<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, 1999

        [_]  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 [_]


As of April 30, 1999 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.
                                                                      --------
          Consolidated Balance Sheets as of
          December 31, 1998 and March 31, 1999                            1

          Consolidated Statements of Operations for the Three
          Months Ended March 31, 1998 and 1999                            3

          Consolidated Statements of Cash Flows for the
          Three Months Ended March 31, 1998 and 1999                      4

          Notes to the Consolidated Financial Statements                  5


Item 2.   Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                            13

Item 3.   Quantitative and Qualitative Disclosures About 
          Market Risk                                                    20


                           Part II. Other Information


Item 6.   Exhibits and Reports on Form 8-K                               20

          Signatures                                                     20


Note:     Items 1, 2, 3, 4 and 5 of Part II are omitted because they are not
          applicable.
<PAGE>
                           HINES HORTICULTURE, INC.
                        (Formerly Hines Holdings, Inc.)
                          CONSOLIDATED BALANCE SHEETS
                     December 31, 1998 and March 31, 1999
                            (Dollars in thousands)

<TABLE> 
<CAPTION> 
<S>                                              <C>                       <C> 
ASSETS                                           December 31,                March 31,
------                                              1998                       1999
                                                 ------------              ------------
                                                                            (Unaudited)
          CURRENT ASSETS:
     Cash                                               $515                        $0 
     Accounts receivable, net of allowance for                                         
       doubtful accounts of $1,224 and $1,338         26,741                    60,414
     Inventories                                     118,126                   129,957
     Prepaid expenses and other current assets         2,326                     2,196
                                                       -----                     -----
                          Total current assets       147,708                   192,567

FIXED ASSETS, net of accumulated depreciation
  and depletion of $29,221 and $31,817               125,417                   130,248

DEFERRED FINANCING EXPENSES, net of
  accumulated amortization of $1,235 and $1,422       4,077                      3,890

GOODWILL, net of accumulated amortization          
  of $2,675 and $2,980                               37,908                     38,103
                                                     ------                     ------
                                                   $315,110                   $364,808 
                                                   ========                   ========
</TABLE> 
The accompanying notes are an integral part of these consolidated financial
statements


                                    Page 1
<PAGE>
                           HINES HORTICULTURE, INC.
                        (Formerly Hines Holdings, Inc.)
                          CONSOLIDATED BALANCE SHEETS
                     December 31, 1998 and March 31, 1999
                            (Dollars in thousands)

<TABLE> 
<CAPTION> 
LIABILITIES AND SHAREHOLDERS' EQUITY                       December 31,            March 31,
------------------------------------                          1998                   1999
                                                           ------------           -----------
                                                                                  (Unaudited)
<S>                                                        <C>                    <C> 
       CURRENT LIABILITIES:                                
     Accounts payable                                       $9,388                    $18,321
     Accrued liabilities                                     6,351                      5,079
     Accrued payroll and benefits                            6,156                      5,035
     Accrued interest                                          751                      3,450
     Long-term debt, current portion                         3,066                      4,210
     Borrowings on revolving credit facility                30,850                     67,900
     Deferred income taxes                                  39,389                     39,330
                                                          --------                   --------
              Total current liabilities                     95,951                    143,325
                                                                                     
LONG-TERM DEBT                                             145,633                    144,611
                                                                                     
DEFERRED INCOME TAXES                                       10,204                     11,866

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY                                                                 
     Common Stock                                                                    
        Authorized - 60,000,000 shares  $.01 par value;                              
        Issued and outstanding - 22,072,549 shares                                   
        at December 31, 1998 and March 31, 1999                221                        221
                                                                                     
     Additional paid in capital                            127,992                    127,976
     Notes receivable from stock sales                        (326)                      (326)
     Deficit                                               (64,565)                   (62,865)
                                                          --------                   --------
            Total shareholders' equity                      63,322                     65,006
                                                          --------                   --------
                                                          $315,110                   $364,808
                                                          ========                   ========
</TABLE> 

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

                                    Page 2
<PAGE>

                           HINES HORTICULTURE, INC.
                        (Formerly Hines Holdings, Inc.)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  Three Months Ended March 31, 1998 and 1999
                   (Dollars in thousands except share data)
                                  (Unaudited)

<TABLE> 
<CAPTION>                                             
                                                     1998             1999
                                                  ---------        ----------
<S>                                               <C>              <C>  
Sales, net                                          $48,174           $59,402
Cost of goods sold                                   23,515            29,343
                                                  ---------        ----------
  Gross profit                                       24,659            30,059
                                                  ---------        ----------
Selling and distribution expenses                    12,705            14,712
General and administrative expenses                   6,207             7,971
                                                  ---------        ----------
  Total operating expenses                           18,912            22,683
                                                  ---------        ----------
  Operating income                                    5,747             7,376
                                                  ---------        ----------
Other expenses
  Interest                                            5,706             4,302
  Amortization of deferred financing expenses           323               187
                                                  ---------        ----------
                                                      6,029             4,489
                                                  ---------        ----------
(Loss) income before income taxes                      (282)            2,887

Income tax (benefit) provision                          (63)            1,187
                                                  ---------        ----------
Net (loss) income                                      (219)            1,700

Less: Preferred stock dividends and
 warrant accretion                                   (2,825)                0
                                                  ---------        ----------
Net (loss) income applicable to common stock        ($3,044)           $1,700
                                                  =========        ==========
Basic earnings per share:

  Net (loss) income per common share                 ($0.39)            $0.08
                                                  =========        ==========
Diluted earnings per share:
  
  Net (loss) income per common share                 ($0.39)            $0.08
                                                  =========        ==========
Weighted average shares outstanding--Basic        7,708,481        22,072,549
                                                  =========        ==========
Weighted average shares outstanding--Diluted      7,708,481        22,072,549
                                                  =========        ==========
</TABLE> 


