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 February 28, 2009TRANSITION
      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











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, a non-accelerated
filer or a smaller reporting company.  See the definitions
of  “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer   ̈
            Accelerated
      filer   xNon-accelerated
      filer   ̈
            Smaller
      reporting company   ̈








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 April 2, 2009: 5,076,463









Griffin
Land & Nurseries, Inc.


Form
10-Q


Index








PART
      I  -
            
            FINANCIAL
      INFORMATIONITEM
      1
            Financial
      StatementsConsolidated
      Statements of Operations (unaudited)13
      Weeks Ended February 28, 2009 and March 1, 2008
            3Consolidated
      Balance Sheets (unaudited)February
      28, 2009 and November 29, 2008
            4Consolidated
      Statements of Changes in Stockholders’ Equity (unaudited)13
      Weeks Ended February 28, 2009 and March 1, 2008
            5Consolidated
      Statements of Cash Flows (unaudited)13
      Weeks Ended February 28, 2009 and March 1, 2008
            6Notes
      to Consolidated Financial Statements (unaudited)
            7-20ITEM
      2
            Management’s
      Discussion and Analysis ofFinancial
      Condition and Results of Operations
            21-28ITEM
      3
            Quantitative
      and Qualitative Disclosures About Market Risk
            29ITEM
      4
            Controls
      and Procedures
            29-30PART
      II  -
            
            OTHER
      INFORMATIONITEM
      1
            Not
      ApplicableITEM
      1A
            Risk
      Factors
            31ITEMS
      2-5
            Not
      ApplicableITEM
      6
            Exhibits
            31-33SIGNATURES
            34








PART
      I
            FINANCIAL
      INFORMATIONITEM
      1.
            FINANCIAL
      STATEMENTS





Griffin
Land & Nurseries, Inc.


Consolidated
Statements of Operations


(dollars
in thousands, except per share data)


(unaudited)





For
      the 13 Weeks Ended,February
      28, 2009
              
              
              March
      1, 2008Landscape
      nursery net sales
              
              $
              449
              
              
              $
              424Rental
      revenue and property sales
              
              
              4,184
              
              
              
              4,057Total
      revenue
              
              
              4,633
              
              
              
              4,481Costs
      of landscape nursery sales
              
              
              419
              
              
              
              438Costs
      related to rental revenue and property sales
              
              
              3,478
              
              
              
              3,471Total
      costs of goods sold and costs related to rental revenue and property
      sales
              
              
              3,897
              
              
              
              3,909Gross
      profit
              
              
              736
              
              
              
              572Selling,
      general and administrative expenses
              
              
              2,800
              
              
              
              2,709Operating
      loss
              
              
              (2,064
              )
              
              
              (2,137
              )Interest
      expense
              
              
              (808
              )
              
              
              (849
              )Investment
      income
              
              
              47
              
              
              
              383Loss
      before income tax benefit
              
              
              (2,825
              )
              
              
              (2,603
              )Income
      tax benefit
              
              
              (1,003
              )
              
              
              (994
              )Net
      loss
              
              $
              (1,822
              )
              
              $
              (1,609
              )Basic
      net loss per common share
              
              $
              (0.36
              )
              
              $
              (0.32
              )Diluted
      net loss per common share
              
              $
              (0.36
              )
              
              $
              (0.32
              )


See Notes
to Consolidated Financial Statements.





3








Griffin  Land
& Nurseries, Inc.


Consolidated
Balance Sheets


(dollars in thousands, except
per share data)


(unaudited)


February
      28, 2009
              
              
              November
      29, 2008ASSETSCurrent
      Assets:Cash
      and cash equivalents
              
              $
              436
              
              
              $
              4,773Short-term
      investments, net
              
              
              6,523
              
              
              
              8,624Accounts
      receivable, less allowance of $139 and $148
              
              
              1,316
              
              
              
              2,071Inventories,
      net
              
              
              27,940
              
              
              
              24,347Deferred
      income taxes
              
              
              4,405
              
              
              
              3,447Other
      current assets
              
              
              4,881
              
              
              
              5,537Total
      current assets
              
              
              45,501
              
              
              
              48,799Real
      estate held for sale or lease, net
              
              
              115,660
              
              
              
              113,948Property
      and equipment, net
              
              
              6,183
              
              
              
              6,437Investment
      in Centaur Media, plc
              
              
              1,454
              
              
              
              3,374Other
      assets
              
              
              10,291
              
              
              
              9,117Total
      assets
              
              $
              179,089
              
              
              $
              181,675LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Current
      portion of long-term debt
              
              $
              8,650
              
              
              $
              8,661Accounts
      payable and accrued liabilities
              
              
              7,464
              
              
              
              5,240Deferred
      revenue
              
              
              982
              
              
              
              1,175Total
      current liabilities
              
              
              17,096
              
              
              
              15,076Long-term
      debt
              
              
              39,551
              
              
              
              39,855Deferred
      income taxes
              
              
              476
              
              
              
              1,257Other
      noncurrent liabilities
              
              
              4,308
              
              
              
              4,327Total
      liabilities
              
              
              61,431
              
              
              
              60,515Commitments
      and contingencies (Note 10)Stockholders'
      Equity:Common
      stock, par value $0.01 per share, 10,000,000 sharesauthorized,
      5,463,429 and 5,455,382 shares issued,respectively,
      and 5,076,463 and 5,068,416 shares outstanding,respectively
              
              
              55
              
              
              
              55Additional
      paid-in capital
              
              
              104,192
              
              
              
              103,997Retained
      earnings
              
              
              27,558
              
              
              
              29,888Accumulated
      other comprehensive (loss) income, net of tax
              
              
              (721
              )
              
              
              646Treasury
      stock, at cost, 386,966 shares
              
              
              (13,426
              )
              
              
              (13,426
              )Total
      stockholders' equity
              
              
              117,658
              
              
              
              121,160Total
      liabilities and stockholders' equity
              
              $
              179,089
              
              
              $
              181,675


See Notes
to Consolidated Financial Statements.




4




Griffin
Land & Nurseries, Inc.


Consolidated
Statements of Changes in Stockholders’ Equity


For the
Thirteen Weeks Ended February 28, 2009 and March 1, 2008


(dollars
in thousands)


(unaudited)




Shares
      of Common Stock Issued
              
              
              Common
      Stock
              
              
              Additional Paid-in Capital
              
              
              Retained
      Earnings
              
              
              Accumulated
      Other Comprehensive (Loss) income
              
              
              Treasury
      Stock
              
              
              Total
              
              
              Total Comprehensive
      LossBalance
      at December 1, 2007
              
              
              5,321,232
              
              
              $
              53
              
              
              $
              101,703
              
              
              $
              40,199
              
              
              $
              5,002
              
              
              $
              (8,054
              )
              
              $
              138,903Stock-based
      compensationexpense
              
              
              -
              
              
              
              -
              
              
              
              47
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              47Dividend
      declared, $0.10 pershare
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (509
              )
              
              
              -
              
              
              
              -
              
              
              
              (509
              )Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,609
              )
              
              
              -
              
              
              
              -
              
              
              
              (1,609
              )
              
              $
              (1,609
              )Other
      comprehensive loss,from
      Centaur Media, plc,net
      of tax
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (715
              )
              
              
              -
              
              
              
              (715
              )
              
              
              (715
              )Balance
      at March 1, 2008
              
              
              5,321,232
              
              
              $
              53
              
              
              $
              101,750
              
              
              $
              38,081
              
              
              $
              4,287
              
              
              $
              (8,054
              )
              
              $
              136,117
              
              
              $
              (2,324
              )Balance
      at November 29, 2008
              
              
              5,455,382
              
              
              $
              55
              
              
              $
              103,997
              
              
              $
              29,888
              
              
              $
              646
              
              
              $
              (13,426
              )
              
              $
              121,160Exercise
      of stock options
              
              
              8,047
              
              
              
              -
              
              
              
              107
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              107Stock-based
      compensationexpense
              
              
              -
              
              
              
              -
              
              
              
              88
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              88Dividend
      declared, $0.10  pershare
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (508
              )
              
              
              -
              
              
              
              -
              
              
              
              (508
              )Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,822
              )
              
              
              -
              
              
              
              -
              
              
              
              (1,822
              )
              
              $
              (1,822
              )Other
      comprehensive loss,from
      cash flow hedgingtransaction,
      net of tax
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (119
              )
              
              
              -
              
              
              
              (119
              )
              
              
              (119
              )Other
      comprehensive loss,from
      Centaur Media, plc,net of tax
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,248
              )
              
              
              -
              
              
              
              (1,248
              )
              
              
              (1,248
              )Balance
      at February 28, 2009
              
              
              5,463,429
              
              
              $
              55
              
              
              $
              104,192
              
              
              $
              27,558
              
              
              $
              (721
              )
              
              $
              (13,426
              )
              
              $
              117,658
              
              
              $
              (3,189
              )See
      Notes to Consolidated Financial
Statements.






