FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

(Mark one)

C

OR

Commission file number   1-9109

RAYMOND JAMES FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

880 Carillon Parkway, St. Petersburg, Florida 33716
(Address of principal executive offices)    (Zip Code)

(727) 567-1000
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X   No___

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes     X      No              

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the close of the latest practicable date.

73,572,91973,762,118 shares of Common Stock as of May 05,August 04, 2004.

2

3

See accompanying Notes to the Condensed Consolidated Financial Statements.

4
* All common stock amounts adjusted for the March 24, 2004 3-for-2 stock split.

5

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 26,June 25, 2004

Note 1 - Basis of Presentation

The condensed consolidated financial statements include the accounts of Raymond James Financial, Inc.  (“RJF”) and its consolidated subsidiaries.  RJF is a Florida-based holding company whose subsidiaries are engaged in various financial service businesses; as used herein, the term “the Company” refers to RJF or one or more of its subsidiaries.  All material intercompany balances and transactions have been eliminated in consolidation.  Certain financial information that is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") but not required for interim reporting purposes has been condensed or omitted.  Pursuant to GAAP, these unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented.  The nature of the Company's business is such that the results of any interim period are not necessarily indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 26, 2003.  To prepare consolidated financial statements in conformity with GAAP, management must estimate certain amounts that affect the reported assets and liabilities, disclosure of contingent assets and liabilities, and reported revenues and expenses. Actual results could differ from those estimates.  Certain other reclassifications have been made to the prior year condensed consolidated financial statements to conform to the current period presentation.

The Company's quarters end on the last Friday of December, March, June and September.  Three of the Company's wholly-owned subsidiaries, Raymond James Bank (“RJBank”), Raymond James Limited (“RJ Ltd.”) and Raymond James Tax Credit Funds, Inc. (“RJ Tax Credit”) have quarters that end on the last day of each calendar quarter.  Any individually material transactions are reviewed and recorded in the appropriate fiscal quarter.

Note 2 - Effects of recently issued accounting standards

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities,” which provides guidance on the consolidation of certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.  Such entities are referred to as variable interest entities (“VIE’s”).  FIN 46 requires that a VIE be consolidated by a business enterprise, if that enterprise is deemed to be the primary beneficiary of the VIE.  FIN 46 was effective January 31, 2003 for the Company with respect to interest in VIE’s that were obtained after that date.  With respect to interests in VIE’s existing prior to February 1, 2003, the FASB issued Interpretation No. 46 (revised December 2003) (“FIN 46R”), which provides technical corrections and extended the effective date of FIN 46 to the first reporting period that ends after March 15, 2004.

The Company fully adopted FIN 46R in the current quarter.  Under the provisions of FIN 46R the Company determined that Raymond James Employee Investment Funds I and II (the “Funds”) and Comprehensive Software Systems, Inc. (“CSS”) are VIE’s.  The 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.  Both 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 solely on the earnings of the Funds.  Accordingly, the Company would absorb the majority of the “expected” losses and is deemed to be the primary beneficiary.  The Company began consolidating the funds upon adoption of FIN 46R in the current quarter.  The funds have combined assets of approximately $11.2 million at March 26, 2004, none of which act as collateral for the obligation of the Funds.  The Company's exposure to loss is limited to its contributions and the loans it funded to the employee investors.  At March 26, 2004, that exposure is approximately $6.4 million.

CSS was formed by a group of broker-dealer firms, including the Company, to develop a back-office software system.  CSS is currently funded by capital contributions and loans from its owners. CSS had assets of  $7.8 million at March 31, 2004.  As a 25% owner, the Company committed to provide an additional $2.2 million in investments in quarterly installments through September 2004.  The Company's exposure to loss is limited to its capital contributions and amounts loaned. All capital contributions prior to the current commitment have been written off.  The carrying value of the Company’s investment in CSS was $720,000 at March 26, 2004.  The Company is not the primary beneficiary of CSS and, therefore, will not consolidate its financial results. 

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“SFAS 150”).  The statement specifies how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.  The statement was effective for financial instruments entered into or modified after May 31, 2003 and was effective for pre-existing instruments as of the Company’s fourth quarter of 2003.  However, in November 2003 the FASB indefinitely deferred the effective date of the statement’s provisions for certain preferred securities subject to mandatory redemption.  Adoption of the provisions of SFAS No. 150 did not have a material effect on the Company’s financial condition or results of operations.  Additionally, the Company does not expect that the deferred provisions will have a material effect on its financial condition or results of operations.

