XNAS:CLMS Calamos Asset Management Inc Class A Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
 
FORM 10-Q
________________
 
R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
FOR THE QUARTERLY PERIOD ENDED: June 30, 2012
   
or
   
£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 000-51003
________________
 
CALAMOS ASSET MANAGEMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
________________
 
Delaware
32-0122554
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification No.)
   
2020 Calamos Court, Naperville, Illinois
60563
(Address of Principal Executive Offices)
(Zip Code)

(630) 245-7200
(Registrant’s telephone number, including area code)
________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. R Yes £ No

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). R Yes £ No

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.

Large accelerated filer £
Accelerated filer R
Non-accelerated filer £
Smaller reporting company £
 
(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 Exchange Act). £ Yes R No

At July 31, 2012, the company had 20,358,983 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
3
Item 2. Management’s Discussion and Analysis of Financial
20
Condition and Results of Operations
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
33
Item 4. Controls and Procedures
33
PART II — OTHER INFORMATION
 
Item 1. Legal Proceedings
34
Item 6. Exhibits
35
SIGNATURES
 
   


 
2

 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

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

   
June 30,
2012
   
December 31,
2011
 
   
(unaudited)
       
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 118,310     $ 102,166  
Receivables:
               
Affiliates and affiliated funds
    17,854       18,492  
Customers
    11,112       10,035  
Investment securities
    315,693       318,496  
Derivative assets
    113       1,018  
Partnership investments, net
    34,123       33,056  
Prepaid expenses
    3,954       2,964  
Deferred tax assets, net
    7,486       8,811  
Other current assets
    825       934  
Total current assets
    509,470       495,972  
Non-current assets:
               
Deferred tax assets, net
    52,485       56,707  
Deferred sales commissions
    3,864       5,444  
Property and equipment, net of accumulated depreciation and amortization ($55,641 at June 30, 2012 and $52,833 at December 31, 2011)
    21,010       22,865  
Other non-current assets
    666       870  
Total non-current assets
    78,025       85,886  
Total assets
  $ 587,495     $ 581,858  
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
LIABILITIES
               
Current liabilities:
               
Distribution fees payable
  $ 15,101     $ 15,860  
Accrued compensation and benefits
    14,456       23,681  
Interest payable
    2,729       2,729  
Derivative liabilities
    -       3,844  
Accrued expenses and other current liabilities
    7,164       5,631  
Total current liabilities
    39,450       51,745  
Long-term liabilities:
               
Long-term debt
    92,115       92,115  
Deferred rent
    9,369       9,423  
Dividend payables on restricted stock units
    818       781  
Total long-term liabilities
    102,302       102,319  
Total liabilities
    141,752       154,064  
STOCKHOLDERS’ EQUITY
               
Class A common stock, $0.01 par value; authorized 600,000,000 shares; 24,357,873 shares issued and 20,357,873 shares outstanding at June 30, 2012; 24,126,757 shares issued and 20,126,757 shares outstanding at December 31, 2011
    244       241  
Class B common stock, $0.01 par value; authorized 1,000 shares; 100 shares issued and outstanding at June 30, 2012 and December 31, 2011
    0       0  
Additional paid-in capital
    215,418       214,102  
Retained earnings
    72,897       67,991  
Accumulated other comprehensive loss
    (2,506 )     (527 )
Treasury stock at cost; 4,000,000 shares at June 30, 2012 and December 31, 2011
    (95,215 )     (95,215 )
Calamos Asset Management, Inc. stockholders’ equity
    190,838       186,592  
Non-controlling interest in Calamos Investments LLC (Calamos Interests)
    242,357       229,168  
Non-controlling interest in partnership investments
    12,548       12,034  
Total non-controlling interest
    254,905       241,202  
Total stockholders’ equity
    445,743       427,794  
Total liabilities and stockholders’ equity
  $ 587,495     $ 581,858  

See accompanying notes to consolidated financial statements.

 
3

 


CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended June 30, 2012 and 2011
(in thousands, except share data)
(unaudited)


   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
 
 
2012
   
2011
   
2012
   
2011
 
REVENUES
                       
Investment management fees
  $ 64,661     $ 70,136     $ 130,648     $ 137,744  
Distribution and underwriting fees
    17,254       21,943       35,760       44,055  
Other
    761       845       1,544       1,673  
Total revenues
    82,676       92,924       167,952       183,472  
EXPENSES
                               
Employee compensation and benefits
    20,942       20,209       43,145       40,841  
Distribution expenses
    15,288       18,276       31,360       36,509  
Amortization of deferred sales commissions
    1,266       1,450       2,675       3,198  
Marketing and sales promotion
    5,528       4,691       9,954       8,130  
General and administrative
    10,715       8,950       20,828       18,131  
Total operating expenses
    53,739       53,576       107,962       106,809  
Operating income
    28,937       39,348       59,990       76,663  
NON-OPERATING INCOME(LOSS)
                               