5




Griffin
Land & Nurseries, Inc.


Consolidated
Statements of Cash Flows


(dollars
in thousands)


(unaudited)





For
      the 13 Weeks Ended,February
      28, 2009
              
              
              March
      1, 2008Operating
      activities:Net
      loss
              
              $
              (1,822
              )
              
              $
              (1,609
              )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
              
              
              1,613
              
              
              
              1,580Deferred
      income tax benefit
              
              
              (1,003
              )
              
              
              (166
              )Stock-based
      compensation expense
              
              
              88
              
              
              
              47Change
      in unrealized gains on trading securities
              
              
              62
              
              
              
              (145
              )Amortization
      of debt issuance costs
              
              
              25
              
              
              
              25Gain
      on sales of properties
              
              
              -
              
              
              
              (330
              )Provision
      for bad debts
              
              
              -
              
              
              
              (19
              )Changes
      in assets and liabilities:Short-term
      investments
              
              
              2,039
              
              
              
              1,509Accounts
      receivable
              
              
              755
              
              
              
              847Inventories
              
              
              (3,593
              )
              
              
              (5,115
              )Other
      current assets
              
              
              656
              
              
              
              (259
              )Accounts
      payable and accrued liabilities
              
              
              1,323
              
              
              
              1,086Deferred
      revenue
              
              
              (309
              )
              
              
              (339
              )Other
      noncurrent assets and noncurrent liabilities, net
              
              
              (981
              )
              
              
              (351
              )Net
      cash used in operating activities
              
              
              (1,147
              )
              
              
              (3,239
              )Investing
      activities:Additions
      to real estate held for sale or lease
              
              
              (1,998
              )
              
              
              (1,414
              )Additions
      to property and equipment
              
              
              (8
              )
              
              
              (165
              )Net
      cash used in investing activities
              
              
              (2,006
              )
              
              
              (1,579
              )Financing
      activities:Dividends
      paid to stockholders
              
              
              (507
              )
              
              
              (509
              )Debt
      issuance costs
              
              
              (469
              )
              
              
              -Payments
      of debt
              
              
              (315
              )
              
              
              (308
              )Exercise
      of stock options
              
              
              107
              
              
              
              -Net
      cash used in financing activities
              
              
              (1,184
              )
              
              
              (817
              )Net
      decrease in cash and cash equivalents
              
              
              (4,337
              )
              
              
              (5,635
              )Cash
      and cash equivalents at beginning of period
              
              
              4,773
              
              
              
              11,120Cash
      and cash equivalents at end of period
              
              $
              436
              
              
              $
              5,485





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.      Summary
of Significant Accounting Policies
  
 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”), 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 been prepared in accordance with the
accounting policies stated in Griffin’s audited financial statements for the
fiscal year ended November 29, 2008 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 Consolidated 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 November 29, 2008 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
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses in the reporting period.  Griffin regularly
evaluates estimates and assumptions related to the useful life and
recoverability of long-lived assets, stock-based compensation expense, deferred
income tax asset valuations, valuation of derivative instruments and inventory
reserves.  Griffin bases its estimates and assumptions on current
facts, historical experience and various other factors that it believes to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by Griffin may differ materially and adversely
from Griffin’s estimates.  To the extent there are material
differences between the estimates and the actual results, future results of
operations will be affected.
 
 In the 2009 first quarter, Griffin
entered into an interest rate swap to hedge an interest rate
exposure.  Griffin does not use derivatives for speculative
purposes.  Griffin applied SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” (“SFAS 133”) as amended, which establishes
accounting and reporting standards for derivative instruments and hedging
activities.  SFAS 133 requires Griffin to recognize all derivatives as
either assets or liabilities in its consolidated balance sheet and measure those
instruments at fair value.  The change in the fair value of the
interest rate swap is assessed in accordance with SFAS 133 and reflected in the
carrying value of the interest rate swap on the consolidated balance
sheet.  The estimated fair value is based primarily on projected
future swap rates.
 
 Griffin applies cash flow hedge
accounting to its interest rate swap which is designated as a hedge of the
variability of future cash flows from a floating rate liability based on the
benchmark interest rate.  The change in fair value of Griffin’s
interest rate swap is recorded as a component of accumulated other
  7
  comprehensive
(loss) income in stockholders’ equity, to the extent it is
effective.  Any ineffective portion of the change in fair value of
this instrument would be recorded to interest expense.
 
 The
results of operations for the thirteen weeks ended February 28, 2009 (the “2009
first quarter”) are not necessarily indicative of the results to be expected for
the full year. The thirteen weeks ended March 1, 2008 is referred to herein as
the “2008 first quarter.”
 
 Recent Accounting
Pronouncements
 
 In
February 2008, the FASB issued FASB Staff Position 157-2 “Effective Date of FASB
Statement No. 157,” (“FSP 157-2”), which delayed the effective date of SFAS No.
157 for all nonfinancial assets and nonfinancial liabilities, except for items
that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually), until the 2009 first quarter for Griffin.
The application of SFAS No. 157 to Griffin’s nonfinancial assets and
nonfinancial liabilities did not impact Griffin’s 2009 first quarter
consolidated financial statements (see Note 9).
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities, an Amendment of FASB Statement No. 133” (“SFAS No.
161”). This new pronouncement did not require any changes in the accounting for
derivative instruments, but is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance and cash flows. SFAS No. 161 applies to all
derivative instruments within the scope of SFAS No. 133, “Accounting for
Derivative Instruments and Hedging Activities,” as well as related hedged items,
bifurcated derivatives and nonderivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS No.
161 must provide more robust qualitative disclosures and expanded quantitative
disclosures.  The adoption of the enhanced disclosures as required
under SFAS No. 161 are included in Griffin’s financial statements for the 2009
first quarter.
 
 In April
2008, the FASB issued FASB Staff Position 142-3, “Determination of the Useful
Life of Intangible Assets” (“FSP 142-3”), which amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill
and Other Intangible Assets” (“SFAS No. 142”).  The objective of FSP
142-3 is to improve the consistency between the useful life of a recognized
intangible asset under SFAS No. 142 and the period of expected cash flows used
to measure the fair value of the asset under SFAS No. 141(R), “Business
Combinations” and other principles of generally accepted accounting
principles.  FSP 142-3 applies to all intangible assets, whether
acquired in a business combination or otherwise, and shall be effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years and applied prospectively to
intangible assets acquired after the effective date.  Griffin is
required to adopt FSP 142-3 in fiscal 2010 and is currently evaluating the
effect of this new pronouncement on its consolidated financial
statements.
  8
  2.
              Industry
      Segment Information
  Griffin
defines its reportable segments by their products and services, which 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.
  For
      the 13 Weeks Ended,February
      28, 2009
                
                March
      1, 2008Total
      net sales and other revenue:Landscape
      nursery net sales
                $
                449
                
                $
                424Rental
      revenue and property sales
                
                4,184
                
                
                4,057$
                4,633
                
                $
                4,481Operating
      (loss) profit:Landscape
      nursery
                $
                (850
                )
                $
                (971
                )Real
      estate
                
                6
                
                
                (68
                )Industry
      segment totals
                
                (844
                )
                
                (1,039
                )General
      corporate expense
                
                (1,220
                )
                
                (1,098
                )Operating
      loss
                
                (2,064
                )
                
                (2,137
                )Interest
      expense
                
                (808
                )
                
                (849
                )Investment
      income
                
                47
                
                
                383Loss
      before income tax benefit
                $
                (2,825
                )
                $
                (2,603
                )
  Identifiable
      assets:
                February
      28, 2009
                
                November
      29, 2008Landscape
      nursery
                $
                35,506
                
                $
                32,984Real
      estate
                
                127,823
                
                
                125,611Industry
      segment totals
                
                163,329
                
                
                158,595General
      corporate
                
                15,760
                
                
                23,080Total
      assets
                $
                179,089
                
                $
                181,675
 The real estate segment had no revenue
from property sales in the 2009 first quarter.  Revenue of the real
estate segment in the 2008 first quarter includes property sales revenue of
$421.
 
