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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2001

or

|/ / | 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 1-8885

THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)(Exact name of Registrant as specified in its charter)

California(State or other jurisdiction of
incorporation or organization)

95-3931727(I.R.S. Employer Identification No.)23823 Valencia Boulevard, Valencia, CA(Address of principal executive offices)

91355(Zip Code)


(661) 255-4000(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 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 / /

At
March 31, 2001, 26,253,833 partnership units were outstanding.

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PART 1.  FINANCIAL INFORMATION
Item 1.  Financial Statements

Consolidated Statements of Income

|                                                    |                                 | Three Months Ended
March 31, |       
|--------------------------------------------------- | ------------------------------- | ---------------------------- | ------
|
|
|Revenues                                            |                                 |                              |       
|Real estate                                         |                                 |                              |       
|                                                    | Residential home and land sales |                              | $     
|                                                    | Industrial and commercial sales |                              |       
|                                                    | Commercial operations           |                              |       
|                                                    |                                 | Income-producing properties  |       
|                                                    |                                 | Valencia Water Company       |       
|                                                    |                                 |                              |       
|                                                    |                                 |                              | 21,826
|                                                    |                                 |                              |       
|Agriculture operations                              |                                 |                              | 708   
|                                                    |                                 |                              |       
|                                                    | Total revenues                  |                              | $     
|                                                    |                                 |                              |       
|Contribution to income                              |                                 |                              |       
|Real estate                                         |                                 |                              |       
|                                                    | Residential home and land sales |                              | $     
|                                                    | Industrial and commercial sales |                              |       
|                                                    | Community development           |                              |       
|                                                    | Commercial operations           |                              |       
|                                                    |                                 | Income-producing properties  |       
|                                                    |                                 | Valencia Water Company       |       
|                                                    |                                 |                              |       
|                                                    |                                 |                              | 4,521 
|                                                    |                                 |                              |       
|Agriculture operations                              |                                 |                              | 394   
|                                                    |                                 |                              |       
|Operating income                                    |                                 |                              | 4,915 
|General and administrative expense                  |                                 |                              | (2,185
|Interest and other, net                             |                                 |                              | (1,691
|                                                    |                                 |                              |       
|Net income                                          |                                 | $                            | 1,039 
|                                                    |                                 |                              |       
|Net income per unit                                 |                                 | $                            | 0.04  
|                                                    |                                 |                              |       
|Net income per unit  diluted                       |                                 | $                            | 0.04  
|                                                    |                                 |                              |       
|Number of units used in computing per unit amounts: |                                 |                              |       
|                                                    | Net income per unit             |                              |       
|                                                    | Net income per unit  diluted   |                              |       
|Cash distributions per unit:                        |                                 |                              |       
|                                                    | Regular                         |                              | $     
|                                                    | Special                         |                              |       

2

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Consolidated Balance Sheets

|In thousands                                                                                                                                                                                           |                   | March 31,
2001 |         | December 31, 2000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------- | -------------- | ------- | -----------------
|ASSETS                                                                                                                                                                                                 |                   |                |         |                  
|Cash and cash equivalents                                                                                                                                                                              |                   | $              | 4,211   |                  
|Accounts and notes receivable                                                                                                                                                                          |                   |                | 8,889   |                  
|Land under development                                                                                                                                                                                 |                   |                | 64,836  |                  
|Land held for future development                                                                                                                                                                       |                   |                | 22,419  |                  
|Income-producing properties held for sale, net                                                                                                                                                         |                   |                | 15,042  |                  
|Income-producing properties, net                                                                                                                                                                       |                   |                | 144,373 |                  
|Property and equipment, net                                                                                                                                                                            |                   |                | 69,360  |                  
|Investment in joint venture                                                                                                                                                                            |                   |                | 547     |                  
|Other assets and deferred charges                                                                                                                                                                      |                   |                | 16,932  |                  
|                                                                                                                                                                                                       |                   |                |         |                  
|                                                                                                                                                                                                       |                   | $              | 346,609 |                  
|                                                                                                                                                                                                       |                   |                |         |                  
|LIABILITIES AND PARTNERS' CAPITAL                                                                                                                                                                      |                   |                |         |                  
|Accounts payable                                                                                                                                                                                       |                   | $              | 24,669  |                  
|Accrued expenses                                                                                                                                                                                       |                   |                | 53,366  |                  
|Deferred revenues                                                                                                                                                                                      |                   |                | 4,111   |                  
|Mortgage and other debt                                                                                                                                                                                |                   |                | 99,861  |                  
|Advances and contributions from developers for utility construction                                                                                                                                    |                   |                | 32,979  |                  
|Other liabilities                                                                                                                                                                                      |                   |                | 25,439  |                  
|                                                                                                                                                                                                       |                   |                |         |                  
|                                                                                                                                                                                                       | Total liabilities |                |         | 240,425          
|Partners' capital                                                                                                                                                                                      |                   |                |         |                  
|26,254 units outstanding, excluding 10,518 units in treasury (cost-$250,868), at March 31, 2001 and 26,590 units outstanding, excluding 10,182 units in treasury (cost-$242,098), at December 31, 2000 |                   |                | 106,184 |                  
|                                                                                                                                                                                                       |                   |                |         |                  
|                                                                                                                                                                                                       |                   | $              | 346,609 |                  
|                                                                                                                                                                                                       |                   |                |         |                  

