NOTE 6 - VARIABLE INTEREST ENTITIES (“VIEs”):

Under the provisions of FIN 46R the Company has determined that Raymond James Employee Investment Funds I and II (the “EIF Funds”), Comprehensive Software Systems, Inc. (“CSS”), certain entities in which Raymond James Tax Credit Funds, Inc. (“RJTCF”) owns variable interests, various partnerships involving real estate, and a trust fund established for employee retention purposes are VIEs.  Of these, the Company has determined that the EIF Funds, certain tax credit fund partnerships/LLCs, and the trust fund should be consolidated in the financial statements as the Company is the primary beneficiary.

The following table summarizes the balance sheets of the variable interest entities consolidated by the Company:

	September 30,	September 30,
	2007	2006
	(in 000's)
Assets:
Cash and Cash Equivalents	$     6,406	$  17,622
Receivables, Other	32,675	88,145
Investments in Real Estate Partnerships – Held by Variable Interest Entities	221,147	227,963
Trust Fund Investment in Parent Company Common Stock*	6,450	5,100
Prepaid Expenses and Other Assets	24,894	16,426
Total Assets	$ 291,572	$ 355,256
Liabilities And Shareholders’ Equity:
Loans Payable Related to Investments by Variable Interest Entities in Real Estate
Partnerships	$ 116,479	$ 193,647
Trade and Other	849	279
Intercompany Payable	8,203	16,098
Total Liabilities	125,531	210,024
Minority Interests	162,319	143,217
Shareholders' Equity	3,722	2,015
Total Liabilities and Shareholders' Equity	$ 291,572	$ 355,256

*  Included in common shares in treasury in the Company’s Consolidated Statements of Financial Condition.

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The following table summarizes the statements of income of the variable interest entities consolidated by the Company:

	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
	(in 000’s)
Revenues:
Interest	$    955	$  1,009	$    822
Other	2,580	4,397	4,248
Total Revenues	3,535	5,406	5,070
Interest Expense	6,972	8,368	3,934
Net Revenues	(3,437)	(2,962)	1,136
Non-Interest Expenses:
Compensation, Commissions and Benefits	1,828	1,584	-
Other	10,430	9,246	5,759
Total Non-Interest Expense	12,258	10,830	5,759
Minority Interest in Earnings of Subsidiaries	(13,858)	(12,245)	(4,631)
Income Before Provision for Income Taxes	(1,837)	(1,547)	8
Provision for Income Taxes	-	-	-
Net (Loss) Income	$ (1,837)	$ (1,547)	$        8

The EIF Funds are limited partnerships, for which the Company is the general partner, that invest in the merchant banking and private equity activities of the Company and other unaffiliated venture capital limited partnerships. The EIF Funds were established as compensation and retention measures for certain qualified key employees of the Company. The Company makes non-recourse loans to these employees for two-thirds of the purchase price per unit. The loans and applicable interest are to be repaid based on the earnings of the EIF Funds. The Company is deemed to be the primary beneficiary, and accordingly, consolidates the EIF Funds, which had combined assets of approximately $17.4 million at September 30, 2007. None of those assets act as collateral for any obligations of the EIF Funds. The Company's exposure to loss is limited to its contributions and the non-recourse loans funded to the employee investors, for which their partnership interests serve as collateral. At September 30, 2007 that exposure is approximately $5.1 million.

CSS was formed by a group of broker-dealer firms, including the Company, to develop a back-office software system. CSS had assets of $4.1 million at September 30, 2007. As of September 30, 2007, the Company owns approximately 42% of CSS. The Company's exposure to loss is limited to its capital contributions. The Company is not the primary beneficiary of CSS and accounts for its investment using the equity method of accounting. The carrying value of the Company’s investment in CSS is zero at September 30, 2007. CSS has agreed in principal to be acquired by an affiliate of a shareholder. No distributions to shareholders are anticipated.

RJTCF is a wholly owned subsidiary of RJF and is the managing member or general partner in approximately 49 separate tax credit housing funds having one or more investor members or limited partners. These tax credit housing funds are organized as limited liability companies or limited partnerships for the purpose of investing in limited partnerships which purchase and develop low income housing properties qualifying for tax credits. As of September 30, 2007, 47 of these tax credit housing funds are VIEs as defined by FIN 46R, and RJTCF’s interest in these tax credit housing funds which are VIEs range from .01% to 1.0%.

RJTCF has concluded that it is the primary beneficiary in approximately one fifth of these tax credit housing funds, and accordingly, consolidates these funds, which have combined assets of approximately $267.7 million at September 30, 2007. None of those assets act as collateral for any obligations of these funds. The Company's exposure to loss is limited to its investments in, advances to, and receivables due from these funds and at September 30, 2007, that exposure is approximately $6.9 million.

RJTCF is not the primary beneficiary of the remaining tax credit housing funds it determined to be VIEs and accordingly the Company does not consolidate these funds. The Company's exposure to loss is limited to its investments in, advances to, and receivables due from these funds and at September 30, 2007, that exposure is approximately $26.8 million.

The two remaining tax credit housing funds that have been determined not to be VIEs are wholly owned by RJTCF and are included in the Company’s consolidated financial statements. During September 30, 2007, only one of these funds had any material activity. These funds typically hold interests in certain tax credit limited partnerships for less than 90 days. The fund had assets of approximately $1.1 million at September 30, 2007.

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As of September 30, 2007, the Company has a variable interest in several limited partnerships involved in various real estate activities, in which a subsidiary is the general partner. The Company is not the primary beneficiary of these partnerships and accordingly the Company does not consolidate these partnerships. These partnerships have assets of approximately $11 million at September 30, 2007. The Company's exposure to loss is limited to its capital contributions. The carrying value of the Company's investment in these partnerships is not material at September 30, 2007.

One of the Company’s restricted stock plans is associated with a trust fund which was established through the Company’s wholly owned Canadian subsidiary. This trust fund was established and funded to enable the trust fund to acquire Company common stock in the open market to be used to settle restricted stock units granted as a retention vehicle for certain employees of the Canadian subsidiary. For financial statement purposes, the Company is deemed to be the primary beneficiary in accordance with FIN 46R, and accordingly, consolidates this trust fund, which has assets of approximately $6.5 million at September 30, 2007. None of those assets are specifically pledged as collateral for any obligations of the trust fund. The Company's exposure to loss is limited to its contributions to the trust fund and at September 30, 2007, that exposure is approximately $6.5 million.

NOTE 7 – LEVERAGED LEASES

The Company is the lessor in a leveraged commercial aircraft transaction with Continental Airlines, Inc. (“Continental"). The Company's ability to realize its expected return is dependent upon this airline’s ability to fulfill its lease obligation. In the event that this airline defaults on its lease commitment and the Trustee for the debt holders is unable to re-lease or sell the plane with adequate terms, the Company would suffer a loss of some or all of its investment.

The value of the Company’s leveraged lease with Continental was approximately $9.9 million as of September 30, 2007. The Company's equity investment represented 20% of the aggregate purchase price; the remaining 80% was funded by public debt issued in the form of equipment trust certificates. The residual value of the aircraft at the end of the lease term of approximately 17 years is projected to be 15% of the original cost. This lease expires in May 2014.

	September 30,	September 30,
	2007	2006
	(in 000's)
Rents Receivable (Net of Principal And
Interest on the Non-Recourse Debt)	$  7,591	$ 8,576
Unguaranteed Residual Values	8,012	8,012
Unearned Income	(5,702)	(5,706)
Investment in Leveraged Leases	9,901	10,882
Deferred Taxes arising from Leveraged Leases	(10,420)	(19,796)
Net Investment in Leveraged Leases	$    (519)	$ (8,914)

Although Continental remains current on its lease payments to the Company, the inability of Continental to make its lease payments, or the termination or modification of the lease through a bankruptcy proceeding, could result in the write-down of the Company's investment and the acceleration of certain income tax payments. The Company continues to monitor this lessee for specific events or circumstances that would increase the likelihood of a default on Continental’s obligations under this lease.

The Company was also the lessor in a leveraged commercial aircraft transaction with Delta Air Lines, Inc. (“Delta”). Delta filed for bankruptcy protection on September 14, 2005. Accordingly, the Company recorded a $6.5 million pre-tax charge in 2005 to fully reserve the balance of its investment in the leveraged lease of an aircraft to Delta. The Company had taken a $4 million pre-tax charge in 2004 to partially reserve for this investment. No amount of these charges represented a cash expenditure. During the second quarter of fiscal 2007, the Company sold its interest in the Delta transaction for $2 million, which was recognized as a pre-tax gain within Other Revenue. Upon closing, certain income tax obligations of approximately $8.5 million were accelerated and paid during the quarter. These tax payments did not impact net earnings, as these amounts were previously recorded as deferred tax liabilities.

