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 June 3, 2006TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE TRANSITION PERIOD FROM ______ TO
                _____





Commission
      File No. 1-12879





GRIFFIN
      LAND & NURSERIES, INC.


(Exact
      name of registrant as specified in its charter)





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





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





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







Yesx
            No ̈




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





Large
                accelerated filer ̈
            Accelerated
                filer ̈
            Non-accelerated
                filerx







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







Yes ̈
            Nox







---


Number
      of
      shares of Common Stock outstanding at July 3, 2006: 5,098,276





Griffin
      Land & Nurseries, Inc.


Form
      10-Q


Index








*PART
                I -*
            
            FINANCIAL
                INFORMATION*ITEM
                1 -*Financial
                StatementsConsolidated
                Statements of Operations (unaudited)13
                and 26 Weeks Ended June 3, 2006 and May 28, 2005
            3Consolidated
                Balance Sheets (unaudited)June
                3, 2006 and December 3, 2005
            4Consolidated
                Statements of Changes in Stockholders’ Equity (unaudited)26
                Weeks Ended June 3, 2006 and May 28, 2005
            5Consolidated
                Statements of Cash Flows (unaudited)26
                Weeks Ended June 3, 2006 and May 28, 2005
            6Notes
                to Consolidated Financial Statements (unaudited)
            7-17*ITEM
                2 -*
            Management’s
                Discussion and Analysis ofFinancial
                Condition and Results of Operations
            18-28*ITEM
                3*
            Quantitative
                and Qualitative Disclosures About Market Risk
            28-29*ITEM
                4 -*
            Controls
                and Procedures
            29*PART
                II -*
            
            OTHER
                INFORMATION*ITEMS
                1-3*
            Not
                Applicable*ITEM
                4*
            Submission
                of Matters to a Vote of Security Holders
            30*ITEM
                5*
            Not
                Applicable*ITEM
                6 -*
            Exhibits
            30SIGNATURES
            31























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





Griffin
      Land & Nurseries, Inc.


Consolidated
      Statements of Operations


(dollars
      in thousands, except per share data)


(unaudited)





*For
                  the 13 Weeks Ended,*
              
              *For
                  the 26 Weeks Ended,*June
                  3, 2006
              
              May
                  28, 2005
              
              June
                  3, 2006
              
              May
                  28, 2005Landscape
                  nursery net sales
              
              $
              21,687
              
              $
              17,174
              
              $
              22,362
              
              $
              17,638Rental
                  revenue and property sales
              
              
              2,906
              
              
              3,533
              
              
              5,920
              
              
              6,398Total
                  revenue
              
              
              24,593
              
              
              20,707
              
              
              28,282
              
              
              24,036Costs
                  of landscape nursery sales
              
              
              19,338
              
              
              14,470
              
              
              20,020
              
              
              15,067Costs
                  related to rental revenue and property sales
              
              
              2,179
              
              
              2,183
              
              
              4,732
              
              
              4,441Total
                  costs of goods sold
              
              
              21,517
              
              
              16,653
              
              
              24,752
              
              
              19,508Gross
                  profit
              
              
              3,076
              
              
              4,054
              
              
              3,530
              
              
              4,528Selling,
                  general and administrative expenses
              
              
              3,419
              
              
              3,319
              
              
              5,915
              
              
              5,637Operating
                  (loss) profit
              
              
              (343
              )
              
              735
              
              
              (2,385
              )
              
              (1,109
              )Interest
                  expense
              
              
              (762
              )
              
              (502
              )
              
              (1,527
              )
              
              (1,038
              )Income
                  from interest, dividends, gains on short-term investments and other
                  investment income
              
              
              589
              
              
              334
              
              
              987
              
              
              520(Loss)
                  income before income tax (benefit) provision
              
              
              (516
              )
              
              567
              
              
              (2,925
              )
              
              (1,627
              )Income
                  tax (benefit) provision
              
              
              (183
              )
              
              193
              
              
              (1,090
              )
              
              (560
              )Net
                  (loss) income
              
              $
              (333
              )
              $
              374
              
              $
              (1,835
              )
              $
              (1,067
              )Basic
                  net (loss) income per common share
              
              $
              (0.07
              )
              $
              0.08
              
              $
              (0.36
              )
              $
              (0.21
              )Diluted
                  net (loss) income per common share
              
              $
              (0.07
              )
              $
              0.07
              
              $
              (0.36
              )
              $
              (0.21
              )





See
      Notes
      to Consolidated Financial Statements *.*








3





Griffin
      Land & Nurseries, Inc.


Consolidated
      Balance Sheets


(dollars
      in thousands, except
      per share data)


(unaudited)


June
                  3, 2006
              
              Dec.
                  3, 2005ASSETSCurrent
                  Assets:Cash
                  and cash equivalents
              
              $
              2,862
              
              $
              1,207Short-term
                  investments, net
              
              
              28,838
              
              
              40,985Accounts
                  receivable, less allowance of$131and
                  $311
              
              
              14,733
              
              
              2,696Inventories,
                  net
              
              
              28,880
              
              
              33,184Deferred
                  income taxes
              
              
              2,058
              
              
              1,770Other
                  current assets
              
              
              4,013
              
              
              3,228Total
                  current assets
              
              
              81,384
              
              
              83,070Real
                  estate held for sale or lease, net
              
              
              81,367
              
              
              79,015Property
                  and equipment, net
              
              
              9,628
              
              
              10,072Investment
                  in Centaur Holdings, plc
              
              
              12,747
              
              
              10,440Other
                  assets
              
              
              5,811
              
              
              6,053Total
                  assets
              
              $
              190,937
              
              $
              188,650LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  Liabilities:Current
                  portion of long-term debt
              
              $
              1,072
              
              $
              1,060Accounts
                  payable and accrued liabilities
              
              
              7,512
              
              
              7,089Total
                  current liabilities
              
              
              8,584
              
              
              8,149Long-term
                  debt
              
              
              42,703
              
              
              43,159Deferred
                  income taxes
              
              
              1,860
              
              
              780Other
                  noncurrent liabilities
              
              
              3,650
              
              
              3,705Total
                  liabilities
              
              
              56,797
              
              
              55,793Commitments
                  and contingencies (Note 9)Stockholders'
                  Equity:Common
                  stock, par value $0.01 per share, 10,000,000 sharesauthorized,
                  5,098,276
                  and 4,999,604 shares issued andoutstanding,
                  respectively
              
              
              51
              
              
              50Additional
                  paid-in capital
              
              
              96,956
              
              
              95,339Retained
                  earnings
              
              
              30,974
              
              
              32,809Accumulated
                  other comprehensive income, net of tax
              
              
              6,159
              
              
              4,659Total
                  stockholders' equity
              
              
              134,140
              
              
              132,857Total
                  liabilities and stockholders' equity
              
              $
              190,937
              
              $
              188,650




See
      Notes
      to Consolidated Financial Statements **.**


4


Griffin
      Land & Nurseries, Inc.


Consolidated
      Statements of Changes in Stockholders’ Equity


For
      the
      Twenty-Six Weeks Ended June 3, 2006 and May 28, 2005


(dollars
      in thousands)


(unaudited)








**Shares
                  of Common Stock**
              
              **Common
                  Stock**
              
              **Additional
                  Paid-in Capital**
              
              **Retained
                  Earnings**
              
              **Accumulated
                  Other Comprehensive Income**
              
              **Total**
              
              **Total
                  Comprehensive Income (Loss)**Balance
                  at Nov. 27, 2004
              
              
              4,959,162
              
              $
              50
              
              $
              94,699
              
              $
              34,177
              
              $
              5,204
              
              $
              134,130Exercise
                  of stock optionsincluding
                  tax benefit of $85
              
              
              15,442
              
              
              -
              
              
              186
              
              
              -
              
              
              -
              
              
              186Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,067
              )
              
              -
              
              
              (1,067
              )
              $
              (1,067
              )Other
                  comprehensive loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (849
              )
              
              (849
              )
              
              (849
              )Balance
                  at May 28, 2005
              
              
              4,974,604
              
              $
              50
              
              $
              94,885
              
              $
              33,110
              
              $
              4,355
              
              $
              132,400
              
              $
              (1,916
              )Balance
                  at Dec. 3, 2005
              
              
              4,999,604
              
              $
              50
              
              $
              95,339
              
              $
              32,809
              
              $
              4,659
              
              $
              132,857Exercise
                  of stock optionsincluding
                  tax benefit of $806
              
              
              98,672
              
              
              1
              
              
              1,563
              
              
              -
              
              
              -
              
              
              1,564Stock-based
                  compensationexpense
              
              
              -
              
              
              -
              
              
              54
              
              
              -
              
              
              -
              
              
              54Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,835
              )
              
              -
              
              
              (1,835
              )
              $
              (1,835
              )Other
                  comprehensive income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,500
              
              
              1,500
              
              
              1,500Balance
                  at June 3, 2006
              
              
              5,098,276
              
              $
              51
              
              $
              96,956
              
              $
              30,974
              
              $
              6,159
              
              $
              134,140
              
              $
              (335
              )See
                  Notes to Consolidated Financial
                  Statements.


5


Griffin
      Land & Nurseries, Inc.


