UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark one)

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
		THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30,~~December 31, 2006

ORor

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

For the transition period from

Commission File Number: 1-9109

RAYMOND JAMES FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Florida		No. 59-1517485
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

880 Carillon Parkway, St. Petersburg, Florida 33716

(Address of principal executive offices) (Zip Code)

(727) 567-1000

(Registrant's telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

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

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

Large accelerated filer x Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o

No x

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.

~~116,089,531~~118,646,428 shares of Common Stock as of ~~August 7, 2006~~February 6, 2007

	RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

	Form 10-Q for the Quarter Ended ~~June 30,~~December 31, 2006

	INDEX


PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated ~~Statement~~Statements of Financial Condition as of ~~June 30,~~December 31, 2006 and September 30, ~~2005~~2006 (unaudited)	3

	Condensed Consolidated ~~Statement~~Statements of ~~Operations~~Income and Comprehensive Income for the three months ended ~~June 30,~~December 31, 2006 and ~~June 24,~~December 31, 2005 (unaudited)	4

	Condensed Consolidated ~~Statement of Operations for the nine months ended June 30, 2006 and June 24, 2005 (unaudited)~~	4

	~~Condensed Consolidated Statement~~Statements of Cash Flows for the ~~nine~~three months ended ~~June 30,~~December 31, 2006 and ~~June 24,~~December 31, 2005 (unaudited)	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2522

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3533

Item 4.	Controls and Procedures	3835



PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	3935

Item 1A.	Risk Factors	3936

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3936

Item 6.	Exhibits	4037

	Signatures	4138

~~Table of Contents~~Index

~~RAYMOND JAMES~~PART I FINANCIAL ~~INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION~~

~~(Unaudited)~~INFORMATION

June 30,
September 30,

2006
2005

(in thousands)
Assets:

Cash and cash equivalents $ 631,912 $ 881,133
Assets segregated pursuant to federal regulations - cash and cash equivalents 3,226,244 2,351,805
Securities purchased under agreements to resell 335,682 117,616
Securities owned:
Trading securities, at fair value 679,651 359,679
Available for sale securities, at fair value 151,141 187,549
Other investments 66,815 -
Receivables:
Brokerage clients, net 1,530,714 1,426,096
Stock borrowed 1,050,153 1,079,849
Bank loans, net 1,904,683 1,000,281
Brokers-dealers and clearing organizations 220,276 110,760
Other 285,163 241,527
Investments in real estate partnerships- held by variable interest entities 186,893 138,228
Property and equipment, net 142,011 137,555
Deferred income taxes, net 84,814 78,373
Deposits with clearing organizations 30,682 31,286
Goodwill 62,575 62,575
Investment in leveraged leases, net 11,116 11,808
Prepaid expenses and other assets 190,243 142,649

$10,790,768 $8,358,769
Liabilities and Shareholders' Equity:

Loans payable $ 556,675 $ 146,462
Loans payable related to real estate- owed by variable interest entities 144,215 144,780
Payables:
Brokerage clients 4,644,957 3,767,535
Stock loaned 1,334,198 1,115,595
Bank deposits 1,448,404 1,076,020
Brokers-dealers and clearing organizations 88,297 146,269
Trade and other 146,659 140,360
Trading securities sold but not yet purchased 197,073 134,595
Securities sold under agreements to repurchase 354,360 33,681
Accrued compensation, commissions and benefits 275,011 299,657
Income taxes payable 36,805 20,961

9,226,654 7,025,915

Minority Interests 120,578 91,031

Shareholders' equity*:
Preferred stock; $.10 par value; authorized
10,000,000 shares; issued and outstanding -0- shares - -
Common Stock; $.01 par value; authorized
180,000,000 shares; issued 117,304,389 at
June 30, 2006 and 114,850,634 at Sept. 30, 2005 1,173 765
Shares exchangeable into common stock; 386,375
at June 30, 2006 and 427,988 at Sept. 30, 2005 4,959 5,493
Additional paid-in capital 227,182 165,074
Retained earnings 1,217,247 1,082,063
Accumulated other comprehensive income 10,936 9,632
1,461,497 1,263,027

Less: 1,293,749 and 1,884,422 common shares in treasury, at cost 17,961 21,204
1,443,536 1,241,823

$10,790,768 $8,358,769

See accompanying Notes to Condensed Consolidated Financial Statements.
* All share amounts adjusted, as necessary, for the March 22, 2006 3-for-2 stock split.
Item 1. FINANCIAL STATEMENTS

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
	December 31,	September 30,
	2006	2006
	(in thousands)
Assets:
Cash and cash equivalents	$ 565,046	$ 641,691
Assets segregated pursuant to federal regulations	3,675,560	3,189,900
Securities purchased under agreements to resell	520,661	776,863
Securities owned:
Trading securities, at fair value	720,784	485,771
Available for sale securities, at fair value	336,004	280,580
Other investments, at fair value	79,074	66,726
Receivables:
Brokerage clients, net	1,571,350	1,504,607
Stock borrowed	877,711	1,068,102
Bank loans, net	2,688,863	2,262,832
Brokers-dealers and clearing organizations	172,898	210,443
Other	269,079	290,294
Investments in real estate partnerships- held by variable interest entities	210,969	227,963
Property and equipment, net	148,942	142,780
Deferred income taxes, net	92,765	94,957
Deposits with clearing organizations	31,102	30,780
Goodwill	62,575	62,575
Investment in leveraged leases, net	10,647	10,882
Prepaid expenses and other assets	242,147	168,904

	$12,276,177	$ 11,516,650
Liabilities and Shareholders' Equity:
Loans payable	$ 408,092	$ 141,638
Loans payable related to investments by variable interest entities in real estate partnerships	140,475	193,647
Payables:
Brokerage clients	5,044,397	4,552,227
Stock loaned	958,250	1,235,104
Bank deposits	3,066,724	2,806,880
Brokers-dealers and clearing organizations	164,635	79,646
Trade and other	125,361	138,091
Trading securities sold but not yet purchased, at fair value	176,324	94,009
Securities sold under agreements to repurchase	172,363	301,110
Accrued compensation, commissions and benefits	230,290	321,224
Income taxes payable	45,195	34,294

	10,532,106	9,897,870

Minority interests	215,174	154,911

Shareholders' equity:
Preferred stock; $.10 par value; authorized
10,000,000 shares; issued and outstanding -0- shares	-	-
Common stock; $.01 par value; authorized 180,000,000 shares; issued 119,048,337 at
December 31, 2006 and 117,655,883 at September 30, 2006	1,160	1,150
Shares exchangeable into common stock; 362,197
at December 31, 2006 and September 30, 2006	4,649	4,649
Additional paid-in capital	221,928	205,198
Retained earnings	1,306,016	1,258,446
Accumulated other comprehensive income	9,422	12,095
	1,543,175	1,481,538
Less: 974,153 and 1,270,015 common shares in treasury, at cost	14,278	17,669
	1,528,897	1,463,869
	$12,276,177	$11,516,650

See accompanying Notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~Index

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS~~

~~(Unaudited)~~

~~(In thousands, except per share amounts)~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
(In thousands, except per share amounts)
	Three Months Ended
	December 31,	December 31,
	2006	2005
Revenues:
Securities commissions and fees	$ 400,865	$ 366,476
Investment banking	41,839	29,714
Investment advisory fees	50,136	42,746
Interest	158,224	88,050
Net trading profits	6,293	5,857
Financial service fees	29,966	23,052
Other	22,306	19,452

Total revenues	709,629	575,347

Interest expense	105,729	48,811
Net revenues	603,900	526,536

Non-Interest Expenses:
Compensation, commissions and benefits	408,509	366,619
Communications and information processing	25,974	24,596
Occupancy and equipment costs	20,150	17,402
Clearance and floor brokerage	7,536	5,766
Business development	21,762	17,131
Investment advisory fees	11,066	6,484
Other	18,112	17,718
Total non-interest expenses	513,109	455,716

Income before minority interest and provision for income taxes	90,791	70,820

Minority interest	(2,975)	(515)

Income before provision for income taxes	93,766	71,335

Provision for income taxes	34,371	26,226

Net income	$ 59,395	$ 45,109

Net income per share-basic	$ 0.52	$ 0.41
Net income per share-diluted	$ 0.50	$ 0.40
Weighted average common shares
outstanding-basic*	114,339	111,501
Weighted average common and common
equivalent shares outstanding-diluted*	117,893	113,636

Cash dividend declared per common share*	$ 0.10	$ 0.08

Net income	$ 59,395	$ 45,109
Other Comprehensive Income:
Net unrealized gain (loss) on available
for sale securities, net of tax	85	(86)
Net unrealized gain on interest rate swaps
accounted for as cash flow hedges, net of tax	-	34
Net change in currency translations	(2,758)	(71)
Total comprehensive income	$ 56,722	$ 44,986
* All share amounts have been adjusted for the March 22, 2006 3-for-2 stock split. See accompanying Notes to Condensed Consolidated Financial Statements.

Three Months Ended

Nine Months Ended

June 30,

June 24,

June 30,

June 24,

2006

2005

2006

2005

Revenues:

Securities commissions and fees $ 424,594 $ 349,364 $ 1,186,079 $1,048,206
Investment banking 44,075 30,544 112,645 87,436
Investment advisory fees 46,371 38,674 132,603 115,233
Interest 125,860 66,354 320,532 178,161
Net trading profits 5,671 2,722 19,717 19,919
Financial service fees 38,288 20,507 86,441 64,665
Other 26,498 18,197 85,505 49,446
Total Revenues 711,357 526,362 1,943,522 1,563,066

Interest expense 81,689 32,818 194,516 87,419
Net Revenues 629,668 493,544 1,749,006 1,475,647

Non-Interest Expenses:

Compensation, commissions and benefits 429,224 348,361 1,195,488 1,039,762
Communications and information processing 25,858 23,948 77,152 67,205
Occupancy and equipment costs 18,701 16,695 54,213 48,570
Clearance and floor brokerage 8,781 6,769 19,607 18,014
Business development 21,782 17,057 58,608 47,303
Other 30,993 29,750 87,525 78,205
Total Non-Interest Expenses 535,339 442,580 1,492,593 1,299,059

Income before provision for income taxes and minority interest 94,329 50,964 256,413 176,588

Provision for income taxes 39,728 19,094 99,733 68,088
Minority interest (2,173) (512) (6,734) 2,178

Net Income
$ 56,774

$ 32,382

$ 163,414

$ 106,322
Net Income per share-basic
$ 0.50

$ 0.29

$ 1.45

$ 0.97
Net Income per share-diluted
$ 0.48

$ 0.29

$ 1.41

$ 0.94
Weighted average common shares

outstanding-basic*
113,464

110,495

112,376

109,980
Weighted average common and common

equivalent shares outstanding-diluted*
116,960

113,382

115,556

113,240

Cash dividends declared per common share*
$ 0.08

$ 0.05

$ 0.24

$ 0.16

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

* Share amounts adjusted, as necessary, for the March 22, 2006 3-for-2 stock split.

~~Table of Contents~~

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~(Unaudited)~~

~~(in thousands)~~

~~(continued on next page)~~

Nine Months Ended

June 30,
June 24,

2006
2005
Cash Flows from operating activities:

Net Income $ 163,414 $ 106,322
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 14,474 12,023
Excess tax benefits from stock-based payment arrangements (1,312) -
Deferred income taxes (6,441) (7,863)
Unrealized loss (gain), premium and discount amortization on available for sale securities and other securities 123 (979)
Effectiveness of interest rate swaps accounted for as cash flow hedges - (4)
Loss (gain) on sale of property and equipment 1,046 (156)
Provision for legal proceedings, bad debts and other accruals 24,411 28,927
Stock-based compensation expense 17,253 11,826

(Increase) decrease in operating assets:
Assets segregated pursuant to federal regulations (874,439) (19,335)
Receivables:
Brokerage clients, net (104,766) (42,544)
Stock borrowed 29,696 397,864
Brokers-dealers and clearing organizations (109,516) 43,926
Other (26,189) (26,860)
Securities purchased under agreements to resell, net of securities
sold under agreements to repurchase
102,613 (41,155)
Trading securities, net (257,494) (35,229)
Investments in real estate partnerships-held by variable interest entities (48,665) 22,569
Prepaid expenses and other assets (44,174) (14,468)

Increase (decrease) in operating liabilities:
Payables:
Brokerage clients 877,422 214,727
Stock loaned 218,603 (374,016)
Brokers-dealers and clearing organizations (57,972) (1,816)
Trade and other (9,612) 9,808
Accrued compensation, commissions and benefits (24,646) (2,874)
Income taxes payable 15,873 (21,284)
Minority Interest 29,547 (1,085)

Net cash (used in) provided by operating activities $ (70,751) $ 258,324
Index

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
(continued on next page)
	Three Months Ended
	December 31,	December 31,
	2006	2005
Cash Flows from operating activities:
Net income	$ 59,395	$ 45,109
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization	5,294	4,378
Excess tax benefits from stock-based payment arrangements	(969)	(733)
Deferred income taxes	2,192	5,055
Unrealized gains, premium and discount amortization
on available for sale securities and other securities	212	159
Loss on sale of property and equipment	17	636
Provision for loan loss, legal proceedings, bad debts and other accruals	6,198	6,244
Stock-based compensation expense	10,568	5,155
Minority interest	(2,975)	(515)

(Increase) decrease in operating assets:
Assets segregated pursuant to federal regulations	(485,660)	(716,342)
Receivables:
Brokerage clients, net	(66,646)	15,145
Stock borrowed	190,391	134,091
Brokers-dealers and clearing organizations	37,545	(37,183)
Other	(40,120)	(5,947)
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase	(77,545)	73,556
Trading securities, net	(152,698)	(143,209)
Prepaid expenses and other assets	3,198	(25,648)

Increase (decrease) in operating liabilities:
Payables:
Brokerage clients	492,170	664,016
Stock loaned	(276,854)	(25,233)
Brokers-dealers and clearing organizations	84,989	(59,500)
Trade and other	6,416	18,128
Accrued compensation, commissions and benefits	(93,332)	(95,443)
Income taxes payable	10,847	7,806

Net cash used in operating activities	(287,367)	(130,275)
See accompanying Notes to Condensed Consolidated Financial Statements.

Index

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
(continued from previous page)
	Three Months Ended
	December 31,	December 31,
	2006	2005

Cash Flows from investing activities:
Additions to property and equipment, net	(11,738)	(10,875)
Loan originations and purchases	(803,875)	(443,955)
Loan repayments	373,633	172,362
Purchases of other investments	(12,348)	(64,127)
Investments in real estate partnerships-held by variable
interest entities	(7,900)	(23,156)
Repayments of loans by investor members of variable interest entities related to investments in real estate partnerships	2,356	4,037
Securities purchased under agreements to resell, net	205,000	-
Purchases of available for sale securities	(80,226)	(2,308)
Available for sale securities maturations and repayments	24,745	18,460

Net cash used in investing activities	(310,353)	(349,562)

Cash Flows from financing activities:
Proceeds from borrowed funds, net	284,600	151,102
Repayments of mortgage and borrowings, net	(18,146)	(5,974)
Proceeds from borrowed funds related to investments by variable interest entities in real estate partnerships	1,846	1,074
Repayments of borrowed funds related to investments by variable interest entities in real estate partnerships	(7,445)	(1,400)
Proceeds from capital contributed to variable interest entities related to investments in real estate partnerships	18,359	27,824
Minority interest	(19,920)	(14,222)
Exercise of stock options and employee stock purchases	13,247	11,941
Increase in bank deposits	259,844	22,512
Purchase of treasury stock	(1,350)	(128)
Cash dividends on common stock	(11,825)	(9,314)
Excess tax benefits from stock-based payment arrangements	969	733

Net cash provided by financing activities	520,179	184,148

Currency adjustment:
Effect of exchange rate changes on cash	(2,758)	(71)
Net decrease in cash and cash equivalents	(80,299)	(295,760)
Cash reduced by deconsolidation of variable interest entity related to investments in real estate partnerships	(291)	-
Cash resulting from consolidation of limited partnerships	3,945	-
Cash and cash equivalents at beginning of period	641,691	881,133

Cash and cash equivalents at end of period	$ 565,046	$ 585,373

Supplemental disclosures of cash flow information:
Cash paid for interest	$ 102,877	$ 48,317
Cash paid for taxes	$ 19,331	$ 12,935
See accompanying Notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~Index

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~(Unaudited)~~

~~(in thousands)~~

~~(continued from previous page)~~

Nine Months Ended

June 30,
June 24,

2006
2005

Cash Flows from investing activities:

Additions to property and equipment, net $ (22,409) $ (18,988)
Loan originations and purchases (1,612,489) (459,838)
Loan repayments 699,807 254,003
Purchases of other investments (66,815) -
Sale of available for sale securities 227 9,251
Purchases of available for sale securities (9,721) (37,434)
Available for sale securities maturations and repayments 45,945 52,098

Net cash used in investing activities (965,455) (200,908)

Cash Flows from financing activities:

Proceeds from borrowed funds 413,033 10,000
Repayments of mortgage and borrowings (2,820) (4,549)
Financing activity related to variable interest entities 6,348 (44,250)
Exercise of stock options and employee stock purchases 28,321 19,120
Increase in bank deposits, net 372,384 220,701
Purchase of treasury stock (5,100) (96)
Cash dividends on common stock (27,841) (19,684)
Excess tax benefits from stock-based payment arrangements 1,312 -

Net cash provided by financing activities 785,637 181,242

Currency adjustment:
Effect of exchange rate changes on cash 1,348 1,857
Net (decrease) increase in cash and cash equivalents (249,221) 240,515
Cash and cash equivalents at beginning of period 881,133 482,348

Cash and cash equivalents at end of period $ 631,912 $ 722,863

Supplemental disclosures of cash flow information:
Cash paid for interest $ 191,274 $ 86,841
Cash paid for taxes $ 90,329 $ 83,075

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~June 30,~~December 31, 2006

Note 1 - Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements include the accounts of Raymond James Financial, Inc. (“RJF”) and its consolidated subsidiaries that are generally controlled through a majority voting interest. RJF is a ~~Florida-based~~ holding company headquartered in Florida whose subsidiaries are engaged in various financial service businesses; as used herein, the term “the Company” refers to RJF and/or one or more of its subsidiaries. In accordance with Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46R”), the Company also consolidates any variable interest entities (“VIEs”) for which it is the primary beneficiary. Additional information is ~~discussed~~provided in Note 4.5. When the Company does not have a controlling interest in an entity, but exerts significant influence over the entity, the Company applies the equity method of accounting. All material intercompany balances and transactions have been eliminated in consolidation.

