UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 Form
10-Q
  X
    QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 26, 2005TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE TRANSITION PERIOD FROM ______ TO
_____
  
 Commission
File No. 0-29288
 
 GRIFFIN
LAND & NURSERIES, INC.
 (Exact
name of registrant as specified in its charter)
 
 Delaware
    06-0868496(state
      or other jurisdiction of incorporation or organization)
    (IRS
      Employer Identification Number)One
      Rockefeller Plaza, New York, New York
    10020(Address
      of principal executive offices)
    (Zip
      Code)Registrant’s
      Telephone Number including Area Code
    (212)
      218-7910
 
 
 
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 
 x
 
 
 Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).
 
 
 x
 
 
 
 Number of
shares of Common Stock outstanding at March 25, 2005:  4,963,438
 
   
   GRIFFIN
LAND & NURSERIES, INC.
 Form
10-Q
 
 
 
 *PART
      I -*
    
    FINANCIAL
      INFORMATION*ITEM
      1 -*Financial
      StatementsConsolidated
      Statements of Operations13
      Weeks Ended February 26, 2005 and February 28, 2004
    3Consolidated
      Balance SheetsFebruary
      26, 2005 and November 27, 2004
    4Consolidated
      Statements of Changes in Stockholders’ Equity13
      Weeks Ended February 26, 2005 and February 28, 2004
    5Consolidated
      Statements of Cash Flows13
      Weeks Ended February 26, 2005 and February 28, 2004
    6Notes
      to Consolidated Financial Statements
    7-15*ITEM
      2 -*
    Management’s
      Discussion and Analysis ofFinancial
      Condition and Results of Operations
    16-21*ITEM
      3 -*
    Quantitative
      and Qualitative Disclosures About Market Risk
    21-22*ITEM
      4 -*
    Controls
      and Procedures
    22*PART
      II -*
    
    OTHER
      INFORMATION*ITEM
      6 -*
    Exhibits
    23SIGNATURES
    24
 
 
 
 
 
 
 **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,*Feb.
      26, 2005
    
    Feb.
      28, 2004Landscape
      nursery net sales
    
    $
    464
    
    $
    422Rental
      revenue and property sales
    
    
    2,840
    
    
    2,484Total
      revenue
    
    
    3,304
    
    
    2,906Costs
      of landscape nursery sales
    
    
    597
    
    
    442Costs
      related to rental revenue and property sales
    
    
    2,259
    
    
    1,892Total
      costs of goods sold
    
    
    2,856
    
    
    2,334Gross
      profit
    
    
    448
    
    
    572Selling,
      general and administrative expenses
    
    
    2,312
    
    
    1,969Operating
      loss
    
    
    (1,864
    )
    
    (1,397
    )Interest
      expense
    
    
    (536
    )
    
    (707
    )Interest
      income, dividend income and gainson
      short-term investments
    
    
    186
    
    
    6Loss
      before income tax benefit and equity investment
    
    
    (2,214
    )
    
    (2,098
    )Income
      tax benefit
    
    
    (760
    )
    
    (783
    )Loss
      before equity investment
    
    
    (1,454
    )
    
    (1,315
    )Loss
      from equity investment
    
    
    -
    
    
    (89
    )Net
      loss
    
    $
    (1,454
    )
    $
    (1,404
    )Basic
      net loss per common share
    
    $
    (0.29
    )
    $
    (0.29
    )Diluted
      net loss per common share
    
    $
    (0.29
    )
    $
    (0.29
    )
 
 See Notes
to Consolidated Financial Statements *.*
  
  
 Griffin
Land & Nurseries, Inc.
 Consolidated
Balance Sheets
 (dollars
in thousands, except
per share data)
 (unaudited)
 
 Feb.
      26, 2005
    
    Nov.
      27, 2004ASSETSCurrent
      Assets:Cash
      and cash equivalents
    
    $
    508
    
    $
    8,827Short-term
      investments, net
    
    
    30,336
    
    
    30,173Accounts
      receivable, less allowance of$159and
      $188
    
    
    908
    
    
    2,162Inventories
    
    
    37,556
    
    
    32,184Deferred
      income taxes
    
    
    1,772
    
    
    1,572Other
      current assets
    
    
    3,969
    
    
    3,423Total
      current assets
    
    
    75,049
    
    
    78,341Real
      estate held for sale or lease, net
    
    
    67,587
    
    
    66,043Property
      and equipment, net
    
    
    11,164
    
    
    11,310Investment
      in Centaur Holdings, plc
    
    
    12,800
    
    
    11,290Other
      assets
    
    
    9,219
    
    
    9,413Total
      assets
    
    $
    175,819
    
    $
    176,397LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable and accrued liabilities
    
    $
    5,296
    
    $
    5,921Current
      portion of long-term debt
    
    
    855
    
    
    855Total
      current liabilities
    
    
    6,151
    
    
    6,776Long-term
      debt
    
    
    31,259
    
    
    31,479Deferred
      income taxes
    
    
    2,608
    
    
    1,979Other
      noncurrent liabilities
    
    
    1,669
    
    
    1,600Total
      liabilities
    
    
    41,687
    
    
    41,834Commitments
      and contingencies (Note 9)Stockholders'
      Equity:Common
      stock, par value $0.01 per share, 10,000,000 sharesauthorized,4,963,438
      and 4,959,162 shares issued andoutstanding,
      respectively
    
    
    50
    
    
    50Additional
      paid-in capital
    
    
    94,741
    
    
    94,699Retained
      earnings
    
    
    33,156
    
    
    34,610Accumulated
      other comprehensive income
    
    
    6,185
    
    
    5,204Total
      stockholders' equity
    
    
    134,132
    
    
    134,563Total
      liabilities and stockholders' equity
    
    $
    175,819
    
    $
    176,397
 See Notes
to Consolidated Financial Statements **.**
  
  Griffin
Land & Nurseries, Inc.
 Consolidated
Statements of Changes in Stockholders’ Equity
 (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. 29, 2003
    
