<PAGE>

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)
     (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                      For the quarter ended March 31, 2004

     ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
   For the transition period from___________________ to _____________________

                             Commission File Number
                                     0-24439


                            HINES HORTICULTURE, INC.
             (Exact name of registrant as specified in its charter)


                DELAWARE                                    33-0803204
    (State or other jurisdiction of                     (I.R.S. Employer
    incorporation or organization)                    Identification Number)

                               12621 Jeffrey Road
                            Irvine, California 92620
               (Address of principal executive offices) (Zip Code)

                                 (949) 559-4444
              (Registrant's telephone number, including area code)

         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 and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                                  Yes (X) No( )

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
                                  Yes( ) No (X)

         As of April 30, 2004 there were 22,072,549 shares of Common Stock, par
value $0.01 per share, outstanding.

================================================================================

<PAGE>

                            HINES HORTICULTURE, INC.
                                      INDEX

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements                                           Page No.
                                                                        --------
         Condensed Consolidated Balance Sheets as of
         March 31, 2004 (unaudited) and December 31, 2003                    3

         Condensed Consolidated Statements of Operations for the
         Three Months Ended March 31, 2004 and 2003 (unaudited)              4

         Condensed Consolidated Statements of Cash Flows for the
         Nine Months Ended March 31, 2004 and 2003 (unaudited)               5

         Notes to the Condensed Consolidated Financial Statements            6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                           19

Item 3.  Quantitative and Qualitative Disclosures About Market Risk          28

Item 4.  Controls and Procedures                                             28

                           PART II. OTHER INFORMATION


Item 1.  Legal Proceedings                                                   29

Item 6.  Exhibits and Reports on Form 8-K                                    29

         Signature                                                           31

Note: Items 2, 3, 4 and 5 of Part II are omitted because they are not
applicable.

                                     Page 2
<PAGE>

PART I. FINANCIAL INFORMATION

Item 1.     Financial Statements

<TABLE>
                                          HINES HORTICULTURE, INC.
                                   CONDENSED CONSOLIDATED BALANCE SHEETS
                                    March 31, 2004 and December 31, 2003
                                 (Dollars in thousands, except share data)
                                                (Unaudited)
<CAPTION>

ASSETS
------                                                                        March 31,        December 31,
                                                                                2004               2003
                                                                            -------------     -------------
<S>                                                                         <C>               <C>
CURRENT ASSETS:
        Cash                                                                $         --      $         --
        Accounts receivable, net of allowance for
           doubtful accounts of $444 and $601                                     51,692            23,724
        Inventories                                                              197,033           173,090
        Prepaid expenses and other current assets                                  3,674             3,157
                                                                            -------------     -------------
                                                   Total current assets          252,399           199,971
                                                                            -------------     -------------

FIXED ASSETS, net of accumulated depreciation
   of $50,311 and $47,566                                                        134,583           136,435

DEFERRED FINANCING EXPENSES, net of
   accumulated amortization of $888 and $443                                      10,225            10,589
DEFFERRED INCOME TAXES                                                            12,234            12,234
GOODWILL                                                                          42,979            42,979
                                                                            -------------     -------------
                                                                            $    452,420      $    402,208
                                                                            =============     =============

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES:
        Accounts payable                                                    $     23,521      $     10,104
        Accrued liabilities                                                       10,935             9,234
        Accrued payroll and benefits                                               5,980             6,971
        Accrued interest                                                           9,569             5,073
        Interest rate swap agreement, current portion                              4,450             5,320
        Long-term debt, current portion                                            5,767             5,789
        Borrowings on revolving credit facility                                   64,625            30,318
        Deferred income taxes                                                     64,440            65,186
                                                                            -------------     -------------

                                              Total current liabilities          189,287           137,995
                                                                            -------------     -------------

LONG-TERM DEBT                                                                   209,287           209,287

OTHER LIABILITIES                                                                  2,189             2,196
                                                                            -------------     -------------

                                                      Total liabilities          400,763           349,478
                                                                            -------------     -------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
        Common stock
           Authorized - 60,000,000 shares, $.01 par value;
           Issued and outstanding - 22,072,549 shares
           at March 31, 2004 and December 31, 2003                                   221               221

        Additional paid-in capital                                               128,781           128,781
        Accumulated deficit                                                      (77,345)          (76,272)
                                                                            -------------     -------------

                                             Total shareholders' equity           51,657            52,730
                                                                            -------------     -------------

                                                                            $    452,420      $    402,208
                                                                            =============     =============

     The accompanying notes are an integral part of these condensed consolidated financial statements.

                                                  Page 3
</TABLE>
<PAGE>
<TABLE>
                                 HINES HORTICULTURE, INC.
                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        Three Months Ended March 31, 2004 and 2003
                        (Dollars in thousands, except share data)
                                        (Unaudited)
<CAPTION>

                                                             Three Months Ended March 31,

                                                               2004               2003
                                                           -------------     -------------
<S>                                                        <C>               <C>
Sales, net                                                 $     60,390      $     59,253
Cost of goods sold                                               31,124            28,600
                                                           -------------     -------------
    Gross profit                                                 29,266            30,653
                                                           -------------     -------------

Selling and distribution expenses                                19,198            19,047
General and administrative expenses                               5,611             5,586
Other operating expenses                                             --             1,242
                                                           -------------     -------------
    Total operating expenses                                     24,809            25,875
                                                           -------------     -------------

    Operating income                                              4,457             4,778

Other expenses
   Interest, net                                                  6,700             6,291
   Interest rate swap agreement income                             (869)             (324)
   Amortization of deferred financing expenses                      445             1,050
                                                           -------------     -------------
                                                                  6,276             7,017
                                                           -------------     -------------

Loss before income taxes                                         (1,819)           (2,239)

Income tax benefit                                                 (746)             (917)
                                                           -------------     -------------

Net loss                                                   $     (1,073)     $     (1,322)
                                                           =============     =============


Basic and diluted earnings per share:

Net loss per common share                                  $      (0.05)     $      (0.06)
                                                           =============     =============

Weighted average shares outstanding--Basic and Diluted       22,072,549        22,072,549
                                                           =============     =============

              The accompanying notes are an integral part of these condensed
                            consolidated financial statements.

                                          Page 4
</TABLE>
<PAGE>
<TABLE>
                               HINES HORTICULTURE, INC.
                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      Three Months Ended March 31, 2004 and 2003
                       (Dollars in thousands, except share data)
                                      (Unaudited)
<CAPTION>

                                                             2004             2003
                                                         ------------     ------------
<S>                                                      <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                             $    (1,073)     $    (1,322)
    Adjustments to reconcile net loss to net cash
      provided by operating activities:
         Depreciation                                          2,715            2,295
         Amortization of deferred financing expenses             445            1,050
         Interest rate swap agreement income                    (869)            (324)
         Deferred income tax benefits                           (746)            (917)
                                                         ------------     ------------
                                                                 472              782
Change in working capital accounts:
    Accounts receivable                                      (27,968)         (25,578)
    Inventories                                              (24,012)         (25,025)
    Prepaid expenses and other current assets                   (517)          (1,236)
    Accounts payable and accrued liabilities                  18,622            9,384
                                                         ------------     ------------
      Change in working capital accounts                     (33,875)         (42,455)
                                                         ------------     ------------

        Net cash used by operating activities                (33,403)         (41,673)
                                                         ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of fixed assets                                    (863)          (1,428)
    Leasehold incentive proceeds                                  62               --
                                                         ------------     ------------
        Net cash used in investing activities                   (801)          (1,428)
                                                         ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net borrowings on revolving line of credit                34,307           43,750
    Repayments of long-term debt                                 (22)             (21)
    Deferred financing expenses incurred                         (81)            (628)
                                                         ------------     ------------
        Net provided by financing activities                  34,204           43,101
                                                         ------------     ------------


NET CHANGE IN CASH                                                --               --

CASH, beginning of period                                         --               --
                                                         ------------     ------------

CASH, end of period                                      $        --      $        --
                                                         ============     ============


Supplemental disclosure of cash flow information:
    Cash paid for interest                               $     2,126      $     8,791
    Cash paid for income taxes                           $         7      $        77

            The accompanying notes are an integral part of these condensed
                          consolidated financial statements.

                                        Page 5
</TABLE>
<PAGE>

                            HINES HORTICULTURE, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


1.       Description of Business:
         ------------------------

                  Hines Horticulture, Inc. ("Hines" or the "Company"), a
         Delaware corporation, produces and distributes horticultural products
         through its wholly owned subsidiaries, Hines Nurseries, Inc. ("Hines
         Nurseries") and Enviro-Safe Laboratories, Inc. Unless otherwise
         specified, references to "Hines" or the "Company" refer to Hines
         Horticulture, Inc. and its subsidiaries.

                  Hines is a leading national supplier of ornamental shrubs,
         color plants and container-grown plants with commercial nursery
         facilities located in Arizona, California, Florida, Georgia, New York,
         Oregon, Pennsylvania, South Carolina and Texas. Hines markets its
         products to retail and commercial customers throughout the United
         States and Canada.

