<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, 2003

          ( ) 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 May 1, 2003 there were 22,072,549 shares of Common Stock, par value $0.01
per share, outstanding.
================================================================================


                                     Page 1
<PAGE>

                            HINES HORTICULTURE, INC.
                                      INDEX

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements                                           Page No.
                                                                        --------

         Consolidated Balance Sheets as of
         March 31, 2003 (unaudited) and December 31, 2002                     3

         Consolidated Statements of Operations for the Three Months
         Ended March 31, 2003 and 2002 (unaudited)                            4

         Consolidated Statements of Cash Flows for the
         Three Months Ended March 31, 2003 and 2002 (unaudited)               5

         Notes to the Consolidated Financial Statements                       6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                            9

Item 3.  Quantitative and Qualitative Disclosures About Market Risk          25

Item 4.  Control and Procedures                                              26

                           PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                    26
         Signature                                                           27
         Certifications Pursuant to Section 302 of the Sarbanes-Oxley
         Act of 2002                                                         28

Note:    Items 1, 2, 3, 4 and 5 of Part II are omitted because they are not
         applicable.


                                     Page 2
<PAGE>
<TABLE>

                                      HINES HORTICULTURE, INC.
                                     CONSOLIDATED BALANCE SHEETS
                                March 31, 2003 and December 31, 2002
                              (Dollars in thousands, except share data)
<CAPTION>

ASSETS                                                            March 31,     December 31,
                                                                    2003            2002
                                                                 ----------      ----------
                                                                (Unaudited)
<S>                                                              <C>             <C>
CURRENT ASSETS:
        Cash                                                     $      --       $      --
        Accounts receivable, net of allowance for
           doubtful accounts of $2,001 and $1,997                   51,416          25,838
        Inventories                                                195,006         169,981
        Prepaid expenses and other current assets                    7,908           6,672
                                                                 ----------      ----------
                                       Total current assets        254,330         202,491
                                                                 ----------      ----------
FIXED ASSETS, net of accumulated depreciation
   and depletion of $40,397 and $38,102                            139,369         140,239
DEFERRED FINANCING EXPENSES, net of
   accumulated amortization of $11,818 and $10,958                   6,905           7,137
DEFFERRED INCOME TAX                                                12,870          12,966
GOODWILL                                                            42,979          42,979
                                                                 ----------      ----------
                                                                 $ 456,453       $ 405,812
                                                                 ==========      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
        Accounts payable                                         $  25,624       $  12,321
        Accrued liabilities                                         11,592          10,911
        Accrued payroll and benefits                                 4,741           6,845
        Accrued interest                                             3,535           6,034
        Long-term debt, current portion                             17,587          17,585
        Borrowings on revolving credit facility                    116,500          72,750
        Deferred income taxes                                       63,077          63,994
                                                                 ----------      ----------

                                  Total current liabilities        242,656         190,440
                                                                 ----------      ----------

LONG-TERM DEBT                                                     164,996         164,829

INTEREST RATE SWAP AGREEMENT                                         8,180           8,741

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, 2003 and December 31, 2002                     221             221

        Additional paid-in capital                                 128,781         128,781
        Deficit                                                    (87,306)        (85,985)
        Accumulated other comprehensive loss                        (1,075)         (1,215)
                                                                 ----------      ----------

                                 Total shareholders' equity         40,621          41,802
                                                                 ----------      ----------

                                                                 $ 456,453       $ 405,812
                                                                 ==========      ==========
</TABLE>

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

                                               Page 3
<PAGE>
<TABLE>

                                           HINES HORTICULTURE, INC.
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  Three Months Ended March 31, 2003 and 2002
                                   (Dollars in thousands, except share data)
                                                  (Unaudited)
<CAPTION>

                                                                       Three Months Ended March 31,

                                                                          2003               2002
                                                                     -------------      -------------
                                                                                          (Restated)
<S>                                                                  <C>                <C>
Sales, net                                                           $     58,523       $     68,723
Cost of goods sold                                                         27,870             34,316
                                                                     -------------      -------------
    Gross profit                                                           30,653             34,407
                                                                     -------------      -------------

Selling and distribution expenses                                          19,047             20,736
General and administrative expenses                                         5,586              5,501
Other expense (income)                                                      1,242             (2,103)
                                                                     -------------      -------------
    Total operating expenses                                               25,875             24,134
                                                                     -------------      -------------

    Operating income                                                        4,778             10,273

Other expenses
   Interest                                                                 6,291              6,711
   Loss on debt extinguishment                                                 --              1,739
   Interest rate swap agreement income                                       (324)            (1,014)
   Amortization of deferred financing expenses                              1,050              1,154
                                                                     -------------      -------------
                                                                            7,017              8,590
                                                                     -------------      -------------

(Loss) income before income taxes and
  discontinued operations                                                  (2,239)             1,683

Income tax (benefit) provision                                               (917)               690
                                                                     -------------      -------------

(Loss) income from continuing operations                                   (1,322)               993

Loss from discontinued operations, net of tax
  benefit of $13,081                                                           --             (6,978)

Cumulative effect of change in accounting principle, net of tax
  benefit of $23,609                                                           --            (55,148)
                                                                     -------------      -------------

Net loss                                                             $     (1,322)      $    (61,133)
                                                                     =============      =============


Basic and diluted earnings per share:

(Loss) income per common share from
  continuing operations                                              $      (0.06)      $       0.04
Loss per common share from
  discontinued operations                                            $         --       $      (0.32)
Cumulative effect of change in accounting principle                  $         --       $      (2.49)
                                                                     -------------      -------------

Net loss per common share                                            $      (0.06)      $      (2.77)
                                                                     =============      =============

Weighted average shares outstanding--Basic                             22,072,549         22,072,549
                                                                     =============      =============
Weighted average shares outstanding--Diluted                           22,072,549         22,104,455
                                                                     =============      =============

                             The accompanying notes are an integral part of these
                                      consolidated financial statements.
</TABLE>

                                                    Page 4
<PAGE>
<TABLE>

                                      HINES HORTICULTURE, INC.
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                             Three Months Ended March 31, 2003 and 2002
                              (Dollars in thousands, except share data)
                                             (Unaudited)
<CAPTION>

                                                                     2003            2002
                                                                  ----------      ----------
                                                                                  (Restated)
<S>                                                               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                                      $  (1,322)      $ (61,133)
    Loss from discontinued operations                                    --           6,978
    Adjustments to reconcile net income to
      net cash used in operating activities -
         Cumulative effect of change in accounting principle             --          55,148
         Depreciation                                                 2,295           2,208
         Amortization of deferred financing costs                     1,050           1,154
         Interest rate swap agreement income                           (324)         (1,014)
         Gain on sale of assets                                          --          (2,103)
         Loss on early retirement of debt                                --           1,739
         Deferred income taxes                                         (917)            689
                                                                  ----------      ----------
                                                                        782           3,666
Change in working capital accounts
    Accounts receivable                                             (25,578)        (31,952)
    Inventories                                                     (25,025)        (18,285)
    Prepaid expenses and other current assets                        (1,236)           (558)
    Accounts payable and accrued liabilities                          9,384          11,783
                                                                  ----------      ----------
      Change in working capital accounts                            (42,455)        (39,012)
                                                                  ----------      ----------

