<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10 - Q

          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 1997

                                       or
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from to

         For Quarter Ended March 31, 1997 Commission file number 1-7585


                      THE NEWHALL LAND AND FARMING COMPANY
                       (A CALIFORNIA LIMITED PARTNERSHIP)
             (Exact name of Registrant as specified in its charter)

                          California                     95-3931727
               (State or other jurisdiction of         (I.R.S. Employer
               incorporation or organization)         Identification No.)

               23823 Valencia Boulevard, Valencia, CA        91355
             (Address of principal executive offices)      (Zip Code)

                                 (805) 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
                                        ---    ---



<PAGE>   2
Part I. Financial Information                                                 2.

Item 1 - Financial Statements


CONSOLIDATED STATEMENTS OF INCOME
Unaudited

<TABLE>
<CAPTION>
                                                        Three Months Ended
In thousands, except per unit                                March 31
------------------------------------               -----------------------------
                                                      1997              1996
                                                   -----------       -----------
<S>                                                   <C>              <C>     
REVENUES

 Real estate
    Residential home and land sales
      Valencia                                        $  5,410         $  9,898
      McDowell Mountain Ranch                             --              5,531
    Industrial and other sales                          19,765            2,136
    Commercial operations                                9,854            8,309
                                                      --------         --------
                                                        35,029           25,874
                                                      --------         --------
 Agriculture
    Operations                                             972              707
    Ranch sales                                           --              6,145
                                                      --------         --------
                                                           972            6,852
                                                      --------         --------
   Total revenues                                     $ 36,001         $ 32,726
                                                      ========         ========

CONTRIBUTION TO INCOME

 Real estate
    Residential home and land sales
      Valencia                                        ($   659)        $    520
      McDowell Mountain Ranch                             --              1,602
    Industrial and other sales                          12,955              399
    Community development                               (2,343)          (2,427)
    Commercial operations                                4,510            4,083
                                                      --------         --------
                                                        14,463            4,177
                                                      --------         --------
 Agriculture
    Operations                                             541              762
    Ranch sales                                           --              5,872
                                                      --------         --------
                                                           541            6,634
                                                      --------         --------
Operating income                                        15,004           10,811

General and administrative expense                      (2,000)          (2,200)
Interest and other, net                                 (2,451)          (2,380)
                                                      --------         --------
Net income                                            $ 10,553         $  6,231
                                                      ========         ========
Net income per unit                                   $   0.30         $   0.17
                                                      ========         ========
Number of units used in computing per
 unit amounts                                           34,822           35,908

Cash distributions per unit
   Regular                                            $   0.10         $   0.10
   Special                                                0.08
</TABLE>



<PAGE>   3
Part I. Financial Information                                                 3.

Item 1 - Financial Statements


CONSOLIDATED  BALANCE  SHEETS

<TABLE>
<CAPTION>
                                                         March 31,  December 31,
In thousands                                               1997          1996
-------------------------------------                    ---------  ------------
                                                         Unaudited
<S>                                                      <C>         <C>
ASSETS
 Cash and cash equivalents                                $  2,107    $  2,412
 Accounts and notes receivable                              21,238      25,557
 Land under development                                     69,599      63,266
 Land held for future development                           32,314      32,357
 Income producing properties, net                          190,215     182,641
 Property and equipment, net                                57,614      57,064
 Other assets and deferred charges                          13,725      13,147
                                                          --------    --------
                                                          $386,812    $376,444
                                                          ========    ========

LIABILITIES AND PARTNERS' CAPITAL

 Accounts payable                                         $ 14,324    $ 11,451
 Accrued expenses                                           38,263      38,101
 Deferred revenues                                           3,195       2,483
 Mortgage and other debt                                   167,251     163,256
 Advances and contributions from developers for
   utility construction                                     19,845      19,075
 Other liabilities                                          21,289      21,425
                                                          --------    --------
        Total liabilities                                  264,167     255,791

 Partners' capital

  34,567 units outstanding, excluding 2,205
     units in treasury, at March 31, 1997 and
  34,701 units outstanding, excluding 2,071
     units in treasury, at December 31, 1996               122,645     120,653
                                                          --------    --------
                                                          $386,812    $376,444
                                                          ========    ========
</TABLE>


<PAGE>   4
Part I. Financial Information                                                 4.

