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 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 $17.0 million at December 31, 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 December 31, 2007 that exposure is approximately $4.7 million.

CSS was formed by a group of broker-dealer firms, including the Company, to develop a back-office software system. During the first quarter of fiscal year 2008, CSS was acquired by an affiliate of a CSS shareholder. As a result of this transaction, the Company sold its interest in CSS for an immaterial amount. This transaction did not have a material impact on the Company’s financial statements.

13

---

RJTCF is a wholly owned subsidiary of RJF and is the managing member or general partner in approximately 50 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 December 31, 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 $270.5 million at December 31, 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 December 31, 2007, that exposure is approximately $6.7 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 December 31, 2007, that exposure is approximately $18.6 million.

The three 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 December 31, 2007, only two of these funds had any material activity. These funds typically hold interests in certain tax credit limited partnerships for less than 90 days. These funds had assets of approximately $7.9 million at December 31, 2007.

As of December 31, 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 December 31, 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 December 31, 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 $13.3 million at December 31, 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 December 31, 2007, that exposure is approximately $13.3 million.

NOTE 7 - 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 December 31, 2007 and September 30, 2007:

	December 31, 2007		September 30, 2007
		Weighted		Weighted
		Average		Average
	Balance	Rate (1)	Balance	Rate (1)
	($ in 000's)
Bank Deposits:
NOW Accounts	$       5,410	1.62%	$       4,493	1.57%
Demand Deposits (Non-Interest Bearing)	2,001	-	3,645	-
Savings and Money Market Accounts	5,961,639	4.12%	5,337,587	4.59%
Certificates of Deposit	239,812	4.72%	239,534	4.75%
Total Bank Deposits	$6,208,862	4.14%	$5,585,259	4.59%

(1) Weighted average rate calculation is based on the actual deposit balances at December 31, 2007 and September 30, 2007.

14

---

RJBank had deposits from officers and directors of $3.8 million and $1.8 million at December 31, 2007 and September 30, 2007, respectively.

Scheduled maturities of certificates of deposit and brokered certificates of deposit at December 31, 2007 and September 30, 2007 were as follows:

	December 31, 2007		September 30, 2007
	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	$ 14,157	$   32,880	$ 14,386	$   23,922
Over Three Through Six Months	13,428	25,572	10,949	28,980
Over Six Through Twelve Months	10,224	31,477	11,790	38,005
Over One Through Two Years	15,744	41,393	14,706	36,997
Over Two Through Three Years	6,476	18,777	7,978	22,345
Over Three Through Four Years	7,872	14,752	7,857	14,103
Over Four Years	1,679	5,381	1,802	5,714
Total	$ 69,580	$ 170,232	$ 69,468	$ 170,066

Interest expense on deposits is summarized as follows:

	Three Months Ended
	December 31,	December 31,
	2007	2006
	(in 000's)
Certificates of Deposit	$   2,816	$   2,806
Money Market, Savings and
NOW Accounts	60,620	30,965
Total Interest Expense	$ 63,436	$ 33,771

NOTE 8 – LOANS PAYABLE:

Loans payable at December 31, 2007 and September 30, 2007 are presented below:

	December 31,	September 30,
	2007	2007
	(in 000's)
Short-Term Borrowings:
Borrowings on Lines of Credit (1)	$    4,194	$     2,685
Current Portion of Mortgage Notes Payable	2,770	2,731
Federal Home Loan Bank Advances (2)	5,000	5,000
Total Short-Term Borrowings	11,964	10,416
Long-Term Borrowings:
Mortgage Notes Payable (3)	61,516	62,224
Federal Home Loan Bank Advances (2)	50,000	50,000
Total Long-Term Borrowings	111,516	112,224
Total Loans Payable	$ 123,480	$ 122,640

15

---

(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 December 31, 2007, the aggregate domestic lines were $1.21 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 three months ended December 31, 2007, interest rates on the lines of credit ranged from 4.75% to 6.13%. For the three months ended December 31, 2006, interest rates on the lines of credit ranged from 5.00% to 6.52%. The Company’s committed $200 million line of credit is subject to a 0.125% per annum facility fee. The Company maintains 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 ranges from 102% to 105% of the cash borrowed. The interest 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 $375 million outstanding at December 31, 2007 which are included in Securities Sold Under Agreements to Repurchase. 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: three in Turkey totaling $18 million and one in Argentina for $3 million. On December 31, 2007, there were no outstanding balances on the settlement lines in Argentina and Turkey. At December 31, 2007 the aggregate unsecured settlement lines of credit available were $95 million, and there were outstanding balances of $4.2 million on these lines. The interest rates for these lines of credit ranged from 9% to 18%.