                  In March 2002, the Company completed the sale of Sun Gro
         Horticulture, which it refers to as Sun Gro, which was the Company's
         peat moss and growing soil mix business. The Company utilized the net
         proceeds from the sale of Sun Gro primarily to reduce outstanding
         indebtedness. As a result of the sale of Sun Gro, the Company no longer
         harvests or produces peat moss or other soil mixes. The Company
         recognized a $5,413 loss, net of tax, from its discontinued operations
         for the year ended December 31, 2002 (a loss of $6,978 in the first
         quarter of 2002 and a gain of $1,565 in the fourth quarter of 2002) and
         a $4,013 gain, net of tax, for the nine months ended September 30,
         2003. The gains in the fourth quarter of 2002 related to the Company's
         receipt of $4,917 Canadian from an escrow account that the Canadian
         Customs & Revenue Authority ("CCRA") required to be set up at the time
         of the Sun Gro sale to withhold $13,136 Canadian pending the
         determination of whether certain aspects of the sale were taxable for
         Canadian purposes. The Company's current operations consist solely of
         its nursery operations.

                  The Condensed Consolidated Financial Statements include the
         accounts of Hines and its wholly owned subsidiaries after elimination
         of intercompany accounts and transactions.

2.       Unaudited Financial Information:
         --------------------------------

                  The unaudited financial information furnished herein, in the
         opinion of management, reflects all adjustments (consisting of only
         normal recurring adjustments), which are necessary to state fairly the
         consolidated financial position, results of operations and cash flows
         of the Company as of and for the periods indicated. The Company
         presumes that users of the interim financial information herein have
         read or have access to the Company's audited consolidated financial
         statements for the preceding fiscal year and that the adequacy of
         additional disclosure needed for a fair presentation, may be determined
         in that context.

                                     Page 6
<PAGE>

                  Accordingly, footnote and other disclosures, which would
         substantially duplicate the disclosures contained in the Company's Form
         10-K for the year ended December 31, 2003, filed on March 30, 2004 by
         Hines Horticulture, Inc. under the Securities Exchange Act of 1934, as
         amended, have been omitted. The financial information herein is not
         necessarily representative of a full year's operations.

3.       Reclassifications:
         ------------------

                  Certain prior year amounts have been reclassified to conform
         to current year presentations.

4.       Earnings Per Share:
         -------------------

                  Earnings per share are calculated in accordance with Statement
         of Financial Accounting Standard ("SFAS") No. 128, "Earnings per
         Share," which requires the Company to report both basic earnings per
         share, based on the weighted-average number of common shares
         outstanding, and diluted earnings per share, based on the
         weighted-average number of common shares outstanding adjusted to
         include the potentially dilutive effect of outstanding stock options
         and warrants using the treasury method. For the three months ended
         March 31, 2004, the incremental shares related to 440,000 warrants
         outstanding were excluded from the computation of diluted earnings per
         share because they would have been anti-dilutive. Additionally, for the
         three months ended March 31, 2004, shares related to the underlying
         employee stock options in the amount of 1,088,723 were excluded from
         the computation of diluted earnings per share because they would have
         been anti-dilutive.

5.       Adoption Of Accounting Pronouncements:
         --------------------------------------

                  In June 2002, the FASB issued SFAS No. 146 "Accounting for
         Costs Associated with Exit or Disposal Activities" ("SFAS No. 146").
         SFAS No. 146 addresses financial accounting and reporting for costs
         associated with exit or disposal activities and nullifies Emerging
         Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for
         Certain Employee Termination Benefits and Other Costs to Exit an
         Activity, including Certain Costs Incurred in a Restructuring." The
         provisions of this statement are effective for exit or disposal
         activities that are initiated after December 31, 2002. In accordance
         with SFAS No. 146, the Company recorded $1,242 of severance expenses
         primarily related to the resignation of Stephen P. Thigpen, Chairman
         and Chief Executive Officer, for the quarter ended March 31, 2003.

                  In December 2002, the FASB issued SFAS No. 148, "Accounting
         for Stock-Based-Compensation-Transition and Disclosure-an Amendment of
         FASB Statement No. 123" ("SFAS No. 148"). SFAS No. 148 amends SFAS No.
         123, "Accounting for Stock-Based Compensation" ("SFAS No. 123") to
         provide alternative methods of transition for a voluntary change to the
         fair value based method of accounting for stock-based employee
         compensation. In addition, SFAS No. 148 amends the disclosure
         requirements of SFAS No. 123 to require prominent disclosures in both
         annual and interim financial statements about the method of accounting
         for stock-based employee compensation and the effect of the method used
         on reported results. As permitted under both SFAS No. 123 and SFAS No.

                                     Page 7
<PAGE>

         148, the Company continues to follow the intrinsic value method of
         accounting under Accounting Principles Board No. 25 "Accounting for
         Stock Issued to Employees."

                                                   Three months ended
                                                       March 31,
                                                 2004              2003
                                             ------------     ------------

         Net loss, as reported               $    (1,073)     $    (1,322)
         Stock option expense                       (124)              (8)
                                             ------------     ------------
         Pro forma net loss                  $    (1,197)     $    (1,330)
                                             ============     ============

         Net loss per share:

         Basic and diluted - as reported     $     (0.05)     $     (0.06)
                                             ============     ============
         Basic and diluted - pro forma       $     (0.05)     $     (0.06)
                                             ============     ============

                  The Company estimates the weighted average fair value of each
         stock option on the grant date using the Black-Scholes option-pricing
         model with the following weighted-average assumptions:

                                                  March 31,
                                              2004         2003
                                           ----------   ----------
         Dividend Yield                           0%           0%
         Expected volatility                  74.22%       78.88%
         Risk-free interest rate               3.33%        3.35%
         Expected life                     Six years    Six years

                  In January 2003, the FASB issued Interpretation No. 46,
         "Consolidation of Variable Interest Entities, an interpretation of
         Accounting Research Bulletin No. 51" ("FIN 46"). The primary objectives
         of FIN 46 are to provide guidance on the identification of entities for
         which control is achieved through means other than through voting
         rights ("variable interest entities") and to determine when and which
         business enterprise ("primary beneficiary") should consolidate the
         variable interest entity. FIN 46 requires existing unconsolidated
         variable interest entities to be consolidated by their primary
         beneficiaries if the entities do not effectively disperse risks among
         the parties involved. Variable interest entities that effectively
         disperse risks will not be consolidated unless a single party holds an
         interest or combination of interests that effectively recombines risks
         that were previously dispersed. In addition, FIN 46 requires that the
         primary beneficiary, as well as all other enterprises with a
         significant variable interest in a variable interest entity, make
         additional disclosures. Certain disclosure requirements of FIN 46 were
         effective for financial statements issued after January 31, 2003. In
         December 2003, the FASB revised FIN 46 ("FIN 46R") to address certain
         FIN 46 implementation issues. The revised provisions are applicable no
         later than the first reporting period ending after March 15, 2004. The
         adoption of FIN 46 and FIN 46R did not have an impact on the Company's
         financial position, results of operations or cash flows.

                                     Page 8
<PAGE>

6.       Inventories:
         ------------

         Inventories consisted of the following:

                                     March 31,       December 31,
                                       2004              2003
                                   -------------    -------------

         Nursery stock             $    183,897     $    162,861
         Material and supplies           13,136           10,229
                                   -------------    -------------
                                   $    197,033     $    173,090
                                   =============    =============

7.       Revolving Lines of Credit:
         --------------------------

                  On September 30, 2003, the Company amended and restated its
         Senior Credit Facility. Hines Nurseries and its domestic operating
         subsidiaries are borrowers under the Senior Credit Facility. The Senior
         Credit Facility consists of (i) a revolving facility with availability
         of up to $145,000 (subject to borrowing base limits) and (ii) a term
         loan facility of up to $40,000. The revolving facility also permits the
         ability to obtain letters of credit up to a sub-limit.

         SENIOR CREDIT FACILITY. The Company entered into the amended and
         restated Senior Credit Facility on September 30, 2003. The Senior
         Credit Facility matures on September 30, 2008.

                  GUARANTEES; COLLATERAL. Obligations under the Senior Credit
         Facility are guaranteed by Hines and any of its domestic subsidiaries
         that are not borrowers under the Senior Credit Facility. Borrowings
         under the Senior Credit Facility are collateralized by substantially
         all of the Company's assets.

                  RESTRICTIONS; COVENANTS. The Senior Credit Facility places
         various restrictions on Hines Nurseries and its subsidiaries,
         including, but not limited to, limitations on the Company's ability to
         incur additional debt, pay dividends or make distributions, sell assets
         or make investments. The Senior Credit Facility specifically restricts
         Hines Nurseries and its subsidiaries from making distributions to Hines
         Horticulture. Distributions to Hines Horticulture are limited to (i)
         payments covering customary general and administrative expenses, not to
         exceed $500 in any fiscal year, (ii) payments to discharge any
         consolidated tax liabilities, (iii) and payments, not to exceed as much
         as $8,300 in any fiscal year or $9,300 over the term of the Senior
         Credit Facility, to enable Hines Horticulture to repurchase its own
         outstanding common stock from holders other than its majority
         shareholder.