 3.   Facility
Shutdown
 
 As reported in Griffin’s 2008 financial
statements, Imperial will shut down its Quincy, Florida farm by the end of
fiscal 2009.  The Quincy farm represents all of Imperial’s growing
operations in Florida.  Imperial expects to continue to operate its
farm in Granby, Connecticut.  The shutdown of the Florida farm
reflects the difficulties that facility has encountered in delivering product to
most of Imperial’s major markets, which are located in the mid-Atlantic area and
northeastern United States.  Imperial has been unable to develop
sufficient volume in more southern markets to reduce its dependence on shipping
Florida product substantial distances.  The closure of the Florida
farm will enable Imperial to focus as a regional grower with most of its major
markets within close proximity of its Connecticut farm.
  As a result of the decision to shut
down Imperial’s Florida farm, Griffin recorded a total charge of $8.9 million in
the fiscal 2008 fourth quarter, comprised of $7.2 million included in costs of
landscape
 9
  nursery
sales for Florida inventories that are expected to be sold below their carrying
values at the time of sale and a restructuring charge of $1.7 million that
included: (i) $1.1 million to write down fixed assets that will no longer be
used; and (ii) $0.6 million for severance payments.  In the 2009 first
quarter, $0.5 million was charged against the reserve for inventory primarily
reflecting the sale of inventory below its carrying costs.  A total of
approximately 70 employees are affected by the shutdown of the Florida
farm.  During the 2009 first quarter, one employee was terminated as a
result of the shutdown of the Florida farm, bringing the total number of
employees terminated as a result of the shutdown of the Florida farm to 15 as of
February 28, 2009.  The liquidation of the Florida inventory, payment
of the balance of severance and the shutdown of the Florida farm are expected to
take place during fiscal 2009.
 
 Included in the reserve for inventory
are the excess of the carrying value of the inventory over the estimated sales
proceeds, costs to maintain the inventory prior to sale and estimated disposal
costs.  Although management used its best judgment in estimating the
amount of the required inventory reserve, the actual amount may differ from the
amount estimated based on several factors, including market
conditions.  Although the effect of differences between estimated and
actual amounts will be reflected in fiscal 2009 results, there were no changes
to the amounts estimated in fiscal 2008 reflected in Imperial’s 2009 first
quarter operating results.


4.  Inventory





Inventories consist of:





February
      28, 2009
              
              November
      29, 2008Nursery
      stock
              $
              32,186
              
              $
              30,051Materials
      and supplies
              
              2,964
              
              
              2,01735,150
              
              
              32,068Reserves
              
              (7,210
              )
              
              (7,721
              )$
              27,940
              
              $
              24,347




10




5.   Real
Estate Assets
 
 Real estate held for sale or lease
consists of:
 
 February
      28, 2009Estimated Useful
      Lives
                Held
      for Sale
                
                Held
      for Lease
                
                TotalLand
                
                $
                1,634
                
                $
                7,770
                
                $
                9,404Land
      improvements
                10
      to 30 years
                
                691
                
                
                7,770
                
                
                8,461Buildings
      and improvements
                10
      to 40 years
                
                -
                
                
                103,659
                
                
                103,659Tenant
      improvements
                Shorter
      of useful life or terms of related lease
                
                -
                
                
                11,480
                
                
                11,480Development
      costs
                
                
                6,311
                
                
                7,987
                
                
                14,2988,636
                
                
                138,666
                
                
                147,302Accumulated
      depreciation
                
                
                -
                
                
                (31,642
                )
                
                (31,642
                )$
                8,636
                
                $
                107,024
                
                $
                115,660




November
      29, 2008Estimated Useful
      Lives
              Held
      for Sale
              
              Held
      for Lease
              
              TotalLand
              
              $
              1,634
              
              $
              7,770
              
              $
              9,404Land
      improvements
              10
      to 30 years
              
              691
              
              
              7,729
              
              
              8,420Buildings
      and improvements
              10
      to 40 years
              
              -
              
              
              103,651
              
              
              103,651Tenant
      improvements
              Shorter
      of useful life or terms of related lease
              
              -
              
              
              11,464
              
              
              11,464Development
      costs
              
              
              6,151
              
              
              5,314
              
              
              11,4658,476
              
              
              135,928
              
              
              144,404Accumulated
      depreciation
              
              
              -
              
              
              (30,456
              )
              
              (30,456
              )$
              8,476
              
              $
              105,472
              
              $
              113,948









11




6.   Investments
 
 Short-Term 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 carried 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 Griffin’s pretax loss.  The composition of
short-term investments at February 28, 2009 and November 29, 2008 is as
follows:




February
      28, 2009
              
              November
      29, 2008Cost
              
              Fair
      Value
              
              Cost
              
              Fair
      ValueU.S.
      Treasury securities
              $
              6,508
              
              $
              6,523
              
              $
              8,433
              
              $
              8,510Certificates
      of deposit
              
              -
              
              
              -
              
              
              114
              
              
              114Total
      short-term investments
              $
              6,508
              
              $
              6,523
              
              $
              8,547
              
              $
              8,624


Income from cash equivalents and
short-term investments in the 2009 first quarter and 2008 first quarter consist
of:





For
      the 13 Weeks Ended,February
      28, 2009
              
              
              March
      1, 2008Interest
      and dividend income
              $
              23
              
              
              $
              37Net
      realized gains on the sales of short-term investments
              
              86
              
              
              
              201Changes
      in unrealized gains on short-term investments
              
              (62
              )
              
              
              145$
              47
              
              
              $
              383


Centaur Media, plc





Griffin’s investment in the common
stock of Centaur Media, plc (“Centaur Media”) is accounted for as an
available-for-sale security under SFAS No. 115.  Accordingly, changes
in the value of Centaur Media, reflecting both changes in the stock price and
changes in the foreign currency exchange rate are included, net of income taxes,
in Accumulated Other Comprehensive (Loss) Income (see Note 8).





As of February 28, 2009, the cost,
gross unrealized loss and fair value of Griffin’s investment in Centaur Media
were $2,677, ($1,223) and $1,454, respectively.  As of November 29,
2008, the cost, gross unrealized gain and fair value of Griffin’s investment in
Centaur Media were $2,677, $697 and $3,374, respectively.  Griffin
believes that the gross unrealized loss on its investment in Centaur Media
common stock is due to the weak economic climate, is temporary in nature and
that Griffin has the intent and the ability to hold its Centaur Media common
stock until it has recovered its cost basis.  Griffin believes it has
sufficient liquidity to meet its operating cash needs without the sale of its
Centaur Media common stock.


12
  7.      Long-Term
Debt
 
 Long-term debt includes:
 
 February
      28, 2009
                  
                  November
      29, 2008Nonrecourse
      mortgages:8.54%,
      due July 1, 2009
                  $
                  7,456
                  
                  $
                  7,4826.08%,
      due January 1, 2013
                  
                  7,582
                  
                  
                  7,6346.30%,
      due May 1, 2014
                  
                  904
                  
                  
                  9395.73%,
      due July 1, 2015
                  
                  20,339
                  
                  
                  20,4188.13%,
      due April 1, 2016
                  
                  5,001
                  
                  
                  5,0607.0%,
      due October 1, 2017
                  
                  6,772
                  
                  
                  6,816Total
      nonrecourse mortgages
                  
                  48,054
                  
                  
                  48,349Capital
      leases
                  
                  147
                  
                  
                  167Total
                  
                  48,201
                  
                  
                  48,516Less:
      current portion
                  
                  (8,650
                  )
                  
                  (8,661
                  )Total
      long-term debt
                  $
                  39,551
                  
                  $
                  39,855
 On February 6, 2009, Griffin entered
into a $12 million Construction to Permanent Loan with Berkshire Bank (the
“Berkshire Bank Loan”), which will provide a significant portion of the
financing for construction
in 2009 of an approximate 304,000 square foot warehouse facility in New England
Tradeport (“Tradeport”), Griffin’s industrial park in Windsor and East Granby,
Connecticut.  Prior to the closing of the Berkshire Bank Loan, Griffin
Land entered into a ten-year lease with a private company to lease approximately
257,000 square feet of this new facility.  Under certain conditions,
but no later than the beginning of the sixth year of the lease, the tenant is
required to lease the entire building.  The lease contains provisions
for a potential expansion of the building of up to approximately 450,000 square
feet.
 
 During the first year, the Berkshire
Bank Loan will function as a construction loan, with Griffin Land drawing funds
as construction on the new warehouse progresses.  The interest rate
during the first year of the Berkshire Bank Loan is the greater of 2.75% above
the thirty day LIBOR rate or 4%.  Payments during this period are for
interest only.  One year after the loan closing date, the Berkshire
Bank Loan converts to a nine-year nonrecourse mortgage collateralized by the new
warehouse facility.  Payments during those nine years will be for
principal and interest and will be based on a twenty-five year amortization
period.  There were no amounts outstanding under the Berkshire Bank
Loan as of February 28, 2009.
 
 At the time Griffin closed the
Berkshire Bank Loan, Griffin also entered into an interest rate swap agreement
with the bank for a notional principal amount of $12 million at inception to fix
the  interest rate for the final nine years of the loan at
6.35%.  The swap agreement was entered into on February 6, 2009;
however, the settlements under the swap agreement commence on March 1,
2010.  Payments under the swap agreement will continue on the first
day of each month until February 1, 2019, which is also the termination date of
the Berkshire Bank Loan.  Griffin is accounting for the interest rate
swap agreement as an effective cash flow hedge (see Notes 8 and
9).  No ineffectiveness on the cash flow hedge was recognized as of
February 28, 2009 and none is anticipated over the term of the
agreement.  There were no amounts reclassified from other
comprehensive (loss) income to interest expense as of February 28, 2009 and no
amounts are anticipated to be reclassified in the next twelve
months.  Amounts in other comprehensive (loss) income will be
reclassified into interest expense over the term of the swap agreement to
achieve the fixed rate on the debt.  The interest rate swap agreement
contains no credit risk related contingent features.  For the 2009
first quarter, the amount of loss recognized on the effective
  13
  portion
of this interest rate swap agreement in other comprehensive loss was $0.2
million, before taxes.  As of February 28, 2009, the interest rate
swap liability was approximately $0.2 million and is included in other
noncurrent liabilities on Griffin’s consolidated balance sheet.
 