Consolidated
      Statements of Cash Flows


(dollars
      in thousands)


(unaudited)


*For
                  the 26 Weeks Ended,*June
                  3, 2006
              
              May
                  28, 2005**Operating
                  activities:**Net
                  loss
              
              $
              (1,835
              )
              $
              (1,067
              )Adjustments
                  to reconcile net loss to net cashprovided
                  by (used in) operating activities:Depreciation
                  and amortization
              
              
              2,652
              
              
              2,318Equity
                  income from investment in agricultural cooperative
              
              
              (151
              )
              
              -Unrealized
                  (gain) loss on trading securities
              
              
              (147
              )
              
              22Provision
                  for bad debts
              
              
              71
              
              
              150Deferred
                  income taxes
              
              
              (15
              )
              
              (65
              )Amortization
                  of debt issuance costs
              
              
              41
              
              
              28Provision
                  for inventory losses
              
              
              40
              
              
              587Gain
                  on sale of properties
              
              
              -
              
              
              (593
              )Real
                  estate asset write-offs
              
              
              -
              
              
              169Changes
                  in assets and liabilities:Short-term
                  investments
              
              
              12,294
              
              
              6,624Accounts
                  receivable
              
              
              (12,068
              )
              
              (9,539
              )Inventories
              
              
              4,264
              
              
              (484
              )Other
                  current assets
              
              
              (825
              )
              
              543Accounts
                  payable and accrued liabilities
              
              
              943
              
              
              317Other
                  noncurrent assets and noncurrent liabilities, net
              
              
              213
              
              
              (747
              )Net
                  cash provided by (used in) operating activities
              
              
              5,477
              
              
              (1,737
              )**Investing
                  activities:**Additions
                  to real estate held for sale or lease
              
              
              (4,651
              )
              
              (5,057
              )Additions
                  to property and equipment
              
              
              (265
              )
              
              (548
              )Proceeds
                  from sale of properties, net of expenses
              
              
              -
              
              
              889Net
                  cash used in investing activities
              
              
              (4,916
              )
              
              (4,716
              )**Financing
                  activities:**Tax
                  effect of stock options exercised
              
              
              806
              
              
              -Exercise
                  of stock options
              
              
              758
              
              
              101Payments
                  of debt
              
              
              (470
              )
              
              (442
              )Net
                  cash provided by (used in) financing activities
              
              
              1,094
              
              
              (341
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              1,655
              
              
              (6,794
              )Cash
                  and cash equivalents at beginning of period
              
              
              1,207
              
              
              8,827Cash
                  and cash equivalents at end of period
              
              $
              2,862
              
              $
              2,033





See
      Notes
      to Consolidated Financial Statements.


6


Griffin
      Land & Nurseries, Inc.


Notes
      to
      Consolidated Financial Statements


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


(unaudited)







1.  Basis
      of
      Presentation







The
      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, 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”). Also, the accompanying financial statements have been prepared in
      accordance with the accounting policies, except for stock- based compensation
      (see below), stated in Griffin’s audited financial statements for the year ended
      December 3, 2005 included in our Report on Form 10-K as filed with the
      Securities and Exchange Commission , and
      should be read in conjunction with the Notes to Financial Statements appearing
      in that report. All adjustments, comprising only normal recurring adjustments,
      except for the other investment income as described in Note 7, which are, in
      the
      opinion of management, necessary for a fair presentation of results for the
      interim periods, have been reflected. The consolidated balance sheet data as
      of
      December 3, 2005 was derived from audited financial statements but does not
      include all disclosures required by accounting principles generally accepted
      in
      the United States of America.





The
      results of operations for the thirteen and twenty-six weeks ended June 3, 2006
      are not necessarily indicative of the results to be expected for the full year.
      Certain amounts from the prior year have been reclassified to conform to the
      current presentation.





In
      the
      twenty-six weeks ended June 3, 2006, Griffin adopted the fair value recognition
      provisions of SFAS No. 123(R) “Share-Based Payments” (“SFAS No. 123(R)") using
      the modified prospective method of adoption. Accordingly, compensation cost
      recognized in the thirteen and twenty-six weeks ended June 3, 2006 is the same
      as that which would have been recognized had the recognition provisions of
      SFAS
      No.123(R) been applied from its original effective date. Results for prior
      periods have not been restated. See Note 5. Prior to the twenty-six weeks ended
      June 3, 2006, Griffin accounted for stock options under the recognition and
      measurement principles of Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees.” No stock-based compensation cost was
      reflected in prior years because all options granted under Griffin’s stock
      option plan had an exercise price equal to the market price of the underlying
      common stock on the date of grant.








2.  Recent
      Accounting Pronouncements









In
      November 2004, the FASB issued SFAS No. 151, “Inventory Costs (an amendment of
      ARB No. 43, Chapter 4).” This new standard requires the recognition of abnormal
      inventory costs related to idle facility expenses, freight, handling costs
      and
      spoilage as period costs. SFAS No. 151 is effective for Griffin in fiscal 2006
      and did not have a material impact on Griffin’s consolidated financial
      statements for the thirteen and twenty-six weeks ended June 3,
      2006.





In
      March
      2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
      Asset Retirement Obligations (an interpretation of FASB Statement No. 143),”
(“Fin No. 47”). Fin No. 47 clarified the timing of liability recognition for
      legal obligations associated with the retirement of tangible long-lived assets.
      Fin No. 47 will be effective for Griffin in the fourth quarter of fiscal 2006.
      Griffin is evaluating the impact of this new pronouncement on its consolidated
      financial statements.





7


In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections-a
      replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS No. 154”).
      This new standard requires retrospective application to prior periods’ financial
      statements of voluntary changes in accounting principles, unless it is
      impracticable to do so. SFAS No. 154 also provides that a correction of errors
      in previously issued financial statements should be termed a “restatement”. The
      new standard is effective for accounting changes and correction of errors in
      fiscal years beginning after December 15, 2005.





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







3.  Industry
      Segment Information








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







*For
                  the 13 Weeks Ended,*
              
              *For
                  the 26 Weeks Ended,*June
                  3, 2006
              
              May
                  28, 2005
              
              June
                  3, 2006
              
              May
                  28, 2005Total
                  revenue:Landscape
                  nursery net sales
              
              $
              21,687
              
              $
              17,174
              
              $
              22,362
              
              $
              17,638Rental
                  revenue and property sales
              
              
              2,906
              
              
              3,533
              
              
              5,920
              
              
              6,398$
              24,593
              
              $
              20,707
              
              $
              28,282
              
              $
              24,036Operating
                  profit (loss):Landscape
                  nursery
              
              $
              551
              
              $
              1,026
              
              $
              (414
              )
              $
              13Real
                  estate
              
              
              97
              
              
              685
              
              
              (164
              )
              
              637Industry
                  segment totals
              
              
              648
              
              
              1,711
              
              
              (578
              )
              
              650General
                  corporate expense
              
              
              (991
              )
              
              (976
              )
              
              (1,807
              )
              
              (1,759
              )Operating
                  (loss) profit
              
              
              (343
              )
              
              735
              
              
              (2,385
              )
              
              (1,109
              )Interest
                  expense
              
              
              (762
              )
              
              (502
              )
              
              (1,527
              )
              
              (1,038
              )Income
                  from interest, dividends, gains on short-term investments and other
                  investment income
              
              
              589
              
              
              334
              
              
              987
              
              
              520(Loss)
                  income before income tax (benefit) provision
              
              $
              (516
              )
              $
              567
              
              $
              (2,925
              )
              $
              (1,627
              )







8





Identifiable
                assets:
            
            June
                3, 2006
            
            Dec.
                3, 2005Landscape
                nursery
            
            $
            53,917
            
            $
            45,495Real
                estate
            
            
            88,755
            
            
            87,313Industry
                segment totals
            
            
            142,672
            
            
            132,808General
                corporate (consists primarily of investments)
            
            
            48,265
            
            
            55,842Total
                assets
            
            $
            190,937
            
            $
            188,650


There
      were no property sales by Griffin’s real estate segment in the thirteen and
      twenty-six weeks ended June 3, 2006. Revenue of the real estate segment in
      the
      thirteen and twenty-six weeks ended May 28, 2005 includes property sales revenue
      of $808 and $915, respectively.





4.  Long-Term
      Debt





Long-term
      debt includes:





June
                  3, 2006
              
              Dec.
                  3, 2005Nonrecourse
                  mortgages:8.54%
                  due July 1, 2009
              
              $
              7,723
              
              $
              7,7616.08%
                  due January 1, 2013
              
              
              9,142
              
              
              9,2446.30%
                  due May 1, 2014
              
              
              1,270
              
              
              1,3205.46%
                  due July 1, 2015
              
              
              12,572
              
              
              12,6448.13%
                  due April 1, 2016
              
              
              5,595
              
              
              5,6747.0%
                  due October 1, 2017
              
              
              7,214
              
              
              7,273Total
                  nonrecourse mortgages
              
              
              43,516
              
              
              43,916Capital
                  leases
              
              
              259
              
              
              303Total
              
              
              43,775
              
              
              44,219Less:
                  current portion
              
              
              (1,072
              )
              
              (1,060
              )Total
                  long-term debt
              
              $
              42,703
              
              $
              43,159








At
      June
      3, 2006 and December 3, 2005, the fair values of Griffin's mortgages were $44.2 million
      and $46.1 million, respectively. Fair value is based on the present value of
      future cash flows discounted at estimated borrowing rates for comparable risks,
      maturities and collateral.





5.  Stock
        Options
 
 The
        Griffin Land & Nurseries, Inc. 1997 Stock Option Plan (the
        "Griffin Stock Option Plan"), adopted in 1997 and subsequently amended, makes
        available a total of 1,250,000 options to purchase shares of Griffin common
        stock. The Griffin Stock Option Plan is administered by the Compensation
        Committee of the Board of Directors of Griffin. Options granted under the
        Griffin Stock Option Plan may be either incentive stock options or non-qualified
        stock options issued at market value on the date approved by the Board of
        Directors of Griffin. Vesting of all of Griffin's previously issued stock
        options is solely based upon service requirements and does not contain market
        or
        performance conditions.
  9
  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 employees vest in equal installments on the third, fourth and fifth
        anniversaries from the date of grant. None of the stock options outstanding
        at
        June 3, 2006 may be exercised as stock appreciation rights.
 