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NOTE 8 - PROPERTY AND EQUIPMENT:

	September 30,	September 30,
	2007	2006
	(in 000's)
Land	$   18,644	$    18,644
Construction in Process	1,621	233
Software Development	7,573	4,522
Buildings, Leasehold and Land Improvements	142,329	137,117
Furniture, Fixtures, and Equipment	182,851	155,198
	353,018	315,714
Less:  Accumulated Depreciation
and Amortization	(186,055)	(172,934)
	$ 166,963	$  142,780

 

NOTE 9 - BANK DEPOSITS:

Bank deposits include Negotiable Order of Withdrawal (“NOW”) accounts, demand deposits, savings and money market accounts and certificates of deposit. The following table presents a summary of bank deposits at September 30, 2007 and September 30, 2006:

	September 30, 2007		September 30, 2006
		Weighted		Weighted
		Average		Average
	Balance	Rate (1)	Balance	Rate (1)
	($ in 000's)
Bank Deposits:
NOW Accounts	$       4,493	1.57%	$       6,088	1.95%
Demand Deposits (Non-Interest Bearing)	3,645	-	2,538	-
Savings and Money Market Accounts	5,337,587	4.59%	2,542,894	4.59%
Certificates of Deposit	239,534	4.75%	255,360	4.49%
Total Bank Deposits	$5,585,259	4.59%	$2,806,880	4.57%

(1) Weighted average rate calculation is based on the actual deposit balances at September 30, 2007 and 2006.

RJBank had deposits from officers and directors of $1,813,000 and $691,000 at September 30, 2007 and September 30, 2006, respectively.

Scheduled maturities of certificates of deposit and brokered certificates of deposit at September 30, 2007 and 2006 were as follows:

	September 30, 2007		September 30, 2006
	Denominations		Denominations
	Greater than	Denominations	Greater than	Denominations
	or Equal	Less than	or Equal	Less than
	to $100,000	$100,000	to $100,000	$100,000
	(in 000's)
Three Months or Less	$ 14,386	$   23,922	$ 16,371	$   37,835
Over Three Through Six Months	10,949	28,980	11,945	26,276
Over Six Through Twelve Months	11,790	38,005	7,821	25,373
Over One Through Two Years	14,706	36,997	11,871	38,556
Over Two Through Three Years	7,978	22,345	10,497	25,809
Over Three Through Four Years	7,857	14,103	6,498	18,387
Over Four Years	1,802	5,714	7,272	10,849
Total	$ 69,468	$ 170,066	$ 72,275	$ 183,085

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Interest expense on deposits is summarized as follows:

	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
	(in 000's)
Certificates of Deposit	$   11,021	$ 10,872	$  6,577
Money Market, Savings and
NOW Accounts	179,741	51,313	12,041
Total Interest Expense	$ 190,762	$ 62,185	$18,618

NOTE 10 – LOANS PAYABLE:

Loans Payable

Loans payable at September 30, 2007 and September 30, 2006 are presented below:

	September 30,	September 30,
	2007	2006
	(in 000's)
Short-Term Borrowings:
Borrowings on Lines of Credit (1)	$    2,685	$   13,040
Current Portion of Mortgage Notes Payable	2,731	2,746
Federal Home Loan Bank Advances (2)	5,000	-
Total Short-Term Borrowings	10,416	15,786
Long-Term Borrowings:
Mortgage Notes Payable (3)	62,224	65,852
Federal Home Loan Bank Advances (2)	50,000	60,000
Total Long-Term Borrowings	112,224	125,852
Total Loans Payable	$ 122,640	$ 141,638

(1)

The Company and its subsidiaries maintain one committed and several uncommitted lines of credit denominated in U.S. dollars and one uncommitted line of credit denominated in Canadian dollars (“CDN”). At September 30, 2007, the aggregate domestic lines were $1.26 billion and CDN $40 million, respectively. The interest rates for these lines of credit are variable and are based on the Fed Funds rate, LIBOR, and Canadian prime rate. For the fiscal year ended September 30, 2007, interest rates on the lines of credit ranged from 5.25% to 6.70%. For the fiscal year ended September 30, 2006, interest rates on the lines of credit ranged from 4.50% to 6.76%. The Company’s committed $200 million line of credit is subject to a 0.125% per annum facility fee. There were no outstanding balances against these lines of credit at September 30, 2007. In addition, the Company’s joint ventures in Turkey and Argentina have multiple settlement lines of credit. The Company has guaranteed certain of these settlement lines of credit as follows: four in Turkey totaling $22.5 million and one in Argentina for $3.0 million. On September 30, 2007, there were no outstanding balances on the settlement lines in Argentina and Turkey. At September 30, 2007 the aggregate unsecured settlement lines of credit available were $76.5 million, and there were outstanding balances of $2.7 million on these lines. The interest rates for these lines of credit ranged from 9% to 20%. During the three months ended June 30, 2007, the Company entered into a $500 million uncommitted tri-party repurchase agreement line of credit. Under this agreement, the Company pledges certain of its trading inventory as collateral against borrowings on this line. The required market value of the collateral is generally 102% of the cash borrowed. The rate is set each day at 25 basis points over the opening Fed Funds rate and this agreement can be terminated by any party on any business day. Under this agreement, there were secured short-term borrowings of $195,000,000 outstanding at September 30, 2007 which are included in Securities Sold Under Agreement to Repurchase.

(2)

RJBank has $55 million, $60 million, and $70 million in FHLB advances outstanding at September 30, 2007, 2006, and 2005, respectively, which are comprised of one short-term, fixed rate advance and several long-term, fixed rate advances. The weighted average interest rate on these fixed rate advances at September 30, 2007, 2006, and 2005 were 5.23%, 4.69%, and 4.60%, respectively. The outstanding FHLB advances mature between May 2008 and February 2011. The maximum amount of FHLB advances outstanding at any month-end during the year ended September 30, 2007, 2006, and 2005 was $70 million, $473.7 million, and $122.6 million, respectively. The average amounts of FHLB advances outstanding and the weighted average interest rate thereon for the years ended September 30, 2007, 2006, and 2005 were $57 million at a rate of 5.24%, $233 million at a rate of 4.66%, and $77 million at a rate of 4.01%, respectively. These advances are secured by a blanket lien on RJBank's residential loan portfolio granted to FHLB. The FHLB has the right to convert advances totaling $35 million and $50 million at September 30, 2007 and September 30, 2006, respectively, to a floating rate at one or more future dates. RJBank has the right to prepay these advances without penalty if the FHLB exercises its right.

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(3)	Mortgage note payable evidences a mortgage loan for the financing of the Company's home office complex. The mortgage loan bears interest at 5.7% and is secured by land, buildings, and improvements with a net book value of $70.7 million at September 30, 2007.

Long-term borrowings at September 30, 2007, based on their contractual terms, mature as follows (in 000's):

2009	$    2,891
2010	8,060
2011	48,239
2012	3,429
2013 and Thereafter	49,605
Total	$112,224

Loans Payable Related to Investments by Variable Interest Entities in Real Estate Partnerships

The borrowings of certain VIEs’ are comprised of several loans, which are non-recourse to the Company.  See Note 6 of the Notes to Consolidated Financial Statements for additional information regarding the entities deemed to be variable interest entities under FIN 46R, which are consolidated by the Company.

VIEs’ loans payable at September 30, 2007 and September 30, 2006 are presented below:

	September 30,	September 30,
	2007	2006
	(in 000's)
Current Portion of Loans Payable	$  13,839	$  32,787
Long-Term Portion of Loans Payable	102,640	160,860
Total Loans Payable	$116,479	$193,647

VIEs’ long-term borrowings at September 30, 2007, based on their contractual terms, mature as follows (in 000's):

2009	$  13,267
2010	12,720
2011	12,748
2012	13,036
2013 and Thereafter	50,869
Total	$102,640

NOTE 11 – DERIVATIVE FINANCIAL INSTRUMENTS:

The Company uses interest rate swaps as well as futures contracts as part of its fixed income business. These positions are marked to market with the gain or loss and the related interest recorded in Net Trading Profits within the statement of income for the period. Any collateral exchanged as part of the swap agreement is recorded in Broker Receivables and Payables in the Consolidated Statements of Financial Condition for the period. At September 30, 2007 and September 30, 2006, the Company had outstanding interest rate derivative contracts with notional amounts of $3.5 billion and $2.3 billion, respectively. The notional amount of a derivative contract does not change hands; it is simply used as a reference to calculate payments. Accordingly, the notional amount of the Company’s derivative contracts outstanding at September 30, 2007 vastly exceeds the possible losses that could arise from such transactions. The net market value of all open swap positions at September 30, 2007 and September 30, 2006 was $22.2 million and $13 million, respectively.

The Company is exposed to credit losses in the event of nonperformance by the counterparties to its interest rate swap agreements. The Company performs a credit evaluation of counterparties prior to entering into swap transactions and monitors their credit standings. Currently, the Company anticipates that all counterparties will be able to fully satisfy their obligations under those agreements. The Company may require collateral from counterparties to support these obligations as established by the credit threshold specified by the agreement and/or as a result of monitoring the credit standing of the counterparties. The Company is also exposed to interest rate risk related to its interest rate swap agreements. The Company monitors exposure in its derivatives subsidiary daily based on established limits with respect to a number of factors, including interest rate, spread, ratio and basis, and volatility risks. These exposures are monitored both on a total portfolio basis and separately for selected maturity periods.