                  The Senior Credit Facility requires Hines Nurseries and its
         subsidiaries to meet specific covenants and financial ratios, including
         a minimum fixed charge coverage test, a maximum leverage test and a
         maximum capital expenditure test. The Senior Credit Facility contains
         customary representations and warranties and customary events of

                                     Page 9
<PAGE>

         default and other covenants. As of March 31, 2004, the Company was in
         compliance with all covenants.

                  INTEREST RATE; FEES. The interest rate on the loans under the
         Senior Credit Facility may be, at the Company's option, Prime rate
         loans or London Inter Bank Offering Rate ("LIBOR") rate loans. Prime
         rate loans under the revolving loan facility bear interest at the Prime
         lending rate plus an additional amount that ranges from 0.75% to 1.75%,
         depending on its consolidated leverage ratio. Prime rate loans under
         the term loan bear interest at the Prime lending rate plus an
         additional amount that ranges from 1.25% to 2.25%, depending on its
         consolidated leverage ratio. Currently, the applicable margin for Prime
         rate loans is (i) 1.75% for the revolving loan facility and (ii) 2.25%
         for the term loan. LIBOR rate loans under the revolving loan facility
         bear interest at the LIBOR rate plus an additional amount that ranges
         from 1.75% to 2.75%, depending on its consolidated leverage ratio.
         LIBOR rate loans under the term loan bear interest at the LIBOR rate
         plus an additional amount that ranges from 2.25% to 3.25%, depending on
         its consolidated leverage ratio. Currently, the applicable margin for
         LIBOR rate loans is (i) 2.75% for the revolving loan facility and (ii)
         3.25% for the term loan. In addition to paying interest on outstanding
         principal, the Company is required to pay a commitment fee on the daily
         average unused portion of the revolving facility that will accrue from
         the closing date based on the utilization of the revolving facility.

                  BORROWING BASE. Availability of borrowings under the revolving
         facility are subject to a borrowing base consisting of the sum of (i)
         85% of eligible accounts receivable plus (ii) the lesser of (x) up to
         55% of eligible inventory or (y) 85% of the appraised net orderly
         liquidation value of eligible inventory. The Company must deliver
         borrowing base certificates and reports at least monthly. The borrowing
         base also may be subject to certain other adjustments and reserves to
         be determined by the agent. Eligible accounts receivable of both The
         Home Depot, the Company's largest customer, and Lowe's Companies, Inc.,
         its second largest customer, may not exceed 30% of total eligible
         accounts receivable at any time. At March 31, 2004, the Company had
         $47,072 of available credit.

                  REPAYMENT. Under the terms of the Senior Credit Facility,
         amortization payments of $1,905 on the term loan will be required at
         the end of each of its second, third and fourth fiscal quarters
         beginning with June 30, 2004 and through the end of the term, with the
         full remaining balance payable on the last installment date. Subject to
         certain exceptions, 100% of the net cash proceeds the Company receives
         from certain asset dispositions and issuances of debt, 50% of the net
         cash proceeds the Company receives from issuances of equity and 25% of
         excess cash flow are required to be applied to repay the term loan
         facility and are to be applied on a pro rata basis to all remaining
         scheduled installments of the term loan facility. The Senior Credit
         Facility may also be voluntarily prepaid at any time without premium or
         penalty.

                                    Page 10
<PAGE>

8.       Long-Term Debt:
         ---------------

<TABLE>
<CAPTION>
                                                            March 31,     December 31,
                                                              2004            2003
                                                          ------------    ------------
<S>                                                       <C>             <C>
         Term loan at the bank's reference rate plus
         2.25% or the LIBOR rate plus 3.25%
         Principal payments, beginning June 30, 2004,
         due each quarter ending June 30, September
         30 and December 31 in the amount of $1,905
         with the outstanding balance of $15,238 due
         on September 30, 2008                            $    40,000     $    40,000

         Senior Notes, interest at 10.25% payable
         semi-annually on each April 1 and October 1,
         maturing on October 1, 2011                          175,000         175,000

         Other obligations due at various dates
         through 2004                                              54              76
                                                          ------------    ------------
                                                              215,054         215,076

         Less current portion                                   5,767           5,789
                                                          ------------    ------------
                  Total long-term debt                    $   209,287     $   209,287
                                                          ============    ============
</TABLE>

               On September 30, 2003, the Company called for redemption its
         $78,000 in aggregate principal amount of the 12.75% Senior Subordinated
         Notes at a redemption price of 106% of the aggregate principal amount
         thereof ($82,680 at September 30, 2003), plus accrued and unpaid
         interest thereon through the date of redemption. In addition, the
         Company refinanced all debt outstanding under the previous Credit
         Facility.

         SENIOR CREDIT FACILITY - TERM LOAN. The term loan facility was drawn
         down in full in connection with the refinancing. Please see Note 7
         above for the terms.

         SENIOR NOTES. On September 30, 2003, Hines Nurseries issued $175,000 of
         Senior Notes that mature on October 1, 2011. The Senior Notes bear
         interest at the rate of 10.25% per annum and will be payable
         semi-annually in arrears on each April 1 and October 1, commencing
         April 1, 2004.

                  GUARANTEES. Hines Horticulture and each of its domestic
         subsidiaries, subject to certain exceptions, has, jointly and
         severally, fully and unconditionally guaranteed, on a senior unsecured
         basis, the obligations of Hines Nurseries under the Senior Notes.

                  REDEMPTION. Prior to October 1, 2006, up to 35% of the
         aggregate principal amount of the Senior Notes may be redeemed with the
         net cash proceeds from one or more public equity offerings, at the
         Company's option, at a redemption price of 110.250% of the principal
         amount thereof plus accrued interest, if any, to the date of
         redemption. On or after October 1, 2007, the Company is entitled, at
         its option, to redeem all or a portion of the Senior Notes at
         redemption prices ranging from 100.000% to 105.125%, depending on the
         redemption date plus accrued and unpaid interest.

                  RESTRICTIONS. The indenture pursuant to which the Senior Notes
         were issued imposes a number of restrictions on Hines Nurseries and its
         other subsidiaries. Subject to certain exceptions, the Company may not
         incur additional indebtedness, make certain restricted payments, make
         certain asset dispositions, incur additional liens or enter into

                                    Page 11
<PAGE>

         significant transactions. A breach of a material term of the indenture
         or other material indebtedness that results in acceleration of the
         indebtedness under the Senior Notes also constitutes an event of
         default under its Senior Credit Facility.

                  REPURCHASE OR A CHANGE OF CONTROL. The Senior Notes contain a
         put option whereby the holders have the right to put the Senior Notes
         back to Hines at 101.000% of the principal amount thereof on the date
         of purchase plus accrued and unpaid interest if a change of control
         occurs.

9.       Interest Rate Swap Agreement:
         -----------------------------

                  In May 2000, the Company entered into an interest rate swap
         agreement to hedge $75,000 of debt. The interest rate swap agreement
         effectively changes the Company's exposure on its variable-rate
         interest payments to fixed-rate interest payments (7.13%) based on the
         3-month LIBOR rate in effect at the beginning of each quarterly period.
         Despite the debt refinancing, the interest rate swap agreement remains
         outstanding and matures in February 2005. The estimated fair value of
         the Company's obligation under the interest rate swap agreement was
         $4,450 at March 31, 2004.

10.      Comprehensive Loss:
         -------------------

                  Comprehensive income includes all changes in equity during a
         period except those resulting from investments by and distributions to
         the Company's shareholders. The Company's comprehensive income includes
         the amortization of the fair value of the interest rate agreement
         recognized upon adoption of SFAS No. 133, "Accounting for Derivative
         Instruments and Hedging Activities." The components of comprehensive
         loss during the three months ended March 31, 2004 and 2003, were as
         follows:

<TABLE>
<CAPTION>
                                                                Three months ended
                                                                     March 31,
                                                               2004              2003
                                                           ------------     ------------
<S>                                                        <C>              <C>
         Net loss                                          $    (1,073)     $    (1,322)
         Amortization of interest rate swap agreement,
            net of tax of $97                                       --              140
                                                           ------------     ------------
         Comprehensive loss                                $    (1,073)     $    (1,182)
                                                           ============     ============
</TABLE>

11.      Guarantor/Non-guarantor Disclosures:
         ------------------------------------

                  The 10.25% Senior Subordinated Notes issued by Hines Nurseries
         (the "issuer") have been guaranteed by Hines Horticulture (the "parent
         guarantor") and by both Hines SGUS, Inc. ("Hines SGUS") and Enviro-Safe
         Laboratories, Inc. ("Enviro-Safe") (collectively Hines SGUS and
         Enviro-Safe are the "subsidiary guarantors"). The issuer and the
         subsidiary guarantors are 100% owned subsidiaries of the parent

                                    Page 12
<PAGE>

         guarantor and the parent and subsidiary guaranties are full,
         unconditional and joint and several. Separate financial statements of
         Hines Nurseries, Hines SGUS and Enviro-Safe are not presented in
         accordance with the exceptions provided by Rule 3-10 of Regulation S-X.