    
    4,876,916
    
    $
    49
    
    $
    93,392
    
    $
    3,612
    
    $
    271
    
    $
    97,324
    
    $
    -Exercise
      of stock options
    
    
    11,212
    
    
    -
    
    
    122
    
    
    -
    
    
    -
    
    
    122
    
    
    -Net
      loss
    
    
    -
    
    
    -
    
    
    -
    
    
    (1,404
    )
    
    -
    
    
    (1,404
    )
    
    (1,404
    )Other
      comprehensive income
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    351
    
    
    351
    
    
    351Balance
      at Feb. 28, 2004
    
    
    4,888,128
    
    $
    49
    
    $
    93,514
    
    $
    2,208
    
    $
    622
    
    $
    96,393
    
    $
    (1,053
    )Balance
      at Nov. 27, 2004
    
    
    4,959,162
    
    $
    50
    
    $
    94,699
    
    $
    34,610
    
    $
    5,204
    
    $
    134,563
    
    $
    -Exercise
      of stock optionsincluding
      tax benefit of $10
    
    
    4,276
    
    
    -
    
    
    42
    
    
    -
    
    
    -
    
    
    42
    
    
    -Net
      loss
    
    
    -
    
    
    -
    
    
    -
    
    
    (1,454
    )
    
    -
    
    
    (1,454
    )
    
    (1,454
    )Other
      comprehensive income
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    981
    
    
    981
    
    
    981Balance
      at Feb. 26, 2005
    
    
    4,963,438
    
    $
    50
    
    $
    94,741
    
    $
    33,156
    
    $
    6,185
    
    $
    134,132
    
    $
    (473
    )See
      Notes to Consolidated Financial Statements.
 
  
  Griffin
Land & Nurseries, Inc.
 Consolidated
Statements of Cash Flows
 (dollars
in thousands)
 (unaudited)
  *For
      the 13 Weeks Ended,*Feb.
      26, 2005
    
    Feb.
      28, 2004**Operating
      activities:**Net
      loss
    
    $
    (1,454
    )
    $
    (1,404
    )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
    
    
    1,081
    
    
    1,122Real
      estate asset write-offs
    
    
    169
    
    
    90Provision
      for inventory losses
    
    
    140
    
    
    -Deferred
      income taxes
    
    
    (100
    )
    
    (1,036
    )Unrealized
      gains on trading securities
    
    
    (70
    )
    
    -Loss
      from equity investment
    
    
    -
    
    
    89Other
    
    
    (17
    )
    
    (20
    )Changes
      in assets and liabilities:Investment
      in trading securities
    
    
    (93
    )
    
    -Accounts
      receivable
    
    
    1,283
    
    
    1,028Inventories
    
    
    (5,512
    )
    
    (4,760
    )Other
      current assets
    
    
    (568
    )
    
    (436
    )Accounts
      payable and accrued liabilities
    
    
    191
    
    
    1,586Other
      noncurrent assets and noncurrent liabilities, net
    
    
    82
    
    
    19Net
      cash used in operating activities
    
    
    (4,868
    )
    
    (3,722
    )**Investing
      activities:**Additions
      to real estate held for sale or lease
    
    
    (3,141
    )
    
    (1,632
    )Additions
      to property and equipment
    
    
    (213
    )
    
    (224
    )Proceeds
      from sale of properties, net of expenses
    
    
    91
    
    
    -Investment
      in Shemin Acquisition Corp.
    
    
    -
    
    
    (143
    )Net
      cash used in investing activities
    
    
    (3,263
    )
    
    (1,999
    )**Financing
      activities:**Payments
      of debt
    
    
    (220
    )
    
    (196
    )Exercise
      of stock options
    
    
    32
    
    
    122Increase
      in debt
    
    
    -
    
    
    5,925Other,
      net
    
    
    -
    
    
    (129
    )Net
      cash (used in) provided by financing activities
    
    
    (188
    )
    
    5,722Net
      (decrease) increase in cash and cash equivalents
    
    
    (8,319
    )
    
    1Cash
      and cash equivalents at beginning of period
    
    
    8,827
    
    
    18Cash
      and cash equivalents at end of period
    
    $
    508
    
    $
    19
 See Notes
to Consolidated Financial Statements.
 
 
 
 Griffin
Land & Nurseries, Inc.
 Notes to
Consolidated Financial Statements
 (dollars
in thousands, 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 stated in Griffin’s audited financial
statements for the year ended November 27, 2004 included in the Report on Form
10-K as filed with the Securities and Exchange Commission , and
should be read in conjunction with the Notes to Financial Statements appearing
in that report. All adjustments, comprising only normal recurring adjustments,
which are, in the opinion of management, necessary for a fair presentation of
results for the interim periods have been reflected. The year end consolidated
balance sheet data as of November 27, 2004 was derived from audited financial
statements but does not include all disclosures required by accounting
principles generally accepted in the United States of America.
 
 In
connection with the preparation of its financial statements for the fiscal year
ended November 27, 2004, Griffin determined that it had inadvertently
reported certain intercompany revenue and expenses of the same amount in each
period related to property management activities at Griffin's real estate
business. Accordingly, Griffin revised rental revenue and related costs to
eliminate the duplicated amounts for the thirteen weeks ended February 28, 2004.
The revisions, which Griffin believes were not material, decreased both revenue
and related costs in the thirteen weeks ended February 28, 2004 by $189 to
eliminate those offsetting intercompany amounts that were inadvertently included
in the prior period. The revisions had no effect on previously reported gross
profit, operating profit (loss), net income (loss) or net income (loss) per
share in any of Griffin's previously issued consolidated statements of
operations. In addition, the revisions had no effect on any of Griffin's
previously issued consolidated balance sheets or consolidated statements of cash
flows.
 