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

                                    Page 3
<PAGE>
                           HINES HORTICULTURE, INC.
                        (Formerly Hines Holdings, Inc.)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Three Months Ended March 31, 1998 and 1999
                            (Dollars in thousands)
                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                                        1998                 1999
                                                                     ---------            ---------
<S>                                                                  <C>                  <C> 
CASH FLOWS FROM OPERATING ACTIVITIES
  Net (loss) income                                                      ($219)               1,700
  Adjustments to reconcile net (loss) income to      
  net cash provided by operating activities -
     Depreciation, depletion and amortization                            2,219                2,900
     Amortization of deferred financing costs                              323                  187
     Gain on sale of fixed assets                                          (20)                   -
     Deferred income taxes                                                  24                1,603
                                                                     ---------            ---------
                                                                         2,327                6,390
                                                                                    
Change in working capital accounts
  Accounts receivable                                                  (30,561)             (33,673)
  Inventories                                                           (9,667)             (11,831)
  Prepaid expenses and other current assets                               (491)                 130
  Accounts payable and accrued liabilities                              11,253                9,239
                                                                     ---------            ---------
     Net cash used in operating activities                             (27,139)             (29,745)
                                                                     ---------            ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of fixed assets                                              (2,739)              (6,957)
  Proceeds from sale of fixed assets                                       194                    -
  Acquisitions                                                               -                 (985)
                                                                     ---------            ---------
     Net cash used in investing activities                              (2,545)              (7,942) 
                                                                     ---------            ---------
CASH FLOWS FROM FINANCING ACTIVITIES                                               
  Borrowings on revolving line of credit                                47,472               38,550
  Repayments on revolving line of credit                               (24,298)              (1,500)
  Proceeds from the issuance of long-term debt                               -                  127
  Repayments of long-term debt                                             (88)                  (5)
  Issuance of preferred and common stock                                 6,250                   --
                                                                     ---------            ---------
     Net cash provided by financing activities                          29,336               37,172 
                                                                     ---------            ---------
NET DECREASE IN CASH                                                      (348)                (515)
                                                                                  
CASH, beginning of period                                                2,543                  515
                                                                     ---------            ---------
CASH, end of period                                                  $   2,195            $       -
                                                                     ---------            ---------


Supplemental disclosure of cash flow information:
  Cash paid for interest, net of capitalized interest ($135)         $   2,211            $   1,468
  Cash paid for income taxes                                         $       5            $      43
</TABLE> 
The accompanying notes are an integral part of these consolidated financial
statements


                                    Page 4
<PAGE>
 
                           HINES HORTICULTURE, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (Dollars in thousands)
                            MARCH 31, 1998 AND 1999
                                  (UNAUDITED)

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

     Hines Horticulture, Inc. ("Hines"), a Delaware corporation, produces and
     distributes horticultural products through its two operating divisions,
     Hines Nurseries and Sun Gro Horticulture ("Sun Gro"). On June 12, 1998,
     Hines succeeded to the business of Hines Holdings, Inc., a Nevada
     corporation, as a result of the merger of Hines Holdings, Inc. into Hines,
     the purpose of which was to change the Company's name and jurisdiction of
     incorporation.  The business of Hines is currently conducted through Hines
     Nurseries, Inc. (formerly Hines Horticulture, Inc.) ("Hines Nurseries") and
     through Sun Gro Horticulture Inc. ("Sun Gro-U.S.") its wholly owned
     subsidiary, Sun Gro Horticulture Canada Ltd. ("Sun Gro-Canada"), and Sun
     Gro-Canada's direct and indirect Canadian subsidiaries.  Hines, together
     with Hines Nurseries, Sun Gro-U.S., Sun Gro-Canada, and Sun Gro-Canada's
     direct and indirect Canadian subsidiaries, are hereafter collectively
     referred to as the "Company."

     Hines Nurseries is a leading national supplier of ornamental, container-
     grown plants with nursery facilities located in California, Oregon,
     Pennsylvania, South Carolina and Texas. Hines Nurseries markets its
     products to retail customers throughout the United States.

     Sun Gro produces, markets and distributes peat-based horticulture products
     for both retail and professional customers.  Sun Gro markets its products
     in North America and various international markets with production
     facilities located in Canada and the United States.

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,
     except in regard to material contingencies or recent significant events,
     may be determined in that context.  Accordingly, footnote and other
     disclosures which would substantially duplicate the disclosures contained
     in the Form 10-K filed on March 26, 1999 by Hines Horticulture, Inc. under
     the Securities Exchange Act of 1934, as amended (the "Exchange Act"), have
     been omitted.  The financial information herein is not necessarily
     representative of a full year's operations.

                                    Page 5
<PAGE>
 
3.   Earnings Per Share: 
     -------------------

     For the three months ended March 31, 1999, there are no differences between
     the numerators and denominators for basic and diluted earnings per share
     since common stock equivalents have been excluded from the earnings per
     share calculation because the effect would be anti-dilutive.  There were no
     dilutive common stock equivalents outstanding during the three months ended
     March 31, 1998.

4.   Segment Information and Guarantor/Non-Guarantor Disclosures:
     ------------------------------------------------------------

     The Senior Subordinated Notes issued by Hines Nurseries (the issuer) have
     been guaranteed by Hines (the parent guarantor) and by Sun Gro-U.S. (the
     subsidiary guarantor). The issuer and the subsidiary guarantor are wholly
     owned subsidiaries of the parent guarantor and the parent and subsidiary
     guarantees are full, unconditional, and joint and several.  Separate
     financial statements of Hines Nurseries and Sun Gro-U.S. are not presented
     and Hines Nurseries and Sun Gro-U.S. are not filing separate reports under
     the Exchange Act because management believes that they would not be
     material to investors. The Senior Subordinated Notes are not guaranteed by
     Sun Gro-Canada or its present or future subsidiaries.