(2)

RJBank had $55 million in FHLB advances outstanding at December 31, 2007, which were 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 December 31, 2007 was 5.23%. The outstanding FHLB advances mature between May 2008 and February 2011. The maximum amount of FHLB advances outstanding at any month-end during the three months ended December 31, 2007 and 2006 was $69 million and $50 million, respectively. The average amounts of FHLB advances outstanding and the weighted average interest rate thereon for the three months ended December 31, 2007 and 2006 were $58.2 million at a rate of 5.32% and $53.8 million at a rate of 5.15%, 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 at December 31, 2007 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.

(3)	Mortgage notes 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 million at December 31, 2007.

NOTE 9 – DERIVATIVE FINANCIAL INSTRUMENTS:

The Company enters into interest rate swaps and 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 Condensed Consolidated Statements of Financial Condition for the period. At December 31, 2007 and September 30, 2007, the Company had outstanding interest rate derivative contracts with notional amounts of $3.8 billion and $3.5 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 December 31, 2007 vastly exceeds the possible losses that could arise from such transactions. The net market value of all open swap positions at December 31, 2007 and September 30, 2007 was $21.9 million and $22.2 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.

16

---

NOTE 10 – INCOME TAXES:

The Company adopted the provisions of FIN 48 on October 1, 2007.  The impact of the adoption of FIN 48 resulted in a decrease to beginning retained earnings and an increase to the liability for unrecognized tax benefits of approximately $4.2 million.

The total amount of gross unrecognized tax benefits as of the date of adoption was approximately $8.6 million.  Of this total, approximately $6.9 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods.

The Company recognizes the accrual of interest and penalties related to income tax matters in interest expense and other expense, respectively.  Interest and penalties accrued as of the beginning of the year were approximately $1.6 million.

The Company’s tax liability does not include any accrual for potential taxes, interest or penalties related to tax assessments of the Company’s Turkish joint venture.  The Company has fully reserved for its equity interest in this joint venture (see Note 11 below for additional information).

The Company files income tax returns in the U. S. federal jurisdiction and various states, local and foreign jurisdictions.  With few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examination by tax authorities for years prior to 2004 for federal tax returns, 2004 for state and local tax returns and 2000 for foreign tax returns.  The Company is under Limited Issue Focused Examinations by the Internal Revenue Service for fiscal years 2005 and 2006.  The fiscal year  2007 federal income tax return is being examined under the IRS Compliance Assurance Program.  This program accelerates the examination of key issues in an attempt to resolve them before the tax return is filed. Certain state and local returns are also currently under various stages of audit.  The IRS and state audits in process are expected to be completed in 2008.  It is anticipated that the net unrecognized tax benefits may be reduced by up to one-half as a result of the audit settlements.

NOTE 11 – COMMITMENTS AND CONTINGENCIES:

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 this leveraged lease with Continental was approximately $10.3 million as of December 31, 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.

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.

RJBank had $55 million in FHLB advances outstanding at December 31, 2007, which were comprised of one short-term, fixed rate advance and several long-term, fixed rate advances. RJBank had $1.4 billion in credit available from the FHLB at December 31, 2007.

17

---

At December 31, 2007 and September 30, 2007, 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 December 31, 2007, RJBank has entered into reverse repurchase agreements totaling $305 million with two counterparties, with individual exposures of $125 million and $180 million. Although RJBank is exposed to risk that these counterparties may not fulfill their contractual obligations, the Company believes 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 purchases of $300.6 million in syndicated loans (included in Bank Loans, Net) due to the sellers’ delays in finalizing settlement. As of December, 31, 2007, RJBank had not settled the purchases of $100.7 million in syndicated loans, which includes $33.2 million of syndicated loans purchased but not settled at September 30, 2007 due to seller delays (all but $5.6 million of these loans were subsequently settled during January 2008). The remaining loans are expected to be settled during the three months ended March 31, 2008.