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NOTE 12 - INCOME TAXES:

The provision (benefit) for income taxes consists of the following:

	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
		(in 000’s)
Current Provision:
Federal	$ 142,531	$ 102,665	$  78,783
State	17,098	16,844	15,483
International	(5,813)	13,379	8,231
	153,816	132,888	102,497
Deferred benefit:
Federal	(26,132)	(3,742)	(3,058)
State	(1,463)	(495)	(1,867)
International	15,573	(927)	(647)
	(12,022)	(5,164)	(5,572)
	$ 141,794	$ 127,724	$  96,925

The Company's income tax expense differs from the amount computed by applying the statutory federal income tax rate due to the following:

	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
		(in 000’s)
Provision Calculated at Statutory Rates	$ 137,279	$ 119,723	$  85,909
State Income Taxes, Net of Federal Benefit	10,163	10,627	8,851
Other	(5,648)	(2,626)	2,165
	$ 141,794	$ 127,724	$  96,925

U.S. and international components of income before income taxes were as follows:

	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
		(in 000’s)
U.S.	$ 356,591	$ 308,003	$ 230,790
International	35,633	34,063	17,181
Income Before Provision for Income Taxes	$ 392,224	$ 342,066	$ 247,971

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The major deferred tax asset (liability) items, as computed under SFAS 109, are as follows:

	September 30,	September 30,
	2007	2006
	(in 000’s)
Deferred Tax Assets:
Deferred Compensation	$  65,392	$ 56,584
Capital Expenditures	10,812	7,286
Accrued Expenses	49,036	40,904
Unrealized Loss	3,035	1,932
Net Operating Loss Carryforward	5,259	13,496
Total Deferred Tax Assets	133,534	120,202
Deferred Tax Liabilities:
Aircraft Leases	(10,420)	(19,796)
Other	(15,192)	(5,449)
Total Deferred Tax Liabilities	(25,612)	(25,245)
Net Deferred Tax Assets	$ 107,922	$ 94,957

The Company has recorded a deferred tax asset at September 30, 2007 and September 30, 2006. A deferred tax asset has also been recognized for net operating loss carryforwards that will expire between 2008 and 2016. No valuation allowance as defined by SFAS 109 is required for the years then ended as Management believes that it is more likely than not the deferred tax asset is realizable.

The “American Jobs Creation Act of 2004” provides for a one-time deduction for qualifying repatriations of foreign earnings in either fiscal year 2005 or 2006. The 85% dividends received deduction can result in a lower tax rate if the eligible dividends are reinvested within the limitations and requirements of Internal Revenue Code Section 965. During fiscal year 2006, the Company repatriated $1.9 million in extraordinary dividends and recorded a tax liability of $102,000. To the degree that the cumulative undistributed earnings of non-U.S. subsidiaries were permanently invested, no deferred U.S. federal income taxes have been provided. The Company has provided for U.S. deferred income taxes in the amount of $11.6 million on undistributed earnings not considered permanently reinvested in its non-U.S. subsidiaries.

NOTE 13 – COMMITMENTS AND CONTINGENCIES:

Long-term lease agreements expire at various times through 2017. Minimum annual rentals under such agreements for the succeeding five fiscal years are approximately: $28.7 million in 2008, $22.2 million in 2009, $19.3 million in 2010, $12.5 million in 2011, $8.8 million in 2012 and $8.9 million thereafter. Rental expense incurred under all leases, including equipment under short-term agreements, aggregated $40 million, $34.3 million and $31.9 million in 2007, 2006 and 2005, respectively.

See Note 7 of the Notes to Consolidated Financial Statements with respect to the Company's interest in certain commercial aircraft leveraged leases.

At September 30, 2007 and September 30, 2006, no securities other than FHLB stock were pledged by RJBank as collateral with the FHLB for advances. In addition to the FHLB stock pledged as collateral for advances, RJBank provided the FHLB with a blanket lien against RJBank's entire portfolio of residential mortgage loans.

As of September 30, 2007, RJBank has entered into reverse repurchase agreements totaling $905 million with two counterparties, with individual exposures of $500 million and $405 million. Although RJBank is exposed to risk that these counterparties may not fulfill their contractual obligations, the risk of default is minimal due to the creditworthiness of these counterparties, collateral received and the short duration of these agreements.

As of September 30, 2007, RJBank had not settled the purchases of $300.6 million in syndicated loans. These loans are expected to be settled during the three months ended December 31, 2007.

See Note 20 of the Notes to Consolidated Financial Statements with respect to RJBank’s commitments to extend credit and other credit-related off balance sheet financial instruments such as standby letters of credit and loan purchases.

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As part of an effort to increase brand awareness, the Company entered into a stadium naming rights contract in July 1998. The contract expires in 2016 and has a 4% annual escalator. Expenses of $3.0 million, $2.9 million and $2.8 million were recognized in the fiscal 2007, 2006 and 2005, respectively.

In the normal course of business, the Company enters into underwriting commitments. Transactions relating to such commitments of RJA that were open at September 30, 2007 and were subsequently settled had no material effect on the consolidated financial statements as of that date. Transactions relating to such commitments of RJ Ltd. that were recorded and open at September 30, 2007 were approximately $11.8 million.

The Company utilizes client marginable securities to satisfy deposits with clearing organizations. At September 30, 2007, the Company had client margin securities valued at $135.7 million pledged with a clearing organization to meet the point in time requirement of $67.5 million. At September 30, 2006, the Company had client margin securities valued at $93.5 million pledged with a clearing organization to meet the point in time requirement of $57.4 million.

 

         In September 2007, Sirchie Acquisition Company, LLC (“SAC”), a 100% owned indirect subsidiary of the Company, entered into two agreements. Under the Stock Purchase Agreement SAC will acquire 51% of the common stock of Law Enforcement Associates Corporation from two sellers. Under the Stock and Asset Purchase Agreement with several sellers, SAC will acquire substantially all of the business, assets, and properties of Sirchie Finger Print Laboratories, Inc., the assets or stock of several other companies and certain real estate. SAC and sellers negotiated a single purchase price for all of the items to be acquired under the two agreements. At closing, one of the sellers will become a member of SAC. The Company’s share of the purchase price obligation is approximately $50 million. The closing of the two agreements is expected to occur before January 31, 2008.

 

        The Company has committed a total of $46.6 million, in amounts ranging from $200,000 to $2 million, to 41 different independent venture capital or private equity partnerships. As of September 30, 2007, the Company has invested $30.4 million of that amount and has received $27 million in distributions. Additionally, the Company is the general partner in two internally sponsored private equity limited partnerships to which it has committed $14 million. Of that amount, the Company has invested $12.2 million and has received $8.6 million in distributions as of September 30, 2007.

The Company is the general partner in EIF Funds. These limited partnerships invest in the merchant banking and private equity activities of the Company and other unaffiliated venture capital limited partnerships. The EIF Funds were established as compensation and retention measures for certain qualified key employees of the Company. At September 30, 2007, the funds have unfunded commitments of $3.4 million.

At September 30, 2007, the approximate market values of collateral received that can be repledged by the Company, were:

Sources of Collateral (In 000's):
Securities Purchased Under Agreements to Resell and Other
Collateralized Financings	$ 1,310,415
Securities Received in Securities Borrowed Vs. Cash Transactions	1,279,127
Collateral Received for Margin Loans	1,472,819
Total	$ 4,062,361

During the year certain collateral was repledged. At September 30, 2007, the approximate market values of this portion of collateral and financial instruments owned that were repledged by the Company, were:

Uses of Collateral and Trading Securities (In 000's):
Securities Purchased Under Agreements to Resell and Other
Collateralized Financings	$    253,522
Securities Received in Securities Borrowed Vs. Cash Transactions	1,248,775
Collateral Received for Margin Loans	148,596
Total	$ 1,650,893

In the normal course of business, certain subsidiaries of the Company act as general partner and may be contingently liable for activities of various limited partnerships. These partnerships engaged primarily in real estate activities. In the opinion of the Company, such liabilities, if any, for the obligations of the partnerships will not in the aggregate have a material adverse effect on the Company's consolidated financial position.

The Company and its subsidiaries maintain one committed and several uncommitted lines of credit denominated in U.S. dollars and one uncommitted line of credit denominated in Canadian dollars (“CDN”). At September 30, 2007, the aggregate domestic lines were $1.26 billion and CDN $40 million, respectively. There were no outstanding balances against these lines of credit at September 30, 2007. The interest rates for these lines of credit are variable and are based on the Fed Funds rate, LIBOR, and Canadian prime rate. The Company’s committed $200 million line of credit is subject to a 0.125% per annum facility fee. RJBank has $55 million in FHLB advances outstanding at September 30, 2007, which are comprised of one short-term, fixed rate advance and several long-term, fixed rate advances. RJBank had $1.32 billion in credit available from the FHLB at September 30, 2007. During the three months ended June 30, 2007, the Company entered into a $500 million uncommitted tri-party repurchase agreement line of credit. Under this agreement, the Company pledges certain of its trading inventory as collateral against borrowings on this line. The required market value of the collateral is generally 102% of the cash borrowed. The rate is set each day at 25 basis points over the opening Fed Funds rate and this agreement can be terminated by any party on any business day. Under this agreement, there were secured short-term borrowings of $195,000,000 outstanding at September 30, 2007 which are included in Securities Sold Under Agreement to Repurchase.