Net cash used in operating activities                               (41,673)        (35,346)

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of fixed assets                                         (1,428)         (1,730)
    Net cash used by discontinued operations                             --          (6,520)
    Proceeds from sale of discontinued operations                        --         131,538
    Proceeds from sale of fixed asset                                    --           3,116
    Acquisitions, adjusted                                               --            (170)
                                                                  ----------      ----------
        Net cash (used in) provided by investing activities          (1,428)        126,234
                                                                  ----------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net borrowings on revolving line of credit                       43,750          21,250
    Repayments of long-term debt                                        (21)       (107,938)
    Deferred financing costs incurred                                  (628)         (4,200)
                                                                  ----------      ----------
        Net cash provided by (used in) financing activities          43,101         (90,888)
                                                                  ----------      ----------


NET CHANGE IN CASH                                                       --              --

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

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


Supplemental disclosure of cash flow information:
    Cash paid for interest                                        $   8,791       $   7,625
    Cash paid for income taxes                                    $      77       $      --

</TABLE>

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


                                               Page 5
<PAGE>

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


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

               Hines Horticulture, Inc. ("Hines" or the "Company"), a Delaware
         corporation, currently 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.

               As of December 31, 2001, the Company also had a growing media
         business. The growing media business was conducted through Sun Gro
         Horticulture, Inc. ("Sun Gro-U.S."), a wholly owned subsidiary of Hines
         Nurseries, Sun Gro-U.S.'s wholly owned subsidiary, Sun Gro Horticulture
         Canada Ltd. ("Sun Gro-Canada"), and Sun Gro-Canada's direct and
         indirect Canadian subsidiaries (collectively referred to as "Sun Gro").

               On March 27, 2002, the Company sold the assets of Sun Gro-U.S.
         and the stock of Sun Gro-Canada, its growing media business, to the Sun
         Gro Horticulture Income Fund, a newly established Canadian income fund.
         The assets sold included 14 facilities located across Canada and the
         United States and control of approximately 50,000 acres of peat bogs in
         Canada. Hines no longer harvests, produces or sells peat moss or has
         the rights to the Sunshine, Parkland Fairway, Black Gold, Lakeland
         Grower, Alberta Rose, Nature's and Gardener's Gold trade names. Hines
         received net proceeds of approximately $119,000 from the sale, which
         were used to pay down outstanding bank debt. The Company recognized a
         $5,562 loss, net of tax, from the sale of its growing media business
         for the year ended December 31, 2002. The Company's current operations
         consist solely of its green goods business.

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


                                     Page 6
<PAGE>

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 April 11, 2003 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.

3.       Earnings Per Share:
         -------------------

               Earnings per share are calculated in accordance with 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, 2003, 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, 2003, shares related to the underlying
         employee stock options in the amount of 1,059,902 were excluded from
         the computation of diluted earnings per share because they would have
         been anti-dilutive.

4.       Adoption Of Accounting Pronouncements:
         --------------------------------------

               In August 2001, the Financial Accounting Standards Board ("FASB")
         issued Statement of Financial Accounting Standard ("SFAS") No. 143
         "Accounting for Asset Retirement Obligations" ("SFAS No. 143"). SFAS
         No. 143 addresses financial accounting and reporting for obligations
         associated with the retirement of tangible long-lived assets and the
         associated asset retirement costs. It would be effective for the
         Company beginning with its 2003 financial statements. The adoption of
         SFAS No. 143 on January 1, 2003 did not have an impact on our financial
         position and results of operations.

               In April 2002, the FASB issued SFAS No. 145 "Rescission of FASB
         Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and
         Technical Corrections" ("SFAS No. 145"). SFAS No. 145 addresses
         financial accounting and reporting for the extinguishments of debt,
         leases and intangible assets of motor carriers. The Company adopted
         SFAS No. 145 on January 1, 2003 and reclassified the loss on debt
         extinguishment previously reported as an extraordinary item as of March
         31, 2002 of $1,026, net of tax, to operations.

                                     Page 7
<PAGE>

               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. The adoption of SFAS No. 146 on
         January 1, 2003 did not have an impact on our financial position and
         results of operations.

               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 account 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. 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,
                                                2003           2002
                                              ---------      ---------
         Net loss, as reported                $ (1,322)      $(61,133)
         Stock option expense                       (8)          (279)
                                              ---------      ---------
         Pro forma net loss                   $ (1,330)      $(61,412)
                                              =========      =========

         Loss per share:

         Basic and diluted - as reported      $  (0.06)      $  (2.77)
                                              =========      =========

         Basic and diluted - pro forma        $  (0.06)      $  (2.78)
                                              =========      =========

5.       Inventories:
         ------------

         Inventories consisted of the following:

                                              March 31,     December 31,
                                                2003           2002
                                              ---------      ---------

         Nursery stock                        $184,835       $161,007
         Material and supplies                  10,171          8,974
                                              ---------      ---------
                                              $195,006       $169,981
                                              =========      =========

                                     Page 8
<PAGE>

6.       Comprehensive Income:
         ---------------------

               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 change in valuation of derivative instruments. The components of
         comprehensive income during the three months ended March 31, 2003 and
         2002, were as follows:

                                              Three Months Ended
                                                   March 31,
                                             2003            2002
                                             ----            ----
                                                          (Restated)


         Net loss                          $ (1,322)      $(61,133)
         Income on derivatives
             reclassified to earnings           140            140
                                           ---------      ---------
         Comprehensive loss                $ (1,182)      $(60,993)
                                           =========      =========


7.       New Accounting Pronouncements:
         ------------------------------

               In March 2003, the FASB issued SFAS No. 149, "Accounting for
         Certain Financial Instruments with Characteristics of Liabilities and
         Equity" ("SFAS No. 149"). This statement establishes standards for
         classification of certain financial instruments that have
         characteristics of both liabilities and equity in the statement of
         financial position. This statement will be effective upon issuance for
         all contracts created or modified after the date the statement is
         issued and otherwise effective at the beginning of the first interim
         period beginning after June 15, 2003. Management does not expect the
         adoption of SFAS No. 149 to have a material impact on its financial
         condition or results of operations.


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

         CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
         PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

               This report contains forward-looking statements. Hines
         Horticulture, Inc. desires to take advantage of the safe harbor
         provisions of the Private Securities Litigation Reform Act of 1995 and
         is including this statement for the express purpose of availing itself
         of the protections of the safe harbor with respect to all
         forward-looking statements. Several important factors, in addition to
         the specific factors discussed in connection with such forward-looking
         statements individually, could affect the future results of Hines
         Horticulture, Inc. and could cause those results to differ materially
         from those expressed in the forward-looking statements contained
         herein.

                                     Page 9
<PAGE>

                   Hines Horticulture, Inc.'s estimated or anticipated future
         results, products and service performance or other non-historical facts
         are forward-looking and reflect Management's current perspective of
         existing trends and information. These statements involve risks and
         uncertainties that cannot be predicted or quantified and, consequently,
         actual results may differ materially from those expressed or implied by
         such forward-looking statements. Such risks and uncertainties include,
         among others, the continued ability of Hines Horticulture, Inc. to
         access water, the impact of growing conditions, risks associated with
         customer concentration, adverse weather conditions, seasonality,
         government regulations, loss of key employees, general economic
         conditions, future acquisitions and the ability to integrate such
         acquisitions in a timely and cost effective manner, the ability to
         manage growth, the impact of competition, the ability to obtain future
         financing or to satisfy payment obligations under existing financing,
         limitations of Hines Horticulture, Inc.'s substantial leverage and debt
         restrictions and other risks and uncertainties described from time to
         time in Hines Horticulture, Inc.'s Securities and Exchange Commission
         filings.