 There
        were 5,140 and 6,268 stock options granted during the twenty-six weeks ended
        June 3, 2006 and May 28, 2005, respectively. The fair values of the stock
        options granted were $18.38 and $11.15 for the twenty-six weeks ended June
        3,
        2006 and May 28, 2005, respectively, estimated as of the dates of grant using
        the Black-Scholes option pricing model. Assumptions used in determining the
        fair
        values of the stock options granted were as follows:
 
 *For
                    the 26 Weeks Ended,*June
                    3, 2006
                
                May
                    28, 2005Expected
                    volatility
                43.31%
                
                44.06%Risk
                    free interest rate
                5.03%
                
                3.77%Option
                    term
                8.8
                    years
                
                5
                    yearsDividend
                    yield
                none
                
                none
 In
        the
        twenty-six weeks ended June 3, 2006, Griffin adopted the fair value recognition
        provisions of SFAS No. 123(R) “Share-Based Payments” (“SFAS No. 123(R) ”) using
        the modified prospective method of adoption. Compensation cost is based on
        the
        estimated fair values of stock options as determined on their grant dates
        and is
        recorded over their vesting periods. Compensation cost recognized in the
        thirteen and twenty-six weeks ended June 3, 2006 was $29 and $54, respectively,
        with related tax benefits of $9 and $17, respectively, and is the same as
        that
        which would have been recognized had the recognition provisions of SFAS
        No.123(R) been applied from its original effective date. Results for prior
        periods have not been restated. The following table reflects the effect on
        net
        loss and net loss per share if the fair value based method had been applied
        to
        all outstanding and unvested stock options in each period:
 
 10
 *For
                    the 13 Weeks Ended,*
                
                *For
                    the 26 Weeks Ended,*June
                    3, 2006
                
                May
                    28, 2005
                
                June
                    3, 2006
                
                May
                    28, 2005Net
                    (loss) income, as reported
                
                $
                (333
                )
                $
                374
                
                $
                (1,835
                )
                $
                (1,067
                )Stock-based
                    employee compensation expense included in reported net (loss)
                    income, net
                    of taxes
                
                
                20
                
                
                -
                
                
                37
                
                
                -Stock-based
                    employee compensation expense determined under fair value based
                    method for
                    all awards, net of taxes
                
                
                (20
                )
                
                (32
                )
                
                (37
                )
                
                (35
                )Net
                    (loss) income, pro forma
                
                $
                (333
                )
                $
                342
                
                $
                (1,835
                )
                $
                (1,102
                )Basic
                    net (loss) income per common share, as reported
                
                $
                (0.07
                )
                $
                0.08
                
                $
                (0.36
                )
                $
                (0.21
                )Basic
                    net (loss) income per common share, pro forma
                
                $
                (0.07
                )
                $
                0.07
                
                $
                (0.36
                )
                $
                (0.22
                )Diluted
                    net (loss) income per common share, as reported
                
                $
                (0.07
                )
                $
                0.07
                
                $
                (0.36
                )
                $
                (0.21
                )Diluted
                    net (loss) income per common share, pro forma
                
                $
                (0.07
                )
                $
                0.07
                
                $
                (0.36
                )
                $
                (0.22
                )
 
 Included
          in Griffin's stock-based
          compensation in the thirteen and twenty-six weeks ended June 3, 2006 are
          the
          costs related to the unvested portion of certain stock option grants made
          in
          fiscal 2002 through fiscal 2005. The stock options granted prior to fiscal
          2002
          and certain other grants in fiscal 2003 and fiscal 2002 were fully vested
          as of
          the beginning of the 2006 fiscal year. A forfeiture rate of 0% was used
          based on
          the limited number of holders of unvested stock options and their positions
          with
          the Company in the 2006 second quarter.
 
 Activity
          under the Griffin Land & Nurseries, Inc. 1997 Stock Option Plan (the
“Griffin Stock Option Plan”) is summarized as follows:
 *For
                    the 26 Weeks Ended,*June
                    3, 2006
                
                May
                    28, 2005**Vested
                    Options**
                
                Number
                    of Shares
                
                Weighted
                    Avg. Exercise Price
                
                Number
                    of Shares
                
                Weighted
                    Avg. Exercise PriceOutstanding
                    at beginning of period
                
                
                503,857
                
                $
                12.65
                
                
                511,074
                
                $
                12.55Exercised
                
                
                (98,672
                )
                
                7.69
                
                
                (15,442
                )
                
                6.60Vested
                
                
                16,736
                
                
                14.19
                
                
                33,225
                
                
                12.86Outstanding
                    at end of period
                
                
                421,921
                
                $
                13.87
                
                
                528,857
                
                $
                12.74
 
  11
 Range
                    of Exercise Prices for Vested Options
                
                Outstanding at     June 3, 2006
                
                Weighted
                    Avg. Exercise Price
                
                Weighted
                    Avg. Remaining Contractual Life (in years)
                
                Total
                    Intrinsic Value$9.00-$18.00
                
                
                419,515
                
                $
                13.81
                
                
                2.7
                
                $
                2,335Over
                    $24.00
                
                
                2,406
                
                
                24.94
                
                
                8.1
                
                
                28421,921
                
                $
                13.87
                
                
                2.7
                
                $
                2,363
 
 
 *For
                    the 26 Weeks Ended,*June
                    3, 2006
                
                May
                    28, 2005**Nonvested
                    Options**
                
                Number
                    of Shares
                
                Weighted
                    Avg. Exercise Price
                
                Number
                    of Shares
                
                Weighted
                    Avg. Exercise PriceNonvested
                    at beginning of period
                
                
                36,816
                
                $
                17.78
                
                
                73,440
                
                $
                14.36Granted
                
                
                5,140
                
                
                31.13
                
                
                6,268
                
                
                25.53Vested
                
                
                (16,736
                )
                
                14.19
                
                
                (33,225
                )
                
                12.86Forfeited
                
                
                -
                
                
                -
                
                
                (9,667
                )
                
                13.70Nonvested
                    at end of period
                
                
                25,220
                
                $
                22.89
                
                
                36,816
                
                $
                17.78
 Range
                    of Exercise Prices for Nonvested Options
                
                Outstanding at     June 3, 2006
                
                Weighted
                    Avg. Exercise Price
                
                Weighted
                    Avg. Remaining Contractual Life (in years)
                
                Total
                    Intrinsic Value$9.00-$18.00
                
                
                9,000
                
                $
                15.26
                
                
                5.8
                
                $
                64Over
                    $24.00
                
                
                16,220
                
                
                27.13
                
                
                9.0
                
                
                22025,220
                
                $
                22.89
                
                
                7.9
                
                $
                284
 Number
                    of option holders at June 3, 2006
                17
 
 As
        of
        June 3, 2006, there was $62 of unrecognized compensation cost related to
        nonvested stock options that will be recognized during the remainder of fiscal
        2006, $72 of unrecognized compensation cost related to nonvested stock options
        that will be recognized in fiscal 2007 and $20 of unrecognized compensation
        cost
        related to nonvested stock options that will be recognized in fiscal 2008.
        The
        total fair value of shares vested during the twenty-six weeks ended June
        3, 2006
        and May 28, 2005 was $106 and $182, respectively.
  12
 6.  Per
        Share
        Results
  Basic
        and
        diluted per share results were based on the following:
 *For
                        the 13 Weeks Ended,*
                    
                    *For
                        the 26 Weeks Ended,*June
                        3, 2006
                    
                    May
                        28, 2005
                    
                    June
                        3, 2006
                    
                    May
                        28, 2005Net
                        (loss) income as reported for computationof
                        basic and diluted per share results
                    
                    $
                    (333
                    )
                    $
                    374
                    
                    $
                    (1,835
                    )
                    $
                    (1,067
                    )Weighted
                        average shares outstanding forcomputation
                        of basic per share results (a)
                    
                    
                    5,097,000
                    
                    
                    4,970,000
                    
                    
                    5,058,000
                    
                    
                    4,965,000Incremental
                        shares from assumed exercise ofGriffin
                        stock options
                    
                    
                    -
                    
                    
                    201,000
                    
                    
                    -
                    
                    
                    -Weighted
                        average shares outstanding forcomputation
                        of diluted per share results (a)
                    
                    
                    5,097,000
                    
                    
                    5,171,000
                    
                    
                    5,058,000
                    
                    
                    4,965,000
 
 (a)
              Incremental
                  shares from the assumed exercise of Griffin stock options were
                  not
                  included in periods where the inclusion of such shares would be
                  anti-dilutive. For the thirteen and twenty-six weeks ended June
                  3, 2006
                  and the twenty-six weeks ended May 28, 2005, the incremental shares
                  from
                  the assumed exercise of stock options would have been 169,000,
                  190,000,
                  and 205,000, respectively.
  7.  Supplemental
          Financial Statement Information
  
 *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 pretax income (loss). At June 3, 2006 and December
          3, 2005, $0.4 million and $1.3 million, respectively, of Griffin’s short-term
          investments were being used as security for a letter of credit of Griffin
          Land.
          The composition of short-term investments at June 3, 2006 and December
          3, 2005
          is as follows:
 
 *As
                      of June 3, 2006*
                  
                  *As
                      of Dec. 3, 2005*Cost
                  
                  Fair
                      Value
                  
                  Cost
                  
                  Fair
                      ValueCertificates
                      of Deposit
                  
                  $
                  16,394
                  
                  $
                  16,635
                  
                  $
                  20,224
                  
                  $
                  20,368Federal
                      Agency Coupon Notes
                  
                  
                  7,832
                  
                  
                  7,936
                  
                  
                  5,834
                  
                  
                  5,878Commercial
                      Paper
                  
                  
                  4,266
                  
                  
                  4,267
                  
                  
                  14,728
                  
                  
                  14,739Total
                      short-term investments
                  
                  $
                  28,492
                  
                  $
                  28,838
                  
                  $
                  40,786
                  
                  $
                  40,985
   13
 Income
          from cash equivalents and short-term investments for the thirteen and twenty-six
          weeks ended June 3, 2006 and May 28, 2005 consists of:
 
 *For
                      the 13 Weeks Ended,*
                  
                  *For
                      the 26 Weeks Ended,*June
                      3, 2006
                  
                  May
                      28, 2005
                  
                  June
                      3, 2006
                  
                  May
                      28, 2005Interest
                      and dividend income
                  
                  $
                  99
                  
                  $
                  153
                  
                  $
                  135
                  
                  $
                  186Net
                      realized gains on the sales of short-term investments
                  
                  
                  434
                  
                  
                  202
                  
                  
                  554
                  
                  
                  356Net
                      unrealized (loss) gain on short-term investments
                  
                  
                  (95
                  )
                  
                  (21
                  )
                  
                  147
                  
                  
                  (22
                  )$
                  438
                  
                  $
                  334
                  
                  $
                  836
                  
                  $
                  520
 *Other
          Investment Income*
 
 In
          the
          thirteen and twenty-six weeks ended June 3, 2006, Griffin recorded $151,
          before
          taxes, as its share of the cumulative undistributed equity income from
          an
          investment in an agricultural cooperative, in which Griffin holds a 25%
          interest, that manufactures and sells fertilizer to its members who are
          growers
          of landscape nursery products. Annual patronage rebates from this investment
          have been accounted for as a reduction of costs of landscape nursery sales.
          Because this investment had not been accounted for in previous periods,
          the
          cumulative effect was recorded within other investment income and is excluded
          from the amounts in the table above. Management believes that the amount
          recorded is immaterial to annual periods and expects that the results of
          this
          investment will not be significant to Griffin in future periods.
 