During the three months ended December 31, 2006, the Company adopted Emerging Issues Task Force (“EITF”) Issue 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” for partnerships created before and not subsequently modified after June 29, 2005. As a result, the Company consolidated three partnerships during the three months ended December 31, 2006. As of December 31, 2006, these partnerships had assets of approximately $81.1 million.

Certain financial information that is normally included in annual financial statements prepared in accordance with generally accepted accounting principles 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. During the quarter ended June 30, 2006, the Company recorded a one-time adjustment of $8.2 million to increase revenues related to financial service fees. This adjustment was necessary to change the recording of certain fees, primarily Individual Retirement Account (“IRA”) fees, from a cash basis to an accrual basis. 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 unaudited condensed consolidated financial statements should be read in conjunction with Management’s Discussion and Analysis and the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2005.~~2006. 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 reclassifications have been made to the unaudited condensed consolidated financial statements of the prior period to conform to the current period presentation.

~~On December 1, 2005 the~~The Company’s Board of Directors approved a change in the Company’s fiscal year from the last Friday in September of each year to September 30 of each year. This also changes the ending date of the Company’s fiscal quarters ~~from the last Friday in each quarter to~~end on the last day of each calendar quarter.

Note 2 - Effects of Recently Issued Accounting ~~Standards:~~Standards, Not Yet Adopted:

In May 2005, the FASB issued Statement No. 154, “Accounting Changes and Error Corrections” (SFAS 154), which replaces APB No. 20, “Accounting Changes” and FASB Statement No. 3, “Reporting Changes in Interim Financial Statements”. The Statement changes the accounting for, and reporting of, a change in accounting principle. Statement 154 requires retrospective application to prior period’s financial statements of voluntary changes in accounting principle and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so. Statement 154 is effective for accounting changes and corrections of errors beginning in the Company’s fiscal year 2007. The Company is currently evaluating the impact on its financial reporting process of the adoption of SFAS 154.

In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force (“EITF”) in Issue 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” on the guidance on how general partners in a limited partnership should determine whether they control a limited partnership. This consensus is effective for general partners of all new limited partnerships formed, and for existing limited partnerships for which the partnership agreements are modified, subsequent to the date of the ratification of this consensus (June 29, 2005). The guidance in this issue is effective for general partners in all other limited partnerships no later than the beginning of the Company’s fiscal year 2007. The Company adopted this EITF for partnerships created or modified after June 29, 2005, the impact of which was not material to its consolidated financial statements, and is currently evaluating the potential impact of this EITF for partnerships created prior to June 29, 2005.

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments." SFAS No. 155 is an amendment of SFAS No. 133 and SFAS No. 140. SFAS No. 155 permits companies to elect, on an instrument by instrument basis, to apply a fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006. The Company does not expect SFAS No. 155 to have a material impact on the consolidated financial statements of the Company.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets." SFAS No. 156 amends SFAS No. 140. SFAS No. 156 requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value. For subsequent measurements, SFAS No. 156 permits companies to choose between using an amortization method or a fair value measurement method for reporting purposes. SFAS No. 156 is effective as of the beginning of a company's first fiscal year that begins after September 15, 2006. The Company does not expect SFAS No. 156 to have a material impact on the consolidated financial statements of the Company.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 establishes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact the adoption of this interpretation will have on its consolidated financial ~~statements.~~statements for the fiscal year ending September 30, 2008.

In July 2006, the FASB issued Staff Position No. FAS 13-2, “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction (“FSP FAS 13-2”). This FASB Staff Position addresses how a change in the timing of cash flows relating to income taxes generated by a leveraged lease transaction affects the accounting by a lessor for that lease. FSP FAS 13-2 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact the adoption of this staff position will have on its consolidated financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements” (“SAB 108”). SAB 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB 108 requires an entity to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. The guidance is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements for the fiscal year ending September 30, 2007.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair-value measurements required under other accounting pronouncements but does not change existing guidance as to whether or not an instrument is carried at fair value. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect SFAS No. 157 to have a material impact on the consolidated financial statements of the Company.

Note 3 - Trading Securities ~~And~~and Trading Securities Sold But Not Yet Purchased:

					December 31, 2006		September 30, 2006
	June 30, 2006		September 30, 2005			Securities		Securities
		Securities		Securities		Sold but		Sold but
		Sold but		Sold but	Trading	Not yet	Trading	Not yet
	Trading	Not yet	Trading	Not yet	Securities	Purchased	Securities	Purchased
	Securities	Purchased	Securities	Purchased	(in 000's)
	(in 000's)
Marketable:
Equities	$34,886	$23,561	$ 32,237	$ 30,256
Municipal obligations	247,180	345	177,984	17	$ 290,673	$ -	$ 192,028	$ 5
Corporate obligations	130,038	2,284	27,830	2,285	172,606	5	134,431	968
Government obligations	108,283	87,603	42,009	99,465	101,052	95,357	37,793	31,636
Agencies	122,522	74,212	60,445	84	88,929	41,989	68,380	34,023
Derivative Contracts	31,546	9,067	12,795	2,488
Other	5,073	-	2,019	-
Non-marketable	123	1	4,360	-
Total debt securities					653,260	137,351	432,632	66,632
	$679,651	$197,073	$359,679	$134,595
Derivative contracts					25,991	9,041	20,904	8,309
Equity securities					38,646	29,932	29,532	19,068
Other securities					2,887	-	2,703	-
Total					$720,784	$176,324	$485,771	$94,009

~~Mortgage backed trading~~Mortgage-backed securities of ~~$197.0~~$111.5 million and ~~$79.8~~$77.1 million at ~~June 30,~~December 31, 2006 and September 30, ~~2005,~~2006, respectively, are included in ~~corporate~~Corporate obligations and ~~agencies~~Agencies in the table above. ~~Mortgage backed~~Mortgage-backed securities sold but not yet purchased of ~~$74.2~~$42 million and ~~$84,000~~$34 million at ~~June 30,~~December 31, 2006 and September 30, ~~2005,~~2006, respectively, are included in ~~agencies~~Agencies in the table above.

Note 4 - Available For Sale Securities:

Available for sale securities are comprised primarily of collateralized mortgage obligations, mortgage related debt, and certain equity securities of the Company's non-broker-dealer subsidiaries, principally Raymond James Bank, F.S.B. (“RJBank”). There were no proceeds from the sale of securities available for sale for the three months ended December 31, 2006 and 2005.

The amortized cost and estimated market values of securities available for sale at December 31, 2006 are as follows:

		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Market
	Cost	Gains	Losses	Value
	(in 000's)


Agency collateralized mortgage obligations	$ 196,829	$ 654	$ (20)	$ 197,463
Non-agency collateralized mortgage obligations	137,179	295	(168)	137,306
Other	1,205	30	-	1,235
	$ 335,213	$ 979	$ (188)	$ 336,004

The amortized cost and estimated market values of securities available for sale at September 30, 2006 are as follows:

		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Market
	Cost	Gains	Losses	Value
	(in 000's)


Agency collateralized mortgage obligations	$ 140,888	$ 461	$ (27)	$ 141,322
Non-agency collateralized mortgage obligations	137,753	330	(156)	137,927
Other	1,306	26	(1)	1,331
	$ 279,947	$ 817	$ (184)	$ 280,580

Note 45 - 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.

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 ~~$18.5~~$19.7 million at ~~June 30,~~December 31, 2006. 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.~~investors, for which their partnership interests serve as collateral. At ~~June 30,~~December 31, 2006 that exposure is approximately ~~$11.5~~$8.7 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 ~~$3.6~~$3.9 million at ~~June 30,~~December 31, 2006. As of December 31, 2006, the Company owns approximately 42% of CSS. The Company's exposure to loss is limited to its capital ~~contributions, amounts loaned and committed.~~contributions. The Company is not the primary beneficiary of CSS and accounts for its investment using the equity method of accounting.

RJTCF is a wholly owned subsidiary of RJF and is the managing member or general partner in approximately ~~42 individual~~44 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 ~~June 30,~~December 31, 2006, 4042 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%.

RJTCF has concluded that it is the primary beneficiary in approximately one ~~third~~quarter of these tax credit housing funds, and accordingly, consolidates these funds, which have combined assets of approximately ~~$249.8~~$271.9 million at ~~June 30,~~December 31, 2006. 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 and advances to these ~~funds. At June 30,~~funds and at December 31, 2006, that exposure is approximately ~~$15.7~~$11.3 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 ~~its financial interests in~~ these funds. The Company's exposure to loss is limited to its investments in and advances to those ~~funds. At June 30,~~funds and at December 31, 2006, that exposure is approximately ~~$32.4~~$24.5 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. As of ~~June 30,~~December 31, 2006, only one of these funds had any material activity. This fund typically holds interests in certain tax credit limited partnerships for less than 90-days and has assets of approximately ~~$5.8~~$8.6 million at ~~June 30,~~December 31, 2006.

As of ~~June 30,~~December 31, 2006, 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 ~~its financial interests in~~ these partnerships. These partnerships have assets of approximately ~~$25.5~~$23 million at ~~June 30,~~December 31, 2006. 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 ~~June 30,~~December 31, 2006.

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 ~~$5.3~~$6.5 million at ~~June 30,~~December 31, 2006. 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. At June 30,~~fund and at December 31, 2006, that exposure is approximately ~~$5.3~~$6.5 million.

Note 6 - Bank Loans, Net and Deposits:

Bank Loans, Net

Bank client receivables are primarily comprised of loans originated or purchased by RJBank and include commercial and residential mortgage loans, as well as consumer loans. These receivables are collateralized by first or second mortgages on residential property, real property, or assets of the borrower. The following table provides a summary of RJBank's loans receivable at December 31, 2006 and September 30, 2006:

	December 31,	September 30,
	2006	2006
	(in 000's)

Residential mortgage loans	$ 1,472,282	$ 1,322,911
Commercial loans	1,240,439	960,977
Consumer loans	4,029	1,917
	2,716,750	2,285,805

Allowance for loan losses	(22,911)	(18,694)
Unearned income, net of deferred expenses	(4,976)	(4,279)

	$ 2,688,863	$ 2,262,832

Bank Deposits

Bank deposits include demand deposits, savings accounts and certificates of deposit. The following table presents a summary of bank deposits at December 31, 2006 and September 30, 2006:

	December 31,		September 30,
	2006		2006
	Balance	Weighted Average Rate	Balance	Weighted Average Rate
	($ in 000's)

Bank deposits:
Demand deposits - interest bearing	$ 7,408	1.97%	$ 6,088	1.95%
Demand deposits - non-interest bearing	2,400	-	2,538	-
Savings and money market accounts	2,814,713	4.60%	2,542,894	4.59%
Certificates of deposit ⁽¹⁾	242,203	4.58%	255,360	4.49%
Total bank deposits	$3,066,724	4.59%	$2,806,880	4.57%

(1)

Certificates of deposit in amounts of $100,000 or more at December 31, 2006 and September 30, 2006 were $69,216,937 and $72,067,000, respectively.

910

Certificates of deposit issued have remaining maturities at December 31, 2006 and September 30, 2006, as follows:

	December 31,	September 30,
	2006	2006
	(in 000's):

One year or less	$115,517	$125,622
One to two years	48,285	50,427
Two to three years	40,188	36,306
Three to four years	19,807	24,885
Four to five years and thereafter	18,406	18,120
Total	$242,203	$255,360

Note 57 - Borrowings:

Loans payable at ~~June 30,~~December 31, 2006 and September 30, ~~2005~~2006 are presented below:

	June 30, 2006	September 30, 2005	December 31, 2006	September 30, 2006
	(in 000's)		(in 000's)
Short-term Borrowings:
Borrowings on lines of credit ⁽¹⁾	$13,738	$ 5,338	$ 290,125	$ 13,040
Current portion of mortgage notes payable⁽²⁾	2,712	2,604	2,783	2,746
Federal home loan bank advances ⁽³⁾	403,700	-
Total short-term borrowings	420,150	7,942	292,908	15,786

Long-term Borrowings:
Mortgage notes payable⁽²⁾	66,525	68,520	65,184	65,852
Federal home loan bank advances ⁽³⁾	70,000	70,000
Federal Home Loan Bank advances ⁽³⁾			50,000	60,000
Total long-term borrowings	136,525	138,520	115,184	125,852

Total borrowings	$556,675	$146,462
Total loans payable			$ 408,092	$ 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.~~dollars (“CDN”). At ~~June 30,~~December 31, 2006, the aggregate domestic lines were ~~$710~~$710.1 million and CDN $40 million, ~~respectively, of which $8.3 million was outstanding.~~respectively. The interest rates for the lines of credit are variable and are based on the Fed Funds rate, LIBOR, and Canadian prime rate. For the three months ended ~~June 30,~~December 31, 2006, interest rates on the lines of credit ranged from ~~5.25%~~4.5% to ~~6.76%~~6.52%. For the three months ended ~~June 30,~~December 31, 2005, interest rates on the lines of credit ranged from ~~3.25%~~4.25% to ~~4.82%~~5.82%. In addition, ~~various foreign~~the Company’s joint ventures ~~of the company~~in Turkey and Argentina have ~~five unsecured~~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 million. At ~~June 30,~~December 31, 2006 the aggregate unsecured settlement lines of credit available were ~~$29~~$78 million, and there was an outstanding balance of ~~which $5.3 million was outstanding.~~approximately $1.8 million. The interest rates for ~~the~~these lines of credit ~~range~~ranged from 7%9% to ~~22%~~21%.

(2)

Mortgage notes payable is comprised of a mortgage loan for the financing of the Company's home office complex and a note for the financing of the office for a foreign joint venture. The mortgage loan bears interest at 5.7% and is secured by land, buildings, and improvements with a net book value of ~~$74.3~~$73 million at ~~June 30,~~December 31, 2006. ~~A new building was purchased for $1.6 million in April 2005 for a~~The foreign joint ~~venture’s office in India and was financed with a~~venture note ~~bearing~~bears interest at 8.25% ~~interest~~ and is secured by the ~~land and~~ building.

