UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





Form
      10-Q





X
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE QUARTERLY PERIOD ENDED September 1, 2007TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE TRANSITION PERIOD FROM ______ TO
                _____





Commission
      File No. 1-12879





GRIFFIN
      LAND & NURSERIES, INC.


(Exact
      name of registrant as specified in its charter)





Delaware
            06-0868496(state
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification Number)One
                Rockefeller Plaza, New York, New York
            10020(Address
                of principal executive offices)
            (Zip
                Code)Registrant’s
                Telephone Number including Area Code
            (212)
                218-7910





(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
                 ̈





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.





Large
                accelerated filer     ̈
            Accelerated
                filer   x
            Non-accelerated
                filer   ̈








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


Yes      ̈
            No    x








­­­


Number
      of
      shares of Common Stock outstanding at October 1, 2007:
      5,080,649


1


Griffin
      Land & Nurseries, Inc.


Form
      10-Q


Index








*PART
                I  -*
            
            FINANCIAL
                INFORMATION*ITEM
                1*
            Financial
                StatementsConsolidated
                Statements of Operations (unaudited)13
                and 39 Weeks Ended September 1, 2007 and September 2, 2006
            3Consolidated
                Balance Sheets (unaudited)September
                1, 2007 and December 2, 2006
            4Consolidated
                Statements of Changes in Stockholders’ Equity (unaudited)39
                Weeks Ended September 1, 2007 and September 2, 2006
            5Consolidated
                Statements of Cash Flows (unaudited)39
                Weeks Ended September 1, 2007 and September 2, 2006
            6Notes
                to Consolidated Financial Statements (unaudited)
            7-19*ITEM
                2*
            Management’s
                Discussion and Analysis ofFinancial
                Condition and Results of Operations
            20-33*ITEM
                3*
            Quantitative
                and Qualitative Disclosures About Market Risk
            33*ITEM
                4*
            Controls
                and Procedures
            34*PART
                II  -*
            
            OTHER
                INFORMATION*ITEM
                1*
            Legal
                Proceedings
            34-35*ITEM
                1A*
            Risk
                Factors
            35*ITEM
                6*
            Exhibits
            35-37SIGNATURES
            38


2


**PART
                I**
            **FINANCIAL
                INFORMATION**ITEM
                1.
            FINANCIAL
                STATEMENTS





Griffin
      Land & Nurseries, Inc.


Consolidated
      Statements of Operations


(dollars
      in thousands, except per share data)


(unaudited)


*For
                  the 13 Weeks Ended,*
              
              
              *For
                  the 39 Weeks Ended,*Sept.
                  1, 2007
              
              
              Sept.
                  2, 2006
              
              
              Sept.
                  1, 2007
              
              
              Sept.
                  2, 2006Landscape
                  nursery net sales
              
              $
              4,861
              
              
              $
              5,104
              
              
              $
              24,294
              
              
              $
              27,466Rental
                  revenue and property sales
              
              
              7,287
              
              
              
              12,593
              
              
              
              24,336
              
              
              
              18,513Total
                  revenue
              
              
              12,148
              
              
              
              17,697
              
              
              
              48,630
              
              
              
              45,979Costs
                  of landscape nursery sales
              
              
              4,387
              
              
              
              5,527
              
              
              
              21,174
              
              
              
              25,547Costs
                  related to rental revenue and property sales
              
              
              3,483
              
              
              
              4,830
              
              
              
              10,590
              
              
              
              9,562Total
                  costs of goods sold
              
              
              7,870
              
              
              
              10,357
              
              
              
              31,764
              
              
              
              35,109Gross
                  profit
              
              
              4,278
              
              
              
              7,340
              
              
              
              16,866
              
              
              
              10,870Selling,
                  general and administrative expenses
              
              
              2,592
              
              
              
              3,405
              
              
              
              9,457
              
              
              
              9,320Operating
                  profit
              
              
              1,686
              
              
              
              3,935
              
              
              
              7,409
              
              
              
              1,550Gain
                  on sale of Centaur Media common stock
              
              
              476
              
              
              
              -
              
              
              
              2,873
              
              
              
              -Interest
                  expense
              
              
              (793
              )
              
              
              (732
              )
              
              
              (2,339
              )
              
              
              (2,259
              )Investment
                  income
              
              
              2,105
              
              
              
              584
              
              
              
              3,018
              
              
              
              1,571Income
                  before income tax provision
              
              
              3,474
              
              
              
              3,787
              
              
              
              10,961
              
              
              
              862Income
                  tax provision
              
              
              1,191
              
              
              
              1,188
              
              
              
              3,993
              
              
              
              98Net
                  income
              
              $
              2,283
              
              
              $
              2,599
              
              
              $
              6,968
              
              
              $
              764Basic
                  net income per common share
              
              $
              0.44
              
              
              $
              0.51
              
              
              $
              1.35
              
              
              $
              0.15Diluted
                  net income per common share
              
              $
              0.43
              
              
              $
              0.49
              
              
              $
              1.32
              
              
              $
              0.15





See
      Notes
      to Consolidated Financial Statements*.*




3




Griffin
      Land & Nurseries, Inc.


Consolidated
      Balance Sheets


(dollars
      in thousands, except
      per share data)


(unaudited)


Sept.
                  1, 2007
              
              
              Dec.
                  2, 2006ASSETSCurrent
                  Assets:Cash
                  and cash equivalents
              
              $
              5,011
              
              
              $
              2,265Short-term
                  investments, net
              
              
              26,842
              
              
              
              35,973Accounts
                  receivable, less allowance of $146 and $143
              
              
              4,365
              
              
              
              2,559Inventories,
                  net
              
              
              28,629
              
              
              
              30,579Deferred
                  income taxes
              
              
              1,294
              
              
              
              2,331Other
                  current assets
              
              
              6,567
              
              
              
              7,226Total
                  current assets
              
              
              72,708
              
              
              
              80,933Real
                  estate held for sale or lease, net
              
              
              105,237
              
              
              
              101,544Property
                  and equipment, net
              
              
              8,540
              
              
              
              9,144Investment
                  in Centaur Media, plc
              
              
              13,757
              
              
              
              18,592Other
                  assets
              
              
              12,953
              
              
              
              6,402Total
                  assets
              
              $
              213,195
              
              
              $
              216,615LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  Liabilities:Current
                  portion of long-term debt
              
              $
              2,260
              
              
              $
              1,197Accounts
                  payable and accrued liabilities
              
              
              5,568
              
              
              
              7,813Deferred
                  revenue
              
              
              4,808
              
              
              
              6,245Total
                  current liabilities
              
              
              12,636
              
              
              
              15,255Long-term
                  debt
              
              
              48,739
              
              
              
              50,631Deferred
                  income taxes
              
              
              4,860
              
              
              
              6,990Other
                  noncurrent liabilities
              
              
              4,380
              
              
              
              4,125Total
                  liabilities
              
              
              70,615
              
              
              
              77,001Commitments
                  and contingencies (Note 8)Stockholders'
                  Equity:Common
                  stock, par value $0.01 per share, 10,000,000 sharesauthorized,
                  5,309,232 and 5,177,709 shares issued,respectively,
                  5,151,549 and 5,132,663 sharesoutstanding,
                  respectively
              
              
              53
              
              
              
              52Additional
                  paid-in capital
              
              
              101,415
              
              
              
              98,549Retained
                  earnings
              
              
              39,345
              
              
              
              32,377Accumulated
                  other comprehensive income, net of tax
              
              
              7,196
              
              
              
              9,942Treasury
                  stock, at cost, 157,683 and 45,046 shares, respectively
              
              
              (5,429
              )
              
              
              (1,306
              )Total
                  stockholders' equity
              
              
              142,580
              
              
              
              139,614Total
                  liabilities and stockholders' equity
              
              $
              213,195
              
              
              $
              216,615


See
      Notes
      to Consolidated Financial Statements**.**


4


Griffin
      Land & Nurseries, Inc.


Consolidated
      Statements of Changes in Stockholders’ Equity


For
      the
      Thirty-Nine Weeks Ended September 1, 2007 and September 2, 2006


(dollars
      in thousands)


(unaudited)





**Shares
                  of Common Stock Issued**
              
              **Common
                  Stock**
              
              **Additional Paid-in Capital**
              
              **Retained
                  Earnings**
              
              **Accumulated
                  Other Comprehensive Income**
              
              **Treasury
                  Stock**
              
              **Total**
              
              **Total Comprehensive
                  Income (Loss)**Balance
                  at Dec. 3, 2005
              
              4,999,604
              
              $
              50
              
              $
              95,339
              
              $
              32,809
              
              $
              4,659
              
              $
              -
              
              $
              132,857Exercise
                  of  stock optionsincluding
                  tax benefit of $866
              
              102,605
              
              
              1
              
              
              1,679
              
              
              -
              
              
              -
              
              
              -
              
              
              1,680Stock-based
                  compensationexpense
              
              -
              
              
              -
              
              
              87
              
              
              -
              
              
              -
              
              
              -
              
              
              87Net
                  income
              
              -
              
              
              -
              
              
              -
              
              
              764
              
              
              -
              
              
              -
              
              
              764
              
              $
              764Other
                  comprehensive income
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,682
              
              
              -
              
              
              2,682
              
              
              2,682Balance
                  at Sept. 2, 2006
              
              5,102,209
              
              $
              51
              
              $
              97,105
              
              $
              33,573
              
              $
              7,341
              
              $
              -
              
              $
              138,070
              
              $
              3,446Balance
                  at Dec.  2, 2006
              
              5,177,709
              
              $
              52
              
              $
              98,549
              
              $
              32,377
              
              $
              9,942
              
              $
              (1,306
              )
              $
              139,614Exercise
                  of  stock options,including
                  tax benefit of $949,and
                  shares tendered related tostock
                  options exercised
              
              131,523
              
              
              1
              
              
              2,771
              
              
              -
              
              
              -
              
              
              (2,568
              )
              
              204Stock-based
                  compensationexpense
              
              -
              
              
              -
              
              
              95
              
              
              -
              
              
              -
              
              
              -
              
              
              95Repurchase
                  of common stock
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,555
              )
              
              (1,555
              )Net
                  income
              
              -
              
              
              -
              
              
              -
              
              
              6,968
              
              
              -
              
              
              -
              
              
              6,968
              
              $
              6,968Reclassification
                  for gains onthe sale of Centaur Media, plcincluded in net income
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,868
              )
              
              -
              
              
              (1,868
              )
              
              (1,868
              )Other
                  comprehensive loss
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (878
              )
              
              -
              
              
              (878
              )
              
              (878
              )Balance
                  at Sept. 1, 2007
              
              5,309,232
              
              $
              53
              
              $
              101,415
              
              $
              39,345
              
              $
              7,196
              
              $
              (5,429
              )
              $
              142,580
              
              $
              4,222See
                  Notes to Consolidated Financial Statements.
  5


Griffin
      Land & Nurseries, Inc.


Consolidated
      Statements of Cash Flows


(dollars
      in thousands)


(unaudited)


*For
                  the 39 Weeks Ended,*Sept.
                  1, 2007
              
              
              Sept.
                  2, 2006**Operating
                  activities:**Net
                  income
              
              $
              6,968
              
              
              $
              764Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              
              
              4,308
              
              
              
              3,933Gain
                  on sales of properties
              
              
              (11,307
              )
              
              
              (6,960
              )Gain
                  on sale of common stock in Centaur Media, plc
              
              
              (2,873
              )
              
              
              -Deferred
                  income taxes
              
              
              (620
              )
              
              
              27Taxes
                  in other comprehensive income reclassified into net income
              
              
              1,022
              
              
              
              -Provision
                  for inventory losses
              
              
              655
              
              
              
              727Unrealized
                  loss (gain) on trading securities
              
              
              393
              
              
              
              (154
              )Stock
                  based compensation expense
              
              
              95
              
              
              
              87Amortization
                  of debt issuance costs
              
              
              75
              
              
              
              62Provision
                  for bad debts
              
              
              14
              
              
              
              83Equity
                  income from investment in agricultural cooperative
              
              
              (7
              )
              
              
              (151
              )Changes
                  in assets and liabilities:Short-term
                  investments
              
              
              8,738
              
              
              
              9,388Accounts
                  receivable
              
              
              (1,820
              )
              
              
              (1,843
              )Inventories
              
              
              1,295
              
              
              
              2,932Other
                  current assets
              
              
              653
              
              
              
              (1,500
              )Accounts
                  payable and accrued liabilities
              
              
              (1,625
              )
              
              
              (146
              )Payment
                  of employee withholding taxes on stock options exercised
              
              
              (994
              )
              
              
              -Mortgage
                  escrow accounts
              
              
              (677
              )
              
              
              (28
              )Deferred
                  revenue
              
              
              608
              
              
              
              1,002Other,
                  net
              
              
              (214
              )
              
              
              (92
              )Net
                  cash provided by operating activities
              
              
              4,687
              
              
              
              8,131**Investing
                  activities:**Proceeds
                  from sales of properties, net of expenses
              
              
              11,361
              
              
              
              14,009Increase
                  in cash held in escrow by a third party
              
              
              (6,400
              )
              
              
              -Additions
                  to real estate held for sale or lease
              
              
              (8,895
              )
              
              
              (21,114
              )Proceeds
                  from sale of common stock in Centaur Media, plc
              
              
              3,467
              
              
              
              -Additions
                  to property and equipment
              
              
              (398
              )
              
              
              (342
              )Proceeds
                  from distribution from Shemin Nurseries Holding Corp.
              
              
              189
              
              
              
              -Net
                  cash used in investing activities
              
              
              (676
              )
              
              
              (7,447
              )**Financing
                  activities:**Repurchase
                  of common stock
              
              
              (1,555
              )
              
              
              -Tax
                  benefit of stock options exercised
              
              
              949
              
              
              
              866Payments
                  of debt
              
              
              (908
              )
              
              
              (736
              )Exercise
                  of stock options
              
              
              249
              
              
              
              814Net
                  cash (used in) provided by financing activities
              
              
              (1,265
              )
              
              
              944Net
                  increase in cash and cash equivalents
              
              
              2,746
              
              
              
              1,628Cash
                  and cash equivalents at beginning of period
              
              
              2,265
              
              
              
              1,207Cash
                  and cash equivalents at end of period
              
              $
              5,011
              
              
              $
              2,835


See
      Notes
      to Consolidated Financial Statements.


6


Griffin
      Land & Nurseries, Inc.