Net interest expense
    (1,408 )     (1,609 )     (2,824 )     (3,504 )
Investment and other income (loss)
    (1,714 )     10,779       21,356       9,152  
Total non-operating income (loss)
    (3,122 )     9,170       18,532       5,648  
Income before income tax provision
    25,815       48,518       78,522       82,311  
Income tax provision
    4,281       4,050       8,565       6,957  
Net income
    21,534       44,468       69,957       75,354  
Net income attributable to non-controlling interest in Calamos Investments LLC (Calamos Interests)
    (20,812 )     (37,775 )     (60,590 )     (64,024 )
Net (income) loss attributable to non-controlling interest in partnership investments
    1,092             (514 )     (5 )
Net income attributable to Calamos Asset Management, Inc.
  $ 1,814     $ 6,693     $ 8,853     $ 11,325  
                                 
Earnings per share:
                               
    Basic
  $ 0.09     $ 0.33     $ 0.44     $ 0.56  
    Diluted
  $ 0.09     $ 0.32     $ 0.43     $ 0.55  
                                 
Weighted average shares outstanding:
                               
    Basic
    20,343,290       20,124,895       20,288,248       20,080,392  
    Diluted
    20,802,688       20,614,941       20,713,171       20,545,099  
                                 
Cash dividends per share
  $ 0.095     $ 0.095     $ 0.19     $ 0.19  

See accompanying notes to consolidated financial statements.


 
4

 


CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Six Months Ended June 30, 2012 and 2011
(in thousands)
(unaudited)

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
 
 
2012
   
2011
   
2012
   
2011
 
Net income
  $ 21,534     $ 44,468     $ 69,957     $ 75,354  
Other comprehensive income (loss), before tax (provision) benefit
                               
Unrealized gains (losses) on available-for-sale securities:
                               
Changes in unrealized gains (losses)
    (17,033 )     4,835       6,354       20,379  
Reclassification adjustment for gains included in net income
    -       (17,183 )     (20,574 )     (18,848 )
Other comprehensive income (loss), before income tax provision
    (17,033 )     (12,348 )     (14,220 )     1,531  
Income tax provision (benefit) related to other comprehensive income (loss)
    (1,388 )     (998 )     (1,160 )     150  
Other comprehensive income (loss), after income tax provision
    (15,645 )     (11,350 )     (13,060 )     1,381  
Comprehensive income
    5,889       33,118       56,897       76,735  
                                 
Comprehensive income attributable to non-controlling interest in Calamos Investments LLC (Calamos Interests)
    (7,530 )     (28,127 )     (49,515 )     (65,223 )
Comprehensive (income) loss attributable to non-controlling interest in partnership investment
    1,092       -       (514 )     (5 )
Comprehensive income (loss) attributable to Calamos Asset Management, Inc.
  $ (549 )   $ 4,991     $ 6,868     $ 11,507  
                                 

See accompanying notes to consolidated financial statements.

 
5

 


CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Six Months Ended June 30, 2012
(in thousands, except share data)
(unaudited)

 
 
 
 
 
 
 
 
CALAMOS ASSET MANAGEMENT, INC. STOCKHOLDERS’ EQUITY
   
Non-
controlling
interest in
Calamos
   
 
 
 
Non-
   
 
 
 
 
 
 
 
 
 
 
 
 
Common
Stock
   
 
Additional
Paid-in
Capital
   
 
 
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
 
 
Treasury
Stock
   
Investments
LLC
(Calamos
Interests)
   
controlling
interest in
partnership
investments
   
 
 
 
Total
 
Balance at December 31, 2011
  $ 241     $ 214,102     $ 67,991     $ (527 )   $ (95,215 )   $ 229,168     $ 12,034     $ 427,794  
Net income
                8,853                   60,590       514       69,957  
Changes in unrealized gains on available-for- sale securities, net of income taxes
                      874             4,961             5,835  
Reclassification adjustment for gains on available-for-sale securities included in income, net of income taxes
                      (2,859 )           (16,036 )           (18,895 )
Issuance of common stock (231,116 Class A common shares)
    3       (3 )                                    
Cumulative impact of changes in ownership of Calamos Investments LLC
          477       (6 )     6             (1,436 )           (959 )
Compensation expense recognized under stock incentive plans
          842                         2,983             3,825  
Dividend equivalent accrued under stock incentive plans
                (77 )                 (274 )           (351 )
Distributions to non-controlling interests
                                  (37,599 )           (37,599 )
Dividends declared
                (3,864 )                             (3,864 )
Balance at June 30, 2012
  $ 244     $ 215,418     $ 72,897     $ (2,506 )   $ (95,215 )   $ 242,357     $ 12,548     $ 445,743  

See accompanying notes to consolidated financial statements.