 *Accumulated
          Other Comprehensive Income*
 
 Changes
          in accumulated other comprehensive income  for
          the
          twenty-six weeks ended June 3, 2006 and May 28, 2005 consist of the
          following:
 
 *For
                        the 26 Weeks Ended,*June
                        3, 2006
                    
                    May
                        28, 2005Balance
                        at beginning of period
                    
                    $
                    4,659
                    
                    $
                    5,204Increase
                        (decrease) in fair value at end of period of Centaur Holdings,
                        plc,net
                        of tax provision of $452 and tax benefit of $322,
                        respectively
                    
                    
                    839
                    
                    
                    (598
                    )Increase
                        (decrease) in value of Centaur Holdings, plc, due to
                        foreigncurrency
                        rate changes, net of tax provision of $355 and tax benefit
                        of $135,
                        respectively
                    
                    
                    661
                    
                    
                    (251
                    )Balance
                        at end of period
                    
                    $
                    6,159
                    
                    $
                    4,355
 *Supplemental
          Cash Flow Information*
 
 Included
          in accounts payable and accrued liabilities at June 3, 2006 and December
          3, 2005
          were $1,863 and $2,383, respectively, for additions to real estate held
          for sale
          or lease.
   14
 *Inventories*
 
 Inventories
          consist of:
 June
                      3, 2006
                  
                  Dec.
                      3, 2005Nursery
                      stock
                  
                  $
                  27,204
                  
                  $
                  32,993Materials
                      and supplies
                  
                  
                  3,056
                  
                  
                  2,35230,260
                  
                  
                  35,345Reserves
                  
                  
                  (1,380
                  )
                  
                  (2,161
                  )$
                  28,880
                  
                  $
                  33,184
 *Property
          and Equipment*
 
 Property
          and equipment consist of:
 
 Estimated
                      Useful Lives
                  
                  June
                      3, 2006
                  
                  Dec.
                      3, 2005Land
                  
                  
                  
                  
                  $
                  674
                  
                  $
                  675Land
                      improvements
                  
                  
                  10
                      to 20 years
                  
                  
                  5,476
                  
                  
                  5,456Buildings
                      and improvements
                  
                  
                  10
                      to 40 years
                  
                  
                  3,057
                  
                  
                  3,057Machinery
                      and equipment
                  
                  
                  3
                      to 20 years
                  
                  
                  17,508
                  
                  
                  17,00426,715
                  
                  
                  26,192Accumulated
                      depreciation
                  
                  
                  
                  
                  
                  (17,087
                  )
                  
                  (16,120
                  )$
                  9,628
                  
                  $
                  10,072
 Griffin
          incurred new capital lease obligations of $26 and $78, respectively, in
          the
          twenty-six weeks ended June 3, 2006 and May 28, 2005.
 
 
 *Real
          Estate Held for Sale or Lease*
 
 Real
          estate held for sale or lease consists of:
 June
                        3, 2006Estimated
                        Useful Lives
                    
                    Held
                        for Sale
                    
                    Held
                        for Lease
                    
                    TotalLand
                    
                    
                    
                    
                    $
                    1,305
                    
                    $
                    5,074
                    
                    $
                    6,379Land
                        improvements
                    
                    
                    15
                        years
                    
                    
                    -
                    
                    
                    5,355
                    
                    
                    5,355Buildings
                        and improvements
                    
                    
                    10
                        to 40 years
                    
                    
                    -
                    
                    
                    69,133
                    
                    
                    69,133Tenant
                        improvements
                    
                    
                    Shorter
                        of useful life or terms of related lease
                    
                    
                    -
                    
                    
                    9,166
                    
                    
                    9,166Development
                        costs
                    
                    
                    
                    
                    
                    7,076
                    
                    
                    5,695
                    
                    
                    12,7718,381
                    
                    
                    94,423
                    
                    
                    102,804Accumulated
                        depreciation
                    
                    
                    
                    
                    
                    -
                    
                    
                    (21,437
                    )
                    
                    (21,437
                    )$
                    8,381
                    
                    $
                    72,986
                    
                    $
                    81,367
   15
 December
                          3, 2005Estimated
                          Useful Lives
                      
                      Held
                          for Sale
                      
                      Held
                          for Lease
                      
                      TotalLand
                      
                      
                      
                      
                      $
                      1,305
                      
                      $
                      5,074
                      
                      $
                      6,379Land
                          improvements
                      
                      
                      15
                          years
                      
                      
                      -
                      
                      
                      5,060
                      
                      
                      5,060Buildings
                          and improvements
                      
                      
                      10
                          to 40 years
                      
                      
                      -
                      
                      
                      62,438
                      
                      
                      62,438Tenant
                          improvements
                      
                      
                      Shorter
                          of useful life or terms of related lease
                      
                      
                      -
                      
                      
                      9,044
                      
                      
                      9,044Development
                          costs
                      
                      
                      
                      
                      
                      5,356
                      
                      
                      10,728
                      
                      
                      16,0846,661
                      
                      
                      92,344
                      
                      
                      99,005Accumulated
                          depreciation
                      
                      
                      
                      
                      
                      -
                      
                      
                      (19,990
                      )
                      
                      (19,990
                      )$
                      6,661
                      
                      $
                      72,354
                      
                      $
                      79,015
 *Deferred
          Income Taxes*
 
 An
          increase in a deferred
          income tax liability of $807 was included as a charge to other comprehensive
          income in the twenty-six weeks ended June 3, 2006 and a decrease to a deferred
          income tax liability of $457 was included as a credit to other comprehensive
          income in the twenty-six weeks ended May 28, 2005 related to the mark to
          market
          adjustments on Griffin’s investment in Centaur Holdings.
 
 *Postretirement
          Benefits*
 
 Griffin
          maintains a postretirement benefits program which provides principally
          health
          and life insurance benefits to certain of its retirees. The liability for
          postretirement benefits is included in other noncurrent liabilities on
          Griffin’s
          consolidated balance sheets. Because Griffin's obligation for retiree medical
          benefits is fixed under the terms of its postretirement benefits program,
          any
          increase in the medical cost trend would have no effect on the accumulated
          postretirement benefit obligation, service cost or interest cost. Griffin's
          postretirement benefits are unfunded, with benefits to be paid from Griffin's
          general assets. Griffin's contributions to the program for the twenty-six
          weeks
          ended June 3, 2006 and May 28, 2005 were $5 and $4, respectively, with
          an
          expected contribution of $15 for the fiscal 2006 full year. The components
          of
          Griffin's postretirement benefits expense are as follows:
 
 *For
                      the 13 Weeks Ended,*
                  
                  *For
                      the 26 Weeks Ended,*June
                      3, 2006
                  
                  May
                      28, 2005
                  
                  June
                      3, 2006
                  
                  May
                      28, 2005Service
                      cost
                  
                  $
                  7
                  
                  $
                  9
                  
                  $
                  15
                  
                  $
                  18Interest
                  
                  
                  12
                  
                  
                  12
                  
                  
                  23
                  
                  
                  25Amortization
                      of unrecognized loss
                  
                  
                  1
                  
                  
                  3
                  
                  
                  2
                  
                  
                  5$
                  20
                  
                  $
                  24
                  
                  $
                  40
                  
                  $
                  48
 
 16
  8.
          Subsequent Event
 
 On
          June
          9, 2006, Griffin Land completed the sale of approximately 130 acres of
          undeveloped land in the New England Tradeport (“Tradeport”) to Walgreen Co.
          (“Walgreen”). The sale price of $13 million, before transaction expenses, was
          paid in cash at closing. Griffin Land will record a significant pretax
          gain from
          this transaction in its 2006 third quarter results of operations.
 
 9.  Commitments
          and Contingencies
 
 As
          of
          June 3, 2006, 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, site work for additional industrial buildings in
          Tradeport and required infrastructure improvements at Tradeport. The
          infrastructure improvements are required by the Connecticut State Traffic
          Commission in connection with an increase in the permitted square feet
          of
          construction in the portion of Tradeport located in Windsor, Connecticut.
          Griffin will post a $6.5 million performance bond with the state to ensure
          that
          the infrastructure improvements are completed.
 
 As
          of
          June 3, 2006, there is a $0.4 million collateralized letter of credit
          outstanding, issued by Griffin Land in favor of the town of Suffield,
          Connecticut that ensures Griffin Land’s performance in completing certain
          infrastructure for Griffin Land’s residential development, Stratton Farms. The
          letter of credit is collateralized by short-term investments of $0.4
          million.
 
 On
          June
          23, 2006 Griffin Land entered into a definitive agreement to acquire an
          approximately 300,000 square foot industrial facility in Connecticut. The
          purchase price is slightly greater than the proceeds from the sale of 130
          acres
          of undeveloped land to Walgreen that was completed on June 9, 2006. The
          facility
          to be acquired is currently owner occupied. Completion of this transaction
          is
          subject to satisfactory completion of due diligence by Griffin Land.
 
 Griffin
          is involved, as a defendant, in various litigation matters arising in the
          ordinary course of business. In the opinion of management, based on the
          advice
          of counsel, the ultimate liability, if any, with respect to these matters
          will
          not be material to Griffin’s consolidated financial position, results of
          operations or cash flows.
 17
 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, except for stock based compensation
          (see below), 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 year ended December 3, 2005
          included in Griffin’s Report on Form 10-K as filed with the Securities and
          Exchange Commission. The preparation of Griffin’s financial statements in
          conformity with accounting principles generally accepted in the United
          States of
          America requires management to make certain estimates and assumptions that
          affect the reported amounts of assets and liabilities and disclosure of
          contingent assets and liabilities at the dates of the financial statements
          and
          revenue and expenses during the periods reported. Actual results could
          differ
          from those estimates. The significant accounting estimates, except for
          stock-based compensation (see below), used by Griffin in preparation of
          its
          financial statements for the thirteen and twenty-six weeks ended June 3,
          2006
          are consistent with those used by Griffin in preparation of its fiscal
          2005
          financial statements.
 