     In 1998, Hines adopted Statement of Financial Accounting Standards ("SFAS")
     No. 131, "Disclosures about Segments of an Enterprise and Related
     Information".  SFAS 131 supersedes SFAS 14, "Financial Reporting for
     Segments of a Business Enterprise", replacing the "industry segment"
     approach with the "management" approach.  The management approach
     designates the internal organization that is used by management for making
     operating decisions and assessing performance as the source of the
     Company's reportable segments.  The adoption of SFAS 131 had no effect on
     the Company's consolidated results of operations, financial position or
     cash flows.  SFAS 131 did however require the disclosure of segment
     information, which is incorporated as part of the following information.
     The Company operates in two segments: 1) the nursery segment and 
     2) the peat-based segment.

                                    Page 6
<PAGE>
 
     The following consolidating information shows (a) Hines on a parent company
     basis only as the parent guarantor (carrying its investment in its
     subsidiary under the equity method), (b) Hines Nurseries as the issuer
     (carrying its investment in its subsidiary under the equity method), (c)
     Sun Gro-U.S. as subsidiary guarantor (carrying its investment in Sun Gro-
     Canada under the equity method), (d) Sun Gro-Canada and its direct and
     indirect subsidiaries, as subsidiary non guarantors, (e) eliminations
     necessary to arrive at the information for the parent guarantor and its
     direct and indirect subsidiaries on a consolidated basis and (f) the parent
     guarantor on a consolidated basis, as follows:

        .  Consolidating balance sheets as of December 31, 1998 and March 31,
           1999 (unaudited);

        .  Consolidating statements of operations for the three months ended
           March 31, 1998 and 1999 (unaudited); and

        .  Consolidating statements of cash flows for the three months ended
           March 31, 1998 and 1999 (unaudited).

                                    Page 7
<PAGE>
 
Guarantor / Non-guarantor Disclosures - (Continued)
 
   Consolidating Balance Sheet
   As of December 31, 1998
   (Dollars in thousands)
<TABLE> 
<CAPTION> 
                                   ------------------------------------------------------------------------------------------
                                                  Nursery            Peat-based Segment
                                                  Segment            
                                   ------------------------------------------------------------------------------------------ 
                                     Hines                   Sun Gro     Sun Gro Canada                        
                                   Horticulture  Hines        U.S.        (Subsidiary                                       
                                    (Parent      Nurseries  (Subsidiary      Non-        Sun Gro                 Consolidated
                                    Guarantor)   (Issuer)   Guarantor)    Guarantors)    Sub-total  Eliminations     Total        

         ASSETS
         ------
<S>                                <C>          <C>          <C>          <C>          <C>          <C>             <C>
Current assets:
    Cash                           $      -     $    515     $     -      $     -      $      -     $        -       $    515
    Accounts receivable, net              -        9,164      14,526        3,051        17,577              -         26,741
    Inventories                           -      108,235       2,696        7,195         9,891              -        118,126
    Prepaid expenses and other            -        1,124         558          644         1,202              -          2,326
     current assets                                                                                             
    Deferred income taxes                32           20         957          963         1,920         (1,972)             -
                                   ------------------------------------------------------------------------------------------
        Total current assets       $     32     $119,058     $18,737      $11,853      $ 30,590        ($1,972)      $147,708
                                   ------------------------------------------------------------------------------------------ 
Fixed assets, net                         -       56,198       6,067       63,152        69,219              -        125,417
Deferred  financing expenses, net         -        4,077           -            -             -              -          4,077
Goodwill, net                             -       37,116           -          792           792              -         37,908
Deferred income taxes                     -       14,508           -            -             -        (14,508)             -
Investments in subsidiaries          66,188       12,149      12,194            -        12,194        (90,531)             -
                                   ------------------------------------------------------------------------------------------
                                   $ 66,220     $243,106     $36,998      $75,797      $112,795      ($107,011)      $315,110
 
    LIABILITIES AND 
    ---------------  
    SHAREHOLDERS' EQUITY
    --------------------
Current liabilities:
    Accounts payable               $      -     $  3,982     $ 1,872      $ 3,534      $  5,406       $      -       $  9,388
    Accrued liabilities                   -        1,638       3,637        1,076         4,713              -          6,351
    Accrued payroll and benefits          -        4,790         718          648         1,366              -          6,156
    Accrued interest                      -          751           -            -             -              -            751
    Long-term debt, current portion       -        2,066           -        1,000         1,000              -          3,066
    Revolving line of credit              -       30,850           -            -             -              -         30,850
    Deferred income taxes                 -       41,361           -            -             -         (1,972)        39,389
    Intercompany accounts             2,898      (33,577)     13,366       17,313        30,679              -              -
                                   ------------------------------------------------------------------------------------------
        Total current liabilities     2,898       51,861      19,593       23,571        43,164         (1,972)        95,951
                                   ------------------------------------------------------------------------------------------
Long-term debt                            -      126,633           -       19,000        19,000              -        145,633
Deferred income taxes                     -        4,683       3,497       16,532        20,029        (14,508)        10,204
Shareholders' equity                                                       
    Common stock                        221       17,971      11,414        4,500        15,914        (33,885)           221
    Additional paid in capital      127,992       21,362       5,889        1,777         7,666        (29,028)       127,992
    Notes receivable from stock        (326)           -           -            -             -              -           (326)
      sales
    Retained earnings (deficit)     (64,565)      20,596      (3,395)      10,417         7,022        (27,618)       (64,565)
                                    -----------------------------------------------------------------------------------------
        Total shareholders' equity   63,322       59,929       13,908      16,694        30,602        (90,531)        63,322
                                    -----------------------------------------------------------------------------------------
                                    $ 66,220    $243,106      $36,998     $75,797      $112,795      ($107,011)      $315,110
                                    =========================================================================================
</TABLE>

                                     Page 8
<PAGE>
 
 . Guarantor/Non-guarantor Disclosures - (Continued)