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The Company’s joint ventures in Turkey and Argentina have multiple settlement lines of credit. The Company has guaranteed certain of these settlement lines of credit as follows: four in Turkey totaling $22.5 million and one in Argentina for $3.0 million. On September 30, 2007, there were no outstanding balances on the settlement lines in Argentina and Turkey. At September 30, 2007 the aggregate unsecured settlement lines of credit available were $76.5 million, and there were outstanding balances of $2.7 million on these lines. The Company has also from time to time authorized performance guarantees for the completion of trades with counterparties in Argentina and Turkey. At September 30, 2007, there were no outstanding performance guarantees in Argentina or Turkey.

The Company guarantees the existing mortgage debt of RJA of approximately $65 million. The Company guarantees interest rate swap obligations of RJ Capital Services, Inc. The Company has also committed to lend to or guarantee obligations of RJTCF of up to $100 million upon request, subject to certain limitations as well as annual review and renewal. RJTCF borrows in order to invest in partnerships which purchase and develop properties qualifying for tax credits. These investments in project partnerships are then sold to various tax credit funds, which have third party investors, and for which RJTCF serves as the managing member or general partner. RJTCF typically sells these investments within 90 days of their acquisition, and the proceeds from the sales are used to repay RJTCF’s borrowings. Additionally, RJTCF may make short-term loans or advances to project partnerships on behalf of the tax credit funds in which it serves as managing member or general partner. At September 30, 2007, cash funded to invest in either loans or investments in project partnerships was $38.7 million. In addition, at September 30, 2007, RJTCF is committed to additional future fundings of $6.1 million related to project partnerships that have not yet been sold to various tax credit funds. RJTCF has also issued certain guarantees to various third parties related to elements of specific performance of certain project partnerships which have been sold to various tax credit funds. RJTCF is not the primary guarantor of these obligations which aggregate to a cumulative maximum obligation of approximately $5.1 million as of September 30, 2007.

See Note 14 of the Notes to Consolidated Financial Statements with respect to the Company's legal and regulatory proceedings.

NOTE 14 – LEGAL AND REGULATORY PROCEEDINGS:

As a result of the extensive regulation of the securities industry, the Company's broker-dealer subsidiaries are subject to regular reviews and inspections by regulatory authorities and self-regulatory organizations, which can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censure to fines and, in serious cases, temporary or permanent suspension from business. In addition, from time to time regulatory agencies and self-regulatory organizations institute investigations into industry practices, which can also result in the imposition of such sanctions.

Raymond James Yatyrym Menkul Kyymetler A. S., (“RJY”), the Company’s Turkish affiliate, was assessed for the year 2001 approximately $7.6 million by the Turkish tax authorities. The authorities applied a significantly different methodology than in the prior year’s audit which the Turkish tax court affirmed. RJY is vigorously contesting most aspects of this assessment and has filed an appeal with the Turkish Counsel of State. A significant portion of the matters at issue involved the activities of an employee terminated in 2004. Audits of 2002 through 2004 are anticipated and their outcome is unknown in light of the change in methodology and the pending litigation. As such, the potential tax liability combined for these subsequent years could range from a few hundred thousand dollars to $7.5 million. The Company has recorded a provision for loss in its consolidated financial statements for its net equity interest in this joint venture. As of September 30, 2007, RJY had total capital of approximately $12.2 million, of which the Company owns approximately 73%.

The Company is a defendant or co-defendant in various lawsuits and arbitrations incidental to its securities business. The Company is contesting the allegations in these cases and believes that there are meritorious defenses in each of these lawsuits and arbitrations. In view of the number and diversity of claims against the Company, the number of jurisdictions in which litigation is pending and the inherent difficulty of predicting the outcome of litigation and other claims, the Company cannot state with certainty what the eventual outcome of pending litigation or other claims will be. In the opinion of the Company's management, based on current available information, review with outside legal counsel, and consideration of amounts provided for in the accompanying consolidated financial statements with respect to these matters, ultimate resolution of these matters will not have a material adverse impact on the Company's financial position or results of operations. However, resolution of one or more of these matters may have a material effect on the results of operations in any future period, depending upon the ultimate resolution of those matters and upon the level of income for such period.

NOTE 15 - CAPITAL TRANSACTIONS:

The following table presents information on a monthly basis for purchases of the Company’s stock for the quarter ended September 30, 2007:

	Number of		Average
Period	Shares Purchased (1)		Price Per Share
July 1, 2007 – July 31, 2007	-		$        -
August 1, 2007 – August 31, 2007	-		-
September 1, 2007 – September 30, 2007	1,548		33.64
Total	1,548		$33.64

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(1)

The Company does not have a formal stock repurchase plan. Shares are repurchased at the discretion of management pursuant to prior authorization from the Board of Directors. On May 20, 2004, the Board of Directors authorized purchases of up to $75 million. Since that date 461,500 shares have been repurchased for a total of $9.6 million, leaving $65.4 million available to repurchase shares. Historically the Company has considered such purchases when the price of its stock approaches 1.5 times book value or when employees surrender shares as payment for option exercises. The decision to repurchase shares is subject to cash availability and other factors. During 2007 and 2006, 69,986 and 189,664 shares were repurchased at an average price of $31.54 and $28.97, respectively. During the three months ended December 31, 2006, 42,618 shares were purchased for the trust fund that was established and funded to acquire Company common stock in the open market to be used to settle restricted stock units granted as a retention vehicle for certain employees of the Company’s wholly owned Canadian subsidiary (see Note 17 below for more information on this trust fund). With the exception of the shares purchased through this trust fund, the Company only purchased shares during the balance of the year that were surrendered by employees as a payment for option exercises.

NOTE 16 - OTHER COMPREHENSIVE INCOME:

The activity in other comprehensive income and related tax effects are as follows:

	September 30,	September 30,	September 30,
	2007	2006	2005
	(in 000's)
Net Unrealized (Loss) Gain on Available for Sale Securities, Net of
Tax Effect Of ($1,217) in 2007, $129 in 2006, and $51 in 2005	$  (2,150)	$    217	$      79
Net Unrealized Gain on Interest Rate Swaps Accounted for as Cash Flow
Hedges, Net of Tax Effect of $0 in 2007, $28 in 2006, and
$566 in 2005	-	44	882
Net Change in Currency Translations, Net of Tax Effect of $11,463 in
2007, $1,312 in 2006, and $3,078 in 2005	20,246	2,202	4,796
Other Comprehensive Income	$ 18,096	$ 2,463	$ 5,757

The components of accumulated other comprehensive income, net of income taxes:

	September 30,	September 30,
	2007	2006
	(in 000's)
Net Unrealized (Loss) Gain on Securities Available for Sale, Net of Tax Effect of ($998) in 2007
and $245 in 2006	$   (1,747)	$      403
Net Currency Translations, Net of Tax Effect of $18,593 in 2007 and $7,285 in 2006	31,938	11,692
Accumulated Other Comprehensive Income	$  30,191	$ 12,095

NOTE 17 - EMPLOYEE BENEFIT PLANS:

The Company's profit sharing plan and employee stock ownership plan provide certain death, disability or retirement benefits for all employees who meet certain service requirements. The plans are noncontributory. Contributions by the Company, if any, are determined annually by the Company’s Board of Directors on a discretionary basis and are recognized as compensation cost throughout the year. Benefits become fully vested after seven years of qualified service. All shares owned by the ESOP are included in earnings per share calculations. Cash dividends paid to the ESOP are reflected as a reduction of retained earnings. The number of shares of RJF common stock held by the ESOP at September 30, 2007 and 2006 was approximately 5,538,000 and 5,370,000, respectively. The Company also offers a plan pursuant to section 401(k) of the Internal Revenue Code, which provides for the Company to match 100% of the first $500 and 50% of the next $500 of compensation deferred by each participant annually. The Company's Long Term Incentive Plan (“LTIP”) is a non-qualified deferred compensation plan that provides benefits to employees who meet certain compensation or production requirements. The Company has purchased and holds life insurance on the lives of most of those employees participating in the LTIP, to earn a competitive rate of return for participants and to provide a source of funds available to satisfy its obligations under this plan. Contributions to the qualified plans and the LTIP contribution for management are made in amounts approved annually by the Board of Directors. Compensation expense includes aggregate contributions to these plans of $40,476,439, $36,912,285, and $26,872,875 for fiscal years 2007, 2006, and 2005, respectively.