 The
results of operations for the thirteen weeks ended February 26, 2005 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.
 
 Griffin
accounts for stock options under Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and has adopted SFAS
No. 123, which requires disclosure of the pro forma effect on earnings and
earnings per share of the fair value method of accounting for stock-based
compensation, and SFAS No. 148, which prescribes a method of disclosure.
Griffin's results would have been the following pro forma amounts under the
method prescribed by SFAS No. 123:
  
 
 *For
      the 13 Weeks Ended,*Feb
      26, 2005
    
    Feb.
      28, 2004Net
      loss, as reported
    
    $
    (1,454
    )
    $
    (1,404
    )Total
      stock based employee compensationexpense
      determined under fair valuemethod
      for all awards, net of tax effects
    
    
    (3
    )
    
    (28
    )Net
      loss, pro forma
    
    $
    (1,457
    )
    $
    (1,432
    )Basic
      net loss per common share, as reported
    
    $
    (0.29
    )
    $
    (0.29
    )Basic
      net loss per common share, pro forma
    
    $
    (0.29
    )
    $
    (0.29
    )Diluted
      net loss per common share, as reported
    
    $
    (0.29
    )
    $
    (0.29
    )Diluted
      net loss per common share, pro forma
    
    $
    (0.29
    )
    $
    (0.29
    )
 
 There
were no stock options granted during the thirteen weeks ended February 26, 2005
and February 28, 2004.
 
 
 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 will be effective for Griffin in fiscal
2006 and is not expected to have a material impact on Griffin’s consolidated
financial statements.
 
 In
December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets
(an amendment of APB Opinion No. 29).” This new standard requires an issuer to
measure and recognize nonmonetary exchanges which are anticipated to have an
impact on future cash flows. SFAS No. 153 will be effective for Griffin in the
fourth quarter of fiscal 2005 and is not expected to have any impact on
Griffin’s consolidated financial statements.
 
 In
December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment.” This new
standard supersedes APB Opinion No. 25, “Accounting for Stock Issued to
Employees,” and its related implementation guidance. SFAS No. 123R requires an
issuer to recognize the compensation cost of employee services received in
exchange for an award of equity instruments. Therefore, the cost of rewarding
individuals with equity instruments will be recognized in Griffin’s financial
statements rather than disclosed in a pro forma statement in the financial
statement footnotes. SFAS No. 123R will be effective for Griffin in the fourth
quarter of fiscal 2005. Management expects to adopt SFAS No. 123R using the
modified prospective application method, and expects that the adoption of SFAS
No. 123R will decrease Griffin’s annual basic and diluted per share results by
$0.01to $0.04 per share.
 
 
  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,*February
      26, 2005
    
    February
      28, 2004Total
      revenueLandscape
      nursery net sales
    
    $
    464
    
    $
    422Rental
      revenue and property sales
    
    
    2,840
    
    
    2,484$
    3,304
    
    $
    2,906Operating
      (loss) profit:Landscape
      nursery
    
    $
    (1,013
    )
    $
    (873
    )Real
      estate
    
    
    (68
    )
    
    19Industry
      segment totals
    
    
    (1,081
    )
    
    (854
    )General
      corporate expense
    
    
    (783
    )
    
    (543
    )Operating
      loss
    
    
    (1,864
    )
    
    (1,397
    )Interest
      expense, net of interest income, dividend income andgains
      on short-term investments
    
    
    (350
    )
    
    (701
    )Loss
      before income tax benefit
    
    $
    (2,214
    )
    $
    (2,098
    )
 
 
 Identifiable
      assets:
    
    Feb.
      26, 2005
    
    Nov.
      27, 2004Landscape
      nursery
    
    $
    54,286
    
    $
    50,330Real
      estate
    
    
    73,428
    
    
    72,958Industry
      segment totals
    
    
    127,714
    
    
    123,288General
      corporate
    
    
    48,105
    
    
    53,109Total
      assets
    
    $
    175,819
    
    $
    176,397
 
 Griffin
revised previously reported rental revenue and related costs in the same amount
to eliminate certain duplicated amounts included in the prior year (see
Note 1). The effect of these revisions, which Griffin believes were not
material, was to decrease both revenue and related costs of the real estate
segment in the thirteen weeks ended February 28, 2004 by $189. The revisions had
no effect on previously reported real estate segment operating profit or
previously reported identifiable assets of the real estate segment.
 
 Revenue
for the real estate segment in the thirteen weeks ended February 26, 2005
includes property sales revenue of $107. There were no property sales in the
thirteen weeks ended February 28, 2004.
 
 See Note
4 for information on Griffin's previously held equity investment in
Centaur.
 
 
 4.  Equity
Investment
 
 On March
10, 2004, Griffin completed the sale of its investment in Centaur
Communications, Ltd. (“Centaur”). Prior to the sale, Griffin accounted for its
investment in Centaur under the equity method of accounting for investments. The
unaudited summarized financial data of Centaur presented below were derived from
consolidated financial information of Centaur for the thirteen weeks ended
February 28, 2004. Griffin’s equity loss for the thirteen weeks ended February
28, 2004 included $92 for amortization of publishing rights and reflected
adjustments necessary to present Centaur’s results in accordance with generally
accepted accounting principles in the United States of America.
 