 
6

 


CALAMOS ASSET MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2012 and 2011
(in thousands)
(unaudited)

 
 
2012
   
2011
 
Cash and cash equivalents at beginning of period
  $ 102,166     $ 82,870  
Cash flows from operating activities:
               
Net income
    69,957       75,354  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Amortization of deferred sales commissions
    2,675       3,198  
Other depreciation and amortization
    2,857       2,967  
Deferred rent
    (54 )     10  
Change in unrealized (gains) losses on CFS securities, derivative assets, derivative liabilities and partnership investments, net
    (3,180 )     1,532  
Net realized gain on sale of investment securities, derivative assets and derivative liabilities
    (15,931 )     (8,970 )
Increase in deferred tax asset valuation allowance
    1,900       -  
Deferred taxes
    4,721       3,859  
Stock based compensation
    3,824       3,759  
Employee taxes paid on vesting under stock incentive plans
    (872 )     (1,030 )
(Increase) decrease in assets:
               
Receivables:
               
Affiliates and affiliated funds
    638       (335 )
Customers
    (1,077 )     (2,142 )
Deferred sales commissions
    (1,096 )     (2,196 )
Other assets
    (708 )     (2,055 )
Increase (decrease) in liabilities:
               
Distribution fees payable
    (759 )     555  
Accrued compensation and benefits
    (9,225 )     (7,684 )
Accrued expenses and other liabilities
    1,307       1,165  
Net cash provided by operating activities
    54,977       67,987  
Cash flows provided by (used in) investing activities:
               
Net additions to property and equipment
    (970 )     (1,277 )
Purchase of investment securities
    (261,329 )     (115,577 )
Proceeds from sale of investment securities
    276,516       96,081  
Net purchases of derivatives
    (11,156 )     (8,946 )
Net changes in partnership investments
    (343 )     18,678  
Net cash provided by (used in) investing activities
    2,718       (11,041 )
Cash flows used in financing activities:
               
Repayment of debt
    -       (32,885 )
Deferred tax (expense) benefit on vesting under stock incentive plans
    (88 )     4  
Distributions paid to non-controlling interests
    (37,599 )     (39,707 )
Cash dividends paid to common stockholders
    (3,864 )     (3,824 )
Net cash used in financing activities
    (41,551 )     (76,412 )
Net increase (decrease) in cash
    16,144       (19,466 )
Cash and cash equivalents at end of period
  $ 118,310     $ 63,404  
Supplemental disclosure of cash flow information:
               
Cash paid for:
               
Income taxes, net
  $ 2,057     $ 2,358  
Interest
  $ 2,977     $ 3,839  

See accompanying notes to consolidated financial statements.

 
7

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

(1) Organization and Description of Business

Calamos Asset Management, Inc. (CAM) is a holding company and as of June 30, 2012 owned 22.1% of Calamos Investments LLC (Calamos Investments). CAM, together with Calamos Investments and Calamos Investments’ subsidiaries (the Company), operates the investment advisory and distribution services businesses reported within these consolidated financial statements. CAM operates and controls all of the business and affairs of Calamos Investments and, as a result of this control, consolidates the financial results of Calamos Investments with its own financial results. The remaining 77.9% ownership interest in Calamos Investments is held by 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. CFP and John P. Calamos, Sr. (collectively Calamos Interests), ownership interest, in accordance with applicable accounting guidance, is reflected and referred to within these consolidated financial statements as “non-controlling interest in Calamos Investments LLC”. As shown in the diagram below, CFP also owns all of CAM’s outstanding Class B common stock, which represents 97.5% of the combined voting power of all classes of CAM’s voting stock. The graphic below illustrates our organizational and ownership structure as of June 30, 2012:







_________________

(1)
Represents combined economic interest of Calamos Family Partners, Inc. and John P. Calamos, Sr. who is also a member of Calamos Investments LLC.
(2)
Represents combined economic interest of all public stockholders, including John P. Calamos, Sr., Nick Calamos and John P. Calamos, Jr.’s combined  7.94% ownership interest of Class A common stock. The calculation of ownership interest includes vested stock options.
(3)
As of May 2, 2012, Calamos International LLP’s name changed to Calamos Investments LLP.

 
8

 

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

The Company primarily provides investment advisory services to individuals and institutional investors through a series of investment products that include open-end, closed-end and offshore funds (collectively, Funds); separate accounts; and partnerships. The subsidiaries through which the Company provides these services include: 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 Wealth Management LLC, a Delaware limited liability company and registered investment advisor; and Calamos Investments LLP, a United Kingdom limited liability partnership, registered investment advisor with the Financial Services Authority in the United Kingdom, and a global distributor of the offshore funds and Company products. For reporting purposes, the offshore funds are reported within the open-end funds.

(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 (GAAP), 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. Investments previously presented as Low-volatility equity investments or Other investments are being presented as either Equity or Convertible investments, based on the underlying investment strategy, in Note 3 Investment Securities and Note 6 Fair Value Measurements.

The consolidated financial statements as of June 30, 2012 and for the three and six months ended June 30, 2012 and 2011 have not been audited by the Company’s independent registered public accounting firm. In the opinion of management, these statements contain all adjustments, including those of a normal recurring nature, necessary for fair presentation of the financial condition and results of operations. The results for the interim periods presented are not necessarily indicative of the results to be obtained for a full fiscal year. This Form 10-Q filing should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The Company consolidates investments in which the Company’s ownership exceeds 50% or in which the Company operates and controls the business and affairs of the entity. As such, the consolidated financial statements include the financial statements of CAM, Calamos Investments, Calamos Investments’ wholly- and majority-owned subsidiaries, and Calamos International Growth Fund LP. All intercompany balances and transactions have been eliminated.