                  The following condensed consolidating information shows (a)
         Hines Horticulture on a parent company basis only as the parent
         guarantor (carrying its investment in its subsidiaries under the equity
         method), (b) Hines Nurseries as the issuer, (c) Hines SGUS and
         Enviro-Safe as subsidiary guarantors, (d) eliminations necessary to
         arrive at the information for the parent guarantor and its direct and
         indirect subsidiaries on a consolidated basis and (e) the parent
         guarantor on a consolidated basis as follows:

o        Condensed consolidating balance sheets as of March 31, 2004 and
         December 31, 2003;
o        Condensed consolidating statements of operations for the three months
         ended March 31, 2004 and 2003; and
o        Condensed consolidating statements of cash flows for the three months
         ended March 31, 2004 and 2003.

                                    Page 13
<PAGE>
<TABLE>
                                                GUARANTOR / NON-GUARANTOR DISCLOSURES
                                                     Consolidating Balance Sheet
                                                        As of March 31, 2004
                                                       (Dollars in thousands)
                                                             (Unaudited)
<CAPTION>

                                                           Hines
                                                       Horticulture       Hines
                                                          (Parent        Nurseries       Subsidiary                    Consolidated
                                                         Guarantor)      (Issuer)        Guarantors    Eliminations        Total
                                                       -------------   -------------   -------------   -------------   -------------
<S>                                                    <C>             <C>             <C>             <C>             <C>
                  ASSETS
                  ------

Current assets:
   Cash                                                $         --    $         --    $         --    $         --    $         --
   Accounts receivable, net                                      --          51,121             571              --          51,692
   Inventories                                                   --         196,447             586              --         197,033
   Prepaid expenses and other current assets                     --           3,216             458              --           3,674
                                                       -------------   -------------   -------------   -------------   -------------
                               Total current assets              --         250,784           1,615              --         252,399
                                                       -------------   -------------   -------------   -------------   -------------

Fixed assets, net                                                --         134,549              34              --         134,583
Deferred financing expenses, net                                 --          10,225              --              --          10,225
Deferred income taxes                                         2,921          28,462              --         (19,149)         12,234
Goodwill, net                                                    --          42,979              --              --          42,979
Investments in subsidiaries                                  56,568              --              --         (56,568)             --
                                                       -------------   -------------   -------------   -------------   -------------
                                                       $     59,489    $    466,999    $      1,649    $    (75,717)   $    452,420
                                                       =============   =============   =============   =============   =============

    LIABILITIES AND SHAREHOLDERS' EQUITY
    ------------------------------------

Current liabilities:
   Accounts payable                                    $         --    $     23,181    $        340    $         --    $     23,521
   Accrued liabilities                                           --          10,933               2              --          10,935
   Accrued payroll and benefits                                  --           5,980              --              --           5,980
   Accrued interest                                              --           9,569              --              --           9,569
   Interest rate swap agreement, current portion                 --           4,450              --              --           4,450
   Long-term debt, current portion                               --           5,767              --              --           5,767
   Borrowings on revolving credit facility                       --          64,625              --              --          64,625
   Deferred income taxes                                         --          68,226              --          (3,786)         64,440
   Intercompany accounts                                      7,832          (7,832)             --              --              --
                                                       -------------   -------------   -------------   -------------   -------------
                          Total current liabilities           7,832         184,899             342          (3,786)        189,287
                                                       -------------   -------------   -------------   -------------   -------------

Long-term debt                                                   --         209,287              --              --         209,287
Deferred income taxes                                            --          15,363              --         (15,363)             --
Other liabilties                                                 --           2,189              --              --           2,189
Shareholders' equity
   Common stock                                                 221          16,981             990         (17,971)            221
   Additional paid in capital                               128,781          21,362              --         (21,362)        128,781
   Retained earnings (deficit)                              (77,345)         16,918             317         (17,235)        (77,345)
                                                       -------------   -------------   -------------   -------------   -------------
                         Total shareholders' equity          51,657          55,261           1,307         (56,568)         51,657
                                                       -------------   -------------   -------------   -------------   -------------

                                                       $     59,489    $    466,999    $      1,649    $    (75,717)   $    452,420
                                                       =============   =============   =============   =============   =============

                                                              Page 14
</TABLE>
<PAGE>
<TABLE>
                                         GUARANTOR / NON-GUARANTOR DISCLOSURES - (CONTINUED)
                                                     Consolidating Balance Sheet
                                                       As of December 31, 2003
                                                       (Dollars in thousands)
                                                             (Unaudited)
<CAPTION>

                                                      Hines
                                                   Horticulture       Hines
                                                     (Parent         Nurseries       Subsidiary                       Consolidated
                                                    Guarantor)       (Issuer)        Guarantors      Eliminations         Total
                                                  -------------    -------------    -------------    -------------    -------------
<S>                                               <C>              <C>              <C>              <C>              <C>
                    ASSETS
                    ------

Current assets:
    Cash                                          $         --     $         --     $         --     $         --     $         --
    Accounts receivable, net                                --           23,361              363               --           23,724
    Inventories                                             --          172,626              464               --          173,090
    Prepaid expenses and other current assets               --            2,640              517               --            3,157
                                                  -------------    -------------    -------------    -------------    -------------
                          Total current assets              --          198,627            1,344               --          199,971
                                                  -------------    -------------    -------------    -------------    -------------

Fixed assets, net                                           --          136,399               36               --          136,435
Deferred financing expenses, net                            --           10,589               --               --           10,589
Deferred income taxes                                    2,922           28,461               --          (19,149)          12,234
Goodwill, net                                               --           42,979               --               --           42,979
Investments in subsidiaries                             57,641               --               --          (57,641)              --
                                                  -------------    -------------    -------------    -------------    -------------
                                                  $     60,563     $    417,055     $      1,380     $    (76,790)    $    402,208
                                                  =============    =============    =============    =============    =============

    LIABILITIES AND SHAREHOLDERS' EQUITY
    ------------------------------------

Current liabilities:
    Accounts payable                              $         --     $     10,099     $          5     $         --     $     10,104
    Accrued liabilities                                     --            9,061              173               --            9,234
    Accrued payroll and benefits                            --            6,971               --               --            6,971
    Accrued interest                                        --            5,073               --               --            5,073
     Interest rate swap agreement                           --            5,320               --               --            5,320
    Long-term debt, current portion                         --            5,789               --               --            5,789
    Borrowings on revolving credit facility                 --           30,318               --               --           30,318
    Deferred income taxes                                   --           68,972               --           (3,786)          65,186
    Intercompany accounts                                7,832           (7,832)              --               --               --
                                                  -------------    -------------    -------------    -------------    -------------
                     Total current liabilities           7,832          133,771              178           (3,786)         137,995
                                                  -------------    -------------    -------------    -------------    -------------

Long-term debt                                              --          209,287               --               --          209,287
Deferred income taxes                                       --           15,363               --          (15,363)              --
Other liabilities                                           --            2,196               --               --            2,196
Shareholders' equity
    Common stock                                           221           16,981              990          (17,971)             221
    Additional paid in capital                         128,781           21,362               --          (21,362)         128,781
    Retained earnings (deficit)                        (76,271)          18,095              212          (18,308)         (76,272)
                                                  -------------    -------------    -------------    -------------    -------------
                    Total shareholders' equity          52,731           56,438            1,202          (57,641)          52,730
                                                  -------------    -------------    -------------    -------------    -------------

                                                  $     60,563     $    417,055     $      1,380     $    (76,790)    $    402,208
                                                  =============    =============    =============    =============    =============

                                                              Page 15
</TABLE>
<PAGE>
<TABLE>
                                          GUARANTOR / NON-GUARANTOR DISCLOSURES - CONTINUED
                                                Consolidating Statement of Operations
                                              For the three months ended March 31, 2004
                                                       (Dollars in thousands)
                                                             (Unaudited)
<CAPTION>

                                                           Hines
                                                        Horticulture       Hines
                                                          (Parent        Nurseries      Subsidary                      Consolidated
                                                         Guarantor)      (Issuer)       Guarantors     Eliminations        Total
                                                       -------------   -------------   -------------   -------------   -------------
<S>                                                    <C>             <C>             <C>             <C>             <C>
Sales, net                                             $         --    $     59,826    $        564    $         --    $     60,390
Cost of goods sold                                               --          30,757             367              --          31,124
                                                       -------------   -------------   -------------   -------------   -------------
   Gross Profit                                                  --          29,069             197              --          29,266
Operating expenses                                               --          24,715              94              --          24,809
                                                       -------------   -------------   -------------   -------------   -------------
   Operating income                                              --           4,354             103              --           4,457
                                                       -------------   -------------   -------------   -------------   -------------
Other expenses:
   Interest, net                                                 --           6,700              --              --           6,700
   Interest rate swap agreement expense                          --            (869)             --              --            (869)
   Amortization of deferred financing expenses, other         1,073             445              --          (1,073)            445
                                                       -------------   -------------   -------------   -------------   -------------
                                                              1,073           6,276              --          (1,073)          6,276
                                                       -------------   -------------   -------------   -------------   -------------
Income (loss) before provision for income taxes              (1,073)         (1,922)            103           1,073          (1,819)
Income tax (benefit) provision                                   --            (788)             42              --            (746)
                                                       -------------   -------------   -------------   -------------   -------------
Net income (loss)                                      $     (1,073)   $     (1,134)   $         61    $      1,073    $     (1,073)
                                                       =============   =============   =============   =============   =============
</TABLE>