Notes
      to
      Consolidated Financial Statements


(dollars
      in thousands unless otherwise noted, except per share data)


(unaudited)







1.      Basis
      of Presentation







The
      accompanying unaudited consolidated financial statements of Griffin Land &
Nurseries, Inc. (“Griffin”) include the accounts of Griffin’s real estate
      division (“Griffin Land”) and Griffin’s wholly-owned subsidiary in the landscape
      nursery business, Imperial Nurseries, Inc. (“Imperial Nurseries”), and have been
      prepared in conformity with the standards of accounting measurement set forth
      in
      Accounting Principles Board Opinion No. 28 and amendments thereto adopted by
      the
      Financial Accounting Standards Board (“FASB”). The accompanying financial
      statements have also been prepared in accordance with the accounting policies
      stated in Griffin’s audited financial statements for the fiscal year ended
      December 2, 2006 included in Griffin’s Report on Form 10-K as filed with the
      Securities and Exchange Commission, and should be read in conjunction with
      the
      Notes to Financial Statements appearing in that report. All adjustments,
      comprising only normal recurring adjustments, which are, in the opinion of
      management, necessary for a fair presentation of results for the interim
      periods, have been reflected and all intercompany transactions have been
      eliminated.  The consolidated balance sheet data as of December 2,
      2006 was derived from Griffin’s audited financial statements but does not
      include all disclosures required by accounting principles generally accepted
      in
      the United States of America.





The
      results of operations for the thirteen and thirty-nine weeks ended September
      1,
      2007 are not necessarily indicative of the results to be expected for the full
      year. Certain amounts from the prior year have been reclassified to conform
      to
      the current presentation.





In
      fiscal 2006, Griffin adopted SFAS No. 123(R) “Share-Based Payment” (“SFAS No.
      123(R)”) using the modified prospective method of adoption. Prior to the
      thirty-nine weeks ended September 2, 2006, Griffin accounted for stock options
      under the recognition and measurement principles of Accounting Principles Board
      Opinion No. 25, “Accounting for Stock Issued to Employees.”





2.      Recent
      Accounting Pronouncements






In
      June
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes” (“Fin No. 48”).  The interpretation clarifies the
      accounting for uncertainty in income taxes recognized in a company's financial
      statements in accordance with Statement of Financial Accounting Standards No.
      109, “Accounting for Income Taxes.”  Specifically, Fin No. 48
      prescribes a recognition threshold and a measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return.  Fin No. 48 also provides guidance on the
      related derecognition, classification, interest and penalties, accounting for
      interim periods, disclosure and transition of uncertain tax
      positions.  Fin No. 48 is effective for fiscal years beginning after
      December 15, 2006, which for Griffin will be fiscal 2008.  Griffin is
      evaluating the impact of this new pronouncement on its consolidated financial
      statements.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements.”  This new standard defines fair value, establishes a
      framework for measuring fair value under generally accepted accounting
      principles and expands disclosures about fair value
      measurements.  This statement does not require any new fair value
      measurements but provides guidance in determining fair value measurements
      presently used in the preparation of financial statements.  This new
      standard is effective for financial statements issued for fiscal years beginning
      after November 15, 2007, which for Griffin will be fiscal






7
 2008.  Griffin
        is evaluating the impact of this new pronouncement on its consolidated financial
        statements.





In
      September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
      No. 87, 88, 106 and 132(R).”  This new standard requires employers to
      recognize the overfunded or underfunded status of a defined benefit
      postretirement plan as an asset or liability in its statement of financial
      position and to recognize changes in that funded status in the year in which
      the
      changes occur through comprehensive income.  For employers that have
      equity securities that trade in a public market, this new standard requires
      the
      recognition of the funded status of a defined benefit postretirement plan and
      requires disclosures as of the end of the fiscal year ending after December
      15,
      2006.  Griffin does not have a defined benefit pension plan and its
      defined benefit postretirement benefits plan is unfunded and is included as
      a
      liability on Griffin’s balance sheet.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities-Including an amendment of FASB
      Statement No. 115.”  This new standard allows an entity the
      irrevocable option to elect fair value for the initial and subsequent
      measurement for certain financial assets and liabilities under an
      instrument-by-instrument election.  Subsequent measurements for the
      financial assets and liabilities an entity elects to fair value will be
      recognized in earnings.  This statement also establishes additional
      disclosure requirements and is effective for fiscal years beginning after
      November 15, 2007, which for Griffin will be fiscal 2008.  Griffin is
      evaluating the impact of this new pronouncement on its consolidated financial
      statements.










3.      Industry
      Segment Information






Griffin’s
      reportable segments are defined by their products and services, and are
      comprised of the landscape nursery and real estate
      segments.  Management operates and receives reporting based upon these
      segments.  Griffin has no operations outside the United
      States.  Griffin’s export sales and transactions between segments are
      not material.




8


*For
                  the 13 Weeks Ended,*
              
              
              *For
                  the 39 Weeks Ended,*Sept.
                  1, 2007
              
              
              Sept.
                  2, 2006
              
              
              Sept.
                  1, 2007
              
              
              Sept.
                  2, 2006Total
                  revenue:Landscape
                  nursery net sales
              
              $
              4,861
              
              
              $
              5,104
              
              
              $
              24,294
              
              
              $
              27,466Rental
                  revenue and property sales
              
              
              7,287
              
              
              
              12,593
              
              
              
              24,336
              
              
              
              18,513$
              12,148
              
              
              $
              17,697
              
              
              $
              48,630
              
              
              $
              45,979Operating
                  profit (loss):Landscape
                  nursery
              
              $
              (679
              )
              
              $
              (1,572
              )
              
              $
              (884
              )
              
              $
              (1,986
              )Real
                  estate
              
              
              3,192
              
              
              
              6,776
              
              
              
              11,701
              
              
              
              6,612Industry
                  segment totals
              
              
              2,513
              
              
              
              5,204
              
              
              
              10,817
              
              
              
              4,626General
                  corporate expense
              
              
              (827
              )
              
              
              (1,269
              )
              
              
              (3,408
              )
              
              
              (3,076
              )Operating
                  profit
              
              
              1,686
              
              
              
              3,935
              
              
              
              7,409
              
              
              
              1,550Gain
                  on sale of Centaur Media common stock
              
              
              476
              
              
              
              -
              
              
              
              2,873
              
              
              
              -Interest
                  expense
              
              
              (793
              )
              
              
              (732
              )
              
              
              (2,339
              )
              
              
              (2,259
              )Investment
                  income
              
              
              2,105
              
              
              
              584
              
              
              
              3,018
              
              
              
              1,571Income
                  before income tax provision
              
              $
              3,474
              
              
              $
              3,787
              
              
              $
              10,961
              
              
              $
              862
    Identifiable
                  assets:
              
              Sept.
                  1, 2007
              
              
              Dec.
                  2, 2006Landscape
                  nursery
              
              $
              41,468
              
              
              $
              42,065Real
                  estate
              
              
              121,507
              
              
              
              110,384Industry
                  segment totals
              
              
              162,975
              
              
              
              152,449General
                  corporate (consists primarily of investments)
              
              
              50,220
              
              
              
              64,166Total
                  assets
              
              $
              213,195
              
              
              $
              216,615




Revenue
      of the real estate segment for
      the thirteen and thirty-nine weeks ended September 1, 2007 includes property
      sales revenue of $3,798 and $13,895, respectively.  Revenue of the
      real estate segment for the thirteen and thirty-nine weeks ended September
      2,
      2006 includes property sales revenue of $9,633.


4.      Long-Term
      Debt





Long-term
      debt
      includes:


9





Sept.
                  1, 2007
              
              
              Dec.
                  2, 2006Nonrecourse
                  mortgages:8.54%,
                  due July 1, 2009
              
              $
              7,608
              
              
              $
              7,6816.08%,
                  due January 1, 2013
              
              
              8,882
              
              
              
              9,0426.30%,
                  due May 1, 2014
              
              
              1,111
              
              
              
              1,2085.73%,
                  due July 1, 2015
              
              
              20,794
              
              
              
              20,9838.13%,
                  due April 1, 2016
              
              
              5,341
              
              
              
              5,4977.0%,
                  due October 1, 2017
              
              
              7,023
              
              
              
              7,139Total
                  nonrecourse mortgages
              
              
              50,759
              
              
              
              51,550Capital
                  leases
              
              
              240
              
              
              
              278Total
              
              
              50,999
              
              
              
              51,828Less:
                  current portion
              
              
              (2,260
              )
              
              
              (1,197
              )Total
                  long-term debt
              
              $
              48,739
              
              
              $
              50,631


Griffin
        Land is currently not in compliance with the debt service coverage ratio
        requirement of its 6.08% mortgage due January 1, 2013, collateralized by
        two
        multi-story office buildings located in Griffin Center in Windsor,
        Connecticut.  In connection with a voluntary $1 million prepayment of
        principal on this mortgage that is expected to be made in the 2007 fourth
        quarter, the lender will defer the debt service coverage requirement until
        the
        beginning of fiscal 2009.  As a result of the expected prepayment,
        Griffin Land will incur a prepayment penalty of $20 to be paid at the maturity
        of the mortgage.  The loan’s future monthly payments will be adjusted
        as a result of this prepayment, but the loan’s interest rate and maturity date
        will not change as a result of this prepayment.
  At
        September 1, 2007 and December 2, 2006, the fair values of Griffin's mortgages
        were $50.6 million and $54.0 million, respectively. Fair value is based on
        the
        present value of future cash flows discounted at estimated borrowing rates
        for
        comparable risks, maturities and collateral.
 
 5.      Stock
        Options
 
 The
        Griffin Land & Nurseries, Inc. 1997 Stock Option Plan (the
        "Griffin Stock Option Plan"), adopted in 1997 and subsequently amended, makes
        available a total of 1,250,000 options to purchase shares of Griffin common
        stock. The Griffin Stock Option Plan is administered by the Compensation
        Committee of the Board of Directors of Griffin. Options granted under the
        Griffin Stock Option Plan may be either incentive stock options or non-qualified
        stock options issued at market value on the date approved by the Board of
        Directors of Griffin. Vesting of all of Griffin's previously issued stock
        options is solely based upon service requirements and does not contain market
        or
        performance conditions.
 
 Stock
        options issued expire ten years
        from the grant date.  Stock options issued to independent directors
        upon their initial election to the board of directors are fully exercisable
        immediately upon the date of the option grant. Stock options issued to
        independent directors upon their reelection to the board of directors vest
        on
        the second anniversary from the date of grant. Stock options issued to employees
        vest in equal installments on the third, fourth and fifth anniversaries from
        the
        date of grant. None of the stock options outstanding at September 1, 2007
        may be
        exercised as stock appreciation rights.
 
 There
        were 4,208 and 14,140 stock
        options granted during the thirty-nine weeks ended September 1, 2007 and
        September 2, 2006, respectively.  In the thirty-nine weeks ended
        September 1, 2007, the fair value of the stock options granted was
        $22.17.  In the thirty-nine weeks ended September 2, 2006, the fair
        values of the stock options granted were $18.38 for 5,140 stock options and
        $15.98 for 9,000 stock options.  The fair values of the stock options
        granted were estimated as of the dates of grant using the
   10
  Black-Scholes
        model.  Assumptions used in determining the fair values of the stock
        options granted were as follows:
 
 *For
                    the 39 Weeks Ended,*Sept.
                    1, 2007
                
                Sept.
                    2, 2006Expected
                    volatility
                43.43%
                
                40.83%
                    to 43.31%Risk
                    free interest rate
                4.65%
                
                5.03%
                    to 5.10%Option
                    term
                8.8
                    years
                
                7
                    to 8.8 yearsDividend
                    yield
                none
                
                none
 Activity
        under the Griffin Stock Option Plan is summarized as follows:
 *For
                    the 39 Weeks Ended,*September
                    1, 2007
                
                
                September
                    2, 2006**Vested
                    Options**
                
                Number
                    of Shares
                
                
                Weighted
                    Avg. Exercise Price
                
                
                Number
                    of Shares
                
                
                Weighted
                    Avg. Exercise PriceOutstanding
                    at beginning of period
                
                
                347,300
                
                
                $
                13.84
                
                
                
                503,857
                
                
                $
                12.65Exercised
                
                
                (131,523
                )
                
                
                13.86
                
                
                
                (102,605
                )
                
                
                7.94Vested
                
                
                14,601
                
                
                
                19.71
                
                
                
                21,548
                
                
                
                16.59Outstanding
                    at end of period
                
                
                230,378
                
                
                
                14.21
                
                
                
                422,800
                
                
                
                13.99
 Range
                      of Exercise Prices for Vested Options
                  
                  Outstanding
                      at  Sept. 1, 2007
                  
                  Weighted
                      Avg. Exercise Price
                  
                  Weighted
                      Avg. Remaining Contractual Life
                    (in
                      years)
                  
                  Total
                      Fair Value
                    (in
                      thousands)$11.00-$18.00
                  
                  
                  216,892
                  
                  
                  $
                  13.52
                  
                  
                  
                  2.4
                  
                  
                  $
                  1,175Over
                    $24.00
                  
                  
                  13,486
                  
                  
                  
                  25.21
                  
                  
                  
                  7.2
                  
                  
                  
                  154230,378
                  
                  
                  
                  14.21
                  
                  
                  
                  2.7
                  
                  
                  $
                  1,329
 *For
                    the 39 Weeks Ended,*September
                    1, 2007
                
                
                September
                    2, 2006**Nonvested
                    Options**
                
                Number
                    of Shares
                
                
                Weighted
                    Avg. Exercise Price
                
                
                Number
                    of Shares
                
                
                Weighted
                    Avg. Exercise PriceNonvested
                    at beginning of period
                
                
                28,741
                
                
                $
                25.27
                
                
                
                36,816
                
                
                $
                17.78Granted
                
                
                4,208
                
                
                
                38.00
                
                
                
                14,140
                
                
                
                31.01Vested
                
                
                (14,601
                )
                
                
                19.71
                
                
                
                (21,548
                )
                
                
                16.59Forfeited
                
                
                -
                
                
                
                -
                
                
                
                (667
                )
                
                
                14.35Nonvested
                    at end of period
                
                
                18,348
                
                
                
                32.62
                
                
                
                28,741
                
                
                
                25.27
   11
   Range
                    of Exercise Prices for Nonvested Options
                
                Outstanding
                    at  Sept. 1, 2007
                
                Weighted
                    Avg. Exercise Price
                
                Weighted
                    Avg. Remaining Contractual Life
                  (in
                    years)
                
                Total
                    Fair Value
                  (in
                    thousands)Over
                    $24.00
                
                
                18,348
                
                
                $
                32.62
                
                
                
                9.0
                
                
                $
                332
   Number
                    of option holders at September 1, 2007
                
                
                19
   Compensation
          cost recognized in the
          thirteen weeks ended September 1, 2007 and September 2, 2006 was $30 and
          $34,
          respectively, with related tax benefits of $8 and $10,
          respectively.  Compensation cost recognized in the thirty-nine weeks
          ended September 1, 2007 and September 2, 2006 was $95 and $87, respectively,
          with related tax benefits of $25 and $27, respectively.
 