 On February 27, 2009, Griffin entered
into a $10 million Revolving Line of Credit with Doral Bank (the “Credit Line”)
that has a term of two years, but may be extended for an additional year by
Griffin.  The Credit Line is collateralized by several of Griffin
Land’s buildings in Griffin Center and Griffin Center South.  The
interest rate on the Credit Line is the greater of the prime rate plus 1.5% or
6.88%.  Griffin intends to use this facility for seasonal working
capital needs, to supplement cash flow from operations and for general corporate
purposes.  There were no amounts outstanding under the Credit Line as
of February 28, 2009.  Subsequent to the end of the 2009 first
quarter, Griffin borrowed $7.5 million under the Credit Line and used the
proceeds to prepay, on April 1, 2009, its 8.54% nonrecourse mortgage that was
due on July 1, 2009.  The mortgage had a balance of $7.4 million when
it was repaid and there was no prepayment penalty.  Griffin is seeking
mortgage financing that may include some or all of the properties that had
collateralized the mortgage that was repaid.
 
 8.    Stockholder’s
Equity
 
 Earnings
Per Share
 
 Basic and
diluted per share results were based on the following:
  For
      the 13 Weeks Ended,February
      28, 2009
                
                March
      1, 2008Net
      loss as reported for computationof basic and diluted per share results
                $
                (1,822
                )
                $
                (1,609
                )Weighted
      average shares outstanding forcomputation
      of basic and dilutedper
      share results (a)
                
                5,073,000
                
                
                5,093,000
  (a)
              Incremental
      shares from the assumed exercise of Griffin stock options are not included
      in periods where the inclusion of such shares would be
      anti-dilutive.  The incremental shares from the assumed exercise
      of stock options in the 2009 first quarter and 2008 first quarter would
      have been 39,000 and 96,000, respectively.
 
 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 Compensation Committee of the Board of Directors of Griffin
administers the Griffin Stock Option Plan. 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 will 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
  14
  employees
vest in equal installments on the third, fourth and fifth anniversaries from the
date of grant. None of the stock options outstanding at February 28, 2009 may be
exercised as stock appreciation rights.
 
 There were 61,749 and 25,000 stock
options granted during the 2009 and 2008 first quarters,
respectively.  The fair values of the stock options granted during the
2009 first quarter were $14.88 for 22,500 options, $14.40 for 22,500 options,
$10.54 for 15,000 options and $15.53 for 1,749 options.  The fair
value of the stock options granted during the 2008 first quarter was
$14.82.  The fair values of all options granted were estimated as of
each grant date using the Black-Scholes option-pricing
model.  Assumptions used in determining the fair value of the stock
options granted were as follows:
  For
      the 13 Weeks Ended,February
      28, 2009
                  
                  March
      1, 2008Expected
      volatility
                  37.7%
      to 42.5%
                  
                  41.1%Risk
      free interest rate
                  1.6%
      to 2.0%
                  
                  3.5%Expected
      option term
                  5
      to 8.5 years
                  
                  7
      yearsAnnual
      dividend yield
                  $0.40
                  
                  $0.40
 Activity
under the Griffin Stock Option Plan is summarized as follows:
  For
      the 13 Weeks Ended,February
      28, 2009
                
                
                March
      1, 2008Vested
      Options
                Number
      of Shares
                
                Weighted
      Avg. Exercise Price
                
                Number
      of Shares
                
                Weighted
      Avg. Exercise PriceOutstanding
      at beginning of period
                
                89,368
                
                
                $
                15.56
                
                
                
                218,378
                
                
                $
                14.13Exercised
                
                (8,047
                )
                
                $
                13.25
                
                
                
                -
                
                
                
                -Granted
      and vested
                
                1,749
                
                
                $
                34.30
                
                
                
                -
                
                
                
                -Outstanding
      at end of period
                
                83,070
                
                
                $
                16.17
                
                
                
                218,378
                
                
                $
                14.13
 Range
      of Exercise Prices for Vested Options
                
                Outstanding
      at February 28, 2009
                
                Weighted
      Avg. Exercise Price
                
                Weighted
      Avg. Remaining Contractual Life
                  (in
      years)
                
                Total
      Intrinsic Value
                
                Total Fair Value$11.00-$14.00
                
                
                50,544
                
                $
                11.99
                
                
                1.7
                
                $
                722
                
                $
                249$15.00-$18.00
                
                
                15,322
                
                $
                16.80
                
                
                2.6
                
                
                145
                
                
                98$24.00-$35.00
                
                
                17,204
                
                $
                27.90
                
                
                5.9
                
                
                11
                
                
                23983,070
                
                $
                16.17
                
                
                2.7
                
                $
                878
                
                $
                586
  15
  For
      the 13 Weeks Ended,February
      28, 2009
                  
                  
                  March
      1, 2008Nonvested
      Options
                  Number
      of Shares
                  
                  Weighted
      Avg. Exercise Price
                  
                  Number
      of Shares
                  
                  Weighted
      Avg. Exercise PriceNonvested
      at beginning of period
                  
                  40,684
                  
                  
                  $
                  33.66
                  
                  
                  
                  18,348
                  
                  
                  $
                  32.62Granted
                  
                  60,000
                  
                  
                  $
                  33.07
                  
                  
                  
                  25,000
                  
                  
                  $
                  34.04Nonvested
      at end of period
                  
                  100,684
                  
                  
                  $
                  33.31
                  
                  
                  
                  43,348
                  
                  
                  $
                  33.44
  Range
      of Exercise Prices for Nonvested Options
                  
                  Outstanding
      at February 28, 2009
                  
                  Weighted
      Avg. Exercise Price
                  
                  Weighted
      Avg. Remaining Contractual Life
                    (in
      years)
                  
                  Total Intrinsic Value
                  
                  
                  Total Fair Value$30.00-$35.00
                  
                  
                  97,528
                  
                  $
                  33.16
                  
                  
                  9.1
                  
                  $
                  -
                  
                  
                  $
                  1,384Over
      $35.00
                  
                  
                  3,156
                  
                  $
                  38.00
                  
                  
                  0.3
                  
                  
                  -
                  
                  
                  
                  70100,684
                  
                  $
                  33.31
                  
                  
                  8.8
                  
                  $
                  -
                  
                  
                  $
                  1,454
  Number
      of option holders at February 28, 2009
                  21
 
 Compensation expense for stock options
recognized in the 2009 first quarter and the 2008 first quarter was $88 and $47,
respectively, with related tax benefits of $26 and $14,
respectively.
 
 As of February 28, 2009, the
unrecognized compensation expense related to nonvested stock options that will
be recognized during future periods is as follows:
   Balance
      of Fiscal 2009
              
              $
      248Fiscal
      2010
              
              $
      297Fiscal
      2011
              
              $
      241Fiscal
      2012
              
              $
      141Fiscal
      2013
              
              $  56Fiscal
      2014
              
              $   7
  16
  Accumulated Other Comprehensive (Loss)
Income
 
 Changes
in accumulated other comprehensive (loss) incomein the 2009 first quarter
and 2008 first quarter consist of the following:
  For
      the 13 Weeks Ended,February
      28, 2009
                    
                    
                    March
      1, 2008Balance
      at beginning of period
                    
                    $
                    646
                    
                    
                    $
                    5,002Decrease
      in fair value of Centaur Media, net of taxes of ($633)and
      ($276), respectively
                    
                    
                    (1,176
                    )
                    
                    
                    (511
                    )Decrease
      in value of cash flow hedge, net of tax of ($64)
                    
                    
                    (119
                    )
                    
                    
                    -Decrease
      in fair value of Centaur Media, due to exchange loss,net
      of taxes of ($39) and ($110), respectively
                    
                    
                    (72
                    )
                    
                    
                    (204
                    )Balance
      at end of period
                    
                    $
                    (721
                    )
                    
                    $
                    4,287Accumulated
      other comprehensive (loss) income is comprised of the
      following:February
      28, 2009
                    
                    
                    November
      29, 2008Change
      in the value of Centaur Media, plc
                    
                    $
                    (786
                    )
                    
                    $
                    462Change
      in value of cash flow hedge
                    
                    
                    (119
                    )
                    
                    
                    -Actuarial
      gain on postretirement benefit plan
                    
                    
                    184
                    
                    
                    
                    184$
                    (721
                    )
                    
                    $
                    646
  Cash Dividend
  In the 2009 first quarter, Griffin
declared a cash dividend of $0.10 per common share for holders of record as of
the close of business on February 23, 2009, payable on March 5, 2009. In the
2008 first quarter, Griffin declared a cash dividend of $0.10 per common
share.
 9.      Supplemental
Financial Statement Information
  Fair Value of Assets, Liabilities and
Interest Rate Hedge
 
 In fiscal 2008, Griffin Adopted SFAS
No. 157, “Fair Value Measurements (“SFAS No. 157”).  SFAS No. 157
establishes a fair value hierarchy that requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring
fair value.  A financial instrument’s categorization within the fair
value hierarchy is based upon the lowest level of input that is significant to
the fair value measurement.  SFAS No. 157 establishes three levels of
inputs that may be used to measure fair value, as
follows:
 
 Level 1
applies to assets or liabilities for which there are quoted market prices in
active markets for identical assets or liabilities. Level 1 securities include
Griffin’s short-term (trading account) investments and available for sale
securities.
 