3

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Consolidated Statements of Cash Flows

|                                               |                                                                                   | Three Months Ended
March 31,                                         |      
|---------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -----
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:          |                                                                                   |                                                                      |      
|                                               | Net income                                                                        |                                                                      | $    
|                                               | Adjustments to reconcile net income to net cash provided by operating activities: |                                                                      |      
|                                               |                                                                                   | Depreciation and amortization                                        |      
|                                               |                                                                                   | Increase in land under development                                   |      
|                                               |                                                                                   | Cost of sales and other inventory changes                            |      
|                                               |                                                                                   | Decrease in accounts and notes receivable                            |      
|                                               |                                                                                   | Decrease in accounts payable, accrued expenses and deferred revenues |      
|                                               |                                                                                   | Cost of property sold                                                |      
|                                               |                                                                                   | Other adjustments, net                                               |      
|                                               |                                                                                   |                                                                      |      
|                                               | Net cash (used in) provided by operating activities                               |                                                                      |      
|                                               |                                                                                   |                                                                      |      
|CASH FLOWS FROM INVESTING ACTIVITIES:          |                                                                                   |                                                                      |      
|                                               | Development of income-producing properties                                        |                                                                      |      
|                                               | Purchase of property and equipment                                                |                                                                      |      
|                                               | Distribution from (investment in) joint venture                                   |                                                                      |      
|                                               |                                                                                   |                                                                      |      
|                                               | Net cash used in investing activities                                             |                                                                      |      
|                                               |                                                                                   |                                                                      |      
|CASH FLOWS FROM FINANCING ACTIVITIES:          |                                                                                   |                                                                      |      
|                                               | Distributions paid                                                                |                                                                      |      
|                                               | Increase in mortgage and other debt                                               |                                                                      |      
|                                               | Increase in advances and contributions from developers for utility construction   |                                                                      |      
|                                               | Purchase of partnership units                                                     |                                                                      |      
|                                               | Issuance of partnership units                                                     |                                                                      |      
|                                               |                                                                                   |                                                                      |      
|                                               | Net cash provided by financing activities                                         |                                                                      |      
|                                               |                                                                                   |                                                                      |      
|Net increase in cash and cash equivalents      |                                                                                   |                                                                      | 494  
|Cash and cash equivalents, beginning of period |                                                                                   |                                                                      | 3,717
|                                               |                                                                                   |                                                                      |      
|Cash and cash equivalents, end of period       |                                                                                   | $                                                                    | 4,211
|                                               |                                                                                   |                                                                      |      

4

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Accounting Policies

The
consolidated financial statements include the accounts of The Newhall Land and Farming Company and its subsidiaries, all of which are wholly-owned (collectively, "the Company"). All significant
intercompany balances and transactions are eliminated.

The
Company's unaudited interim financial statements have been prepared in conformity with generally accepted accounting principles used in the preparation of the Company's annual
financial statements. In the opinion of the Company, all adjustments necessary for a fair presentation of the results of operations for the three months ended March 31, 2001 and 2000 have been
made. The interim statements are condensed and do not include some of the information necessary for a more complete understanding of the financial data. Accordingly, your attention is directed to the
footnote disclosures found on pages 26 through 38 of the December 31, 2000 Annual Report on Form 10-K and particularly to Note 2 therein which includes a summary of
significant accounting policies. Certain reclassifications have been made to prior period's amounts to conform to the current period presentation.

Interim
financial information for the Company has substantial limitations as an indicator for the calendar year because:



Note 2.  Details of Land Under Development

|(In $000)                                  |                              | March 31,
2001 |        | December 31,
2000
|------------------------------------------ | ---------------------------- | -------------- | ------ | -----------------
|Residential development                    |                              | $              | 33,138 |                  
|Industrial and commercial land development |                              |                | 30,949 |                  
|Agriculture                                |                              |                | 749    |                  
|                                           |                              |                |        |                  
|                                           | Total land under development |                | $      | 64,836           
|                                           |                              |                |        |                  