(3)

RJBank has ~~$473.7~~$50 million in ~~Federal Home Loan Bank ("FHLB")~~FHLB advances outstanding at ~~June 30,~~December 31, 2006, which are comprised of ~~$403.7 million short-term, floating rate and $70.0 million~~ long-term, fixed rate advances. ~~The short-term, floating rate advances currently bear interest at rates ranging from 5.11% to 5.13%.~~ The long-term, fixed rate advances bear interest at rates ranging from ~~2.37%~~4.82% to 5.67%. The outstanding FHLB advances mature between ~~July 2006~~May 2008 and ~~October 2014.~~February 2011. These advances are secured by a blanket lien on ~~the Bank's~~RJBank's residential loan portfolio ~~issued~~granted to FHLB at ~~June~~December 31, 2006. The FHLB has the right to convert advances totaling $40 million and $50 million at December 31, 2006 and September 30, ~~2006.~~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.

Note 68 - Stock Based Compensation:

~~At June 30, 2006, 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 ~~Statement of Financial Accounting Standard (“SFAS”) No. 123(R),~~ ~~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~~123R, “Share-Based Payment”, which requires the ~~modified prospective application transition method within~~measurement and recognition of compensation expense for all share-based payment awards made to employees and directors 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 ~~provisions of SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure”. Prior~~Notes to the adoption of SFAS No. 123(R), benefits of tax deductions in excess of recognized compensation costs were reported as operating cash flows. SFAS No. 123(R) requires excess tax benefits to be reported as a financing cash inflow rather than as a reduction of taxes paid.

~~Fixed Stock Option Plans~~

The Company has two qualified and three non-qualified fixed stock option plans. 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 June 30, 2006, the 1992 Plan still has options outstanding. Options are granted to key administrative employees andConsolidated Financial ~~Advisors of Raymond James & Associates, Inc. who achieve certain gross commission levels. Options are exercisable~~Statements included in the ~~36th to 72nd months following~~Company's Annual Report on Form 10-K for the ~~date of grant and only in the event that the grantee is an employee of the Company at that time, disabled or recently retired.~~

As noted above, the Company has three non-qualified fixed stock option plans. Under the first of those plans, the Company may grant up to 5,125,781 shares of common stock to independent contractor Financial Advisors. Options are exercisable five years after grant date provided that the Financial Advisors are still associated with the Company. Under the Company's second non-qualified stock option plan, the Company may grant up to 854,298 shares of common stock to the Company's outside directors. Options vest over a five-year period from grant date provided that the director is still serving on the Board of the Company. Under the Company's third 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.

year ended September 30, 2006. The Company’s net income for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2006 and 2005 includes ~~$2.0~~$7.8 million and ~~$5.4~~$4.6 million, respectively, of compensation costs and ~~$154,000~~$2.1 million and ~~$450,000,~~$1.2 million, respectively of income tax benefits related to the Company’s ~~five~~share-based plans available for awards to employees and members of its Board of Directors.

During the three months ended December 31, 2006, the Company granted 219,500 stock options, 841,641 shares of restricted stock and 60,959 restricted stock units to employees under its stock-based employee compensation plans. No share-based payment awards were made to outside directors during the three months ended December 31, 2006.

The weighted-average grant-date fair value of stock options granted to employees during the three months ended December 31, 2006 was $9.38 per share. Pre-tax unrecognized compensation expense for stock options granted to employees and outside directors, net of estimated forfeitures, was $13.2 million as of December 31, 2006, and will be recognized as expense over a weighted-average period of approximately three years.

The weighted-average grant-date fair value of restricted stock granted to employees during the three months ended December 31, 2006 was $30.67 per share. Pre-tax unrecognized compensation expense for unvested restricted stock granted to employees, net of estimated forfeitures, was $55 million as of December 31, 2006, and will be recognized as expense over a weighted-average period of approximately 3.29 years.

The weighted-average grant-date fair value of restricted stock units granted to employees during the three months ended December 31, 2006 was $31.78 per share. Pre-tax unrecognized compensation expense for unvested restricted stock units granted to employees, net of estimated forfeitures, was $4.4 million as of December 31, 2006, and will be recognized as expense over a weighted-average period of approximately 2.13 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 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” 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, 2006 for more information). The Company’s net income for the three ~~and nine~~ months ended ~~June 24,~~December 31, 2006 and 2005 includes ~~$2.0~~$2.4 million and ~~$6.2~~$0.4 million, respectively, of compensation costs and ~~$243,000~~$0.9 million and ~~$653,000,~~$147,000, respectively of income tax benefits related to the Company’s ~~five fixed stock option plans.~~share-based plans available for awards to its independent contractor Financial Advisors.

~~These amounts may not be representative~~During the three months ended December 31, 2006, the Company granted 342,600 stock options and 13,300 shares of ~~future stock-based compensation expense since the estimated~~restricted stock to its independent contractor Financial Advisors.

The weighted-average grant-date fair value of stock options ~~is amortized~~granted 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 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 inindependent contractor Financial Advisors during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2006 ~~and June 24, 2005:~~

Three Months Ended
Nine Months Ended

June 30, 2006
June 24, 2005
June 30, 2006
June 24, 2005
Dividend Yield 1.06% 1.10% 1.20% 1.10%
Expected Volatility 29.38% 39.21% 29.38% 38.54%
Risk-free Interest Rate 5.18% 3.88% 4.38% 3.68%
Expected Lives 4.9 yrs 5.1 yrs 4.9 yrs 5.2 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 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 over its entire history. The expected volatility used by the Company in the prior period presented was based on the annualized volatility of the price of the Company’s stock over its entire history. 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 of their vesting date and full contractual term and (2) the assumption that all outstanding options will be exercised at their full contractual term.

~~A summary of option activity of the Company's five fixed stock option plans for the nine months ended June 30, 2006 is presented below:~~

Weighted

Weighted
Average

Average
Remaining
Aggregate

Options For
Exercise
Contractual
Intrinsic

Shares
Price ($)
Term (Years)
Value ($)
Outstanding at
October 1, 2005 7,050,171 $14.97
Granted 1,965,113 23.91 - -
Exercised (803,169) 13.45 - -
Canceled (32,954) 15.82
Expired (2,250) 13.95 - -
Outstanding at
December 31, 2005 8,176,911 $17.26 3.14 $64,219,903
Granted 31,350 30.13 - -
Exercised (632,979) 14.89 - -
Canceled (112,099) 18.80
Expired (5,475) 16.95 - -
Outstanding at
March 31, 2006 7,457,708 $17.49 3.13 $90,014,615
Granted 40,995 28.91 - -
Exercised (135,241) 14.18 - -
Canceled (88,407) 17.48
Expired (4,250) 16.58 - -
Outstanding at
June 30, 2006 7,270,805 $17.59 2.94 $92,225,250
Options exercisable at
June 30, 2006 1,167,307 $14.20 0.80 $18,761,604

$8.87 per share. As of ~~June 30,~~December 31, 2006, there was ~~$18.4~~$10 million of total unrecognized pre-tax compensation cost related to unvested stock ~~options.~~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 ~~three~~3.5 years.

The ~~weighted average grant date~~weighted-average grant-date fair value of stock options granted during the three and nine months ended June 30, 2006 was $9.19 per share and $7.16 per share, respectively. The weighted average grant date fair value of stock options granted during the three and nine months ended June 24, 2005 was $6.74 per share and $6.07 per share, respectively. The total intrinsic value of stock options exercised during the three and nine months ended June 30, 2006 was $2.1 million and $18.2 million, respectively. The total intrinsic value of stock options exercised during the three and nine months ended June 24, 2005 was $0.4 million and $12.0 million, respectively. The total grant date fair value of stock options vested during the three and nine months ended June 30, 2006 was $252,000 and $4.9 million, respectively. The total grant date fair value of stock options vested during the three and nine months ended June 24, 2005 was $223,000 and $6.9 million, respectively.

Cash received from stock option exercises for the three and nine months ended June 30, 2006 was $2.0 million and was $21.7 million, respectively. The actual tax benefit realized for the tax deductions from option exercise of the Company’s fixed stock option plans was $267,000 and $2.2 million for the three and nine months, respectively, ended June 30, 2006.

~~Restricted Stock Plan~~

~~Under the 2005 Restricted Stock Plan the Company is authorized to issue up to 2,250,000~~ restricted stock ~~units or restricted shares of common stock~~granted to ~~employees and~~ independent ~~contractors. The 2005 Plan was established to replace, on substantially the same terms and conditions, the 1999 Plan. During~~contractor Financial Advisors during the three months ended ~~March~~December 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 activity occurred during the nine months ended June 30, 2006:

Weighted

Average

Grant Date

Shares/Units
Fair Value ($)
Nonvested at
October 1, 2005 1,022,043 $16.02
Granted 653,243 21.70
Vested (43,052) 13.44
Canceled - -
Nonvested at
December 31, 2005 1,632,234 $18.35
Granted 219,874 29.41
Vested (93,202) 14.81
Canceled (22,703) 19.81
Nonvested at
March 31, 2006 1,736,203 $19.98
Granted 228,594 29.63
Vested (76,628) 13.47
Canceled (17,965) 17.94
Nonvested at
June 30, 2006 1,870,204 $21.46

The Company’s net income for the three months ended June 30, 2006 includes $1.9 million of compensation costs and $749,000 of income tax benefits related to the Company’s Restricted Stock Plan. The Company’s net income for the three months ended June 24, 2005 includes $1.1 million of compensation costs and $401,000 of income tax benefits related to this plan.

The Company’s net income for the nine months ended June 30, 2006 includes $5.5 million of compensation costs and $2.1 million of income tax benefits related to the Company’s Restricted Stock Plan. The Company’s net income for the nine months ended June 24, 2005 includes $3.0 of compensation costs and $1.1 million of income tax benefits related to this plan.

$31.78 per share. As of ~~June 30,~~December 31, 2006, there was ~~$31.3~~$0.4 million of total unrecognized pre-tax compensation cost related to ~~grants under the Company’s Restricted Stock Plan.~~unvested restricted shares 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 ~~3.8~~2.9 years. ~~The total fair value of shares vested under this plan during the three months and nine months ended June 30, 2006 was $1.0 million and $3.0 million, respectively.~~

1312

~~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, and its expired predecessor plan, the Company sold approximately 97,000 and 178,000 shares to employees during the three months ended June 30, 2006 and June 24, 2005, respectively. The compensation cost is calculated as the value of the 15% discount from market value and was $426,000 and $483,000 during the three months ended June 30, 2006 and June 24, 2005, respectively. The Company sold approximately 273,000 and 401,000 shares to employees during the nine months ended June 30, 2006 and June 24, 2005, respectively. The compensation cost is calculated as the value of the 15% discount from market value and was $1,160,000 and $1,164,000 during the nine months ended June 30, 2006 and June 24, 2005, respectively.

~~Stock Bonus Plan~~

The Company's 1999 Stock Bonus Plan authorizes the Company to issue up to 2,250,000 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 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. 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 nine months ended June 30, 2006:

Weighted

Average

Grant Date

Shares
Fair Value ($)
Nonvested at
October 1, 2005 862,026 $17.38
Granted 393,135 24.87
Vested (264,468) 13.95
Canceled (2,377) -
Nonvested at
December 31, 2005 988,316 $21.32
Granted 20,019 28.65
Vested (1,543) 11.32
Canceled (5,158)
Nonvested at
March 31, 2006 1,001,634 $21.16
Granted - -
Vested - -
Canceled (4,916) -
Nonvested at
June 30, 2006 996,718 $21.40

The Company’s net income for the three months ended June 30, 2006 includes $1.8 million of compensation costs and $694,000 of income tax benefits related to the Company’s Stock Bonus Plan. The Company’s net income for the three months ended June 24, 2005 includes $0.9 million of compensation costs and $334,000 of income tax benefits related to this plan.

The Company’s net income for the nine months ended June 30, 2006 includes $5.1 million of compensation costs and $2.0 million of income tax benefits related to the Company’s Stock Bonus Plan. The Company’s net income for the nine months ended June 24, 2005 includes $2.7 million of compensation costs and $1.0 million of income tax benefits related to this plan.

As of June 30, 2006, there was $10.4 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 1.6 years. There were no shares vested under this plan during the three months ended June 30, 2006. The total fair value of shares vested under this plan during the nine months ended June 30, 2006 was $3.7 million.

Note 79 - Commitments and Contingencies:

The Company is the lessor in two leveraged commercial aircraft transactions with two major domestic airlines (Delta Air Lines, Inc. “Delta” and Continental Airlines, Inc. “Continental"). The Company's ability to realize its expected return is dependent upon the airlines' ability to fulfill their lease obligations. In the event that the airlines default on their lease commitments and the ~~Trustees~~Trustee for the debt holders ~~are~~is unable to re-lease or sell the planes with adequate terms, the Company would suffer a loss of some or all of its investment.

Delta Airlines filed for bankruptcy protection on September 14, 2005. Accordingly, the Company recorded a $6.5 million pretax charge ~~during the three months ended September 30,~~in 2005 to fully reserve the balance of its investment in the leveraged lease of an aircraft to Delta. The Company ~~also took~~had taken a $4 million pretax charge in ~~the~~ 2004 ~~fiscal year~~ to partially reserve for this investment. No amount of these charges represents a cash expenditure; however, in the likely event of a material modification to the lease or foreclosure of the aircraft by the debt holders in fiscal 2007, certain ~~of the Company’s deferred~~ tax payments of up to approximately ~~$8.2~~$7.9 million could be accelerated. The expected tax payments are currently reflected on the statement of financial condition as a deferred tax liability and are not expected to result in a further charge to earnings. Subsequent to December 31, 2006, the Company entered into an agreement in principle to sell its interest in the Delta transaction for $2 million, which is expected to be recognized as a pre-tax gain in the quarter ending March 31, 2007. Upon closing, the aforementioned tax payments will be triggered.

The Company also has ~~an outstanding~~a leveraged lease outstanding with Continental valued at ~~$11.1~~$10.6 million as of ~~June 30,~~December 31, 2006. 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 ~~September 2013.~~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. ~~Given the difficult economic environment for the airline industry, the~~The Company ~~is closely monitoring~~continues to monitor this ~~investment~~lessee for specific events or circumstances that would ~~allow for~~increase the likelihood of a ~~reasonable estimation of any potential impairment.~~default on Continental’s obligations under this lease.

~~Raymond James Bank, F.S.B ("RJBank")~~RJBank has outstanding at any time a significant number of commitments to extend ~~credit.~~credit or purchase loans. 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, purchase loans and letters of credit outstanding ~~are~~is as follows:

	June 30, 2006	September 30, 2005	December 31, 2006	September 30, 2006
	(in 000's)		(in 000's)

Standby letters of credit	$ 46,633	$ 15,933	$ 79,049	$ 55,193
Consumer lines of credit	23,281	21,326	23,994	25,772
Commercial lines of credit	587,619	168,804	906,886	760,253
Unfunded loan commitments - variable rate	418,673	288,169	270,989	264,663
Unfunded loan commitments - fixed rate	10,835	11,402	10,783	6,412

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

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 ~~June 30,~~December 31, 2006, ~~$46.6~~$79.0 million of such letters of credit were outstanding. Of the letters of credit outstanding, ~~$45.3~~$78.9 million are underwritten as part of a larger corporate credit ~~relationship, and the remaining $1.3 million are fully secured by cash or securities.~~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 ~~cover~~satisfy the maximum potential future amount of any ~~future~~ payments of amounts drawn down under the existing letters of credit.

At ~~June 30,~~December 31, 2006 and September 30, ~~2005,~~2006, no securities were pledged by RJBank as collateral with the FHLB for advances. In lieu of pledging securities 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, 2006, RJBank has entered into a $255 million reverse repurchase agreement with a single counterparty. Although RJBank is exposed to risk that this counterparty may not fulfill its contractual obligation, the risk of default is minimal due to the creditworthiness of the counterparty, collateral received and the short duration of this agreement.

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 ~~$735,605~~$736,000 and ~~$707,313~~$707,000 were recognized in the three months ended ~~June 30,~~December 31, 2006 and ~~June 24, 2005, respectively.~~2005.

In the normal course of business, the Company enters into underwriting commitments. Transactions relating to such commitments that were open at ~~June 30,~~December 31, 2006 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 ~~June 30,~~December 31, 2006 and September 30, ~~2005,~~2006, the Company had client margin securities valued at ~~$78.3~~$68.1 million and ~~$93.4~~$65.2 million, respectively, on deposit with a clearing organization.

The Company has guaranteed lines of credit for various foreign joint ventures as follows: two lines of credit totaling $12.5 million in Turkey and one line of credit totaling $3 million in Argentina. At June 30, 2006, there were no outstanding balances on the lines of credit in Turkey and Argentina. The Company has also from time to time authorized guarantees for the completion of trades with counterparties in Argentina and Turkey. At June 30, 2006 there were outstanding guarantees for a maximum of $5 million in Turkey and no guarantees were outstanding for Argentina.