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Stock-Based Compensation Plans

At September 30, 2007, the Company had multiple stock-based employee compensation plans, which are described below. The Company issues new shares under all plans approved by shareholders. Effective October 1, 2005, the Company adopted SFAS No. 123R, “Share-Based Payment”. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements given that it adopted the fair value recognition provisions of SFAS No. 123 effective September 28, 2002 using the modified prospective application transition method within the provisions of SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure”. Prior to the adoption of SFAS No. 123R, benefits of tax deductions in excess of recognized compensation costs were reported as operating cash flows. SFAS No. 123R requires excess tax benefits to be reported as a financing cash inflow rather than as a reduction of taxes paid, as part of operating cash flows.

Fixed Stock Option Plans

The Company has two qualified and two non-qualified fixed stock option plans available for grants to employees and members of the Company’s Board of Directors. Under the 2002 Incentive Stock Option Plan, one of the Company’s qualified plans, the Company may grant options to its management personnel for up to 9,000,000 shares of common stock. The 2002 Plan was established to replace, on substantially the same terms and conditions, the 1992 Plan. As of September 30, 2007, the 1992 Plan still has options outstanding. Options are granted to key administrative employees and Financial Advisors of Raymond James & Associates, Inc. who achieve certain gross commission levels. Options are exercisable in the 36th to 72nd months following the date of grant and only in the event that the grantee is an employee of the Company at that time, disabled, deceased or recently retired.

As noted above, the Company has two non-qualified fixed stock option plans. Under the first of those plans, the Company may grant up to 854,298 shares of common stock to the Company's outside directors. Options vest over a three-year period from grant date provided that the director is still serving on the Board of the Company. Under the Company's second non-qualified stock option plan, the Company may grant up to 2,531,250 shares of common stock to key management personnel. Option terms are specified in individual agreements and expire on a date no later than the tenth anniversary of the grant date. Under all fixed stock option plans, the exercise price of each option equals the market price of the Company's stock on the date of grant.

The Company’s net income for the years ended September 30, 2007, September 30, 2006, and September 30, 2005 includes $5.9 million, $5.6 million, and $6.2 million, respectively, of compensation costs and $212,000, $281,000, and $293,000, respectively of income tax benefits related to the Company’s four fixed stock option plans available for grants to employees and members of its Board of Directors.

These amounts may not be representative of future stock-based compensation expense since the estimated fair value of stock options is amortized to expense straight line over the vesting period and additional options may be granted in future years. The fair value of each fixed option grant for these plans is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for stock option grants in years ended 2007, 2006, and 2005:

	2007		2006		2005
Dividend Yield	1.32%		1.19%		1.10%
Expected Volatility	29.44%		29.38%		38.56%
Risk-free Interest Rate	4.68%		4.41%		3.69%
Expected Lives	4.8 yrs		4.9 yrs		5.1 yrs

The dividend yield assumption is based on the Company’s current declared dividend as a percentage of the stock price. The expected volatility assumption for the current period and fiscal 2006 is based on the Company’s historical stock price and is a weighted average combining (1) the volatility of the most recent year, (2) the volatility of the most recent time period equal to the expected lives assumption, and (3) the annualized volatility of the price of the Company’s stock since the late 1980’s. The expected volatility used by the Company in fiscal 2005 was based on the annualized volatility of the price of the Company’s stock since the late 1980’s. The risk-free interest rate assumption is based on the U.S. Treasury yield curve in effect at the time of grant of the options. The expected lives assumption is based on the average of (1) the assumption that all outstanding options will be exercised at the midpoint between their vesting date and full contractual term and (2) the assumption that all outstanding options will be exercised at their full contractual term.

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A summary of option activity of the Company's four fixed stock option plans available for grants to employees and members of its Board of Directors for the year ended September 30, 2007 is presented below:

			Weighted
		Weighted	Average
		Average	Remaining	Aggregate
	Options For	Exercise	Contractual	Intrinsic
	Shares	Price ($)	Term (Years)	Value ($)
Outstanding at
October 1, 2006	5,354,323	$ 18.02	-	$                  -
Granted	268,872	31.71	-	-
Exercised	(1,475,530)	14.29	-	-
Canceled	(148,539)	21.13	-	-
Expired	(13,500)	15.06	-	-
Outstanding at
September 30, 2007	3,985,626	$ 20.19	2.52	$ 50,459,546
Exercisable at
September 30, 2007	1,002,972	$ 15.26	1.05	$ 17,644,932

As of September 30, 2007, there was $9.6 million of total unrecognized compensation cost related to stock options for these plans. These costs are expected to be recognized over a weighted average period of approximately 2.2 years. The weighted average grant date fair value of stock options granted under these plans during the years ended September 30, 2007, September 30, 2006 and September 30, 2005 was $9.37 per share, $7.36 per share and $6.44 per share, respectively. The total intrinsic value of stock options exercised for these plans during the years ended September 30, 2007, September 30, 2006 and September 30, 2005 was $25.0 million, $15.3 million and $11.2 million, respectively. The total grant date fair value of stock options vested for these plans during the years ended September 30, 2007, September 30, 2006 and September 30, 2005  was $8.0 million, $5.4 million and $7.0 million, respectively.

Cash received from stock option exercises for these plans for the year ended September 30, 2007 was $20.2 million. The actual tax benefit realized for the tax deductions from option exercise for these stock option plans was $612,000 for the year ended September 30, 2007.

Restricted Stock Plan

Under the 2005 Restricted Stock Plan the Company is authorized to issue up to 4,250,000 restricted stock units or restricted shares of common stock to employees and independent contractors. The 2005 Plan was established to replace, on substantially the same terms and conditions, the 1999 Plan. During the three months ended March 31, 2006, this plan was amended to allow the issuance of restricted stock units as retention measures for certain employees of the Company. In addition, the Company, through its wholly owned Canadian subsidiary, established a trust fund which is associated with the 2005 Plan. This trust fund was established and funded to enable the trust fund to acquire Company common stock in the open market to be used to settle restricted stock units granted as a retention vehicle for certain employees of the Canadian subsidiary. Awards under this plan may be granted by the Company in connection with initial employment or under various retention plans for individuals who are responsible for a contribution to the management, growth, and/or profitability of the Company. These awards are forfeitable in the event of termination other than for death, disability or retirement. The compensation cost is recognized over the vesting period of the awards and is calculated as the market value of the awards on the date of grant. The following employee related activity occurred during the year ended September 30, 2007:

		Weighted
		Average
		Grant Date
	Shares/Units	Fair Value ($)
Nonvested at
October 1, 2006	1,855,869	$ 21.77
Granted	930,060	30.73
Vested	(139,526)	17.02
Canceled	(95,735)	25.04
Nonvested at
September 30, 2007	2,550,668	$ 25.30

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The Company’s net income for the year ended September 30, 2007 includes $11.7 million of compensation costs and $4.5 million of income tax benefits related to the Company’s Restricted Stock Plan. The Company’s net income for the years ended September 30, 2006 and September 30, 2005 includes $7.5 million and $3.7 million, respectively, of compensation costs and $2.9 million and $1.4 million, respectively, of income tax benefits related to this plan.

As of September 30, 2007, there was $44.2 million of total unrecognized compensation cost related to grants under the Company’s Restricted Stock Plan. These costs are expected to be recognized over a weighted average period of approximately 3.4 years. The total fair value of shares vested under this plan during the year ended September 30, 2007 was $2.4 million.

Employee Stock Purchase Plan

Under the 2003 Employee Stock Purchase Plan, the Company is authorized to issue up to 3,375,000 shares of common stock to its full-time employees, nearly all of whom are eligible to participate. Under the terms of the Plan, employees can choose each year to have up to 20% of their annual compensation specified to purchase the Company's common stock. Share purchases in any calendar year are limited to the lesser of 1,000 shares or shares with a market value of $25,000. The purchase price of the stock is 85% of the market price on the day prior to the purchase date. Under the Plan the Company sold approximately 444,000, 379,000 and 493,000 shares to employees during the years ended September 30, 2007, September 30, 2006 and September 30, 2005, respectively. The compensation cost is calculated as the value of the 15% discount from market value and was $2.1 million, $1.6 million and $1.4 million during the years ended September 30, 2007, September 30, 2006 and September 30, 2005, respectively.

Stock Bonus Plan

The Company's 2007 Stock Bonus Plan authorizes the Company to issue up to 3,000,000 restricted shares to officers and certain other employees in lieu of cash for 10% to 20% of annual bonus amounts in excess of $250,000.  The 2007 Plan was established to replace, on substantially the same terms and conditions, the 1999 Plan.  The determination of the number of shares to be granted may encompass a discount from market value at the discretion of the Compensation Committee of the Board of Directors. Under the plan the shares are generally restricted for a three year period, during which time the shares are forfeitable in the event of voluntary termination other than for death, disability or retirement. The compensation cost is recognized over the three-year vesting period based on the market value of the shares on the date of grant. The following activity occurred during the year ended September 30, 2007:

		Weighted
		Average
		Grant Date
	Shares	Fair Value ($)
Nonvested at
October 1, 2006	989,946	$ 21.49
Granted	339,969	30.73
Vested	(217,145)	16.75
Canceled	(16,989)	25.06
Nonvested at
September 30, 2007	1,095,781	$ 25.24

The Company’s net income for the year ended September 30, 2007 includes $9.1 million of compensation costs and $3.5 million of income tax benefits related to the Company’s Stock Bonus Plan. The Company’s net income for the years ended September 30, 2006 and September 30, 2005 includes $5.4 million and $3.5 million, respectively, of compensation costs and $2.0 million and $1.3 million, respectively, of income tax benefits related to this plan.