5

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Note 3.  Details for Earnings per Unit Calculation

|(in 000's except per unit)            |                                     | Income
(numerator) |       | Units
(denominator) |        | Per Unit
|------------------------------------- | ----------------------------------- | ------------------ | ----- | ------------------- | ------ | --------
|For three months ended March 31, 2001 |                                     |                    |       |                     |        |         
|Net income per unit                   |                                     |                    |       |                     |        |         
|                                      | Net income available to unitholders |                    | $     | 1,039               |        | 26,397  
|Effect of dilutive securities         |                                     |                    |       |                     |        |         
|                                      | Unit options                        |                    |       |                    |        | 267     
|                                      |                                     |                    |       |                     |        |         
|Net income per unitdiluted           |                                     | $                  | 1,039 |                     | 26,664 |         
|                                      |                                     |                    |       |                     |        |         
|For three months ended March 31, 2000 |                                     |                    |       |                     |        |         
|Net income per unit                   |                                     |                    |       |                     |        |         
|                                      | Net income available to unitholders |                    | $     | 3,197               |        | 28,944  
|Effect of dilutive securities         |                                     |                    |       |                     |        |         
|                                      | Unit options                        |                    |       |                    |        | 369     
|                                      |                                     |                    |       |                     |        |         
|Net income per unitdiluted           |                                     | $                  | 3,197 |                     | 29,313 |         
|                                      |                                     |                    |       |                     |        |         

Note 4.  Details of Income-Producing Properties, Income Producing Properties Held for Sale and Property and Equipment

|(In $000)                                 |                                          | March 31,
2001 |         | December 31,
2000 |  
|----------------------------------------- | ---------------------------------------- | -------------- | ------- | ----------------- | -
|Income-producing properties               |                                          |                |         |                   |  
|                                          | Land                                     |                | $       | 36,593            |  
|                                          | Buildings                                |                |         | 131,963           |  
|                                          | Other                                    |                |         | 3,240             |  
|                                          | Properties under development             |                |         | 4,164             |  
|                                          |                                          |                |         |                   |  
|                                          |                                          |                | 175,960 |                   |  
|Accumulated depreciation                  |                                          |                | (31,587 | )                 |  
|                                          |                                          |                |         |                   |  
|                                          |                                          | $              | 144,373 |                   | $
|                                          |                                          |                |         |                   |  
|Income-Producing Properties Held for Sale |                                          |                |         |                   |  
|                                          | Office                                   |                | $       | 11,223            |  
|                                          | Other                                    |                |         | 7,311             |  
|                                          |                                          |                |         |                   |  
|                                          |                                          |                | 18,534  |                   |  
|                                          | Accumulated Depreciation                 |                |         | (3,492            | )
|                                          |                                          |                |         |                   |  
|                                          |                                          | $              | 15,042  |                   | $
|                                          |                                          |                |         |                   |  
|Property and equipment                    |                                          |                |         |                   |  
|                                          | Land                                     |                | $       | 3,759             |  
|                                          | Buildings                                |                |         | 5,974             |  
|                                          | Equipment                                |                |         | 9,527             |  
|                                          | Water supply systems, orchards and other |                |         | 83,778            |  
|                                          | Construction in progress                 |                |         | 5,514             |  
|                                          |                                          |                |         |                   |  
|                                          |                                          |                | 108,552 |                   |  
|                                          | Accumulated depreciation                 |                |         | (39,192           | )
|                                          |                                          |                |         |                   |  
|                                          |                                          | $              | 69,360  |                   | $
|                                          |                                          |                |         |                   |  

6

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Note 5.  Business Segment Reporting

The following table provides financial information regarding revenues from external customers, income and total assets for the Company's business segments and
also provides a reconciliation to the Company's consolidated totals:

|                        |                             | Three months ended March 31, 2001
|----------------------- | --------------------------- | ---------------------------------
|
|Real Estate             |                             |                                  
|                        | Residential                 |                                  
|                        | Industrial and commercial   |                                  
|                        | Community development       |                                  
|                        | Income-producing properties |                                  
|                        | Valencia Water Company      |                                  
|Agriculture             |                             |                                  
|Central administration  |                             |                                  
|                        |                             |                                  
|                        |                             |                                  
|Interest and other, net |                             |                                  
|Other                   |                             |                                  
|                        |                             |                                  
|                        |                             | $                                
|                        |                             |                                  
|Real Estate             |                             |                                  
|                        | Residential                 |                                  
|                        | Industrial and commercial   |                                  
|                        | Community development       |                                  
|                        | Income-producing properties |                                  
|                        | Valencia Water Company      |                                  
|Agriculture             |                             |                                  
|Central administration  |                             |                                  
|                        |                             |                                  
|                        |                             |                                  
|Interest and other, net |                             |                                  
|Other                   |                             |                                  
|                        |                             |                                  
|                        |                             | $                                
|                        |                             |                                  