 Three
      Months Ended,Feb.
      28, 2004Net
      sales
    
    $
    25,410Costs
      and expenses
    
    
    25,664Operating
      loss
    
    
    (254
    )Nonoperating
      income
    
    
    169Pretax
      loss
    
    
    (85
    )Income
      tax benefit
    
    
    (94
    )Net
      income
    
    $
    9
 
 5.  Long-Term
Debt
 
 Long-term
debt includes:
 
 Feb.
      26, 2005
    
    Nov.
      27, 2004Nonrecourse
      mortgages:8.54%
      due July 1, 2009
    
    $
    7,820
    
    $
    7,8426.08%
      due January 1, 2013
    
    
    9,388
    
    
    9,4336.30%
      due May 1, 2014
    
    
    1,408
    
    
    1,4368.13%
      due April 1, 2016
    
    
    5,810
    
    
    5,8537.0%
      due October 1, 2017
    
    
    7,376
    
    
    7,410Total
      nonrecourse mortgages
    
    
    31,802
    
    
    31,974Capital
      leases
    
    
    312
    
    
    360Total
    
    
    32,114
    
    
    32,334Less:
      current portion
    
    
    (855
    )
    
    (855
    )Total
      long-term debt
    
    $
    31,259
    
    $
    31,479
 
 In March
2004, as a result of the proceeds received from the sale of Centaur (see Note
4), Griffin repaid the entire amount then outstanding ($18.4 million) under its
Credit Agreement (the “Credit Agreement”) with Fleet National Bank and
subsequently terminated the Credit Agreement, which was scheduled to expire in
February 2005.
 
 At
February 26, 2005 and November 27, 2004, the fair values of Griffin's mortgages
were $34.8  million
and $33.2 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.
 
 6.  Stock
Options
 
 Activity
under the Griffin Land & Nurseries, Inc. 1997 Stock Option Plan (the
“Griffin Stock Option Plan”) is summarized as follows:
 
 
 Number
      of Shares
    
    Weighted
      Avg. Exercise PriceOutstanding
      at November 27, 2004
    
    
    584,514
    
    $
    12.78Exercised
    
    
    (4,276
    )
    
    7.53Cancelled
    
    
    (9,667
    )
    
    13.70Outstanding
      at February 26, 2005
    
    
    570,571
    
    $
    12.80
 Number
      of option holders at February 26, 2005
    
    
    26
   Range
      of Exercise Prices
    
    Outstanding
      at Feb. 26, 2005
    
    Weighted
      Avg. Exercise Price
    
    Weighted
      Avg. Remaining Contractual Life (in years)Under
      $3.00
    
    
    6,000
    
    $
    2.07
    
    
    0.2$3.00-$11.00
    
    
    98,172
    
    
    7.53
    
    
    1.0Over
      $11.00
    
    
    466,399
    
    
    14.05
    
    
    4.0570,571
 At
February 26, 2005, 508,296  options
outstanding under the Griffin Stock Option Plan were exerciseable with a
weighted average exercise price of $12.60  per
share.
 
 7.  Per Share
Results
   Basic and
diluted per share results were based on the following:
 *For
      the 13 Weeks Ended,*Feb.
      26, 2005
    
    Feb.
      28, 2004Net
      loss as reported for computationof
      basic and diluted per share results
    
    $
    (1,454
    )
    $
    (1,404
    )Weighted
      average shares outstanding forcomputation
      of basic and diluted per share results
    
    
    4,961,000
    
    
    4,879,000
 (a)
    Incremental
      shares from the exercise of Griffin stock options were not included in
      periods where the inclusion of such shares would be anti-dilutive. For the
      thirteen weeks ended February 26, 2005 and February 28, 2004 the
      incremental shares from the assumed exercise of stock options would have
      been 205,000 and 148,000, respectively.
 
 
 8.  Supplemental
Financial Statement Information
  
 *Short-Term
Investments*
 
 Griffin's
short-term investments are comprised of equity and 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 date, and net
realized and unrealized gains and losses on those investments are included in
pretax income (loss). The composition of short-term investments at February 26,
2005 and November 27, 2004 is as follows:
 
 *As
      of Feb. 26, 2005*
    
    *As
      of Nov. 27, 2004*Cost
    
    Market
      Value
    
    Cost
    
    Market
      ValueCommercial
      Paper
    
    $
    6,242
    
    $
    6,244
    
    $
    15,015
    
    $
    15,032Certificates
      of Deposit
    
    
    3,249
    
    
    3,266
    
    
    7,368
    
    
    7,415Auction
      Rate Fixed Income Securities
    
    
    4,500
    
    
    4,507
    
    
    4,500
    
    
    4,506Federal
      Agency Coupon Notes
    
    
    16,275
    
    
    16,319
    
    
    3,219
    
    
    3,220Total
      short-term investments
    
    $
    30,266
    
    $
    30,336
    
    $
    30,102
    
    $
    30,173
 
 Income
from cash equivalents and short-term investments for the thirteen weeks ended
February 26, 2005 and February 28, 2004 consists of:
 
 *For
      the 13 Weeks Ended,*Feb.
      26, 2005
    
    Feb.
      28, 2004Interest
      and dividend income
    
    $
    33
    
    $
    6Net
      realized gains on the sales of short-term investments
    
    
    83
    
    
    -Net
      unrealized gains on short-term investments
    
    
    70
    
    
    -$
    186
    
    $
    6
 
 *Accumulated
Other Comprehensive Income*
 
 Changes
in accumulated other comprehensive income  for the
thirteen weeks ended February 26, 2005 and February 28, 2004 consist of the
following:
 
 *For
      the 13 Weeks Ended,*Feb.
      26, 2005
    
    Feb.
      28, 2004Balance
      at beginning of period
    
    $
    5,204
    
    $
    271Effect
      of foreign currency exchange rate changes related to equity investment inCentaur
      Communications, Ltd.
    
    
    -
    
    
    351Increase
      in fair market value at end of period of Centaur Holdings, plc,net
      of tax of $473
    
    
    877
    
    
    -Increase
      in value of Centaur Holdings, plc, due to foreign currency
      exchangerate
      changes, net of tax of $56
    
    
    104
    
    
    -Balance
      at end of period
    
    $
    6,185
    
    $
    622
   
 *Supplemental
Cash Flow Information*
 
 In the
thirteen weeks ended February 26, 2005 and February 28, 2004, Griffin did not
make any income tax payments. In the thirteen weeks ended February 26, 2005 and
February 28, 2004, Griffin made interest payments of $0.6 million and $0.7
million, respectively.
 