<TABLE>
                                          GUARANTOR / NON-GUARANTOR DISCLOSURES - CONTINUED
                                                Consolidating Statement of Operations
                                              For the three months ended March 31, 2003
                                                       (Dollars in thousands)
                                                             (Unaudited)
<CAPTION>

                                                           Hines
                                                        Horticulture       Hines
                                                          (Parent        Nurseries      Subsidary                      Consolidated
                                                         Guarantor)      (Issuer)       Guarantors     Eliminations        Total
                                                       -------------   -------------   -------------   -------------   -------------
<S>                                                    <C>             <C>             <C>             <C>             <C>
Sales, net                                             $         --    $     58,681    $        572    $         --    $     59,253
Cost of goods sold                                               --          28,228             372              --          28,600
                                                       -------------   -------------   -------------   -------------   -------------
   Gross Profit                                                  --          30,453             200              --          30,653
Operating expenses                                               --          25,741             134              --          25,875
                                                       -------------   -------------   -------------   -------------   -------------
   Operating income                                              --           4,712              66              --           4,778
                                                       -------------   -------------   -------------   -------------   -------------
Other expenses:
   Interest, net                                                 --           6,291              --              --           6,291
   Interest rate swap agreement expense                          --            (324)             --              --            (324)
   Amortization of deferred financing expenses, other         1,322           1,050              --          (1,322)          1,050
                                                       -------------   -------------   -------------   -------------   -------------
                                                              1,322           7,017              --          (1,322)          7,017
                                                       -------------   -------------   -------------   -------------   -------------
Income (loss) before provision for income taxes              (1,322)         (2,305)             66           1,322          (2,239)
Income tax (benefit) provision                                   --            (944)             27              --            (917)
                                                       -------------   -------------   -------------   -------------   -------------
Net income (loss)                                      $     (1,322)   $     (1,361)   $         39    $      1,322    $     (1,322)
                                                       =============   =============   =============   =============   =============

                                                              Page 16
</TABLE>
<PAGE>
<TABLE>
                                      GUARANTOR / NON-GUARANTOR DISCLOSURES - CONTINUED
                                            CONSOLIDATING STATEMENT OF CASH FLOWS
                                          FOR THE THREE MONTHS ENDED MARCH 31, 2004
                                                   (DOLLARS IN THOUSANDS)
                                                         (UNAUDITED)
<CAPTION>

                                                      Hines
                                                  Horticulture      Hines
                                                    (Parent       Nurseries      Subsidiary                    Consolidated
                                                   Guarantor)     (Issuer)       Guarantors    Eliminations        Total
                                                 -------------  -------------   -------------  -------------   -------------
<S>                                              <C>            <C>             <C>            <C>             <C>
Cash used in operating activities                $         --   $    (33,403)   $         --   $         --    $    (33,403)
                                                 -------------  -------------   -------------  -------------   -------------

Cash flows from investing activities:
  Purchase of fixed assets                                 --           (863)             --             --            (863)
  Leasehold incentive proceeds                             --             62              --             --              62
                                                 -------------  -------------   -------------  -------------   -------------
     Net cash used in investing activities                 --           (801)             --             --            (801)
                                                 -------------  -------------   -------------  -------------   -------------

Cash flows from financing activities:
  Proceeds from revolving line of credit                   --         34,307              --             --          34,307
  Repayments of long-term debt                             --            (22)             --             --             (22)
  Deferred financing costs                                 --            (81)             --             --             (81)
                                                 -------------  -------------   -------------  -------------   -------------
     Net cash provided by financing activities             --         34,204              --             --          34,204
                                                 -------------  -------------   -------------  -------------   -------------

Net change in cash                                         --             --              --             --              --
Cash, beginning of year                                    --             --              --             --              --
                                                 -------------  -------------   -------------  -------------   -------------
Cash, end of year                                $         --   $         --    $         --   $         --    $         --
                                                 =============  =============   =============  =============   =============

                                                          Page 17
</TABLE>
<PAGE>
<TABLE>
                                      GUARANTOR / NON-GUARANTOR DISCLOSURES - CONTINUED
                                            CONSOLIDATING STATEMENT OF CASH FLOWS
                                          FOR THE THREE MONTHS ENDED MARCH 31, 2003
                                                    (DOLLARS IN THOUSANDS)
                                                         (UNAUDITED)
<CAPTION>

                                                     Hines
                                                  Horticulture      Hines
                                                    (Parent       Nurseries      Subsidiary                     Consolidated
                                                   Guarantor)     (Issuer)       Guarantors     Eliminations        Total
                                                 -------------  -------------   -------------   -------------   -------------
<S>                                              <C>            <C>             <C>             <C>             <C>
Cash used in operating activities                $         --   $    (41,673)   $         --    $         --    $    (41,673)
                                                 -------------  -------------   -------------   -------------   -------------

Cash flows from investing activities:
  Purchase of fixed assets                                 --         (1,428)             --              --          (1,428)
                                                 -------------  -------------   -------------   -------------   -------------
     Net cash used in investing activities                 --         (1,428)             --              --          (1,428)
                                                 -------------  -------------   -------------   -------------   -------------

Cash flows from financing activities:
  Proceeds from revolving line of credit                   --         43,750              --              --          43,750
  Repayments of long-term debt                                           (21)             --              --             (21)
  Deferred financing costs                                 --           (628)             --              --            (628)
                                                 -------------  -------------   -------------   -------------   -------------
     Net cash provided by financing activities             --         43,101              --              --          43,101
                                                 -------------  -------------   -------------   -------------   -------------

Net change in cash                                         --             --              --              --              --
Cash, beginning of year                                    --             --              --              --              --
                                                 -------------  -------------   -------------   -------------   -------------
Cash, end of year
                                                 $         --   $         --    $         --    $         --    $         --
                                                 =============  =============   =============   =============   =============

                                                          Page 18
</TABLE>
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

         Unless the context otherwise requires, the term (1) "Hines
Horticulture" means Hines Horticulture, Inc., a Delaware corporation, (2) the
term "Hines Nurseries" means Hines Nurseries, Inc., a California corporation,
and a wholly owned subsidiary of Hines Horticulture and (3) the terms "we," "us"
and "our" mean, collectively, the combined entity of Hines Horticulture and its
wholly owned subsidiaries.

         FORWARD LOOKING STATEMENTS AND RISK FACTORS

         Except for historical information contained herein, this quarterly
report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended, which involve certain risks and uncertainties.
Forward-looking statements are included with respect to, among other things, the
company's current business plan and strategy and strategic operating plan. These
forward-looking statements are identified by their use of such terms and phrases
as "intends," "intend," "intended," "goal," "estimate," "estimates," "expects,"
"expect," "expected," "project," "projected," "projections," "plans,"
"anticipates," "anticipated," "should," "designed to," "foreseeable future,"
"believe," "believes" and "scheduled" and similar expressions. Our actual
results or outcomes may differ materially from those anticipated. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date the statement was made. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.

         Important factors that we believe might cause actual results to differ
from any results expressed or implied by these forward-looking statements are
discussed in the cautionary statements contained in Exhibit 99.1 to this Form
10-Q, which are incorporated herein by reference. In assessing forward-looking
statements contained herein, readers are urged to read carefully all cautionary
statements contained in this Form 10-Q. Our business and operations are subject
to a number of risks and uncertainties, and the cautionary statements contained
in this Form 10-Q should not be considered to be a definitive list of all
factors that might affect our business, financial condition and future results
of operations and should be read in conjunction with the factors, risks and
uncertainties contained in our other filings with the Securities and Exchange
Commission. For any forward-looking statements, we claim the protection of the
safe harbor for forward-looking statements in Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.

         OVERVIEW

         We are a leading national supplier of ornamental shrubs, color plants
and container-grown plants with 13 commercial nursery facilities located in
Arizona, California, Florida, Georgia, New York, Oregon, Pennsylvania, South
Carolina and Texas. We produce approximately 4,300 varieties of ornamental
shrubs and color plants and we sell to more than 2,000 retail and commercial
customers, representing more than 8,000 outlets throughout the United States.
Hines Horticulture currently produces and distributes horticultural products
through its wholly owned subsidiaries, Hines Nurseries and Enviro-Safe
Laboratories, Inc.