See Note 15 of the Notes to Condensed 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.

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 $765,000 and $736,000 were recognized in the three months ended December 31, 2007 and 2006, respectively.

In the normal course of business, the Company enters into underwriting commitments. Transactions relating to such commitments of Raymond James & Associates (“RJA”) that were open at December 31, 2007 and were subsequently settled had no material effect on the consolidated financial statements as of that date. Transactions relating to such commitments of Raymond James Ltd. (“RJ Ltd.”) that were recorded and open at December 31, 2007 were approximately CDN $3.2 million.

The Company utilizes client marginable securities to satisfy deposits with clearing organizations. At December 31, 2007, the Company had client margin securities valued at $122.7 million pledged with a clearing organization to meet the point in time requirement of $59.1 million. 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.

In January 2008, Sirchie Acquisition Company, LLC (“SAC”), an 80% owned indirect subsidiary of the Company, acquired 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. The Company’s equity investment in SAC was approximately $20 million. SAC also acquired 51% of the common stock of Law Enforcement Associates Corporation as part of the transaction. This acquisition is one of the Company’s recent merchant banking initiatives.

The Company has committed a total of $56.5 million, in amounts ranging from $200,000 to $5 million, to 43 different independent venture capital or private equity partnerships. As of December 31, 2007, the Company has invested $32.2 million of that amount and has received $28.1 million in distributions. Additionally, the Company controls the general partner in two internally sponsored private equity limited partnerships to which it has committed $14.3 million. Of that amount, the Company has invested $13 million and has received $8.8 million in distributions as of December 31, 2007. The Company is not the controlling general partner in another internally sponsored private equity limited partnership to which it has committed $30 million. As of December 31, 2007, the Company has not invested or received any distributions.

The Company is the general partner in the 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 December 31, 2007, the funds have unfunded commitments of $2.7 million.

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.

18

---

At December 31, 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	$    658,022
Securities Received in Securities Borrowed Vs. Cash Transactions	1,003,240
Collateral Received for Margin Loans	1,491,143
Total	$ 3,152,405

During the quarter certain collateral was repledged. At December 31, 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	$    193,849
Securities Received in Securities Borrowed Vs. Cash Transactions	968,124
Collateral Received for Margin Loans	122,676
Total	$ 1,284,649

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. At December 31, 2007, the aggregate domestic lines were $1.21 billion and CDN $40 million. 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. The Company maintains 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 ranges from 102% to 105% of the cash borrowed. The interest 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 $375 million outstanding at December 31, 2007 which are included in Securities Sold Under Agreements to Repurchase.

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: three in Turkey totaling $18 million and one in Argentina for $3 million. On December 31, 2007, there were no outstanding balances on the settlement lines in Argentina and Turkey. At December 31, 2007 the aggregate unsecured settlement lines of credit available were $95 million, and there were outstanding balances of $4.2 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 December 31, 2007, there were no outstanding performance guarantees in Argentina or Turkey.

The Company guarantees the existing mortgage debt of RJA of approximately $64.3 million. The Company guarantees interest rate swap obligations of RJ Capital Services, Inc. The Company has also committed to lend to RJTCF, or guarantee obligations in connection with RJTCF’s low income housing development/rehabilitation and syndication activities, aggregating up to $125 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 December 31, 2007, cash funded to invest in either loans or investments in project partnerships was $38.7 million. In addition, at December 31, 2007, RJTCF is committed to additional future fundings of $44.0 million related to project partnerships that have not yet been sold to various tax credit funds. The Company and RJTCF also issue certain guarantees to various third parties related to project partnerships which have been or are expected to be sold to one or more tax credit funds under RJTCF’s management. In some instances, RJTCF is not the primary guarantor of these obligations which aggregate to a cumulative maximum obligation of approximately $5.4 million as of December 31, 2007.