 Included
in accounts payable and accrued liabilities at February 26, 2005 and November
27, 2004 were $1,393 and $2,209, respectively, for additions to real estate held
for sale or lease.
 
 
 *Inventories*
 
 Inventories
consist of:
 Feb.
      26, 2005
    
    Nov.
      27, 2004Nursery
      stock
    
    $
    35,724
    
    $
    31,737Materials
      and supplies
    
    
    2,618
    
    
    1,09638,342
    
    
    32,833Reserves
    
    
    (786
    )
    
    (649
    )$
    37,556
    
    $
    32,184
 
 *Property
and Equipment*
 
 Property
and equipment consist of:
 
 Estimated
      Useful Lives
    
    Feb.
      26, 2005
    
    Nov.
      27, 2004Land
    
    
    
    
    $
    1,283
    
    $
    1,283Land
      improvements
    
    
    10
      to 20 years
    
    
    5,316
    
    
    5,274Buildings
    
    
    10
      to 40 years
    
    
    3,043
    
    
    3,033Machinery
      and equipment
    
    
    3
      to 20 years
    
    
    16,199
    
    
    16,05425,841
    
    
    25,644Accumulated
      depreciation
    
    
    
    
    
    (14,677
    )
    
    (14,334
    )$
    11,164
    
    $
    11,310
 
 Griffin
did not incur any capital lease obligations in the thirteen weeks ended February
26, 2005. Griffin incurred capital lease obligations of  $ 92 in the
thirteen weeks ended February 28, 2004.
 
 *Real
Estate Held for Sale or Lease*
 
 Real
estate held for sale or lease consists of:
 
 February
      26, 2005Estimated
      Useful Lives
    
    Held
      for Sale
    
    Held
      for Lease
    
    TotalLand
    
    
    
    
    $
    1,250
    
    $
    4,101
    
    $
    5,351Land
      improvements
    
    
    15
      years
    
    
    -
    
    
    4,992
    
    
    4,992Buildings
    
    
    40
      years
    
    
    -
    
    
    61,306
    
    
    61,306Development
      costs
    
    
    
    
    
    5,064
    
    
    9,073
    
    
    14,1376,314
    
    
    79,472
    
    
    85,786Accumulated
      depreciation
    
    
    
    
    
    -
    
    
    (18,199
    )
    
    (18,199
    )$
    6,314
    
    $
    61,273
    
    $
    67,587
 November
      27, 2004Estimated
      Useful Lives
    
    Held
      for Sale
    
    Held
      for Lease
    
    TotalLand
    
    
    
    
    $
    1,252
    
    $
    4,101
    
    $
    5,353Land
      improvements
    
    
    15
      years
    
    
    -
    
    
    4,992
    
    
    4,992Buildings
    
    
    40
      years
    
    
    -
    
    
    61,279
    
    
    61,279Development
      costs
    
    
    
    
    
    4,939
    
    
    6,998
    
    
    11,9376,191
    
    
    77,370
    
    
    83,561Accumulated
      depreciation
    
    
    
    
    
    -
    
    
    (17,518
    )
    
    (17,518
    )$
    6,191
    
    $
    59,852
    
    $
    66,043
 *Deferred
Income Taxes*
 
 A
deferred tax liability of $529 was included as a charge to other comprehensive
income in the thirteen weeks ended February 26, 2005 related to the mark to
market adjustment on the 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 the
consolidated balance sheets. Because Griffin's obligation for retiree medical
benefits is fixed under the terms of Griffin's 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 for the thirteen weeks ended February
26, 2005 and February 28, 2004 were $2 and $1 respectively, with an expected
contribution of $18 for the fiscal 2005 full year. The components of Griffin's
postretirement benefits expense are as follows:
 
 
 *For
      the 13 Weeks Ended,*Feb.
      26, 2005
    
    Feb.
      28, 2004Service
      cost
    
    $
    9
    
    $
    8Interest
    
    
    13
    
    
    12Amortization
      of unrecognized loss
    
    
    2
    
    
    2$
    24
    
    $
    22
 
 
 9.  Commitments
and Contingencies
 
 As of
February 26, 2005, Griffin had committed purchase obligations of  $3.2 million,
principally for construction of the shell of a new industrial building at
Griffin Land and for the purchase of raw materials by Imperial.
 
 Griffin
is involved, as a defendant, in various litigation matters arising in the
ordinary course of business. In the opinion of management, based on the advice
of counsel, the ultimate liability, if any, with respect to these matters will
not be material to Griffin’s consolidated financial position, results of
operations or cash flows.
 
 
   
 ITEM
      2.
    MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIALCONDITION
      AND RESULTS OF OPERATIONS
 
 Overview
 
 The
consolidated financial statements of Griffin Land & Nurseries, Inc.
(“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”).
Through March 9, 2004, Griffin had an equity investment in Centaur
Communications, Ltd. (“Centaur”), a privately held magazine publishing business
based in the United Kingdom. On March 10, 2004, Griffin completed the sale of
its investment in Centaur, receiving cash proceeds of $68.9 million after
transaction expenses of $1.5 million but before income tax payments, and
6,477,150 shares of common stock of Centaur Holdings, plc. (“Centaur Holdings”),
the newly formed acquiring company. Griffin has retained its ownership interest
in Centaur Holdings and accounts for that investment as an available-for-sale
security under SFAS No. 115, “Accounting For Certain Investments in Debt and
Equity Securities.”
 
 The
significant accounting policies and methods used in the preparation of Griffin’s
consolidated financial statements included in Item 1 are consistent with those
used in the preparation of Griffin’s audited financial statements for the year
ended November 27, 2004 included in Griffin’s Report on Form 10-K as filed with
the Securities and Exchange Commission. The preparation of Griffin’s financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and revenue and expenses during the periods reported. Actual results
could differ from those estimates. The significant accounting estimates used by
Griffin in preparation of its financial statements for the thirteen weeks ended
February 26, 2005 are consistent with those used by Griffin in preparation of
its fiscal 2004 financial statements.
 