6

In November 2003, the FASB's Emerging Issues Task Force (“EITF") issued EITF 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”.  The proposed guidance, as it currently exists, requires issuers to determine whether an investment is impaired, whether an impairment is other than temporary, and recognize an impairment loss equal to the difference between the investment's carrying value and its fair value.  The guidance generally determines an impairment to be other than temporary unless “positive evidence indicating that an investment's carrying amount is recoverable within a reasonable period of time outweighs negative evidence to the contrary.”  The EITF addresses debt and equity securities accounted for under both SFAS 115, “Accounting for Certain Investments in Debt and Equity Securities” and SFAS 124, “Accounting for Certain Investments Held by Not-for-Profit Organizations”, as well as investments accounted for by both the equity and cost methods.  Although the task force has planned further discussions related to this topic, effective for fiscal years ending after December 15, 2003, EITF 03-1 requires disclosures for those investments with unrealized losses that have not been recognized as other-than-temporary impairments including identification of the amount of investments that have been in an unrealized loss position for more than twelve months, as well as the related unrealized loss.  The EITF will most significantly affect the Company’s available for sale securities held by RJBank.  Based on its assessment of the current guidance provided in the EITF, the Company does not believe that it has a material effect on its consolidated financial statements.

On March 9, 2004, the SEC issued Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments” (“SAB 105”).  SAB 105 applies to those loan commitments that are accounted for as derivatives in accordance with paragraph three of SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” and contains specific guidance on measuring those loan commitments at fair value.  Additionally, it requires registrants to disclose their accounting policies related to loan commitments accounted for as derivatives, including the methods and assumptions used to estimate the fair value of the commitments, as well as any associated hedging strategies.  SAB 105 is effective for new loan commitments entered into subsequent to March 31, 2004.  The adoption of SAB 105 did not have a material impact on the Company's consolidated financial statements. 

On March 31, 2004, the FASB ratified the consensuses reached by the Emerging Issues Task Force (“EITF") in issue 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” on the guidance to be used in determining whether an investment is “other-than-temporarily” impaired.  The FASB had previously ratified in November 2003, certain disclosure requirements that were outlined in EITF 03-1.  This EITF addresses debt and equity securities accounted for under both SFAS 115, “Accounting for Certain Investments in Debt and Equity Securities” and SFAS 124, “Accounting for Certain Investments Held by Not-for-Profit Organizations”, as well as investments accounted for by both the equity and cost methods.  The guidance prescribed by EITF 03-1 in determining whether an impairment is “other-than-temporary” requires assessing such factors as the investors ability and intent to hold the impaired “investment for a reasonable period of time sufficient for a forecasted recovery of fair value up to the cost of the investment”, as well as the severity and duration of the impairment.  Additionally, EITF 03-1 requires annual disclosures for those investments with unrealized losses that have not been recognized as other-than-temporary impairments.  The disclosure must include the amount of unrealized losses and the related fair value of the investments with unrealized losses.   These disclosures must be “segregated by those investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or longer.”  The Company will adopt the recognition and measurement provisions in its fourth fiscal quarter of 2004.  The Company does not believe that the impact to the consolidated financial statements will be material.  The disclosure requirements will be implemented in the fiscal year 2004 annual financial statements. 

On March 31, 2004 the FASB ratified the consensus reach by the Emerging Issues Task Force on EITF Issue 03-16, “Accounting for Investments in Limited Liability Companies.”  This EITF issues requires “that an investment in a Limited Liability Company (“LLC”) that maintains a “specific ownership account” for each investor – similar to a partnership capital account structure – should be viewed as similar to an investment in a limited partnership for purposes of determining whether a noncontrolling investment in an LLC should be accounted for using the cost method or the equity method.”  These requirements are applicable for reporting periods beginning after June 15, 2004.  The Company does not believe that the adoption of SAB 105EITF 03-16 will have a material impact on its consolidated financial statements. statements

7

Note 3 – Trading Account Securities Owned And Securities Sold But Not Yet Purchased, at fair value (In 000's):

Note 4 – Variable Interest Entities (“VIE’s”)

Under the provisions of FASB Interpretation 46R ("FIN 46R") the Company determined that Raymond James Employee Investment Funds I and II (the “Funds”) and Comprehensive Software Systems, Inc. (“CSS”) are VIE’s.  The 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.  Both 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 solely on the earnings of the Funds.  The Company is deemed to be the primary beneficiary, and accordingly, consolidates the Funds, which have combined assets of approximately $10.7 million at June 25, 2004.  None of those assets act as collateral for any obligations of the Funds.  The Company's exposure to loss is limited to its contributions and the loans it funded to the employee investors.  At June 25, 2004, that exposure is approximately $9 million.