 As
          of September 1, 2007, there was $30
          of unrecognized compensation cost related to nonvested stock options that
          will
          be recognized during the remainder of fiscal 2007, $94 of unrecognized
          compensation cost related to nonvested stock options that will be recognized
          in
          fiscal 2008, $43 of unrecognized compensation cost related to nonvested
          stock
          options that will be recognized in fiscal 2009 and a total of $17 of
          unrecognized compensation cost related to nonvested stock options that
          will be
          recognized in fiscal years 2010 and 2011.  The total fair value of
          shares vested during the thirty-nine weeks ended September 1, 2007 and
          September
          2, 2006 was $130 and $161, respectively.
 
 
 6.      Per
          Share Results
  Basic
          and
          diluted per share results were based on the following:
 
 *For
                    the 13 Weeks Ended,*
                
                
                *For
                    the 39 Weeks Ended,*Sept.
                    1, 2007
                
                
                Sept.
                    2, 2006
                
                
                Sept.
                    1, 2007
                
                
                Sept.
                    2, 2006Net
                    income as reported for computationof basic and diluted per share results
                
                $
                2,283
                
                
                $
                2,599
                
                
                $
                6,968
                
                
                $
                764Weighted
                    average shares outstanding forcomputation
                    of basic per share results
                
                
                5,151,000
                
                
                
                5,099,000
                
                
                
                5,145,000
                
                
                
                5,072,000Incremental
                    shares from assumed exerciseof
                    Griffin stock options
                
                
                103,000
                
                
                
                168,000
                
                
                
                129,000
                
                
                
                182,000Weighted
                    average shares outstanding forcomputation
                    of diluted per share results
                
                
                5,254,000
                
                
                
                5,267,000
                
                
                
                5,274,000
                
                
                
                5,254,000
 
 12
   7.      Supplemental
          Financial Statement Information
  
 *Investments*
 
 Griffin's
          short-term investments are
          comprised of debt securities and are accounted for as trading securities
          under
          SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
          Securities.”   Accordingly, the securities are recorded at their
          fair values based upon the quoted market prices of those investments at
          the
          balance sheet dates, and net realized and unrealized gains and losses on
          those
          investments are included in pretax income (loss).  At September 1,
          2007 and December 2, 2006, $0.8 million and $0.4 million, respectively,
          of
          Griffin’s short-term investments were being used as collateral for letters of
          credit of Griffin Land.  The composition of short-term investments at
          September 1, 2007 and December 2, 2006 is as follows:
 
 *September
                      1, 2007*
                  
                  
                  *December
                      2, 2006*Cost
                  
                  
                  Fair
                      Value
                  
                  
                  Cost
                  
                  
                  Fair
                      ValueU.S.
                      Treasury securities
                  
                  $
                  20,864
                  
                  
                  $
                  20,900
                  
                  
                  $
                  -
                  
                  
                  $
                  -Federal
                      agency securities
                  
                  
                  5,132
                  
                  
                  
                  5,189
                  
                  
                  
                  12,289
                  
                  
                  
                  12,440Certificates
                      of deposit
                  
                  
                  753
                  
                  
                  
                  753
                  
                  
                  
                  9,069
                  
                  
                  
                  9,342Commercial
                      paper
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  14,129
                  
                  
                  
                  14,191Total
                      short-term investments
                  
                  $
                  26,749
                  
                  
                  $
                  26,842
                  
                  
                  $
                  35,487
                  
                  
                  $
                  35,973
 
 Investment
          income for the thirteen and
          thirty-nine weeks ended September 1, 2007 and September 2, 2006
          includes:
 *For
                      the 13 Weeks Ended,*
                  
                  
                  *For
                      the 39 Weeks Ended,*Sept.
                      1, 2007
                  
                  
                  Sept.
                      2, 2006
                  
                  
                  Sept.
                      1, 2007
                  
                  
                  Sept.
                      2, 2006Dividend
                      income from Shemin Nurseries Holding Corp.
                  
                  $
                  1,628
                  
                  
                  $
                  -
                  
                  
                  $
                  1,628
                  
                  
                  $
                  -Interest
                      and dividend income from short-term investments
                  
                  
                  158
                  
                  
                  
                  180
                  
                  
                  
                  369
                  
                  
                  
                  315Net
                      realized gains on the sales of short-term investments
                  
                  
                  411
                  
                  
                  
                  397
                  
                  
                  
                  1,407
                  
                  
                  
                  951Net
                      unrealized (loss) gain on short-term investments
                  
                  
                  (92
                  )
                  
                  
                  7
                  
                  
                  
                  (393
                  )
                  
                  
                  154Other
                      investment income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7
                  
                  
                  
                  151$
                  2,105
                  
                  
                  $
                  584
                  
                  
                  $
                  3,018
                  
                  
                  $
                  1,571
 Included
          in investment income in the
          thirteen and thirty-nine weeks ended September 1, 2007 is $1.6 million
          of a
          total of $1.8 million in cash received from Shemin Nurseries Holding Corp.
          (“SNHC”).  The amount reported as dividend income is based on the
          amount of cumulative earnings of SNHC, with the balance of the amount received
          from SNHC reported as a return of investment.  After this transaction,
          Griffin’s remaining investment in SNHC is $0.3 million and is included in other
          assets on Griffin’s
 
 13
 
 consolidated
          balance sheet.  Griffin, which holds approximately 14% of the
          outstanding common stock of SNHC, accounts for its investment in SNHC under
          the
          cost method of accounting for investments.
 
 Other
          investment income in the
          thirty-nine weeks ended September 2, 2006 reflects $151, before taxes,
          as
          Griffin’s share of the cumulative undistributed equity income from an investment
          in an agricultural cooperative, in which Griffin held a 25% interest, that
          manufactures and sells liquid fertilizer to its members who are growers
          of
          landscape nursery products.  Annual patronage rebates from this
          investment are accounted for as a reduction of the cost of landscape nursery
          sales.  Because this investment had not been accounted for in periods
          prior to the thirty-nine weeks ended September 2, 2006, the cumulative
          effect
          was recorded as other investment income in the thirty-nine weeks ended
          September
          2, 2006.  Management believes that the amount recorded was immaterial
          to annual periods.
 
 *Deferred
          Revenue on Land Sale*
 
 In
          fiscal
          2006, Griffin sold 130 acres of undeveloped land in the New England Tradeport
          (“Tradeport”), Griffin’s industrial park located in Windsor and East Granby,
          Connecticut, for cash proceeds of $13.0 million.  As provided in the
          terms of the contract for the sale of the land, and as required under the
          State
          Traffic Commission Certificate covering the area in Tradeport located in
          Windsor, certain improvements to existing roads were required.  The
          cost of these improvements is the responsibility of Griffin Land, however,
          a
          portion of the costs will either be reimbursed from the purchaser of the
          land or
          performed by the town.  As a result of Griffin Land’s continuing
          involvement with the required improvements to the existing roads, this
          land sale
          was accounted for under the percentage of completion
          method.  Accordingly, the revenue and the pretax gain on the sale are
          being recognized on a pro rata basis in a ratio equal to the percentage
          of the
          total costs incurred to the total anticipated costs of sale, including
          the
          allocated costs of the required improvements to existing roads. Costs included
          in determining the percentage of completion are the cost of the land sold,
          allocated master planning costs of Tradeport, selling and transaction costs
          and
          estimated future costs related to the land sold.
 
 In
          the
          thirteen weeks ended September 1, 2007, management reduced its estimate
          of the
          total costs to be incurred to complete the required improvements due to
          changes
          to the design of certain portions of the required improvements.  As a
          result, the total projected pretax gain on this transaction was increased
          from
          $9.7 million to $10.2 million, and the percentage of completion through
          September 1, 2007 increased as a result of the reduction of the expected
          total
          costs.  As of September 1, 2007, approximately 75% of the total costs
          related to this transaction had been incurred, therefore, from the date
          of the
          transaction through September 1, 2007, 75% of the total revenue and pretax
          gain
          on the sale have been recognized in Griffin’s statements of
          operations.  Griffin’s statements of operations for the thirteen and
          thirty-nine weeks ended September 1, 2007 include revenue of $1.7 million
          and
          $1.8 million, respectively, and a pretax gain of $1.6 million and $1.7
          million,
          respectively, from this land sale.  Griffin’s fiscal 2006 statement of
          operations included revenue of $7.9 million and a pretax gain of $5.9 million
          from this land sale.  The balance of the revenue and the pretax gain
          on sale will be recognized as the remaining costs, principally the required
          roadwork improvements, are incurred, which is expected to take place over
          the
          next nine months.  Included on Griffin’s balance sheet as of September
          1, 2007 is deferred revenue of approximately $3.3 million that will be
          recognized as the road improvements are completed.  Management has
          used its best estimates, based on industry knowledge and experience, in
          projecting the total costs of the required road improvements, however,
          increases
          or decreases in projected future costs from current estimated amounts would
          reduce or increase the amount of gain to be recognized in future
          periods.
 
 14
 
 *Accumulated
          Other Comprehensive
          Income*
  
 In
          the thirteen weeks ended September
          1, 2007, Griffin sold 200,000 shares that it held in Centaur Media, plc
          (“Centaur Media”) for proceeds of $0.6 million.  In the first six
          months of fiscal 2007, Griffin sold 1,000,000 shares of Centaur Media for
          proceeds of $2.9 million.  As of September 1, 2007, Griffin holds
          5,277,150 shares of the 6,477,150 shares in Centaur Media that it held
          at the
          beginning of this year.  Griffin’s investment in Centaur Media is
          accounted for as an available-for-sale security under SFAS No. 115 “Accounting
          for Investments.”  Accordingly, the investment in Centaur Media is
          carried at its fair value on Griffin’s consolidated balance sheet, with
          increases or decreases recorded, net of tax, in other comprehensive
          income.  Upon the sale of shares in Centaur Media, the change, net of
          tax, in the value of the shares of Centaur Media that were sold during
          the time
          Griffin held those shares is reclassified from accumulated other comprehensive
          income and included in Griffin’s net income.
 
 Changes
          in accumulated other
          comprehensive incomefor the thirty-nine
          weeks
          ended September 1, 2007 and September 2, 2006 consist of the
          following:
 
 *For
                      the 39 Weeks Ended,*Sept.
                      1, 2007
                  
                  
                  Sept.
                      2, 2006Balance
                      at beginning of period
                  
                  $
                  9,942
                  
                  
                  $
                  4,659Reclassification
                      to recognize sale of shares and relatedgains
                      on Centaur Media, plc included in net income,net
                      of tax provision of $1,022
                  
                  
                  (1,868
                  )
                  
                  
                  -(Decrease)
                      increase in fair value at end of period of Centaur Mediaplc,
                      net of tax benefit of $551 and tax provision of $982,
                      respectively
                  
                  
                  (1,024
                  )
                  
                  
                  1,824Increase
                      in value of Centaur Media, plc, due to foreign currencyexchange
                      rate changes, net of tax provision of $78 and $461,respectively
                  
                  
                  146
                  
                  
                  
                  858Balance
                      at end of period
                  
                  $
                  7,196
                  
                  
                  $
                  7,341
 *Treasury
          Stock*
 
 On
          May 10, 2007, Griffin repurchased
          42,000 of its outstanding shares for approximately $1.6
          million.  Also, thus far this year, Griffin has received 70,637 shares
          of its common stock in connection with the exercise of stock options and
          for
          reimbursement of income tax withholdings related to those stock option
          exercises, which, together, increased treasury stock by approximately $2.6
          million.  Griffin remitted approximately $1.0 million to the federal,
          state and municipal governments on behalf of certain employees for the
          applicable withholding taxes related to those stock option
          exercises.
 
 *Supplemental
          Cash Flow Information*
 
 Included
          in accounts payable and
          accrued liabilities at September 1, 2007 and December 2, 2006 were $1,262
          and
          $1,882, respectively, for additions to real estate held for sale or
          lease.  Accounts payable and accrued liabilities related to additions
          to real estate held for sale or lease decreased $620 in the thirty-nine
          weeks ended September 1, 2007 and increased $1,827 in the thirty-nine weeks
          ended September 2, 2006.
 
 Griffin
          incurred new capital lease obligations of $79 and $84, respectively, in
          the
          thirty-nine weeks ended September 1, 2007 and September 2, 2006.
 