The Company has committed to lend $1.7 million to CSS in four equal installments beginning in April 2006, the last of which is due in December 2006. CSS was formed by a group of broker-dealer firms, including the Company, to develop a back-office software system.

The Company has committed a total of $42.6 million, in amounts ranging from $200,000 to $2.0 million, to 40 different independent venture capital or private equity partnerships. As of ~~June 30,~~December 31, 2006, the Company ~~had~~has invested ~~$28.8~~$30 million of that ~~amount.~~amount and has received $26 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 ~~$11.1~~$11.7 million and has received $6.7 million in distributions as of ~~June 30,~~December 31, 2006.

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 ~~June 30,~~December 31, 2006, the ~~Company has $5.1 million committed to these funds.~~funds have unfunded commitments of $4.3 million.

At ~~June 30,~~December 31, 2006, 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	$ ~~431,334~~261,580
Securities received in securities borrowed vs. cash transactions	~~1,076,708~~878,296
Collateral received for margin loans	~~1,500,173~~1,452,632
Total	$~~3,008,215~~2,592,508

During the quarter certain collateral was ~~repledged. At June 30,~~repledged and at December 31, 2006, 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	$ ~~431,334~~261,580
Securities received in securities borrowed vs. cash transactions	~~1,050,153~~849,693
Collateral received for margin loans	~~397,752~~174,160
Total	$~~1,879,239~~1,285,433

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. At December 31, 2006, the aggregate domestic lines were $710.1 million and total Canadian lines were CDN $40 million. The interest rates for the 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 $50 million in FHLB advances outstanding at December 31, 2006, which are comprised of long-term, fixed rate advances. RJBank had $947 million in credit available from the FHLB at December 31, 2006.

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 million. At December 31, 2006 the aggregate unsecured settlement lines of credit available were $78 million, and there was an outstanding balance of approximately $1.8 million. 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, 2006, there were no outstanding performance guarantees in Turkey or Argentina.

1614

The Company guarantees the existing mortgage debt of RJA of approximately ~~$68~~$66.9 million. The Company ~~may guarantee~~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 ~~$90.0~~$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 ~~June 30,~~December 31, 2006, cash funded to invest in either loans or investments in project partnerships was ~~$46.0~~$43 million. In addition, at ~~June 30,~~December 31, 2006, RJTCF is committed to additional future fundings of ~~$42.8~~$18.9 million related to project partnerships that have not yet been sold to various tax credit funds.

The Company is a defendant or co-defendant in various lawsuits and arbitrations incidental to its securities business. Like others in the retail securities industry, the Company experienced a significant increase in the number of claims seeking recovery due to portfolio losses in the early 2000's. During the past ~~two years,~~year, the number of claims has declined ~~but is still above long-term~~to more historic levels.

As previously reported, RJF and ~~Raymond James Financial Services, Inc. ("RJFS") are~~RJFS were 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. In July 2005, RJFS paid approximately $24 million in a settlement with approximately 380 claimants in this litigation, representing approximately two-thirds of the outstanding claims. In September 2006, RJFS settled with an additional 150 claimants for a lump sum of $18 million. These settlements effectively extinguish the Company’s liability with the exception of one remaining lawsuit in federal court involving one claimant family group.

Raymond James Yatyrym Menkul Kyymetler A. S., (“RJY”), the Company’s Turkish affiliate, was assessed for the year 2001 approximately US$6.8 million by the Turkish tax authorities. The authorities applied a significantly different methodology than in the prior year’s audit. RJY is vigorously contesting most aspects of this assessment and has filed an appeal with the Turkish tax court. Audits of 2002 through 2004 are anticipated and their outcome is unknown in light of the change in methodology and the pending litigation. The Company ~~estimates that the value~~has made provision in its consolidated financial statements for its estimate of the ~~claims resolved also represents approximately two-thirds~~reasonable potential exposure for this matter. As of ~~the value of the~~December 31, 2006, RJY had total claims and has made adjustments to its litigation reserves to give effect to the estimated impact of the settlement. Several of the arbitration claims relating to this matter had been previously settled by RJFS for amounts consistent with its evaluation of those claims. The remaining lawsuits are pending in five state courts; three of the suits have been consolidated for pretrial purposes, and one of those has been set for trial in October 2006. In June 2006, the Texas First Circuit Court of Appeals overturned orders denying motions to compel arbitrationcapital of approximately ~~one half~~US$6.8 million, of ~~these claims, and those plaintiffs have agreed to refile their claims in arbitration. Initial motions to compel arbitration of some of~~which the ~~plaintiffs' claims in the two non-consolidated cases are pending.~~Company owns approximately 73%.

The Company is contesting the allegations in ~~these~~this and other 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 810 - Capital Transactions:

The following table presents information on a monthly basis for purchases of the Company’s stock for the quarter ended ~~June 30,~~December 31, 2006:

Number of

Average
Period
Shares Purchased ⁽¹⁾

Price Per Share

April 1, 2006 - April 30, 2006 - -
May 1, 2006 - May 31, 2006 - -
June 1, 2006 - June 30, 2006 1,410 28.56
Total 1,410 $28.56

	Number of	Average
Period	Shares Purchased ⁽¹⁾	Price Per Share

October 1, 2006 - October 31, 2006	2,149	$31.77
November 1, 2006 - November 30, 2006	842	30.92
December 1, 2006 - December 31, 2006	5,795	31.63
Total	8,786	$31.59

1715

(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 ~~389,263~~400,300 shares have been repurchased for a total of ~~$7.3~~$7.7 million, leaving ~~$67.7~~$67.3 million available to repurchase shares. Historically the Company has considered such purchases when the price of its stock reaches or 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 ~~June~~the three months ended December 31, 2006, the Company only purchased shares that were surrendered by employees as payment for option exercises.

Note 911 - Regulation 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. Raymond James & Associates, Inc. (“RJA”), a member firm of the New York Stock Exchange (“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 to exceed fifteen times net capital, as defined. Rule 15c3-1 also provides for an “alternative net capital requirement”, which ~~both~~ RJA, Raymond James Financial Services, Inc. (“RJFS”) and ~~RJFS~~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. 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 position of RJA at ~~June 30,~~December 31, 2006 and September 30, ~~2005~~2006 was as follows:

	June 30,	September 30,	December 31,	September 30,
	2006	2005	2006	2006
Raymond James & Associates, Inc.:	($ in 000's)		($ in 000's)
(alternative method elected)
Net capital as a percent of Aggregate
Debit Items	23.6%	27.8%	23.62%	27.58%
Net capital	$ 336,470	$ 372,615	$ 330,412	$ 369,443
Less: required net capital	(28,536)	(26,804)	(27,974)	(26,793)
Excess net capital	$ 307,934	$ 345,811	$ 302,438	$ 342,650

At ~~June 30,~~December 31, 2006 and September 30, ~~2005,~~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 ~~June 30,~~December 31, 2006 and September 30, ~~2005~~2006 was as follows:

	June 30,	September 30,	December 31,	September 30,
	2006	2005	2006	2006
Raymond James Financial Services, Inc.:	(in 000's)		(in 000's)
(alternative method elected)
Net capital	$ 58,504	$ 41,851	$ 35,691	$ 41,200
Less: required net capital	(250)	(250)	(250)	(250)
Excess net capital	$ 58,254	$ 41,601	$ 35,441	$ 40,950

At December 31, 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 December 31, 2006 and September 30, 2006 was as follows:

	December 31,	September 30,
	2006	2006
Heritage Fund Distributors, Inc.	(in 000’s)
(alternative method elected)
Net capital	$ 6,979	$ 1,669
Less: required net capital	(250)	(250)
Excess net capital	$ 6,729	$ 1,419

Raymond James Ltd. ("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. The Company was not in Early Warning Level 1 or Level 2 at ~~June 30,~~December 31, 2006 or September 30, ~~2005.~~2006.

The Risk Adjusted Capital of RJ Ltd. was CDN$~~33,023,319~~33,761,000 and CDN$~~25,482,000~~42,841,000 at ~~June 30,~~December 31, 2006 and September 30, ~~2005,~~2006, 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 ~~June 30,~~December 31, 2006 and September 30, ~~2005,~~2006, the Bank meets all capital adequacy requirements to which it is subject.

As of ~~June 30,~~December 31, 2006, 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						To be well capitalized
			Requirement for capital		under prompt				Requirement for capital		under prompt
			adequacy		corrective action				adequacy		corrective action
	Actual		purposes		provisions		Actual		purposes		provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio	Amount	Ratio	Amount	Ratio	Amount	Ratio
	($ in 000's)						($ in 000's)
As of June 30, 2006:
As of December 31, 2006:
Total capital (to
risk-weighted assets)	$ 188,971	14.0%	$ 108,165	8.0%	$ 135,207	10.0%	$ 252,621	11.6%	$ 173,904	8.0%	$ 217,380	10.0%
Tier I capital (to
risk-weighted assets)	172,070	12.7%	54,083	4.0%	81,124	6.0%	225,448	10.4%	86,952	4.0%	130,428	6.0%
Tier I capital (to
adjusted assets)	172,070	8.2%	84,074	4.0%	105,093	5.0%	225,448	6.7%	134,298	4.0%	167,873	5.0%

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, 2005:
Total capital (to
risk-weighted assets) $ 173,466 24.9% $55,685 8.0% $69,606 10.0%
Tier I capital (to
risk-weighted assets) 165,874 23.8% 27,842 4.0% 41,764 6.0%
Tier I capital (to
adjusted assets) 165,874 12.6% 52,628 4.0% 65,785 5.0%

1917

					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, 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 1012 - Earnings Per Share:

The following table presents the computation of basic and diluted earnings per share (in 000’s, except per share amounts):

	Three Months Ended		Nine Months Ended		Three Months Ended
	June 30,	June 24,	June 30,	June 24,	December 31,	December 31,
	2006	2005	2006	2005	2006	2005

Net income	$56,774	$ 32,382	$163,414	$ 106,322	$ 59,395	$ 45,109

Weighted average common shares
outstanding during the period*	113,464	110,495	112,376	109,980	114,339	111,501

Dilutive effect of stock options and awards* (1)	3,496	2,887	3,180	3,260
Dilutive effect of stock options and awards (1)*					3,554	2,135

Weighted average diluted common
shares* (1)	116,960	113,382	115,556	113,240
shares (1)*					117,893	113,636

Net income per share - basic	$0.50	$ 0.29	$1.45	$ 0.97
Net income per share - basic*					$ 0.52	$ 0.41

Net income per share - diluted (1)	$0.48	$ 0.29	$1.41	$ 0.94
Net income per share - diluted (1)*					$ 0.50	$ 0.40

Securities excluded from weighted average
common shares because their effect
would be antidulitive*	-	1,095	-	1,023	-	-

* ~~Share amounts adjusted, as necessary, for~~Gives effect to the three-for-two stock split paid on March 22, ~~2006 3-for-2 stock split.~~2006.

(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 11 - Other Comprehensive Income:~~

~~Total comprehensive income for the three and nine months ended June 30, 2006 and June 24, 2005 is as follows (in 000's):~~

Three Months Ended
Nine Months Ended

June 30,
June 24,
June 30,
June 24,

2006
2005
2006
2005
Net income $56,774 $ 32,382 $163,414 $ 106,322
Other comprehensive income:
Unrealized gain (loss) on securities available for sale, net of tax 35 (90) (88) 21
Unrealized gain on interest rate swaps accounted for as cash flow hedges, net of tax 2 246 44 835
Foreign currency translation adjustment 2,689 (1,021) 1,348 498

Total comprehensive income $59,500 $ 31,517 $164,718 $ 107,676

2018

Note 123 - Derivative Financial Instruments:

The Company makes limited use of derivative financial instruments in certain of its businesses. Certain derivative financial instruments have been used to manage well-defined interest rate risk at RJBank, while others are used in the conduct of the Company’s fixed income business.

~~The Company~~ uses interest rate ~~derivative~~swaps as well as futures contracts ~~primarily interest rate swaps,~~ as part of its fixed income business. The Company enters into interest rate swaps to reduce interest rate risk associated with maintaining certain fixed income trading inventories. The Company also enters into interest rate swaps with institutional clients to assist them with their management of interest rate risk. The Company reduces its exposure to interest rate risk arising from such client transactions by entering into offsetting interest rate derivative contracts with market counterparties. AllThese positions are marked to market with the gain or loss and the related interest recorded in Net Trading Profits within the statement of ~~operations~~income for the period. Any collateral exchanged as ~~required by collateral support agreements in conjunction with certain interest rate derivatives~~part of the swap agreement is recorded in Broker Receivables and Payables ~~within~~in the consolidated statement of financial condition for the period. At ~~June 30,~~December 31, 2006 and September 30, ~~2005,~~2006, the Company had outstanding interest rate derivative contracts with notional amounts of ~~$2.2~~$2.6 billion and ~~$1.7~~$2.3 billion, respectively. The notional amount of ~~an interest rate swap is not~~ a ~~principal amount and~~derivative contract does not change hands; it is simply used as a reference to calculate ~~the exchange of interest~~ payments. Accordingly, the notional amount of the Company’s ~~interest rate derivatives~~derivative contracts outstanding at ~~June 30,~~December 31, 2006 ~~significantly~~vastly exceeds the ~~likely~~ possible losses that could arise from such transactions. The net market value of all open ~~interest rate derivative~~swap positions at ~~June 30,~~December 31, 2006 and September 30, ~~2005~~2006 was ~~$22~~$17 million and ~~$10~~$13 million, respectively.

RJBank uses variable-rate deposits to finance the purchase of certain loan pools that are fixed for the first five years of their life. The funding sources expose RJBank to variability in interest payments due to changes in interest rates. Management has used derivative financial instruments to hedge exposure to the variability of its interest payments by entering into interest rate swap agreements to manage fluctuations in cash flows resulting from interest rate risk. These swaps change the variable-rate cash flow exposure on the funding sources to fixed cash flows. Under the terms of the interest rate swaps, RJBank received variable interest rate payments and made fixed interest rate payments, thereby creating the equivalent of fixed-rate funding. During the three months ended June 30, 2006, RJBank’s sole remaining interest rate swap agreement expired. At September 30, 2005, RJBank was party to $11.5 million in notional amount of interest rate swap agreements. RJBank had cash of $0.9 million pledged or held as interest-bearing collateral for such agreements at September 30, 2005.

Changes in the fair value of a derivative that is highly effective, as defined by SFAS 133, and that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income until earnings are affected by the variability in cash flows of the designated hedged item. Any ineffectiveness resulting from the cash flow hedge is recorded in income or expense at the end of each reporting period. For purposes of the statement of cash flows, any ineffectiveness resulting from the cash flow hedge is subtracted or added back in the reconciliation of net income to cash provided by operating activities at the end of each reporting period. When hedge accounting is discontinued, RJBank continues to carry the derivative at its fair value in the statement of financial condition, and recognizes any changes in its fair value in earnings. For the three and nine months ended June 30, 2006 and June 24, 2005, RJBank had an immaterial impact on the Condensed Consolidated Statement of Operations from ineffective cash flow hedges and transition adjustments.

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.~~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. ~~However, state laws prohibit certain municipalities~~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 risk, spread, ratio and ~~other governmental entities from posting collateral in these transactions. For additional discussion regarding the Company’s objectives~~basis risk and ~~strategies relative to derivative instruments in the context of the Company’s overall risk management strategy, refer to the Market Risk section in Item 7A, “Quantitative~~volatility. These exposures are monitored both on a total portfolio basis and ~~Qualitative Disclosures about Market Risk” included in the Company's Annual Report on Form 10-K~~separately for ~~the year ended September 30, 2005.~~selected maturity periods.

Note 1314 - Segment Information:

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. ~~Reclassifications have been made in the segment disclosures for the nine months ended June 24, 2005 to conform to the current period presentation.~~

The Company currently operates through the following seven business segments: Private Client Group; Capital Markets; Asset Management; RJBank; Emerging Markets; Stock Loan/Borrow and various corporate investments combined in the "Other" segment. 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, ~~2005.~~2006. 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 United States, 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 United States, 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., private equity management by Raymond James Capital, Inc. and RJ Ventures, LLC, 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 Argentina, India, Turkey, and Uruguay. 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 Other segment includes various ~~investments~~investment and corporate activities of the Company.