<TABLE>
<CAPTION>
                                                       Nursery             Peat-based Segment
                                                       Segment                               
-----------------------------------------------------------------------------------------------------------------------------------
                                           Hines                   Sun Gro     Sun Gro Canada                         
                                        Horticulture    Hines        U.S.       (Subsidiary                           
                                          (Parent     Nurseries  (Subsidiary        Non-       Sun Gro                 Consolidated
                                         Guarantor)    (Issuer)   Guarantor)    Guarantors)   Sub-total  Eliminations      Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>        <C>           <C>            <C>        <C>           <C>  
         ASSETS                                                                                                       
         ------                                                                                                       
Cash                                      $      -    $      -      $     -        $     -     $      -   $        -      $      -
Accounts receivable, net                         -      32,713       23,034          4,667       27,701            -        60,414
Inventories                                      -     119,718        3,734          6,505       10,239            -       129,957
Prepaid expenses and other                       -       1,191          338            667        1,005            -         2,196
 current assets                                                                                                       
Deferred income taxes                           32          20          956            980        1,936       (1,988)            -
                                          ----------------------------------------------------------------------------------------
    Total current assets                  $     32    $153,642      $28,062        $12,819     $ 40,881      ($1,988)     $192,567
                                          ----------------------------------------------------------------------------------------
                                                                                                                      
Fixed assets, net                                -      61,103        5,891         63,254       69,145            -       130,248
Deferred financing expenses, net                 -       3,890            -              -            -            -         3,890
Goodwill, net                                    -      37,317            -            786          786            -        38,103
Deferred income taxes                            -      14,508            -              -            -      (14,508)            -
Investments in subsidiaries                 67,888      13,921       12,301              -       12,301      (94,110)            -
                                          ----------------------------------------------------------------------------------------
                                          $ 67,920    $284,381      $46,254        $76,859     $123,113    ($110,606)     $364,808
                                          ========================================================================================
                                                                                                                      
  LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                
  ------------------------------------                                                                                
                                                                                                                      
Current liabilities:                                                                                                  
  Accounts payable                        $      -    $ 11,845      $ 2,043        $ 4,433     $  6,476   $        -      $ 18,321
  Accrued liabilities                            -       1,813        2,483            783        3,266            -         5,079
  Accrued payroll and benefits                   -       3,435          845            755        1,600            -         5,035
  Accrued interest                               -       3,450            -              -            -            -         3,450
  Long-term debt, current portion                -       3,194            -          1,016        1,016            -         4,210
  Revolving line of credit                       -      67,900            -              -            -            -        67,900
  Deferred income taxes                          -      41,318            -              -            -       (1,988)       39,330
  Intercompany accounts                      2,914     (40,386)      21,261         16,211       37,472            -             -
                                          ----------------------------------------------------------------------------------------
    Total current liabilities                2,914      92,569       26,632         23,198       49,830       (1,988)      143,325
                                          ----------------------------------------------------------------------------------------
                                                                                                                      
Long-term debt                                   -     125,500            -         19,111       19,111            -       144,611
Deferred income taxes                            -       4,683        3,942         17,749       21,691      (14,508)       11,866
Shareholders' equity                                                                                                  
  Common stock                                 221      17,971       11,414          4,500       15,914      (33,885)          221
  Additional paid in capital               127,976      21,362        5,889          1,777        7,666      (29,028)      127,976
  Notes receivable from stock sales           (326)          -            -              -            -            -          (326)
  Retained earnings (deficit)              (62,865)     22,296       (1,623)        10,524        8,901      (31,197)      (62,865)
                                          ----------------------------------------------------------------------------------------
    Total shareholders' equity              65,006      61,629       15,680         16,801       32,481      (94,110)       65,006
                                          ----------------------------------------------------------------------------------------
                                                                                                                      
                                          $ 67,920    $284,381      $46,254        $76,859     $123,113    ($110,606)     $364,808
                                          ========================================================================================
</TABLE>

                                                              Page 9
<PAGE>
 
Guarantor/Non-guarantor Disclosures - (Continued)
 
Consolidating Statement of Operations
For the quarter ended March 31, 1998
(Dollars in thousands)
 
<TABLE> 
<CAPTION> 
                                                      Nursery               Peat-based Segment
                                                      Segment
                                       --------------------------------------------------------------------------------------------
                                          Hines                    Sun Gro    Sun Gro Canada
                                       Horticulture    Hines         U.S.      (Subsidiary
                                         (Parent     Nurseries   (Subsidiary       Non-       Sun Gro                  Consolidated
                                        Guarantor)    (Issuer)    Guarantor)   Guarantors)   Sub-total   Eliminations     Total
                                       --------------------------------------------------------------------------------------------
<S>                                    <C>           <C>         <C>          <C>            <C>         <C>           <C> 
Sales, net                              $     -       $28,453       $17,226        $6,934      $24,160     ($4,439)      $48,174
Cost of goods sold                            -        14,432         9,088         4,434       13,522      (4,439)       23,515
                                       --------------------------------------------------------------------------------------------
    Gross Profit                              -        14,021         8,138         2,500       10,638           -        24,659
Operating expenses                            -        10,087         6,708         2,117        8,825           -        18,912
                                       --------------------------------------------------------------------------------------------
    Operating income                          -         3,934         1,430           383        1,813           -         5,747
                                       --------------------------------------------------------------------------------------------
Other expenses:                                                                                                          
   Interest                                  15         5,317           153           221          374           -         5,706
   Interest - intercompany                    -          (440)          382            58          440           -             -
  Amortization of deferred 
   financing expenses, other                210          (263)          259            75          334          42           323
                                       --------------------------------------------------------------------------------------------
                                            225         4,614           794           354        1,148          42         6,029
                                       --------------------------------------------------------------------------------------------
                                                                                                                         
Income (loss) before provision for                                                                                       
 (benefit from) income taxes               (225)         (680)          636            29          665         (42)         (282)
Income tax provision (benefit)               (6)         (470)          166           247          413           -           (63)
                                       --------------------------------------------------------------------------------------------
Net income (loss)                         ($219)        ($210)      $   470         ($218)     $   252        ($42)        ($219)
                                       ============================================================================================
</TABLE> 