 15
 
 
 *Inventories*
 
 Inventories
          consist of:
 Sept.
                      1, 2007
                  
                  
                  Dec.
                      2, 2006Nursery
                      stock
                  
                  $
                  27,704
                  
                  
                  $
                  29,415Materials
                      and supplies
                  
                  
                  1,907
                  
                  
                  
                  2,37229,611
                  
                  
                  
                  31,787Reserves
                  
                  
                  (982
                  )
                  
                  
                  (1,208
                  )$
                  28,629
                  
                  
                  $
                  30,579
 
 *Property
          and
          Equipment*
 
 Property
          and equipment consist
          of:
 Estimated Useful
                      Lives
                  
                  Sept.
                      1, 2007
                  
                  
                  Dec.
                      2, 2006Land
                  
                  
                  $
                  674
                  
                  
                  $
                  674Land
                      improvements
                  10
                      to 20 years
                  
                  
                  5,507
                  
                  
                  
                  5,478Buildings
                      and improvements
                  10
                      to 40 years
                  
                  
                  3,060
                  
                  
                  
                  3,060Machinery
                      and equipment
                  3
                      to 20 years
                  
                  
                  17,389
                  
                  
                  
                  17,23126,630
                  
                  
                  
                  26,443Accumulated
                      depreciation
                  
                  
                  
                  (18,090
                  )
                  
                  
                  (17,299
                  )$
                  8,540
                  
                  
                  $
                  9,144
 
 *Real
          Estate Held for Sale or
          Lease*
 
 Real
          estate held for sale or lease
          consists of:
 
 
 16
 
 September
                    1, 2007Estimated Useful
                    Lives
                
                Held
                    for Sale
                
                
                Held
                    for Lease
                
                
                TotalLand
                
                
                $
                1,696
                
                
                $
                6,437
                
                
                $
                8,133Land
                    improvements
                15
                    years
                
                
                12
                
                
                
                6,113
                
                
                
                6,125Buildings
                    and improvements
                10
                    to 40 years
                
                
                -
                
                
                
                88,380
                
                
                
                88,380Tenant
                    improvements
                Shorter
                    of useful life or terms of related lease
                
                
                -
                
                
                
                9,596
                
                
                
                9,596Development
                    costs
                
                
                
                6,704
                
                
                
                11,319
                
                
                
                18,0238,412
                
                
                
                121,845
                
                
                
                130,257Accumulated
                    depreciation
                
                
                
                -
                
                
                
                (25,020
                )
                
                
                (25,020
                )$
                8,412
                
                
                $
                96,825
                
                
                $
                105,237
 
 December
                    2, 2006Estimated Useful
                    Lives
                
                Held
                    for Sale
                
                
                Held
                    for Lease
                
                
                TotalLand
                
                
                $
                1,720
                
                
                $
                6,396
                
                
                $
                8,116Land
                    improvements
                15
                    years
                
                
                12
                
                
                
                5,614
                
                
                
                5,626Buildings
                    and improvements
                10
                    to 40 years
                
                
                -
                
                
                
                81,857
                
                
                
                81,857Tenant
                    improvements
                Shorter
                    of useful life or terms of related lease
                
                
                -
                
                
                
                9,034
                
                
                
                9,034Development
                    costs
                
                
                
                7,179
                
                
                
                12,056
                
                
                
                19,2358,911
                
                
                
                114,957
                
                
                
                123,868Accumulated
                    depreciation
                
                
                
                -
                
                
                
                (22,324
                )
                
                
                (22,324
                )$
                8,911
                
                
                $
                92,633
                
                
                $
                101,544
 
 *Other
          Assets*
 
 Included
          in other assets at September
          1, 2007 is restricted cash of $6.4 million reflecting the net cash proceeds
          from
          a land sale completed earlier this year.  The cash is being held in
          escrow by a third-party, on behalf of Griffin, potentially to acquire a
          property
          in connection with a Section 1031 exchange for income tax
          purposes.  If completed, the Section 1031 exchange would defer the
          payment of income taxes related to all or a portion of the gain on the
          property
          sold.  If the acquisition of a property for a Section 1031 exchange is
          not completed, the cash proceeds from the land sale will be remitted to
          Griffin.
 
 *Income
          Taxes*
 
 Griffin’s
          effective income tax rates
          were 34.3% and 36.4%, respectively, in the thirteen and thirty-nine week
          periods
          ended September 1, 2007 as compared to 31.4% and 11.4%, respectively, in
          the
          thirteen and thirty-nine week periods ended September 2, 2006.  The
          effective tax rates in the thirteen and thirty-nine weeks ended September
          1,
          2007 reflect the statutory rate of 35% adjusted for state income taxes
          and
          permanent differences between book and taxable income.  The effective
          tax rates used in the
 
 17
 
 interim
          periods are based on management’s projections for the balance of the
          year.  To the extent that actual results differ from those
          projections, the effective income tax rate may change.
 
 A
          deferred tax asset of $473 and
          a****deferred tax liability of $1,443 were included as a
          credit and a charge, respectively, to other comprehensive income in the
          thirty-nine weeks ended September 1, 2007 and September 2, 2006, respectively,
          related to the mark to market adjustments on Griffin’s investment in Centaur
          Media.
 
 *Postretirement
          Benefits*
 
 Griffin
          maintains a postretirement
          benefits program which provides principally health and life insurance benefits
          to certain of its retirees. The liability for postretirement benefits is
          included in other noncurrent liabilities on Griffin’s consolidated balance
          sheets. Because Griffin's obligation for retiree medical benefits is fixed
          under
          the terms of its postretirement benefits program, any increase in the medical
          cost trend would have no effect on the accumulated postretirement benefit
          obligation, service cost or interest cost. Griffin's postretirement benefits
          are
          unfunded, with benefits to be paid from Griffin's general
          assets.  Griffin's contributions to the program for the thirty-nine
          weeks ended September 1, 2007 and September 2, 2006 were $7 and $9,
          respectively, with an expected contribution of $10 for the fiscal 2007
          full
          year.  The components of Griffin's postretirement benefits expense are
          immaterial for all periods presented.
 
 *Settlement
          of
          Litigation*
 
 On
          June
          25, 2007, Griffin and its subsidiary, Imperial Nurseries, settled a lawsuit
          filed against them and several of their officers and employees (the “Griffin
          Defendants”) by twelve migrant and seasonal workers employed by an independent
          farm labor contractor, Pro Tree Forestry Services (“Pro Tree”), that had been
          engaged by Imperial to provide labor at its Connecticut farm.  The
          plaintiffs alleged, among other things, that they worked at Imperial’s
          Connecticut farm for approximately three months in the spring of 2006;
          that they
          were not paid sufficient wages by the Pro Tree defendants as required by
          state
          and federal laws; and that the Griffin Defendants were liable as joint
          and/or
          integrated employers.  The lawsuit included a number of other causes
          of action against the Pro Tree defendants related to this issue, including
          claims under the Migrant and Seasonal Agricultural Protection Act, the
          Racketeer
          Influenced and Corrupt Organizations Act (“RICO”), the Alien Tort Claims Act,
          and other statutory and common law claims, and asserted that certain of
          the
          Griffin Defendants were jointly liable for certain of those
          claims.  Under the settlement, Griffin agreed to pay certain amounts
          to the plaintiffs for wages and damages they allegedly suffered.  In
          addition, on July 13, 2007, Imperial settled a lawsuit filed against it
          by the
          United States Department of Labor (the “DOL”) that claimed that Pro Tree had
          underpaid its employees while they were working at Imperial’s Connecticut farm,
          and because Pro Tree refused to pay back wages to its employees, Imperial
          was
          required to pay those individuals.  The total cost to Griffin for the
          settlement of both those lawsuits, including legal fees incurred through
          September 1, 2007 and net of recovery under Griffin’s insurance policies, was
          approximately $0.5 million, which is included in selling, general and
          administrative expenses.  Substantially all of the cost was recorded
          in the first two quarters of fiscal 2007.
 
 8.      Commitments
          and Contingencies
 
 As
          of
          September 1, 2007, Griffin had committed purchase obligations of $3.3
          million, principally for Griffin Land’s construction of the shell of a new
          industrial building in Tradeport, site work for additional industrial buildings
          in Tradeport and required infrastructure improvements at
          Tradeport.  The infrastructure improvements are required by the
          Connecticut State Traffic Commission in connection with an increase in
          the
          permitted square feet of construction in the portion of Tradeport located
          in
          Windsor,
   18
  Connecticut.  Griffin
            posted a $6.5 million performance bond with the state to ensure that
            the
            infrastructure improvements are completed.
 
 As
          of September 1, 2007, there were two
          collateralized letters of credit outstanding, aggregating approximately
          $0.8
          million, issued by Griffin Land in favor of the towns of Suffield and Windsor,
          Connecticut that ensures Griffin Land’s performance in completing certain
          infrastructure for Griffin Land’s residential development, Stratton Farms and
          certain road improvements at New England Tradeport.  The letters of
          credit are collateralized by short-term investments of $0.8
          million.
 
 On
          January 31, 2007, Griffin announced
          that its board of directors had authorized a program to repurchase, from
          time to
          time, up to 150,000 shares of its outstanding common stock.  The
          repurchases, if and when made, will be done through private
          transactions.  The program to repurchase does not obligate Griffin to
          repurchase any specific number of shares, and may be suspended at any time
          at
          management’s discretion.  Through September 1, 2007, Griffin has
          repurchased 42,000 shares of its outstanding common stock for $1.6
          million.  Subsequent to September 1, 2007, Griffin repurchased an
          additional 70,900 shares for $2.6 million.
 
 Griffin
          is involved, as a defendant, in
          various litigation matters arising in the ordinary course of
          business.  In the opinion of management, based on the advice of
          counsel, the ultimate liability, if any, with respect to these matters
          will not
          be material to Griffin’s consolidated financial position, results of operations
          or cash flows.
 
 19
 
 
 ITEM
                    2.
                MANAGEMENT’S
                    DISCUSSION AND ANALYSIS OF FINANCIALCONDITION
                    AND RESULTS OF OPERATIONS
 
 **Overview**
 
 The
          consolidated financial statements
          of Griffin include the accounts of Griffin’s subsidiary in the landscape nursery
          business, Imperial Nurseries, Inc. (“Imperial”), and Griffin’s Connecticut and
          Massachusetts based real estate business (“Griffin Land”).
 
 The
          significant accounting policies and
          methods used in the preparation of Griffin’s consolidated financial statements
          included in Item 1 are consistent with those used in the preparation of
          Griffin’s audited financial statements for the fiscal year ended December 2,
          2006 included in Griffin’s Report on Form 10-K as filed with the Securities and
          Exchange Commission.  The preparation of Griffin’s financial
          statements in conformity with accounting principles generally accepted
          in the
          United States of America requires management to make certain estimates
          and
          assumptions that affect the reported amounts of assets and liabilities
          and
          disclosure of contingent assets and liabilities at the dates of the financial
          statements and revenue and expenses during the periods
          reported.  Actual results could differ from those
          estimates.  The significant accounting estimates used by Griffin in
          preparation of its financial statements for the thirteen and thirty-nine
          weeks
          ended September 1, 2007 are consistent with those used by Griffin in preparation
          of its fiscal 2006 financial statements except for the total projected
          costs of
          the required roadwork improvements related to the land sale to Walgreen,
          which
          were reduced as a result of changes to the design of certain portions
          of the required improvements.
 
 **Summary**
 
 Griffin
          had net income of $2.3 million
          for the thirteen weeks ended September 1, 2007 (the “2007 third quarter”) as
          compared to net income of $2.6 million for the thirteen weeks ended September
          2,
          2006 (the “2006 third quarter”).  The lower results in the 2007 third
          quarter as compared to the 2006 third quarter were principally due to lower
          profit from property sales by Griffin Land partially offset by a lower
          operating
          loss at Imperial, higher investment income and a gain from the sale of
          a portion
          of Griffin’s investment in Centaur Media, plc.
 
 Griffin
          had net income of $7.0 million
          for the thirty-nine weeks ended September 1, 2007 (the “2007 nine month period”)
          as compared to net income of $0.8 million for the thirty-nine weeks ended
          September 2, 2006 (the “2006 nine month period”).  The increase in net
          income was principally due to higher profit on property sales by Griffin
          Land,
          improved results from Griffin Land’s leasing operations, a lower operating loss
          at Imperial Nurseries, higher investment income and a gain on the sale
          of a
          portion of Griffin’s investment in Centaur Media, plc.
 
 At
          the beginning of fiscal 2006,
          Griffin adopted the fair value recognition provisions of SFAS No. 123(R)
          “Accounting for Stock-Based Compensation” (“SFAS No. 123(R)”) using the modified
          prospective method of adoption. The effect of the adoption of SFAS No.
          123(R) on
          the 2006 third quarter and 2006 nine month period results of operations
          was not
          material. See Notes 1 and 5 to the consolidated financial statements included
          in
          Item 1.
 
 
 20
 **Results
            of Operations**
  **Thirteen
            Weeks Ended September 1, 2007 Compared to the Thirteen Weeks Ended September
            2,
            2006**
 Griffin’s
          consolidated total revenue
          decreased from $17.7 million in the 2006 third quarter to $12.1 million
          in the
          2007 third quarter.  The decrease of approximately $5.5 million
          reflects a $5.3 million decrease in revenue at Griffin Land and a $0.2
          million
          decrease in revenue at Imperial.
 
 The
          $5.3 million decrease in revenue at
          Griffin Land reflects a decrease of $5.8 million in revenue from property
          sales
          partially offset by an increase of $0.5 million in revenue from its leasing
          operations.  Property sales occur periodically and changes in revenue
          from period to period from these transactions are generally not indicators
          of
          any trends in the real estate business.  Property sales revenue in the
          2007 third quarter includes $2.1 million from the sale of the second phase
          of
          residential lots in Stratton Farms, Griffin Land’s residential development in
          Suffield, Connecticut and the recognition of $1.7 million of revenue previously
          deferred from last year’s land sale to Walgreen.  The revenue
          recognized in the 2007 third quarter reflects the effect of management
          reducing
          its estimate of the total costs to be incurred to complete the required
          improvements due to changes to the design of certain portions of the required
          improvements.  Property sales revenue in the 2006 third quarter
          included $7.8 million from the sale to Walgreen of 130 acres of undeveloped
          land
          in the New England Tradeport (“Tradeport”), Griffin Land’s industrial park in
          Windsor and East Granby, Connecticut.  The total proceeds on that sale
          were  $13.0 million, but only $7.8 million was initially recognized as
          revenue with the balance deferred and to be recognized as required road
          improvements are completed.  That property sale was accounted for
          under the percentage of completion method due to the requirement that Griffin
          Land complete certain offsite improvements under the sale
          agreement.  The 2006 third quarter also included $1.0 million of
          revenue from the initial sale of residential lots in Stratton
          Farms.
 
 The
          $0.5
          million increase in Griffin Land's revenue from its leasing operations
          in the
          2007 third quarter, as compared to the 2006 third quarter, principally
          reflects
          $0.4 million of revenue from leasing previously vacant space and $0.1 million
          of
          revenue from the new Tradeport industrial building that was completed in
          the
          2007 second quarter and partially leased.  At September 1, 2007,
          Griffin Land owned 1,837,000 square feet of industrial, flex and office
          space,
          with 1,275,000 square feet (69%) leased.  Griffin Land’s vacant space
          at September 1, 2007 includes a 308,000 square foot warehouse, which has
          remained vacant since it was acquired near the end of the 2006 third
          quarter.  Excluding that building, Griffin’s occupancy rate was 83% as
          of September 1, 2007.  At the end of fiscal 2006, Griffin Land owned
          1,711,000 square feet with 1,194,000 square feet (70%) leased.  The
          increase in the total square footage of Griffin Land’s portfolio from 1,711,000
          to 1,837,000 square feet reflects a new industrial building in Tradeport
          completed earlier this year.  Approximately 42,000 square feet of this
          new building was leased at the end of the 2007 third quarter.  The
          increase of approximately 81,000 square feet under lease at the end of
          the 2007
          third quarter versus the end of fiscal 2006 reflects the space leased in
          the new
          industrial building placed in service earlier this year and approximately
          39,000
          square feet of previously vacant space leased during the first three quarters
          of
          fiscal 2007.  Market activity for industrial space in the area where
          Griffin’s properties are located softened in 2007 as compared to last year,
          although there has been a recent increase in requests for proposals from
          prospective tenants.  Although there was an increase, earlier this
          year, in activity in the market for office space in the area where Griffin’s
          office properties are located, the office market continues to be relatively
          soft.
 