Information concerning operations in these segments of business is as ~~follows (in 000's):~~follows:

	Three Months Ended		Nine Months Ended		Three Months Ended
	June 30,	June 24,	June 30,	June 24,	December 31,
	2006	2005	2006	2005	2006	2005
	(000's)		(000's)		(000's)
Revenues:
Private Client Group	$ 458,622	$ 341,010	$ 1,251,272	$ 1,019,478	$ 449,133	$ 375,745
Capital Markets	133,004	107,378	361,796	331,202	117,551	106,604
Asset Management	51,384	43,689	146,459	125,661	58,147	46,950
RJBank	28,457	12,243	68,975	31,046	50,402	17,854
Emerging Markets	17,511	8,213	43,360	27,521	11,797	13,809
Stock Loan/Borrow	16,850	8,797	42,605	21,386	15,059	11,616
Other	5,529	5,032	29,055	6,772	7,540	2,769
Total	$ 711,357	$ 526,362	$1,943,522	$1,563,066	$ 709,629	$ 575,347

Income Before Provision for Income Taxes and Minority Interest:
Income Before Provision for Income Taxes:					Income Before Provision for Income Taxes:
Private Client Group	$ 54,246	$ 17,989	$ 129,588	$ 81,634	$ 54,010	$ 36,811
Capital Markets	20,904	15,210	57,564	45,504	13,811	14,575
Asset Management	12,955	10,292	35,072	29,107	14,755	11,014
RJBank	4,632	3,379	10,058	9,457	6,439	3,201
Emerging Markets	3,830	1,222	7,393	3,960	936	2,210
Stock Loan/Borrow	2,422	2,046	6,970	4,381	196	2,224
Other	(2,487)	1,338	16,502	367	3,619	1,300
Pre-tax Income	96,502	51,476	263,147	174,410	$ 93,766	$ 71,335

Minority Interest	(2,173)	(512)	(6,734)	2,178

Total	$ 94,329	$ 50,964	$ 256,413	$ 176,588

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


	June 30,	September 30,	December 31,	September 30,
	2006	2005	2006	2006
	(000's)		(000's)
Total Assets:
Private Client Group *	$ 5,441,617	$ 4,528,048	$ 5,854,602	$ 5,370,018
Capital Markets **	1,460,432	1,032,815	1,516,024	1,369,479
Asset Management	74,907	74,418	146,297	76,684
RJBank	2,130,268	1,327,675	3,422,227	3,120,840
Emerging Markets	93,004	91,550	969,854	58,950
Stock Loan/Borrow	1,352,621	1,147,314	60,156	1,250,857
Other	237,919	156,949	307,017	269,822
Total	$10,790,768	$ 8,358,769	$ 12,276,177	$ 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.

2320

The Company has operations in the United States, Canada, Europe and joint ventures in India, Turkey, Argentina and ~~Argentina.~~Uruguay. Substantially all long-lived assets are located in the United States. The following table represents revenue by ~~country (in 000's):~~country:

	Three Months Ended		Nine Months Ended		Three Months Ended
	June 30,	June 24,	June 30,	June 24,	December 31,	December 31,
	2006	2005	2006	2005	2006	2005
	(000's)		(000's)		(000's)
Revenues:
United States	$ 623,911	$ 473,619	$ 1,687,476	$ 1,395,258	$ 629,465	$ 492,894
Canada	59,157	36,129	175,756	116,620	56,391	54,655
Europe	11,814	9,766	39,760	27,692	12,648	15,273
Other	16,475	6,848	40,530	23,496	11,125	12,525
Total	$ 711,357	$ 526,362	$ 1,943,522	$ 1,563,066	$ 709,629	$ 575,347

~~While the dollar amount~~The Company has $13.6 million invested in emerging market joint ventures, ~~is only $5.9 million, these investments~~which carry greater risk than amounts invested in developed markets.

2421

~~Table of Contents~~Index

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business and Total Company Overview

The following Management’s Discussion and Analysis is intended to help the reader understand the results of operations and the financial condition of the Company. Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, the Company’s financial statements and accompanying notes to the financial statements.

The Company’s overall financial results continue to be highly and directly correlated to the direction and activity levels of the U.S. equity markets. Despite the ~~consistent~~flat yield curve resulting from numerous increases in short-term interest rates in 2005 - 2006 and ~~rapidly increasing oil~~volatile energy prices, positive recruiting results in the private client group, a strong pipeline in investment banking, increased assets under management, and growth at RJBank should augur well for continued strong revenues.

Results of Operations - Three Months Ended ~~June 30,~~December 31, 2006 Compared with the Three Months Ended ~~June 24,~~December 31, 2005

Total Company

Net revenues of ~~$629,668,000~~$603.9 million represented a ~~28%~~15% increase over the prior year’s $526.5 million, with all revenue line items showing an increase. Net income increased 32% over the prior year quarter, ~~with increases~~demonstrating the operating leverage inherent in ~~revenues from~~ all segments contributing to a fourth consecutive record revenue quarter. Net interest income increased $10.6 million, or 32%, as a result of both increased balances and rates. Securities commissions and fees increased 22% with the majority of that increase in the Private Client Group, reflecting strong employee recruiting results. Financial service fees increased $17.8 million or 87%, $8.2 million of which related to a one-time adjustment to change the recording of certain fees, primarily Individual Retirement Account (“IRA”) fees from a cash basis to an accrual basis. The remaining increase relates to the growth in the number of IRAs and other accounts that generate fees, new fees and the recording of certain fees on a gross basis (the offsetting expense, approximately $2 million, being recorded in clearance and floor brokerage). The 44% increase in investment banking fees is the result of an increase in the number of underwriting deals to 34 from 23 in the same quarter of the prior year. Investment advisory fees increased 20%, tracking a 21% increase in assets under management over the prior June. The increase in other income is the result of increased mutual fund education and sponsorship fees. Non-interest expenses were up 21% over the same quarter prior year. Compensation expense increased 23%, in line with the increase in securities commissions and fees. Occupancy and business development include expenses associated with opening new private client group offices, increased advertising and recruiting Financial Advisors. SignificantCompany’s significant operating ~~leverage was evident, as~~segments. Both net income for the quarter was 75% higher than for the same quarter in the prior year. As discussed above, the Company’s results include a one-time adjustment to financial service fees related to a change from recording certain client fees on a cash basis to an accrual basis. Excluding this $8.2 million favorable adjustment, net revenues ~~were $621,498,000, up 26% over the prior year,~~ and net income were the second highest in the Company’s history. Diluted net income was ~~$51,709,000 or $0.44~~$0.50 per ~~diluted~~ share, ~~for the quarter,~~ up ~~52%~~25% from the prior year’s ~~$0.29~~$0.40 per ~~diluted~~ share. The quarter included a 34% increase in net interest income, record merger and acquisition fee revenue, and was augmented by a $10 million incentive compensation accrual reversal.

Segments

The following tables present the gross revenues and pre-tax income of the Company on a segment basis (in 000’s):

	Three Months Ended			Three Months Ended
	June 30,	June 24,	Percentage	December 31,	December 31,	Percentage
	2006	2005	Change	2006	2005	Change
Revenues:
Private Client Group	$ 458,622	$ 341,010	34%	$ 449,133	$ 375,745	20%
Capital Markets	133,004	107,378	24%	117,551	106,604	10%
Asset Management	51,384	43,689	18%	58,147	46,950	24%
RJBank	28,457	12,243	132%	50,402	17,854	182%
Emerging Markets	17,511	8,213	113%	11,797	13,809	(15%)
Stock Loan/Stock Borrow	16,850	8,797	92%	15,059	11,616	30%
Other	5,529	5,032	10%	7,540	2,769	172%
Total	$ 711,357	$ 526,362	35%	$ 709,629	$ 575,347	23%

	Three Months Ended
	December 31,	December 31,	Percentage
	2006	2005	Change
Income Before Provision for Income Taxes:
Private Client Group	$ 54,010	$ 36,811	47%
Capital Markets	13,811	14,575	(5%)
Asset Management	14,755	11,014	34%
RJBank	6,439	3,201	101%
Emerging Markets	936	2,210	(58%)
Stock Loan/Stock Borrow	196	2,224	(91%)
Other	3,619	1,300	178%
Pre-tax Income	$ 93,766	$ 71,335	31%

2522

Three Months Ended

June 30,

June 24,

Percentage

2006

2005

Change
Income Before Provision for Income Taxes and Minority Interest:

  Private Client Group $ 54,246 $ 17,989 202%
  Capital Markets 20,904 15,210 37%
  Asset Management 12,955 10,292 26%
  RJBank 4,632 3,379 37%
  Emerging Markets 3,830 1,222 213%
  Stock Loan/Stock Borrow 2,422 2,046 18%
  Other (2,487) 1,338 (286)%
Pre-tax Income
96,502 51,476 87%

Minority Interest
(2,173) (512) 324%

Total
$ 94,329 $ 50,964 85%

Net Interest Analysis

The following table presents the net interest income of the Company for the periods indicated. The respective average rates are presented on an annualized basis:

	Three Months Ended
	December 31,	December 31,
	2006	2005
	($ in 000's)
Interest Revenue
Margin balances:
Average balance	$ 1,368,875	$ 1,256,184
Average rate	8.0%	6.7%
Interest revenue - margin balances	27,254	21,121

Assets segregated pursuant to federal regulations:
Average balance	3,478,406	2,571,386
Average rate	5.3%	4.0%
Interest revenue - segregated assets	45,828	25,971

Raymond James Bank, FSB interest revenue:
Average earning assets	3,207,727	1,382,965
Average rate	6.1%	5.1%
Interest revenue - Raymond James Bank, FSB	50,293	17,706

Stock borrowed interest revenue	15,059	11,616

Interest revenue- variable interest entities	256	286
Other interest revenue	19,534	11,350

Total interest revenue	$ 158,224	$ 88,050

Interest Expense
Client interest program:
Average balance	$ 4,341,141	$ 3,408,985
Average rate	4.4%	3.0%
Interest expense - client interest program	48,139	25,869

Raymond James Bank, FSB interest expense:
Average interest bearing liabilities	2,992,054	1,210,379
Average rate	4.6%	3.2%
Interest expense - Raymond James Bank, FSB	34,464	9,798

Stock loaned interest expense	12,983	8,468

Interest expense- variable interest entities	1,743	1,000
Other interest expense	8,400	3,676

Total interest expense	$ 105,729	$ 48,811

Net interest income	$ 52,495	$ 39,239

Private Client Group

The Private Client Group (“PCG”) segment includes the retail branches of the Company's broker-dealer subsidiaries located throughout the United States, Canada, and the United Kingdom. The Private Client Group Financial Advisors provide securities brokerage services including the sale of equity securities, mutual funds, fixed income instruments, annuities and insurance products. This segment accounts for the majority of the Company's revenues ~~(64%~~(63% of total company revenues for the three months ended ~~June 30,~~December 31, 2006). It generates revenues principally through commissions charged on securities transactions, fees from wrap fee investment accounts and the interest revenue generated from client margin loans and cash balances. The Company primarily charges ~~commissions~~for the services provided to its Private Client Group clients based on commission schedules or through ~~asset-based fee alternatives that clients can elect as an alternative to traditional commissions.~~asset based advisory fees.

The success of the Private Client Group is dependent upon the quality and integrity of its Financial Advisors and other associates and the Company's ability to attract, retain, and motivate a sufficient number of these associates. The Company faces competition for qualified associates from major financial services companies, including other brokerage firms, insurance companies, banking institutions, and discount brokerage firms. The Company currently offers several alternatives for Financial Advisors ranging from the traditional branch setting, under which the Financial Advisors are employees of the Company and the costs associated with running the branch are incurred by the Company, to the independent contractor model, under which the Financial Advisors are responsible for all of their own direct costs. Accordingly, the independent contractor Financial Advisors are paid a larger percentage of commissions and fees. By offering alternative models to potential and existing Financial Advisors, the Company is able to effectively compete with other brokerage firms for qualified Financial Advisors, as Financial Advisors can choose the model that best suits their practice and profile. For the past two years, the Company has focused on increasing its minimum production standards and recruiting Financial Advisors with high average production. The following table presents a summary of Private Client Group Financial Advisors as of the periods indicated:

	June 30,	March 31,	June 24,	December 31,	December 31,
	2006	2006	2005	2006	2005
Private Client Group - Financial Advisors:
Traditional Branch	1,242	1,192	1,076	1,218	1,170
Independent Contractor	3,439	3,479	3,554	3,281	3,491
Total Financial Advisors	4,681	4,671	4,630	4,499	4,661

~~Private Client Group~~The PCG results reflect a 47% increase in pre-tax ~~profits were up~~income over ~~200% ($36 million)~~the prior year on a ~~34%~~20% increase in revenues. Commission revenues increased $41 million (14%) over the ~~same~~prior year quarter, inwith 54% of that increase coming from the prior year. These results include strong recruiting results in the domestic employee model, significantly lower legal expenses and a 25% increase in net interest earnings. In addition, the aforementioned adjustment of $8.2 million to financial service fees was included in this segment’s revenues.RJA private client group. RJA has been ~~highly successful in~~successfully recruiting ~~Financial Advisors, with~~large producers throughout the past year, adding a net ~~increase of 149 since June 2005. This increase is particularly significant as~~39 FAs. Average production within RJA’s PCG group has increased 13% from $371,000 to $ 419,000. Commission expense also increased 14%, in line with the ~~Financial Advisors recruited have generally been large producers. RJA has also opened 39 new office locations since June 2005. While this growth generated increases~~increase in commission revenue, it also resulted in significant increases in the related expenses associated with Financial Advisors’ bonuses, account transfer fees, and branch opening costs. Due to the decrease in legal costs and increased net interest, the Private Client Group margins have more than doubled despite these increased recruiting costs.

revenue. Of the Company’s ~~$44~~$52.5 million ~~dollars~~ in net interest income for the most recent quarter, ~~nearly $28~~approximately $30.9 million was attributable to ~~the Private Client Group.~~PCG. Net interest ~~generated by~~income increased $7.4 million (32%), accounting for 43% of the increase in the segment’s pre-tax income. This increase resulted from an 8.9% increase in average customer margin balances, ~~predominantly~~an increase in segregated cash in excess of the ~~net of earnings on margin loans and assets segregated pursuant to federal regulations less interest paid on~~increased customer cash balances ~~are credited~~and increased rates earned on the additional segregated cash. PCG margins on net revenue increased from 10.6% to ~~the Private Client Group. Balances in these accounts, as well as the associated rates, have increased since the prior year resulting in a $5 million, or 25%, increase in net interest in this segment.~~

Three Months Ended

June 30,

March 31,

June 24,

2006

2006

2005

($ in millions)
Client Margin Accounts:

Average Balance $ 1,214 $ 1,199 $ 1,105
Average Rate 7.89% 7.42% 5.88%

Assets Segregated:

Average Balance $ 3,240 $ 2,968 $ 2,391
Average Rate 4.99% 4.53% 2.99%

Client Interest Program:

Average Balance $ 3,564 $ 3,348 $ 2,847
Average Rate 4.20% 3.74% 2.23%
13.3%.

Capital Markets

The Capital Markets segment includes institutional sales and trading in the United States, Canada, and Europe; management of and participation in underwritings; financial advisory services including private placements and merger and acquisition services; public finance activities; and the syndication and related management of investment partnerships designed to yield returns in the form of low-income housing tax credits to institutions. The Company provides securities brokerage services to institutions with an emphasis on the sale of U.S. and Canadian equities and fixed income products. Institutional sales commissions account for ~~the majority~~over 50% of the ~~segment's revenue~~segment’s revenues and are driven primarily through trade volume, resulting from a combination of general market activity and by the Capital Markets group’s ability to find attractive investment opportunities and promote those opportunities to potential and existing clients. Revenues from investment banking activities are driven principally by the number and the dollar value of the transactions with which the Company is involved. This segment also includes trading of taxable and tax-exempt fixed income products, as well as equity securities in the OTC and Canadian markets. This trading involves the purchase of securities from, and the sale of securities to, clients of the Company or other dealers who may be purchasing or selling securities for their own account or acting as agent for their clients. Profits and losses related to this trading activity are primarily derived from the spreads between bid and ask prices in the relevant market.