The Calamos Interests’ combined 77.9% and 78.1% interest in Calamos Investments as of June 30, 2012 and December 31, 2011, respectively, is represented as a non-controlling interest in Calamos Investments LLC in the Company’s consolidated financial statements. Non-controlling interest in Calamos Investments is derived by multiplying the historical equity of Calamos Investments by the Calamos Interests’ aggregate ownership percentage for the periods presented. Issuances and repurchases of CAM’s common stock results in changes in CAM’s ownership percentage and to the non-controlling interests’ ownership percentage of Calamos Investments 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.

CAL is the general partner and controls the operations of Calamos International Growth Fund LP, thus the Company consolidated the results of the partnership into its consolidated financial results. The combined interests of this partnership not owned by the Company, is presented as non-controlling interest in partnership investments in the Company’s consolidated financial statements.

The assets and liabilities of Calamos International Growth Fund LP are presented on a net basis within partnership investments, net in the consolidated statements of financial condition, the net income is included in Investment and other income (loss) in the consolidated statements of operations, and the change in partnership investments is included in the net changes in partnership investments in the consolidated statements of cash flows. Calamos International Growth Fund LP is 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 5 Partnership Investments.
 
 
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.

 
9

 


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

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. During the second quarter of 2012, the Company recorded a $1.9 million valuation allowance to reduce its deferred income tax assets to an amount that is more likely than not to be realized based on available evidence at the time the estimate was made. Determining a valuation allowance requires management to make significant judgments and assumptions. In determining a valuation allowance the Company uses historical and forecasted future realized and unrealized gains and losses on its investment, ongoing tax planning strategies, and forecasts of future taxable income. Each quarter the Company re-evaluates its estimate related to its valuation allowance, including its assumptions about future taxable income. As of June 30, 2012 and December 31, 2011, the Company’s valuation allowance on its deferred tax assets was $7.1 million and $5.2 million, respectively and related to its capital loss carryforward. The Company’s capital loss carryforward is used against realized gains on its investments, derivative assets, derivative liabilities and partnership investments.

During the year there were no additional changes to the Company’s significant accounting policies or estimates. For a comprehensive disclosure of the Company’s significant accounting policies, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.
 
 
(3) Investment Securities

As a registered broker-dealer, CFS is required to carry all investment securities it owns at fair value and record all changes in fair value in current earnings. As such, unrealized gains and losses on CFS securities, as well as realized gains and losses on all investment securities, are included in investment and other income (loss) in the consolidated statements of operations. The following table provides a summary of investment securities owned as of June 30, 2012 and December 31, 2011:

   
June 30, 2012
 
 
 
 
(in thousands)
 
 
 
 
Cost
   
 
 
Unrealized
Gains
   
 
 
Unrealized
Losses
   
 
 
 
Fair Value
 
Available-for-sale securities:
                       
Funds
                       
Equity
  $ 193,370     $ 2,222     $ (13,575 )   $ 182,017  
Fixed income
    89,847       124       (2,842 )     87,129  
Convertible
    43,477       90       (2,113 )     41,454  
Other
    1,610       46       (261 )     1,395  
Total available-for-sale securities
  $ 328,304     $ 2,482     $ (18,791 )   $ 311,995  
CFS securities:
                               
Funds
                               
Equity
  $ 3,004     $ 573     $     $ 3,577  
Common stock
    56       65             121  
Total CFS securities
  $ 3,060     $ 638     $     $ 3,698  
Total investment securities
                          $ 315,693  



 
10

 


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

 
 
December 31, 2011
 
 
 
 
(in thousands)
 
 
 
 
Cost
   
 
 
Unrealized
Gains
   
 
 
Unrealized
Losses
   
 
 
 
Fair Value
 
Available-for-sale securities:
                       
Funds
                       
Equity
  $ 179,686     $ 8,703     $ (15,052 )   $ 173,337  
Fixed income
    88,329       14       (4,566 )     83,777  
Convertible
    47,481       9,801       (678 )     56,604  
Other
    1,556       27       (337 )     1,246  
Total available-for-sale securities
  $ 317,052     $ 18,545     $ (20,633 )   $ 314,964  
CFS securities:
                               
Funds
                               
Equity
  $ 3,004     $ 399     $     $ 3,403  
Common stock
    55       74             129  
Total CFS securities
  $ 3,059     $ 473     $     $ 3,532  
Total investment securities
                          $ 318,496  

Of the $315.6 million and $318.4 million investments in Funds at June 30, 2012 and December 31, 2011, respectively, $270.7 million and $276.1 million were invested in affiliated funds.

The aggregate fair value of available-for-sale investment securities that was in an unrealized loss position at June 30, 2012 and December 31, 2011 was $274.3 million and $252.2 million, respectively. As of June 30, 2012, the cumulative losses on securities that had been in a continuous loss position for 12 months or longer totaled $5.0 million.

At June 30, 2012 and December 31, 2011, the Company believes that the unrealized losses attributed to its 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. 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.