 Net
          sales and other revenue at Imperial
          decreased from $5.1 million in the 2006 third quarter to $4.9 million in
          the
          2007 third quarter.  Imperial’s unit sales volume decreased
          approximately 24% in the 2007 third quarter as compared to the 2006 third
          quarter.  The decrease in net sales was proportionately less than the
          unit sales volume decrease due to higher pricing in the 2007 third quarter,
          as
          compared to the 2006 third quarter, and selling, on average, larger units
          in the
          2007 third quarter than the 2006 third
 21
 quarter.
            The higher pricing in the 2007 third quarter principally reflects Imperial
            selling a greater percentage of its product to independent garden centers
            this
            year, the customer segment with the most favorable pricing for Imperial,
            and
            increases in delivery charges this year. Imperial’s sales to independent garden
            centers increased to approximately 53% in the 2007 third quarter from
            approximately 44% in the 2006 third quarter.
 Griffin
          had consolidated operating
          profit of $1.7 million in the 2007 third quarter as compared to consolidated
          operating profit of $3.9 million in the 2006 third quarter.  The
          decrease in operating profit reflects a decrease of $3.5 million in the
          operating profit at Griffin Land partially offset by a $0.9 million decrease
          in
          Imperial’s operating loss and a $0.4 million decrease in general corporate
          expense.
 
 Operating
          results at Griffin Land in the 2007 and 2006 third quarters were as
          follows:
 2007
                  
                  
                  2006Third
                      Qtr.
                  
                  
                  Third
                      Qtr.(amounts
                      in thousands)Rental
                      revenue
                  
                  $
                  3,489
                  
                  
                  $
                  2,960Costs
                      related to rental revenue excludingdepreciation
                      and amortization expense (a)
                  
                  
                  1,472
                  
                  
                  
                  1,202Profit
                      from leasing activities before general andadministrative
                      expenses and before depreciationand
                      amortization expense (a)
                  
                  
                  2,017
                  
                  
                  
                  1,758Revenue
                      from property sales
                  
                  
                  3,798
                  
                  
                  
                  9,633Costs
                      related to property sales
                  
                  
                  900
                  
                  
                  
                  2,673Gain
                      from property sales
                  
                  
                  2,898
                  
                  
                  
                  6,960Profit
                      from leasing activities and gain from property salesbefore
                      general and administrative expenses and beforedepreciation
                      and and amortization expense (a)
                  
                  
                  4,915
                  
                  
                  
                  8,718General
                      and administrative expenses excluding depreciationand amortization expense (a)
                  
                  
                  (604
                  )
                  
                  
                  (981
                  )Profit
                      before depreciation and amortization expense (a)
                  
                  
                  4,311
                  
                  
                  
                  7,737Depreciation
                      and amortization expense related to costs ofrental revenue
                  
                  
                  (1,111
                  )
                  
                  
                  (955
                  )Depreciation
                      and amortization expense - other
                  
                  
                  (8
                  )
                  
                  
                  (6
                  )Operating
                      profit
                  
                  $
                  3,192
                  
                  
                  $
                  6,776
 
 (a)
                The
                    costs related to rental revenue excluding depreciation and amortization
                    expense, profit from leasing activities before general and administrative
                    expenses and before depreciation and amortization expense, general
                    and
                    administrative expenses excluding depreciation and amortization
                    expense,
                    and profit before depreciation and amortization expense are disclosures
                    not in conformity with accounting principles generally accepted
                    in the
                    United States of America.  They are presented because Griffin
                    believes they are useful financial indicators for measuring the
                    results in
                    its real estate business segment.  However, they should not be
                    considered as an alternative to operating profit as a measure
                    of operating
                    results in accordance with accounting principles generally accepted
                    in the
                    United States of America.
 
 
 
 22
  Profit
            from leasing activities before
            general and administrative expenses and before depreciation and amortization
            expense increased by approximately $0.3 million in the 2007 third quarter
            as
            compared to the 2006 third quarter, reflecting the increased rental revenue
            partially offset by an increase in costs related to rental revenue excluding
            depreciation and amortization expense.  The higher costs reflect the
            increase in building operating expenses due to the effect of the warehouse
            building purchased at the end of the 2006 third quarter and the effect
            of the
            Tradeport industrial building that was completed earlier this
            year.  Building operating expenses for Griffin Land’s other facilities
            were substantially unchanged in the 2007 third quarter as compared to
            the 2006
            third quarter.
 Profit
          from property sales in the 2007
          third quarter includes the sale of the second phase of Stratton Farms and
          the
          recognition of approximately $1.6 million of gain that was previously deferred
          from the 2006 sale to Walgreen of undeveloped land in the
          Tradeport.   As provided in the terms of the contract for the
          sale of the land and the State Traffic Commission Certificate covering
          the area
          in Tradeport located in Windsor, certain improvements to existing roads
          were
          required.  The cost of these improvements is the responsibility of
          Griffin Land, however, a portion of the costs will either be reimbursed
          from the
          purchaser of the land or performed by the town.  As a result of
          Griffin’s continuing involvement with the required improvements to the existing
          roads, this land sale was accounted for under the percentage of completion
          method.  Accordingly, the revenue and the pretax gain on the sale are
          being recognized on a pro rata basis in a ratio equal to the percentage
          of the
          total costs incurred to the total anticipated costs of sale, including
          the
          allocated costs of the required improvements to existing roads.  In
          the 2007 third quarter, management reduced its estimate of the total costs
          to be
          incurred to complete the required improvements due to changes to the design
          of
          certain portions of the required improvements.  As a result, the total
          projected pretax gain on this transaction was increased from $9.7 million
          to
          $10.2 million and the percentage of completion through September 1, 2007
          increased as a result of the reduction of the total expected
          costs.  As a result of the change of the estimated total costs and
          additional costs incurred in the 2007 third quarter, Griffin Land recognized
          $1.6 million of pretax gain on this transaction in the 2007 third
          quarter.
 
 Griffin
          Land’s general and administrative expenses decreased approximately $0.4 million
          in the 2007 third quarter as compared to the 2006 third quarter due principally
          to lower incentive compensation expense in the current year’s
          quarter.  Depreciation and amortization expense at Griffin Land was
          higher in the 2007 third quarter as compared to the 2006 third quarter
          due
          principally to depreciation of $0.2 million related to the warehouse facility
          acquired near the end of the third quarter of last year and the new Tradeport
          industrial building placed in service earlier this year.
 
 Operating
          results at Imperial in the
          2007 and 2006 third quarters were as follows:
 2007
                  
                  
                  2006Third
                      Qtr.
                  
                  
                  Third
                      Qtr.(amounts
                      in thousands)Net
                      sales and other revenue
                  
                  $
                  4,861
                  
                  
                  $
                  5,104Cost
                      of goods sold
                  
                  
                  4,387
                  
                  
                  
                  5,527Gross
                      profit (loss)
                  
                  
                  474
                  
                  
                  
                  (423
                  )Selling,
                      general and administrative expenses
                  
                  
                  1,153
                  
                  
                  
                  1,149Operating
                      loss
                  
                  $
                  (679
                  )
                  
                  $
                  (1,572
                  )
 
 The
          $0.9 million decrease in Imperial’s
          operating loss reflects the $0.9 million increase at the gross profit
          line.  The higher gross profit principally reflects improved pricing
          this year, including increased charges to customers for product delivery,
          and
          lower delivery costs.  The improved pricing
 
 23
  reflects,
            in part, independent garden center customers, the customer segment with
            the most
            favorable pricing for Imperial, becoming a larger percentage of Imperial’s total
            sales.  The lower delivery costs reflect Imperial expanding its base
            of trucking vendors this year and the more efficient routing of
            trucks.  In addition, the 2006 third quarter included a $0.6 million
            charge for unsaleable inventories whereas the 2007 third quarter charge
            for
            unsaleable inventories was $0.4 million.  Imperial’s gross margin on
            sales, excluding the effect of the inventory charges in the 2007 and
            2006 third
            quarters, increased from 4.3% in the 2006 third quarter to 17.6% in the
            2007
            third quarter.  Imperial’s 2007 third quarter selling, general and
            administrative expenses were substantially unchanged from the 2006 third
            quarter.
 Griffin’s
          general corporate expense
          decreased from $1.3 million in the 2006 third quarter to $0.8 million in
          the
          2007 third quarter.  The decrease in general corporate expense
          principally reflects decreases of $0.3 million in incentive compensation
          expense
          and $0.2 million of costs related to compliance with Section 404 of the
          Sarbanes-Oxley Act in the current year.  The decrease in incentive
          compensation expense reflects the inclusion in the 2006 third quarter of
          incentive compensation expense related to the land sale to Walgreen that
          closed
          in that period. The decrease in cost for compliance with Section 404 of
          the
          Sarbanes-Oxley Act generally reflects a reduction of outside consulting
          costs
          this year as a result of hiring additional staff to assist in Griffin’s
          compliance efforts and generally lower costs in a company’s second year of
          compliance.
 
 In
          the 2007 third quarter, Griffin sold
          200,000 shares of Centaur Media and recorded a pretax gain of $0.5
          million.  Management may continue to sell a portion of Griffin’s
          holdings in Centaur Media this year, depending on the market price of Centaur
          Media’s common stock and the foreign currency exchange rate.
 
 Griffin’s
          consolidated interest expense was substantially unchanged in the 2007 third
          quarter as compared to the 2006 third quarter.  An increase in
          interest expense due to an additional borrowing of $8.5 million under a
          nonrecourse mortgage loan completed in the 2006 fourth quarter was offset
          by an
          increase in the amount of interest capitalized in the 2007 third quarter
          as
          compared to the 2006 third quarter.  The increase in capitalized
          interest in the 2007 third quarter reflects interest capitalized on the
          construction of the new industrial building in Tradeport that was started
          earlier this year and interest capitalized on land improvements that were
          under
          construction during the 2007 third quarter.  Griffin’s average
          outstanding debt increased to $51.1 million in the 2007 third quarter from
          $43.7
          million in the 2006 third quarter, reflecting the mortgage completed near
          the
          end of fiscal 2006.
 
 Griffin’s
          investment income increased from $0.6 million in the 2006 third quarter
          to $2.1
          million in the 2007 third quarter.  The increase principally reflects
          $1.6 million from a dividend from Shemin Nurseries Holding Corp. (“SNHC”), a
          private company of which Griffin holds approximately 14%.  Partially
          offsetting the dividend income from SNHC was lower investment income from
          Griffin’s short-term investments, due principally to having, on average, a lower
          amount of short-term investments in the 2007 third quarter as compared
          to the
          2006 third quarter.
 
 Griffin’s
          effective income tax rate was
          34.3% in the 2007 third quarter as compared to 31.4% in the 2006 third
          quarter.  The effective tax rate used in the 2007 third quarter
          reflects federal income taxes at 35% adjusted for state income taxes and
          permanent differences between book and taxable income.  The effective
          tax rate for interim periods is based on management’s projections for the
          balance of the year.  To the extent that actual results differ from
          current projections, the effective income tax rate may change.  The
          effective income tax rate in the 2006 third quarter reflected an increase
          of
          $0.1 million in state deferred tax assets as a result of changes in the
          projected benefits to be realized from state temporary differences and
          state net
          operating loss carryforwards that resulted from changes in management’s
          projections, at that time, of future operating results.
 
 
 24
 
 **Thirty-Nine
              Weeks Ended September 1, 2007 Compared to the Thirty-Nine Weeks Ended
              September
              2, 2006**
 
 Griffin’s
              consolidated total revenue
              increased from $46.0 million in the 2006 nine month period to $48.6
              million in
              the 2007 nine month period, reflecting an increase in revenue of approximately
              $5.8 million at Griffin Land, partially offset by a decrease in revenue
              of
              approximately $3.2 million at Imperial.
  Revenue
            at Griffin Land increased from
            $18.5 million in the 2006 nine month period to $24.3 million in the 2007
            nine
            month period.  The increase of approximately $5.8 million reflects an
            increase of approximately $4.2 million in revenue from property sales
            and an
            increase of approximately $1.6 million of revenue from leasing
            operations.  Property sales occur periodically, and changes in revenue
            from period to period from these transactions are generally not indicators
            of
            any trends in the real estate business.  Revenue from property sales
            in the 2007 nine month period reflects several sales of undeveloped land
            that
            were completed this year, including the second quarter sale of approximately
            73
            acres in Griffin Center in Windsor, Connecticut to The Hartford Insurance
            Company for their construction of a large office complex, the second
            quarter
            sale of approximately 103 acres in South Windsor, Connecticut to a food
            distributor for construction of a distribution facility, and the sale
            of the
            second phase of residential lots of Stratton Farms that was completed
            in the
            third quarter.  In addition, the 2007 nine month period includes $1.8
            million of revenue recognized from the land sale to Walgreen that was
            completed
            last year, which is being accounted for using the percentage of completion
            method.  The revenue recognized in the 2007 nine month period reflects
            the effect of management reducing its estimate of the total costs to
            be incurred
            to complete the required improvements due to changes to the design of
            certain
            portions of the required improvements.  Property sales revenue in the
            2006 nine month period included the initial revenue recognition from
            the land
            sale to Walgreen, the first sale of residential lots in Stratton Farms
            and two
            smaller land sales.
 
 The
            increase of $1.6 million in Griffin Land's revenue from its leasing operations
            in the 2007 nine month period, as compared to the 2006 nine month period,
            principally reflects leasing space that was vacant during the 2006 nine
            month
            period, net of space previously occupied that is now vacant, $0.2 million
            from
            the new Tradeport building that was completed and partially leased earlier
            this
            year and $0.2 million from other lease revenue.
 