2724

~~Pre-tax profits in~~

Capital Market’s quarterly results included record merger and acquisition (“M&A”) fees of $20 million for the ~~Capital Markets Group increased $5.7~~quarter ended December 31, 2006. Commission revenues were $2.5 million ~~or 37%, over~~lower than the ~~same quarter~~ prior year ~~with revenues up $25.6 million, or 24%. This increase is the combined result of the $10.4 million increase in underwriting fees and the $8.8 million increase in commissions - much of which was~~quarter. Commissions were flat in RJ Ltd. ~~The increased underwriting fees reflect the increase~~and up $1.4 million in fixed income, however commissions were down almost $3 million in RJA’s domestic institutional sales division and down $2.7 million in the institutional European branches, for a net decline in the segment. The decline can be primarily attributed to lower underwriting commission revenues. Although the Company underwrote an equal number of ~~offerings reflected~~domestic deals, the Company was not the lead or co-lead manager in ~~the table below. Merger and acquisition fees were down $2 million~~as many deals. The number of underwritings at RJ Ltd. declined considerably from ~~the same quarter~~14 in the prior ~~year.~~year to two in the quarter ended December 31, 2006. As a result, underwriting fee revenue was down 33%. Capital Markets margins declined from 12.7% to 10.6%.

	Three Months Ended		Three Months Ended
	June 30,	June 24,	December 31,	December 31,
	2006	2005	2006	2005
Number of managed/co-managed public equity offerings:
US	27	20
United States			27	27
Canada	7	3	2	14

Total dollars raised (in 000's):
US	$6,899,588	$6,721,247
United States			$6,088,000	$5,052,000
Canada (in U.S. dollars)	134,770	41,944	158,000	220,000

Asset Management

The Asset Management segment includes investment portfolio management services, mutual fund management, private equity management, and trust services. Investment portfolio management services include both proprietary and selected outside money managers. The majority of the revenue for this segment is generated by the investment advisory fees related to asset management services for individual investment portfolios and mutual funds. These accounts are billed a fee based on a percentage of assets. Investment advisory fees are charged based on either a single point in time within the quarter, typically the beginning or end of a quarter, or the “average daily” balances of assets under management. The balance of assets under management is affected by both the performance of the underlying investments and the new sales and redemptions of client accounts/funds. Improving equity markets provide the Asset Management segment with the potential to improve revenues from investment advisory fees as existing accounts appreciate in value, in addition to individuals and institutions being more likely to commit new funds to the equity markets. The following table presents the assets under management as of the dates indicated:

	June 30,	March 31,	Dec. 31,	June 24,	Dec. 31,	Sept. 30,	Dec. 31,
	2006	2006	2005	2005	2006	2006	2005
Assets Under Management (in 000's):

Eagle Asset Management, Inc.	$12,335,316	$12,727,040	$11,583,998	$11,198,226	$ 12,951,956	$ 12,463,417	$11,583,998
Heritage Family of Mutual Funds	9,910,089	9,581,853	8,587,468	8,439,054	9,842,757	9,311,324	8,587,468
Raymond James Consulting Services	7,484,119	7,552,451	6,886,746	6,192,639	8,508,212	7,915,168	6,886,746
Awad Asset Management	1,071,161	1,176,690	1,189,863	1,189,450	1,028,454	996,353	1,189,863
Freedom Accounts	4,471,471	3,832,768	3,052,367	1,956,063	5,920,265	5,122,733	3,052,367
Total Assets Under Management	35,272,156	34,870,802	31,300,442	28,975,432	38,251,644	35,808,995	31,300,442

Less: Assets Managed for other internal Asset Management Entities	3,628,540	3,672,474	3,250,683	2,807,011
Less: Assets Managed for Affiliated Entities					4,320,643	3,991,281	3,250,683

Total Third Party Assets Under Management	$31,643,616	$31,198,328	$28,049,759	$26,168,421	$33,931,001	$31,817,714	$28,049,759

Trust Company Assets Under Administration	$ 1,247,676	$ 1,223,025	$ 1,155,358	$ 1,041,895

~~Assets Under Management~~

Investment Advisory fees increased ~~21%~~17% over the same quarter in the prior ~~year. This was~~year, with assets under management up 21%. The increases in assets under management are predominantly in high net worth or retail individual accounts, with significant increases in Freedom (a managed mutual fund product), Raymond James Consulting Services (a program offering independent investment subadvisors to the ~~combined result~~Company’s clients) and Eagle Asset Management (proprietary asset management). The Heritage mutual funds and money market balances also increased, despite the movement of ~~positive net sales, increased asset values from positive investment performance, and~~approximately $1.3 billion in cash balances out of the money market into RJBank. The increases are due to the increase in overall client assets ~~from~~at the firm, a large portion of which have been brought in by the clients of newly recruited Financial Advisors ~~transferring large asset balances~~in addition to market appreciation. Demonstrating the ~~Company's asset~~leverage associated with increased assets under management, ~~programs. This increase in assets generated an 18% increase in revenues and~~margins have increased from nearly 23% to 26% ~~increase in pre-tax profits within~~since the ~~segment.~~prior year.

RJBank

RJBank provides residential, consumer, and corporate loans, as well as FDIC-insured deposit accounts, to clients of the Company's broker-dealer subsidiaries and to the general public. RJBank also purchases residential whole loan pools, and participates with other banks in corporate loan syndications. RJBank generates revenue principally through the interest income earned on the loans noted above offset by the interest expense it incurs on client deposits and borrowings. RJBank’s objective is to maintain a substantially duration-matched portfolio of assets and liabilities.

Net interest ~~earnings~~and pre-tax income at RJBank ~~increased 66%~~has doubled over the same quarter in the prior ~~year quarter as a~~year. This is the direct result of the ~~continued significant growth of its balance sheet.~~increased loan and deposit balances at RJBank. In July 2006, RJA began to utilize a RJBank ~~loan balances increased $1.01 billion over~~sweep option for the ~~same period~~cash that is or has been held in the ~~prior year,~~Heritage Money Market or ~~114%, as~~in client brokerage accounts. Approximately $1.3 billion was transferred into RJBank ~~invested on a leveraged basis~~ in ~~preparation for~~ the ~~introduction of an additional cash sweep offering to brokerage customers. The~~ first phase of a multi- year phase-in of this cash sweep ~~program was effective~~option. In conjunction with this increase in ~~July 2006. The growth in RJBank’s asset balances~~customer deposits, RJBank has ~~been made up~~increased its loan portfolio, both by the purchase of ~~purchases of~~additional residential ~~mortgage~~ loan pools and ~~participation~~an increase in ~~large corporate~~commercial loan ~~syndications. During periods~~participations. The second phase of ~~growth when new loans are originated or purchased,~~the RJBank sweep option is anticipated to take place in March 2007, transferring an ~~allowance for loan losses is established for potential losses inherent in those new loans. Accordingly, a robust period of growth generally results in charges~~estimated additional $1.5 billion to earnings in that period, while the benefits of higher interest earnings are realized in later periods. During the quarter ended June 30, 2006 RJBank re-evaluated and implemented changes to its loan loss reserve methodology in conjunction with a revisionRJBank. Related to the ~~corporate~~growth in the loan ~~grading process. The new loan grading process provides more specific and detailed risk measurement across~~portfolio there was the ~~corporate loan portfolio. This change resulted in a modest decrease~~attendant growth in the loan loss ~~reserve~~reserves which is reflected as ~~a percentage~~an increase in other expense, suppressing the earnings, as is expected during periods of ~~total loans. In anticipation of growth~~robust growth. RJBank margins were 40% in ~~RJBank customer deposits as a result~~the quarter ended December 31, 2006 versus 37% in the same quarter of the ~~newly introduced sweep option, RJBank intends to continue to grow its loan portfolio.~~prior year.

Emerging Markets

Emerging Markets includes the results of the Company’s joint ~~venture operations~~ventures in ~~India,~~ Latin America and Turkey. The ~~quarter ended June 30, 2006 included~~Company has signed an agreement to sell its interest in its joint venture in India. Results in the emerging market segment are down 58% from the prior year - the result of a ~~significant underwriting fee ($3 million)~~decline in commission revenues in both Latin America and Turkey. These declines were modestly offset by trading profits and increased ~~commissions~~investment advisory fees in ~~both Turkey and~~ Latin America and increased ~~trading profits~~investment banking revenue in Turkey. Despite the decline in revenues, expenses were flat with the prior year quarter resulting in a decline in pre-tax results.

Stock Loan/Stock Borrow

This segment conducts its business through the borrowing and lending of securities from and to other broker-dealers, financial institutions and other counterparties, generally as an intermediary. The borrower of the securities puts up a cash deposit, commonly 102% of the market value of the securities, on which interest is earned. Accordingly, the lender receives cash and pays interest. These cash deposits are adjusted daily to reflect changes in current market value. The net revenues of this operation are the interest spreads generated. Improved results in this segment were a result of higher interest rates and resultant improved spreads, as the average balances actually declined marginally.

Stock Loan interest revenue is higher than in the prior year due to higher rates on similar average balances, which was offset by commensurate interest expenses on similar balances. Overall, spreads narrowed in the current period versus the prior comparative period. The segment was also negatively impacted by an increase in legal reserves taken in regard to a pending regulatory matter. As a result, the segment’s pre-tax income was down 90% from the prior year.

Other

This segment consists of earnings on corporate cash, private equity investments and other corporate investments made at the corporate level net of expenses, predominantly executive compensation.

The loss in the Other segment is primarily the result of an unrealized loss recognized on the remaining NYSE Group, Inc. (“NYX”) shares received as a result of the NYSE becoming a public company (“NYSE conversion”) combined with corporate bonus expense associated with improved profitability.

~~Results of Operations - Nine Months Ended June 30, 2006 Compared with the Nine Months Ended June 24, 2005~~

Except as discussed below, the underlying reasons for the variances to the prior year period are substantially the same as the comparative quarterly discussion above and the statements contained in such foregoing discussion also apply for the nine month comparison.

~~Total Company~~

For the first nine months of fiscal 2006, the Company's total revenues increased $380 million, or 24%, over the same period in the prior year. The largest increase in revenue was in interest, as both rates and balances increased throughout the Company. Net income increased $57.1 million, or 54%, to $163.4 million, or $1.41 per diluted share, from $106.3 million, or $0.94 per diluted share. These results include the gain on the NYSE conversion, and sale of the Montreal Exchange seats, in the prior quarter, and the adjustment to certain financial service fees, without which, net income increased 39% over the prior year to $148 million or $1.28 per diluted share.

~~Segments~~

~~The following tables present the revenues and pre-tax income of the Company on a segment basis (in 000’s):~~

Nine Months Ended

June 30,

June 24,

Percentage

2006

2005

Change
Revenues:

  Private Client Group $ 1,251,272 $ 1,019,478 23%
  Capital Markets 361,796 331,202 9%
  Asset Management 146,459 125,661 17%
  RJBank 68,975 31,046 122%
  Emerging Markets 43,360 27,521 58%
  Stock Loan/Stock Borrow 42,605 21,386 99%
  Other 29,055 6,772 329%
Total
$ 1,943,522 $ 1,563,066 24%

Nine Months Ended

June 30,

June 24,

Percentage

2006

2005

Change
Income Before Provision for Income Taxes and Minority Interest:

  Private Client Group $ 129,588 $ 81,634 59%
  Capital Markets 57,564 45,504 27%
  Asset Management 35,072 29,107 20%
  RJBank 10,058 9,457 6%
  Emerging Markets 7,393 3,960 87%
  Stock Loan/Stock Borrow 6,970 4,381 59%
  Other 16,502 367 4,396%
Pre-tax Income
263,147 174,410 51%

Minority Interest
(6,734) 2,178 (409)%

Total
$ 256,413 $ 176,588 45%

~~Within the Capital Markets segment, mergers and acquisition fees are up over $10 million, over half of which were earned in the second quarter.~~

~~Year to date~~ results for the ~~Other segment~~three months ended December 31, 2006 include the ~~$16~~positive impact of approximately $1.9 million ~~gain on the NYSE conversion.~~in bonus reversals.

Statement of Financial Condition Analysis

The Company’s statement of financial condition consists primarily of cash and cash equivalents (a large portion of which are segregated for the benefit of customers), receivables and payables. The statement of financial condition is primarily liquid in nature, providing the Company with flexibility in financing its business. Total assets of ~~$10.8~~$12.3 billion at ~~June 30,~~December 31, 2006 were up approximately ~~29%~~6.6% over September 30, ~~2005.~~2006. Most of this increase is due to the significant increases in brokerage client cash deposits, leading to a similar increase in segregated cash balances on the asset side, and growth of RJBank, with the increased loan balances being largely funded by ~~FHLB advances.~~deposits. RJBank loan balances increased significantly as the Company continued to ~~prepare for the introduction of~~introduce an additional cash sweep offering to brokerage customers. The Company initiated the first phase of this option in July 2006 and plans to continue to expand the offering for the next few years, which will result in continued growth in RJBank balances. The other significant increase in assets was in ~~securities owned (trading inventory).~~trading securities. The broker-dealer gross assets and liabilities, including trading inventory, stock loan/stock borrow, receivables and payables from/to brokers, dealers and clearing organizations and clients fluctuate with the Company's business levels and overall market conditions.

Liquidity and Capital Resources

Cash used in operating activities during the ~~nine~~three months ended ~~June 30,~~December 31, 2006 was approximately ~~$70.8~~$287.4 million, primarily attributable to the increase in segregated assets (directly correlated to the increase in brokerage client deposits), an increase in securities inventory levels ~~an increase in prepaid expenses~~ and ~~other assets, an increase in~~ receivables from clients, ~~an increase~~and a decrease in payables associated with the Company’s stock loan/borrowed business, securities ~~purchased~~sold under agreements to ~~resell,~~repurchase, and ~~a decrease in~~ accrued compensation, commissions and benefits. This was offset by ~~an increase in payables due clients,~~ a decrease in receivables associated with the Company’s stock loan/borrowed business and an increase in payables ~~associated with the Company’s stock loan/borrowed business,~~to broker-dealers and ~~an increase in securities sold under agreements to repurchase.~~clearing organizations.

Investing activities used ~~$965.5~~$310.4 million, ~~in cash,~~ which is primarily due to loans originated and purchased by ~~RJBank, the purchases of other investments and capital expenditures, net of~~RJBank. This was offset by loan repayments at RJBank and ~~the maturation~~sales by RJBank of ~~available for sale securities.~~securities under agreements to resell.

Financing activities provided ~~$785.6~~$520.2 million, the result of an increase in ~~FHLB advances and~~borrowings, an increase in deposits at RJBank and cash provided from the exercise of stock options and employee stock purchases. This was partially offset by the repayments of borrowings ~~purchases of treasury stock~~ and the payment of cash dividends.

At ~~June 30,~~December 31, 2006 and September 30, ~~2005~~2006 the Company had loans payable of approximately ~~$556.6~~$408.1 million and ~~$146~~$141.6 million, respectively. The balance at ~~June 30,~~December 31, 2006 is comprised primarily of a ~~$68.2~~$66.9 million loan for its home-office complex, a $1.1 million mortgage loan for the office of a foreign joint venture, ~~$473.7~~$50 million in Federal Home Loan Bank advances ~~(used to fund operations at RJBank)~~(RJBank), and various short-term borrowings totaling approximately ~~$13.6 million.~~ $290.1 million (used to fund increased inventory levels).

In ~~July~~addition, the Company and its subsidiaries have the following lines of credit: RJF has a committed $200 million line of credit, RJA has uncommitted bank lines of credit aggregating $485.1 million with commercial banks, Raymond James Credit Corporation has a line of credit for $25 million, and RJ Ltd. has a CDN$40 million uncommitted line of credit (see Note 7 to the Condensed Consolidated Financial Statements for further information on the Company's lines of credit). At December 31, 2006, ~~$403.7~~the Company had approximately $290.1 million in outstanding short-term borrowings under these lines of ~~the $473.7~~credit. The Company’s committed $200 million line of credit is subject to a 0.125% per annum facility fee. RJBank has $50 million in FHLB advances outstanding at December 31, 2006, which are comprised of long-term, fixed rate advances. RJBank had $947 million in credit available from the FHLB at December 31, 2006.

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 million. At December 31, 2006 the aggregate unsecured settlement lines of credit available were ~~repaid by~~$78 million, and there was an outstanding balance of approximately $1.8 million. The Company has also from time to time authorized performance guarantees for the ~~Company after the first phase~~completion of ~~the new sweep program transferred customer deposits to RJBank.~~trades with counterparties in Argentina and Turkey. At December 31, 2006, there were no outstanding performance guarantees in Turkey or Argentina.