                    Therefore, Hines Horticulture, Inc. wishes to caution each
         reader of this report to consider carefully these factors as well as
         the specific factors discussed with each forward-looking statement in
         this report and disclosed in its filings with the Securities and
         Exchange Commission as such factors, in some cases, have affected, and
         in the future (together with other factors) could affect, the ability
         of Hines Horticulture, Inc. to implement its business strategy and may
         cause actual results to differ materially from those contemplated by
         the statements expressed herein.

         SALE OF SUN GRO BUSINESS

               On March 27, 2002, the Company completed the sale of its growing
         media business to Sun Gro Horticulture Income Fund (the "Fund"), a
         newly established Canadian income fund. The assets sold included 14
         facilities located across Canada and the United States and control of
         approximately 50,000 acres of peat bogs in Canada. Hines received net
         proceeds of approximately $119 million from the sale, which were used
         to pay down outstanding bank debt. The Company recognized a $5.6
         million loss, net of tax, from the sale of its growing media business
         for the year ended December 31, 2002. The Company's current operations
         consist solely of its green goods business.

                    The growing media business was sold pursuant to an
         Acquisition Agreement, dated as of March 18, 2002, by and among Hines,
         the Fund and other related parties which contained customary
         representations, warranties and indemnification obligations of Hines,
         including indemnification for tax related matters associated with
         transfer pricing issues and the reorganization of the growing media
         business prior to the sale to the Fund. In connection with the sale,


                                    Page 10
<PAGE>

         Hines entered into an Underwriting Agreement, dated as of March 18,
         2002, among Hines, the Fund and other related parties, pursuant to
         which the Units of the Fund were offered. The Underwriting Agreement
         contains customary representations, warranties and indemnification
         obligations of Hines. Hines also entered into a supply agreement with a
         subsidiary of the Fund to purchase peat moss and other growing media
         products to be used in the Company's green goods business.

                    In connection with the sale of the growing media business to
         the Sun Gro Horticulture Income Fund, the Canadian Customs & Revenue
         Authority ("CCRA") required that approximately $13.1 million Canadian
         (US$8.2 million) of the gross proceeds from the transaction be withheld
         in an escrow account pending the determination of whether certain
         aspects of the sale were taxable for Canadian purposes. The amount
         withheld was not included in the measurement of the gain on the sale of
         Sun Gro for financial statement purposes. The Company firmly believes
         that the transaction is exempt from tax for Canadian purposes, but
         after more than seven months of discussions with the CCRA, progress on
         this matter was not satisfactory to the Company. Accordingly, the
         Company decided that the best course of action was to file a tax
         return, submit the required tax payment, and make a claim for refund on
         the basis that the transaction is exempt from tax for Canadian
         purposes. On November 7, 2002, the Company submitted a tax payment of
         $8.2 million Canadian (US$5.1 million) to the CCRA. The balance of the
         escrow funds of $4.9 million Canadian (US$3.1 million) was then
         remitted to the Company. The receipt of the $4.9 million Canadian
         (US$3.1 million) was recorded in the fourth quarter of 2002 as an
         adjustment to the loss on the sale of Sun Gro. The Company will
         continue to actively pursue a refund of the $8.2 million Canadian
         (US$5.1 million) through all the appropriate administrative and/or
         judicial channels.

                    The Company's Consolidated Financial Statements included in
         this Quarterly Report on Form 10-Q reflect the financial position,
         results of operations and cash flows of the Sun Gro business as
         "discontinued operations." In accordance with SFAS No. 144, the
         Company's Consolidated Financial Statements have been restated to
         reflect the financial position, results of operations and cash flows of
         the Sun Gro business as "discontinued operations."


         OVERVIEW

               GENERAL. Hines is one of the largest commercial green goods
         operations in North America, producing one of the broadest assortments
         of container-grown plants in the industry. The Company sells its green
         goods products primarily to the retail segment, which includes premium
         independent garden centers, as well as leading home centers and mass
         merchandisers, such as Home Depot, Lowe's, Wal-Mart and Target.

               SEASONALITY. The Company's green goods business, like that of its
         competitors, is highly seasonal. The Company has experienced, and
         expects to continue to experience, significant variability in net
         sales, operating income and net income on a quarterly basis.

                                    Page 11
<PAGE>

               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. If the Company's ability to use the cash method of accounting
         for federal income tax purposes was limited or eliminated, the
         Company's cash income tax payments could increase significantly.

               As a result of the Company's ability to deduct its growing costs
         under the farming exception, the Company has historically not been
         required to pay cash income taxes and has generated net operating
         losses for federal income tax purposes. At December 31, 2001, the
         Company had approximately $49.2 million in net operating loss ("NOL")
         carryforwards for federal income tax purposes.

               As a result of the sale of the Sun Gro business, the Company
         estimates that it will utilize approximately $37.9 million of these net
         operating loss carryforwards for 2002 federal income tax purposes.
         Because of this NOL utilization and the Company's projections of future
         earnings, the Company anticipates it will begin paying cash income
         taxes for federal purposes in 2005. The Company is currently paying
         cash income taxes for state income tax purposes in certain states due
         to the differing rules regarding the carryforward of net operating
         losses.

               At March 31, 2003, the Company has a current liability for
         deferred income taxes of $63.1 million. Because the majority of the
         items to which this liability relates are comprised of current assets
         and current liabilities in the balance sheet (such as inventory,
         accounts receivable, accounts payable, etc.), this deferred tax item is
         also characterized as current. The classification of this liability as
         a current item does not mean that it will be paid within the next year.

         RECENT DEVELOPMENTS

               On February 3, 2003, the Board of Directors accepted the
         resignation of Stephen P. Thigpen as Chairman and C.E.O. and appointed
         Douglas D. Allen as Chairman and Robert A. Ferguson as Chief Operating
         Officer. Pursuant to his employment agreement with the Company, dated
         as of August 3, 1995, the Company made a lump sum cash payment to Mr.
         Thigpen of two times his annual base salary totaling $1.0 million which
         was recorded as compensation expense in the three months ended March
         31, 2003.

         CRITICAL ACCOUNTING POLICIES

               The preparation of financial statements in conformity with
         accounting principles generally accepted in the United States of
         America requires Management to make estimates and assumptions that
         affect the reported amounts of assets and liabilities 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.
         Management believes that the following areas represent its most
         critical accounting policies related to actual results that may vary
         from those estimates.