                                    Page 19
<PAGE>

         On September 30, 2003, we closed a refinancing plan, which we refer to
as the refinancing, which included the issuance by our wholly owned subsidiary,
Hines Nurseries, of $175.0 million principal amount of 10.25% Senior Notes due
2011 and amending and restating our senior credit facility, which, as amended,
we refer to as our Senior Credit Facility. The Senior Credit Facility has a term
of five years and consists of a $145.0 million revolving facility, with
availability subject to a borrowing base, and a $40.0 million term loan
facility. Borrowings under the Senior Credit Facility are secured by
substantially all of our assets. The net proceeds from the refinancing were used
to refinance all borrowings under our prior Credit Facility and to redeem all of
Hines Nurseries' outstanding 12.75% Senior Subordinated Notes due 2005.

         DISCONTINUED OPERATIONS

         In March 2002, we completed the sale of Sun Gro Horticulture, which we
refer to as Sun Gro, to a newly established Canadian income fund. We received
net proceeds of approximately $125.0 million from the sale, which includes the
tax refunds from the Canadian Customs & Revenue Authority recorded in the fourth
quarter of 2002 and third quarter of 2003, the majority of which were used to
pay down outstanding indebtedness. As a result of the sale of Sun Gro, we no
longer harvest or produce peat moss or other growing soil mixes.

         UNITED STATES TAX MATTERS

         As a result of our business activities, we qualify for a special
exception under the U.S. federal tax code that allows us to use the cash method
of accounting for federal income tax purposes. Under the cash method, sales are
included in taxable income when payments are received and expenses are deducted
as they are paid. We derive significant tax benefits by being able to deduct the
cost of inventory as the cost is incurred. As a result of our ability to utilize
the cash method of accounting, we have historically generated net operating
losses for federal income tax purposes and have not been required to pay cash
income taxes. At December 31, 2003, we had $26.9 million in net operating loss
carryforwards for federal income tax purposes.

         Based on our current projections, we anticipate that we will incur tax
liability and begin paying cash income taxes for federal purposes in 2006. We
are currently paying cash income taxes for state income tax purposes in certain
states due to the differing rules regarding the utilization of net operating
losses.

         Although the use of the cash method of accounting for federal income
taxes defers the payment of federal income taxes, the deferral of such taxes
produces a current liability for accounting purposes. At March 31, 2004, we had
a current liability for deferred income taxes of $64.4 million. The liability is
deemed current for accounting purposes because the majority of the items to
which this liability relates are comprised of current assets and current
liabilities in our balance sheet (such as inventory, accounts receivable and
accounts payable). The classification of this liability as a current item,
however, does not mean that it is required to be paid within the next twelve
months.

                                    Page 20
<PAGE>

         SEASONALITY

         Our business is highly seasonal. The seasonal nature of our operations
results in a significant increase in our working capital between the growing and
selling cycles. As a result, operating activities in the first and fourth
quarters use significant amounts of cash, and in contrast, operating activities
in the second and third quarters generate substantial cash as we ship inventory
and collect accounts receivable. We have experienced, and expect to continue to
experience, significant variability in net sales, operating income and net
income on a quarterly basis.

RESULTS OF OPERATIONS
---------------------

THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THREE MONTHS
ENDED MARCH 31, 2003

         NET SALES. Net sales of $60.4 million for the three months ended March
31, 2004 increased $1.1 million, or 1.9%, from net sales of $59.3 million for
the comparable period in 2003. The increase in sales was due to strong sales of
bedding plants and shrubs throughout the Sunbelt markets primarily as a result
of favorable weather in March. Sales in the Northeast declined as prolonged
winter weather reduced early spring orders for shrubs. Also affecting sales in
the Northeast, and other parts of the country, was the continued trend among
gardening retailers to better manage inventory levels by reducing pre-spring
stocking orders, which has resulted in lower first quarter sales. Sales in the
Southeast were weaker as we strategically consolidated our customer base and
transitioned certain sales to customers in other regions. However, we did see
higher same-store sales partially offset the impact of the customer
consolidation in the Southeast.

         GROSS PROFIT. Gross profit of $29.3 million for the three months ended
March 31, 2004 decreased $1.4 million, or 4.5%, from gross profit of $30.7
million for the comparable period in 2003. As a percentage of net sales, gross
profit for the quarter declined to 48.5% from 51.7% in 2003. The decline in
gross profit was attributable to the softer sale of shrubs in the Northeast, and
a decrease in sales of bedding plants in the Southeast. These two regions tend
to generate better gross profit margins than those in other markets.

         SELLING AND DISTRIBUTION EXPENSES. Selling and distribution expenses of
$19.2 million for the three months ended March 31, 2004 increased $0.2 million,
or 0.8%, from $19.0 million for the comparable period in 2003 due to increased
sales. As a percentage of net sales, selling and distribution expenses remained
unchanged at 32% as a result of new logistics strategies, improved common
carrier relations and better payload management. These initiatives have been
instrumental in mitigating rising fuel costs and the recently implemented
carrier charges associated with new federal trucking regulations.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the three months ended March 31, 2004 were $5.6 million, unchanged
from the same period a year ago as a result of our continued focus on
controlling costs.

         OTHER OPERATING EXPENSES. There were no other operating expenses for
the three months ended March 31, 2004. Other operating expense of $1.2 million
for the three months ended March 31, 2003 represents severance costs associated

                                    Page 21
<PAGE>

with the resignation of our former Chief Executive Officer in February of 2003
and the elimination of certain other management positions.

         OPERATING INCOME. Operating income of $4.5 million for the three months
ended March 31, 2004 decreased by $0.3 million, or 6.7%, from $4.8 million for
the comparable period in 2003 due primarily to our lower gross profit margins.
The comparable period in 2003 included the severance expense of $1.2 million, as
discussed above.

         OTHER EXPENSES. Other expenses of $6.3 million for the three months
ended March 31, 2004 decreased $0.7 million, or 10.6%, from $7.0 million for the
comparable period in 2003. The decrease was due to the impact of the mark to
market adjustment on our interest rate swap partially offset by higher interest
expense. Financing costs included income of $0.9 million relating to the fair
value adjustment of the interest rate swap agreement compared to income of $0.3
million in the comparable period a year ago. Interest expense increased to $6.7
million from $6.3 million a year earlier due to our debt refinancing, which
shifted more of our revolving debt to higher interest rate fixed-term
instruments in order to increase availability under our new revolving credit
facility.

         INCOME TAX BENEFIT. Our effective income tax rate for the three months
ended March 31, 2004 was 41%, unchanged from the same period a year ago.

         NET LOSS. Net loss of $1.1 million for the three months ended March 31,
2004 improved by $0.2 million, or 18.8%, from $1.3 million for the comparable
period in 2003. This improvement was due primarily to the improvement in our
other expenses and partially offset by the decline in our gross profit margins,
as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

         Our primary sources of liquidity are funds generated by operations and
borrowings under our senior credit facility. Our senior credit facility expires
in 2008 and consists of a revolving facility with availability of up to $145.0
million (subject to certain borrowing base limits) and a term loan facility of
up to $40.0 million. Note 7 and Note 8 to the Condensed, Consolidated Financial
Statements (unaudited) included in Part I, Item 1 of this Quarterly Report on
Form 10-Q provides additional information pertaining to our senior credit
facility. At March 31, 2004, we were in compliance with all of our debt
covenants.

         The seasonal nature of our operations results in a significant
fluctuation in certain components of working capital (primarily accounts
receivable and inventory) during the growing and selling cycles. As a result,
operating activities during the first and fourth quarters use significant
amounts of cash, and in contrast, operating activities for the second and third
quarters generate substantial cash as we ship inventory and collect accounts
receivable.

         Net cash used in operating activities was $33.4 million for the three
months ended March 31, 2004 compared to $41.7 million for the comparable period
in 2003 mainly due to the change in timing of our semi-annual interest payment
of $9.0 million on our notes compared to $5.0 million paid in the first quarter
of 2003. However, continued improvements in working capital, through better
inventory management, have also contributed to us using less cash in the

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operations of our business. The improvement in working capital was also affected
to a lesser degree by an increase in prepaid expenses for the three months ended
March 31, 2004 compared to the same period a year ago.

         Net cash used in investing activities was $0.8 million for the three
months ended March 31, 2004 compared to $1.4 million for the same period a year
ago due to a decrease in capital expenditures. Capital expenditures for the
three months ended March 31, 2004 primarily included the purchase of nursery
related machinery and equipment.

         Net cash provided by financing activities was $34.2 million for the
three months ended March 31, 2004 compared to $43.1 million for the comparable
period in 2003. The decrease was the result of fewer net borrowings on our
revolving credit facility as a result of the change in timing of our semi-annual
interest payment on our notes and the improvements in working capital, as
discussed above.

         We typically draw down our revolving credit facilities in the first and
fourth quarters to fund our seasonal inventory buildup and seasonal operating
expenses. Approximately 73% of our sales occur in the first half of the year,
generally allowing us to reduce borrowing under our revolving credit facilities
in the second and third quarters. On March 31, 2004, we had $64.6 million of
borrowings under our new working capital revolver, resulting in unused borrowing
capacity of approximately $47.1 million after applying the borrowing base
limitations and letters of credits to our available borrowings.