Item 1 - Financial Statements


CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited

<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                  March 31,
                                                                            -----------------------
In thousands                                                                  1997          1996
-------------------------------------                                       ---------  ------------
<S>                                                                         <C>           <C>     
CASH FLOWS FROM OPERATING ACTIVITIES

  Net income                                                                $ 10,553      $  6,231

  Adjustments to reconcile net income to net cash provided by 
    operating activities:

    Depreciation and amortization                                              2,299         1,891
    Increase in land under development                                        (6,333)       (5,180)
    Decrease in accounts and notes receivable                                  4,319         2,545
    Increase in accounts payable, accrued
       expenses and deferred revenues                                          3,747         2,663
    Cost of property sold                                                      5,078           264
    Other adjustments, net                                                      (501)         (425)
                                                                            --------      --------
  Net cash provided by operating activities                                   19,162         7,989
                                                                            --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES

  Development of income-producing properties                                 (14,260)      (10,518)
  Purchase of property and equipment                                          (1,198)       (2,611)
                                                                            --------      --------

  Net cash used in investing activities                                      (15,458)      (13,129)
                                                                            --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES

  Distributions paid                                                          (6,247)       (3,589)
  Increase in mortgage and other debt                                          3,995        11,316
  Increase (decrease) in advances and contributions from
     developers for utility construction                                         770           (40)
  Purchase of partnership units                                               (2,527)       (2,468)
                                                                            --------      --------
  Net cash (used in) provided by financing activities                         (4,009)        5,219
                                                                            --------      --------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                            (305)           79
                                                                            --------      --------

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                 2,412         4,285
                                                                            --------      --------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                    $  2,107      $  4,364
                                                                            ========      ========
</TABLE>


<PAGE>   5
Part I. Financial Information                                                 5.

Item 1 - Financial Statements


                   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
substantially 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 statement of the results of
operations for the three months ended March 31, 1997 and 1996 have been made.
Certain reclassifications have been made to prior periods' amounts to conform to
the current period presentation.


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 25 through
32 of the December 31, 1996 Annual Report to Partners and particularly to Note 2
which includes a summary of significant accounting policies.


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

-      Land sales occur irregularly and are recognized at the close of escrow or
        on the percentage of completion basis if the Company has an obligation
        to complete certain future improvements and provided profit recognition
        criteria are met.

-      Agricultural crops are on an annual cycle and income is recognized upon
        harvest. Most major crops are harvested during the fall and winter.

-      Sales of non-developable farm land occur irregularly and are recognized
        upon close of escrow provided profit recognition criteria are met.

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Note 2. Details of Land Under Development
(In $000)                                               March 31,   December 31,
                                                          1997         1996
                                                        --------    -----------
                                                      (Unaudited)
<S>                                                     <C>           <C>    
Valencia
   Residential land development                         $ 4,094       $ 1,093
   Industrial and commercial land development            51,845        49,580
   Homes completed or under construction
        with venture partners                            11,810        12,371
Agriculture                                               1,850           222
                                                        -------       -------
        Total land under development                    $69,599       $63,266
                                                        =======       =======
</TABLE>



-------------------------------------------------
Note 3. Details for Earnings per Unit Calculation
-------------------------------------------------

<TABLE>
<CAPTION>
                                                          Three months ended March 31,
 (Unaudited)                                                  1997            1996
                                                          ---------------------------
<S>                                                        <C>            <C>       
Average number of units outstanding during the period      34,694,506     35,752,138
Net units issuable in connection with dilutive options
  based upon use of the treasury stock method                 127,570        156,233
                                                           ----------     ----------

Average number of primary units                            34,822,076     35,908,371
                                                           ==========     ==========
</TABLE>



<PAGE>   6
Part I. Financial Information                                                 6.
-----------------------------
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
         of Operations
         -------------

                                    RESULTS OF OPERATIONS

Comparison of First Quarter 1997 to First Quarter 1996
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):

<TABLE>
<CAPTION>
                                                      Increase (Decrease)
                                                    -----------------------
                                                      Amount          %
                                                    -----------    --------
<S>                                                 <C>            <C>
REVENUES
  Real Estate
    Residential home and land sales
        Valencia                                    $ (4,488)          -45%
        McDowell Mountain Ranch                       (5,531)         -100%
    Industrial and other sales                        17,629           825%
    Commercial operations                              1,545            19%
                                                    --------      --------
                                                       9,155            35%
  Agriculture
     Operations                                          265            37%
     Ranch sales                                      (6,145)         -100%
                                                    --------      --------