                                    Page 12
<PAGE>

               REVENUE RECOGNITION: Hines records 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. The Company records 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. 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, the
         Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets"
         ("SFAS No. 142"). In accordance with this standard, goodwill has been
         classified as indefinite-lived assets no longer subject to
         amortization. Indefinite-lived assets were 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, the Company must determine if the carrying amount of equity
         exceeds the fair value based upon the quoted market price of the
         Company's common stock. If the Company determines that goodwill may be
         impaired, the Company compares the "implied fair value" of the
         goodwill, as defined by SFAS No. 142, to its carrying amount to
         determine the impairment loss, if any. The initial impairment analysis
         was completed in the fourth quarter of 2002. The Company recorded a
         one-time, non-cash charge of $55.1 million, net of tax, to reduce the
         carrying value of its goodwill. The Company recognized this impairment
         charge as a cumulative effect of change in accounting principle.

               ACCRUED LIABILITIES: The accrued liabilities include amounts
         accrued for expected claims costs relating to the Company's insurance
         programs for workers' compensation and auto liability. The Company has
         large deductibles for these lines of insurance, which means it must pay
         the portion of each claim that falls below the deductible amount. The
         Company's expected claims costs are based on an actuarial analysis that


                                    Page 13
<PAGE>

         considers the Company's current payroll and automobile profile, recent
         claims history, insurance industry loss development factors and the
         deductible amounts. The Company accrues its 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
         the Company's insurance programs for workers' compensation and auto
         liability are maintained at levels believed by Management to adequately
         reflect the Company's probable claims obligations.

         RESULTS OF OPERATIONS

         THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS
         ENDED MARCH 31, 2002

               NET SALES. Net sales of $58.5 million for the three months ended
         March 31, 2003 decreased $10.2 million, or 14.8%, from net sales of
         $68.7 million for the comparable period in 2002. This decrease was due
         to the soft retail environment and a shift in the seasonal stocking
         patterns of the retail garden centers into April. These seasonal
         stocking patterns were significantly affected by Easter occurring in
         late April in 2003 versus late March last year and by cold, wet weather
         that persisted through the end of March in the Northeast and Midwest.
         This was somewhat offset by strong sales in the South resulting from
         favorable weather and newly established store service programs that
         generated increased volume in the Atlanta and Memphis markets. In
         addition, the Company's first quarter sales to Kmart were down by
         approximately $1.0 million from the first quarter of 2002.

               GROSS PROFIT. Gross profit of $30.7 million for the three months
         ended March 31, 2003 decreased $3.7 million, or 10.8%, from gross
         profit of $34.4 million for the comparable period in 2002 due to lower
         sales as discussed above. As a percentage of net sales, gross profits
         for the first quarter increased to 52.4% compared to 50.1% in 2002.
         This increase was primarily attributable to an increase in unit selling
         price and better inventory management through the Company's store
         service programs. The increase in unit selling price was mainly product
         mix related but also reflected a modest price increase with key
         customers.

               SELLING AND DISTRIBUTION EXPENSES. Selling and distribution
         expenses of $19.0 million for the three months ended March 31, 2003
         decreased $1.7 million, or 8.2%, from $20.7 million for the comparable
         period in 2002 due to lower sales as discussed above. As a percentage
         of sales, selling and distribution expenses increased to 32.5% compared
         to 30.1 % in 2002. This increase is mainly due to higher fuel costs and
         the impact of lower sales on the ratio of fixed costs to sales.

               GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
         expenses of $5.6 million for the three months ended March 31, 2003
         increased $0.1 million, or 1.8%, from $5.5 million for the comparable
         period in 2002. The modest increase was due primarily to efforts by the
         Company to control costs, improve efficiencies and consolidate many of
         its operational activities.

                                    Page 14
<PAGE>

               OTHER (EXPENSE) INCOME. Other operating expense of $1.2 million
         for the three months ended March 31, 2003 represents severance costs
         associated with both the resignation of the Company's former Chief
         Executive Officer in February of 2003 and the elimination of certain
         administrative positions. Other operating income of $2.1 million for
         the three months ended March 31, 2002 primarily represents the net gain
         from the sale in the first quarter of 2002 of land in Hillsboro,
         Oregon.

               OPERATING INCOME. Operating income of $4.8 million for the three
         months ended March 31, 2003 decreased by $5.5 million, or 53.4%, from
         the $10.3 million for the comparable period in 2002. This decrease was
         mainly due to the decrease in other operating income and lower sales as
         discussed above.

               OTHER EXPENSES. Other expenses of $7.0 million for the three
         months ended March 31, 2003 decreased $1.6 million, or 18.6%, from $8.6
         million for the comparable period in 2002. The decrease was mainly
         attributable to a $1.7 million loss on the extinguishment of debt that
         was included in other expenses in 2002. Lower interest expense during
         the first quarter was offset by the impact of the mark-to-market
         adjustment on the Company's interest rate swap. Last year's financing
         costs included $1.0 million of income relating to the mark-to-market
         adjustment compared with only $0.3 million in 2003.

                  INCOME TAX PROVISION. The Company's effective income tax rate
         was 41% for both the three months ended March 31, 2003 and 2002.

               (LOSS) INCOME FROM CONTINUING OPERATIONS. The loss from
         continuing operations of $1.3 million for the three months ended March
         31, 2003 declined by $2.3 million from income of $1.0 million for the
         comparable period in 2002 due primarily to lower operating income as
         discussed above.

               NET (LOSS). The net loss of $1.3 million for the three months
         ended March 31, 2003 improved from $61.1 million in the comparable
         period in 2002. This improvement was mainly due certain charges that
         impacted the first quarter of 2002, including a $55.1 million charge
         stemming from the adoption of SFAS NO. 142, a $7.0 million loss from
         discontinued operations, and a $1.7 million charge relating to the
         early extinguishment of debt.

         LIQUIDITY AND CAPITAL RESOURCES

                  The Company's primary sources of liquidity are funds generated
         by operations and borrowings under its Amended Senior Credit Facility,
         which matures on December 31, 2004. 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. 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 the Company
         ships inventory and collects accounts receivable. The Company
         historically borrows under its revolving credit facilities to fund peak
         working capital needs.

                                    Page 15
<PAGE>

               Net cash used in operating activities was $41.7 million for the
         three months ended March 31, 2003 compared to $35.3 million for the
         comparable period in 2002 mainly due to lower sales and an increase in
         working capital. The increase in working capital was mainly due to
         higher inventory resulting from the lower sales and a smaller increase
         in accounts payable and accrued liabilities compared to the same period
         in 2002. This was partially offset by an improvement in Days Sales
         Outstanding and a reduction in customer credits compared to the same
         period in 2002.

                  Net cash used in investing activities was $1.4 million for the
         three months ended March 31, 2003 compared to a net cash provided by
         investing activities of $126.3 million for the comparable period in
         2002. The decrease was due mainly to the impact of non-recurring events
         during the first quarter of 2002, including the proceeds received from
         the sale of the Sun Gro business and the sale of the Oregon property.

               The Company's capital expenditures were $1.4 million for the
         three months ended March 31, 2003 compared to capital expenditures of
         $1.7 million for the comparable period in 2002. The capital
         expenditures for 2003 primarily included the purchase of nursery
         related machinery and equipment. The Company's capital expenditures for
         2003 are expected to be approximately $7.0 million.

                  Net cash provided by financing activities was $43.1 million
         for the three months ended March 31, 2003 compared to a net use of cash
         of $90.9 million for the comparable period in 2002. The improvement was
         primarily related to the impact of certain events on the first quarter
         of 2002, including the use of the proceeds from the sale of the Sun Gro
         business and the sale of the Oregon property to pay down outstanding
         bank debt as described below and to pay financing costs of $4.2
         million.