CSS was formed by a group of broker-dealer firms, including the Company, to develop a back-office software system.  CSS is currently funded by capital contributions and loans from its owners. CSS had assets of $7.2 million at June 30, 2004.  The Company is committed to provide an additional $1.4 million in capital contributions through September 2004.  The Company's exposure to loss is limited to its capital contributions and amounts loaned.  The Company is not the primary beneficiary of CSS and, therefore,   accounts for its investment using the equity method of accounting.  The carrying value of the Company’s investment in CSS was $1.4 million at June 25, 2004. 

Note 45 - Stock-based Compensation

At March 26,June 25, 2004, the Company had nine stock-based employee compensation plans, which are described more fully in Note 12 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended September 26, 2003. The Company accounts for stock-based compensation in accordance with the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation."  For the three months ended March 26,June 25, 2004 and March 28,June 27, 2003, the Company recognized expense of $4.0$4.2 million and $3.1$2.6 million, respectively, related to its stock-based compensation plans.

Note 56 - Commitments and Contingencies

RJBank has outstanding at any time a significant number of commitments to extend credit. These arrangements are subject to strict credit control assessments and each client's credit worthiness is evaluated on a case-by-case basis. A summary of commitments to extend credit and letters of credit outstanding at March 31,June 30, 2004 and September 30, 2003, are as follows:

7

8

Because many commitments expire without being funded in whole or part, the contract amounts are not estimates of future cash flows.  The majority of loan commitments have terms of up to one year.

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 March 31,June 30, 2004, $8,990,426$8.6 million of such letters of credit were outstanding, for which RJBank has a contingent liability to fund in the event the account party (on whose behalf the letter of credit was written) cannot or does not meet its financial obligations.outstanding.  Of the letters of credit outstanding, $4,890,676$5.3 million are underwritten as part of a larger corporate credit relationship, and the remaining $4,099,750$3.3 million are fully secured by cash or securities.  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 cover the maximum potential amount of any future payments of amounts drawn down under the existing letters of credit.

Securities with carrying values of $160,790,056 and $72,811,246 at March 31, 2004 andAt September 30, 2003 respectively,securities with carrying value of $72.8 million were pledged by RJBank as collateral with the Federal Home Loan Bank of ("FHLB") for advances.  In lieu of pledging securities for advances beginning in the current quarter, RJBank has provided the FHLB with a lien against RJBank's portfolio of residential mortgages.

As part of an effort to increase brand awareness, the Company entered into a stadium naming rights contract in July 1998. The contract has a thirteen-year term with a five-year renewal option and a 4% annual escalator.  Expenses of $680,109 and $653,951 were recognized in the three months ended March 26,June 25, 2004 and March 28,June 27, 2003, respectively.

In the normal course of business, the Company enters into underwriting commitments.  Transactions relating to such commitments that were open at March 26,June 25, 2004 and were subsequently settled had no material effect on the consolidated financial statements as of that date.

The Company utilizes client marginable securities to satisfy deposits with clearing organizations.  At March 26,June 25, 2004 and September 26, 2003, the Company had client margin securities valued at $86,423,000$86.7 million and $97,807,000,$97.8 million, respectively, on deposit with a clearing organization.

The Company has guaranteed lines of credit for various foreign joint ventures as follows: fourthree lines of credit totaling $12.5 million in Turkey and one line of credit totaling $1.3 million in Argentina.  At March 26,June 25, 2004, there were no outstanding balances on these lines of credit.  In addition, the Company has guaranteed the completion of trades with counterparties in Turkey and Argentina not to exceed $ 27$27 million.