 Summary
 
 Griffin
          incurred a net loss of $0.3 million for the thirteen weeks ended June 3,
          2006
          (the “2006 second quarter”) as compared to net income of $0.4 million for the
          thirteen weeks ended May 28, 2005 (the “2005 second quarter”). The lower results
          reflect the inclusion of $0.6 million in the 2005 second quarter of pretax
          profit from property sales at Griffin Land. There were no property sales
          by
          Griffin Land in the 2006 second quarter. In addition, operating profit
          at
          Imperial was lower in the 2006 second quarter as compared to the 2005 second
          quarter as lower gross margins on sales more than offset the effect of
          increased
          sales volume. Interest expense was higher in the 2006 second quarter as
          compared
          to the 2005 second quarter due to interest expense on a $12.7 million
          nonrecourse mortgage on two industrial buildings. Griffin Land entered
          into the
          nonrecourse mortgage in the 2005 third quarter.
 
 Griffin’s
          net loss for the twenty-six weeks ended June 3, 2006 (the “2006 six month
          period”) was $1.8 million as compared to a net loss of $1.1 million for the
          twenty-six weeks ended May 28, 2005 (the “2005 six month period”). The higher
          net loss in the 2006 six month period reflects lower operating results
          at
          Griffin Land and Imperial in the 2006 six month period as compared to the
          2005
          six month period. The lower results in the current year at Griffin Land
          reflect
          the inclusion of $0.6 million in the 2005 six month period of gain on property
          sales as compared to no property sales in the 2006 six month period. Imperial
          incurred an operating loss in the 2006 six month period as compared to
          essentially break even operating results in the 2005 six month period.
          The lower
          results at Imperial principally reflect the effect of lower margins on
          sales
          which more than offset Imperial’s higher sales volume in the 2006 six month
          period. Interest expense in the 2006 six month period was higher than the
          2005
          six month period due to interest on the $12.7 million nonrecourse mortgage
          entered into by Griffin Land in the 2005 third quarter.
 
 At
          the
          beginning of the 2006 fiscal year, Griffin adopted the fair value recognition
          provisions of SFAS No. 123(R) “Share-Based Payments” (“SFAS No. 123(R)”) using
          the modified prospective method of adoption. Results for prior periods
          have not
          been restated. The effect of the adoption of SFAS No. 123R on the 2006
          second
          quarter and six month results of operations was not material. See Notes
          1 and 5
          to the consolidated financial statements included in Item 1.
 
 
 18
  **Results
          of Operations**
 
 **Thirteen
          Weeks Ended June 3, 2006 Compared to the Thirteen Weeks Ended May 28,
          2005**
 
 Griffin’s
          consolidated total revenue increased from $20.7 million in the 2005 second
          quarter to $24.6 million in the 2006 second quarter. The increase of
          approximately $3.9 million reflects an increase in revenue of approximately
          $4.5
          million at Imperial partially offset by a decrease in revenue of $0.6 million
          at
          Griffin Land.
 
 The
          decrease in revenue of approximately $0.6 million at Griffin Land reflects
          a
          decrease of $0.8 million in property sales revenue partially offset by
          an
          increase of approximately $0.2 million in revenue from its leasing operations.
          There were no property sales in the 2006 second quarter as compared to
          a
          property sale that generated revenue of $0.8 million in the 2005 second
          quarter.
          At June 3, 2006, Griffin Land owned 1,403,000 square feet of industrial,
          flex
          and office space, with 1,026,000 square feet (73%) leased. At the end of
          the
          2005 second quarter, Griffin Land had 1,266,000 square feet of industrial,
          flex
          and office space, with 1,011,000 square feet (80%) leased. The increase
          in total
          space in Griffin Land’s portfolio as of June 3, 2006 as compared to the end of
          the 2005 second quarter reflects the completion of the second of two new
          137,000
          square foot industrial buildings in the New England Tradeport (“Tradeport”).
          This new building came on line in the 2006 first quarter. Another new 137,000
          square foot industrial building was completed at the end of the 2005 second
          quarter, and is included in Griffin Land’s total space owned at that time.
          However, leases in that new building were not effective until the 2005
          third
          quarter. The increase in space leased at the end of the 2006 second quarter
          versus the comparable time last year principally reflects leases in these
          two
          new industrial buildings in Tradeport, which are each approximately 50%
          leased,
          partially offset by leases that terminated subsequent to the 2005 second
          quarter, including two leases aggregating 33,501 square feet that were
          terminated in the 2006 second quarter before their scheduled expiration,
          as the
          result of the tenant filing bankruptcy and rejecting the leases. The increase
          in
          revenue from leasing operations principally reflects $0.3 million from
          the two
          new industrial buildings placed in service subsequent to the 2005 second
          quarter
          and $0.1 million from leasing space that was vacant in the 2005 second
          quarter,
          partially offset by a reduction of $0.2 million reflecting the effect of
          leases
          terminating subsequent to the 2005 second quarter.
 
 Market
          activity for the leasing of industrial space in the area where Griffin
          Land’s
          properties are located remained fairly strong in the 2006 second quarter.
          There
          have also been expressions of interest from certain tenants in the two
          new
          Tradeport industrial buildings to increase their space leased and to extend
          their lease terms. Activity for the leasing of office space, which had
          been
          weak, has recently increased based on inquiries from prospective tenants.
          Subsequent to the end of the 2006 second quarter, Griffin Land executed
          leases
          for 39,100 square feet of industrial space and 30,000 square feet of flex
          space.
          In addition, Griffin Land has received verbal commitments from prospective
          lessees for leases for approximately 97,000 square feet of industrial space.
          There is no assurance that the increased market activity for the leasing
          of
          space will result in leases for all or a portion of Griffin Land’s currently
          vacant space. In addition, there have been inquiries for potential sales
          of
          undeveloped land.
 
 Net
          sales
          and other revenue at Imperial increased from $17.2 million in the 2005
          second
          quarter to $21.7 million in the 2006 second quarter. Imperial’s unit sales
          volume increased approximately 29% in the 2006 second quarter as compared
          to the
          2005 second quarter. The increased volume is attributed to improved spring
          weather in the 2006 second quarter as compared to last year and management’s
          focus on reducing Imperial’s inventories to levels more in line with expected
          sales. Imperial’s landscape nursery business is highly seasonal, with sales
          peaking in the spring. Sales in the second quarter (March through May)
          are a
          significant component of the full year’s net sales. Over the past three years,
          Imperial’s second quarter net sales accounted for at least 62% of the full year
          net sales in each of those years.
  19
 Griffin
          incurred a consolidated operating loss of $0.3 million in the 2006 second
          quarter as compared to a consolidated operating profit of $0.7 million
          in the
          2005 second quarter. The lower operating results in the 2006 second quarter
          principally reflect decreases of approximately $0.6 million at Griffin
          Land and
          approximately $0.5 million at Imperial. General corporate expense was
          substantially unchanged in the 2006 second quarter as compared to the 2005
          second quarter.
 
 Operating
          results at Griffin Land in the 2006 and 2005 second quarters were as
          follows:
 
 2006
                  
                  2005Second
                      Qtr.
                  
                  Second
                      Qtr.(amounts
                      in thousands)Rental
                      revenue
                  
                  $
                  2,906
                  
                  $
                  2,725Costs
                      related to rental revenue excludingdepreciation
                      and amortization (a)
                  
                  
                  1,153
                  
                  
                  1,142Profit
                      from leasing activities before general andadministrative
                      expenses and before depreciationand
                      amortization expense (a)
                  
                  
                  1,753
                  
                  
                  1,583Revenue
                      from property sale
                  
                  
                  -
                  
                  
                  808Costs
                      related to property sale
                  
                  
                  -
                  
                  
                  221Gain
                      from property sale
                  
                  
                  -
                  
                  
                  587Profit
                      from leasing activities and gain from propertysale
                      before general and administrative expenses andbefore
                      depreciation and amortization expenses (a)
                  
                  
                  1,753
                  
                  
                  2,170General
                      and administrative expenses excludingdepreciation
                      and amortization expense (a)
                  
                  
                  (623
                  )
                  
                  (657
                  )Profit
                      before depreciation and amortization expense (a)
                  
                  
                  1,130
                  
                  
                  1,513Depreciation
                      and amortization expense related tocosts
                      of rental revenue
                  
                  
                  (1,026
                  )
                  
                  (820
                  )Depreciation
                      and amortization expense - other
                  
                  
                  (7
                  )
                  
                  (8
                  )Operating
                      profit
                  
                  $
                  97
                  
                  $
                  685
 
 (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 generally accepted accounting principles
                    in the
                    United States of America. They are presented because Griffin
                    believes they
                    are useful financial indicators for measuring the results in
                    its real
                    estate business segment. However, they should not be considered
                    as an
                    alternative to operating profit as a measure of operating results
                    in
                    accordance with generally accepted accounting principles in the
                    United
                    States of America.
   20
 Profit
          from leasing activities before general and administrative expenses and
          before
          depreciation and amortization expense increased by approximately $0.2 million
          in
          the 2006 second quarter as compared to the 2005 second quarter. The increase
          reflects the increased rental revenue from the two buildings that came
          on line
          subsequent to the 2005 second quarter. Costs related to rental revenue
          excluding
          depreciation and amortization expense were essentially unchanged as increased
          operating expenses for the two new industrial buildings and higher utility
          costs
          at all properties were offset by overall lower operating expenses in existing
          buildings. The increase in utility expenses principally reflects rate increases
          that went into effect this year.
 
 The
          sale
          of commercial land in the 2005 second quarter generated proceeds of $0.8
          million
          and a gain of $0.6 million. There were no property sales in the 2006 second
          quarter. Griffin Land’s general and administrative expenses were slightly lower
          in the 2006 second quarter than the 2005 second quarter.
 