As of September 30, 2007, there was $10.2 million of total unrecognized compensation cost related to grants under the Company’s Stock Bonus Plan. These costs are expected to be recognized over a weighted average period of approximately 1.2 years. The total fair value of shares vested under this plan during the fiscal year ended September 30, 2007 was $3.6 million.

Employee Investment Funds

Certain key employees of the Company participate in the Raymond James Employee Investment Funds I and II, which are limited partnerships that invest in the merchant banking and venture capital activities of the Company and other unaffiliated venture capital limited partnerships. The Company makes non-recourse loans to these employees for two thirds of the purchase price per unit. The loans and applicable interest are to be repaid based solely on the distributions from the funds.

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NOTE 18 – NON-EMPLOYEE STOCK-BASED COMPENSATION:

Under two of its non-qualified fixed stock option plans, the Company may grant stock options to its independent contractor Financial Advisors. Under the 2007 Stock Option Plan for Independent Contractors, the Company may grant up to 2,000,000 shares of common stock to independent contractor Financial Advisors. The 2007 Plan was established to replace, on substantially the same terms and conditions, the 1990 Plan. As of September 30, 2007, the 1990 Plan still has options outstanding. Options are exercisable five years after grant date provided that the Financial Advisors are still associated with the Company, disabled, deceased or recently retired. Under these fixed stock option plans, the exercise price of each option equals the market price of the Company's stock on the date of grant.

Prior to fiscal 2006, the Company valued stock options awarded to its independent contractor Financial Advisors at fair value on the date of grant and amortized these options over their expected service period in accordance with SFAS No. 123. However, after further analysis on the application of SFAS No. 123R, the SEC guidance contained in Staff Accounting Bulletin (“SAB”) No. 107, and Emerging Issues Task Force (“EITF”) No. 96-18, “Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”, to these non-employee awards, the Company concluded that absent a specific performance commitment, these grants are to be measured at their vesting date fair value and their fair value estimated at reporting dates prior to that time. The compensation expense recognized each period should be based on the most recent estimated value. The Company’s recording of compensation expenses prior to fiscal 2006 for these grants were an estimate based on grant date fair value. Fiscal 2006 includes the effect of the change for that year. The effect on years prior to fiscal 2006 was not material. Further, in accordance with EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” the Company classifies these non-employee awards as liabilities at fair value upon vesting, with changes in fair value reported in earnings until these awards are exercised or forfeited.

The Company’s net income for the years ended September 30, 2007, September 30, 2006, and September 30, 2005 includes $7.0 million, $9.7 million, and $2.1 million, respectively, of compensation costs and $2.7 million, $3.7 million, and $804,000, respectively, net of income tax benefits related to option grants to its independent contractor Financial Advisors.

The fair value of each fixed option grant awarded to an independent contractor Financial Advisor is estimated on the date of grant and periodically revalued using the Black-Scholes option pricing model with the following weighted average assumptions used for fiscal years ended 2007, 2006,  and 2005:

	2007		2006		2005
Dividend Yield	1.27%		1.11%		1.10%
Expected Volatility	29.65%		30.89%		38.20%
Risk-free Interest Rate	4.70%		4.62%		3.37%
Expected Lives	2.92 yrs		2.76 yrs		2.56 yrs

The dividend yield assumption is based on the Company’s current declared dividend as a percentage of the stock price. The expected volatility assumption for the current period and fiscal 2006 is based on the Company’s historical stock price and is a weighted average combining (1) the volatility of the most recent year, (2) the volatility of the most recent time period equal to the expected lives assumption, and (3) the annualized volatility of the price of the Company’s stock since the late 1980’s. The expected volatility used by the Company in fiscal 2005 was based on the annualized volatility of the price of the Company’s stock since the late 1980’s. The risk-free interest rate assumption is based on the U.S. Treasury yield curve in effect at each point in time the options are valued. The expected lives assumption is based on the difference between the option’s vesting date plus 90 days (the average exercise period) and the date of the current reporting period.

A summary of option activity of the Company's fixed stock option plans under which awards are granted to its independent contractor Financial Advisors for the year ended September 30, 2007 is presented below:

			Weighted
		Weighted	Average
		Average	Remaining	Aggregate
	Options For	Exercise	Contractual	Intrinsic
	Shares	Price ($)	Term (Years)	Value ($)
Outstanding at
October 1, 2006	1,687,325	$ 16.64	-	-
Granted	327,200	31.78	-	-
Exercised	(383,728)	15.27	-	-
Canceled	(58,568)	17.73	-	-
Expired	(4,263)	19.62	-	-
Outstanding at
September 30, 2007	1,567,966	$ 20.25	3.17	$ 19,761,733
Exercisable at
September 30, 2007	107,675	$ 13.54	0.71	$  2,078,723

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As of September 30, 2007, there was $7.7 million of total unrecognized compensation cost related to unvested stock options granted to its independent contractor Financial Advisors based on estimated fair value at that date. These costs are expected to be recognized over a weighted average period of approximately 2.3 years. The weighted average grant date fair value of stock options granted under these plans during the years ended September 30, 2007, September 30, 2006 and September 30, 2005 was $9.70 per share, $11.87 per share and $9.51 per share, respectively. The total intrinsic value of stock options exercised for these plans during the years ended September 30, 2007, September 30, 2006 and September 30, 2005 was $6.1 million, $5.6 million and $2.7 million, respectively. The total estimated fair value of stock options vested for these plans during the years ended September 30, 2007, September 30, 2006 and September 30, 2005 was $6.2 million, $4.1 million and $3.5 million, respectively.

Cash received from stock option exercises for these plans for the year ended September 30, 2007 was $5.9 million. There were no actual tax benefits realized for the tax deductions from option exercise of awards to its independent contractor Financial Advisors for the year ended September 30, 2007.

Under the 2005 Restricted Stock Plan the Company may grant restricted shares of common stock or restricted stock units to employees and independent contractor Financial Advisors. The following activity  for independent contractor Financial Advisors occurred during the year ended September 30, 2007:

		Weighted
		Average
		Grant Date
	Shares	Fair Value ($)
Nonvested at
October 1, 2006	-	-
Granted	75,850	$32.85
Vested	(549)	32.85
Canceled	(900)	32.85
Nonvested at
September 30, 2007	74,401	$32.85

The Company’s net income for the year ended September 30, 2007 includes $276,000 of compensation costs and $105,000 of income tax benefits related to restricted shares granted to its independent contractor Financial Advisors.

As of September 30, 2007, there was $2.0 million of total unrecognized compensation cost related to grants issued to its independent contractor Financial Advisors based on estimated fair value at that date. These costs are expected to be recognized over a weighted average period of approximately 4.7 years. The total fair value of shares vested under this plan during the year ended September 30, 2007 was $18,000.

NOTE 19 - REGULATIONS AND CAPITAL REQUIREMENTS:

Certain broker-dealer subsidiaries of the Company are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934. RJA, a member firm of the Financial Industry Regulatory Authority (“FINRA”), is also subject to the rules of FINRA, whose requirements are substantially the same. Rule 15c3-1 requires that aggregate indebtedness, as defined, not exceed 15 times net capital, as defined. Rule 15c3-1 also provides for an “alternative net capital requirement”, which RJA, Raymond James Financial Services, Inc. (“RJFS”) and Heritage Fund Distributors, Inc. (“HFD”) have elected. It requires that minimum net capital, as defined, be equal to the greater of $250,000 or two percent of Aggregate Debit Items arising from client transactions. FINRA may require a member firm to reduce its business if its net capital is less than four percent of Aggregate Debit Items and may prohibit a member firm from expanding its business and declaring cash dividends if its net capital is less than five percent of Aggregate Debit Items. The net capital position of RJA at September 30, 2007 and September 30, 2006 was as follows:

	September 30,	September 30,
	2007	2006
	($ in 000's)
Raymond James & Associates, Inc.:
(Alternative Method Elected)
Net Capital as a Percent of Aggregate
Debit Items	21.94%	27.58%
Net Capital	$ 332,873	$ 369,443
Less: Required Net Capital	(30,344)	(26,793)
Excess Net Capital	$ 302,529	$ 342,650

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At September 30, 2007 and September 30, 2006, RJFS had no Aggregate Debit Items and therefore the minimum net capital of $250,000 was applicable. The net capital position of RJFS at September 30, 2007 and September 30, 2006 was as follows:

	September 30,	September 30,
	2007	2006
	(in 000's)
Raymond James Financial Services, Inc.:
(Alternative Method Elected)
Net Capital	$ 70,583	$ 41,200
Less: Required Net Capital	(250)	(250)
Excess Net Capital	$ 70,333	$ 40,950

At September 30, 2007 and September 30, 2006, HFD had no Aggregate Debit Items and therefore the minimum net capital of $250,000 was applicable. The net capital position of HFD at September 30, 2007 and September 30, 2006 was as follows:

	September 30,	September 30,
	2007	2006
	(in 000’s)
Heritage Fund Distributors, Inc.
(Alternative Method Elected)
Net Capital	$ 6,039	$ 1,669
Less: Required Net Capital	(250)	(250)
Excess Net Capital	$ 5,789	$ 1,419

RJ Ltd. is subject to the Minimum Capital Rule (By-Law No. 17 of the Investment Dealers Association ("IDA") and the Early Warning System (By-Law No. 30 of the IDA). The Minimum Capital Rule requires that every member shall have and maintain at all times Risk Adjusted Capital greater than zero calculated in accordance with Form 1 (Joint Regulatory Financial Questionnaire and Report) and with such requirements as the Board of Directors of the IDA may from time to time prescribe. Insufficient Risk Adjusted Capital may result in suspension from membership in the stock exchanges or the IDA.