19

---

The Company was required to enter into a pair of agreements, both with Raymond James Trust, National Association and one with the Office of the Controller of the Currency (“OCC”), as a condition to the conversion of Raymond James Trust Company, now known as Raymond James Trust, National Association, (‘RJT”) from a state to a federally chartered institution. The conversion was effective January 1, 2008.  Under those agreements, the Company is obligated to provide RJT with sufficient capital in a form acceptable to the OCC to meet and maintain the capital and liquidity requirements commensurate with RJT’s risk profile for its conversion and any subsequent requirements of the OCC. The conversion expands RJT’s market nationwide, while substituting federal for multiple state regulatory oversight. RJT’s federal charter limits it to fiduciary activities. Thus, capital requirements are not expected to be significant. Based on current projections, RJT’s existing capital is expected to be sufficient for the foreseeable future.

Raymond James Yatyrym Menkul Kyymetler A. S., (“RJY”), the Company’s Turkish affiliate, was assessed for the year 2001 approximately $6.8 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 Council of State. The Turkish tax authorities, utilizing the 2001 methodology assessed RJY $5.7 million for 2002, which is also being challenged. Audits of 2003 and 2004 are anticipated and their outcome is unknown in light of the change in methodology and the pending litigation. The Company has recorded a provision for loss in its consolidated financial statements for its net equity interest in this joint venture. As of December 31, 2007, RJY had total capital of approximately $13.2 million, of which the Company owns approximately 50%.

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 12 - CAPITAL TRANSACTIONS:

The following table presents information on a monthly basis for purchases of the Company’s stock for the quarter ended December 31, 2007:

	Number of		Average
Period	Shares Purchased (1)		Price Per Share
October 1, 2007 – October 31, 2007	3,986		$35.47
November 1, 2007 – November 30, 2007	80,266		32.40
December 1, 2007 – December 31, 2007	137,064		33.11
Total	221,316		$32.90

20

---

(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 682,816 shares have been repurchased for a total of $16.8 million, leaving $58.2 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 the three months ended December 31, 2007, 208,651 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 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended September 30, 2007 for more information on this trust fund). With the exception of the shares purchased through this trust fund, the Company only purchased shares that were surrendered by employees as a payment for option exercises during the three months ended December 31, 2007.

NOTE 13 – STOCK BASED COMPENSATION:

The Company applies the provisions of SFAS No. 123R, “Share-Based Payment”, to account for share-based awards made to employees and directors.  This pronouncement requires the measurement and recognition of compensation expense for all share-based awards made to employees and directors to be based on estimated fair values.  The Company’s share-based employee and outside director compensation plans are described more fully in Note 17 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended September 30, 2007.  The Company’s net income for the three months ended December 31, 2007 and 2006 includes $10.3 million and $7.8 million, respectively, of compensation costs and $3.0 million and $2.1 million, respectively of income tax benefits related to the Company’s share-based plans available for awards to employees and members of its Board of Directors.

During the three months ended December 31, 2007, the Company granted 1,466,450 stock options, 811,696 shares of restricted stock and 206,295 restricted stock units to employees under its stock-based employee compensation plans. During the three months ended December 31, 2007, no options were granted to outside directors. Restricted stock grants under the 2007 Stock Bonus Plan and the 2005 Restricted Stock Plan are limited to 750,000 and 1,200,000 shares, respectively, per fiscal year.

The weighted-average grant-date fair value of stock options granted to employees and directors during the three months ended December 31, 2007 was $8.27 per share. Pre-tax unrecognized compensation expense for stock options granted to employees and outside directors, net of estimated forfeitures, was $18.4 million as of December 31, 2007, and will be recognized as expense over a weighted-average period of approximately 3.1 years.

The weighted-average grant-date fair value of restricted stock granted to employees during the three months ended December 31, 2007 was $31.75 per share. Pre-tax unrecognized compensation expense for unvested restricted stock granted to employees, net of estimated forfeitures, was $68.2 million as of December 31, 2007, and will be recognized as expense over a weighted-average period of approximately 3.2 years.