Guarantor/Non-guarantor Disclosures - (Continued)

Consolidating Statement of Operations
For the quarter ended March 31, 1999
(Dollars in thousands)
 
<TABLE> 
<CAPTION> 
                                                      Nursery               Peat-based Segment
                                                      Segment
                                       --------------------------------------------------------------------------------------------
                                          Hines                    Sun Gro    Sun Gro Canada
                                       Horticulture    Hines         U.S.      (Subsidiary
                                         (Parent     Nurseries   (Subsidiary       Non-       Sun Gro                  Consolidated
                                        Guarantor)    (Issuer)    Guarantor)   Guarantors)   Sub-total   Eliminations     Total
                                       --------------------------------------------------------------------------------------------
<S>                                    <C>           <C>         <C>          <C>            <C>         <C>           <C> 
Sales, net                                $     -      $33,173      $22,106       $9,997       $32,103     ($5,874)      $59,402
Cost of goods sold                              -       17,813       11,418        5,986        17,404      (5,874)       29,343
                                       --------------------------------------------------------------------------------------------
    Gross Profit                                -       15,360       10,688        4,011        14,699           -        30,059
Operating expenses                              -       11,854        8,093        2,736        10,829           -        22,683
                                       --------------------------------------------------------------------------------------------
    Operating income                            -        3,506        2,595        1,275         3,870           -         7,376
                                       --------------------------------------------------------------------------------------------
Other expenses:                                                                                                         
   Interest                                     -        3,794          157          351           508           -         4,302
   Interest - intercompany                      -         (359)         331           28           359           -             -
   Amortization of deferred                                                                                             
    financing expenses, other              (1,700)      (1,585)          49            0            49       3,423           187
                                       --------------------------------------------------------------------------------------------
                                           (1,700)       1,850          537          379           916       3,423         4,489
                                       --------------------------------------------------------------------------------------------

Income (loss) before provision for                                                                                      
 (benefit from) income taxes                1,700        1,656        2,058          896         2,954      (3,423)        2,887
Income tax provision (benefit)                  -          (44)         443          788         1,231           -         1,187
                                       --------------------------------------------------------------------------------------------
Net income                                $ 1,700      $ 1,700      $ 1,615       $  108       $ 1,723     ($3,423)      $ 1,700
                                       ============================================================================================
</TABLE>

                                    Page 10
<PAGE>
 
Guarantor / Non-guarantor Disclosures - (Continued)
 
Consolidating Statement of Cash Flows
For the quarter ended March 31, 1998
(Dollars in thousands)
 
<TABLE> 
<CAPTION> 
                                                      Nursery               Peat-based Segment
                                                      Segment
                                       --------------------------------------------------------------------------------------------
                                          Hines                    Sun Gro    Sun Gro Canada
                                       Horticulture    Hines         U.S.      (Subsidiary
                                         (Parent     Nurseries   (Subsidiary       Non-       Sun Gro                  Consolidated
                                        Guarantor)    (Issuer)    Guarantor)   Guarantors)   Sub-total   Eliminations     Total
                                       --------------------------------------------------------------------------------------------
<S>                                    <C>           <C>         <C>          <C>            <C>         <C>           <C> 
Cash used in operating activities         ($4,250)   ($21,358)     ($1,450)        ($81)      ($1,531)       $-          ($27,139)
                                       --------------------------------------------------------------------------------------------
                                                                                                                     
Cash flows from investing activities:                                                                                
  Purchase of fixed assets, net                 -      (2,621)          (9)        (109)         (118)        -            (2,739)
  Proceeds from sale of fixed assets            -           -            4          190           194         -               194
                                       --------------------------------------------------------------------------------------------
  Net cash (used in) provided by                                                                                     
   investing activities                         -      (2,621)          (5)          81            76         -            (2,545)
                                       --------------------------------------------------------------------------------------------
                                                                                                                     
Cash flows from financing activities:                                                                                
  Proceeds from (repayments on)                                                                                      
   revolving line of credit                     -      24,719       (1,545)           -        (1,545)        -            23,174
  Intercompany advances (repayments)       (2,000)     (1,000)       3,000            -         3,000         -                 -
  Repayments of long-term debt                  -         (88)           -            -             -         -               (88)
  Issuance of preferred and common 
   stock                                    6,250           -            -            -             -         -             6,250
                                       --------------------------------------------------------------------------------------------
  Net cash provided by financing                                                                                     
   activities                               4,260      23,631        1,455            0         1,455         0            29,336
                                       --------------------------------------------------------------------------------------------
                                                                                                                     
Net decrease in cash                            -        (348)           -            -             -         -              (348)
Cash beginning of year                          -       2,543            -            -             -         -             2,543
                                       --------------------------------------------------------------------------------------------
Cash, end of year                         $     -    $  2,195      $     -        $   -       $     -        $-          $  2,195
                                       ============================================================================================
</TABLE>

                                    Page 11
<PAGE>
 
 . Guarantor / Non-guarantor Disclosures - (Continued)
 
  Consolidating Statement of Cash Flows
  For the quarter ended March 31, 1999
  (Dollars in thousands)

<TABLE> 
<CAPTION> 
                                                       Nursery             Peat-based Segment
                                                       Segment                               
-----------------------------------------------------------------------------------------------------------------------------------
                                           Hines                   Sun Gro     Sun Gro Canada                         
                                        Horticulture    Hines        U.S.       (Subsidiary                           
                                          (Parent     Nurseries  (Subsidiary        Non-       Sun Gro                 Consolidated
                                         Guarantor)    (Issuer)   Guarantor)    Guarantors)   Sub-total  Eliminations      Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>        <C>           <C>            <C>        <C>           <C>  
Cash provided by (used in) operating 
 activities                             $         -    ($24,218)     ($6,645)        $ 1,118    ($5,527)    $       -      ($29,745)
                                        -------------------------------------------------------------------------------------------
                                                                                                                     