 Net
            sales and other revenue at Imperial
            decreased from $27.5 million in the 2006 nine month period to $24.3 million
            in
            the 2007 nine month period.  Unit sales volume decreased 26% in the
            2007 nine month period as compared to the 2006 nine month period.  Due
            to the seasonality of the landscape nursery business, the decrease in
            Imperial’s
            net sales during the 2007 nine month period took place mostly during
            the second
            quarter.  The decrease in net sales was due to less product being
            available for sale this year and generally poor weather in Imperial’s markets
            during most of the spring.  The reduced amount of product available
            for sale this year reflects Imperial’s efforts last year to move previously
            unsold product and management’s decision to reduce inventories to levels
            consistent with sales expectations.  The relatively poor weather this
            spring resulted in the reduction of reorders as it took retail customers
            a
            longer time to sell through their initial deliveries of product.  The
            decrease in net sales was proportionately less than the decrease in unit
            sales
            volume due to higher pricing in the 2007 nine month period and selling,
            on
            average, larger units in the 2007 nine month period than the 2006 nine
            month
            period.  The higher pricing in the current year principally reflects
            Imperial selling a greater percentage of its product to independent garden
            center customers this year, the customer segment with the most favorable
            pricing
            for Imperial.  Imperial’s sales to independent garden center customers
            increased to approximately 54% in the 2007 nine month period from approximately
            44% in the 2006 nine month period.
 
  25
  Griffin
            had consolidated operating
            profit of $7.4 million in the 2007 nine month period as compared to consolidated
            operating profit of $1.6 million in the 2006 nine month
            period.  Operating results at Griffin Land and Imperial increased by
            approximately $5.1 million and by approximately $1.1 million, respectively,
            in
            the 2007 nine month period as compared to the 2006 nine month
            period.  General corporate expense increased by approximately $0.3
            million in the 2007 nine month period as compared to the 2006 nine month
            period.
  Operating
            results at Griffin Land in
            the 2007 and 2006 nine month periods were as follows:
 2007
                    
                    
                    2006Nine
                        Month Period
                    
                    
                    Nine
                        Month Period(amounts
                        in thousands)Rental
                        revenue
                    
                    $
                    10,441
                    
                    
                    $
                    8,880Costs
                        related to rental revenue excludingdepreciation
                        and amortization expense (a)
                    
                    
                    4,715
                    
                    
                    
                    3,809Profit
                        from leasing activities before general andadministrative
                        expenses and before depreciationand
                        amortization expense (a)
                    
                    
                    5,726
                    
                    
                    
                    5,071Revenue
                        from property sales
                    
                    
                    13,895
                    
                    
                    
                    9,633Costs
                        related to property sales
                    
                    
                    2,588
                    
                    
                    
                    2,673Gain
                        from property sales
                    
                    
                    11,307
                    
                    
                    
                    6,960Profit
                        from leasing activities and gain from property salesbefore general and administrative expenses and beforedepreciation and amortization expense (a)
                    
                    
                    17,033
                    
                    
                    
                    12,031General
                        and administrative expenses excluding depreciationand amortization expense (a)
                    
                    
                    (2,018
                    )
                    
                    
                    (2,320
                    )Profit
                        before depreciation and amortization expense (a)
                    
                    
                    15,015
                    
                    
                    
                    9,711Depreciation
                        and amortization expense related to costs ofrental revenue
                    
                    
                    (3,287
                    )
                    
                    
                    (3,080
                    )Depreciation
                        and amortization expense - other
                    
                    
                    (27
                    )
                    
                    
                    (19
                    )Operating
                        profit
                    
                    $
                    11,701
                    
                    
                    $
                    6,612
 
 (a)
                  The
                      costs related to rental revenue excluding depreciation and
                      amortization
                      expense, profit from leasing activities before general and
                      administrative
                      expenses and before depreciation and amortization expense,
                      general and
                      administrative expenses excluding depreciation and amortization
                      expense,
                      and profit before depreciation and amortization expense are
                      disclosures
                      not in conformity with accounting principles generally accepted
                      in the
                      United States of America.  They are presented because Griffin
                      believes they are useful financial indicators for measuring
                      the results in
                      its real estate business segment.  However, they should not be
                      considered as an alternative to operating profit as a measure
                      of operating
                      results in accordance with accounting principles generally
                      accepted in the
                      United States of America.
 The
              increase of $0.7 million in Griffin
              Land’s profit from leasing activities before general and administrative
              expenses
              and before depreciation and amortization expense principally reflects
              the
              increase
 
 26
 
 in
              rental
              revenue partially offset by an increase in costs related to rental
              revenue
              excluding depreciation and amortization expenses.  The higher costs
              reflect $0.8 million of building operating expenses related to the
              warehouse
              facility purchased at the end of last year’s third quarter and the Tradeport
              industrial building that was completed earlier this year, and an increase
              of
              $0.1 million in various expenses in all of Griffin Land’s other
              buildings.
 The
          increase in the gain from property
          sales at Griffin Land in the 2007 nine month period principally reflects
          the
          higher volume of property sale transactions in the current
          year.  Profit from property sales in the 2007 nine month period
          includes the recognition of approximately $1.7 million of gain that was
          previously deferred from the 2006 land sale to Walgreen.  As provided
          in the terms of the contract for the sale of that land, and as required
          under
          the State Traffic Commission Certificate, certain improvements to existing
          roads
          were required.  The cost of these improvements is the responsibility
          of Griffin Land, however, a portion of the costs will either be reimbursed
          from
          the purchaser of the land or performed by the town.  As a result of
          Griffin Land’s continuing involvement with the required improvements to the
          existing roads, this land sale was accounted for under the percentage of
          completion method.  Accordingly, the revenue and the pretax gain on
          the sale are being recognized on a pro rata basis in a ratio equal to the
          percentage of the total costs incurred to the total anticipated costs of
          sale,
          including the allocated costs of the required improvements to existing
          roads.  In the 2007 nine month period, management reduced its estimate
          of the total costs to be incurred to complete the required improvements
          due to
          changes to the design of certain portions of the required
          improvements.  As a result, the total projected pretax gain on this
          transaction increased from $9.7 million to $10.2 million and the percentage
          of
          completion through September 1, 2007 increased as a result of the reduction
          of
          the total expected costs.
 
 Griffin
          Land’s general and administrative expenses decreased approximately $0.3 million
          in the 2007 nine month period as compared to the 2006 nine month period
          due
          principally to lower incentive compensation expense.  Depreciation and
          amortization expense at Griffin Land increased $0.2 million in the 2007
          nine
          month period as compared to the 2006 nine month period.  Depreciation
          expense increased $0.5 million related to the warehouse purchased near
          the end
          of the 2006 third quarter, the new industrial building and tenant improvements
          placed in service in the 2007 nine month period.  The effect of these
          increases were offset by the inclusion in the 2006 nine month period of
          $0.3
          million of accelerated depreciation and amortization expense related to
          leases
          that terminated last year.
 
 Imperial’s
          operating results for the
          2007 and the 2006 nine month periods are as follows:
 2007
                  
                  
                  2006Nine
                      Month Period
                  
                  
                  Nine
                      Month Period(amounts
                      in thousands)Net
                      sales and other revenue
                  
                  $
                  24,294
                  
                  
                  $
                  27,466Cost
                      of goods sold
                  
                  
                  21,174
                  
                  
                  
                  25,547Gross
                      profit
                  
                  
                  3,120
                  
                  
                  
                  1,919Selling,
                      general and administrative expenses
                  
                  
                  4,004
                  
                  
                  
                  3,905Operating
                      loss
                  
                  $
                  (884
                  )
                  
                  $
                  (1,986
                  )
 
 The
          increase in Imperial’s operating
          results reflects a $1.2 million increase in gross profit partially offset
          by a
          $0.1 million increase in selling, general and administrative
          expenses.  The higher gross profit reflects improved pricing in the
          current year, including higher charges for delivery, and lower delivery
          costs.  The improved pricing reflects a greater percentage of
          Imperial’s sales volume going to independent garden center customers, the
          customer segment with the most favorable pricing for
          Imperial.
 
 27
 The
            lower
            delivery costs reflect Imperial expanding its base of trucking vendors
            this year
            and the more efficient routing of trucks.  The effect of the improved
            pricing and lower delivery costs was partially offset by a higher charge
            for
            unsaleable inventories, which was $0.7 million in the 2007 nine month
            period as
            compared to $0.6 million in the 2006 nine month period.  Imperial’s
            gross margin on sales, excluding the charges for unsaleable inventories
            in the
            2007 and 2006 nine month periods, increased from 9.3% in the 2006 nine
            month
            period to 15.8% in the 2007 nine month period.
 Imperial’s
          selling, general and
          administrative expenses increased by $0.1 million in the 2007 nine month
          period
          as compared to the 2006 nine month period, reflecting $0.2 million of costs
          related to the litigation against Imperial by employees of a farm labor
          contractor previously engaged by Imperial.  That increase was
          partially offset by a reduction in selling expenses, due principally to
          lower
          headcount.  As a percentage of net sales, selling, general and
          administrative expenses increased from 14.2% in the 2006 nine month period
          to
          16.5% in the 2007 nine month period.
 
 Griffin’s
          general corporate expense
          increased to $3.4 million in the 2007 nine month period from $3.1 million
          in the
          2006 nine month period.  The increase principally reflects $0.3
          million of costs incurred, principally in the first two quarters of the
          year,
          related to the litigation against the Company. That litigation has been
          settled.
          In addition, general legal costs increased $0.1 million, payroll costs
          increased
          $0.1 million, due, in part, to additional staff added this year, and other
          general corporate expenses increased by $0.2 million in the 2007 nine month
          period. These increases were partially offset by a reduction of $0.2 million
          in
          incentive compensation expense, reflecting a higher accrual last year for
          property sales completed in the 2006 nine month period, and a decrease
          of $0.2
          million for costs of compliance with Section 404 of the Sarbanes-Oxley
          Act. The
          lower compliance costs reflect the hiring of additional staff to assist
          in
          Griffin’s compliance efforts, which reduced the services of outside consultants
          this year, and generally lower costs for a company’s second year of
          compliance.
 
 In
          the 2007 nine month period, Griffin
          sold 1.2 million of its approximately 6.5 million shares of common stock
          in
          Centaur Media and recorded a pretax gain of $2.9 million on those
          sales.  Management may continue to sell a portion of Griffin's
          holdings in Centaur Media this year, depending on the market price of Centaur
          Media’s common stock and the foreign currency exchange rate.
 
 Griffin’s
          consolidated interest expense
          of $2.3 million in the 2007 nine month period was substantially unchanged
          from
          the 2006 nine month period.  An increase in interest expense due to an
          additional borrowing of $8.5 million under a nonrecourse mortgage loan
          completed
          in the 2006 fourth quarter was offset by an increase in the amount of interest
          capitalized in the 2007 nine month period as compared to the 2006 six month
          period.  The increase in capitalized interest in 2007 reflects
          interest capitalized on the construction of a building in Tradeport that
          was
          completed at the end of the 2007 first quarter, interest capitalized on
          a new
          Tradeport industrial building started in the 2007 second quarter and interest
          capitalized on land improvements that were under construction in the 2007
          nine
          month period.  Griffin’s average outstanding debt in the 2007 nine
          month period was $51.4 million as compared to $43.9 million in the 2006
          nine
          month period.
 
 Griffin’s
          investment income was $3.0
          million in the 2007 nine month period as compared to $1.6 million in the
          2006
          nine month period.  The increase of $1.4 million principally reflects
          the dividend income of $1.6 million from SNHC in the 2007 third
          quarter.  The effect of the dividend income from SNHC in the 2007 nine
          month period was partially offset by lower investment income from Griffin’s
          short-term investments in the current year.  The lower investment
          income from short-term investments was due to having, on average, a lower
          amount
          of short-term investments in the 2007 nine month period as compared to
          the 2006
          nine month period.  In addition, investment income in the 2006 nine
          month period included approximately $0.2 million of undistributed equity
          income
          from an investment in an agricultural cooperative in which Griffin holds
          a 25%
          interest.  Because this investment had not been accounted for in
          periods prior to the 2006 nine month period, the cumulative effect was
          recorded
          in
 
 28
 investment
            income in the 2006 nine month period.  The investment income in the
            2007 nine month period related to that agricultural cooperative was
            minimal.
 
 Griffin’s
            effective income tax rate was
            36.4% for the 2007 nine month period, as compared to 11.4% for the 2006
            nine
            month period.  The effective tax rate for the 2007 nine month period
            reflects a 35% rate for federal income taxes adjusted for state income
            taxes and
            permanent differences between book and taxable income. The effective
            tax rate
            for interim periods is based on management’s projections for the balance of the
            year.  To the extent that actual results differ from current
            projections, the effective income tax rate may change.  The lower than
            the expected statutory rate for the 2006 nine month period reflected
            changes in
            the mix of earnings in separate state jurisdictions and the recognition
            of $0.1
            million of projected state deferred tax benefits in that period.
 **Off
          Balance Sheet Arrangements**
 
 Griffin
          does not have any material off
          balance sheet arrangements.
 
 **Liquidity
          and Capital Resources**
 
 Net
          cash provided by operating
          activities was $4.7 million in the 2007 nine month period as compared to
          $8.1
          million in the 2006 nine month period.  Net cash provided by operating
          activities in the 2007 nine month period includes $8.7 million of cash
          generated
          from a reduction of short-term investments as compared to $9.4 million
          of cash
          generated from a reduction of short-term investments in the 2006 nine month
          period.  Excluding the cash provided by the reduction in short-term
          investments in each period, Griffin used cash of $4.1 million in operating
          activities in the 2007 nine month period as compared to $1.3 million in
          the 2006
          nine month period.  The higher cash used in operating activities in
          2007, excluding the cash generated from the reduction of short-term investments,
          reflects the lower amount of cash provided by the reduction of inventories
          and
          the higher amount of cash used as a result of a decrease in accounts payable
          and
          accrued liabilities.  Partially offsetting these items was a favorable
          change in other current assets, principally reflecting Griffin's income
          tax
          receivable related to fiscal 2006 being offset by federal income taxes
          payable
          based on Griffin's earnings in fiscal 2007.
 