7

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

Results of Operations

Comparison of First Quarter of 2001 to First Quarter of 2000
Unaudited

The
amounts of increase or decrease in revenues and income from the prior year first quarter are as follows (in 000s, except per unit):

|                                                    |                        | Three months                    |                            
|--------------------------------------------------- | ---------------------- | ------------------------------- | ---------------------------
|
|
|Revenues                                            |                        |                                 |                            
|                                                    | Real Estate            |                                 |                            
|                                                    |                        | Residential home and land sales |                            
|                                                    |                        | Industrial and commercial sales |                            
|                                                    |                        | Commercial operations           |                            
|                                                    |                        |                                 | Income-producing properties
|                                                    |                        |                                 | Valencia Water Company     
|                                                    |                        |                                 |                            
|                                                    |                        |                                 | (5,885                     
|                                                    | Agriculture operations |                                 |                            
|                                                    |                        |                                 |                            
|Total revenues                                      |                        | $                               | (5,830                     
|                                                    |                        |                                 |                            
|Contribution to Income                              |                        |                                 |                            
|                                                    | Real Estate            |                                 |                            
|                                                    |                        | Residential home and land sales |                            
|                                                    |                        | Industrial and commercial sales |                            
|                                                    |                        | Community development           |                            
|                                                    |                        | Commercial operations           |                            
|                                                    |                        |                                 | Income-producing properties
|                                                    |                        |                                 | Valencia Water Company     
|                                                    |                        |                                 |                            
|                                                    |                        |                                 | (3,932                     
|Agriculture operations                              |                        |                                 | (13                        
|                                                    |                        |                                 |                            
|Operating income                                    |                        |                                 | (3,945                     
|General and administrative expense                  |                        |                                 | 58                         
|Interest and other, net                             |                        |                                 | 1,729                      
|                                                    |                        |                                 |                            
|Net income                                          |                        | $                               | (2,158                     
|                                                    |                        |                                 |                            
|Net income per unit                                 |                        | $                               | (0.07                      
|                                                    |                        |                                 |                            
|Net income per unit  diluted                       |                        | $                               | (0.07                      
|                                                    |                        |                                 |                            
|Number of units used in computing per unit amounts: |                        |                                 |                            
|Net income per unit                                 |                        |                                 | (2,547                     
|                                                    |                        |                                 |                            
|Net income per unit  diluted                       |                        |                                 | (2,649                     
|                                                    |                        |                                 |                            

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For the three months ended March 31, 2001, revenues totaled $22.5 million and net income totaled $1.0 million compared with revenues of $28.4 million and
net income of $3.2 million for the first quarter of 2000. The primary contributors to 2001 first quarter revenues and income were the Company's commercial operations, comprised of the Company's
portfolio of income-producing properties and Valencia Water Company, along with the sale of 14 acres of industrial and commercial land. The decrease in first quarter results compared to the same
period in 2000 is mainly attributed to the absence of residential lot sales, lower rental income due to the prior year sale of income-producing properties and suspension of depreciation during 2000 on
assets being held for sale as part of the Company's business plan to sell approximately one-half of its income portfolio. In the 2000 first quarter, 130 residential lots in Bridgeport were
sold, contributing $4.2 million to revenues and $1.9 million to income.

The
Company's business plan for the year anticipates revenues being generated from residential, commercial and industrial land sales; the portfolio of income-producing properties; sale
of the Company's option on the Broomfield, Colorado property, which closed escrow on May 1, 2001 for $13 million and will contribute about $12.7 million to 2001 second quarter net
income; and the sale of three income properties, including the remaining two properties identified in last year's asset sale program that did not close escrow. About 950 residential lots are expected
to be sold, along with approximately 80 acres of commercial and industrial land. In addition, the Company is negotiating the
sale of additional apartment land. The ability to complete these sales in 2001 will be dependent upon a variety of factors including, but not limited to, identification of suitable buyers, agreement
with the buyer on definitive terms, availability of financing to the buyer, and market conditions.

Residential Home and Land Sales

No
residential lots were sold in the first quarter of 2001 and no residential lots were in escrow at the end of the quarter. Lot sales in Valencia are being impacted by the Public Utilities
Commission's (PUC) decision to combine its review of Valencia Water Company's request to expand its service area together with the water company's water management plan. The PUC requested
environmental studies be submitted on water availability for the projects included in the service area expansion. The water company has provided the necessary information to the PUC and expects a
decision in the 2001 third quarter. A total of 4,195 residential lots and apartment units is affected. The total includes 1,650 lots and apartments that the City of Santa Clarita annexed in
December 2000 and 2,545 lots and apartments in the Company's West Creek community.

The
Los Angeles County Board of Supervisors approved the West Creek community in January 2001. Opponents to the community have filed a California Environmental Quality Act
(CEQA) lawsuit challenging the Board of Supervisors' approval. As with prior CEQA lawsuits, the results of these types of legal challenges are difficult to predict. An adverse decision will likely
delay the development of the community beyond the delay created by the PUC process previously mentioned.

Land
development work continues on Valencia Westridge, which will feature 1,700 homes surrounding a Tournament Players Club (TPC) golf course, a joint venture with PGA TOUR Golf Course
Properties. During the 2001 first quarter, an appellate court dismissed the appeal of the Los Angeles County Superior Court dismissal of a CEQA lawsuit. The Company plans to sell approximately 650
improved lots in this community in the second half of 2001. In addition, 300 lots on 40 net acres in Altavista may be sold in 2001 depending on results and timing of the PUC decision.