The Early Warning System is designed to provide advance warning that a member firm is encountering financial difficulties. This system imposes certain sanctions on members who are designated in Early Warning Level 1 or Level 2 according to their capital, profitability, liquidity position, frequency of designation or at the discretion of the IDA. Restrictions on business activities and capital transactions, early filing requirements, and mandated corrective measures are sanctions that may be imposed as part of the Early Warning System. RJ Ltd. was not in Early Warning Level 1 or Level 2 at September 30, 2007 or September 30, 2006.

The Risk Adjusted Capital of RJ Ltd. was CDN $47,724,293 and CDN $42,841,000 September 30, 2007 and September 30, 2006, respectively.

The Company’s other domestic and international broker-dealers are in compliance with and meet all net capital requirements.

RJBank is subject to various regulatory and capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, RJBank must meet specific capital guidelines that involve quantitative measures of RJBank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. RJBank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require RJBank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I Capital (as defined in the regulations) to risk-weighted assets (as defined). Management believes that, as of September 30, 2007, RJBank meets all capital adequacy requirements to which it is subject.

As of September 30, 2007, the most recent notification from the Office of Thrift Supervision categorized RJBank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized”, RJBank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed RJBank's category.

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					To be well capitalized
			Requirement for capital		under prompt
			adequacy		corrective action
	Actual		purposes		provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
	($ in 000's)
As of September 30, 2007:
Total Capital (to
Risk-Weighted Assets)	$ 420,704	10.1%	$ 332,832	8.0%	$ 416,040	10.0%
Tier I Capital (to
Risk-Weighted Assets)	368,699	8.9%	166,416	4.0%	249,624	6.0%
Tier I Capital (to
Average Assets)	368,699	5.8%	253,048	4.0%	316,309	5.0%
As of September 30, 2006:
Total Capital (to
Risk-Weighted Assets)	$ 219,339	12.0%	$ 146,716	8.0%	$ 183,396	10.0%
Tier I Capital (to
Risk-Weighted Assets)	196,415	10.7%	73,358	4.0%	110,037	6.0%
Tier I Capital (to
Average Assets)	196,415	6.4%	122,975	4.0%	153,719	5.0%

NOTE 20 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:

In the normal course of business, the Company purchases and sells securities as either principal or agent on behalf of its clients. If either the client or counterparty fails to perform, the Company may be required to discharge the obligations of the nonperforming party. In such circumstances, the Company may sustain a loss if the market value of the security or futures contract is different from the contract value of the transaction.

The Company also acts as an intermediary between broker-dealers and other financial institutions whereby the Company borrows securities from one broker-dealer and then lends them to another. Securities borrowed and securities loaned are carried at the amounts of cash collateral advanced and received in connection with the transactions. The Company measures the market value of the securities borrowed and loaned against the cash collateral on a daily basis. The market value of securities borrowed and securities loaned was $1,159,689,000 and $1,159,615,000, respectively, at September 30, 2007 and $1,034,563,000 and $1,197,215,000, respectively, at September 30, 2006. The contract value of securities borrowed and securities loaned was $1,200,798,000 and $1,204,702,000, respectively, at September 30, 2007 and $1,068,102,000 and $1,235,104,000, respectively, at September 30, 2006. Additional cash is obtained as necessary to ensure such transactions are adequately collateralized. If another party to the transaction fails to perform as agreed (for example failure to deliver a security or failure to pay for a security), the Company may incur a loss if the market value of the security is different from the contract amount of the transaction.

The Company has also loaned, to brokers-dealers and other financial institutions, securities owned by clients and others for which it has received cash or other collateral. The market value of securities loaned was $74,074,000 at September 30, 2007. If a borrowing institution or broker-dealer does not return a security, the Company may be obligated to purchase the security in order to return it to the owner. In such circumstances, the Company may incur a loss equal to the amount by which the market value of the security on the date of nonperformance exceeds the value of the collateral received from the financial institution or the broker-dealer.

The Company has sold securities that it does not currently own, and will therefore, be obligated to purchase such securities at a future date. The Company has recorded $138.4 million and $94 million at September 30, 2007 and September 30, 2006, respectively, which represents the market value of the related securities at such dates. The Company is subject to loss if the market price of those securities not covered by a hedged position increases subsequent to fiscal year end. The Company utilizes short government obligations and equity securities to economically hedge long proprietary inventory positions. At September 30, 2007, the Company had $106,010,000 in short government obligations and $11,048,000 in short equity securities, which represented economic hedge positions. At September 30, 2006, the Company had $31,636,000 in short government obligations, $34,023,000 in short agency securities and $19,068,000 in short equity securities, which represented hedge positions.

The Company enters into security transactions involving forward settlement. Forward contracts provide for the delayed delivery of the underlying instrument. The Company has entered into transactions with contract values of $2,036,818,000 and $2,304,629,000 and market values of $2,033,023,000 and $2,297,824,000 as of September 30, 2007 and September 30, 2006, respectively. The contractual amounts related to these financial instruments reflect the volume and activity and do not reflect the amounts at risk. The gain or loss on these transactions is recognized on a trade date basis. Transactions involving future settlement give rise to market risk, which represents the potential loss that can be caused by a change in the market value of a particular financial instrument. The Company's exposure to market risk is determined by a number of factors, including the duration, size, composition and diversification of positions held, the absolute and relative levels of interest rates, and market volatility. The credit risk for these transactions is limited to the unrealized market valuation gains recorded in the Consolidated Statements of Financial Condition.

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The majority of the Company's transactions, and consequently, the concentration of its credit exposure is with clients, broker-dealers and other financial institutions in the U.S. These activities primarily involve collateralized arrangements and may result in credit exposure in the event that the counterparty fails to meet its contractual obligations. The Company's exposure to credit risk can be directly impacted by volatile securities markets, which may impair the ability of counterparties to satisfy their contractual obligations. The Company seeks to control its credit risk through a variety of reporting and control procedures, including establishing credit limits based upon a review of the counterparties' financial condition and credit ratings. The Company monitors collateral levels on a daily basis for compliance with regulatory and internal guidelines and requests changes in collateral levels as appropriate.

RJBank has outstanding at any time a significant number of commitments to extend credit and other credit-related off balance sheet financial instruments such as standby letters of credit and loan purchases. These arrangements are subject to strict credit control assessments and each customer’s credit worthiness is evaluated on a case-by-case basis. A summary of commitments to extend credit and other credit-related off balance sheet financial instruments outstanding at September 30, 2007 and 2006, is as follows:

	September 30,	September 30,
	2007	2006
	(in 000's)
Standby Letters of Credit	$   100,397	$   55,193
Open End Consumer Lines of Credit	27,871	25,772
Commercial Lines of Credit	1,218,690	760,253
Unfunded Loan Commitments - Variable Rate	397,752	264,663
Unfunded Loan Commitments - Fixed Rate	12,831	6,412

Because many loan commitments expire without being funded in whole or part, the contract amounts are not estimates of future cash flows.

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. The credit risk amounts are equal to the contractual amounts, assuming that the amounts are fully advanced and that the collateral or other security is of no value. RJBank uses the same credit approval and monitoring process in extending loan commitments and other credit-related off balance sheet instruments as it does in making loans.

RJBank’s policy is generally to require customers to provide collateral at the time of closing. The amount of collateral obtained, if it is deemed necessary by RJBank upon extension of credit, is based on RJBank’s credit evaluation of the borrower. Collateral held varies but may include accounts receivable, inventory, real estate, and income producing commercial properties.

In the normal course of business, RJBank issues, or participates in the issuance of, financial standby letters of credit whereby it provides an irrevocable guarantee of payment in the event the letter of credit is drawn down by the beneficiary. As of September 30, 2007, $100.4 million of such letters of credit were outstanding. Of the letters of credit outstanding, $100 million are underwritten as part of a larger corporate credit relationship. In the event that a letter of credit is drawn down, RJBank would pursue repayment from the account party under the existing borrowing relationship, or would liquidate collateral, or both. The proceeds from repayment or liquidation of collateral are expected to satisfy the maximum potential future amount of any payments of amounts drawn down under the existing letters of credit. At September 30, 2007, RJBank had $1.6 million in unearned fees related to these instruments. The credit risk involved in issuing letters of credit is essentially the same as that involved with extending loan commitments to clients, and accordingly, RJBank uses a credit evaluation process and collateral requirements similar to those for loan commitments.