The table below summarizes information on available-for-sale securities as well as the change in unrealized gains and losses on CFS securities for the three and six months ended June 30, 2012 and 2011:

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2012
   
2011
   
2012
   
2011
 
(in thousands)
                       
Available-for-sale securities:
                       
Proceeds from sale                                                                
  $     $ 83,975     $ 276,516     $ 96,081  
Gross realized gains on sales                                                                
  $     $ 12,631     $ 26,440     $ 14,368  
                                 
CFS securities:
                               
  Change in unrealized gains (losses)                                                                   
  $ (296 )   $ (99 )   $ 165     $ 504  


 
11

 


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

The tables below summarize the tax (provision) benefit on unrealized gains and gains reclassified out of accumulated other comprehensive income on available-for-sale securities for the three and six months ended June 30, 2012 and 2011:

   
Three Months Ended June 30, 2012
   
Three Months Ended June 30 , 2011
 
(in thousands)
 
Before-Tax Amount
   
Tax (Provision) Benefit
   
After-Tax
Amount
   
Before-Tax Amount
   
Tax (Provision) Benefit
   
After-Tax
Amount
 
Available-for-sale securities:
                                   
Changes in unrealized gains (losses)
  $ (17,033 )   $ 1,388     $ (15,645 )   $ 4,835     $ (391 )   $ 4,444  
Reclassification adjustment for realized gains included in income
                      (17,183 )     1,389       (15,794 )
Other comprehensive loss
  $ (17,033 )   $ 1,388     $ (15,645 )   $ (12,348 )   $ 998     $ (11,350 )


   
Six Months Ended June 30, 2012
   
Six Months Ended June 30 , 2011
 
(in thousands)
 
Before-Tax Amount
   
Tax (Provision) Benefit
   
After-Tax
Amount
   
Before-Tax Amount
   
Tax (Provision) Benefit
   
After-Tax
Amount
 
Available-for-sale securities:
                                   
Changes in unrealized gains
  $ 6,354     $ (519 )   $ 5,835     $ 20,379     $ (1,675 )   $ 18,704  
Reclassification adjustment for realized gains included in income
    (20,574 )     1,679       (18,895 )     (18,848 )     1,525       (17,323 )
Other comprehensive income (loss)
  $ (14,220 )   $ 1,160     $ (13,060 )   $ 1,531     $ (150 )   $ 1,381  

(4) Derivative Assets and Liabilities

In order to reduce the volatility equity markets have on the fair value of the Company’s corporate investment portfolio and to assist in compliance with its debt covenants, the Company uses exchange traded option contracts as an economic hedge of price changes in its investment securities portfolio. The Company's corporate investment portfolio consists of cash and cash equivalents, investment securities, partnership investments and derivative assets and liabilities. The equity price risk in the investment portfolio is hedged using exchange-traded option contracts that correlate most closely with the change in value of the portfolio being hedged. The use of these option contracts is part of a hedge overlay strategy to minimize downside risk in the hedged portfolio, while participating in a portion of the upside of a market rally. 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 option contracts is reported in derivative assets and derivative liabilities 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 $108,000 and $2.5 million for the quarter ended June 30, 2012 and 2011, respectively. Net losses of $8.2 million and $8.6 million were recorded for the six months ended June 30, 2012 and 2011, respectively. The Company is using these derivatives for risk management purposes but has not designated the contracts as hedges for accounting purposes.


 
12

 


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

(5) Partnership Investments

Presented below are the underlying assets and liabilities of Calamos International Growth Fund LP that the Company reports on a net consolidated basis, as well as partnership investments that the Company accounts for under the equity method. These investments are presented collectively as partnership investments, net in the consolidated statements of financial condition as of June 30, 2012 and December 31, 2011.

 
(in thousands)
 
June 30,
2012
   
December 31,
2011
 
Consolidated partnership:
           
Securities owned
  $ 12,323     $ 11,471  
Cash and cash equivalents
    252       651  
Other current assets
    312       64  
Accrued expenses and other current liabilities
    (314 )     (127 )
Total
    12,573       12,059  
Equity method investment in partnerships
    21,550       20,997  
Partnership investments, net
  $ 34,123     $ 33,056  

(6) 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. Transfers between levels are measured at the end of the reporting period. As of June 30, 2012, the Company transferred $7.7 million of foreign securities from Level 1 to Level 2. These transfers were due to the Company now using applied factors that utilize a systematic fair valuation model on securities that trade on certain foreign exchanges. The Company had no additional transfers between levels during the reporting periods.

Investments are presented in the consolidated financial statements at fair value in accordance with GAAP. Investments in open-end 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. Foreign securities trading on foreign exchanges or over-the-counter markets may be valued utilizing a valuation model provided by an independent pricing service to reflect the impact of movement in the U.S. market after the foreign markets close. 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, call options written are reported at the last quoted ask price. 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 Company’s prime broker.


 
13

 


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

The following tables provide the hierarchy of inputs used to derive the fair value of the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, respectively.
   