 Summary
 
 Griffin’s
net loss for the thirteen weeks ended February 26, 2005 (the “2005 first
quarter”) was substantially unchanged from the net loss for the thirteen weeks
ended February 28, 2004 (the “2004 first quarter”). Lower operating profit in
the 2005 first quarter was substantially offset by lower interest expense and
higher interest income, dividend income and gains on short-term investments in
the 2005 first quarter. Operating profit at Griffin Land was lower in the 2005
first quarter as compared to the 2004 first quarter, as higher rental revenue
was offset by a charge of $0.2 million to write off capitalized costs related to
a lease termination (a new lease with a new tenant became effective upon the
termination of the existing lease) and higher operating expenses of its
buildings. The 2005 first quarter operating loss at Imperial was higher than
Imperial’s operating loss in the 2004 first quarter due principally to a charge
for inventory losses in the 2005 first quarter. Imperial historically incurs a
first quarter operating loss due to the highly seasonal nature of the landscape
nursery business.
 
 **Results
of Operations**
 
 **Thirteen
Weeks Ended February 26, 2005 Compared to the Thirteen Weeks Ended February 28,
2004**
 
 Griffin’s
consolidated total revenue increased from $2.9 million in the 2004 first quarter
to $3.3 million in the 2005 first quarter. The increase of $0.4 million reflects
increases in revenue of $0.3 million at Griffin Land and $0.1 million at
Imperial.
 
 
 Revenue
at Griffin Land increased from $2.5 million in the 2004 first quarter to $2.8
million in the 2005 first quarter. The increase of $0.3 million reflects an
increase of $0.2 million in revenue from its leasing operations and revenue of
$0.1 million from a property sale. There were no property sales in the 2004
first quarter. The increase in revenue from leasing operations principally
reflects a net increase in space leased in the 2005 first quarter as compared to
the 2004 first quarter. At February 26, 2005, Griffin Land owned 1,130,000
square feet of industrial, flex and office space, with 934,000 square feet (83%)
leased. At the end of the 2004 first quarter, Griffin Land had 1,130,000 square
feet of industrial, flex and office space, with 870,000 square feet (77%)
leased. The increase space leased at the end of the 2005 first quarter versus
the comparable time last year principally reflects the start of rental payments
on new leases subsequent to the 2004 first quarter. These include two leases for
an aggregate of 54,000 square feet of the 117,000 square foot industrial
building in the New England Tradeport in Windsor, Connecticut that was completed
near the end of fiscal 2003 and a lease for 16,000 square feet of Griffin’s
50,000 square foot single story office building in Griffin Center in Windsor,
Connecticut. Rental revenue from new leases of previously vacant space covering
approximately 20,000 square feet in one of Griffin Land’s older industrial
buildings in the New England Tradeport, was substantially offset by
approximately 25,000 square feet, primarily flex space, that was leased in the
2004 first quarter, but vacant in the current period.
 
 There was
a significant increase in real estate market activity particularly by users of
industrial and warehouse space in the latter part of fiscal 2004 which has
continued into the current year. The increased market activity is evidenced by
the increases in requests for proposals to Griffin Land by prospective users for
that type of space and interest by certain current tenants seeking to increase
the amount of warehouse and industrial space they currently lease. Subsequent to
the end of the 2005 first quarter, Griffin Land completed a lease for an
additional approximately 39,000 square feet of its 117,000 square foot
industrial building, resulting in that building now being approximately 80%
leased. Also, subsequent to the 2005 first quarter, Griffin Land signed a lease
for approximately 31,300 square feet for its 137,000 square foot industrial
building that is currently under construction. This new lease is with a current
tenant that required additional space and will, therefore, vacate the 25,000
square feet it currently leases in one of Griffin Land’s other industrial
buildings. The vacated space will be leased to that building’s other tenant
which is also seeking to increase the amount of space it currently leases. A
lease for approximately 40,000 square feet for the industrial building currently
under construction had been signed earlier.
 
 Net sales
and other revenue at Imperial increased from $0.4 million in the 2004 first
quarter to $0.5 million in the 2005 first quarter. Imperial’s landscape nursery
business is highly seasonal, with sales peaking in the spring. Sales in the
winter months that comprise the first quarter (December through February) are
not significant when compared to the full year’s net sales. Over the past three
years, Imperial’s first quarter net sales accounted for less than 3% of the full
year net sales in each of those years.
 
 Griffin
incurred a consolidated operating loss of $1.9 million in the 2005 first quarter
as compared to a consolidated operating loss of $1.4 million in the 2004 first
quarter. The higher operating loss principally reflects a change from
approximately break even to a $0.1 million operating loss at Griffin Land, an
increase of $0.1 million in the operating loss at Imperial and an increase of
$0.3 million of general corporate expense.
 
 Griffin
Land incurred an operating loss of $0.1 million in the 2005 first quarter as
compared to break even results in the 2004 first quarter, reflecting the
following:
 
 
 2005
    
    2004First
      Qtr.
    
    First
      Qtr.(amounts
      in thousands)Profit
      from leasing activities before general andadministrative
      expenses and before depreciationand
      amortization expense
    
    $
    1,373
    
    $
    1,434Loss
      from land sales
    
    
    (11
    )
    
    (70
    )General
      and administrative expenses
    
    
    (649
    )
    
    (573
    )Profit
      before depreciation and amortization expense
    
    
    713
    
    
    791Depreciation
      and amortization expense
    
    
    (781
    )
    
    (772
    )Operating
      (loss) profit
    
    $
    (68
    )
    $
    19
 
 Profit
from leasing activities before general and administrative expenses and before
depreciation and amortization expense decreased slightly, as the increase in
rental revenue was more than offset by a charge of $0.2 million to write off
capitalized costs related to a lease that was terminated in the 2005 first
quarter and higher building operating expenses, due to seasonal cost of snow
plowing during the winter months. The lease termination was related to a new
longer-term lease with a new tenant for that building. The new lease rental
rates were equal to the rental rates under the terminated lease over the
remaining term of the terminated lease. The sale of a residential lot generated
proceeds of $0.1 million but was essentially at the break even profit level.
Although there were no property sales in the 2004 first quarter, Griffin Land
wrote off costs related to a proposed property sale that did not take place.
Griffin Land’s general and administrative expenses were higher in the 2005 first
quarter than the 2004 first quarter due principally to bad debt expense and
higher insurance expenses.
 