The Company has committed a total of $29$30.9 million, in amounts ranging from $500,000 to $1,500,000, to 3133 different independent venture capital or private equity partnerships.  As of March 26,June 25, 2004, the Company had invested $23$24.2 million of that amount.   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 $8 million as of March 26,June 25, 2004.

The Company guarantees certain obligations of subsidiaries as follows: the mortgage debt of Raymond James & Associates, Inc. ("RJA") of $73$72.8 million, the interest rate swap obligations of RJ Capital Services, Inc. (a maximum exposure of $20 million), and the debt of Raymond James Credit Corporation, Inc. of $190,000,$191,000, which is secured by securities held as collateral for client borrowings. The Company has also committed to guarantee obligations of RJ Tax Credit of up to $90 million upon request. RJ Tax Credit may borrow in order to fund the purchase and development of properties qualifying for tax credits, which are then sold to third parties.  This commitment is reviewed annually and currently expires in November 2004.  The borrowings are secured by properties under development. At March 31,June 30, 2004, there are no guarantees outstanding that relate to borrowings from third parties. In addition, at June 30, 2004, RJ Tax Credit is committed to purchase properties, subject to due diligence, totaling $42,063,425 at March 31, 2004.

The Company has expanded its corporate headquarters with the completion of a fourth tower.  The cost for the building and adjacent garage was $33 million.  In connection therewith, the Company made a second draw of $27 million on its mortgage on January 30, 2004, which brought the total mortgage on its headquarters complex to $73$88.5 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.

8

9

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.

As previously reported, the Company and Raymond James Financial Services (“RJFS”) are defendants in a series of lawsuits and arbitrations relating to an alleged mortgage lending program known as the "Premiere 72" program, that was administered by a company owned in part by two individuals who were registered as Financial Advisors with RJFS in Houston.  Arbitration claims or lawsuits have been filed on behalf of approximately 600 persons, of whom 45% were never clients of RJFS.  In January 2004, the Company settled two groups of claims relating to this matter that were scheduled for arbitration, involving $2,000,000 in alleged losses and a claim for punitive damages.  Settlements to date are consistent with the Company's evaluation of those claims.  Arbitration proceedings for an additional group of claimants began in May 2004 and are scheduled to begincontinue in MayAugust 2004.  The Company has made provision in its financial statements for its estimate of the reasonable potential exposure for these claims.

As previously reported, RJFS and its counsel have been engaged in discussions with the SEC staff regarding a proposed enforcement action relating to actions of a former Financial Advisor in the RJFS Rhode Island office. RJFS and the SEC staff were unable to reach a resolution with respectregarding a proposed enforcement action alleging failure to this matter andsupervise a former Financial Advisor in the matter has been referred theRJFS Rhode Island office.  Prior to their referral to the full Commission of their recommendation for consideration.  Whileenforcement action, the SEC staff notified RJFS that they proposed to recommend additional charges against the firm for violations of the anti-fraud provisions of the Federal Securities Laws, and seek payment of a material amount from RJFS if they should prevail.  The SEC staff did not point to any new or additional evidence to support this escalation of their claim against RJFS.  The Company does not believe there is a basis for these charges and continues to believe that no enforcement proceeding is warranted,warranted.  However, it cannot predict what determination will be made by the SEC.  The Company has made provision in its financial statements for its estimate of the reasonable potential exposure for this claim.  If enforcement proceedings are authorized, the Company will have the right to a full hearing before an SEC administrative law judge.

As previously reported, the Company undertook a review of sales of Class A load mutual funds in excess of $2,500 since January 1, 1999 through December 31, 2003 and has committed to refund to clients any overcharges plus applicable interest arising from the failure to afford applicable discounts to clients.  The refunds, including interest, total $9.3 million, of which $9 million has already been remitted to clients.  Of the total refunds the Company has estimated that it will recover $4.6 million from its Financial Advisors and an additional $900,000 in contributions from mutual funds.  The Company has also undertaken a review of sales of Class A load mutual funds since January 1, 20012004 and, again, will refund to clients any overcharges arising from the failure to afford applicable discounts to clients.  The Company has also determined to undertake a similar review for all sales in excess of $2,500 in 1999 and 2000 and will refund to clients any overcharges.  The Company hashad previously made adequate provision in its financial statements reflecting an estimate of the probablenet impact of these refunds. At the end

As previously reported, in April of the prior quarter,2004 an NASD arbitration was filed by two clients of RJA’s Switzerland branch seeking recovery of their combined losses of approximately $21 million.  While the Company reported an accrued liability to clients of $12.3 million with an offsetting receivable from Financial Advisors of $6.2 million.  There has been no material change in the Company’s estimate of this liability since that date.  However, the ultimate liability to clients and amount recoverable from Financial Advisors may be more than or less than the amount provided for.