 
   
Fair Value Measurements Using
 
 
 
 
 
(in thousands)
Description
 
 
 
 
 
June 30,
2012
   
Quoted Prices
in Active
Markets for
Identical Assets
and Liabilities
(Level 1)
   
 
Significant
Other
Observable
Inputs
(Level 2)
 
Cash and cash equivalents
                 
Money market funds
  $ 5,168     $ 5,168     $  
Investment securities (Note 3)
                       
Funds
                       
Equity
    185,594       185,594        
Fixed income
    87,129       87,129        
Convertible
    41,454       41,454        
Other
    1,395       1,395        
Total Funds
    315,572       315,572        
Common stock
    121       121        
Investment securities
 
    315,693       315,693        
Derivative assets (Note 4)
                       
Exchange-traded put option contracts
    113       113        
                         
Securities owned by the partnership (Note 5)
                       
Common stocks
    12,323       4,413       7,910  
Short term investments
    252       252        
      12,575       4,665       7,910  
Total
  $ 333,549     $ 325,639     $ 7,910  
                         


 
14

 


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


   
 
   
Fair Value Measurements Using
 
 
 
 
 
(in thousands)
Description
 
 
 
 
 
December 31,
2011
   
Quoted Prices
in Active
Markets for
Identical Assets
and Liabilities
(Level 1)
   
 
Significant
Other
Observable
Inputs
(Level 2)
 
Cash and cash equivalents
                 
Money market funds
  $ 3,983     $ 3,983     $  
Investment securities (Note 3)
                       
Funds
                       
Equity
    176,740       176,740        
Fixed income
    83,777       83,777        
Convertible
    56,604       56,604        
Other
    1,246       1,246        
Total Funds
    318,367       318,367        
Common stock
    129       129        
Investment securities
    318,496       318,496        
                         
Derivative assets (Note 4)
                       
Exchange-traded put option contracts
    1,018       1,018        
                         
Derivative liabilities (Note 4)
                       
Exchange-traded call option contracts
    (3,844 )     (3,844 )      
                         
Securities owned by the partnership (Note 5)
                       
Common stocks
    11,471       11,261       210  
Fixed income
    626             626  
      12,097       11,261       836  
Securities sold but not yet purchased of the partnership (Note 5)
                       
Common stocks
    (72 )     (72 )      
Exchange-traded call option contracts
    (31 )     (31 )      
      (103 )     (103 )      
Total
  $ 331,647     $ 330,811     $ 836  

The fair value of long-term debt, not measured at fair value in the consolidated financial statements, was $110.8 and $109.6 million, respectively at June 30, 2012 and December 31, 2011. The carrying value was $92.1 million at June 30, 2012 and December 31, 2011. These fair value estimates are calculated using discounted cash flows based on the Company’s incremental borrowing rates for the debt and market inputs for similar bonds at the measurement date, and are Level 2 inputs within the fair value hierarchy.

The carrying value of all other financial instruments approximates fair value due to the short maturities of these financial instruments.

(7) Loans Payable

The Company has access to margin loans for the settlement of call options, as well as an additional source of liquidity. The interest rates that can be charged on margin loans range from 1.75% to 2.50% per annum, based on the Company’s average debt balance and brokerage firm’s lending rate. These loans are due on demand. The Company can borrow up to 70% of its marginable securities on deposit with its brokerage firm. The Company had no margin loan balances outstanding at June 30, 2012 and December 31, 2011.


 
15

 


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

(8) Stock Based Compensation

Under the Company’s incentive compensation plan, certain employees of the Company receive stock based compensation comprised of stock options and restricted stock units (RSUs). Historically, RSUs have been settled with newly issued shares so that no cash was used by the Company to settle awards; however, the Company may also use treasury shares upon the exercise of stock options and upon conversion of RSUs. The Company’s Annual Report on Form 10-K for the year ended December 31, 2011 provides details of this plan and its provisions.

During the six months ended June 30, 2012, the Company granted 604,917 RSUs and there were 60,004 RSUs forfeited. During the same period, the Company granted no stock options and there were 14,620 stock options forfeited.

During the six months ended June 30, 2012, 300,141 RSUs vested with 69,025 units withheld for taxes and 231,116 RSUs converted into an equal number of shares of CAM’s Class A common stock. The total intrinsic value and the fair value of the converted shares was $2.9 million. The total tax benefit realized in connection with the vesting of the RSUs during the six months ended June 30, 2012 was $335,000, as the Company receives tax benefits based upon the portion of Calamos Investments’ expense that it recognizes.

During the six months ended June 30, 2012 and 2011, compensation expense recorded in connection with the RSUs and stock options was $3.8 million for both periods, of which $842,000 and $821,000 during the six months ended June 30, 2012 and 2011, respectively, was credited as additional paid-in capital after giving effect to the non-controlling interests. The amount of deferred tax asset created was $312,000 and $304,000 during the six months ended June 30, 2012 and 2011, respectively. As of June 30, 2012, $17.9 million of total unrecognized compensation expense related to unvested stock option and RSU awards is expected to be recognized over a weighted-average period of 4.0 years.