 Depreciation
          and amortization expense at Griffin Land increased approximately $0.2 million
          in
          the 2006 second quarter as compared to the 2005 second quarter. The increase
          reflects depreciation expense of $0.2 million principally related to the
          two new
          industrial buildings that came on line subsequent to the 2005 second
          quarter.
 
 Imperial’s
          operating results were lower in the 2006 second quarter as compared to
          the 2005
          second quarter, as follows:
 2006
                  
                  2005Second
                      Qtr.
                  
                  Second
                      Qtr.(amounts
                      in thousands)Net
                      sales and other revenue
                  
                  $
                  21,687
                  
                  $
                  17,174Cost
                      of goods sold
                  
                  
                  19,338
                  
                  
                  14,470Gross
                      profit
                  
                  
                  2,349
                  
                  
                  2,704Selling,
                      general and administrative expenses
                  
                  
                  1,798
                  
                  
                  1,678Operating
                      profit
                  
                  $
                  551
                  
                  $
                  1,026
  The
          $0.5
          million decrease in operating results at Imperial reflects a $0.4 million
          decrease in gross profit and a $0.1 million increase in selling, general
          and
          administrative expenses. The decrease in gross profit reflects higher cost
          of
          goods sold and lower pricing, which more than offset the increase in net
          sales.
          The higher cost of goods sold was due to higher plant costs and significantly
          higher costs of delivery, which were not passed through to customers. The
          increase in plant costs was partially due to selling inventory that had
          been
          held past its anticipated sale date and accumulated higher costs. The increased
          costs of delivery reflect the general increase in rates charged by trucking
          companies, including fuel surcharges, due to the increase in energy costs
          this
          year, and the use of higher cost trucking vendors to ensure that there
          was a
          sufficient number of trucks available for the increased volume shipped
          from
          Imperial's northern Florida farm in the 2006 second quarter. The lower
          pricing
          reflects management’s decision to reduce excess inventory levels by offering
          special pricing on certain items that were considered to be held in excess
          amounts and increased sales of seconds grade products, which are sold at
          a
          substantial discount to normal pricing. The increase in delivery costs
          this year
          could depress shipments from Imperial’s northern Florida facility during the
          balance of the year, as customers seek to source product closer to their
          locations to minimize freight charges.
 
 Griffin’s
          general corporate expense was $1.0 million in both the 2006 and the 2005
          second
          quarters. The 2005 second quarter included a $0.1 million retrospective
          insurance charge related to a former affiliate of Griffin. Excluding the
          effect
          of that item in the 2005 second quarter, general corporate expense increased
          by
          $0.1 million in the 2006 second quarter due principally to an increased
          accrual
          for incentive compensation expense and higher audit expenses. Based on
          the
          market price of its common stock on the last day of its fiscal second quarter,
          Griffin’s market capitalization of its public float resulted in Griffin becoming
          an accelerated filer effective at the end of fiscal 2006. As a result,
          Griffin
          is required to complete its adoption of the Section 404 provisions of the
          Sarbanes-Oxley Act, which is expected to result in significant general
          corporate
          expense during the balance of this year.
  21
 Griffin’s
          consolidated interest expense increased approximately $0.3 million in the
          2006
          second quarter as compared to the 2005 second quarter. The higher interest
          expense principally reflects interest on a $12.7 million nonrecourse mortgage
          on
          two industrial buildings in Tradeport that was entered into by a subsidiary
          of
          Griffin Land in the 2005 third quarter. Griffin’s average outstanding debt
          increased to $43.9 million in the 2006 second quarter from $32.0 million
          in the
          2005 second quarter, reflecting the new mortgage.
 
 Griffin
          reported income from interest, dividends, gains on short-term investments
          and
          other investment income of $0.6 million in the 2006 second quarter as compared
          to $0.3 million in the 2005 second quarter. The increase in the 2006 second
          quarter as compared to the 2005 second quarter reflects an increase in
          the
          average amount of short-term investments in the 2006 second quarter as
          compared
          to the 2005 second quarter and generally higher interest rates in the current
          year. In addition, the 2006 second quarter includes approximately $0.2
          million
          of undistributed equity income from an investment in an agricultural cooperative
          in which Griffin holds a 25% interest. Because this investment had not
          been
          accounted for in prior periods, the cumulative effect was recorded within
          other
          investment income. Management believes the amount recorded is immaterial
          to
          annual periods and expects that the results of this investment will not
          be
          significant to Griffin in future periods.
 
 Griffin’s
          effective income tax rate was 35.5% in the 2006 second quarter as compared
          to
          34.0% in the 2005 second quarter. The higher effective income tax rate
          in the
          2006 second quarter principally reflects a higher projected effective tax
          rate
          for fiscal 2006 as compared to fiscal 2005 due to higher state income taxes
          in
          the current year. The effective tax rate used in the 2006 second 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.
  **Twenty-Six
          Weeks Ended June 3, 2006 Compared to the Twenty-Six Weeks Ended May 28,
          2005**
 
 Net
          sales
          and other revenue increased from $24.0 million in the 2005 six month period
          to
          $28.3 million in the 2006 six month period, reflecting an increase in net
          sales
          of approximately $4.7 million at Imperial, partially offset by a decrease
          in
          revenue of approximately $0.5 million at Griffin Land.
 
 Net
          sales
          and other revenue at Griffin Land decreased from $6.4 million in the 2005
          six
          month period to $5.9 million in the 2006 six month period. The decrease
          of
          approximately $0.5 million reflects a $0.9 million decrease in revenue
          from
          property sales, as there were no property sales in the 2006 six month period,
          partially offset by an increase of $0.4 million of revenue from leasing
          operations. Revenue from leasing operations increased from $5.5 million
          in the
          2005 six month period to $5.9 million in the 2006 six month period. The
          increase
          principally reflects revenue of $0.7 million from leases in buildings that
          came
          on line after the 2005 six month period and revenue of $0.2 million of
          leasing
          previously vacant space, partially offset by the loss of revenue of $0.5
          million
          from leases included in the 2005 six month period that expired and were
          not
          renewed or were terminated early.
 
 Net
          sales
          and other revenue at Imperial increased from $17.6 million in the 2005
          six month
          period to $22.4 million in the 2006 six month period. Unit sales volume
          increased 30% in the 2006 six month period as compared to the 2005 six
          month
          period. The increase in net sales in the 2006 six month period reflects
          the
          factors as discussed in the 2006 second quarter results.
 
 22
 Griffin
          incurred a consolidated operating loss of $2.4 million in the 2006 six
          month
          period as compared to a consolidated operating loss of $1.1 million in
          the 2005
          six month period. Operating results at Griffin Land and Imperial decreased
          by
          approximately $0.8 million and approximately $0.4 million, respectively,
          in the
          2006 six month period as compared to the 2005 six month period. General
          corporate expense remained essentially the same in the 2006 six month period
          as
          compared to the 2005 six month period.
 
 Operating
          results at Griffin Land decreased from operating profit of $0.6 million
          in the
          2005 six month period to an operating loss of $0.2 million in the 2006
          six month
          period, reflecting the following:
 
 2006
                  
                  2005Six
                      Month Period
                  
                  Six
                      Month Period(amounts
                      in thousands)Rental
                      revenue
                  
                  $
                  5,920
                  
                  $
                  5,483Costs
                      related to rental revenue excludingdepreciation
                      and amortization (a)
                  
                  
                  2,607
                  
                  
                  2,502Profit
                      from leasing activities before general andadministrative
                      expenses and before depreciationand
                      amortization expense (a)
                  
                  
                  3,313
                  
                  
                  2,981Revenue
                      from property sales
                  
                  
                  -
                  
                  
                  915Costs
                      related to property sales
                  
                  
                  -
                  
                  
                  339Gain
                      from property sales
                  
                  
                  -
                  
                  
                  576Profit
                      from leasing activities and gain from propertysales
                      before general and administrative expenses andbefore
                      depreciation and amortization expense (a)
                  
                  
                  3,313
                  
                  
                  3,557General
                      and administrative expenses excludingdepreciation
                      and amortization expense (a)
                  
                  
                  (1,339
                  )
                  
                  (1,306
                  )Profit
                      before depreciation and amortization expense (a)
                  
                  
                  1,974
                  
                  
                  2,251Depreciation
                      and amortization expense related tocosts
                      of rental revenue
                  
                  
                  (2,125
                  )
                  
                  (1,600
                  )Depreciation
                      and amortization expense - other
                  
                  
                  (13
                  )
                  
                  (14
                  )Operating
                      (loss) profit
                  
                  $
                  (164
                  )
                  $
                  637
 
 
 (a)
                The
                    costs related to rental revenue excluding depreciation and amortization,
                    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 generally accepted accounting principles
                    in the
                    United States of America. They are presented because Griffin
                    believes they
                    are useful financial indicators for measuring the results in
                    its real
                    estate division. However, they should not be considered as an
                    alternative
                    to operating profit as a measure of operating results in accordance
                    with
                    generally accepted accounting principles in the United States
                    of
                    America.
 
 
 23
 The
          increase of $0.3 million in Griffin Land’s profit from leasing activities before
          general and administrative expenses and before depreciation and amortization
          expense principally reflects the increased revenue from the two new industrial
          properties included in the 2006 six month period, partially offset by higher
          building operating expenses, principally related to the two new industrial
          buildings that were in service in the 2006 six month period but were not
          in
          service during the 2005 six month period. The 2005 six month period also
          included a charge of $0.2 million to write off capitalized costs related
          to a
          lease that was terminated in that year. The lease termination was related
          to a
          new longer-term lease with a new tenant for that building, with lease rates
          that
          are equal to the rental rates under the terminated lease over the remaining
          term
          of the terminated lease.
 
 The
          gain
          from property sales at Griffin Land in the 2005 six month period principally
          reflects the sale of commercial land in Windsor, Connecticut. General and
          administrative expenses were essentially unchanged in the 2006 six month
          period
          as compared to the 2005 six month period.
 