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NOTE 21 – EARNINGS PER SHARE:

The following table presents the computation of basic and diluted earnings per share:

	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
	(in 000’s, except per share amounts)
Net Income	$ 250,430	$ 214,342	$ 151,046
Weighted Average Common Shares
Outstanding During the Period*	115,608	112,614	110,217
Dilutive Effect of Stock Options and Awards (1)*	3,085	3,124	2,831
Weighted Average Diluted Common
Shares (1)*	118,693	115,738	113,048
Net Income per Share – Basic*	$      2.17	$      1.90	$      1.37
Net Income per Share - Diluted (1)*	$      2.11	$      1.85	$      1.33
Securities Excluded from Weighted Average
Diluted Common Shares Because Their Effect
Would Be Antidilutive*	1,321	0	108

*      2005 amounts have been adjusted for the March 22, 2006 3-for-2 stock split .

 

(1)   Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include stock options, units and awards.

 

NOTE 22 – SEGMENT ANALYSIS:

SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Revisions have been made in the segment disclosures for the fiscal years ended September 30, 2006 and 2005 to conform to the current period presentation. As a result, financial service fees revenue and investment advisory fees expense increased by approximately $12.8 million and $11.2 million, respectively, for the fiscal years ended September 30, 2006 and 2005 in the Asset Management segment. These revisions did not impact the Company’s net income for the fiscal years ended September 30, 2006 and 2005.

The Company currently operates through the following eight business segments: Private Client Group; Capital Markets; Asset Management; RJBank; Emerging Markets; Stock Loan/Borrow; Proprietary Capital and various corporate activities combined in the "Other" segment.  In the quarter ended September 30, 2007, a new segment was established: Proprietary Capital. The components of this segment were previously included in Asset Management and Other. Reclassifications have been made in the segment disclosure for previous years to conform to this presentation. The business segments are based upon factors such as the services provided and the distribution channels served and are consistent with how the Company assesses performance and determines how to allocate resources throughout the Company and its subsidiaries. The financial results of the Company's segments are presented using the same policies as those described in Note 1, “Summary of Significant Accounting Policies”. Segment data includes charges allocating corporate overhead and benefits to each segment. Intersegment revenues, charges, receivables and payables are eliminated between segments upon consolidation.

The Private Client Group segment includes the retail branches of the Company's broker-dealer subsidiaries located throughout the U.S., Canada and the United Kingdom. These branches provide securities brokerage services including the sale of equities, mutual funds, fixed income products and insurance products to their individual clients. The segment includes net interest earnings on client margin loans and cash balances. Additionally, this segment includes the correspondent clearing services that the Company provides to other broker-dealer firms.

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The Capital Markets segment includes institutional sales and trading in the U.S., Canada and Europe. It provides securities brokerage, trading, and research services to institutions with an emphasis on the sale of U.S. and Canadian equities and fixed income products. This segment also includes the Company's management of and participation in underwritings, merger and acquisition services, public finance activities, and the operations of Raymond James Tax Credit Funds.

The Asset Management segment includes investment portfolio management services of Eagle Asset Management, Inc., Awad Asset Management, Inc., and Raymond James Consulting Services (RJA’s asset management services division), mutual fund management by Heritage Asset Management, Inc., and trust services of Raymond James Trust Company and Raymond James Trust Company West. In addition to the asset management services noted above, this segment also offers fee-based programs to clients who have contracted for portfolio management services from outside money managers.

RJBank is a separate segment, which provides consumer, residential, and commercial loans, as well as FDIC-insured deposit accounts to clients of the Company's broker-dealer subsidiaries and to the general public.

The Emerging Markets segment includes various joint ventures in Turkey and Latin America. These joint ventures operate in securities brokerage, investment banking and asset management.

The Stock Loan/Borrow segment involves the borrowing and lending of securities from and to other broker-dealers, financial institutions and other counterparties, generally as an intermediary.

The Proprietary Capital segment consists of the Company’s principal capital and private equity activities including: various direct and third party private equity and merchant banking investments (including Raymond James Capital, Inc. a captive private equity business), Special Situations Investments, the EIF Funds, and two private equity funds sponsored by the Company: Raymond James Capital Partners, L.P., and Ballast Point Ventures, L.P.

The Other segment includes certain corporate activities of the Company.

Information concerning operations in these segments of business is as follows:

	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
	(in 000’s)
Revenues:
Private Client Group	$  1,938,154	$  1,679,813	$  1,397,578
Capital Markets	506,498	487,419	455,151
Asset Management	234,875	207,821	179,845
RJBank	279,572	114,692	45,448
Emerging Markets	59,083	55,263	38,768
Stock Loan/Borrow	68,685	59,947	31,876
Proprietary Capital	8,280	17,312	10,952
Other	14,432	23,311	8,578
Total Revenues	$ 3,109,579	$ 2,645,578	$ 2,168,196
Income Before Provision for Income Taxes:
Private Client Group	$    219,864	$    168,519	$    102,245
Capital Markets	68,966	78,221	77,333
Asset Management	60,517	48,749	40,442
RJBank	27,005	16,003	14,204
Emerging Markets	3,640	2,857	5,927
Stock Loan/Borrow	5,003	8,001	5,962
Proprietary Capital	3,577	8,468	4,182
Other	3,652	11,248	(2,324)
Pre-Tax Income	$     392,224	$    342,066	$    247,971

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	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
	(in 000’s)
Net Interest Income (Expense):
Private Client Group	$     124,656	$    109,116	$      80,011
Capital Markets	(8,566)	(8,036)	1,009
Asset Management	1,535	1,096	394
RJBank	84,501	40,536	22,997
Emerging Markets	2,967	2,180	1,422
Stock Loan/Borrow	9,409	12,354	9,003
Proprietary Capital	1,122	290	102
Other	11,704	15,775	12,835
Net Interest Income (Expense)	$    227,328	$   173,311	$    127,773

The following table presents the Company's total assets on a segment basis:

	September 30,	September 30,
	2007	2006
	(in 000’s)
Total Assets:
Private Client Group *	$  6,608,059	$  5,370,018
Capital Markets **	1,533,273	1,369,479
Asset Management	95,894	66,007
RJBank	6,312,966	3,074,782
Emerging Markets	104,238	58,950
Stock Loan/Borrow	1,302,937	1,250,857
Proprietary Capital	115,062	57,254
Other	181,739	269,303
Total	$ 16,254,168	$ 11,516,650

*Includes $46 million of goodwill allocated pursuant to SFAS No. 142, "Goodwill and Other Intangible Assets".

**Includes $17 million of goodwill allocated pursuant to SFAS No. 142.

The Company has operations in the U.S., Canada, Europe and joint ventures in Turkey and Latin America. Substantially all long-lived assets are located in the U.S. Revenues, classified by the major geographic areas in which they are earned, were as follows:

	Year Ended
	September 30,	September 30,	September 30,
	2007	2006	2005
	(in 000’s)
Revenues:
United States	$ 2,757,314	$ 2,322,518	$ 1,923,776
Canada	249,372	222,365	162,525
Europe	52,156	52,489	46,432
Other	50,737	48,206	35,463
Total	$ 3,109,579	$ 2,645,578	$ 2,168,196

The Company has $18.4 million invested in emerging market joint ventures, which carry greater risk than amounts invested in developed markets.

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QUARTERLY FINANCIAL INFORMATION

(unaudited)

2007	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.
	(in 000’s, except per share data)
Revenues	$ 709,629	$ 738,271	$ 822,753	$ 838,926
Net Revenues	603,900	625,719	688,660	691,636
Non-Interest Expenses	513,109	530,764	583,133	600,412
Income Before Income Taxes	93,766	92,955	109,898	95,605
Net Income	59,395	59,715	68,353	62,967
Net Income per Share – Basic	.52	.52	.59	.54
Net Income per Share – Diluted(1)	.50	.50	.57	.53
Dividends Declared per Share	.10	.10	.10	.10

2006	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.
	(in 000’s, except per share data)
Revenues(2)	$ 578,397	$ 660,023	$ 714,665	$ 692,493
Net Revenues(2)	529,586	596,007	632,976	590,339
Non-Interest Expenses(2)	458,766	504,743	538,647	512,845
Income Before Income Taxes	71,335	95,310	96,502	78,919
Net Income	45,109	61,531	56,774	50,928
Net Income per Share - Basic(3)	.41	.54	.50	.45
Net Income per Share - Diluted(3)	.40	.53	.48	.44
Dividends Declared per Share(3)	.08	.08	.08	.08

(1)	Due to rounding the quarterly results do not add to the total for the year.

(2)	Financial service fees revenue and investment advisory fees expense were revised to conform to the current year presentation. These revisions did not impact the Company’s prior period net income. See Note 1 to the Consolidated Financial Statements for further information.

(3)	Adjusted for three-for-two stock split paid on March 22, 2006.