 In
          the 2007 nine month period, Griffin
          used net cash of $0.7 million in investing activities as compared to $7.4
          million used in investing activities in the 2006 nine month
          period.  Net cash used in investing activities in the 2007 nine month
          period reflects $8.9 million used for additions to Griffin Land’s real estate
          assets, principally reflecting the completion of a 127,000 square foot
          industrial building in Tradeport, built on speculation, the start of
          construction, on speculation, of a new 149,000 square foot industrial building
          in Tradeport, site work for several other industrial buildings in Tradeport
          and
          tenant improvements related to new leases.  Additions to property and
          equipment, principally for Imperial, were $0.4 million in the 2007 nine
          month
          period, principally to replace equipment used in Imperial’s farming
          operations.  These items were substantially offset by cash of $11.4
          million generated from property sales net of an increase of $6.4 million
          of cash
          held in an escrow account.  The increase in cash held in escrow
          reflects the proceeds of a property sale completed this year being held
          in
          escrow for the potential use of acquiring property in a Section 1031 exchange
          for income tax purposes.  If completed, the Section 1031 exchange
          would defer the payment of income taxes related to all or a portion of
          the gain
          from that property sale.  If the acquisition of a property for a
          Section 1031 exchange is not completed, the cash proceeds being held in
          escrow
          will be remitted to Griffin.  In addition, cash of $3.5 million was
          provided by the sale of a portion of Griffin’s investment in Centaur
          Media.  The $0.2 million return of investment from SNHC reflects the
          portion of a total of  $1.8 million received from SNHC that was not
          reported as dividend income, based on SNHC’s cumulative earnings.
 
 Net
          cash used in financing activities
          was $1.3 million in the 2007 nine month period as compared to net cash
          of $0.9
          million provided by financing activities in the 2006 nine month
          period.  The net cash
 
 29
 used
            in
            financing activities in the 2007 nine month period includes $1.6 million
            of cash
            used by Griffin to repurchase 42,000 shares of its outstanding common
            stock and
            $0.9 million used for principal payments on Griffin Land’s nonrecourse mortgages
            and payments of capital lease obligations.  Partially offsetting those
            items were $0.9 million of cash provided by the tax benefit of stock
            options
            exercised and $0.2 million of cash provided by the exercise of stock
            options.
 In
          the near-term, Griffin plans to
          continue to invest in its real estate business.  In addition to the
          completion earlier this year of the shell of a 127,000 square foot industrial
          building in Tradeport that was built on speculation, Griffin Land started
          construction on the shell of a 149,000 square foot industrial building
          in
          Tradeport, which is also being built on speculation.  This new
          building is expected to be completed in the fourth
          quarter.  Subsequent to the end of the 2007 third quarter, a lease for
          approximately 50,000 square feet of this building presently under construction
          was executed, with the tenant expected to take occupancy near the end of
          this
          fiscal year.  Griffin Land has completed much of the site work for
          several additional industrial buildings in the Tradeport.  The cost of
          site work in the section of Tradeport where these new buildings are located
          was
          higher than site costs for previous Tradeport buildings constructed by
          Griffin
          Land, reflecting the nature of the land on which the buildings will be
          located
          along with berms and roadwork required to develop this section of
          Tradeport.  Griffin Land also expects to incur expenditures to build
          out the interiors of its new buildings as leases are completed, and to
          continue
          to invest in infrastructure improvements required for present and future
          development in its office and industrial parks.
 
 Earlier
          this year, Griffin determined
          that an agreement to sell to the State of Connecticut Department of
          Environmental Protection (the "DEP") approximately 165 acres of undeveloped
          land
          in Suffield, Connecticut will not be completed.  The land would have
          been used for conservation purposes by the DEP.  The agreement was
          terminated because the current level of certain residual pesticides that
          remain
          in the upper portions of the soil from the previous use of the land for
          farming
          exceeds certain levels, thereby reducing the amount the DEP would be able
          to pay
          for the land.  While remediation of the residual pesticides is not
          required, Griffin is considering its options to perform
          remediation.
 
 In
          the 2007 third quarter, Griffin Land
          reached an accord for a settlement with the Town of Simsbury’s land use
          commissions regarding Meadowood, its proposed residential
          development.  A formal settlement agreement must be executed by
          Griffin Land and the town, and is subject to approval by the Connecticut
          Superior Court, which is expected.  The settlement provides, among
          other things, the number of homes permitted to be built in Meadowood, the
          amount
          of open space to be included in Meadowood and resolution of environmental
          remediation issues prior to the commencement of construction. Griffin Land
          intends to continue with its Meadowood residential development plans and
          to
          proceed with residential development plans on its other land holdings that
          are
          appropriate for that use.
 
 Griffin
          Land is currently not in
          compliance with the debt service coverage ratio requirement of its 6.08%
          mortgage due January 1, 2013.  This mortgage is collateralized by two
          multi-story office buildings located in Griffin Center in Windsor,
          Connecticut.  In connection with a $1 million prepayment of principal
          on this mortgage that is expected to be made in the 2007 fourth quarter,
          the
          lender will defer the debt service coverage requirement until the beginning
          of
          2009.  As a result of the prepayment, Griffin will incur a prepayment
          penalty of $20,000 to be paid at the maturity of the mortgage.  The
          loan’s future monthly payments will be adjusted to reflect the prepayment, but
          the loan’s interest rate and maturity date are not changed as a result of this
          prepayment.
 
 On
          January 31, 2007, Griffin announced
          that its board of directors had authorized a program to repurchase, from
          time to
          time, up to 150,000 shares of its outstanding common stock.  The
          repurchases will be done through private transactions.  The program to
          repurchase does not obligate Griffin to repurchase any specific number
          of
          shares, and may be suspended at any time at management’s
          discretion.  Through the end of the 2007 third quarter, Griffin had
          repurchased 42,000 shares of its outstanding
 
 30
 
 common
            stock for $1.6 million.  Subsequent to the end of the 2007 third
            quarter, Griffin Land repurchased 70,900 shares for $2.6 million.
 
 On
            July 16, 2007, Griffin
            executed an agreement to sell a parcel of undeveloped land located in
            Tampa,
            Florida for approximately $2.1 million.  This land had been a site for
            a distribution facility by a former subsidiary of Griffin’s former parent
            company, Culbro Corporation (“Culbro”).  Griffin received this land in
            connection with the distribution of Griffin’s common stock to Culbro’s
            stockholders in 1997.  Although this transaction is expected to be
            completed in the 2007 fourth quarter there can be no assurance that this
            transaction will be completed under its current terms, or at
            all.
 
 On
          June 22, 2007, Griffin Land executed
          an agreement to sell approximately 45 acres of land in Bloomfield, Connecticut
          that is part of Griffin Center to a developer of residential
          housing.  The purchase price is $4.5 million, but may increase to $5.6
          million or decrease to $3.9 million depending on the number of residential
          units
          the buyer is permitted to build.  In addition, Griffin Land would
          receive additional revenue upon the buyer’s sale of residential
          units.  Completion of this transaction is subject to several
          contingencies, including satisfactory completion of due diligence by the
          buyer
          and the buyer obtaining governmental approvals for its proposed development
          plans.  The time frame for the buyer to obtain all of the required
          governmental approvals is expected to be an extended one, with the closing
          of
          this transaction not expected within the next twelve months.  There
          can be no assurance that this transaction will be completed under its current
          terms, or at all.
 
 Griffin
          Land has agreed to purchase an
          approximately 30,000 square foot warehouse on approximately 24 acres of
          land in
          Bloomfield from its current owner, who uses the facility in its
          operations.  A substantial amount of the land that is to be acquired
          is currently undeveloped. As part of the agreement to purchase this facility,
          Griffin Land would enter into a ten year lease agreement with the current
          owner
          for the entire warehouse facility.  The purchase price is expected to
          be $2.6 million, which would be paid for with a portion of the proceeds,
          currently in escrow, from the land sale earlier this year to The Hartford
          Insurance Company.  Completion of this transaction is subject to
          completion of a definitive agreement and satisfactory completion of due
          diligence on the real estate assets to be acquired.  There is no
          assurance that this transaction will be completed under these terms, or
          at
          all.
 
 Griffin’s
          payments (including principal and interest) under contractual obligations
          as of
          September 1, 2007 are as follows:
 Total
                  
                  
                  Due
                      Within One Year
                  
                  
                  Due
                      From 1-3 Years
                  
                  
                  Due
                      From 3-5 Years
                  
                  
                  Due
                      in More Than 5 Years(in
                      millions)Mortgages
                  
                  $
                  70.7
                  
                  
                  $
                  5.4
                  
                  
                  $
                  15.4
                  
                  
                  $
                  7.3
                  
                  
                  $
                  42.6Capital
                      Lease Obligations
                  
                  
                  0.3
                  
                  
                  
                  0.2
                  
                  
                  
                  0.1
                  
                  
                  
                  -
                  
                  
                  
                  -Operating
                      Lease Obligations
                  
                  
                  0.2
                  
                  
                  
                  0.2
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Purchase
                      Obligations (1)
                  
                  
                  3.3
                  
                  
                  
                  3.3
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Other
                      (2)
                  
                  
                  2.2
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2.2$
                  76.7
                  
                  
                  $
                  9.1
                  
                  
                  $
                  15.5
                  
                  
                  $
                  7.3
                  
                  
                  $
                  44.8
 
 (1)
                Includes
                    obligations for the construction of the shell of a new industrial
                    building
                    by Griffin Land, completion of tenant improvements, infrastructure
                    improvements in Tradeport and for the purchase of raw materials
                    by
                    Imperial.
 (2)
                Includes
                    Griffin’s deferred compensation plan and other postretirement benefit
                    liabilities.
 
 As
          of
          September 1, 2007, Griffin had cash and short-term investments of approximately
          $31.9
 
 31
 million,
            down from $38.2 million at the beginning of the year. The decrease principally
            reflects the seasonal working capital requirements in the landscape nursery
            business, Griffin’s investment in its real estate business, and the proceeds
            from a substantial land sale remaining in escrow held by a third-party,
            on
            behalf of Griffin, for the potential acquisition of real estate assets
            under a
            Section 1031 exchange for income tax purposes. Management believes that
            the
            significant amount of cash and short-term investments currently held
            by Griffin
            will be sufficient to finance the working capital requirements of its
            businesses, the continued investment in Griffin’s real estate assets for the
            foreseeable future and the repurchase of its common stock as authorized
            by the
            board of directors.  Griffin may also continue to seek nonrecourse
            mortgage placements on selected properties.  Griffin also anticipates
            seeking to purchase either or both land and buildings with a substantial
            portion
            of its cash and short-term investment balances.   Real estate
            acquisitions may or may not occur based on many factors, including real
            estate
            pricing.
 
 Recent
          Accounting
          Pronouncements
 
 In
          June 2006, the FASB issued FASB
          Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (“Fin No.
          48”).  The interpretation clarifies the accounting for uncertainty in
          income taxes recognized in a company's financial statements in accordance
          with
          Statement of Financial Accounting Standards No. 109, "Accounting for Income
          Taxes."  Specifically, Fin No. 48 prescribes a recognition threshold
          and a measurement attribute for the financial statement recognition and
          measurement of a tax position taken or expected to be taken in a tax
          return.  Fin No. 48 also provides guidance on the related
          derecognition, classification, interest and penalties, accounting for interim
          periods, disclosure and transition of uncertain tax positions.  Fin
          No. 48 is effective for fiscal years beginning after December 15, 2006,
          which
          for Griffin will be fiscal 2008.  Griffin is evaluating the impact of
          this new pronouncement on its consolidated financial statements.
 
 In
          September 2006, the FASB issued SFAS No. 157, “Fair Value
          Measurements.”  This new standard defines fair value, establishes a
          framework for measuring fair value under generally accepted accounting
          principles and expands disclosures about fair value
          measurements.  This statement does not require any new fair value
          measurements but provides guidance in determining fair value measurements
          presently used in the preparation of financial statements.  This new
          standard is effective for financial statements issued for fiscal years
          beginning
          after November 15, 2007, which for Griffin will be fiscal
          2008.  Griffin is evaluating the impact of this new pronouncement on
          its consolidated financial statements.
 
 In
          September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
          Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
          No. 87, 88, 106 and 132(R).”  This new standard requires employers to
          recognize the overfunded or underfunded status of a defined benefit
          postretirement plan as an asset or liability in its statement of financial
          position and to recognize changes in that funded status in the year in
          which the
          changes occur through comprehensive income.  For employers that have
          equity securities that trade in a public market, this new standard requires
          the
          recognition of the funded status of a defined benefit postretirement plan
          and
          requires disclosures as of the end of the fiscal year ending after December
          15,
          2006.  Griffin does not have a defined benefit pension plan and its
          defined benefit postretirement benefit plan is unfunded and is included
          as a
          liability on Griffin’s balance sheet.
 
 In
          February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
          Financial Assets and Financial Liabilities-Including an amendment of FASB
          Statement No. 115.”  This new standard allows an entity the
          irrevocable option to elect fair value for the initial and subsequent
          measurement for certain financial assets and liabilities under an
          instrument-by-instrument election.  Subsequent measurements for the
          financial assets and liabilities an entity elects to fair value will be
          recognized in earnings.  This statement also establishes additional
          disclosure requirements and is effective for fiscal
 
 32
  years
            beginning after November 15, 2007, which for Griffin will be fiscal 2008.
            Griffin is evaluating the impact of this new pronouncement on its consolidated
            financial statements.
  **Forward-Looking
          Information**
 
 The
          above information in Management’s
          Discussion and Analysis of Financial Condition and Results of Operations
          includes “forward-looking statements” within the meaning of Section 27A of the
          Securities Act and Section 21E of the Exchange Act.  Although Griffin
          believes that its plans, intentions and expectations reflected in such
          forward-looking statements are reasonable, it can give no assurance that
          such
          plans, intentions or expectations will be achieved, particularly with respect
          to
          improvement in the operating results of Imperial, leasing currently vacant
          space, construction of additional facilities in the real estate business,
          completion of land sales that are currently under contract or approval
          of a
          currently proposed residential subdivision.  The projected information
          disclosed herein is based on assumptions and estimates that, while considered
          reasonable by Griffin as of the date hereof, are inherently subject to
          significant business, economic, competitive and regulatory uncertainties
          and
          contingencies, many of which are beyond the control of Griffin.
 
 ITEM
                    3.
                QUANTITATIVE
                    AND QUALITATIVE DISCLOSURES ABOUT MARKET
                    RISK
 
 Market
          risk represents the risk of
          changes in value of a financial instrument, derivative or non-derivative,
          caused
          by fluctuations in interest rates, foreign exchange rates and equity
          prices.  Changes in these factors could cause fluctuations in earnings
          and cash flows.
 