 Depreciation
          and amortization expense at Griffin Land increased by $0.5 million in the
          2006
          six month period as compared to the 2005 six month period due principally
          to the
          two new industrial buildings in service this year and the accelerated
          depreciation of costs as a result of the early termination of two leases
          because
          of a tenant’s bankruptcy filing this year.
 
 Imperial’s
          operating results decreased from essentially break even in the 2005 six
          month
          period to an operating loss of $0.4 million in the 2006 six month period
          as
          follows:
 
 2006
                  
                  2005Six
                      Month Period
                  
                  Six
                      Month Period(amounts
                      in thousands)Net
                      sales and other revenue
                  
                  $
                  22,362
                  
                  $
                  17,638Cost
                      of goods sold
                  
                  
                  20,020
                  
                  
                  15,067Gross
                      profit
                  
                  
                  2,342
                  
                  
                  2,571Selling,
                      general and administrative expenses
                  
                  
                  2,756
                  
                  
                  2,558Operating
                      (loss) profit
                  
                  $
                  (414
                  )
                  $
                  13
 
 
 The
          decrease in Imperial’s operating results reflects a $0.2 million decrease in
          gross profit and a $0.2 million increase in selling, general and administrative
          expenses. The lower gross profit reflects the effect of lower gross margins
          on
          sales in the 2006 six month period. The 2005 six month period also included
          a
          charge of $0.5 million for plant disposals in excess of expected amounts.
          There
          was no charge for excess inventory disposals in the 2006 six month period.
          However, Imperial’s gross margin on sales decreased from 17.7% in the 2005 six
          month period (excluding the effect of the inventory charge) to 10.5% in
          the 2006
          six month period, reflecting higher plant costs in the current year, increased
          delivery costs and lower pricing.
 
 Imperial’s
          selling, general and administrative expenses increased by $0.2 million
          in the
          2006 six month period as compared to the 2005 six month period. The increase
          principally reflects higher selling expenses, principally sales commissions,
          related to the increase in net sales volume in the current year. As a percentage
          of net sales, selling, general and administrative expenses decreased from
          14.5%
          in the 2005 six month period to 12.3% in the 2006 six month period.
 
 24
 Griffin’s
          general corporate expense of $1.8 million in the 2006 six month period
          was
          essentially unchanged from the 2005 six month period. The 2005 six month
          period
          included a $0.1 million retrospective insurance charge related to a former
          affiliate of Griffin. Excluding the effect of that item in the 2005 six
          month
          period, general corporate expense increased by $0.1 million due principally
          to
          an increase in accrued incentive compensation expense and other general
          and
          administrative expenses.
 
 Griffin’s
          consolidated interest expense increased from $1.0 million in the 2005 six
          month
          period to $1.5 million in the 2006 six month period. The increase principally
          reflects interest on the new $12.7 million mortgage that was completed
          in the
          2005 third quarter. Griffin’s average outstanding debt in the 2006 six month
          period was $44.0 million as compared to $32.2 million in the 2005 six month
          period.
 
 Griffin’s
          income from interest, dividends, gains on short-term investments and other
          investment income was $1.0 million in the 2006 six month period as compared
          to
          $0.5 million in the 2005 six month period. The increase of investment income
          in
          the current year reflects the higher amount of short-term investments in
          the
          current year and higher short-term interest rates in the current year.
          In
          addition, the 2006 six month period includes approximately $0.2 million
          of
          undistributed equity income from an investment in an agricultural cooperative
          in
          which Griffin holds a 25% interest. Because this investment had not been
          accounted for in prior periods, the cumulative effect was recorded within
          other
          investment income. Management believes the amount recorded is immaterial
          to
          annual periods and expects that the results of this investment will not
          be
          significant to Griffin in future periods.
 
 Griffin’s
          effective income tax benefit rate was 37.3% for the 2006 six month period,
          as
          compared to 34.4% for the 2005 six month period. The higher effective income
          tax
          rate in the 2006 six month period as compared to the 2005 six month period
          principally relates to higher state income taxes in the current year. The
          effective tax rate for the 2006 six month period reflects a 35% rate for
          federal
          income taxes adjusted for state income taxes 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.
 
 **Off
          Balance Sheet Arrangements**
 
 Griffin
          does not have any material off balance sheet arrangements.
 
 **Liquidity
          and Capital Resources**
 
 Net
          cash
          provided by operating activities was $5.5 million in the 2006 six month
          period
          as compared to net cash used in operating activities of $1.7 million in
          the 2005
          six month period. The 2006 six month period net cash provided by operating
          activities includes $12.3 million of cash generated from a reduction of
          short-term investments as compared to $6.6 million of cash generated from
          the
          reduction of short-term investments in the 2005 six month period. Excluding
          that
          item in each period, Griffin had net cash used in operations of $6.8 million
          in
          the 2006 six month period as compared to $8.4 million in the 2005 six month
          period. The lower amount of cash used in operating activities, excluding
          the
          cash generated from short-term investments, principally reflects the reduction
          of inventories at Imperial, partially offset by the effect of lower operating
          results and net unfavorable changes in accounts receivable and other current
          assets.
 
 Net
          cash
          used in investing activities increased from $4.7 million in the 2005 six
          month
          period to $4.9 million in the 2006 six month period due principally to
          the lack
          of proceeds from property sales in the 2006 six month period. Additions
          to real
          estate held for sale or lease decreased from $5.1 million in the 2005 six
          month
          period to $4.7 million in the 2006 six month period. Cash used for additions
          to
          Griffin Land’s real estate assets in the current period principally reflects
          infrastructure work on a residential subdivision in Suffield, Connecticut,
          payments related to the completion of the new industrial building that
          came on
          line in the 2006 first quarter and recently completed tenant improvements
          related to new leases. Additions to property and equipment, principally
          for
          Imperial, were $0.3 million in the 2006 six month period as compared to
          $0.5
          million in the 2005 six month period. Capital expenditures for Imperial
          in the
          2006 six month period were principally to replace equipment used in its
          farming
          operations.
 
 25
 Net
          cash
          provided by financing activities was $1.1 million in the 2006 six month
          period
          as compared to net cash of $0.3 million used in financing activities in
          the 2005
          six month period. The net cash provided by financing activities in the
          2006 six
          month period reflects cash proceeds from stock options exercised in the
          current
          year partially offset by payments of mortgage principal. Also included
          in cash
          provided by financing activities in the 2006 six month period is a $0.8
          million
          tax benefit from the exercise of stock options. In accordance with SFAS
          No.
          123(R), the presentation in Griffin’s statement of cash flows in the current
          year has changed from prior periods to report the tax benefits from the
          exercise
          of stock options as a financing cash flow. Prior to the adoption of SFAS
          No.
          123(R), these tax benefits were reported as an operating cash flow. The
          net cash
          used in financing activities in the 2005 six month period reflected payments
          of
          principal on Griffin Land’s mortgages.
 
 In
          the
          near-term, Griffin plans to continue to invest in its real estate business.
          In
          the 2006 second quarter, Griffin Land started construction, on speculation,
          on
          the shell of a new 127,000 square foot industrial building in the Tradeport.
          Griffin Land has also started the site work for several additional industrial
          buildings in the Tradeport. The cost of site work in the portion of Tradeport
          where these new buildings will be located is expected to be higher than
          site
          costs for previous buildings recently built by Griffin Land. The higher
          site
          costs reflect the nature of the land on which the buildings will be located
          along with required berming and roadwork on this site.  Griffin Land also
          expects to incur expenditures to build out the interiors of its new buildings
          as
          leases are completed, and to continue to invest in infrastructure improvements
          required for present and future development in its office and industrial
          parks.
          In the latter part of fiscal 2005, Griffin Land started infrastructure
          work on
          Stratton Farms, a residential development in Suffield, Connecticut. Griffin
          Land
          is continuing with the infrastructure work on Stratton Farms in fiscal
          2006 and
          is currently marketing sales of residential lots in this development. Griffin
          Land is also continuing to work towards obtaining approvals for Meadowood,
          its
          proposed residential development in Simsbury, Connecticut. There have been
          some
          preliminary discussions with town officials regarding potential settlement
          options for Meadowood. Griffin Land intends to proceed with these and other
          residential development plans on its land holdings that are appropriate
          for that
          use.
 
 On
          June
          9, 2006, Griffin Land completed the sale of approximately 130 acres of
          undeveloped land in the Tradeport to Walgreen Co. (“Walgreen”). The sale price
          was $13 million, before transaction expenses, and was paid in cash at closing.
          Griffin Land will record a significant pretax gain from this transaction
          in the
          2006 third quarter.
 
 On
          January 20, 2006, Griffin Land entered into a letter of intent with a
          prospective buyer to sell approximately 105 acres of undeveloped land in
          South
          Windsor, Connecticut. Based on the terms of the letter of intent, Griffin
          Land,
          which holds a 75% interest in that property through a joint venture, would
          receive proceeds of approximately $2.7 million, before expenses. Completion
          of
          this transaction is subject to several contingencies, including completion
          of a
          definitive agreement and the buyer receiving governmental approvals for
          its
          proposed development on this site. In addition, on January 30, 2006, Griffin
          Land entered into a letter of intent with a prospective buyer for the sale
          of 8
          acres of undeveloped land in Windsor, Connecticut. Based on the terms of
          the
          letter of intent, Griffin Land’s proceeds from this proposed transaction would
          be approximately $0.5 million. Completion of this transaction is dependent
          on
          several factors, including completion of a definitive agreement. There
          is no
          assurance that these transactions will be completed under their current
          terms,
          or at all.
 
 26
 On
          June
          23, 2006, Griffin entered into a definitive agreement to acquire an
          approximately 300,000 square foot warehouse facility in Connecticut. The
          facility is currently owner occupied and is expected to be vacant at the
          time of
          the closing. The closing of this transaction is contingent upon the satisfactory
          completion of due diligence on the facility to be acquired. If all contingencies
          are satisfied, the closing of this transaction is expected to take place
          in the
          third quarter. The purchase price is slightly greater than the proceeds
          Griffin
          received from the recently completed sale of undeveloped land to Walgreen.
          There
          is no assurance that this transaction will be completed under its current
          terms,
          or at all. Griffin expects this acquisition to be included as part of a
          Section
          1031 exchange for income tax purposes, which would result in the deferral
          of
          income tax payments related to the gain from the sale of undeveloped land
          to
          Walgreen.
 