During
the first quarter of 2001, demand for new homes in Valencia set a first quarter sales record with merchant builders selling 217 new homes, compared to 86 homes sold in the same
period last year. At March 31, 2001, merchant builders had 313 homes in escrow, compared to 112 homes at the end of the 2000 first quarter. While the Company does not participate directly in
profits generated from escrow closings by merchant builders, these merchant builder sales are key to Company's future success in selling additional lots.

9

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In the 2000 first quarter, 130 lots for attached homes closed escrow in Bridgeport. The sale added $4.2 million to revenues and $1.9 million to income. In addition,
$4.1 million in revenues and $1.9 million in income were recognized from previous lot sales in Bridgeport under percentage of completion accounting. At March 31, 2000, the
remaining 76 residential lots for detached homes in Bridgeport were in escrow for $7.8 million and subsequently closed escrow early in the 2000 second quarter.

Industrial and Commercial Sales

Industrial Land Sales

In
the 2001 first quarter, one industrial parcel, totaling 9.5 acres, closed escrow for $4.7 million contributing $1.3 million to income. At March 31, 2001, a
15.0-acre industrial parcel was in escrow for approximately $8.4 million. All escrow closings are subject to market and other conditions beyond the control of the Company. During
the first three months of 2000, no industrial land sales closed escrow and, at March 31, 2000, four industrial parcels totaling 8.4 acres were in escrow for $5.3 million.

The
Company has approximately 380 net entitled acres of industrial land remaining in Valencia. With few large industrial land parcels available for development in Los Angeles County,
the Company is targeting sales in the range of 50 to 75 industrial acres per year through completion of Valencia industrial land buildout.

Commercial Land Sales

Three
commercial parcels, totaling 4.1 acres, closed escrow in the first quarter of 2001, contributing $2.9 million to revenues and $2.2 million to income. Two of the sales were
recognized under percentage of completion accounting. At March 31, 2001, eight commercial parcels totaling 38 acres were in escrow for approximately $25 million. All escrow closings are
subject to market and other conditions beyond the control of the Company.

No
commercial land sales closed escrow in the 2000 first quarter and six commercial parcels, totaling 42.8 acres, were in escrow for approximately $26 million at
March 31, 2000. Results for the 2000 first
quarter included revenues of $2.6 million and income of $1.5 million recognized under percentage of completion accounting from the 1999 sale of land for an apartment site.

Income Property Sales

No
income property sales were completed in the first quarter of 2001 or 2000. At March 31, 2001, the Company had two properties remaining to be sold from its asset sales program announced last
year, the Bank of America and Spectrum Club buildings. In addition, a 35,310-square-foot building in Valencia Commerce Center has been added to the program. These three
buildings are expected to be sold later this year for a total of approximately $17 million.

The
ability to complete income property and other sales in 2001 will be dependent upon a variety of factors including, but not limited to, identification of a suitable buyer,
availability of financing to the buyer, market conditions, agreement with the buyer on definitive terms and successful completion of the buyer's due diligence.

Community Development

Community
development expenses for the first quarter of 2001 decreased 20% from the comparative prior year first quarter primarily due to expenses in 2000 relating to the Company's option on 1,800
acres in Broomfield, Colorado and marketing expenses including updating of Valencia's website. Community development expenses for 2001 are expected to increase about 20% from the 2000 level with the
continued focus on entitlements, planning and community marketing to complete the projected

10

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sellout of Valencia residential land by 2005 and begin the development of Newhall Ranch. The Company's option on the Broomfield, Colorado property was sold on May 1, 2001.

On
April 19, 2001, the Company and Los Angeles County released the Company's research and summary of findings, along with proposed actions to be taken, for public review on the
six issues in the Newhall Ranch project's Environmental Impact Report that were identified in June 2000 by a Kern
County Superior Court as requiring further environmental studies. The areas studied, and the findings include:











11

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The
Court ruled in the Company's favor on all other issues raised by opponents. The "affordable housing" opponent has appealed the Superior Court's decision.

Public
hearings before the Los Angeles County Planning Commission are scheduled to begin on June 20, 2001. Once approved by the Commission, the six issues would go before the
Board of Supervisors, which is expected to occur this fall. The Company's goal is to have these six issues back before the judge by year-end. However, the length of time that the public
hearings and judicial process will take is difficult to predict, and circumstances beyond the Company's control could further delay resolution of the issues. An adverse decision by the County or Court
and/or additional legal action will likely delay the start of the development of the community beyond 2003. If the judge rules in the Company's favor, the Company can begin processing the necessary
documentation for tentative maps on the first two villages in Newhall RanchRiver Village and Mesas East.

Income-Producing Properties

For
the first three months of 2001, revenues and income were down 24% and 38%, respectively, over the first three months of 2000 due to properties sold in 2000 as part of the Company's plan to sell
approximately one-half of its income portfolio to finance its unit repurchase program. The sold properties included Castaic Shopping Center, Plaza del Rancho, a 3-story office
building, three office buildings for Princess Cruises and four apartment complexes.