Total revenues                                      $  3,275            10%
                                                    ========      ========

CONTRIBUTION TO INCOME
  Real Estate
    Residential home and land sales
        Valencia                                    $ (1,179)         -227%
        McDowell Mountain Ranch                       (1,602)         -100%
    Industrial and other sales                        12,556          3147%
    Community development                                 84             3%
    Commercial operations                                427            10%
                                                    --------      --------
                                                      10,286           246%
  Agriculture
    Operations                                          (221)          -29%
    Ranch sales                                       (5,872)         -100%
                                                    --------      --------

 Operating income                                      4,193            39%

    General and administrative expense                   200             9%
    Interest and other, net                              (71)           -3%
                                                    --------      --------

 Net income                                         $  4,322            69%
                                                    ========      ========

Net income per unit                                 $   0.13            76%
                                                    ========      ========

Number of units used in computing
  per unit amounts                                    (1,086)           -3%
                                                    ========      ========
</TABLE>


<PAGE>   7
Part I. Financial Information                                                 7.
-----------------------------
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
         of Operations
         -------------


The increases and decreases in revenues and income for the three months are
attributable to the following:

For the quarter ended March 31, 1997, revenues totaled $36.0 million and income
totaled $10.6 million compared to revenues for the 1996 first quarter of $32.7
million and income of $6.2 million. The primary contributor to 1997 first
quarter results was the sale of a 208-unit apartment complex for $18.3 million
adding $12.9 million to income. In the 1996 first quarter, the Company completed
the sale of 539 acres of crop land at the Suey Ranch for $6.5 million which
added nearly $5.9 million to income.

RESIDENTIAL HOME AND LAND SALES

VALENCIA

The Company generates revenues and income from Valencia residential projects by
selling residential lots to merchant builders and home sales through joint
ventures. Revenues and income are recorded by the Company on residential lot
sales when title is transferred to the merchant builder who, in turn, builds
homes for sale. The Company also participates in home construction on lots it
owns by establishing joint ventures with builders who have created innovative
new home designs, targeting niche markets unmet by merchant builders. Under the
joint venture program, the Company recognizes its portion of revenues and income
upon close of escrow to the homebuyer. By participating in joint ventures, the
Company generates increased income as it receives a portion of homebuilding
profits in return for sharing in the risk of homebuilding and financing
construction costs.

Merchant builders and the Company's homebuilding joint venture partners sold 150
homes in Valencia during the first quarter of 1997, an increase of 9.5% over
home sales in the 1996 first quarter. This represents the highest first quarter
of new home sales in Valencia since 1988. At March 31, 1997, 135 homes were in
escrow by all builders compared to 54 at the end of the 1996 fourth quarter. The
increase in home sales is a result of a strengthening market for homes in Los
Angeles County and the wide variety of product choices and prices available to
homebuyers in Valencia. With the close-out of three product lines in the 1997
first quarter, Valencia's market share of all new home sales in the Santa
Clarita Valley dropped to 38%, compared with 45% for the same period last year,
according to an independent research group. In the 1996 fourth quarter, the
latest reporting period, Valencia accounted for 11% of new home sales in Los
Angeles County compared with 7% for the previous year.

Merchant Builder Program

There were no residential lot sales completed by the Company in Valencia in the
1997 or 1996 first quarters. In the 1996 first quarter, deferred revenues
totaling $1.0 million and income of $207,000 were recognized from prior
residential lot sales under percentage of completion accounting. No deferred
revenues or income were recognized in the 1997 first quarter. Currently, 388
lots are in escrow for approximately $23 million with closings scheduled through
the remainder of the year subject to market and other conditions. At March 31,
1996, two residential parcels totaling 143 lots for approximately $10 million
and 491 unimproved lots in Castaic, a community north of Valencia, for $4.5
million were in escrow.