                  The Company typically draws under its revolving credit
         facilities in the first and fourth quarters to fund its seasonal
         inventory buildup of green goods products and seasonal operating
         expenses. Approximately 75% of the Company's sales 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.
         On May 6, 2003, the Company had unused borrowing capacity of $24.5
         million under its $115.0 million working capital revolver facility and
         had no unused borrowing capacity under its $30.0 million seasonal
         revolver facility that can only be utilized between February 1 and June
         15.

               On March 27, 2002, the Company completed the sale of its Sun Gro
         business and received net proceeds of approximately $119.0 million. In
         addition, the Company completed the sale of 22.5 acres of land located
         in Hillsboro, Oregon in March 2002, and received net proceeds of
         approximately $2.9 million. The Company used $108.0 million of the
         aggregate proceeds from the sale of the Sun Gro business and the sale
         of the Oregon land to reduce long-term debt with the remaining amount
         of $14.0 million used to reduce the amount outstanding under its
         working capital revolver.

                                    Page 16
<PAGE>

               Effective March 18, 2003, the Company obtained a fourth amendment
         to its Amended Senior Credit Facility to (i) allow the Company to add
         back to EBITDA for 2002 and 2003 specific charges related to certain
         one-time events for purposes of its financial covenants that establish
         minimum EBITDA levels, minimum interest coverage ratios and maximum
         leverage ratios, and (ii) allow the Company to add-back to EBITDA fees
         and expenses associated with the fourth amendment. In consideration for
         approving the amendment, all consenting lenders were paid a fee of 25
         basis points on outstanding loan commitments, which equated to
         approximately $0.6 million.

               At March 31, 2003, the Company's Amended Senior Credit Facility
         was comprised of a $115.0 million working capital revolver, a $30.0
         million seasonal revolving loan commitment, which can only be utilized
         for the period between February 1 and June 15, a New Term Loan in the
         amount of $51.3 million and a Tranche B Term Loan in the amount of
         $51.1 million. Borrowings under the Amended Senior Credit Facility are
         collateralized by substantially all the Company's assets. The Amended
         Senior Credit Facility places various restrictions on the Company,
         including, but not limited to, limitations on the Company's ability to
         incur additional debt, limitations on capital expenditures and
         limitations on dividends the Company can pay to shareholders. The
         Amended Senior Credit Facility requires the Company to meet specific
         covenants and financial ratios. At the Company's option, the interest
         rate on the loans under the Amended Senior Credit Facility may be base
         rate loans, which is the higher of the prime rate or the rate which is
         1/2 of 1.00% in excess of the federal funds effective rate, or
         Eurodollar rate loans.

                  The Company's net debt position (short-term and long-term
         debt) at March 31, 2003 was $299.1 million compared to net debt of
         $303.2 million at March 31, 2002.

               Base rate loans under the working capital revolving loan and the
         New Term Loan bear interest at the base rate plus an additional amount
         which ranges from 1.00% to 3.00%, depending on the Company's
         consolidated leverage ratio. Base rate loans under the seasonal working
         capital revolver bear interest at the base rate plus 2.25% and under
         the Tranche B Term Loan at the base rate plus an additional amount
         between 2.75% and 3.00%, depending on the Company's consolidated
         leverage ratio. Currently, the applicable margin for base rate loans is
         (i) 3.00% for working capital revolving loans, (ii) 3.00% for the New
         Term Loan and (iii) 3.00% for the Tranche B Term Loan.

               Eurodollar rate loans under the working capital revolving loan
         and the New Term Loan bear interest at the Eurodollar rate plus an
         additional amount that ranges from 2.00% to 4.00%, depending on the
         Company's consolidated leverage ratio. Eurodollar rate loans under the
         seasonal working capital revolver bear interest at the Eurodollar rate
         plus 3.25% and under the Tranche B Term Loan at the Eurodollar rate
         plus an additional amount between 3.75% and 4.00%, depending on the
         Company's consolidated leverage ratio. Currently, the applicable margin
         for Eurodollar rate loans is (i) 4.00% for working capital revolving
         loans, (ii) 4.00% for the New Term Loan and (iii) 4.00% for the Tranche
         B Term Loan.

                                    Page 17
<PAGE>

               Under the Company's Amended Senior Credit Facility, the New Term
         Loan, the Tranche B Term Loan and the $115.0 million working capital
         revolver mature on December 31, 2004. Principal repayments due under
         the Company's Amended Senior Credit Facility for the term loans total
         $17.5 million in 2003 and $84.9 million in 2004. The expiration of the
         Company's $30.0 million seasonal working capital facility has been
         extended to June 15, 2004.

               Madison Dearborn Capital Partners, L.P. ("MDCP"), the Company's
         principal shareholder, provided a guarantee for the extension of the
         $30.0 million seasonal revolving loan commitment effective February 1,
         2002. On November 28, 2000, in exchange for MDCP's original guaranty of
         the Company's seasonal revolver, the Company issued a warrant to MDCP
         to purchase 440,000 shares of common stock at an exercise price of
         $3.50 per share valued at $0.84 million. The warrant is exercisable at
         any time prior to December 31, 2005. If MDCP is required to make any
         payment with respect to its guarantee on the seasonal revolving loan
         commitment, the Company would be required to issue to MDCP an
         additional warrant to purchase a number of shares of the Company's
         common stock equal to the amount of such payment divided by the
         then-current market price of the Company's common stock.

               In addition, Hines Nurseries (the issuer of the notes and our
         wholly owned subsidiary) has outstanding $78.0 million of Senior
         Subordinated Notes (the "Notes") due October of 2005. The Company has
         fully and unconditionally guaranteed the issuer's obligations under the
         Notes and the Notes are redeemable, in whole or in part, at the option
         of the Company, on or after October 15, 2000 at a redemption price of
         106.00% of the principal amount thereof plus accrued interest, if any,
         to the date of redemption. The Notes contain an embedded derivative in
         the form of a put option whereby the holder has the right to put the
         instrument back to the Company at 105% if a change in control of the
         Company should occur. The Company does not anticipate that the
         derivative will have significant value because no change of control is
         currently contemplated.

               The Notes currently bear interest at 12.75% per annum, and the
         indenture pursuant to which the Notes were issued imposes a number of
         restrictions on our operating subsidiaries, including their ability to
         incur additional indebtedness, to make certain restricted payments
         (including dividends to the Company), to make certain asset
         dispositions, to incur additional liens and to enter into significant
         transactions. A breach of a material term of the indenture for the
         Notes or other material indebtedness that results in the acceleration
         of the indebtedness under the Notes also constitutes an event of
         default under the Amended Senior Credit Facility. In addition, the
         Company is obligated to pay a premium at maturity equal to 5.00% of the
         principal amount of the Notes to be repaid. The Company is accreting
         this premium over the term of the maturity of the Notes as additional
         interest expense. At March 31, 2003, the amount of the premium was $2.0
         million and, based on the $78.0 million of Notes outstanding, is
         expected to be $3.9 million upon maturity.