12

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Results for the current and prior year first quarters include the effects of the cessation of depreciation on Properties Held for Sale and Sold Properties of $155,000 and $1,654,000,
respectively. The 2000 amount includes depreciation expense suspended on Valencia Town Center regional mall and entertainment center as they were held for sale at March 31, 2000. Subsequently,
in the fourth quarter of 2000, the regional mall and entertainment center were re-classified as held for investment and depreciation expense was recorded covering the entire period they
were held for sale.

Edwards
Theaters Circuit, Inc., which filed for Chapter 11 bankruptcy last year, is expected to affirm its current lease during the 2001 second quarter for the IMAX 3D theater
and 11 screens in Valencia Entertainment Center that opened in the summer of 1999. The terms of the lease for the original 10-screen Edwards Theater, located in the Valencia Town Center
regional mall that was recently remodeled to include stadium seating and other up-to-date improvements, are under discussion. Edwards has paid rent when due for the two
complexes.

A
few other, smaller retail tenants in the Company's income properties are also operating while in bankruptcy proceedings. However, overall retail operations are performing well. At
March 31, 2001, NorthPark Village Square neighborhood shopping center, River Oaks Shopping Center and Town Center Plaza, a 25,193-square-foot mixed-use
building located adjacent to the Hyatt Valencia Hotel, were 100% leased. Valencia Town Center regional mall was 99% leased at the end of the 2001 first quarter.

The
Company's 244-room Hyatt Valencia Hotel and 152-room Hilton Garden Inn continued to post improved performance both in occupancy rates and average daily
rates in the first quarter of 2001 compared to the same period last year.

Valencia Water Company

Valencia
Water Company is a regulated public water utility and a wholly-owned subsidiary of the Company serving over 22,000 metered connections. Revenues for the three months ended March 31,
2001 were about the same as the 2000 first quarter while income declined 19% primarily due to an increase in administrative expense for various legal proceedings in which Valencia Water Company is
involved.

Agricultural Operations

For
the first quarter of 2001, revenues and income, including the Company's energy operations, were about the same as the year earlier quarter. The major contributor to revenues and income was energy
operations, where oil prices continued strong.

General and Administrative Expense

General
and administrative expenses for the first quarter of 2001 were approximately the same as the comparable prior year period. For all of 2001, general and administrative expenses are expected to
decrease about 30% from 2000 levels primarily due to lower compensation expense.

Interest and Other, net

A
51% net decrease from the comparable 2000 quarter is primarily due to the Company's strategy in 2000 of utilizing existing debt capacity to fund unit repurchases until the sale of income properties
were completed later that year. Interest expense in 2001 for the total year is expected to be substantially lower than in the previous year due to lower anticipated borrowings outstanding compared to
2000.

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Financial Condition

Liquidity and Capital Resources

At
March 31, 2001, the Company had cash and cash equivalents of $4.2 million and $135.7 million available under bank lines, net of $18.9 million in letters of credit.
Borrowings outstanding totaled $7.4 million against unsecured lines of credit and $32 million against a revolving mortgage facility. In addition, the Company had fixed rate debt totaling
$60.5 million. The Company believes it has adequate sources of cash from operations and debt capacity to finance future operations on both a short- and long-term basis and, combined
with anticipated land and property sales, to fund its unit repurchases. The Company ended the 2001 first quarter with a conservative debt to income portfolio ratio of 31% which provides adequate debt
capacity to fund operations and complete the current repurchase program. At March 31, 2001, there was no debt secured by raw land or land under development inventories in Valencia.

In
September 1999, the Company announced its intention to repurchase up to 6,384,446 units (including 884,446 units under a previous authorization), equal to approximately 20%
of the then outstanding units. From the time the repurchase plan was announced through March 31, 2001, 5,294,062 units, or 83% of the 6,384,446 units, were repurchased including 394,560 units
purchased in the first quarter of 2001. At March 31, 2001, a total of 1,090,384 units remain to be repurchased under the current authorization. The Company repurchases partnership units from
time to time in the open market and through block transactions. Numerous factors could affect the Company's ability to complete the repurchase program including, but not limited to, changing market
conditions, rising interest rates, challenges to governmental approvals, and finding suitable buyers for certain properties. If the Company is on track to accomplish its current business plan and
market conditions remain strong, another repurchase program may be announced for an additional 5 to 7% of the total outstanding units. The Company's ability to accelerate the pace at which it can
deliver entitled product to market, close sales, and the price at which its units are trading are some of the factors that will determine the number of units it is able to repurchase.

At
March 31, 2001, there were no material commitments for capital expenditures other than approximately $21 million for the completion of two office buildings that were
sold in December 2000 and the expected landfill lease termination. In addition, over $40 million is expected to be invested in major roads and freeway improvements in 2001 to enable the
Company to continue its land sales program for Valencia.