Merchant builders new to Valencia with initial projects in escrow with the
Company include Richmond American with 90 lots for single-family homes, Laing
Homes for 132 detached, cluster homes, and Brookfield Homes for 81 high-density,
detached homes. In addition, Centex, which is opening models this month for its
Willows single-family homes on lots purchased from the Company in 1996, is in
escrow for an additional 33 lots for that project and 52 lots for a new project
to be called Wildrose. Due to improving market conditions, the Company expects a
higher proportion of total home and lot sales in 1997 to be from sales of lots
to merchant builders compared to the prior year.

During the 1997 first quarter, approval was received from the City of Santa
Clarita for North Hills, an upscale 400-home community overlooking Valencia
Country Club, site of the 1998 L.A. Nissan Open. The project will consist of
higher-priced homes geared toward the growing number of executives desiring to
live in Valencia. There is strong interest in this project and the Company
anticipates selling most, if not all, of these high value lots in 1997.


<PAGE>   8
Part I. Financial Information                                                 8.
-----------------------------
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
         of Operations
         -------------


Joint Venture Program
In the 1997 first quarter, the Company's five active joint-venture homebuilding
projects closed escrow on 26 homes, contributing $5.4 million to revenues and
$570,000 to income. This compares with 49 joint venture closings during the
first three months of 1996, contributing $8.9 million to revenues and $983,000
to income. With the close-out of the CourtHomes and Avalon joint-venture
projects during the 1997 first quarter and the Montana townhome project in the
fourth quarter of last year, the Company does not expect to match the number of
joint venture home sales achieved last year.

New joint venture projects that are expected to open this summer include two
projects with EPAC: Cheyenne, a 166 townhome neighborhood similar to and located
near the successful Montana Townhomes which sold out last year, and 76 upscale
townhomes adjacent to Valencia Country Club in the Valencia Town Center area,
called Avignon. In addition, a new joint venture project in Valencia NorthPark
with Warmington Homes, named Nouvelle, is starting with models scheduled to open
in May. At March 31, 1997, 24 homes were in escrow by homebuilding joint
ventures compared with 47 homes at the end of the 1996 first quarter.

McDOWELL MOUNTAIN RANCH

On April 17, 1996, the Company completed the sale of the entire remaining
McDowell Mountain Ranch project in Scottsdale, Arizona. In the first quarter of
1996, prior to the sale of the entire project, escrow closed on 219 residential
lots which contributed $5.5 million to revenues and $2.1 million to income.

INDUSTRIAL AND OTHER SALES

Sale of the 208-unit Stonecreek apartment complex contributed $18.3 million to
revenues and $12.9 million to income in the 1997 first quarter. Also completed
during the quarter, was the sale of a 2.1-acre commercial parcel in the expanded
portion of Valencia Auto Center for $1.5 million adding $1.0 million to income.

The 1996 first quarter included the sale of a 2.7-acre commercial parcel which
contributed $1.7 million to revenues and $861,000 to income. Also included in
1996 first quarter results are deferred revenues of $449,000 and income of
$234,000 recognized from prior year sales.

At March 31, 1997, properties in escrow included two parcels totaling 9.8 acres
for $2.3 million, a 12.6 acre site for a senior apartment complex for $1.8
million and a 17,400-square-foot, three-story office building for approximately
$2.0 million. All escrow closings are subject to market and other conditions.

COMMUNITY DEVELOPMENT

The Company's community development activities are focused on securing the
necessary governmental land use approvals as well as an intensified strategic
marketing program to complete the build-out of Valencia by 2005 and begin the
development of Newhall Ranch, a new community on the Company's 12,000 acres west
of Valencia. The governmental approval process continues on this new town
planned for 25,000 homes in five lifestyle villages. The Regional Planning
Commission (RPC) has closed the public comment period on the Environmental
Impact Report and RPC approval is expected this summer. The next step will be
hearings at the Los Angeles County Board of Supervisors which should start later
this year. Development is planned to begin around the year 2000.

The Company is working with PGA Tour Golf Course Properties to incorporate the
design of the Tournament Players Club (TPC) championship golf course into the
overall plan of the Westridge project. This 1,700-home project, which is planned
for a wide range of housing choices surrounding the 18-hole golf course, is
expected to undergo public hearings before the Los Angeles County Planning
Commission this year and the Board of Supervisors in early 1998.

The Company is also focusing on obtaining additional residential entitlements in
Valencia to support the accelerated pace of development to meet forecasted
demand. Several lifestyle villages are planned, offering a wide range of homes
based on extensive research studies of homebuyers. During the first quarter of
1997, approval was received from the City of Santa Clarita for North Hills, an
upscale 400-home community overlooking Valencia Country Club.