As of ~~June 30,~~December 31, 2006, ~~consistent with year-end,~~ the Company's liabilities are comprised primarily of brokerage client payables of ~~$4.6~~$5.0 billion at the broker-dealer subsidiaries and deposits of ~~$1.45~~$3.1 billion at RJBank, as well as deposits held on stock loaned transactions of ~~$1.3 billion.~~$958.3 million. The Company primarily acts as an intermediary in stock borrowed/loan transactions. As a result, the liability associated with the stock loan transactions is related to the ~~$1.05 billion~~$877.7 million receivable comprised of the Company's cash deposits for stock borrowed transactions. To meet its obligations to clients, the Company has approximately ~~$3.9~~$4.2 billion in cash and assets segregated pursuant to federal regulations. The Company also has client brokerage receivables of ~~$1.5~~$1.6 billion.

~~The Company believes its existing assets, which are highly liquid in nature, together with funds generated from operations should provide adequate funds for continuing operations.~~

As of June 30, 2006 both of the Company's domestic broker-dealer subsidiaries well exceeded the net capital requirements of the Uniform Net Capital Rule under the Securities Exchange Act of 1934, RJ Ltd exceeded the Risk Adjusted Capital required under the Minimum Capital Rule of the IDA, and RJBank was “well capitalized” under the regulatory framework for prompt corrective action. There have been no significant changes in circumstances since year-end that have affected the capital of either the broker-dealer subsidiaries or RJBank with respect to their respective regulatory capital requirements.

The Company will continue its ~~endorsement~~implementation of a new cash sweep option to its clients through RJBank. This new cash sweep option will require substantial capital to be contributed to RJBank to meet regulatory requirements, and therefore may require the Company to infuse an estimated $200 to $300 million over the next several years for this purpose.

The Company has committed a total of $42.6 million, in amounts ranging from $200,000 to $2.0 million, to 40 different independent venture capital or private equity partnerships. As of December 31, 2006, the Company has invested $30 million of that amount and has received $26 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 $11.7 million and has received $6.7 million in distributions as of December 31, 2006.

Management has been authorized by the Board of Directors to repurchase its common stock at their discretion for general corporate purposes. There is no formal stock repurchase plan at this time. In May 2004 the Board authorized the repurchase of up to $75 million of shares. As of December 31, 2006 the unused portion of this authorization was $67.3 million.

The Company has committed to lend to or guarantee obligations of its wholly owned subsidiary, RJ Tax Credit Funds, Inc. (“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 December 31, 2006, cash funded to invest in either loans or investments in project partnerships was $43 million. In addition, at December 31, 2006, RJTCF is committed to additional future fundings of $18.9 million related to project partnerships that have not yet been sold to various tax credit funds.

The Company believes its existing assets, which are highly liquid in nature, together with funds generated from operations, should provide adequate funds for continuing operations.

The Company is the lessor in two leveraged commercial aircraft transactions with two major domestic airlines (Delta Air Lines, Inc. “Delta” and Continental Airlines, Inc. “Continental"). The Company's ability to realize its expected return is dependent upon the airlines' ability to fulfill their lease obligations. In the event that the airlines default on their lease commitments and the Trustee for the debt holders is unable to re-lease or sell the planes with adequate terms, the Company would suffer a loss of some or all of its investment.

Delta Airlines filed for bankruptcy protection on September 14, 2005. Accordingly, the Company recorded a $6.5 million pretax 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 pretax charge in 2004 to partially reserve for this investment. No amount of these charges represents a cash expenditure; however, in the likely event of a material modification to the lease or foreclosure of the aircraft by the debt holders in fiscal 2007, certain tax payments of up to approximately $7.9 million could be accelerated. The expected tax payments are currently reflected on the statement of financial condition as a deferred tax liability and are not expected to result in a further charge to earnings. Subsequent to December 31, 2006, the Company entered into an agreement in principle to sell its interest in the Delta transaction for $2 million, which is expected to be recognized as a pre-tax gain in the quarter ending March 31, 2007. Upon closing, the aforementioned tax payments will be triggered.

The Company also has a leveraged lease outstanding with Continental valued at $10.6 million as of December 31, 2006. 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’s Turkish affiliate was assessed for the year 2001 approximately US$6.8 million by the Turkish tax authorities. This affiliate is vigorously contesting most aspects of this assessment and has filed an appeal with the Turkish tax court. Audits of 2002 through 2004 are anticipated and their outcome is unknown in light of the change in methodology from the prior year’s audit and the pending litigation. As of December 31, 2006, this affiliate had total capital of approximately US$6.8 million, of which the Company owns approximately 73%.

As of December 31, 2006 all of the Company's domestic broker-dealer subsidiaries exceeded the net capital requirements of the Uniform Net Capital Rule under the Securities Exchange Act of 1934, RJ Ltd. exceeded the Risk Adjusted Capital required under the Minimum Capital Rule of the IDA, and RJBank was “well capitalized” under the regulatory framework for prompt corrective action. There have been no significant changes in circumstances since year-end that have affected the capital of any of the broker-dealer subsidiaries or RJBank with respect to their respective regulatory capital requirements.

The Company has contractual obligations of approximately $2.3 billion, with ~~$1.9~~$1.8 billion coming due in the next twelve months related to its short and long-term debt, non-cancelable lease agreements, partnership investments, unfunded commitments to extend credit, a stadium naming rights agreement, and ~~$658 million~~$1.0 billion in commitments related to RJBank's letters of credit and lines of credit. Commitments related to letters of credit and lines of credit may expire without being funded in whole or part, therefore these amounts are not estimates of future cash flows (see Note 79 to the Condensed Consolidated Financial Statements for further information on the Company’s commitments).

In addition to the mortgage loan and advances from the FHLB, the Company and its subsidiaries have several lines of credit denominated in U.S. dollars and one line of credit denominated in Canadian dollars, with aggregate available balances of $710 million and CDN$40 million, respectively (see Note 5 to the Condensed Consolidated Financial Statements for further information on the Company's lines of credit). At June 30, 2006, the Company was in compliance with all covenants of the lines of credit and its mortgage loans.

Effects of Inflation

The Company's assets are primarily liquid in nature and are not significantly affected by inflation. However, the rate of inflation affects the Company's expenses, including employee compensation, communications and occupancy, which may not be readily recoverable through charges for services provided by the Company.

Factors Affecting “Forward-Looking Statements”

From time to time, the Company may publish “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, or make oral statements that constitute forward-looking statements. These forward-looking statements may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products, anticipated market performance, and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company cautions readers that a variety of factors could cause the Company's actual results to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. These risks and uncertainties, many of which are beyond the Company's control, are discussed in the section entitled “Risk Factors” of Item 11A of Part I included in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2005~~2006 and in Item 1A of Part II of this report on Form 10-Q. The Company does not undertake any obligation to publicly update or revise any forward-looking statements.

Critical Accounting Policies

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. For a full description of these and other accounting policies, see 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, ~~2005.~~2006. The Company believes that of its significant accounting policies, those described below involve a high degree of judgment and complexity. These critical accounting policies require estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the condensed consolidated financial statements. Due to their nature, estimates involve judgment based upon available information. Actual results or amounts could differ from estimates and the difference could have a material impact on the condensed consolidated financial statements. Therefore, understanding these policies is important in understanding the reported results of operations and the financial position of the Company.

3229

Valuation of Securities and Other Assets

“Trading securities” and “Available for sale securities” are reflected in the Condensed Consolidated ~~Statement~~Statements of Financial Condition at fair value or amounts that approximate fair value. In accordance with SFAS 115, “Accounting for Certain Investments in Debt and Equity Securities”, unrealized gains and losses related to these financial instruments are reflected in net earnings or other comprehensive income, depending on the underlying purpose of the instrument. The following table presents the Company’s trading and available for sale securities segregated into cash (i.e., non-derivative) trading instruments, derivative contracts, and available for sale securities:

	June 30, 2006		December 31, 2006
	Financial Instruments Owned at Fair Value	Financial Instruments Sold but not yet Purchased at Fair Value	Financial Instruments Owned at Fair Value	Financial Instruments Sold but not yet Purchased at Fair Value
	(in 000’s)		(in 000’s)

Cash trading instruments	$ 648,105	$ 188,006	$ 694,793	$ 167,283
Derivative contracts	31,546	9,067	25,991	9,041
Available for sale securities	151,141	-	336,004	-
Total	$ 830,792	$ 197,073	$ 1,056,788	$ 176,324

Cash Trading Instruments, ~~and~~ Available for Sale Securities and Derivative Contracts

When available, the Company uses prices from independent sources such as listed market prices, or broker or dealer price quotations to derive the fair value of the instruments. For investments in illiquid, privately held or other securities that do not have readily determinable fair values, the Company uses estimated fair values as determined by management. Fair market value of OTC derivative contracts is estimated by using pricing models, based on the contractual terms and conditions, current market levels of interest rates and volatilities, and other factors. The following table presents the carrying value of cash trading instruments, available for sale securities, and derivative contracts for which fair value is measured based on quoted prices or other independent sources versus those for which fair value is determined by management:

	June 30, 2006		December 31, 2006
	Financial Instruments Owned at Fair Value	Financial Instruments Sold but not yet Purchased at Fair Value	Financial Instruments Owned at Fair Value	Financial Instruments Sold but not yet Purchased at Fair Value
	(in 000’s)		(in 000’s)
Fair value based on quoted prices and independent sources	$ 796,160	$ 188,006	$ 1,030,670	$ 167,283
Fair value determined by Management	34,632	9,067	26,118	9,041
Total	$ 830,792	$ 197,073	$ 1,056,788	$ 176,324

Derivative Contracts

Fair value for derivative contracts are obtained from pricing models that consider current market and contractual prices for the underlying financial instruments, as well as time value and yield curve or volatility factors underlying the positions.

Investment in Leveraged Leases

The Company is the lessor in two leveraged commercial aircraft transactions with two major domestic airlines (Delta Air Lines, Inc. “Delta” and ~~Continental)~~Continental Airlines, Inc. “Continental"). The Company's ability to realize its expected return is dependent upon the airlines' ability to fulfill their lease obligations. In the event that the airlines default on their lease commitments and the ~~Trustees~~Trustee for the debt holders ~~are~~is unable to re-lease or sell the planes with adequate terms, the Company would suffer a loss of some or all of its investment. Delta Airlines filed for bankruptcy protection on September 14, 2005. Accordingly, the Company recorded a $6.5 million pretax charge ~~during the three months ended September 30,~~in 2005 to fully reserve the balance of its investment in the leveraged lease of an aircraft to Delta. The Company ~~also took~~had taken a $4 million pretax charge in ~~the~~ 2004 ~~fiscal year~~ to partially reserve for this investment. No amount of these charges represents a cash expenditure; however, in the likely event of a material modification to the lease or foreclosure of the aircraft by the debt holders in fiscal 2007, certain ~~of the Company’s deferred~~ tax payments of up to approximately ~~$8.2~~$7.9 million could be accelerated. The expected tax payments are currently reflected on the statement of financial condition as a deferred tax liability and are not expected to result in a further charge to earnings. Subsequent to December 31, 2006, the Company entered into an agreement in principle to sell its interest in the Delta transaction for $2 million, which is expected to be recognized as a pre-tax gain in the quarter ending March 31, 2007. Upon closing, the aforementioned tax payments will be triggered.

Goodwill

Goodwill is related to the acquisitions of Roney & Co. (now part of RJA) and Goepel McDermid, Inc. (now called Raymond James ~~Ltd)~~Ltd.). This goodwill, totaling $63 million, was allocated to the reporting units within the Private Client Group and Capital Markets segments pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets”. Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. In accordance with SFAS No. 142, indefinite-life intangible assets and goodwill are not amortized.

~~The Company reviews~~ Rather they are subject to impairment testing on an annual basis, or more often if events or circumstances indicate there may be impairment. This test involves assigning tangible assets and liabilities, identified intangible assets and goodwill to reporting units and comparing the fair value of each reporting unit to its ~~goodwill in order to determine whether its~~carrying amount. If the fair value is ~~impaired on at least an annual basis. Goodwill is impaired when~~less than the carrying amount, a further test is required to measure the amount of the ~~reporting unit exceeds the implied fair value of the reporting unit.~~ impairment.

When available, the Company uses recent, comparable transactions to estimate the fair value of the respective reporting units. The Company calculates an estimated fair value based on multiples of revenues, earnings, and book value of comparable transactions. However, when such comparable transactions are not available or have become outdated, the Company uses discounted cash flow scenarios to estimate the fair value of the reporting units. As of ~~June 30,~~December 31, 2006, goodwill had been allocated to the Private Client Group of RJA, and both the Private Client Group and Capital Markets segments of RJ Ltd. As of the most recent impairment test, the Company determined that the carrying value of the goodwill for each reporting unit had not been impaired. However, changes in current circumstances or business conditions could result in an impairment of goodwill. As required, the Company will continue to perform impairment testing on an annual basis or when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Reserves

The Company recognizes liabilities for contingencies when there is an exposure that, when fully analyzed, indicates it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. When a range of probable loss can be estimated, the Company accrues the most likely amount; if not determinable, the Company accrues at least the minimum of the range of probable loss.

The Company records reserves related to legal proceedings in "other payables". Such reserves are established and maintained in accordance with SFAS No. 5, "Accounting for Contingencies", and Financial Interpretation No. 14. The determination of these reserve amounts requires significant judgment on the part of management. Management considers many factors including, but not limited to: the amount of the claim; the amount of the loss in the client's account; the basis and validity of the claim; the possibility of wrongdoing on the part of an employee of the Company; previous results in similar cases; and legal precedents and case law. Each legal proceeding is reviewed with counsel in each accounting period and the reserve is adjusted as deemed appropriate by management. Lastly, each case is reviewed to determine if it is probable that insurance coverage will apply, in which case the reserve is reduced accordingly. Any change in the reserve amount is recorded in the consolidated financial statements and is recognized as a charge/credit to earnings in that period. ~~Lastly, each case is reviewed to determine if it is probable that insurance coverage will apply, in which case a receivable is recorded.~~

The Company also records reserves or allowances for doubtful accounts related to client receivables and loans. Client receivables at the broker-dealers are generally collateralized by securities owned by the brokerage clients. Therefore, when a receivable is considered to be impaired, the amount of the impairment is generally measured based on the fair value of the securities acting as collateral, which is measured based on current prices from independent sources such as listed market prices or broker-dealer price quotations.

Client loans at RJBank are generally collateralized by real estate or other property. RJBank provides for both an allowance for losses in accordance with SFAS No. 5, “Accounting for Contingencies”, and a reserve for individually impaired loans in accordance with SFAS No. 114, “Accounting by a Creditor for Impairment of a Loan”. The calculation of the SFAS No. 5 allowance is subjective as management segregates the loan portfolio into different homogeneous classes and assigns each class an allowance percentage based on the perceived risk associated with that class of loans. ~~During the quarter, the loan grading system used by management to determine the level of risk in the corporate loan portfolio was revised and expanded to 15 different risk categories.~~ The factors taken into consideration when assigning the reserve percentage to each reserve category include estimates of borrower default probabilities and collateral values; trends in delinquencies; volume and terms; changes in geographic distribution, lending policies, local, regional, and national economic conditions; concentrations of credit risk and past loss history. In addition, the Company provides for potential losses inherent in RJBank’s unfunded lending commitments using the criteria above, further adjusted for an estimated probability of funding. For individual loans identified as impaired, RJBank measures impairment based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. At ~~June 30,~~December 31, 2006, the amortized cost of all RJBank loans was ~~$1.92~~$2.7 billion and an allowance for loan losses of ~~$15.9~~$22.9 million was recorded against that balance. The total allowance for loan losses, including ~~$2.8~~$4.6 million in reserves for off-balance sheet exposures maintained in Other Liabilities, is equal to ~~0.97%~~1.01% of the amortized cost of the loan portfolio.

The Company also makes loans or pays advances to Financial Advisors, primarily for recruiting and retention purposes. The Company provides for an allowance for doubtful accounts based on an evaluation of the Company’s ability to collect such receivables. The Company’s ongoing evaluation includes the review of specific accounts of Financial Advisors no longer associated with the Company and the Company’s historical collection experience. At ~~June 30,~~December 31, 2006 the receivable from Financial Advisors was ~~$80~~$92.8 million, which is net of an allowance of ~~$8.4~~$4.5 million for estimated uncollectibility.

Income Taxes

SFAS No. 109, “Accounting for Income Taxes”, establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact the Company’s financial position, results of operations, or cash flows.