 Griffin’s
          payments (including principal and interest) under contractual obligations
          as of
          June 3, 2006 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
                  
                  $
                  63.4
                  
                  $
                  3.9
                  
                  $
                  7.8
                  
                  $
                  13.7
                  
                  $
                  38.0Capital
                      Lease Obligations
                  
                  
                  0.3
                  
                  
                  0.1
                  
                  
                  0.2
                  
                  
                  -
                  
                  
                  -Operating
                      Lease Obligations
                  
                  
                  0.4
                  
                  
                  0.2
                  
                  
                  0.2
                  
                  
                  -
                  
                  
                  -Purchase
                      Obligations (1)
                  
                  
                  11.8
                  
                  
                  6.9
                  
                  
                  4.9
                  
                  
                  -
                  
                  
                  -Other
                      (2)
                  
                  
                  1.8
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1.8$
                  77.7
                  
                  $
                  11.1
                  
                  $
                  13.1
                  
                  $
                  13.7
                  
                  $
                  39.8
 
 (1)
                Includes
                    obligations for the construction of the shell of a new industrial
                    building
                    at Griffin Land and for the purchase of raw materials by
                    Imperial.
 (2)
                Includes
                    Griffin’s deferred compensation plan and other postretirement benefit
                    liabilities.
 
 As
          of
          June 3, 2006, Griffin had cash and short-term investments of approximately
          $31.7
          million. Management believes that the significant amount of cash and short-term
          investments held by Griffin will be sufficient to finance the working capital
          requirements of its businesses and fund continued investment in Griffin’s real
          estate assets for the foreseeable future. Griffin Land may also continue
          to seek
          nonrecourse mortgage placements on selected properties. Griffin also anticipates
          seeking to purchase either or both land and buildings with a substantial
          portion
          of its cash and short-term investment balances. There currently is a definitive
          agreement in place for Griffin to acquire a warehouse facility in Connecticut
          (see above). Other real estate acquisitions may or may not occur based
          on many
          factors, including real estate pricing.
 
 
 Recent
          Accounting Pronouncements
 
 In
          November 2004, the FASB issued SFAS No. 151, “Inventory Costs (an amendment of
          ARB No. 43, Chapter 4).” This new standard requires the recognition of abnormal
          inventory costs related to idle facility expenses, freight, handling costs
          and
          spoilage as period costs. SFAS No. 151 is effective for Griffin in fiscal
          2006
          and did not have a material impact on Griffin’s consolidated financial
          statements for the thirteen and twenty-six weeks ended June 3,
          2006.
 
 In
          March
          2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
          Asset Retirement Obligations (an interpretation of FASB Statement No. 143),”
(“Fin No. 47”). Fin No. 47 clarifies the timing of liability recognition for
          legal obligations associated with the retirement of tangible long-lived
          assets.
          Fin No. 47 will be effective for Griffin in the fourth quarter of fiscal
          2006.
          Griffin is evaluating the impact of this new pronouncement on its consolidated
          financial statements.
 
 27
 In
          May
          2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections-a
          replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS No. 154”).
          This new standard requires retrospective application to prior periods’ financial
          statements of voluntary changes in accounting principles, unless it is
          impracticable to do so. SFAS No. 154 also provides that a correction of
          errors
          in previously issued financial statements should be termed a “restatement”. The
          new standard is effective for accounting changes and correction of errors
          in
          fiscal years beginning after December 15, 2005.
 
 In
          June
          2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty
          in
          Income Taxes." The interpretation clarifies the accounting for uncertainty
          in
          income taxes recognized in a company's financial statements in accordance
          with
          Statement of Financial Accounting Standards No. 109, "Accounting for Income
          Taxes." Specifically, the pronouncement prescribes a recognition threshold
          and a
          measurement attribute for the financial statement recognition and measurement
          of
          a tax position taken or expected to be taken in a tax return. The interpretation
          also provides guidance on the related derecognition, classification, interest
          and penalties, accounting for interim periods, disclosure and transition
          of
          uncertain tax positions. The interpretation is effective for fiscal years
          beginning after December 15, 2006. Griffin is evaluating the impact of
          this new
          pronouncement on its consolidated financial statements.
 
 
 **Forward-Looking
          Information**
 
 The
          above
          information in Management’s Discussion and Analysis of Financial Condition and
          Results of Operations includes “forward-looking statements” within the meaning
          of Section 27A of the Securities Act and Section 21E of the Exchange Act.
          Although Griffin believes that its plans, intentions and expectations reflected
          in such forward-looking statements are reasonable, it can give no assurance
          that
          such plans, intentions or expectations will be achieved, particularly with
          respect to improvement in operating results of Imperial, leasing currently
          vacant space, construction of additional facilities in the real estate
          business,
          completion of land sales that are currently under contract, completion
          of real
          estate acquisitions currently under contract, approval of currently proposed
          residential subdivisions or completion of an acquisition of a warehouse
          facility
          currently under contract. The projected information disclosed herein is
          based on
          assumptions and estimates that, while considered reasonable by Griffin
          as of the
          date hereof, are inherently subject to significant business, economic,
          competitive and regulatory uncertainties and contingencies, many of which
          are
          beyond the control of Griffin.
 ITEM
                      3.
                  QUANTITATIVE
                      AND QUALITATIVE DISCLOSURES ABOUT MARKET
                      RISK
 
 Market
            risk represents the risk of changes in value of a financial instrument,
            derivative or non-derivative, caused by fluctuations in interest rates,
            foreign
            exchange rates and equity prices. Changes in these factors could cause
            fluctuations in earnings and cash flows.
 
 For
            fixed
            rate mortgage debt, changes in interest rates generally affect the fair
            market
            value of the debt instrument, but not earnings or cash flows. Griffin
            does not
            have an obligation to prepay any fixed rate debt prior to maturity, 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 and related
            principal payment requirements are described in Note 4 to the unaudited
            consolidated financial statements included in Item 1. For variable rate
            debt,
            changes in interest rates generally do not impact the fair market value
            of the
            debt instrument, but do affect future earnings and cash flows. Griffin
            did not
            have any variable rate debt outstanding during the thirteen weeks ended
            June 3,
            2006.
  28
 Griffin
            is potentially exposed to market risks from fluctuations in interest
            rates and
            the effects of those fluctuations on market values of Griffin’s cash
            equivalents. These investments generally consist of overnight investments
            that
            are not significantly exposed to interest rate risk. Griffin’s short-term
            investments generally consist of debt instruments with maturities ranging
            from
            one to thirty-six months, with a weighted average maturity of approximately
            four
            months as of June 3, 2006. These investments are not significantly exposed
            to
            interest rate risk except to the extent that changes in interest rates
            will
            ultimately affect the amount of interest income earned and cash flow
            from these
            investments.
 
 Griffin
            does not currently have any derivative financial instruments in place
            to manage
            interest costs, but that does not mean that Griffin will not use them
            as a means
            to manage interest rate risk in the future.
  Griffin
            does not have foreign currency exposure in operations. Griffin does have
            an
            investment in a public company, Centaur Holdings, plc, based in the United
            Kingdom. 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 was 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 that
            reasonable assurance level.
 
 Changes
            in Internal Control over Financial Reporting
 
 There
            has
            been no change in Griffin’s internal control over financial reporting during
            Griffin’s most recent fiscal quarter that has materially affected, or is
            reasonably likely to materially affect, Griffin’s internal control over
            financial reporting.
 
 
 29
 **PART
                      II**
                  **OTHER
                      INFORMATION**
 
 ITEMS
                      1 - 3.
                  Not
                      ApplicableITEM
                      4
                  Submission
                      of Matters to a Vote of Security Holders(a)
                  Annual
                      Meeting of Stockholders: May 16, 2006(b)
                  The
                      following were elected as Directors at the Annual Meeting,
                      representing
                      all of the directors:(c)(i)
                  1)
                      Mr. Winston Churchill, Jr. was elected a Director for 2006
                      with 4,968,835
                      votes in favor, 5,334 withheld, and 123,941 not voting.2)
                      Mr. Edgar M. Cullman was elected a Director for 2006 with 4,967,027
                      votes
                      in favor, 7,142 withheld, and 123,941 not voting.3)
                      Mr. David M. Danziger was elected a Director for 2006 with
                      4,776,705 votes
                      in favor, 197,464 withheld, and 123,941 not voting.4)
                      Mr. Frederick M. Danziger was elected a Director for 2006 with
                      4,967,071
                      votes in favor, 7,098 withheld, and 123,941 not voting.5)
                      Mr. Thomas C. Israel was elected a Director for 2006 with 4,778,769
                      votes
                      in favor, 195,400 withheld, and 123,941 not voting.6)
                      Mr. Alan Plotkin was elected a Director for 2006 with 4,778,769
                      votes in
                      favor, 195,400 withheld, and 123,941 not voting.7)
                      Mr. David F. Stein was elected a Director for 2006 with 4,778,769
                      votes in
                      favor, 195,400 withheld, and 123,941 not voting.(ii)
                  The
                      authorization of the selection of PricewaterhouseCoopers LLP
                      as
                      independent registered public accountants for 2006 was approved
                      with
                      4,780,987 votes in favor, 193,051 opposed, and 124,072 not
                      voting.ITEM
                      5
                  Not
                      ApplicableITEM
                      6.
                  ExhibitsExhibit
                      No.
                  Description31.1
                  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
 
 
 
 30
 
 
 SIGNATURES
 
 Pursuant
            to the requirements of the Securities Exchange Act of 1934, the Registrant
            has
            duly caused this report to be signed on its behalf by the undersigned
            thereunto
            duly authorized.
 
 
 GRIFFIN
                        LAND & NURSERIES, INC./s/
                        FREDERICK M. DANZIGERDate:
                        July 18, 2006
                    
                    Frederick
                        M. DanzigerPresident
                        and Chief Executive Officer/s/
                        ANTHONY J. GALICIDate:
                        July 18, 2006
                    
                    Anthony
                        J. GaliciVice
                        President, Chief Financial Officer and Secretary
 31