                  At March 31, 2003, the Company had the following contractual
         obligations (payments due by period, in millions):

                                    Page 18
<PAGE>
<TABLE>
<CAPTION>

                                                     Payments Due by Period
                                          ------------------------------------------
Contractual Cash Obligations     Total    Less than                          After
                                            1 year    1-3 years  4-5 years  5 years
------------------------------------------------------------------------------------
<S>                            <C>         <C>        <C>         <C>       <C>
Tranche B Term Loan            $   51.1    $    --    $   51.1    $   --    $   --
New Term Loan                      51.3       17.5        33.8                  --
Senior Subordinated Notes          81.9         --        81.9        --        --
Other obligations                   0.2        0.1         0.1                  --
Operating Leases                   20.3        4.4         8.9       0.7       6.3
                               ---------   --------   ---------   -------   -------
Total                          $  204.8    $  22.0    $  175.8    $  0.7    $  6.3
                               =========   ========   =========   =======   =======
</TABLE>

               Hines does not have any off balance sheet financing or any
         financial arrangements with any related parties, other than operating
         leases.

               In our opinion, cash generated by operations and from borrowings
         available under the Amended Senior Credit Facility will be sufficient
         to meet the Company's anticipated working capital, capital expenditures
         and debt service requirements through 2003. A total of $17.5 million
         will become due under the Senior Credit Facility during 2003.

               The Senior Credit Facility requires the Company to maintain
         compliance with various financial covenants. Failure to comply with any
         of the covenants of the Senior Credit Facility during 2003 would
         require the Company to seek waivers or an amendment to the Senior
         Credit Facility. In the past, the Company has been successful in
         obtaining waivers and in negotiating amendments to its bank agreements,
         including the amendment to the Senior Credit Facility, effective March
         18, 2003. The Company was in compliance with these amended covenants
         during the first quarter of 2003 and, based upon Management's 2003
         operating plan, expects to remain in compliance with these amended
         covenants during 2003. Actual results of operations will depend on
         numerous factors, many of which are beyond our control. As a result, we
         cannot ensure that the Company will comply with its financial covenants
         during the remainder of 2003. If the Company fails to comply in the
         future with the amended covenants in its Senior Credit Facility, the
         Company currently believes that, based on its prior experience with
         lenders, it may be able to seek a waiver of such non-compliance or
         otherwise amend the covenants in a manner so as to cure the
         non-compliance. In the event the Company should fail to comply with one
         of the covenants and is unable to either obtain a waiver or
         successfully negotiate an amendment to the Senior Credit Facility, then
         the Company would be in default under the Senior Credit Facility.

               A total of $84.9 million will become due under the Senior Credit
         Facility during 2004. At this time, the Company is in the process of
         considering alternatives for refinancing this debt, including
         refinancing with existing financial institutions or others, or
         extending the debt's maturity. There can be no assurance that
         Management will be successful in refinancing this debt or extending its
         maturity.

         FORWARD LOOKING STATEMENTS AND RISK FACTORS

               We have made, and will make, "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 in our Annual Report, Forms
         10-K and 10-Q and in other contexts relating to our future prospects,


                                    Page 19
<PAGE>

         our operations and our strategies. Forward-looking statements include,
         but are not limited to, information regarding our future economic
         performance and financial condition, the plans and objectives of our
         Management and our assumptions regarding our performance and these
         plans and objectives.

               The forward-looking statements that we make in our Annual Report,
         Forms 10-K and 10-Q and in other contexts represent challenging goals
         for our Company, and the achievement of these goals and our operations
         are subject to a variety of risks and assumptions and numerous factors
         beyond our control. Important factors that could cause actual results
         to differ materially from the forward-looking statements we make are
         described below. The following risk factors should not be considered a
         definitive list of all risks associated with our operations and should
         be read in conjunction with the risks and uncertainties contained in
         our other filings with the Securities and Exchange Commission.

         WEATHER; GENERAL AGRICULTURAL RISKS

               Adverse weather or production difficulties occurring at a time of
         peak production or sales (in the first half of the calendar year),
         particularly on weekends during the peak gardening season, could cause
         declines in net sales and operating income that could have a material
         adverse effect on the Company. The Company's operations may also be
         adversely affected by disease, freezing conditions, snow, drought or
         other inclement weather. There can be no assurance that future weather
         conditions will not have a material adverse effect on the Company.
         Agricultural production is highly dependent upon the availability of
         water. The Company's facilities receive their water from a variety of
         sources, including on-site wells, reservoirs and holding ponds,
         municipal water districts and irrigation water supplied to local
         districts by facilities owned and operated by the United States acting
         through the Department of Interior Bureau of Reclamation. The loss or
         reduction of access to water at any of the Company's facilities could
         have a material adverse effect on the Company.

         IRVINE LAND LEASE

               The Company's 479-acre nursery facility and headquarters in
         Irvine, California is entirely on leased land. The lease on the
         majority of the acreage does not expire until December 31, 2010.
         However, the lessor of the Irvine land has the option to terminate the
         lease on two specific parcels at an earlier date. The lessor has
         exercised this option and has provided written notice to the Company
         that it must vacate a 115-acre parcel by September 1, 2003 and must
         vacate an additional 30-acre parcel by August 31, 2004. The Company is
         actively pursuing an extension of these exit timelines with the lessor
         in order to allow the Company adequate time to transition the product
         that is grown on this acreage to other facilities. However, there can
         be no assurance that the Company will be successful in obtaining these
         extensions. The failure of the Company to obtain these extensions could
         cause declines in net sales and operating income that could have a
         material adverse effect on the Company.

                                    Page 20
<PAGE>

         SUDDEN OAK DEATH

               Sudden Oak Death (SOD) is caused by a fungus-like pathogen
         recently identified by University of California scientists and named
         PHYTOPHTHORA RAMORUM. Since its appearance in 1995, SOD has killed tens
         of thousands of coast live oak, black oak, tan oak and Shreve oak in
         Northern California. It can also infect leaves and branches of
         rhododendron, buckeye, madrone, manzanita, bigleaf maple, bay laurel
         and evergreen huckleberry. Most recently, both saplings of Redwood and
         Douglas Fir trees have been found to be susceptible. To date, SOD has
         been identified in 12 California counties and has been confirmed in a
         small town in southwest Oregon.

               Restrictive regulation of soil media containing Redwood and/or
         Douglas Fir sawdust by the U.S. Department of Agriculture ("USDA") or
         California Department of Forest and Agriculture ("CDFA") could cause
         declines in net sales and operating income that could have a material
         adverse effect on the Company given that our California nursery
         operations utilize soil media containing Redwood and/or Douglas Fir
         sawdust. At this point in time, it is not clear how the USDA/CDFA will
         regulate soil media. Currently, there is no scientific data that
         indicates that P. RAMORUM is present in sawdust, but Redwoods and
         Douglas Firs are on the host list as discussed above. We are currently
         undergoing studies growing plants in alternatives to Redwood and/or
         Douglas Fir sawdust. We are also working closely with local, state and
         federal researchers on an effective treatment for P. RAMORUM in a
         nursery operation. There is no clearly understood or accepted treatment
         for wide-scale infection of this disease at this time nor is it known
         how this disease is spread.