 For
          fixed rate mortgage debt, changes
          in interest rates generally affect the fair market value of the debt instrument,
          but not earnings or cash flows.  Griffin does not have an obligation
          to prepay any fixed rate debt prior to maturity, however, Griffin has agreed
          to
          make a $1 million prepayment on a mortgage in which Griffin was not in
          compliance with the debt service coverage ratio as of September 1, 2007. 
The lender has agreed to defer the debt service coverage ratio requirement
          until
          fiscal 2009.  Interest rate risk and changes in the fair market value
          of fixed rate debt should not have a significant impact on earnings or
          cash
          flows until such debt is refinanced, if necessary.  Griffin’s mortgage
          interest rates are described in Note 4 to the unaudited consolidated financial
          statements included in Item 1.  For variable rate debt, changes in
          interest rates generally do not impact the fair market value of the debt
          instrument, but do affect future earnings and cash flows.  Griffin did
          not have any variable rate debt outstanding during the thirty-nine weeks
          ended
          September 1, 2007.
 
 Griffin
          is potentially exposed to
          market risks from fluctuations in interest rates and the effects of those
          fluctuations on market values of Griffin’s cash equivalents.  These
          investments generally consist of overnight investments that are not
          significantly exposed to interest rate risk.  Griffin’s short-term
          investments generally consist of debt instruments with maturities ranging
          from
          one to sixteen months, with a weighted average maturity of approximately
          three
          months as of September 1, 2007.  These investments are not
          significantly exposed to interest rate risk except to the extent that changes
          in
          interest rates will ultimately affect the amount of interest income earned
          and
          cash flow from these investments.
 
 Griffin
          does not currently have any
          derivative financial instruments in place to manage interest costs, but
          that
          does not mean that Griffin will not use them as a means to manage interest
          rate
          risk in the future.
 
 Griffin
          does not have foreign currency
          exposure related to its operations.  Griffin has an investment in a
          public company, Centaur Media, plc, based in the United Kingdom.  The
          liquidation of that investment and conversion of proceeds into United States
          currency is subject to future foreign currency exchange rates.
 
 
 33
 
 ITEM
                      4.
                  CONTROLS
                      AND PROCEDURES
  Evaluation
            of Disclosure Controls and Procedures
 Griffin
              maintains disclosure controls
              and procedures that are designed to ensure that information required
              to be disclosed in its Exchange Act reports is recorded, processed,
              summarized
              and reported within
              the time periods specified in the Securities and Exchange Commission’s rules and
              forms, and that such
              information is accumulated and communicated to Griffin’s management, including
              its 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 recognizes
              that any controls and procedures, no matter how well designed and operated,
              can
              provide only reasonable assurance of achieving the desired control
              objectives,
              and management necessarily is required to apply its judgment in evaluating
              the
              cost-benefit relationship of possible controls and
              procedures.
 
 As
          required by SEC Rule 13a-15(b),
          Griffin carried out an evaluation, under the supervision and with the
          participation of Griffin’s management, including Griffin’s Chief Executive
          Officer and Griffin’s Chief Financial Officer, of the effectiveness of the
          design and operation of Griffin’s disclosure controls and procedures as of the
          end of the fiscal period covered by this report.  Based on the
          foregoing, Griffin’s Chief Executive Officer and Chief Financial Officer
          concluded that disclosure controls and procedures were effective at the
          reasonable assurance level.
 
 Changes
          in Internal Control over Financial Reporting
 
 There
          has been no change in Griffin’s
          internal control over financial reporting during Griffin’s most recent fiscal
          quarter that has materially affected, or is reasonably likely to materially
          affect, Griffin’s internal control over financial reporting.
 
 **PART
                    II**
                **OTHER
                    INFORMATION**
 
 ITEM
                    1.
                LEGAL
                    PROCEEDINGS
 
 In
          1999, Griffin Land filed land use
          applications with the land use commissions of Simsbury, Connecticut for
          Meadowood, a proposed residential development on approximately 363 acres
          of
          land.  In 2000, Simsbury’s land use commissions issued denials of
          Griffin Land’s Meadowood application.  As a result of those denials,
          Griffin brought several separate, but related, suits appealing those
          decisions.  In 2002, the trial court upheld two of Griffin Land’s
          appeals and ordered the town’s Planning and Zoning Commissions to approve the
          Meadowood application.  The town appealed those
          decisions.  In 2004, the Connecticut Supreme Court ordered the Zoning
          Commission to approve the zoning regulations proposed by Griffin Land for
          Meadowood.  The Connecticut Supreme Court also upheld the denial of
          the Meadowood application by the Planning Commission because Griffin Land
          had
          not obtained the required sewer usage permits at the time the application
          was
          made to the Planning Commission.  The required sewer usage permits for
          Meadowood have been subsequently obtained.  Also in 2004, the
          Connecticut Supreme Court reversed a lower court decision that had denied
          Griffin Land a wetlands permit, and remanded the case to Superior Court
          for
          further proceedings to determine if a wetlands permit must be
          issued.  In 2005, the Superior Court ruled that Griffin Land must
          again apply to the town’s Conservation and Inland Wetlands Commission for a
          wetlands permit for its proposed Meadowood development.  However, the
          wetlands case was accepted for review by the Connecticut Appellate
          Court.
 
 In
          January
          2007, Griffin Land and the town of Simsbury jointly filed a motion in the
          Appellate Court to have the appeal remanded to the Superior Court in
          anticipation of the parties potentially presenting a settlement proposal
          to the
          court for its review and approval. On June 13, 2007, at a joint
 
 34
 meeting
            of the town’s Planning, Zoning and Inland Wetlands Commissions, a tentative
            settlement agreement was presented for their review. The tentative settlement
            includes, among other things, approval for up to 299 homes, certain remediation
            measures to be performed by Griffin Land and the purchase by the town,
            subject
            to approvals, of a portion of the Meadowood land for town open space.
            The Zoning
            and Inland Wetlands Commissions approved resolutions at that meeting
            accepting
            the proposed settlement terms. The Planning Commission approved the resolution
            at a subsequent meeting.  A formal settlement agreement must be
            executed by Griffin Land and the town and then approved by the Connecticut
            Superior Court, which will consider each Commission’s agreement at a public
            court hearing and render its decision.  If approved by the Court, as
            expected, the previously filed cases would be withdrawn with no further
            litigation between the parties on this matter.
 On
          June
          25, 2007, Griffin and its subsidiary, Imperial Nurseries, settled a lawsuit
          filed against them and several of their officers and employees (the “Griffin
          Defendants”) by twelve migrant and seasonal workers employed by an independent
          farm labor contractor, Pro Tree Forestry Services (“Pro Tree”), that had been
          engaged by Imperial to provide labor at its Connecticut farm.  The
          plaintiffs alleged, among other things, that they worked at Imperial’s
          Connecticut farm for approximately three months in the spring of 2006;
          that they
          were not paid sufficient wages by the Pro Tree defendants as required by
          state
          and federal laws; and that the Griffin defendants were liable as joint
          and/or
          integrated employers.  The lawsuit included a number of other causes
          of action against the Pro Tree defendants related to this issue, including
          claims under the Migrant and Seasonal Agricultural Protection Act, the
          Racketeer
          Influenced and Corrupt Organizations Act (“RICO”), the Alien Tort Claims Act,
          and other statutory and common law claims, and asserted that certain of
          the
          Griffin Defendants were jointly liable for certain of those
          claims.  Under the settlement, Griffin agreed to pay certain amounts
          to the plaintiffs for wages and damages they allegedly suffered.  On
          July 13, 2007, Imperial settled a lawsuit filed against Imperial by the
          United
          States Department of Labor (the “DOL”) that claimed that Pro Tree had underpaid
          its employees while they were working at Imperial’s Connecticut farm, and
          because Pro Tree refused to pay back wages to its employees, Imperial was
          required to pay those individuals.  The total cost to Griffin for both
          those lawsuits, including legal fees incurred through September 1, 2007
          and net
          of recovery under Griffin’s insurance policies, was approximately $0.5
          million.
 
 Griffin
          is involved, as a defendant, in
          other various litigation matters arising in the ordinary course of
          business.  In the opinion of management, based on the advice of legal
          counsel, the ultimate liability, if any, with respect to these matters
          will not
          be material to Griffin’s consolidated financial position, results of operations
          or cash flows.
 
 ITEM
                    1A.
                RISK
                    FACTORS
 
 There
          have been no material changes
          from the risk factors as previously disclosed in Item 1A of the Company's
          Annual
          Report on Form 10-K for the year ended December 2, 2006.
 ITEM
                      6
                  EXHIBITSExhibit
                      No.
                  Description3.1
                  Form
                      of Amended and Restated Certificate of Incorporation of Griffin
                      Land &
                      Nurseries, Inc. (incorporated by reference to the Form 10 of
                      Griffin Land
                      & Nurseries, Inc., filed April 8, 1997, as
                      amended)
   35
   3.2
                    Form
                        of Bylaws of Griffin Land & Nurseries, Inc. (incorporated by reference
                        to the Form 10 of Griffin Land & Nurseries, Inc., filed April 8,
                        1997, as amended)10.1
                    Form
                        of Tax Sharing Agreement among Culbro Corporation, Griffin
                        Land &
                        Nurseries, Inc. and General Cigar Holdings, Inc. (incorporated
                        by
                        reference to the Registration Statement on Form S-1 of General
                        Cigar
                        Holdings, Inc., filed December 24, 1996, as amended)10.4
                    Form
                        of Agricultural Lease between Griffin Land & Nurseries, Inc. and
                        General Cigar Holdings, Inc. (incorporated by reference to
                        the
                        Registration Statement on Form S-1 of General Cigar Holdings,
                        Inc., filed
                        December 24, 1996, as amended)10.6
                    Form
                        of 1997 Stock Option Plan of Griffin Land & Nurseries, Inc.
                        (incorporated by reference to the Form 10 of Griffin Land
& Nurseries,
                        Inc., filed April 8, 1997, as amended)10.7
                    Form
                        of 401(k) Plan of Griffin Land & Nurseries, Inc. (incorporated by
                        reference to the Form 10 of Griffin Land & Nurseries, Inc., filed
                        April 8, 1997, as amended)10.17
                    Loan
                        Agreement dated June 24, 1999 (incorporated by reference
                        to Form 10-Q
                        dated August 28, 1999, filed October 8, 1999)10.21
                    Mortgage
                        Deed, Security Agreement, Financing Statement and Fixture
                        Filing with
                        Absolute Assignment of Rents and Leases dated September 17,
                        2002 between
                        Tradeport Development I, LLC and Farm Bureau Life Insurance
                        Company
                        (incorporated by reference to Form 10-Q dated August 31,
                        2002, filed
                        October 11, 2002)10.24
                    Mortgage
                        Deed and Security Agreement dated December 17, 2002 between
                        Griffin Center
                        Development IV, LLC and Webster Bank (incorporated by reference
                        to Form
                        10-K dated November 30, 2002, filed February 28, 2003)10.28
                    Secured
                        Installment Note and First Amendment of Mortgage and Loan
                        Documents dated
                        April 16, 2004 among Tradeport Development I, LLC, and Griffin
                        Land &
                        Nurseries, Inc. and Farm Bureau Life Insurance Company (incorporated
                        by
                        reference to Form 10-Q dated May 29, 2004, filed July 13,
                        2004)10.29
                    Mortgage
                        Deed Security Agreement, Fixture Filing, Financing Statement
                        and
                        Assignment of Leases and Rents dated July 6, 2005 by Tradeport
                        Development
                        II, LLC in favor of First Sunamerica Life Insurance Company
                        (incorporated
                        by reference to Form 10-Q dated May 28, 2005, filed on November
                        2,
                        2005)10.30
                    Promissory
                        Note dated July 6, 2005 (incorporated by reference to Form
                        10-Q dated May
                        28, 2005, filed on November 2,
                        2005)
   36
 10.31
                    Guaranty
                        Agreement as of July 6, 2005 by Griffin Land & Nurseries, Inc. in
                        favor of Sunamerica Life Insurance Company (incorporated
                        by reference to
                        Form 10-Q dated May 28, 2005, filed on November 2,
                        2005)10.32
                    Amended
                        and Restated Mortgage Deed Security Agreement, Fixture Filing,
                        Financing
                        Statement and Assignment of Leases and Rents dated November
                        16, 2006 by
                        Tradeport Development II, LLC in favor of First Sunamerica
                        Life Insurance
                        Company (incorporated by reference to Form 10-K dated December
                        2, 2006,
                        filed February 15, 2007)10.33
                    Amended
                        and Restated Promissory Note dated November 16, 2006 (incorporated
                        by
                        reference to Form 10-K dated December 2, 2006, filed February
                        15,
                        2007)10.34
                    Guaranty
                        Agreement as of November 16, 2006 by Griffin Land & Nurseries, Inc. in
                        favor of Sunamerica Life Insurance Company (incorporated
                        by reference to
                        Form 10-K dated December 2, 2006, filed February 15,
                        2007)14
                    Griffin
                        Land & Nurseries, Inc. Code of Ethics (incorporated by reference
                        to
                        Form 10-K dated November 29, 2003, filed February 25,
                        2004)21
                    Subsidiaries
                        of Griffin Land & Nurseries, Inc. (incorporated by reference to the
                        Form 10 of Griffin Land & Nurseries, Inc., filed April 8, 1997, as
                        amended)31.1
                    Certifications
                        of Chief Executive Officer Pursuant to Rule 13a-14(a), as
                        Adopted Pursuant
                        to Section 302 of the Sarbanes-Oxley Act of 200231.2
                    Certifications
                        of Chief Financial Officer Pursuant to Rule 13a-14(a), as
                        Adopted Pursuant
                        to Section 302 of the Sarbanes Oxley Act of 200232.1
                    Certifications
                        of Chief Executive Officer Pursuant to 18 U.S.CSection
                        1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                        Act of
                        200232.2
                    Certifications
                        of Chief Financial Officer Pursuant to 18 U.S.CSection
                        1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                        Act of
                        2002
  37
    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.
 
 GRIFFIN
                      LAND & NURSERIES, INC./s/
                      FREDERICK M. DANZIGERDate:  October
                      11, 2007
                  
                  Frederick
                      M. DanzigerPresident
                      and Chief Executive Officer/s/ ANTHONY J. GALICIDate:  October
                      11, 2007
                  
                  Anthony
                      J. GaliciVice
                      President, Chief Financial Officer and
                      Secretary
  38