The following discussion relates to principal items in the Consolidated Statements of Cash Flow:

Operating Activities

Net
cash used by operating activities totaled $7.6 million for the 2001 first quarter. Cash generated from operating activities included the sale of 14 industrial/commercial acres, the income
property portfolio and the collection of a $9.4 million land sale note, which generated a total of $24.5 million. Cash used by operating activities included primarily
$15.2 million of expenditures for land under development
inventories mostly related to land preparation and infrastructure improvements to ready land for development or sale. Additional uses of cash included the Company's general & administrative
expenses and interest expense.

Investing Activities

Expenditures
for development of income-producing properties totaled $1.3 million and were primarily for two office buildings that were sold in December 2000. Purchase of property and
equipment was primarily for water utility construction.

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Financing Activities

A
quarterly distribution totaling $5.3 million was paid in the 2001 first quarter which consisted of a $.10 per unit quarterly distribution and a $.10 per unit special distribution. Borrowings
against lines of credit increased by $25.4 million during the quarter. Units repurchased during the quarter totaled 394,560 for $10.0 million or an average price of $25.38 per unit. The
Company's policy is to provide sufficient distributions, including special distributions, to pay the taxes associated with Company earnings. The declaration of distributions, and the amount declared,
are determined by the Board of Directors on a quarterly basis taking into account the Company's earnings, financial condition and prospects.

Inflation, Risks And Related Factors Affecting Forward-Looking Information

Except
for historical matters, the matters discussed in this report are forward-looking statements that involve risks and uncertainties. We have tried, wherever practical, to identify these
forward-looking statements by using words like "anticipate," believe," "estimate," "project," "expect," and similar expressions. Forward-looking statements include, but are not limited to, statements
about plans; opportunities; negotiations; market and economic conditions; development, construction, and sales activities; and availability of financing.

We
caution you not to place undue reliance on these forward-looking statements, which reflect our current beliefs and are based on information currently available to us. We do not
undertake any obligation to publicly revise these forward-looking statements to reflect future events or changes in circumstances.

These
forward-looking statements are subject to risks and uncertainties that could cause our actual results, performance, or achievements to differ from those expressed in or implied
by these statements. In particular, among the factors that could cause actual results to differ materially are:

Sales of Real Estate:The majority of the Company's revenues is generated by its real estate operations. The ability of the Company to
consummate sales of real estate is dependent on various factors including, but not limited to, availability of financing to the buyer, agreement with buyers on definitive terms regulatory and legal
issues and successful completion of the buyer's due diligence. The fact that a real estate transaction has entered escrow does not necessarily mean that the transaction ultimately will close.
Therefore, the timing of sales may differ from that anticipated by the Company. The inability to close sales as anticipated could adversely impact the recognition of revenue in any specific period.

Economic Conditions:Real estate development is significantly impacted by general and local economic conditions, which are beyond the
control of the Company. The Company's real estate operations are concentrated in Southern California. The regional economy is profoundly affected by the entertainment, technology, defense and certain
other segments. Consequently, all sectors of real estate development for the Company tend to be cyclical. While the economy of Southern California continues to be strong, there can be no assurances
that present trends will continue.

Inflation:The Company believes it is well positioned against the effects of inflation. Historically, during periods of inflation, the
Company has been able to increase selling prices of properties to offset rising costs of land development and construction. Recently, land values have been increasing at a faster rate than costs.
However, there are no assurances that this trend will continue. A portion of the commercial income portfolio is protected from inflation since percentage rent clauses and Consumer Price Index
increases in the Company's leases tend to adjust rental receipts for inflation, while the underlying value of commercial properties has tended to rise over the long term.

Interest Rates and Financing:Fluctuations in interest rates and the availability of financing have an important impact on the Company's
performance. Sales of the Company's properties could be adversely

15

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impacted by the inability of buyers to obtain adequate financing. Further, the Company's real estate development activities are dependent on the availability of adequate sources of capital. Certain of
the Company's credit facilities bear interest at variable rates and would be negatively impacted by increasing interest rates.

Competition:The sale and leasing of residential, industrial and commercial real estate is highly competitive, with competition coming
from numerous and varied sources. The degree of competition is affected by such factors as the supply of real estate available which is comparable to that sold and leased by the Company and the level
of demand for such real estate. Valencia experienced a slight decrease in its new home sale market share at both the local and the county level in 2000, due to the temporary decline in new home
inventory. There is no assurance that this new home sales decline will reverse in the future even with an increasing supply of new homes in Valencia given competing projects in the region. This could
impact the Company's ability to sell residential land.

Geographic Concentration:The Company's real estate development activities are focused on the 19,400 acres that it owns in Los Angeles
County. The Company's entire commercial income portfolio is located in the Valencia area. Therefore, any factors affecting that concentrated area, such as changes in the housing market, economic
conditions and environmental factors, which cannot be predicted with certainty, could affect future results.

Exposure to Natural Occurrences:The Company's real estate development and sales activities may be affected by natural occurrences such
as earthquakes and weather conditions that may impact progress of infrastructure construction and land development, and the pace of sales.