         SEASONALITY; VARIABILITY OF QUARTERLY RESULTS AND CERTAIN CHANGES

               The Company's business, like that of its competitors, is highly
         seasonal. In 2002, approximately 75% of net sales and approximately
         109% of operating profits occurred in the first half of the year, with
         approximately 54% of net sales and approximately 87% of operating
         profits occurring in the second quarter of 2002. The Company has
         experienced, and expects to continue to experience, significant
         variability in net sales, operating income and net income on a
         quarterly basis. The principal factor contributing to this variability
         is weather, particularly on weekends during the peak gardening season,
         which could cause declines in net sales and operating income that could
         have a material adverse effect on the Company.

         Other factors that may contribute to this variability include:

         -        weather conditions during peak growing and gardening seasons;
         -        shifts in demand for live plant products;
         -        changes in product mix, service levels and pricing by the
                  Company and its competitors;
         -        the effect of acquisitions;
         -        the economic stability of the retail customers; and
         -        the Company's relationship with each of its retail customers.

                                    Page 21
<PAGE>

         CUSTOMER CONCENTRATION; DEPENDENCE ON HOME DEPOT

               Our top 10 customers together accounted for approximately 78% of
         our fiscal year 2002 net sales. Our largest customer, Home Depot,
         accounted for approximately 47% of our fiscal year 2002 net sales.
         These customers hold significant positions in the retail lawn and
         garden market. Management expects that a small number of customers will
         continue to account for a substantial portion of the Company's net
         sales for the foreseeable future. The Company does not have long-term
         contracts with any of its retail customers, and there can be no
         assurance that they will continue to purchase its products.

               The loss of, or a significant adverse change in, the Company's
         relationship with Home Depot or any other major customer could have a
         material adverse effect on the Company. The loss of, or a reduction in
         orders from, any significant retail customers, losses arising from
         retail customers' disputes regarding shipments, fees, merchandise
         condition or related matters, or the Company's inability to collect
         accounts receivable from any major retail customer could have a
         material adverse effect on the Company. In addition, there can be no
         assurance that revenue from customers that have accounted for
         significant revenue in past periods, individually or as a group, will
         continue, or if continued, will reach or exceed historical levels in
         any period.

         KMART BANKRUPTCY

               Kmart, one of our top customers, filed for bankruptcy relief
         under Chapter 11 of the bankruptcy code on January 22, 2002. On May 6,
         2003 Kmart emerged from bankruptcy. During this time we have continued
         to ship products to Kmart. However, if Kmart substantially alters its
         sales of lawn and garden products, the loss of, or reduction in, orders
         or the Company's inability to collect accounts receivables from Kmart,
         could have a material adverse effect on the Company, its business and
         operations. During the year ended December 31, 2002, the Company's net
         sales to Kmart were approximately $8.0 million, a decrease of $9.0
         million from the comparable period in 2001. During the three months
         ended March 31, 2003 the Company's net sales to Kmart were
         approximately $1.3 million, a decrease of $1.0 million from the
         comparable period in 2002. The Company believes that it will likely
         further reduce sales to Kmart for the remainder of fiscal 2003.

         SUBSTANTIAL LEVERAGE

               We had debt outstanding in the principal amount of $299.1 million
         as of March 31, 2003. Our substantial indebtedness could have important
         consequences for you. For example, it could:

         -        make it more difficult for us to satisfy our obligations;
         -        increase our vulnerability to general adverse economic and
                  industry conditions;
         -        require us to dedicate a substantial portion of cash flows
                  from operations to payments on our indebtedness, which would
                  reduce cash flows available to fund working capital, capital
                  expenditures and other general corporate requirements;
         -        limit our flexibility in planning for, or reacting to, changes
                  in our business and the industry in which we operate;
         -        place us at a competitive disadvantage compared to our
                  competitors that have less debt;
         -        limit our ability to borrow additional funds; and
         -        expose us to risks inherent in interest rate fluctuations
                  because some of our borrowings are at variable rates of
                  interest, which could result in higher interest expense in the
                  event of increases in interest rates.

                                    Page 22
<PAGE>

               Our ability to make payments on and to refinance our indebtedness
         and to fund planned capital expenditures will depend on our ability to
         generate cash in the future. To some extent, this is subject to general
         economic, financial, competitive, legislative, regulatory and other
         factors that are beyond our control.

               We cannot assure that we will be able to refinance any of our
         indebtedness on commercially reasonable terms or at all.

         COVENANT RESTRICTIONS

               Our credit facility and the indenture governing our outstanding
         Notes contain restrictive covenants that require us to maintain
         specified financial ratios and satisfy other financial condition tests.
         Our ability to meet those financial ratios and tests can be affected by
         events beyond our control, and we cannot assure you that we will meet
         those tests. A breach of any of these covenants could result in a
         default under our credit facility and/or the Notes, and the lenders
         and/or noteholders could elect to declare all of our outstanding
         indebtedness to be immediately due and payable and terminate all
         commitments to extend further credit. We cannot be sure that our
         lenders or the noteholders would waive a default or that we could pay
         the indebtedness in full if it were accelerated.

         GOVERNMENTAL REGULATIONS; MINIMUM WAGE

               The Company is subject to certain federal, state and local
         health, safety and environmental laws and regulations regarding the
         production, storage and transportation of certain of its products and
         the disposal of its waste.

               Certain of the Company's operations and activities, such as water
         runoff from its production facilities and the use of certain
         pesticides, are subject to regulation by the United States
         Environmental Protection Agency and similar state and local agencies.
         These agencies may regulate or prohibit the use of such products,
         procedures or operations, thereby affecting the Company's operations
         and profitability. In addition, the Company must comply with a broad
         range of environmental laws and regulations. Additional or more
         stringent environmental laws and regulations may be enacted in the
         future and such changes could have a material adverse effect on the
         Company. The Company uses reclamation water as one of the sources of
         water for a few of its production facilities. Federal reclamation laws
         and regulations govern the use and pricing of reclamation water,
         including availability of subsidized water rates. Changes in the laws
         could have a material adverse effect on the Company.

               In addition, the Company is subject to the Fair Labor Standards
         Act as well as various federal, state and local regulations that govern
         matters such as minimum wage requirements, overtime and working
         conditions. A large number of the Company's seasonal employees are paid
         at, or slightly above, the applicable minimum wage level and,
         accordingly, changes in such laws and regulations could have a material
         adverse effect on the Company by increasing its costs.

         MADISON DEARBORN CAPITAL PARTNERS, L.P. OWNS APPROXIMATELY 54% OF
         THE OUTSTANDING COMMON SHARES OF HINES ON A FULLY DILUTED BASIS.

               MDCP owns approximately 54% of the outstanding common shares of
         Hines on a fully diluted basis and has sufficient voting power to
         control, or at the least significantly influence, the election of
         directors and the approval of other actions requiring the approval of
         our shareholders.

         COMPETITION

               The wholesale nursery industry is highly competitive. Competition
         in the nursery products segment of the lawn and garden industry is
         based principally on the breadth of product offering, consistent
         product quality and availability, customer service and price. The
         nursery products segment is highly fragmented. According to the 1997
         Census of Agriculture released by the USDA's National Agricultural
         Statistics Service, the nursery business is comprised of approximately

                                    Page 23
<PAGE>

         30,000 primarily small and regionally based growers, with the top 100
         growers accounting for approximately 22% of the industry volume.
         Management believes Hines Horticulture, Inc. is one of only two growers
         able to serve every major regional market in North America, the
         Company's only national competitor being Monrovia Nursery Company. In
         each of its markets, Hines competes with regional growers such as Color
         Spot Nurseries, Inc. in the West, Clinton Nurseries in the Northeast,
         Zelenka Nurseries in the Midwest, Wight Nurseries in the South and many
         other smaller regional and local growers. Hines' key competitive
         advantages are its ability to provide consistent, high quality products
         in large volumes, its nationwide distribution and its value-added
         services.