 
 Level 2
applies to assets or liabilities for which there are inputs other than quoted
prices included within Level 1 that are observable for the asset or liability,
such as quoted prices
   17
 for
similar assets or liabilities in active markets; quoted prices for assets or
liabilities in markets with insufficient volume or infrequent transactions (less
active markets); or model-derived valuations in which significant inputs are
observable or can be derived principally from, or corroborated by, observable
market data.  Level 2 liabilities include an interest rate swap
derivative. The fair value of Griffin’s interest rate swap derivative instrument
is determined based on inputs that are readily available in public markets or
can be derived from information available in publicly quoted
markets.  Therefore, Griffin has categorized this derivative
instrument as Level 2 within the fair value hierarchy.
 
 
 Level 3
applies to assets or liabilities for which there are unobservable inputs to the
valuation methodology that are significant to the measurement of the fair value
of the assets or liabilities. Level 3 assets include certain fixed assets and
accruals related to the shutdown of Imperial's Florida farm.  Such
fixed assets were measured in accordance with Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long Lived
Assets." Such accruals were measured in accordance with Statement of Financial
Accounting Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities." These assets and liabilities are classified within Level 3
of the fair value hierarchy because management determined that significant
adjustments derived from Griffin’s own assumptions are required to determine
fair value at the measurement date.
 
 
 The following are Griffin’s financial
assets and liabilities carried at fair value and measured at fair value on a
recurring basis as of February 28, 2009:
  Quoted
      Prices in
                  
                  Significant
                  
                  SignificantActive
      Markets for
                  
                  Observable
                  
                  UnobservableIdentical
      Assets
                  
                  Inputs
                  
                  Inputs(Level
      1)
                  
                  (Level
      2)
                  
                  (Level
      3)Trading
      securities
                  $
                  6,523
                  
                  $
                  -
                  
                  $
                  -Available
      for sale securities
                  $
                  1,454
                  
                  $
                  -
                  
                  $
                  -Interest
      rate swap
                  $
                  -
                  
                  $
                  (183
                  )
                  $
                  -
  
 Included on Griffin’s consolidated
balance sheet as of February 28, 2009 are certain nonfinancial assets and
nonfinancial liabilities, related to the shutdown of Imperial’s Florida farm,
that are measured at fair value on a nonrecurring basis as
follows:
  Quoted
      Prices in
                  
                  Significant
                  
                  SignificantActive
      Markets for
                  
                  Observable
                  
                  UnobservableIdentical
      Assets
                  
                  Inputs
                  
                  Inputs(Level
      1)
                  
                  (Level
      2)
                  
                  (Level
      3)Fixed
      assets
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -Severance
      accrual
                  $
                  -
                  
                  $
                  -
                  
                  $
                  (532
                  )
 Certain fixed assets of Imperial’s
Florida farm were deemed to have no fair value as of November 29, 2008 and were
fully impaired at that time.
  18
  Deferred
Revenue on Land Sale
 
 In fiscal
2006, Griffin sold 130 acres of undeveloped land in Tradeport for cash proceeds
of $13.0 million.  As provided under the contract for the sale of that
land and 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 were the responsibility of
Griffin, however, a portion of the costs were reimbursed from the purchaser of
the land and performed by the town.  As a result of Griffin’s
continuing involvement with the required road improvements, that land sale was
accounted for under the percentage of completion method.  Accordingly,
the revenue and the pretax gain on the sale were 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 road
improvements.  Griffin’s consolidated statement of operations for the
2008 first quarter included revenue of $0.4 million and a pretax gain of $0.3
million from this land sale.  As of November 29, 2008, the required
road improvements were completed and all of the costs incurred, therefore, all
of the revenue and pretax gain on the sale were recognized as of that
date.  Accordingly, there is no revenue or pretax gain related to this
transaction in the 2009 first quarter.
 
 Supplemental
Cash Flow Information
 
 The decreases of $1,920 and $1,101,
respectively, in the 2009 first quarter and 2008 first quarter in Griffin’s
Investment in Centaur Media reflect the mark to market adjustment of this
investment and did not affect Griffin’s cash.
 
 Included in accounts payable and
accrued liabilities at February 28, 2009 and November 29, 2008 were $1,883 and
$983, 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 increased by $900 in the 2009 first
quarter and decreased by $174 in the 2008 first quarter.
 
 As of February 28, 2009, included in
Griffin’s accrued liabilities is a dividend payable of $508 reflecting a
dividend on Griffin’s common stock declared prior to the end of the 2009 first
quarter, that was paid subsequent to the end of Griffin’s 2009 first
quarter.  As of November 29, 2008, Griffin’s accrued liabilities
included $507 for a dividend on Griffin’s common stock that was declared prior
to the end of fiscal 2008 and paid in the 2009 first quarter.
 
 Interest payments, net of capitalized
interest, were $809 and $829, respectively in the 2009 first quarter and 2008
first quarter, respectively.
 Property and Equipment
 
 Property and equipment consist
of:
 
 Estimated Useful
      Lives
                    
                    February
      28, 2009
                    
                    November
      29, 2009Land
                    
                    
                    $
                    715
                    
                    $
                    715Land
      improvements
                    10
      to 20 years
                    
                    
                    5,650
                    
                    
                    5,650Buildings
      and improvements
                    10
      to 40 years
                    
                    
                    3,060
                    
                    
                    3,060Machinery
      and equipment
                    3
      to 20 years
                    
                    
                    17,494
                    
                    
                    17,52926,919
                    
                    
                    26,954Accumulated
      depreciation
                    
                    
                    
                    (20,736
                    )
                    
                    (20,517
                    )$
                    6,183
                    
                    $
                    6,437
  19
 Griffin
did not incur any new capital lease obligations in the 2009 first
quarter.  Griffin incurred new capital lease obligations of $26 in the
2008 first quarter.
 
 Income Taxes
 
 Griffin’s effective income tax rate was
35.5% in the 2009 first quarter as compared to 38.2% in the 2008 first
quarter.  The effective tax rate used in the 2009 first quarter 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.
 
 A decrease to deferred income tax
liabilities of $736 in the 2009 first quarter relates to the mark to market
adjustment on Griffin’s investment in Centaur Media and to the value of a
derivative that was entered into in the 2009 first quarter.  The
decrease in deferred taxes in the 2008 first quarter relates to the mark to
market adjustment related to Centaur Media.  These decreases to
deferred income tax liabilities are included as credits in Griffin’s other
comprehensive loss for the 2009 and 2008 first quarters.
 
 Postretirement
Benefits
 
 Griffin maintains a postretirement
benefits program that 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.
Griffin’s postretirement benefits are unfunded, with benefits to be paid from
Griffin's general assets.  Griffin’s contributions to its
postretirement benefits program in the 2009 first quarter and 2008 first quarter
were $1 and $2, respectively, with an expected contribution of $16 for the
fiscal 2009 full year.  The components of Griffin's postretirement
benefits expense are immaterial for all periods presented.
 
 
 10.           Commitments
and Contingencies
 
 As of
February 28, 2009, Griffin had committed purchase obligations of $11.8
million, principally for Griffin Land’s construction of the shell of a new
industrial building in Tradeport and for the purchase of plants and raw
materials by Imperial.
 
 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, individually or in the aggregate,
to Griffin’s consolidated financial position, results of operations or cash
flows.
  20
 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 November 29,
2008 included in Griffin’s Annual Report on Form 10-K as filed with the
Securities and Exchange Commission.
 
 The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses in the reporting period.  Griffin regularly
evaluates estimates and assumptions related to the useful life and
recoverability of long-lived assets, stock-based compensation expense, deferred
income tax asset valuations, valuation of derivative instruments and inventory
reserves.  Griffin bases its estimates and assumptions on current
facts, historical experience and various other factors that it believes to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by Griffin may differ materially and adversely
from Griffin’s estimates.  To the extent there are material
differences between the estimates and the actual results, future results of
operations will be affected.  The significant accounting estimates
used by Griffin in preparation of its financial statements for the thirteen
weeks ended February 28, 2009 are consistent with those used by Griffin to
prepare its fiscal 2008 financial statements.
 