Cash flows from investing activities:                                                                                
  Purchase of fixed assets, net                 (16)     (6,033)        (148)           (760)      (908)            -        (6,957)
  Acquisitions                                    -        (500)           -            (485)      (485)            -          (985)
                                        -------------------------------------------------------------------------------------------
    Net cash used in investing 
     activities                                 (16)     (6,533)        (148)         (1,245)    (1,393)            -        (7,942)
                                        -------------------------------------------------------------------------------------------

Cash flows from financing activities:                                                                                
  Proceeds from revolving line of 
   credit                                         -      37,050            -               -          -             -        37,050
  Intercompany advances (repayments)             16      (6,809)       6,793               -      6,793             -             -
  Proceeds from the issuance of 
   long-term debt                                 -           -            -             127        127             -           127
  Repayments of long-term debt                    -          (5)           -               -          -             -            (5)
  Issuance of preferred and common 
   stock                                          -           -            -               -          -             -             - 
                                        -------------------------------------------------------------------------------------------
    Net cash provided by financing 
     activities                                   -      30,236        6,793             127      6,920             0        37,172
                                                                                                                     
Net decrease in cash                              -        (515)           -               -          -             -          (515)

Cash, beginning of year                           -         515            -               -          -             -           515
                                        -------------------------------------------------------------------------------------------
Cash, end of year                       $         -   $       -     $      -         $     -   $      -     $       -      $      -
                                        ===========================================================================================
 
</TABLE>
                                    Page 12
<PAGE>
 
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS.

  The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes contained herein and in the
Annual Report on Form 10-K filed on March 26, 1999 by Hines Horticulture, Inc.
This discussion contains trend analysis and other forward-looking statements
that involve risks and uncertainties.

  Overview

  General.  Hines is one of the largest commercial nursery operations in North
America, producing one of the broadest assortments of container-grown plants in
the industry. The Company sells its nursery products primarily to the retail
segment which includes premium independent garden centers as well as the leading
home centers and mass merchandisers, such as Home Depot, Lowe's, Wal-Mart, Kmart
and Target.  The Company is also the largest North American producer and
marketer of sphagnum peat moss and professional peat-based growing mixes. The
Company sells its peat-based products primarily to professional customers,
including greenhouse growers, nursery growers and golf course developers. The
Company believes that sales of its nursery products have been positively
affected by societal and demographic trends, such as greater levels of
homeownership, the aging of the American population and the increasing
popularity of gardening.  Recent trends in the retail distribution channel, such
as the expansion of large "big box" retailers and their growing emphasis on the
lawn and garden category, have increased consumer exposure to lawn and garden
products. Management believes these trends have favorably impacted the Company
and provide excellent opportunities for improved operating performance.

  Seasonality.  The Company's nursery business, like that of its competitors,
is highly seasonal.  In 1998, approximately 79% of Hines Nurseries' net sales
and approximately 115% of Hines Nurseries' operating income occurred in the
first half of the year.  Approximately 60% of Hines Nurseries' net sales and
approximately 100% of Hines Nurseries' operating income occurred in the second
quarter of 1998.  The Company has experienced and expects to continue to
experience significant seasonality in net sales, operating income and net
income.  This quarterly variability is primarily the result of the consumer
gardening cycle, which is closely aligned to seasonal weather patterns,
particularly weekend weather during the peak growing season, as well as other
factors.  Sun Gro's sales, because they are more heavily weighted towards the
professional markets, typically do not experience the large seasonal variances
present in the retail market, and are only slightly weighted towards the first
half of the year.

                                    Page 13
<PAGE>
 
  Acquisitions.  The Company has completed a number of recent acquisitions to
expand and diversify its operations.  In the three years ended December 31,
1998, the Company has completed five acquisitions. These acquisitions have and
will continue to affect the period-to-period comparability of the operating
results discussed below. The Company intends to pursue strategic acquisitions
from time to time that increase its production capacity, broaden or complement
its existing product lines, expand its geographic presence or offer operating
synergies. The Company believes that the highly fragmented nature of the nursery
industry presents it with a number of opportunities to make such acquisitions,
though the Company does not have current agreements to consummate any such
acquisitions.

  Tax Matters.  The Company derives significant benefits under the U.S. federal
tax code by qualifying 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. The primary
benefit the Company receives is the ability to deduct the cost of inventory as
it is incurred.  As a result of the Company's ability to deduct its growing
costs under the farming exception, the Company has generally not been required
to pay cash income taxes and has generated net operating losses for federal
income tax purposes.  During the same period, the Company has continued to show
a tax provision relating to the recording of deferred taxes.

Results of Operations

Three Months Ended March 31, 1999 compared to Three Months Ended March 31, 1998

  Net sales.  Net sales of $59.4 million for the three months ended March 31,
1999 increased $11.2 million, or 23.2%, from net sales of $48.2 million for the
comparable period in 1998.  Sales from the Company's nursery operations
increased 16.6% during the first quarter, with both the western and southern
regions contributing significant growth. Increased volumes were largely
attributable to continued expansion of key facilities in these regions,
particularly the Houston operation.  After 1998's early spring season, the East
and Midwest returned to a more typical, later-arriving spring, which resulted in
those regions recording lower sales in the first quarter of 1999 versus the
comparable period in 1998.

  Net sales of the Company's peat moss and peat-based products increased by
35.0% from the comparable period in 1998.  This increase in net sales was
attributable to the Company's acquisition on April 6, 1998 of Lakeland Peat
Moss, supplemented by internally generated growth from a mix line expansion at
its eastern peat business and a substantial increase in the western peat
harvest.