         DEPENDENCE ON MANAGEMENT

               The Company's success is largely dependent on the skills,
         experience and efforts of its senior management. The loss of services
         of one or more members of the Company's senior management could have a
         material adverse effect on the Company. The Company does not maintain
         key-man life insurance policies on any members of Management. No
         members of senior management are bound by non-compete agreements, and
         if any such members were to depart and subsequently compete with the
         Company, such competition could have a material adverse effect on the
         Company.

         ACCOUNTING PRONOUNCEMENTS ADOPTED

               In August 2001, FASB issued SFAS No. 143 "Accounting for Asset
         Retirement Obligations" ("SFAS No. 143"). SFAS No. 143 addresses
         financial accounting and reporting for obligations associated with the
         retirement of tangible long-lived assets and the associated asset
         retirement costs. It would be effective for the Company beginning with
         its 2003 financial statements. The adoption of SFAS No. 143 on January
         1, 2003 did not have an impact on our financial position and results of
         operations.

               In April 2002, the FASB issued SFAS No. 145 "Rescission of
         FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13
         and Technical Corrections" ("SFAS No. 145"). SFAS No. 145 addresses
         financial accounting and reporting for the extinguishments of debt,
         leases and intangible assets of motor carriers. The Company adopted
         SFAS No. 145 on January 1, 2003 and reclassified the loss on debt
         extinguishment previously reported as an extraordinary item as of March
         31, 2002 of $1,026, net of tax, to operations.

               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 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. The
         adoption of FAS 146 on January 1, 2003 did not have an impact on our
         financial position and results of operations.

               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 account for stock-based
         employee compensation and the effect of the method used on reported
         results. The annual disclosure requirements of SFAS No. 123 are
         effective for the Company as of December 31, 2002 and the interim
         disclosure requirements will be effective during its first quarter of
         fiscal year 2003. As permitted under both SFAS No. 123 and SFAS No.
         148, the Company continues to follow the intrinsic value method of
         accounting under Accounting Principles Board No. 25 "Accounting for
         Stock Issued to Employees." The Company has included the disclosure
         requirements of SFAS No. 148 in the notes to the accompanying
         Consolidated Financial Statements.

         NEW ACCOUNTING PRONOUNCEMENTS

               In March 2003, the FASB issued SFAS No. 149, "Accounting for
         Certain Financial Instruments with Characteristics of Liabilities and
         Equity" ("SFAS No. 149"). This statement establishes standards for
         classification of certain financial instruments that have
         characteristics of both liabilities and equity in the statement of
         financial position. This statement will be effective upon issuance for
         all contracts created or modified after the date the statement is
         issued and otherwise effective at the beginning of the first interim

                                    Page 24
<PAGE>

         period beginning after June 15, 2003. Management does not expect the
         adoption of SFAS No. 149 to have a material impact on its financial
         condition or results of operations.

         EFFECTS OF INFLATION

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


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

               As part of its ongoing business, the Company is exposed to
         certain market risks, including fluctuations in interest rates, foreign
         exchange rates, commodity prices and its common stock price. The
         Company does not enter into transactions designed to mitigate its
         market risks for trading or speculative purposes.

               We have various debt instruments outstanding at March 31, 2003
         that are impacted by changes in interest rates. As a means of managing
         our interest rate risk on these debt instruments, 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, the Company entered into an interest rate swap
         agreement to hedge $75.0 million of its loan facility. 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, with a maximum rate of 8%. The interest rate swap
         agreement matures in February 2005. The estimated fair value of the
         Company's obligation under the interest rate swap agreement was $8.2
         million at March 31, 2003.

               The Company also manages its interest rate risk by balancing the
         amount of its 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, 2003 the carrying amount and
         estimated fair value of the Company's long-term debt was $182.6 million
         and $184.5 million, respectively. Given the Company's balance of fixed
         rate and variable rate debt, we estimate a change in interest costs of
         approximately $1.0 million for every one-percentage point change in
         applicable interest rates.

                                    Page 25
<PAGE>

ITEM 4.  CONTROLS AND PROCEDURES

               Within the 90 days prior to the date of this report, the Company
         carried out an evaluation, under the supervision and with the
         participation of the Company's Management, including the Company's
         principal executive officer and principal financial officer, of the
         effectiveness of the design and operation of the Company's disclosure
         controls and procedures, as defined in Exchange Act Rule 15d-14(c).
         Based upon that evaluation, the Company's principal executive officer
         and principal financial officer concluded that the Company's disclosure
         controls and procedures are effective in enabling the Company to
         record, process, summarize and report information required to be
         included in the Company's periodic SEC filings within the required time
         period. There have been no significant changes in the Company's
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date the Company carried out its
         evaluation and no corrective action with regard to significant
         deficiencies or material weaknesses were undertaken.


PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

               (a) Exhibits

               Exhibit 99.1    Certification of Chief Operating Officer Pursuant
                        To 18 U.S.C. Section 1350, As Adopted Pursuant To
                        Section 906 Of The Sarbanes-Oxley Act of 2002.*

               Exhibit 99.2    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.*

* Pursuant to Commission Release No. 33-8212, this certification will be treated
as "accompanying" this Quarterly Report on Form 10-Q/A and not "filed" as part
of such report for purposes of Section 18 of the Exchange Act, or otherwise
subject to the liability of Section 18 of the Exchange Act 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 Exchange Act, except to the
extent that the registrant specifically incorporates it by reference.

               (b) Reports on Form 8-K

               The Company filed the following reports on Form 8-K during the
               quarter ended March 31, 2003.

               1.       Current report on Form 8-K dated February 7, 2003
                        (the date of the earliest event reported), filed on
                        February 12, 2003, for the purpose of reporting under
                        Item 5, the resignation of Stephen P. Thigpen as
                        Chairman of the Board and Chief Executive Officer.

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

                                    Page 26
<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
                                                  (Principal financial officer
                                                  and duly authorized officer)

Date:  May 14, 2003


                                    Page 27
<PAGE>

                                 CERTIFICATIONS

I, Robert A. Ferguson, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Hines
         Horticulture, Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         c)       presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officer and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officer and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.



Date: May 14, 2003                       By:      /S/ ROBERT A. FERGUSON
                                                  --------------------------
                                                  Robert A. Ferguson
                                                  Chief Operating Officer
                                                  (Principal Executive Officer)

                                    Page 28
<PAGE>

I, Claudia M. Pieropan, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Hines
         Horticulture, Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         c)       presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officer and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officer and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.



Date: May 14, 2003                       By:  /S/ CLAUDIA M. PIEROPAN
                                              ----------------------------------
                                              Claudia M. Pieropan
                                              Chief Financial Officer, Secretary
                                              and Treasurer (Principal Financial
                                              Officer)


                                    Page 29