The weighted-average grant-date fair value of restricted stock units granted to employees during the three months ended December 31, 2007 was $30.44 per share.  Pre-tax unrecognized compensation expense for unvested restricted stock units granted to employees, net of estimated forfeitures, was $7.8 million as of December 31, 2007, and will be recognized as expense over a weighted-average period of approximately 2 years.

Under one of its non-qualified fixed stock option plans, the Company may grant stock options to its independent contractor Financial Advisors.  In addition, the Company may grant restricted stock units or restricted shares of common stock to its independent contractor Financial Advisors under one of its restricted stock plans.  The Company accounts for share-based awards to its independent contractor Financial Advisors in accordance with 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” and EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (see Note 18 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended September 30, 2007 for more information).  The Company’s net income for the three months ended December 31, 2007 and 2006 includes $1.5 million and $2.4 million, respectively, of compensation costs and $0.6 million and $0.9 million, respectively of income tax benefits related to the Company’s share-based plans available for awards to its independent contractor Financial Advisors.

21

---

During the three months ended December 31, 2007, the Company granted 48,000 stock options and 19,472 shares of restricted stock to its independent contractor Financial Advisors.

The weighted-average grant-date fair value of stock options granted to independent contractor Financial Advisors during the three months ended December 31, 2007 was $10.38 per share.  As of December 31, 2007, there was $6.8 million of total unrecognized pre-tax 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 3.2 years.

The weighted-average grant-date fair value of restricted stock granted to independent contractor Financial Advisors during the three months ended December 31, 2007 was $32.66 per share.  As of December 31, 2007, there was $2.1 million of total unrecognized pre-tax compensation cost related to unvested restricted stock 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 4 years.

NOTE 14 - 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 December 31, 2007 and September 30, 2007 was as follows:

	December 31,	September 30,
	2007	2007
	($ in 000's)
Raymond James & Associates, Inc.:
(Alternative Method Elected)
Net Capital as a Percent of Aggregate
Debit Items	19.35%	21.94%
Net Capital	$ 320,847	$ 332,873
Less: Required Net Capital	(33,163)	(30,344)
Excess Net Capital	$ 287,684	$ 302,529

At December 31, 2007 and September 30, 2007, RJFS had no Aggregate Debit Items and therefore the minimum net capital of $250,000 was applicable. The net capital position of RJFS at December 31, 2007 and September 30, 2007 was as follows:

	December 31,	September 30,
	2007	2007
	(in 000's)
Raymond James Financial Services, Inc.:
(Alternative Method Elected)
Net Capital	$ 51,491	$ 70,583
Less: Required Net Capital	(250)	(250)
Excess Net Capital	$ 51,241	$ 70,333

22

---

At December 31, 2007 and September 30, 2007, HFD had no Aggregate Debit Items and therefore the minimum net capital of $250,000 was applicable. The net capital position of HFD at December 31, 2007 and September 30, 2007 was as follows:

	December 31,	September 30,
	2007	2007
	(in 000’s)
Heritage Fund Distributors, Inc.
(Alternative Method Elected)
Net Capital	$ 5,156	$ 6,039
Less: Required Net Capital	(250)	(250)
Excess Net Capital	$ 4,906	$ 5,789

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 December 31, 2007 or September 30, 2007.

The Risk Adjusted Capital of RJ Ltd. was CDN $48,759,341 and CDN $47,724,293 at December 31, 2007 and September 30, 2007, 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 December 31, 2007, RJBank meets all capital adequacy requirements to which it is subject.

23

---

As of December 31, 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.

					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 December31, 2007:
Total Capital (to
Risk-Weighted Assets)	$ 509,943	10.3%	$ 395,200	8.0%	$ 494,000	10.0%
Tier I Capital (to
Risk-Weighted Assets)	448,193	9.1%	197,600	4.0%	296,400	6.0%
Tier I Capital (to
AdjustedAssets)	448,193	6.6%	273,197	4.0%	341,497	5.0%
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
AdjustedAssets)	368,699	5.8%	253,048	4.0%	316,309	5.0%

NOTE 15 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:

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 December 31, 2007 and September 30, 2007, is as follows:

	December 31,	September 30,
	2007	2007
	(in 000's)
Standby Letters of Credit	$   146,517	$   100,397
Open End Consumer Lines of Credit	31,320	27,871
Commercial Lines of Credit	1,329,702	1,218,690
Unfunded Loan Commitments - Variable Rate	487,162	397,752
Unfunded Loan Commitments - Fixed Rate	12,005	12,831

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.