<PAGE>   9
Part I. Financial Information                                                 9.
-----------------------------
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
         of Operations
         -------------


Community development expenses were approximately the same in the first quarter
of 1997 as compared to the first quarter of 1996. Expenditures for entitlements
are expected to continue at current levels to complete the approval process for
the lifestyle villages that will enable the Company to increase residential
absorption when those lot sales begin in late 1998 or early 1999.

COMMERCIAL OPERATIONS

Commercial operations include the Company's portfolio of income-producing
properties and Valencia Water Company, a wholly-owned public water utility. The
commercial portfolio is a relatively stable source of earnings and cash flow,
which provides debt capacity to grow the Company and working capital for
continuing operations. Revenues from commercial operations for the 1997 first
quarter increased 19% while income increased 10% from the year earlier quarter.
Income from commercial operations did not increase in line with revenues due to
higher depreciation expense associated with new projects.

One of the primary contributors to increases in revenues and income from
commercial operations is the 750,000-square-foot Valencia Marketplace, a
high-volume retail center along Interstate 5, which opened its fully-leased
first phase consisting of 260,000 square feet during the fourth quarter of 1996
with Wal-Mart, Sport Chalet, Toys R Us and Staples. A Circuit City store opened
in the 1997 first quarter, and two major restaurants - Chili's and Macaroni
Grill, a Payless Shoe Store and Michaels, a national arts and crafts retailer,
are scheduled to open by summer. Including space occupied and under development,
the center is currently 77% leased.

Also contributing to the increases is the first phase of NorthPark Village
Square, the Company's newest neighborhood shopping center, which opened in
September, 1996 and is 100% leased. Valencia Town Center shopping mall was 97%
leased, including 5% leased to short-term tenants, at the end of the 1997 first
quarter. The occupancy rate at both River Oaks and Castaic Village neighborhood
shopping centers was 97% at the end of the 1997 first quarter.

In March, 1997, escrow closed on the sale by the Company of Stonecreek, a
208-unit apartment complex. The sale enabled the Company to capitalize on strong
demand for institutional quality apartments and invest the proceeds in its
aggressive commercial expansion program. The Company's Northglen and Portofino
apartment complexes were over 95% leased at March 31, 1997. SkyCrest, the
Company's newest apartment complex, will contain 264 units when completed. At
the end of the 1997 first quarter, 111 units of the 196 units completed were
occupied and an additional 37 units were leased or reserved. SkyCrest is
achieving the highest rental rates in the history of the Company.

The focus of commercial development and portfolio expansion is along Town Center
Drive, a mixed-use pedestrian-oriented "main street" extending west from the
regional shopping mall to the 250-room Hyatt Valencia Hotel and
20,000-square-foot conference center currently under construction. A
55,000-square-foot Spectrum Health Club, across from the hotel, will open this
summer. A 100,000-square-foot entertainment complex with an Edwards IMAX 3D
theatre, 12 additional movie screens, restaurants and retail shops will begin
construction this summer. The Company had a total of nine projects in various
stages of development in the Valencia area at the end of the 1997 first quarter.

AGRICULTURAL OPERATIONS

Excluding a prior year reversal of a $400,000 contingency associated with
previously sold farm land, revenues and income from agricultural operations
increased over the prior year first quarter due to higher than anticipated price
and yield on avocados harvested at the Suey Ranch.

RANCH SALES

No sale of farm land was completed during the current year first quarter. In the
prior year first quarter, the Company completed the sale of 539 acres of row
crop land on the Suey Ranch for $6.5 million contributing $5.9 million to
income.


<PAGE>   10
Part I. Financial Information                                                10.
-----------------------------
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
         of Operations
         -------------


On April 4, 1997, the Company announced the sale of 1,673 acres of vineyards and
undeveloped land on its 38,000-acre Suey Ranch. This sale enabled the Company to
realize historically high vineyard values and is in keeping with the strategy of
selling farm properties that have little or no future development potential. The
sale will contribute $17.9 million to revenues and about $17.0 million to
operating income in the 1997 second quarter. The Company's remaining 3,940 acres
at the Merced Ranch are under a purchase option which the Company expects the
prospective buyer to exercise and complete the sale in the second half of 1997.