RJFS, along with 15 other brokerage firms, has settled with both the SEC and NASD enforcement actions relatinghad valid defenses to the mutual fund discount issue discussed above.   RJFS was censured, paid a fine of $2.6 million and agreed toclaims, it resolved the undertakings set forth above.matter for an immaterial amount without admitting any liability.

The Company is a defendant or co-defendant in various lawsuits and arbitrations incidental to its securities business. The Company is contesting the allegations of the complaints in these cases and believes that there are meritorious defenses in each of these lawsuits.  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 currently available information, review with outside legal counsel, and consideration of amounts provided for with respect to these matters in the Company's financial statements, the ultimate resolution of these matters will not result in a material adverse effect on the consolidated financial position or results of operations of the Company, except for the possible impact of the matter noted below, which is in its initial stages.Company.  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 these matters and upon the level of income for such period.

In April of 2004 an NASD arbitration was filed by two clients of RJA’s Switzerland branch seeking recovery of their combined losses of approximately $21 million.  The clients, a Lebanese resident and a Lebanese corporation, allege the investments, which began in mid-2000, were unsuitable and concentrated in technology stocks.  The Company anticipates contesting the allegations of this complaint and believes there are meritorious defenses; however, since investigation of the claim has just begun, the Company is unable to reasonably estimate what exposure, if any, it may have in this matter.

Note 6 -7 – Capital Transactions

At their meeting on February 12, 2004, the Company’s Board of Directors declared a 3-for-2 stock split.  The additional shares were distributed on March 24, 2004, to shareholders of record on March 4, 2004.  All references in the Condensed Consolidated Financial Statements to amounts per share and to the number of shares outstanding have been restated to give retroactive effect to the stock split.

9

10

The following table presents information on a monthly basis for purchases of the Company’s stock for the quarter ended March 26,June 25, 2004 (in 000’s, except per share amounts):

(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 as needed to meet the demands of the employee stock compensation plans.  At March 26,directors.  On May 20, 2004, in accordance with approval from the board of directors 1,429,999authorized purchases of up to $75 million.  No shares were availablehave been purchased since that date.  Historically the Company has considered such purchases when the price of its stock reaches or approaches 1.5 times book value.  The decision to be repurchased.repurchase shares is subject to cash availability and other factors.

Note 78 - Regulation and Capital Requirements

The 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 NYSE, is also subject to the rules of the NYSE, whose requirements are substantially the same. Rule 15c3-1 requires that aggregate indebtedness, as defined, not exceed fifteen times net capital, as defined. Rule 15c3-1 also provides for an “alternative net capital requirement”, which both RJA and RJFS 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.  The NYSE 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 positions of the Company's U.S. broker-dealer subsidiaries were as follows:

In accordance with the Securities and Exchange Commission's no action letter dated November 3, 1998, RJA has agreed to compute a reserve requirement for the proprietary accounts of introductory firms.  As of March 26,June 25, 2004 and September 26, 2003, RJA's deposit requirements were $498,000$670,000 and $511,000, respectively.

RJFS elected the alternative net capital requirement beginning with the month ended September 26, 2003.  At March 26,June 25, 2004 and September 26, 2003, RJFS had no Aggregate Debit Items and therefore the minimum net capital of $250,000 was applied.  The net capital position of RJFS at March 26,June 25, 2004 and September 26, 2003 was as follows:

Raymond James 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. 

10

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 its 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.  The Company was not in Early Warning level 1 or level 2 at March 31,June 30, 2004 or September 26,30, 2003. 

The Risk Adjusted Capital of RJ Ltd. was CDN$21,944,35921.3 million (US$16.1 million) and CDN$11,337,49011.3 million (US$8.4 million) at March 31,June 30, 2004 and September 30, 2003, respectively.

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 March 31,June 30, 2004, RJBank meets all capital adequacy requirements to which it is subject.

As of March 31,June 30, 2004, 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 the institution's classification.