 The
operating loss at Imperial increased from $0.9 million in the 2004 first quarter
to $1.0 million in the 2005 first quarter, as follows:
 
 2005
    
    2004First
      Qtr.
    
    First
      Qtr.(amounts
      in thousands)Net
      sales and other revenue
    
    $
    464
    
    $
    422Cost
      of goods sold
    
    
    597
    
    
    442Gross
      loss
    
    
    (133
    )
    
    (20
    )Selling,
      general and administrative expenses
    
    
    (880
    )
    
    (853
    )Operating
      loss
    
    $
    (1,013
    )
    $
    (873
    )
 Due to
the seasonality of the landscape nursery business, Imperial historically incurs
a first quarter operating loss. The increase in cost of goods sold in the 2005
first quarter as compared to the 2004 first quarter reflects a charge of $0.1
million for unsalable inventory. The unsalable inventory charge was due to the
inventory of one plant variety, which is no longer in production, at Imperial’s
northern Florida operation that became diseased over the winter.
 
 Griffin’s general corporate expense
increased from $0.5 millon in the 2004 first quarter to $0.8 million in the 2005
first quarter due principally to increased audit expenses and higher donation
expenses.
 
 Griffin’s consolidated interest expense decreased from $0.7 million in the 2004
first quarter to $0.5 million in the 2005 first quarter. The lower interest
expense reflects the termination of Griffin’s revolving credit agreement in the
2004 second quarter and a portion of the 2005 first quarter interest
  ****
 
 being
capitalized as compared to no capitalized interest in the 2004 first quarter.
Griffin’s average outstanding debt in the 2005 first quarter was $32.2 million
as compared to average outstanding debt of $45.5 million in the 2004 first
quarter.
 
 Griffin
reported higher interest income, dividend income and gains on short-term
investments of $0.2 million in the 2005 first quarter, reflecting earnings on
investment of the remaining proceeds from the sale of Centaur.
 
 Griffin’s
effective income tax benefit rate was 34.3% in the 2005 first quarter as
compared to 37.3% in the 2004 first quarter. The lower income tax benefit rate
principally reflects the effect of state and local income taxes.
 
 There was
no equity income in the 2005 first quarter as a result of the sale of Centaur on
March 10, 2004. Griffin incurred an equity loss of $0.1 million from Centaur in
the 2004 first quarter.
 
 **Liquidity
and Capital Resources**
 
 Cash used
in operating activities increased from $3.7 million in the 2004 first quarter
period to $4.9 million in the 2005 first quarter period. The $1.2 million
increase in cash used in operating activities principally reflects an increase
of $0.2 million in accounts payable and accrued liabilities in the 2005 first
quarter as compared to an increase of $1.6 million in accounts payable and
accrued liabilities in the 2004 first quarter and an increase of $5.5 million in
inventories in the 2005 first quarter as compared to an increase of $4.8 million
in the 2004 first quarter. The change in accounts payable and accrued
liabilities principally reflects timing of payments. The higher increase in
inventories reflects the timing of raw material purchases at Imperial. The
unfavorable changes of inventories and accounts payable were partially offset by
non-cash adjustments to the net loss being higher in the 2005 first quarter as
compared to the 2004 first quarter.
 
 Cash used
in investing activities increased from $2.0 million in the 2004 first
quarter to $3.3 million in the 2005 first quarter. Additions to real
estate held for sale or lease increased from $1.6 million in the 2004 first
quarter to $3.1 million in the 2005 first quarter. The higher amount of
additions to Griffin Land’s real estate assets principally reflects the ongoing
construction of the shell of a 137,000 square foot industrial building in the
New England Tradeport, which is expected to be substantially completed at the
end of the second quarter. This building was built on speculation, however
leases for approximately 73,500 square feet have been signed. Additions to
property and equipment, principally for Imperial, were $0.2 million in both the
2005 and 2004 first quarters. The current year expenditures were principally to
purchase additional portable shelving units that are used on trucks in
delivering product to customers. The prior year additions at Imperial were
principally for completion of the expansion of its Florida operations.
 
 Net cash
used in financing activities was $0.2 million in the 2005 first quarter as
compared to net cash of $5.7 million provided by financing activities in the
2004 first quarter. The net cash used in financing activities in the 2005 first
quarter reflects payments of principal on Griffin Land’s mortgages. The net cash
generated from financing activities in the 2004 first quarter included
borrowings under the Credit Agreement to finance Griffin’s operations during
that period. The balance outstanding under the Credit Agreement was subsequently
repaid with a portion of the proceeds from the sale of Centaur and the Credit
Agreement was then terminated.
 
 In the
balance of fiscal 2005, Griffin plans to continue to invest in its real estate
business. As a result of the recent completion of new leases for industrial
space and expressions of interest by potential
 
 
 users of
that type of space, Griffin Land expects to begin construction in the 2005
second quarter on the shell of an additional 137,000 square foot industrial
building in the New England Tradeport. This new construction is also being done
on speculation, however, there have been significant expressions of interest for
space in this new building by prospective tenants. Griffin Land also expects to
incur expenditures to build out the interiors of its new buildings as leases are
completed. In addition to activity in the industrial and warehouse market, there
has been an increase in inquiries for office space. If current outstanding
proposals to lease office space are accepted, Griffin Land will consider
increasing its inventory of office space in order to meet the needs of current
and future users of office space. Griffin Land also expects to continue to
invest in infrastructure improvements required for present and future
development in its office and industrial parks. Griffin Land is currently
seeking a mortgage on a recently completed industrial building and an industrial
building currently under construction.
 