         At March 31, 2004, we had total outstanding indebtedness of $279.7
million.

         We do not have any off balance sheet financing or any financial
arrangements with related parties, other than operating leases. The following
table discloses aggregate information about our contractual obligations and
commercial commitments as of March 31, 2004.

                                                  PAYMENTS DUE BY PERIOD
                                          --------------------------------------
                                                   (DOLLARS IN MILLIONS)
                                            LESS   ---------------------  AFTER
                                           THAN 1      1-3      4-5         5
CONTRACTUAL CASH OBLIGATIONS      TOTAL     YEAR      YEARS    YEARS      YEARS
----------------------------    --------  --------  --------  --------  --------

Term loan ..................       40.0       5.7      17.1      17.2        --
10.25% Senior Notes ........      175.0        --        --        --     175.0
Revolving Facility .........       64.6      64.6        --        --        --
Other obligations ..........        0.1       0.1        --        --        --
Operating leases ...........       19.3       4.5       7.3       1.1       6.4
                                --------  --------  --------  --------  --------
Total ......................    $ 299.0   $  74.9   $  24.4   $  18.3   $ 181.4
                                ========  ========  ========  ========  ========

         We believe that cash generated by operations and from borrowings
expected to be available under our senior credit facility will be sufficient to
meet our anticipated working capital, capital expenditures and debt service
requirements for at least the next twelve months.

The following is a summary of certain material terms of our Senior Credit
Facility and Hines Nurseries' 10.25% Senior Notes due 2011.

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<PAGE>

OUR SENIOR CREDIT FACILITY

         We entered into our Senior Credit Facility on September 30, 2003. Hines
Nurseries and its domestic operating subsidiaries are borrowers under the Senior
Credit Facility. The credit facility consists of (i) a revolving facility with
availability of up to $145.0 million (subject to borrowing base limits) and (ii)
a term loan facility of up to $40.0 million. The revolving facility also permits
us to obtain letters of credit up to a sub-limit. The term loan facility was
drawn down in full in connection with our Refinancing. The Senior Credit
Facility matures on September 30, 2008.

         GUARANTEES; COLLATERAL. Obligations under the Senior Credit Facility
are guaranteed by us and any of our domestic subsidiaries that are not borrowers
under the new credit facility. Borrowings under the Senior Credit Facility are
collateralized by substantially all of our assets.

         RESTRICTIONS; COVENANTS. The Senior Credit Facility places various
restrictions on Hines Nurseries and its subsidiaries, including, but not limited
to, limitations on our ability to incur additional debt, pay dividends or make
distributions, sell assets or make investments. The Senior Credit Facility
specifically restricts Hines Nurseries and its subsidiaries from making
distributions to Hines Horticulture. Distributions to Hines Horticulture are
limited to (i) payments covering customary general and administrative expenses,
not to exceed $0.5 million in any fiscal year, (ii) payments to discharge any
consolidated tax liabilities, (iii) and payments, not to exceed as much as $8.3
million in any fiscal year or $9.3 million over the term of the Senior Credit
Facility, to enable Hines Horticulture to repurchase its own outstanding common
stock from holders other than our majority shareholder. Dividends to Hines
Horticulture are disallowed under the Senior Credit Facility.

         The Senior Credit Facility requires Hines Nurseries and its
subsidiaries to meet specific covenants and financial ratios, including a
minimum fixed charge coverage test, a maximum leverage test and a maximum
capital expenditure test. The new Senior Credit Facility contains customary
representations and warranties and customary events of default and other
covenants. As of March 31, 2004, we were in compliance with all covenants.

         INTEREST RATE; FEES. The interest rate on the loans under the Senior
Credit Facility may be, at our option, prime rate loans or London Inter Bank
Offering Rate ("LIBOR") rate loans. Prime rate loans under the revolving loan
facility bear interest at the prime lending rate plus an additional amount that
ranges from 0.75% to 1.75%, depending on our consolidated leverage ratio. Prime
rate loans under the term loan bear interest at the prime lending rate plus an
additional amount that ranges from 1.25% to 2.25%, depending on our consolidated
leverage ratio. Currently, the applicable margin for prime rate loans is (i)
1.75% for the new revolving loan facility and (ii) 2.25% for the new term loan.

         LIBOR rate loans under the revolving loan facility bear interest at the
LIBOR rate plus an additional amount that ranges from 1.75% to 2.75%, depending
on our consolidated leverage ratio. LIBOR rate loans under the new term loan
bear interest at the LIBOR rate plus an additional amount that ranges from 2.25%
to 3.25%, depending on our consolidated leverage ratio. Currently, the
applicable margin for LIBOR rate loans is (i) 2.75% for the new revolving loan
facility and (ii) 3.25% for the new term loan. In addition to paying interest on

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<PAGE>

outstanding principal, we are required to pay a commitment fee on the daily
average unused portion of the revolving facility which will accrue from the
closing date based on the utilization of the revolving facility.

         BORROWING BASE. Availability of borrowing under the revolving facility
are subject to a borrowing base consisting of the sum of (i) 85% of eligible
accounts receivable plus (ii) the lesser of (x) up to 55% of eligible inventory
or (y) 85% of the appraised net orderly liquidation value of eligible inventory.

         We must deliver borrowing base certificates and reports at least
monthly. The borrowing base also may be subject to certain other adjustments and
reserves to be determined by the agent. Eligible accounts receivable of both The
Home Depot, our largest customer, and Lowe's Companies, Inc., our second largest
customer, may not exceed 30% of total eligible accounts receivable at any time.

         REPAYMENT. Amortization payments of $1.9 million on the term loan will
be required at the end of our second, third and fourth fiscal quarters beginning
with June 30, 2004 and through the end of the term, with the full remaining
balance payable on the last installment date. Subject to certain exceptions,
100% of the net cash proceeds we receive from certain asset dispositions and
issuances of debt, 50% of the net cash proceeds we receive from issuances of
equity and 25% of excess cash flow (beginning in 2004) are required to be
applied to repay the term loan facility and are to be applied on a pro rata
basis to all scheduled installments of the term loan facility. The Senior Credit
Facility may also be voluntarily prepaid at any time without premium or penalty.

OUR SENIOR NOTES

         On September 30, 2003, Hines Nurseries issued $175.0 million of Senior
Notes that mature on October 1, 2011. The Notes bear interest at the rate of
10.25% per annum and will be payable semi-annually in arrears on each April 1
and October 1, commencing April 1, 2004.

         GUARANTEES. Hines Horticulture and each of its domestic subsidiaries,
subject to certain exceptions, has, jointly and severally, fully and
unconditionally guaranteed, on a senior unsecured basis, the obligations of
Hines Nurseries under the Notes.

         REDEMPTION. Prior to October 1, 2006, up to 35% of the aggregate
principal amount of the Notes may be redeemed with the net cash proceeds from
one or more public equity offerings, at our option, at a redemption price of
110.250% of the principal amount thereof plus accrued interest, if any, to the
date of redemption. On or after October 1, 2007, we are entitled, at our option,
to redeem all or a portion of the Notes at redemption prices ranging from
100.000% to 105.125%, depending on the redemption date, plus accrued and unpaid
interest.

         RESTRICTIONS. The indenture pursuant to which the Notes were issued
imposes a number of restrictions on Hines Nurseries and our other subsidiaries.
Subject to certain exceptions, we may not incur additional indebtedness, make
certain restricted payments, make certain asset dispositions, incur additional
liens or enter into significant transactions. A breach of material term of the
indenture or other material indebtedness that results in acceleration of the

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<PAGE>

indebtedness under the Notes also constitutes an event of default under our
Senior Credit Facility.

         REPURCHASE ON A CHANGE IN CONTROL. The Notes contain a put option
whereby the holders have the right to put the Notes back to us at 101.000% of
the principal amount thereof on the date of purchase, plus accrued and unpaid
interest if a change of control occurs.

CRITICAL ACCOUNTING POLICIES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. We believe that the following
areas represent our most critical accounting policies related to actual results
that may vary from those estimates.

         REVENUE RECOGNITION.

         We record revenue, net of sales discounts and allowances, when all of
the following have occurred: an agreement of sale exists, product delivery and
acceptance has occurred and collection is reasonably assured.

         SALES RETURNS AND ALLOWANCES.

         Amounts accrued for sales returns and allowance are maintained at a
level believed adequate by management to absorb probable losses in the trade
receivable due to sales discounts and allowances. The provision rate is
established by management using the following criteria: past sales returns
experience, current economic conditions and other relevant factors. The rate is
re-evaluated on a quarterly basis. Provisions for sales discounts and allowances
charged against income increase the allowance. We record revenue, net of sales
discounts and allowances, when the risk of ownership is transferred to the
customer. Allowances are provided at the time revenue is recognized in
accordance with SFAS No. 48, "Revenue Recognition When Right of Return Exists."