 Summary
 
 Griffin incurred a net loss of $1.8
million for the thirteen weeks ended February 28, 2009 (the “2009 first
quarter”) as compared to a net loss of $1.6 million for the thirteen weeks ended
March 1, 2008 (the “2008 first quarter”).  The higher net loss
principally reflects lower investment income in the 2009 first quarter partially
offset by a slightly lower consolidated operating loss in the 2009 first
quarter.  Imperial incurred a smaller operating loss in the 2009 first
quarter as compared to the 2008 first quarter, and Griffin Land’s overall
operating results were essentially break-even in the 2009 first quarter as
compared to a small operating loss in the 2008 first
quarter.  Imperial historically incurs an operating loss in the first
quarter due to the highly seasonal nature of its landscape nursery
business.  Griffin’s general corporate expense was slightly higher in
the 2009 first quarter as compared to the 2008 first quarter, principally
reflecting the timing of expenses.
 
 Results
of Operations
 
 Thirteen
Weeks Ended February 28, 2009 Compared to the Thirteen Weeks Ended March 1,
2008
 
 Griffin’s consolidated total revenue
increased to $4.6 million in the 2009 first quarter from $4.5 million in the
2008 first quarter.  The net increase reflects a $0.1 million increase
in revenue at Griffin Land.  Net sales and other revenue at Imperial,
which are minimal in the first quarter due to the seasonality of its landscape
nursery business, were substantially unchanged.
  21
 The increase in Griffin Land’s total
revenue principally reflects an increase of $0.5 million in rental revenue, due
principally to revenue from leases that started after the 2008 first quarter and
therefore are included in 2009 first quarter rental revenue, partially offset by
a reduction of $0.4 million in property sale revenue.  A summary of
the square footage of Griffin Land’s real estate portfolio is as
follows:
 
 Total
                  Square
                  Footage
                Square
                  Footage
                  Leased
                Percentage
                  LeasedAs
      of February 28, 2009
                2,116,000
                1,684,000
                80%As
      of November 29, 2008
                2,116,000
                1,684,000
                80%As
      of March 1, 2008
                2,016,000
                1,331,000
                66%
 
 Griffin
Land’s square footage leased at the end of the 2009 first quarter was unchanged
from the square footage leased at year end 2008.  The increase in
square footage leased at the end of the 2009 first quarter as compared to the
end of the 2008 first quarter principally reflects the leasing, during 2008, of
Griffin Land’s approximate 308,000 square foot warehouse in Manchester,
Connecticut that had been vacant, and the leasing of approximately 58,000 square
feet in a new 100,000 square foot building built during 2008 in New England
Tradeport (“Tradeport”), Griffin Land’s industrial park in Windsor and East
Granby, Connecticut.  The tenant in that new building previously
leased approximately 22,000 square feet in another of Griffin Land’s Tradeport
industrial buildings.  The previously leased space remains
vacant.
 
 Market
activity for industrial and office space continued to be soft in the 2009 first
quarter, reflecting the weak economy.  Griffin Land did not enter into
any new leases for its existing properties during the 2009 first
quarter.  However, during the 2009 first quarter, Griffin Land entered
into a ten-year lease with a private company for approximately 257,000 square
feet in an approximate 304,000 square foot industrial building that will be
built in Tradeport by Griffin Land and is expected to be completed in the 2009
third quarter.  Under certain conditions, but no later than the
beginning of the sixth year of the lease, the tenant is required to lease the
entire building.  The lease also contains provisions for the expansion
of the building up to approximately 450,000 square feet.  Griffin Land
also expects to enter into a ten-year lease for the entire approximately 40,000
square feet in a single story office building in Griffin Center South that has
been vacant.  Tenant occupancy of this building is also expected to
start in the third quarter this year.
 
 Griffin Land had no property sales
revenue in the 2009 first quarter.  Property sales revenue in the 2008
first quarter was for the recognition of a portion of the previously deferred
revenue on a 2006 land sale that was accounted for under the percentage of
completion method.  Property sales occur periodically and changes in
revenue from year to year from those transactions may not be indicative of any
trends in the real estate business.
 
 Net sales and other revenue at Imperial
were essentially unchanged in the 2009 first quarter as compared to the 2008
first quarter.  Imperial’s landscape nursery business is highly
seasonal, with sales peaking in the spring.  First quarter sales at
Imperial are not significant because sales in the winter months that comprise
the first quarter (December through February) have accounted for less than 3% of
Imperial’s full year net sales in each of the past three years.
 
 Griffin incurred a consolidated
operating loss, including general corporate expense, of $2.1 million in the 2009
first quarter which was slightly lower than the consolidated operating loss
incurred in the 2008 first quarter.  Imperial’s operating loss in the
2009 first quarter was lower than its 2008 first quarter operating loss, whereas
Griffin Land’s operating results were essentially break-even in the 2009 first
quarter as compared to a small operating loss in the 2008 first
quarter.  Griffin’s general corporate
  22
  expense
was $0.1 million higher in the 2009 first quarter than the 2008 first quarter,
principally reflecting the timing of expenses.
 
 Operating
results at Griffin Land in the 2009 and 2008 first quarters were as
follows:
 
 2009
                  
                  
                  2008First
      Qtr.
                  
                  
                  First
      Qtr.(amounts
      in thousands)Rental
      revenue
                  
                  $
                  4,184
                  
                  
                  $
                  3,636Costs
      related to rental revenue excludingdepreciation
      and amortization expense (a)
                  
                  
                  (2,117
                  )
                  
                  
                  (2,153
                  )Profit
      from leasing activities before general andadministrative
      expenses and before depreciationand
      amortization expense (a)
                  
                  
                  2,067
                  
                  
                  
                  1,483Revenue
      from property sales
                  
                  
                  -
                  
                  
                  
                  421Costs
      related to property sales
                  
                  
                  -
                  
                  
                  
                  (91
                  )Gain
      from property sales
                  
                  
                  -
                  
                  
                  
                  330Profit
      from leasing activities and gain from property salesbefore
      general and administrative expenses and beforedepreciation
      and amortization expense (a)
                  
                  
                  2,067
                  
                  
                  
                  1,813General
      and administrative expenses excluding depreciationand amortization expense (a)
                  
                  
                  (692
                  )
                  
                  
                  (645
                  )Profit
      before depreciation and amortization expense
                  
                  
                  1,375
                  
                  
                  
                  1,168Depreciation
      and amortization expense related to costs ofrental revenue
                  
                  
                  (1,361
                  )
                  
                  
                  (1,227
                  )Depreciation
      and amortization expense - other
                  
                  
                  (8
                  )
                  
                  
                  (9
                  )Operating
      profit (loss)
                  
                  $
                  6
                  
                  
                  $
                  (68
                  )
 
 (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 State 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 aggregate of: (i) costs related
      to rental revenue excluding depreciation and amortization expense; (ii)
      costs related to property sales; and (iii) depreciation and amortization
      expense related to costs of rental revenue, equals the costs related to
      rental revenue and property sales as reported on Griffin’s consolidated
      statement of operations.
 
 Profit from leasing activities before
general and administrative expenses and before depreciation and amortization
expense increased by approximately $0.6 million in the 2009 first quarter as
compared to the 2008 first quarter, principally reflecting the increase in
rental revenue.  Costs related to rental revenue excluding
depreciation and amortization expense were essentially unchanged.  An
increase in building operating expenses of approximately $0.1 million due to the
new building that came on line in
  23
  the 2008
third quarter was offset by a net decrease of approximately $0.1 million in
operating expenses in all other buildings.
 
 There
were no property sales in the 2009 first quarter.  The gain from
property sales in the 2008 first quarter reflected the recognition of previously
deferred revenue and profit from the land sale to Walgreen that closed in fiscal
2006.  The land sale to Walgreen was accounted for under the
percentage of completion method, whereby a portion of the revenue and gain on
sales was initially deferred and recognized as required road improvements were
made.  The required road improvements were completed as of November
29, 2008, therefore, all of the revenue and gain on that transaction have been
recognized.
 
 Griffin
Land’s general and administrative expenses were slightly higher in the 2009
first quarter as compared to the 2008 first quarter due principally to higher
payroll expense.  Depreciation and amortization expense at Griffin
Land increased from $1.2 million in the 2008 first quarter to $1.4 million in
the 2009 first quarter.  The increase reflects depreciation expense of
approximately $0.1 million for the Tradeport industrial building completed and
placed in service in the 2008 third quarter and an increase of $0.1 million of
amortization expense principally reflecting the acceleration of the amortization
of a tenant relationship intangible asset related to a tenant in one of Griffin
Land’s multi-story office buildings that were acquired several years
ago.  The lease with that tenant will expire in 2009 and will not be
renewed.
 