24

---

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 December 31, 2007, $146.5 million of such letters of credit were outstanding. Of the letters of credit outstanding, $145.8 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 December 31, 2007, RJBank had $1.8 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.

See Note 20 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended September 30, 2007 for more information regarding the Company’s financial instruments with off-balance sheet risk.

NOTE 16 – EARNINGS PER SHARE:

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

	Three Months Ended
	December 31,	December 31,
	2007	2006
	(in 000’s, except per share amounts)
Net Income	$  56,242	$  59,395
Weighted Average Common Shares
Outstanding During the Period	116,881	114,339
Dilutive Effect of Stock Options and Awards (1)	3,360	3,554
Weighted Average Diluted Common
Shares (1)	120,241	117,893
Net Income per Share – Basic	$      0.48	$       0.52
Net Income per Share - Diluted (1)	$      0.47	$       0.50
Securities Excluded from Weighted Average
Diluted Common Shares Because Their Effect
Would Be Antidilutive	1,382	-

(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 17 – 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.

25

---

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 periods 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 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended September 30, 2007.  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.

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, Inc.

The Asset Management segment includes investment portfolio management services of Eagle Asset Management, Inc., Eagle Boston Investment 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, N.A. 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 merchant banking business), short-term special situation and bridge 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.

26

---

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

	Three Months Ended
	December 31,	December 31,
	2007	2006
	(in 000’s)
Revenues:
Private Client Group	$    516,022	$   449,133
Capital Markets	114,760	120,454
Asset Management	63,181	57,646
RJBank	102,589	50,402
Emerging Markets	12,658	11,797
Stock Loan/Borrow	13,876	15,059
Proprietary Capital	1,129	(1,618)
Other	4,976	6,756
Total Revenues	$   829,191	$   709,629
Income Before Provision for Income Taxes:
Private Client Group	$     55,154	$     54,010
Capital Markets	6,363	16,714
Asset Management	17,515	14,948
RJBank	14,774	6,439
Emerging Markets	(1,546)	936
Stock Loan/Borrow	1,643	196
Proprietary Capital	(639)	(1,395)
Other	(2,507)	1,918
Pre-Tax Income	$    90,757	$     93,766

Net Interest Income (Expense):
Private Client Group	$     28,304	$      30,968
Capital Markets	(326)	(2,228)
Asset Management	524	356
RJBank	35,204	15,829
Emerging Markets	904	708
Stock Loan/Borrow	2,571	2,076
Proprietary Capital	724	85
Other	1,681	4,701
Net Interest Income (Expense)	$    69,586	$      52,495

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

	December 31,	September 30,
	2007	2007
	(in 000’s)
Total Assets:
Private Client Group *	$    7,070,266	$  6,608,059
Capital Markets **	1,868,248	1,533,273
Asset Management	92,385	95,894
RJBank	6,819,063	6,312,966
Emerging Markets	119,105	104,238
Stock Loan/Borrow	952,111	1,302,937
Proprietary Capital	117,060	115,062
Other	59,480	181,739
Total	$ 17,097,718	$ 16,254,168

*       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.

27

---

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:

	Three Months Ended
	December 31,	December 31,
	2007	2006
	(in 000’s)
Revenues:
United States	$ 730,910	$  629,465
Canada	68,618	56,391
Europe	16,088	12,648
Other	13,575	11,125
Total	$ 829,191	$  709,629

The Company has $11.3 million invested, net of a $6.6 million reserve for its Turkish joint venture interest, in emerging market joint ventures, which carry greater risk than amounts invested in developed markets.

28

---

 

Item 4. CONTROLS AND PROCEDURES