         ALLOWANCE FOR DOUBTFUL ACCOUNTS.

         The allowance for bad debts is maintained at a level believed by
management to adequately reflect the probable losses in the trade receivable due
to customer defaults, insolvencies or bankruptcies. The provision is established
by management using the following criteria: customer credit history, customer
current credit rating and other relevant factors. The provision is re-evaluated
on a quarterly basis. Provisions to bad debt expense charged against income
increase the allowance. All recoveries on trade receivables previously charged
off are credited to the accounts receivable recovery account charged against
income, while direct charge-offs of trade receivables are deducted from the
allowance.

         ACCOUNTING FOR GOODWILL IMPAIRMENT.

         On January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets." In accordance with this standard, goodwill has been
classified as indefinite-lived assets no longer subject to amortization.

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<PAGE>

Indefinite-lived assets are subject to impairment testing upon adoption of SFAS
No. 142 and at least annually thereafter. In accordance with SFAS No. 142, this
involves a two step process. First, we must determine if the carrying amount of
equity exceeds the fair value based upon the quoted market price of our common
stock. If we determine that goodwill may be impaired, we compare the "implied
fair value" of the goodwill, as defined by SFAS No. 142, to its carrying amount
to determine the impairment loss, if any.

         ACCRUED LIABILITIES.

         The accrued liabilities include amounts accrued for expected claims
costs relating to our insurance programs for workers compensation and auto
liability. We have large deductibles for these lines of insurance, which means
we must pay the portion of each claim that falls below the deductible amount.
Our expected claims costs are based on an actuarial analysis that considers our
current payroll and automobile profile, recent claims history, insurance
industry loss development factors and the deductible amounts. We accrue our
expected claims costs for each year on a ratable monthly basis with a
corresponding charge against income. Management reviews the adequacy of the
accruals at the end of each quarter. The accruals for the expected costs
relating to our insurance programs for workers compensation and auto liability
are maintained at levels believed by our management to adequately reflect our
probable claims obligations.

ACCOUNTING PRONOUNCEMENTS ADOPTED

         In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities, an interpretation of Accounting Research Bulletin
No. 51" ("FIN 46"). The primary objectives of FIN 46 are to provide guidance on
the identification of entities for which control is achieved through means other
than through voting rights ("variable interest entities") and to determine when
and which business enterprise ("primary beneficiary") should consolidate the
variable interest entity. FIN 46 requires existing unconsolidated variable
interest entities to be consolidated by their primary beneficiaries if the
entities do not effectively disperse risks among the parties involved. Variable
interest entities that effectively disperse risks will not be consolidated
unless a single party holds an interest or combination of interests that
effectively recombines risks that were previously dispersed. In addition, FIN 46
requires that the primary beneficiary, as well as all other enterprises with a
significant variable interest in a variable interest entity, make additional
disclosures. Certain disclosure requirements of FIN 46 were effective for
financial statements issued after January 31, 2003. In December 2003, the FASB
revised FIN 46 ("FIN 46R") to address certain FIN 46 implementation issues. The
revised provisions are applicable no later than the first reporting period
ending after March 15, 2004. The adoption of FIN 46 and FIN 46R did not have a
material effect on our financial position, results of operations or cash flows.

EFFECTS OF INFLATION

         Management believes our results of operations have not been materially
impacted by inflation over the past three years.

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<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         As part of our ongoing business, we are exposed to certain market
risks, including fluctuations in interest rates, foreign exchange rates,
commodity prices and Hines Horticulture's common stock price. We do not enter
into transactions designed to mitigate market risks for trading or speculative
purposes.

         We have various debt instruments outstanding at March 31, 2004 that are
impacted by changes in interest rates. As a means of managing our interest rate
risk on variable-rate debt, we entered into the interest rate swap agreement
described below to effectively convert certain variable rate debt obligations to
fixed rate obligations.

         In May 2000, we entered into an interest rate swap agreement to hedge
$75.0 million of debt. The interest rate swap agreement effectively changes our
exposure on the variable-rate interest payments to fixed-rate interest payments
(7.13%) based on the 3-month LIBOR rate in effect at the beginning of each
quarterly period. The estimated fair value of our obligation under the interest
rate swap agreement was $6.5 million at March 31, 2004. The interest rate swap
agreement remains outstanding and matures in February 2005.

         We also manage our interest rate risk by balancing the amount of our
fixed and variable long-term debt. For fixed-rate debt, interest rate changes
affect the fair market value of such debt but do not impact earnings or cash
flows. Conversely, for variable-rate debt, interest rate changes generally do
not affect the fair market value of such debt but do impact future earnings and
cash flows, assuming other factors are held constant. At March 31, 2004 the
carrying amount and estimated fair value of our long-term debt was $279.7
million and $295.4 million, respectively. Given the current balance of our fixed
rate and variable rate debt, we estimate a change in interest costs of
approximately $0.3 million for every one-percentage point change in applicable
interest rates. Without considering the fixed interest rate provided by our swap
agreement, which expires at the end of February of 2005, we estimate a change in
interest costs of approximately $1.0 million for every one-percentage point
change in applicable interest rates.

ITEM 4.  CONTROLS AND PROCEDURES

         Based on the evaluation of the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended), our principal executive officer and our
principal financial officer have concluded that such controls and procedures
were effective as of the end of the period covered by this report. In connection
with such evaluation, no change in our internal control over financial reporting
occurred during the last fiscal quarter covered by this report that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

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<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         From time to time, the Company is involved in various disputes and
litigation matters, which arise in the ordinary course of business. The
litigation process is inherently uncertain and it is possible that the
resolution of these disputes and lawsuits may adversely affect the Company's
financial position. Management believes, however, that the ultimate resolution
of such matters will not have a material adverse impact on the Company's
consolidated financial position, results of operations or cash flows.

         In connection with the Company's acquisition of Lovell, the Company
agreed, subject to various provisions in the purchase agreement, to make
earn-out payments to the sellers of up to approximately $5.0 million for fiscal
2001 if the purchased operations achieved certain performance thresholds.
Although the Company determined that the thresholds were not met and no earn-out
payment was required, the sellers of Lovell are disputing the Company's
determination and have initiated arbitration proceedings against the Company.
The sellers also contend that the amount of the earn-out at issue is $7.5
million. As of the date hereof, the two sides have mutually selected an
arbitrator, discovery has been completed and the arbitration hearing is in its
initial stages. The Company intends to vigorously contest this matter and
believes it has meritorious defense to the sellers' claims. However, in the
event of an adverse determination, the Company could be required to pay all or a
portion of the disputed earn-out payment plus other fees and expenses. The
amount of such earn-out payment would become part of the purchase price for the
assets associated with the acquisition and would be accounted for as goodwill,
subject to impairment testing under SFAS No. 142 "Goodwill and Other Intangible
Assets."


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

         Exhibit 31.1   Certification of Chief Executive Officer Pursuant To
                Section 302 Of The Sarbanes-Oxley Act Of 2002.

         Exhibit 31.2   Certification of Chief Financial Officer Pursuant To
                Section 302 Of The Sarbanes-Oxley Act Of 2002.

         Exhibit 32.1   Certification of Chief Executive Officer Pursuant To
                18 U.S.C. Section 1350, As Adopted Pursuant To Section 906
                Of The Sarbanes-Oxley Act of 2002.*

         Exhibit 32.2   Certification of Chief Financial Officer Pursuant To
                18 U.S.C. Section 1350, As Adopted Pursuant To Section 906
                Of The Sarbanes-Oxley Act of 2002.*

         Exhibit 99.1   Cautionary Statements

                                    Page 29
<PAGE>

* Pursuant to Commission Release No. 33-8238, this certification will be treated
as "accompanying" this Quarterly Report on Form 10-Q and not "filed" as part of
such report for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended, or otherwise subject to the liability of Section 18 of the
Securities Exchange Act of 1934, as amended, and this certification will not be
deemed to be incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except
to the extent that the registrant specifically incorporates it by reference.

               (b) Reports on Form 8-K

               We filed the following reports on Form 8-K during the quarter
               ended March 31, 2004.

                  1.       Current report on Form 8-K dated March 11, 2004 (the
                           date of the earliest event reported), filed on March
                           17, 2004, for the purpose of reporting operating
                           results from continuing operations for the fiscal
                           year ended December 31, 2003 and to announce the
                           appointment of Robert A. Ferguson to President and
                           Chief Executive Officer and to announce the
                           appointment of Thomas R. Reusche to Chairman of the
                           Board.

                                    Page 30
<PAGE>

                                    SIGNATURE

         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.

                                             HINES HORTICULTURE, INC.
                                             (REGISTRANT)



                                             By:    /s/ Claudia M. Pieropan
                                                    ----------------------------
                                                    Claudia M. Pieropan
                                                    Chief Financial Officer,
                                                    Secretary and Treasurer
                                                    (Principal financial officer
                                                    and duly authorized officer)

Date:  May 14, 2004

                                    Page 31