 Imperial’s operating results in the
2009 and 2008 first quarters were as follows:
 
 2009
                  
                  
                  2008First
      Qtr.
                  
                  
                  First
      Qtr.(amounts
      in thousands)Net
      sales and other revenue
                  
                  $
                  449
                  
                  
                  $
                  424Cost
      of goods sold
                  
                  
                  419
                  
                  
                  
                  438Gross
      profit (loss)
                  
                  
                  30
                  
                  
                  
                  (14
                  )Selling,
      general and administrative expenses
                  
                  
                  (880
                  )
                  
                  
                  (957
                  )Operating
      loss
                  
                  $
                  (850
                  )
                  
                  $
                  (971
                  )
  
 Due to the seasonality of the landscape
nursery business, Imperial historically incurs a first quarter operating
loss.  As previously noted, Imperial’s first quarter net sales are not
significant to its total net sales for the year.  Selling, general and
administrative expenses were lower in the 2009 first quarter as compared to the
2008 first quarter due principally to lower headcount of sales personnel,
reflecting the elimination of Imperial’s two most southern sales territories
last year in connection with the shutdown of the Florida farm.
 
 As
previously reported, Imperial will shut down its Quincy, Florida growing
operations by the end of fiscal 2009.  Imperial expects to continue to
operate its farm in Granby, Connecticut.  The shutdown of Imperial’s
Florida farm reflects the difficulties that facility has encountered in
delivering product to most of Imperial’s major markets, which are located in the
mid-Atlantic area and northeastern United States.  Imperial recorded
charges totaling $8.9 million in fiscal 2008 related to the shutdown of Florida,
principally relating to the writedown of Florida inventories that, as a result
of the shutdown, will be sold below their carrying values.  Although
management used its best judgment in estimating the amount of the required
inventory reserves, actual amounts may differ from the amounts estimated based
on several factors, including market conditions.  Although the effect
of differences between estimated and actual amounts will be reflected in 2009
results, there were no changes to the amounts estimated in fiscal 2008 reflected
in Imperial’s 2009 first quarter operating results.
  24
  Imperial’s fiscal 2009 operating
results are expected to be negatively impacted by the weak economy and poor
housing market.  Selling prices in fiscal 2009 are expected to be
generally lower than recent years as Imperial discounts product more heavily
than normal to sell inventory before it becomes unsaleable and to liquidate
remaining inventory at its Florida farm.  In addition, Imperial
expects increased competition from other growers also seeking to liquidate
inventories of product not sold in 2008 as expected.
 
 Griffin’s general corporate expense was
$1.2 million in the 2009 first quarter as compared to $1.1 million in the 2008
first quarter.  The increase in general corporate expense principally
reflects the timing of expenses.
 
 Griffin’s
consolidated interest expense was slightly lower in the 2009 first quarter as
compared to the 2008 first quarter, principally reflecting lower interest as a
result of the normal reduction of mortgage principal as payments are made on
Griffin’s nonrecourse mortgages.  Griffin’s average outstanding debt
was $48.4 million in the 2009 first quarter as compared to $49.6 million in the
2008 first quarter.
 
 Griffin’s
investment income decreased from $0.4 million in the 2008 first quarter to less
than $0.1 million in the 2009 first quarter.  The decrease in
investment income in the 2009 first quarter principally reflects Griffin having
an average balance of short-term investments of $8.1 million in the 2009 first
quarter as compared to an average of $25.3 million of short-term investments in
the 2008 first quarter.  The reduction in short-term investments
principally reflects the liquidation of a portion of these investments and use
of the proceeds over the last nine months of fiscal 2008 and the 2009 first
quarter to invest in additions to Griffin Land’s real estate assets and
supplement cash generated from Griffin’s operations.
 
 As of the end of the 2009 first
quarter, Griffin’s carrying value of its investment in Centaur Media is below
its cost basis.  Griffin believes that the decrease in the market
value of its Centaur common stock is attributed to the overall weak economic
climate.  Griffin believes that the gross unrealized loss on its
investment in Centaur Media common stock is temporary in nature and Griffin has
the intent and the ability to hold its Centaur Media common stock until it has
recovered its cost basis.  Griffin believes it has sufficient
liquidity to meet its operating cash needs without the sale of its Centaur Media
common stock.
 
 Griffin’s effective income tax rate was
35.5 % in the 2009 first quarter as compared to 38.2% in the 2008 first
quarter.  The effective tax rate reflects a 34% federal tax rate with
the balance attributed to state taxes.  The effective tax rate used in
the 2009 first quarter is based on management’s projections of operating results
for the full year.  To the extent that actual results differ from
current projections, the effective income tax rate may change.
 
 Off
Balance Sheet Arrangements
 
 Griffin does not have any material off
balance sheet arrangements.
  Liquidity
and Capital Resources
 
 Net cash used in operating activities
was $1.1 million in the 2009 first quarter as compared to $3.2 million in the
2008 first quarter.  Net cash used in operating activities in the 2009
first quarter includes $2.0 million of cash generated from a reduction of
short-term investments as compared to $1.5 million of cash generated from a
reduction of short-term investments in the 2008 first
quarter.  Excluding the reduction of short-term investments in each
period, Griffin had net cash used in operating activities of $3.2 million in the
2009 first quarter as compared to $4.7 million in the 2008 first
quarter.  The lower usage of cash in the 2009 first quarter as
compared to the 2008 first quarter principally reflects a smaller
  25
  build up
of inventory at Imperial, principally reflecting the effect of the planned
shutdown of Imperial’s Florida farm by the end of this year.
 
 In the 2009 first quarter, Griffin had
net cash of $2.0 million used in investing activities as compared to net cash of
$1.6 million used in investing activities in the 2008 first
quarter.  The net cash used in investing activities in the 2009 first
quarter principally reflects additions to Griffin Land’s real estate assets,
mainly for site work for the construction of a new approximate 304,000 square
foot warehouse facility in Tradeport.  This facility is being built as
a result of Griffin Land entering into a ten-year lease with a private company
for this new building (see above).  Cost of the site work on this
project will be higher than it has been for other of Griffin Land’s buildings
because of the soil conditions.  Construction of this new facility is
expected to be completed in the 2009 third quarter.  Additions to
property and equipment were minimal in the 2009 first quarter as compared to
$0.2 million in the 2008 first quarter, principally to replace equipment used in
Imperial’s farming operations.
 
 Net cash used in financing activities
was $1.2 million in the 2009 first quarter as compared to $0.8 million in the
2008 first quarter.  The net cash used in financing activities in the
2009 first quarter includes a $0.5 million dividend payment on Griffin’s common
stock, $0.5 million of debt issuance costs in connection with two new borrowing
agreements completed in the 2009 first quarter (see below), and $0.3 million for
payments of principal on Griffin Land’s nonrecourse mortgages and capital lease
obligations.  Partially offsetting these items was $0.1 million of
cash received from the exercise of stock options.
 
 In fiscal 2007, Griffin’s Board of
Directors authorized a program to repurchase, from time to time, outstanding
shares of Griffin common stock.  The program to repurchase did not
obligate Griffin to repurchase any specific number of shares. The program
expired on December 31, 2008 and was not extended.  Griffin did not
repurchase any common stock in the 2009 first quarter.
 
 In the near-term, Griffin plans to
continue to invest in its real estate business, including the construction of
the new 304,000 square foot warehouse facility in Tradeport, expenditures to
build out interiors of its buildings as leases are completed and infrastructure
improvements required for future development of its real estate
holdings.
 
 On February 6, 2009, Griffin entered
into a $12 million Construction to Permanent Loan with Berkshire Bank (the
“Berkshire Bank Loan”), which will provide a significant portion of the
financing for construction of the approximate 304,000 square foot warehouse
facility in Tradeport.  Prior to the closing of the Berkshire Bank
Loan, Griffin Land entered into a ten-year lease with a private company for
approximately 257,000 square feet of the new 304,000 square foot facility to be
built in 2009 by Griffin Land. During
the first year, the Berkshire Bank Loan will function as a construction loan,
with Griffin Land drawing funds as construction on the new warehouse
proceeds.  The interest rate during the first year of the Berkshire
Bank Loan is the greater of 2.75% above the thirty day LIBOR rate or
4%.  Payments during this period are for interest only.  One
year after the closing date of the Berkshire Bank Loan, it converts to a
nine-year nonrecourse mortgage collateralized by the new warehouse
facility.  At the time Griffin closed on the Berkshire Bank Loan,
Griffin also entered into a swap agreement with the bank for a notional
principal amount of $12 million at inception to fix the interest rate for the
final nine years of the loan at 6.35%.  Payments during those nine
years will be for principal and interest and will be based on a twenty-five year
amortization period.  Griffin is accounting for the interest rate swap
agreement as an effective cash flow hedge (see Notes 7, 8 and 9 to the
consolidted financial statements in Item 1).
 