                                    Page 14
<PAGE>
 
  Gross profit.  Gross profit of $30.1 million for the three months ended
March 31, 1999 increased $5.4 million, or 21.9%, from gross profit of $24.7
million for the comparable period in 1998.  The increase was primarily
attributable to higher sales at both the Company's nursery and peat moss
operations.  As a percent of sales, gross margin decreased from 51.2% to 50.6%
of net sales due to increased sales growth of nursery commodity lines and a
geographical shift of seasonal activity within the nursery business to
facilities with generally lower margins.  This decrease was partially offset by
improved margins in the peat moss business.  The peat moss operations' increase
was primarily attributable to the greater emphasis on professional customers.
While the addition of Lakeland to the Company's peat business during the second
quarter of 1998 increased sales and gross profit for the three months ended
March 31, 1999, it did have a slightly negative impact on gross margins compared
with the comparable period in 1998.

  Operating expenses.  Operating expenses of $22.7 million for the three months
ended March 31, 1999 increased $3.8 million, or 20.1%, from $18.9 million for
the comparable period in 1998. The increase was primarily attributable to the
Lakeland acquisition and the significant investment in sales and management
infrastructure required to support the Company's current and future growth.
Operating expenses as a percentage of net sales were reduced from 39.3% to 38.2%
in first three months of 1999, primarily attributable to the Company's ability
to leverage operating expenses on higher sales volume.

  Operating income.  Operating income of $7.4 million for the three months ended
March 31, 1999 increased $1.7 million, or 29.8%, from $5.7 million for the
comparable period in 1998. As a percentage of net sales, operating income
improved 0.6% to 12.4% from 11.8% due primarily to improved operating expenses
as described above, offset by a decrease in gross margins.

  Interest expense.  Interest expense of $4.3 million for the three months ended
March 31, 1999 decreased $1.4 million, or 24.6%, from $5.7 million for the
comparable period in 1998. The reduction was primarily attributable the
redemption of $42.0 Million of Senior Subordinated Notes in connection with the
Company's initial public offering of common stock in June 1998.

  Provision for income taxes.  The Company's effective income tax rate was 41.1%
and 22.3% for the three months ended March 31, 1999 and 1998, respectively.

     Net income (loss).  Net income of $1.7 million for the three months ended
March 31, 1999 increased $1.9 million from a net loss of $0.2 million for the
comparable period in 1998.  The improvement to net income was primarily
attributable to increased sales and lower interest expense as described above.

                                    Page 15
<PAGE>
 
Liquidity and Capital Resources
-------------------------------

  The Company has historically satisfied its working capital requirements
through operating cash flow. Due to the highly seasonal nature of the Company's
nursery operations, the Company historically borrows under its revolving credit
facilities to fund peak needs.

  On June 22, 1998, the Company completed the issuance of 5.1 million shares of
common stock through an initial public offering (the "Offering") resulting in
net proceeds to the Company (after deducting issuance costs) of approximately
$50.2 million. The proceeds were used for the redemption of $42.0 million in
aggregate principal amount of senior subordinated notes and repayment, in part,
of certain debt secured by a mortgage.

  In conjunction with the Offering, the Company entered into a new senior credit
facility (the "Senior Credit Facility") with Bankers Trust Company, Bank of
America, N.T. & S.A. and Harris Trust & Savings Bank.  The Senior Credit
Facility amended and restated the Company's previous senior credit facilities to
provide for a new $50.0 million term loan and a $200.0 million revolving credit
facility, increasing the Company's total borrowing capacity by $100.0 million.
The revolving credit facility is comprised of a $100.0 million working capital
facility and a $100.0 million acquisition facility. The Senior Credit Facility
has a five-year term. The revolving credit facility and all other obligations
under the Senior Credit Facility are secured by substantially all of the assets
and common stock of Hines Nurseries and Sun Gro-U.S., as well as a pledge of 65%
of the common stock of Sun Gro-Canada. The principal repayment schedule for the
term loan is $2.5 million in 1999, $6.25 million in 2000, $11.25 million in
2001, $18.75 million in 2002 and $11.25 million in 2003. Amounts borrowed under
the acquisition facility will convert into a term loan in 2000 and will begin to
amortize thereafter. The Senior Credit Facility, among other things, limits the
ability of Hines Nurseries and its subsidiaries to pay any dividends.

  In October 1995, Hines Nurseries issued $120.0 million in aggregate principal
amount of 11 3/4% senior subordinated notes due 2005 (the "Senior Subordinated
Notes") to refinance certain indebtedness incurred in connection with the
acquisition of Hines by MDCP and certain members of management.  The Senior
Subordinated Notes were subsequently exchanged in a registered offering for
$120.0 million of the Company's 11 3/4% Senior Subordinated Notes due 2005,
Series B.  As of March 31, 1999, $78.0 million in aggregate principal amount
remains outstanding. The indenture pursuant to which the Senior Subordinated
Notes were issued imposes a number of restrictions on Hines Nurseries and Sun
Gro-U.S. The indenture limits, among other things, their ability to incur
additional indebtedness, to make certain restricted payments (including
dividends to Hines), to make certain asset dispositions, to incur certain liens
and to enter into certain significant transactions. In addition, breach of a
material term of the indenture or any other material indebtedness that results
in the acceleration of such indebtedness would trigger an event of default under
the Senior Credit Facility, causing all amounts owing thereunder 

                                    Page 16
<PAGE>
 
to become immediately due and payable. The Senior Credit Facility imposes a
number of similar and certain additional restrictions (including financial
covenants) on Hines Nurseries and its subsidiaries.

  The seasonal nature of the Company's operations results in a significant
increase in certain components of working capital (primarily accounts receivable
and inventory) during the growing and selling cycles. Net cash used by operating
activities for the three months ended March 31, 1999, of $29.7 million increased
$2.6 million, from $27.1 million for the comparable period in 1998. This
increase is attributable to the increased inventory levels to support the
Company's expanded operations and an increased accounts receivable balance.

