April 26, 2005).
4.1				Stockholders' Agreement among John P. Calamos, Sr., Nick P. Calamos and John P. Calamos, Jr., certain trusts controlled
				by them, Calamos Family Partners, Inc. and the Registrant (incorporated by reference to Exhibit 4.1 to the Registrant's
				Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 3, 2004).
4.2				Registration Rights Agreement between Calamos Family Partners, Inc., John P. Calamos, Sr. and the Registrant
				(incorporated by reference to Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and
				Exchange Commission on December 3, 2004).
10				Amendment Number 2 to the Second Amended and Restated Limited Liability Company Agreement of Calamos Holdings LLC.
31.1				Certification pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
31.2				Certification pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
32.1				Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2				Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

-16-


	CALAMOS ASSET MANAGEMENT, INC.
	(Registrant)
Date: August 4, 2006	By:	/s/ Patrick H. Dudasik
		Patrick H. Dudasik Executive Vice President, Chief Financial Officer and Treasurer


CALAMOS ASSET MANAGEMENT, INC.		CALAMOS FAMILY PARTNERS, INC.

By:	/s/ James S. Hamman, Jr.	By:	/s/ John P. Calamos, Sr.
	James S. Hamman, Jr. EVP, General Counsel & Secretary		John P. Calamos, Sr.

/s/ John P. Calamos, Sr.
John P. Calamos, Sr.

	1.		Amendment. Section 2.06 of the Limited Liability Company Agreement is hereby amended to remove “Calamos Capital LLC”.

	2.		Reaffirmation. In all other respects the Limited Liability Company Agreement remains the same and in full force and effect.

	3.		Effective Date. This Amendment No. 2 shall become effective as of the date first written above (the “Effective Date”). On and after the Effective Date of this Amendment No. 2, each reference in the Limited Liability Company Agreement to “this Agreement,” “hereunder,” “hereof,” or words of like import referring to the Limited Liability Company Agreement shall mean and be a reference to the Limited Liability Company Agreement as amended by this Amendment No. 2.

	4.		Governing Law. The validity and construction of this Amendment No. 2 shall be determined and governed in all respects by the laws of the State of Delaware without regard to conflict of laws principles.

1.		I have reviewed this Quarterly Report on Form 10-Q of Calamos Asset Management, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



/s/ John P. Calamos, Sr.
John P. Calamos, Sr.
Chairman, Chief Executive Officer and Co-Chief Investment Officer



/s/ Patrick H. Dudasik
Patrick H. Dudasik
Executive Vice President, Chief Financial Officer and Treasurer