 On February 27, 2009, Griffin entered
into a $10 million Revolving Line of Credit with Doral Bank (the “Credit Line”)
that has a term of two years, but may be extended for an additional year by
Griffin.  The Credit Line is collateralized by several of Griffin
Land’s buildings in Griffin Center and
  26
  Griffin
Center South.  The interest rate on the Credit Line is the greater of
the prime rate plus 1.5% or 6.88%.  Griffin intends to use this
facility for seasonal working capital needs, to supplement cash flow from
operations and other corporate purposes.  There were no amounts
outstanding under the Credit Line as of February 28, 2009.  Subsequent
to the end of the 2009 first quarter, Griffin borrowed $7.5 million under the
Credit Line and used the proceeds to prepay its 8.54% nonrecourse mortgage that
was due on July 1, 2009.  The mortgage had a balance of $7.4 million
due when it was repaid.
 
 On April 2, 2009, Griffin received a
commitment from a bank for a mortgage on three of the buildings that
collateralized the mortgage that was just repaid and another building that was
not previously mortgaged.  The proposed mortgage financing would be
for a maximum of $10.5 million, with $8.5 million of proceeds received at
closing and the balance to be received if currently vacant space in the
buildings is leased within three years of the loan closing.  The
mortgage would be nonrecourse, but Griffin will be required to master lease the
buildings until overall occupancy and operating results of the collateral
properties increase to certain levels, as defined.  Interest on the
mortgage will be at a floating rate, but Griffin would be required to enter into
a swap agreement to fix the interest rate over the life of the
loan.  Closing on this mortgage is subject to several contingencies,
including completion of a definitive loan agreement with the
bank.  There is no assurance that this mortgage loan will be completed
under its current terms, or at all.
 
 Griffin’s
payments (including principal and interest) under contractual obligations as of
February 28, 2009 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
                    $
                    63.1
                    
                    $
                    11.4
                    
                    $
                    7.4
                    
                    $
                    13.2
                    
                    $
                    31.1Capital
      Lease Obligations
                    
                    0.2
                    
                    
                    0.1
                    
                    
                    0.1
                    
                    
                    -
                    
                    
                    -Operating
      Lease Obligations
                    
                    1.0
                    
                    
                    0.2
                    
                    
                    0.5
                    
                    
                    0.3
                    
                    
                    -Purchase
      Obligations (1)
                    
                    11.8
                    
                    
                    11.8
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Other
      (2)
                    
                    1.6
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1.6$
                    77.7
                    
                    $
                    23.5
                    
                    $
                    8.0
                    
                    $
                    13.5
                    
                    $
                    32.7
 
 (1)
                  Includes
      obligations for the construction of the shell of a new industrial building
      by Griffin Land and for the purchase of plants and raw materials by
      Imperial.
 (2)
                  Includes
      Griffin’s deferred compensation plan and other postretirement benefit
      liabilities.
 
 As of
February 28, 2009, Griffin had cash and short-term investments of approximately
$7.0 million.  Management believes that the additional financing
provided by the Credit Line may be required to supplement Griffin’s cash and
short-term investments to meet its seasonal working capital requirements, the
continued investment in Griffin’s real estate assets and the payment of
quarterly dividends on its common stock.  As described above, Griffin
recently received a commitment from a bank for a mortgage on certain Tradeport
properties.  Should the proposed mortgage financing not be completed,
management believes that the capacity under the Credit Line and the Berkshire
Bank Loan would be sufficient to meet Griffin’s operating cash needs and fund
construction of the approximately 304,000 square foot facility being built by
Griffin Land in Tradeport in 2009.
 
 Griffin
may also continue to seek nonrecourse mortgage placements on other of its
properties.  Griffin also anticipates seeking to purchase either or
both land and buildings.  Real estate acquisitions may or may not
occur based on many factors, including real estate pricing.
  27
  Recent
Accounting Pronouncements
 
 In
February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB
Staff Position 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”),
which delayed the effective date of SFAS No. 157 for all nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually),
until the 2009 first quarter for Griffin.  The application of SFAS No.
157 to Griffin’s nonfinancial assets and nonfinancial liabilities did not impact
Griffin’s 2009 first quarter consolidated financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities, an Amendment of FASB Statement No. 133” (“SFAS No.
161”). This new pronouncement did not require any changes in the accounting for
derivative instruments, but is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance and cash flows. SFAS No. 161 applies to all
derivative instruments within the scope of SFAS No. 133, “Accounting for
Derivative Instruments and Hedging Activities,” as well as related hedged items,
bifurcated derivatives and nonderivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS No.
161 must provide more robust qualitative disclosures and expanded quantitative
disclosures.  The adoption of the enhanced disclosures as required
under SFAS No. 161 are included in Griffin’s financial statements for the 2009
first quarter.
 
 In April
2008, the FASB issued FASB Staff Position 142-3, “Determination of the Useful
Life of Intangible Assets” (“FSP 142-3”), which amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill
and Other Intangible Assets” (“SFAS No. 142”).  The objective of FSP
142-3 is to improve the consistency between the useful life of a recognized
intangible asset under SFAS No. 142 and the period of expected cash flows used
to measure the fair value of the asset under SFAS No. 141(R), “Business
Combinations” and other principles of generally accepted accounting
principles.  FSP 142-3 applies to all intangible assets, whether
acquired in a business combination or otherwise, and shall be effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years and applied prospectively to
intangible assets acquired after the effective date.  Griffin is
required to adopt FSP 142-3 in fiscal 2010 and is currently evaluating the
effect 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
the timing of the shutdown of Imperial’s Florida farm, the sale of the remaining
Florida inventories in 2009, leasing of currently vacant space, construction of
additional facilities in the real estate business, approval of proposed
residential subdivisions, completing the proposed mortgage financing on certain
of Griffin Land’s Tradeport properties  and Griffin’s anticipated
future liquidity.  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.
  28
  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, and therefore, 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 7
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.  During the 2009 first quarter, Griffin
entered into two loan facilities that have variable interest rates, although
there were no amounts outstanding under either of these facilities as of
February 28, 2009.  Griffin also entered into a swap agreement that
effectively converts the variable rate interest on its new $12 million
construction to permanent loan to a fixed rate during the final nine years of
that ten-year loan.
 
 Griffin is potentially exposed to
market risks from fluctuations in interest rates and the effects of those
fluctuations on the 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 two to ten months, with a weighted
average maturity of approximately seven months as of February 28,
2009.  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 have foreign currency
exposure related to its operations.  Griffin does have an investment
in a public company, Centaur Media, plc, based in the United
Kingdom.  The amount to be realized from the ultimate liquidation of
that investment and conversion of proceeds into United States currency is
subject to future foreign currency exchange rates.
 
 
 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.
  29
  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.
  30
  PART
      II
                    OTHER
      INFORMATION
 
 ITEM
      1A.
                    RISK
      FACTORS
 
 There have been no material changes
from risk factors as previously disclosed in Item 1A of the Company’s Annual
Report on Form 10-K for the year ended November 29, 2008.
 
 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)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)10.4
                    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)10.22
                    Letter
      of Agreement between Griffin Land & Nurseries, Inc. and USAA Real
      Estate Company (incorporated by reference to Form 10-Q dated August 31,
      2002, filed October 11, 2002)10.23
                    Agreement
      of Purchase and Sale of Partnership Interest between Griffin Land &
      Nurseries, Inc. and USAA Real Estate Company dated December 3, 2002
      (incorporated by reference to Form 10-K dated November 30, 2002, filed
      February 28, 2003)
  31
  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)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)10.35
                    Employment
      Agreement by and between Imperial Nurseries, Inc. and Gregory Schaan dated
      January 1, 2001, as amended April 9, 2008 (incorporated by reference to
      Form 10-Q dated March 1, 2008, filed April 10, 2008)10.36
      *
                    Construction
      Loan and Security Agreement dated February 6, 2009 by and between
      Tradeport Development III, LLC, Griffin Land & Nurseries, Inc., and
      Berkshire Bank
  32
  10.37
      *
                    $12,000,000
      Construction Note dated February 6, 200910.38
      *
                    Revolving
      Line of Credit Loan Agreement dated February 27, 2009 between Griffin Land
      & Nurseries, Inc. and Doral Bank, FSB10.39
      *
                    $10,000,000
      Promissory Note (Revolving Line of Credit) dated February 27,
      200916.1
                    Letter
      from PricewaterhouseCoopers LLP dated March 26, 2008 (incorporated by
      reference to Form 8-K dated March 25, 2008, filed March 27,
      2008)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
 
 
 *  Filed
herewith.
  33
 
 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.BY:
       /s/
      FREDERICK M. DANZIGERDate:  April
      9, 2009
                    
                    Frederick
      M. DanzigerPresident
      and Chief Executive OfficerBY: /s/ ANTHONY J.
      GALICIDate:  April
      9, 2009
                    
                    Anthony
      J. GaliciVice
      President, Chief Financial Officer and Secretary,Chief
      Accounting Officer
 34