  Net cash used for investing activities during the three months ended March 31,
1999 increased $5.4 million to $7.9 million from $2.5 million for the comparable
period in 1998. The increase was primarily due to the Company's development of
additional nursery acreage, the purchase of nursery-related structures, certain
vehicles, and machinery and equipment.

  Net cash provided by financing activities during the three months ended March
31, 1999 increased $7.9 million to $37.2 million from $29.3 million for the
comparable period in 1998. The increase was primarily associated with increased
borrowings under the Company's revolving credit facility related to the net cash
used for investing activities described above.

  The Company typically draws under its revolving credit facilities in the first
and fourth quarters to fund its inventory buildup of nursery products and
seasonal operating expenses. Approximately 79% of the sales of Hines Nurseries
occur in the first half of the year, generally allowing the Company to reduce
borrowings under its revolving credit facilities in the second and third
quarters. Working capital requirements for the Company's peat moss operations
are less seasonal in nature, with slight inventory buildups generally occurring
in the third and fourth quarters. On April 30, 1999, the Company had unused
borrowing capacity of $81.0 million and $ 31.0 million under its acquisition
revolver and working capital revolver, respectively, within the Senior Credit
Facility.

  As a result of the Company's ability to deduct its growing costs under the
farming exception, the Company has generally not been required to pay cash
income taxes in recent years and has generated net operating losses for federal
income tax purposes. Even with the benefits of the farming exception, the
Company may nonetheless be required to pay cash income taxes in future years
after use, loss or expiration of its tax net operating loss carry forwards. Such
cash income taxes could also result from increased taxable income due to, among
other reasons, (1) reduction in the Company's deduction for interest expense
resulting from the Company's repayment of indebtedness with the proceeds of the
Offering, (2) any slowdown in, or elimination of, future growth in the Company's
inventory of growing plants, or (3) limits on the Company's ability to use net

                                    Page 17
<PAGE>
 
operating loss carryforwards to offset all of its tax liability under the
alternative minimum tax system.

  The Company's capital expenditures were approximately $6.9 million for the
three months ended March 31, 1999. The capital expenditures for Hines Nurseries
($6.0 million) related primarily to the development of additional nursery
acreage, the purchase of nursery-related structures, vehicles, and machinery and
equipment. The capital expenditures for Sun Gro ($0.9 million) related primarily
to peat bog development and the purchase of peat bog harvesting and processing
equipment. The Company's capital expenditures for 1999 are expected to be
approximately $25.0 million.

  Management believes that cash generated by operations and borrowings available
under the Senior Credit Facility will be sufficient to meet the Company's
anticipated working capital, capital expenditures and debt service requirements
for the foreseeable future. However, as a result of its plan to pursue strategic
acquisitions, the Company may require additional debt or equity financing in the
future.

Year 2000 Compliance
--------------------

  The Company has instituted a program to determine whether its computerized
information systems are able to interpret dates beyond the year 1999 and has
implemented programming modifications to its main operational and financial
reporting systems that will address these issues. All modified programming is
currently operational and testing has been completed. The financial systems of
companies recently acquired by the Company may not be entirely Year 2000
compliant. It is expected, however, that the Company will integrate the
financial data of these acquired companies into the Company's main system during
1999 and will have no need to rely on any non-compliant systems.

  The Company is in the early stage of evaluating non-information technology
systems, which include telephone equipment, greenhouse automation and watering
systems. Upgrades or replacements are being made as necessary, and are expected
to be completed by the end of 1999.

  Evaluation and testing of personal computers will be performed internally. As
needed, personal computers will be made Year 2000 compliant by systematic
upgrades or replacements by the end of 1999.

  The Company relies on third party suppliers for finished goods, raw materials,
water, other utilities, transportation and a variety of other key services. The
Company is evaluating the status of suppliers with whom it has a material
relationship through confirmation and follow-up procedures and expects this
phase to be completed by mid-1999.

                                    Page 18
<PAGE>
 
  The total cost of the Year 2000 Compliance Program is not expected to be
material to the Company's consolidated financial position or results of
operations. To date, the Company has spent approximately $0.3 million on Year
2000 compliance. The Company believes that the total cost of ensuring Year 2000
compliance for its own operational and financial systems will be less than $0.5
million.

  Although management believes the Company has an adequate plan to be Year 2000
compliant, there can be no assurance that this program ultimately will be
successful. The Company will continue to assess where alternative courses of
action are needed as the information technology and non-information technology
readiness plans are executed. A major effort related to formal contingency
planning will be in the third quarter of 1999, once a significant portion of the
business groups' readiness plans have been completed.

  The principal business risks to the Company relating to completion of Year
2000 efforts are:

 . The inability of key business partners to provide goods and services as a
  result of Year 2000 issues.

 . Unforeseen issues arising in connection with recent and future acquisitions or
  business partnerships.

  Because the Company's Year 2000 readiness is dependent upon key business
partners also being Year 2000 Compliant, there can be no guarantee that the
Company's efforts will prevent a material adverse impact on its results of
operations, financial condition and cash flows. The possible consequences to the
Company of its key business partners' inability to provide goods and services as
a result of Year 2000 issues include temporary delays in delivery of finished
products; delays in receipt of key items, containers and packaging supplies;
invoice and collection errors; and excess inventory of perishable items. The
Company believes that its readiness efforts, which include confirmation and
other testing with critical suppliers to determine if contingency planning is
needed, should reduce the likelihood of such disruptions.

  The foregoing represents a Year 2000 readiness disclosure entitled to
protection as provided in the Year 2000 Information and Readiness Disclosure
Act.

                                    Page 19
<PAGE>
 
Item 3.    Quantitative and Qualitative Disclosures About Market Risk

           The Company has not experienced any material changes to its market
           risk exposures since December 31, 1998.

                          PART II.  OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K
           Exhibits 27.1 Financial Data Schedule

Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.

                                   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
                                         (Principal financial officer
                                         and duly authorized officer)


Date:  May 12, 1999

                                    Page 20