~~Table of Contents~~Index

Item 3. ~~Quantitative and Qualitative Disclosure About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

For a description of the Company’s risk management policies, including a discussion of the Company’s primary market risk exposures, which include interest rate risk and equity price risk, as well as a discussion of the Company’s credit risk, operational risk, and regulatory and legal risk and a discussion of how these exposures are managed, refer to the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2005.~~2006.

Market Risk

Market risk is the risk of loss to the Company resulting from changes in interest rates and equity prices. The Company has exposure to market risk primarily through its broker-dealer and banking operations. The Company's broker-dealer subsidiaries, primarily RJA, trade tax exempt and taxable debt obligations and act as an active market maker in approximately ~~340~~235 over-the-counter equity securities. In connection with these activities, the Company maintains inventories in order to ensure availability of securities and to facilitate client transactions. Additionally, the Company, primarily within its Canadian broker-dealer subsidiary, invests for its own proprietary equity investment account.

~~The following table represents~~See Note 3 of the Notes to the Condensed Consolidated Financial Statements for information regarding the fair value of trading inventories associated with the Company's broker-dealer client facilitation, market-making ~~activities~~ and proprietary trading activities.

June 30, 2006

September 30, 2005

Securities

Securities

Sold but

Sold but

Trading

Not yet

Trading

Not yet

Securities

Purchased

Securities

Purchased

(in 000's)

Marketable:
Municipal $ 247,180 $ 345 $ 177,984 $ 17
Corporate 130,038 2,284 27,830 2,285
Government 108,283 87,603 42,009 99,465
Agency 122,522 74,212 60,445 84
Total debt securities 608,023 164,444 308,268 101,851

Derivative contracts 31,546 9,067 12,795 2,488
Equity securities 34,886 23,561 32,237 30,256
Other securities 5,196 1 6,379 -
Total $ 679,651 $ 197,073 $359,679 $134,595

Changes in value of the Company's trading inventory may result from fluctuations in interest rates, credit ratings of the issuer, equity prices and the correlation among these factors. The Company manages its trading inventory by product type and has established trading divisions that have responsibility for each product type. The Company's primary method of controlling risk in its trading inventory is through the establishment and monitoring of limits on the dollar amount of securities positions that can be entered into and other ~~risk based~~risk-based limits; limits are established both for categories of securities (e.g., OTC equities, high yield securities, municipal bonds) and for individual traders. As of ~~June 30,~~December 31, 2006 the absolute fixed income and equity inventory limits were ~~$2,205,000,000~~$1,905,000,000 and ~~$79,775,000,~~$83,250,000, respectively. The Company's trading activities were well within these limits at ~~June 30,~~December 31, 2006. Position limits in trading inventory accounts are monitored on a daily basis. Consolidated position and exposure reports are prepared and distributed to senior management. Limit violations are carefully monitored. Management also monitors inventory levels and trading results, as well as inventory aging, pricing, concentration and securities ratings. For derivatives, primarily interest rate swaps, the Company monitors exposure in its derivatives subsidiary daily based on established limits with respect to a number of factors, including interest rate risk, spread, ratio and basis risk and volatility. These exposures are monitored both on a total portfolio basis and separately for selected maturity periods.

Interest Rate Risk

~~RJA~~The Company is exposed to interest rate risk as a result of maintaining trading inventories of fixed income instruments ~~which are sensitive to changes in interest rates.~~and actively manages this risk using hedging techniques that involve swaps, futures, and U.S. Treasury obligations. The Company monitors, on a daily basis, the Value-at-Risk (“VaR”) in its institutional Fixed Income trading portfolios (cash instruments and interest rate derivatives). VaR is aan appropriate statistical technique for estimating the potential loss in ~~the Company's fixed income portfolio~~trading portfolios due to typical adverse market movements over a specified time horizon ~~and~~with a suitable confidence level.

~~The~~To calculate VaR, the Company uses historical simulation. This approach assumes that historical changes in market conditions are representative of future changes. The simulation is based upon daily market data for ~~calculating VaR. Simulated scenarios were derived based on a one-year observation period, with equal weighting given to~~ the ~~one-day relative change scenarios.~~previous twelve months. VaR is reported at a 99% confidence level, based on a one-day ~~holding period.~~time horizon. This means that the Company ~~would~~could expect to incur losses greater than ~~that~~those predicted by the VaR estimates only once in every 100 trading days, or about 2.5 times a year. During the three months ended December 31 2006, the reported daily loss in the institutional Fixed Income trading portfolio exceeded the predicted VaR one time. This is consistent with the model and its business-as-usual assumptions.

However, ~~shortfalls~~trading losses on a single day ~~can~~could exceed the reported VaR by significant ~~amounts. Shortfalls can also~~amounts in unusually volatile markets and might accumulate over a longer time horizon, such as a number of consecutive trading days. Accordingly, management employs additional interest rate risk controls including position limits, a daily review of trading results, review of the status of aged inventory, independent controls on pricing, monitoring of concentration risk, and by issuer ratings.

3633

The following tables set forth the high, low, and daily average VaR for the Company's overall institutional portfolio during the ~~nine~~three months ended ~~June 30,~~December 31, 2006, with the corresponding dollar value of the Company's portfolio.

Nine months ended June 30, 2006
VaR at
($ in 000's)
High
Low
Daily Average

June 30, 2006
September 30, 2005

Daily VaR $1,251 $312 $762 $553 $ 532
Portfolio Value (net) $303,377 $177,669 $299,775 $407,108 $169,978
Daily VaR as a percent of Daily Portfolio Value 0.41% 0.18% 0.26% 0.14% 0.31%

	Three months ended December 31, 2006			VaR at
($ in 000's)	High	Low	DailyAverage	December 31, 2006	September 30, 2006
Daily VaR	$ 859	$ 366	$ 513	$ 443	$ 483
Related Portfolio Value (net)*	$361,767	$359,999	$405,773	$459,263	$312,917
VaR as a percent of Portfolio Value	0.24%	0.10%	0.13%	0.10%	0.15%

~~The reported P/L loss in~~*Portfolio value achieved on the ~~portfolio exceeded~~day of the ~~VaR one time during the period. The increase in VaR from September 30, 2005 resulted from additional trading inventory.~~VAR calculation.

The modeling of the risk characteristics of trading positions involves a number of assumptions and approximations. While management believes that its assumptions and approximations are reasonable, there is no uniform industry methodology for estimating VaR, and different assumptions or approximations could produce materially different VaR estimates. ~~Given its reliance on historical data,~~As a result, VaR ~~is most effective~~statistics are more reliable when used as indicators of risk levels and trends within a firm than as a basis for inferring differences in estimating risk exposures in markets in which there are no sudden fundamental changes or shifts in market conditions. An inherent limitation of VaR models is that the distribution of past changes in market risk factors may not produce accurate predictions of future market risk, particularly during periods of unusual market events and disruptions. Moreover, VaR calculated for a one-day time horizon does not fully capture the market risk of positions that cannot be liquidated or offset with hedges within one day. Accordingly, management also monitors the risk in its trading activities by establishing position limits and daily review of trading results, inventory aging, pricing, concentration, and securities ratings.risk-taking across firms.

Additional information is discussed under Derivative Financial Instruments in Note 1213 of the Notes to the Condensed Consolidated Financial Statements.

RJBank maintains an earning asset portfolio that is comprised of mortgage, corporate and consumer loans, as well as mortgage-backed securities, securities purchased under resale agreements, and other investments. Those earning assets are funded in part by its obligations to clients, including demand deposits, money market accounts, savings accounts, and certificates of ~~deposit~~deposit; and FHLB advances. Based on the current earning asset portfolio of RJBank, market risk for RJBank is limited primarily to interest rate risk. RJBank analyzes interest rate risk based on forecasted net interest income, which is the net amount of interest received and interest paid, and the net portfolio valuation, both in a range of interest rate scenarios. The following table represents the carrying value of RJBank's assets and liabilities that are subject to market risk. This table does not include financial instruments with limited market risk exposure due to offsetting asset and liability positions, short holding periods or short periods of time until the interest rate resets.

RJBank Financial Instruments with Market Risk (as described above, in 000's):	RJBank Financial Instruments with Market Risk (as described above, in 000's):			RJBank Financial Instruments with Market Risk (as described above, in 000's):

		June 30, 2006	September 30, 2005		December 31, 2006	September 30, 2006

Mortgage-backed securities		$ 12,127	$ 6,716		$ 149,551	$ 151,437
Municipal obligations		0	5
Loans receivable, net		1,139,881	648,649		1,446,722	1,282,504
Total assets with market risk		$1,152,008	$ 655,370		$ 1,596,273	$ 1,433,941


Certificates of deposit		$ 338,366	$ 220,660		$ 242,203	$ 255,360
Federal Home Loan Bank advances		60,000	70,000		50,000	60,000
Interest rate swaps		0	72
Total liabilities with market risk		$ 398,366	$ 290,732		$ 292,203	$ 315,360

~~As noted above, RJBank reviews interest rate risk based on net interest income and impact on RJBank's equity.~~ One of the core objectives of RJBank's Asset/Liability Management Committee is to manage the sensitivity of net interest income to changes in market interest rates. The Asset/Liability Management Committee uses several measures to monitor and limit RJBank's interest rate risk including scenario analysis, interest repricing gap analysis and limits, and net portfolio value limits. ~~Model-based scenario analysis is used to monitor and report the interest rate risk positions, and analyze alternative strategies.~~

~~Net interest income is the net amount of interest received less interest paid. This involves large volumes of contracts and transactions, and numerous different products.~~ Simulation models and estimation techniques are used to assess the sensitivity of the net interest income stream to movements in interest rates. Assumptions about consumer behavior play an important role in these calculations; this is particularly relevant for loans such as mortgages where the client has the right, but not the obligation, to repay before the scheduled maturity. ~~On the liability side, the re-pricing characteristics of deposits are based on estimates since the rates are not coupled to a specified market rate.~~

The sensitivity of net interest income to interest rate conditions is estimated for a variety of scenarios. Assuming an immediate and lasting shift of 100 basis points in the term structure of interest rates, RJBank's sensitivity analysis indicates that an upward movement would decrease RJBank's net interest income by ~~14.08%.~~13.31% in the first year after the rate jump, whereas a downward shift of the same magnitude would increase RJBank's net interest income by ~~11.21%~~1.49%. These sensitivity figures are based on positions as of ~~June 30,~~December 31, 2006, and are subject to certain simplifying assumptions, including that management takes no corrective action.

Equity Price Risk

The Company is exposed to equity price risk as a consequence of making markets in equity securities and the investment activities of RJA and RJ Ltd. The U.S. broker-dealer activities are primarily client-driven, with the objective of meeting clients' needs while earning a trading profit to compensate for the risk associated with carrying inventory. The Company attempts to reduce the risk of loss inherent in its inventory of equity securities by monitoring those security positions constantly throughout each day and establishing position limits. The Company's Canadian broker-dealer has a proprietary trading business with 2827 traders. The average aggregate inventory held for proprietary trading during the ~~quarter-ended June 30,~~three months ended December 31, 2006 was CDN$~~7,466,925.~~6,114,834. The Company's equity securities inventories are priced on a regular basis and there are no material unrecorded gains or losses.

~~Table of Contents~~Index

Item 4. CONTROLS AND PROCEDURES

Disclosure controls are procedures designed to ensure that information required to be disclosed in the Company's reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as the Company's are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in the Company’s internal control over financial reporting during the quarter ended ~~June 30,~~December 31, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~Table of Contents~~Index

PART II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

As previously reported, RJF and RJFS ~~are~~were 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. In July 2005, RJFS paid approximately $24 million in a settlement with approximately 380 claimants in this litigation, representing approximately two-thirds of the outstanding claims. In September 2006, RJFS settled with an additional 150 claimants for a lump sum of $18 million. These settlements effectively extinguish the Company’s liability with the exception of one remaining lawsuit in federal court involving one claimant family group.

~~Table of Contents~~Index

Item 1A. RISK FACTORS

~~See~~There were no changes to Item 1A, “Risk Factors” ~~on pages 11 and 12 of~~included in the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2005.~~2006.

As a result of high levels of storm induced damage over the past two years in Florida and along the Gulf Coast, insurance coverage for wind and flood damage has become harder to obtain and substantially more expensive. As a consequence, the Company has been forced to pay more for the coverage it obtained and self-insure against these risks to a greater degree than in the past.

~~Table of Contents~~

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Reference is made to information contained under “Capital Transactions” in Note 810 of the Notes to Condensed Consolidated Financial Statements for the information required by Part II, Item 2(c).

The Company expects to continue paying cash dividends. However, the payment and rate of dividends on the Company's common stock is subject to several factors including operating results, financial requirements of the Company, compliance with the net worth covenant in the Company's line of credit agreement, and the availability of funds from the Company's subsidiaries, including the broker-dealer subsidiaries, which may be subject to restrictions under the net capital rules of the SEC, NYSE and the IDA; and RJBank, which may be subject to restrictions by federal banking agencies. Such restrictions have never become applicable with respect to the Company's dividend payments. (See Note 911 of the Notes to the Condensed Consolidated Financial Statements for more information on the capital restrictions placed on RJBank and the Company's broker-dealer subsidiaries).

3936

~~Table of Contents~~Index

Item 6. EXHIBITS

~~3(ii)~~		~~Amended and Restated By-laws of Raymond James Financial, Inc. reflecting amendments adopted by the Board of Directors on May 25, 2006, filed herewith.~~

11		Statement Re: Computation of per Share Earnings (The calculation of per share earnings is included in Part I, Item 1 in the Notes to Condensed Consolidated Financial Statements (Earnings Per Share) and is omitted here in accordance with Section (b)(11) of Item 601 of Regulation S-K.).

31.1		Principal Executive Officer Certification as required by Rule 13a-14(a)/15d-14(a), filed herewith.

31.2		Principal Financial Officer Certification as required by Rule 13a-14(a)/15d-14(a), filed herewith.

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,filed herewith.

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,filed herewith.

4037

Index

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		RAYMOND JAMES FINANCIAL, INC.
		(Registrant)




Date: ~~August~~February 9, ~~2006~~2007		/s/ Thomas A. James
		Thomas A. James
		Chairman and Chief
		Executive Officer




		/s/ Jeffrey P. Julien
		Jeffrey P. Julien
		Senior Vice President - Finance
		and Chief Financial
		Officer

			Weighted
		Weighted	Average
		Average	Remaining	Aggregate
	Options For	Exercise	Contractual	Intrinsic
	Shares	Price ($)	Term (Years)	Value ($)
Outstanding at
October 1, 2005	7,050,171	$14.97
Granted	1,965,113	23.91	-	-
Exercised	(803,169)	13.45	-	-
Canceled	(32,954)	15.82
Expired	(2,250)	13.95	-	-
Outstanding at
December 31, 2005	8,176,911	$17.26	3.14	$64,219,903
Granted	31,350	30.13	-	-
Exercised	(632,979)	14.89	-	-
Canceled	(112,099)	18.80
Expired	(5,475)	16.95	-	-
Outstanding at
March 31, 2006	7,457,708	$17.49	3.13	$90,014,615
Granted	40,995	28.91	-	-
Exercised	(135,241)	14.18	-	-
Canceled	(88,407)	17.48
Expired	(4,250)	16.58	-	-
Outstanding at
June 30, 2006	7,270,805	$17.59	2.94	$92,225,250
Options exercisable at
June 30, 2006	1,167,307	$14.20	0.80	$18,761,604

		Weighted
		Average
		Grant Date
	Shares/Units	Fair Value ($)
Nonvested at
October 1, 2005	1,022,043	$16.02
Granted	653,243	21.70
Vested	(43,052)	13.44
Canceled	-	-
Nonvested at
December 31, 2005	1,632,234	$18.35
Granted	219,874	29.41
Vested	(93,202)	14.81
Canceled	(22,703)	19.81
Nonvested at
March 31, 2006	1,736,203	$19.98
Granted	228,594	29.63
Vested	(76,628)	13.47
Canceled	(17,965)	17.94
Nonvested at
June 30, 2006	1,870,204	$21.46

	Nine months ended June 30, 2006			VaR at
($ in 000's)	High	Low	Daily Average	June 30, 2006	September 30, 2005

Daily VaR	$1,251	$312	$762	$553	$ 532
Portfolio Value (net)	$303,377	$177,669	$299,775	$407,108	$169,978
Daily VaR as a percent of Daily Portfolio Value	0.41%	0.18%	0.26%	0.14%	0.31%