(9) Non-operating Income (Loss)

Non-operating income (loss) was comprised of the following components for the three and six months ended June 30, 2012 and 2011:


   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2012
   
2011
   
2012
   
2011
 
(in thousands)
                       
Interest income
  $ 96     $ 53     $ 184     $ 122  
Interest expense
    (1,504 )     (1,662 )     (3,008 )     (3,626 )
  Net interest expense
    (1,408 )     (1,609 )     (2,824 )     (3,504 )
                                 
Investment income (loss)
    (2,574 )     9,934       19,624       7,449  
Dividend income
    791       779       1,576       1,600  
Miscellaneous other income
    69       66       156       103  
  Investment and other income (loss)
    (1,714 )     10,779       21,356       9,152  
Non-operating income (loss)
  $ (3,122 )   $ 9,170     $ 18,532     $ 5,648  


 
16

 


CALAMOS ASSET MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
(10) Income Taxes

Calamos Investments is subject to certain income-based state taxes; therefore, income taxes reflect not only the portion attributed to CAM stockholders but also a portion of income taxes attributable to non-controlling interests.

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
   
   
2012
   
2011
   
2012
   
2011
(in thousands)
                     
Income tax provision
  $ 4,281     $ 4,050     $ 8,565     $ 6,957  
Income tax provision attributable to non-controlling interest in Calamos  Investments
    (122 )     (119 )     (194 )     (272 )
Income taxes attributable to CAM
    4,159       3,931       8,371       6,685  
Net income attributable to CAM
    1,814       6,693       8,853       11,325  
Income before taxes attributable to CAM
  $ 5,973     $ 10,624     $ 17,224     $ 18,010  
CAM’s effective income tax rate
    69.6 %     37.0 %     48.6 %     37.1 %

As of December 31, 2011, the Company’s capital loss carryforward was $27.6 million, of which $21.8 million will expire in 2013 and $5.8 million will expire in 2014, if not used before the expiration dates. During the second quarter the Company recorded a $1.9 million valuation allowance on the deferred tax asset, related to this capital loss carryforward, to reduce the deferred tax asset to an amount that is more likely than not to be realized. In determining the valuation allowance the Company used historical and forecasted future realized and unrealized gains and losses on its investment, ongoing tax planning strategies, and forecasts of future taxable income. Each quarter the Company re-evaluates its estimate related to the valuation allowance, including its assumptions about future taxable income. As of June 30, 2012, the Company’s valuation allowance on this deferred tax asset was $7.1 million. Excluding the deferred tax valuation allowance, our effective income tax rate would be 37.8% and 37.6% for the second quarter and first six months ended June 30, 2012.
 
 
(11) Earnings Per Share

The following table reflects the calculation of basic and diluted earnings per share:
 
(in thousands, except per share data)
 
Three Months Ended June 30,
   
 Six Months Ended June 30,
 
   
2012
   
2011
   
2012
   
2011
 
Earnings per share – basic
                       
Earnings available to common shareholders
  $ 1,814     $ 6,693     $ 8,853     $ 11,325  
Weighted average shares outstanding
    20,343       20,125       20,288       20,080  
Earnings per share – basic
  $ 0.09     $ 0.33     $ 0.44     $ 0.56  
                                 
Earnings per share – diluted
                               
Earnings available to common shareholders
  $ 1,814     $ 6,693     $ 8,853     $ 11,325  
Weighted average shares outstanding
    20,343       20,125       20,288       20,080  
Dilutive impact of restricted stock units
    460       490       425       465  
Weighted average diluted shares outstanding
    20,803       20,615       20,713       20,545  
Earnings per share – diluted
  $ 0.09     $ 0.32     $ 0.43     $ 0.55  

When dilutive, diluted shares outstanding are calculated (a) assuming that Calamos Interests exchanged all of their ownership interest in Calamos Investments and their CAM Class B common stock for shares of CAM’s Class A common stock (the Exchange) and (b) including the effect of outstanding dilutive equity incentive compensation awards. As of June 30, 2012 and 2011, the impact of the Exchange was anti-dilutive and, therefore, excluded from the calculation of diluted earnings per share.


 
17

 


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

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 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 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 option’s exercise price. This result is possible because compensation cost attributed to future services and not yet recognized is included as a component of the assumed proceeds upon exercise. The dilutive effect of such options and RSUs would increase the
weighted average number of shares used in the calculation of diluted earnings per share.

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 Company’s 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.

The shares issued upon Exchange as presented 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 Company’s independent directors may determine the fair market value of CAM’s net assets and its ownership in Calamos Investments. For example, premiums and/or discounts 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. Further, based upon currently available information, the Company believes it is extremely remote that any Exchange would transpire without a fair market valuation of CAM’s net assets and an agreement by Calamos Interests to Exchange, based upon that fair market valuation.

The following table shows the number of shares which were excluded from the computation of diluted earnings per share as they were anti-dilutive:
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
Exchange of Calamos Interests’ ownership in Calamos Investments for shares of Class A common stock
    40,993,210       48,384,017       40,993,210       48,384,017  
Stock options
    2,330,443       2,356,455       2,330,443       2,356,455  
Total
    43,323,653       50,740,472       43,323,653       50,740,472  

The maximum number of shares of Class A common stock that could be issued to the Calamos Interests upon exchange is 71,931,185 as of June 30, 2012.
 