Government Regulation and Entitlement Risks:In developing its projects, the Company must obtain the approval of numerous governmental
authorities regulating such matters as permitted land uses, density and traffic, and the provision of utility services such as electricity, water and waste disposal. In addition, the Company is
subject to a variety of federal, state and local laws and regulations concerning protection of health and the environment. This government regulation affects the types of projects which can be pursued
by the Company and increases the cost of development and ownership. The Company devotes substantial financial and managerial resources to comply with these requirements. To varying degrees, certain
permits and approvals will be required to complete the developments currently being undertaken or planned by the Company. Furthermore, the timing, cost and scope of planned projects may be subject to
legal challenges, particularly large projects with regional impacts. (See following "Litigation" discussion.) In addition, the continued effectiveness of permits already granted is subject to factors
such as changes in policies, rules and regulations and their interpretation and application. The ability to obtain necessary approvals and permits for its projects can be beyond the Company's control
and could restrict or prevent development of otherwise desirable new properties. The Company's results of operations in any period will be affected by the amount of entitled properties the Company has
in inventory.

Litigation:The land use approval processes the Company must follow to ultimately develop its projects have become increasingly complex.
Moreover, the statutes, regulations and ordinances governing the approval processes provide third parties the opportunity to challenge the proposed plans and approvals. As a result, the prospect of,
and actual, third-party challenges to planned real estate developments have provided additional uncertainties in real estate development planning and entitlements. Third-party challenges in the form
of litigation will, by its nature, adversely affect the length of time required to obtain the necessary approvals. In addition, adverse decisions arising from any litigation increase the costs and may
adversely affect the design, scope, plans and profitability of a project.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk primarily due to fluctuations in interest rates. The Company utilizes both fixed rate and variable rate debt. At March
31, 2001, the Company had $39.4 million of variable debt outstanding with interest rates ranging from 6.32% to 6.90% and $60.5 million of fixed rate debt with interest rates ranging from 7.33% to
8.45%.

The
table below presents principal cash flows and related weighted average interest rates of the Company's long-term fixed rate and variable rate debt at March 31, 2001 by expected
maturity dates:

|Dollars in thousands    |                                | 2001 |   | 2002   |  | 2003 |       | 2004 |   | 2005   |  | Thereafter |       | Total |   | Fair
Value
|----------------------- | ------------------------------ | ---- | - | ------ |  | ---- | ----- | ---- | - | ------ |  | ---------- | ----- | ----- | - | ----------
|Mortgage and Other Debt |                                |      |   |        |  |      |       |      |   |        |  |            |       |       |   |           
|                        | Fixed Rate Debt                |      | $ | 1,264  |  | $    | 1,479 |      | $ | 10,968 |  | $          | 1,512 |       | $ | 1,655     
|                        | Weighted Average Interest Rate |      |   | 7.58   |  |      | 7.55  |      |   | 8.32   |  |            | 7.35  |       |   | 7.37      
|                        | Variable Rate Debt (1)         |      | $ | 32,000 |  | $    | 7,400 |      |   |        |  |            |       |       |   |           
|                        | Weighted Average Interest Rate |      |   | 6.32   |  |      | 6.90  |      |   |        |  |            |       |       |   |           

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There
is inherent rollover risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable
because of the variability of future interest
rates and the Company's future financing requirements. The Company manages its interest rate risk by maintaining a conservative ratio of fixed rate, long-term debt to total debt in order to maintain
variable rate exposure at an acceptable level and by taking advantage of favorable market conditions for long-term debt. In addition, the Company's guideline for total debt is not to exceed 60% of the
appraised value of the income portfolio.

PART II.  OTHER INFORMATION
Item 1.  Legal Proceedings.

Please
refer to "Community Development" and "Litigation" underPart I, Item 2.  "Management's Discussion and Analysis of Financial Condition and Results of
Operations".

Item 6.  Exhibits and Reports on Form 8-K



Items Reported

Date of ReportChange in the Company's certifying accountant from KPMG LLP to Deloitte & Touche LLP and the retirement of Thomas L. Lee as Chief Executive Officer effective March 21, 2001 and Chairman of
the Board effective March 31, 2001.

March 21, 2001


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

| |  | THE NEWHALL LAND AND FARMING COMPANY(a California Limited Partnership)
Registrant
| |  | ---------------------------------------------------------------------------------
| |  | By:                                                                              
| |  | By:                                                                              

|Date: May 4, 2001 |  | By: | /s/GARY M. CUSUMANOGary M. Cusumano President and Chief Executive Officer of Newhall Management Corporation
(Principal Executive Officer)        
|----------------- |  | --- | -------------------------------------------------------------------------------------------------------------------------------------------------
|Date: May 4, 2001 |  | By: | /s/STUART R. MORKStuart R. Mork Senior Vice President and Chief Financial Officer of Newhall Management Corporation
(Principal Financial Officer)
|Date: May 4, 2001 |  | By: | /s/DONALD L. KIMBALLDonald L. Kimball Vice PresidentFinance and Controller of Newhall Management Corporation
(Principal Accounting Officer)     

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