 Last
year, Griffin Land received approval for its proposed residential development,
Stratton Farms, in Suffield, Connecticut. An owner of certain land adjacent to
Stratton Farms has filed an appeal of the approvals issued by the town’s land
use commissions. Infrastructure work on this residential development has not
started because one environmental permit is still required before work can
begin. Revenue from land sales in Stratton Farms is not expected this year.
 
 Subsequent
to the end of the 2005 first quarter, Griffin Land completed the sale, which was
contracted for last year, of commercial land in Windsor, Connecticut. Proceeds
were $0.8 million. There are also two land sales currently under contract which
have not yet been completed. A prospective sale of undeveloped residential land
for $0.8 million is contingent on the buyer obtaining approvals from the towns’
land use commissions, and a prospective sale of undeveloped residential land for
$0.4 million is contingent on the buyer obtaining financing. Completion of the
latter sale is expected to take place later this year. Griffin Land intends to
proceed with residential development plans on other of its lands that are also
appropriate for that use.
 
 Griffin’s
payments (including principal and interest) under contractual obligations as of
February 26, 2005 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
    
    $
    48.8
    
    $
    3.0
    
    $
    6.0
    
    $
    13.0
    
    $
    26.8Capital
      Lease Obligations
    
    
    0.4
    
    
    0.1
    
    
    0.2
    
    
    0.1
    
    
    -Operating
      Lease Obligations
    
    
    0.6
    
    
    0.2
    
    
    0.3
    
    
    0.1
    
    
    -Purchase
      Obligations (1)
    
    
    3.2
    
    
    3.2
    
    
    -
    
    
    -
    
    
    -Other
      (2)
    
    
    1.4
    
    
    -
    
    
    -
    
    
    -
    
    
    1.4$
    54.4
    
    $
    6.5
    
    $
    6.5
    
    $
    13.2
    
    $
    28.2
 
 (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.
 
 **** 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
Griffin’s 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 expects to use
the balance of the proceeds from the Centaur sale for additional real estate
investment; however, there are no
 
 
 specific
real estate investments planned at this time. Such investment 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 will be effective for Griffin in fiscal
2006 and is not expected to have a material impact on Griffin’s consolidated
financial statements.
 
 In
December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets
(an amendment of APB Opinion No. 29).” This new standard requires an issuer to
measure and recognize nonmonetary exchanges which are anticipated to have an
impact on future cash flows. SFAS No. 153 will be effective for Griffin in the
fourth quarter of fiscal 2005 and is not expected to have any impact on
Griffin’s consolidated financial statements.
 
 In
December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment.” This new
standard supersedes APB Opinion No. 25, “Accounting for Stock Issued to
Employees,” and its related implementation guidance. SFAS No. 123R requires an
issuer to recognize the compensation cost of employee services received in
exchange for an award of equity instruments. Therefore, the cost of rewarding
individuals with equity instruments will be recognized in Griffin’s financial
statements rather than disclosed in a pro forma statement in the financial
statement footnotes. SFAS No. 123R will be effective for Griffin in the fourth
quarter of fiscal 2005. Management expects to adopt SFAS No. 123R using the
modified prospective application method, and expects that the adoption of SFAS
No. 123R will decrease Griffin’s annual basic and diluted per share results by
$0.01to $0.04 per share.
 
 
 **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 and approval of
currently proposed residential subdivisions. 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 repay 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. 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 had no variable rate debt
outstanding at February 26, 2005. Therefore, an increase in interest rates of 1%
would not have affected Griffin’s interest expense in the thirteen weeks ended
February 26, 2005.
 
 
 Griffin
is exposed to market risks from fluctuations in interest rates and the effects
of those fluctuations on market values of Griffin’s cash equivalents and
short-term investments. These investments generally consist of investments with
maturities principally less than three months that 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 its operations. Griffin has an
investment in Centaur Holdings plc, a public company traded on the London Stock
Exchange and a private company, Linguaphone Group Ltd., both based in the United
Kingdom. The ultimate liquidation of those investments and conversion of
proceeds into United States currency is subject to future foreign currency
exchange rates.
 
 ITEM
      4.
    CONTROLS
      AND PROCEDURES
 
 Griffin
maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in Griffin’s 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 for 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 is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
 
 As
required by SEC Rule 13a-15(b), Griffin carried out an evaluation, under the
supervision and with the participation of Griffin’s management, including
Griffin’s Chief Executive Officer and Griffin’s Chief Financial Officer, of the
effectiveness of the design and operation of Griffin’s disclosure controls and
procedures as of the end of the quarter covered by this report. Based on the
foregoing, Griffin’s Chief Executive Officer and Chief Financial Officer
concluded that Griffin’s disclosure controls and procedures were effective at
the reasonable assurance level.
  There has been no change
in Griffin’s internal controls over financial reporting during Griffin’s most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, Griffin’s internal controls over financial
reporting.
  
  
 **PART
      II**
    **OTHER
      INFORMATION**
 
 
 ITEMS
      1 - 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-OxleyAct
      of 200232.2
    Certifications
      of Chief Financial Officer Pursuant to 18 U.S.CSection
      1350, as Adopted Pursuant to Section 906 of the
    Sarbanes-OxleyAct
      of 2002
 
 
 
 
 
  
  
 
 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:April
      12, 2005
    
    Frederick
      M. DanzigerPresident
      and Chief Executive Officer/s/
      ANTHONY J. GALICIDate:April
      12, 2005
    
    Anthony
      J. GaliciVice
      President, Chief Financial Officer and Secretary