 
(12) Recently Issued Accounting Pronouncements

The Company has reviewed all newly issued accounting pronouncements that are applicable to its business and to the preparation of its consolidated financial statements, including those not yet required to be adopted. The Company does not believe any such pronouncements will have a material effect on the Company’s financial position or results of operations. Accounting guidance that either have become effective this year or will become effective in future years, with respect to the Company’s consolidated financial statements, are described below:

In December 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance that requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. This guidance is effective for annual and interim periods beginning on or after January 1, 2013. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company’s effective date is January 1, 2013. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued new guidance that requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. An entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The Company has elected the two separate but consecutive statements approach with the

 
18

 


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

adoption of this guidance. This guidance is effective and was adopted by the Company during the first quarter of this year.

In May 2011, the FASB issued new guidance to clarify the application of existing fair value measurement requirements and to change particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. This guidance is effective and was adopted by the Company during the first quarter of this year. The adoption of this guidance has resulted in the Company reporting the level in the fair value hierarchy and the observable inputs required for the calculation of the fair value of the Company’s long-term debt.

 
19

 


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

We are a firm of 342 full-time associates that primarily provides investment advisory services to institutions and individuals, managing $33.4 billion in assets as of June 30, 2012. 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 open-end funds; net inflows into and withdrawals from separate accounts that we manage; fluctuations in the financial markets around the world that result in appreciation or depreciation of assets under management; and the number and types of our investment strategies and products.

We market our investment strategies to our clients through a variety of products designed to suit their investment needs. We currently categorize the portfolios that we manage within four investment product types captured in our Funds and separate accounts. The following table lists our assets under management by product as of June 30, 2012 and 2011.

 
 
June 30 ,
 
(in millions)
 
2012
   
2011
 
Funds
           
Open-end funds
  $ 20,081     $ 22,911  
Closed-end funds
    5,388       5,557  
Total Funds
    25,469       28,468  
Separate Accounts
               
Institutional accounts
    5,650       6,239  
Managed accounts
    2,265       2,645  
Total separate accounts
    7,915       8,884  
Total Assets Under Management
  $ 33,384     $ 37,352  

Our revenues are substantially comprised of investment management fees earned under contracts with Funds and separate accounts that we manage. Our revenues are also comprised of distribution and underwriting fees, including asset-based distribution 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 and depreciation on investments; the level of net inflows and outflows, which represent the sum of new and existing client funding, withdrawals and terminations; and purchases and redemptions of open-end fund shares. The mix of assets under management among our investment products impacts our revenues as our fee schedules vary by product.

Our largest operating expenses are typically related to: employee compensation and benefits expenses, which includes salaries, incentive compensation and related benefits costs; distribution expenses, which includes open-end funds distribution cost, including Rule 12b-1 payments; marketing and sales promotion expenses, which includes expenses necessary to market products offered by us; and amortization of deferred sales commissions for open-end funds. Operating expenses may fluctuate due to a number of factors including variations in staffing and compensation, changes in distribution expense as a result of fluctuations in open-end fund net sales and market appreciation or depreciation, and marketing-related expenses that include supplemental distribution payments.

 
20

 
Operating Results

Second Quarter and Six Months Ended June 30, 2012 Compared to Second Quarter and Six Months Ended June 30, 2011

Assets Under Management

Assets under management decreased by $4.0 billion, or 11%, to $33.4 billion as of June 30, 2012 from $37.4 billion as of June 30, 2011. Our assets under management consisted of 76% Funds and 24% separate accounts as of June 30, 2012 and 2011.

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
               
Change
               
Change
 
   
2012
   
2011
   
Amount
   
Percent
   
2012
   
2011
   
Amount
   
Percent
 
(in millions)
                                               
Funds
                                               
Beginning assets under management
  $ 27,435     $ 29,081     $ (1,646 )     (6 )%   $ 25,045     $ 27,352     $ (2,307 )     (8 )%
Net (redemptions) purchases
    (540 )     (218 )     (322 )     *       (572 )     128       (700 )     *  
Market appreciation (depreciation)
    (1,426 )     (395 )     (1,031 )     *       996       988       8       1  
Ending assets under management
    25,469       28,468       (2,999 )     (11 )     25,469       28,468       (2,999 )     (11 )
Average assets under management
    26,008       28,803       (2,795 )     (10 )     26,354       28,586       (2,232 )     (8 )
Institutional
                                                               
Beginning assets under management
    6,291       6,179       112       2       5,505       5,559       (54 )     (1 )
Net (redemptions) purchases
    (261 )     169       (430 )     *       (20 )     423       (443 )     *  
Market appreciation (depreciation)
    (380 )     (109 )     (271 )     *       165       257       (92 )     (36 )
Ending assets under management
    5,650       6,239       (589 )     (9 )     5,650       6,239       (589 )     (9 )
Average assets under management
    5,954       6,294       (340 )     (5 )     5,943       6,037       (94 )     (2 )
Managed Accounts
                                                               
Beginning assets under management
    2,491       2,701       (210 )     (8 )     2,227       2,503       (276 )     (11 )
Net redemptions
    (50 )     (44 )     (6 )     14       (95 )     (26 )     (69 )     *  
Market appreciation (depreciation)
    (176 )     (12 )     (164 )     *       133       168       (35 )     (21 )
Ending assets under management
    2,265       2,645       (380 )     (14 )     2,265       2,645