The proceeds from these sales will be used to repurchase additional units as
authorized by the Board of Directors, to expand our commercial portfolio and to
pursue our aggressive plans to build out Valencia.


GENERAL AND ADMINISTRATIVE EXPENSE

A 9% decrease in general and administrative expenses is primarily due to
variances in the timing of expenses. The Company expects general and
administrative expenses for the year to be slightly lower than in 1996 due to
the prior year charge for curtailment of a retirement plan for outside directors
and its replacement with a deferred equity compensation plan.

INTEREST AND OTHER, NET

There were no significant variances from the prior year first quarter.


                               FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1997, the Company had cash and cash equivalents of $2.1 million and
$108.9 million in available lines of credit to fund its development activities.
The Company believes it has adequate sources of cash from operations and
available debt capacity, including existing lines of credit, to finance future
operations plus take advantage of new development opportunities. At March 31,
1997, there was no debt against raw land or land under development inventories.

There are no material commitments for capital expenditures other than the
Company's plans in the ordinary course of business to expand its portfolio of
income-producing properties. In the first three months of 1997, the Company
expended $14.3 million for commercial portfolio development. Up to $70 million
in additional capital expenditures for income-producing properties under
development is projected to for the remainder of 1997. Construction of new
income-producing properties on Company-owned land creates additional debt
capacity. It is the Company's policy to limit total Company-wide debt to
approximately 60% or less of the value of the portfolio of income-producing
properties.

At the January 15, 1997 Board of Directors meeting, the existing unit repurchase
program was increased to two million units, bringing total units available for
repurchase to 510,022. From December 1, 1995 through April 16, 1997, the Company
has repurchased a total of 1,818,615 units, including 328,637 in 1997, at an
average purchase price of $16.49. The repurchases equaled 5.0% of the units
outstanding at December 1, 1995.

The following discussion relates to principal items in the Consolidated
Statement of Cash Flows:

Operating Activities

Net cash provided by operating activities in the first quarter of 1997 totaled
$19.2 million and included the sale of a 208-unit apartment complex for $18.3
million in cash. Sales of 26 residential homes and a 2.7-acre commercial parcel
provided $5.7 million in cash and $1.2 million in notes. In addition, notes
totaling $2.8 million from land sales in prior years were collected during the
quarter.


<PAGE>   11
Part I. Financial Information                                                11.
-----------------------------
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
         of Operations
         -------------


Expenditures for land under development inventories totaled $11.8 million in the
1997 first quarter and were primarily for land development and infrastructure to
support future and pending land sales and home construction advances for the
Company's joint-venture homebuilding program.

Investing Activities

Expenditures for income-producing properties under development in Valencia
totaled $14.3 million during the 1997 first quarter. Properties under
construction include Valencia Marketplace, a 750,000-square-foot value-oriented
retail center; the 250-room Hyatt Valencia Hotel and 20,000-square-foot
conference center; SkyCrest, a 264-unit apartment complex; a 55,000-square-foot
Spectrum Health Club; four industrial buildings totaling nearly 300,000 square
feet under the build-to-suit/lease program; and Plaza del Rancho, a
53,000-square-foot mixed-use project adjacent to Valencia Industrial Center.
Construction is scheduled to start this summer on a 100,000-square-foot
entertainment complex with an Edwards IMAX 3D theatre, 12 additional movie
screens, restaurants and retail shops. Four additional build-to-suit/lease
industrial buildings totaling over 300,000 square feet are planned to begin
construction later this year. Of the approximately 600,000 square feet of
build-to-suit/lease space under construction or planned to start this year,
290,000 square feet are already leased.

Financing Activities

An 18-cent per unit distribution totaling $6.2 million was paid on March 10,
1997. This distribution represented a 10-cents per unit regular quarterly cash
distribution and an 8-cents per unit special distribution. The declaration of
distributions is reviewed by the Board of Directors on a quarterly basis. The
declaration of any distribution, and the amount declared, is determined by the
Board of Directors taking into account the Company's earnings, financial
condition and prospects. The next quarterly distribution will be considered by
the Board of Directors on May 21, 1997.

During the 1997 first quarter, borrowings against unsecured lines of credit
totaled $3.6 million. The increase in borrowings was primarily for costs
associated with income-producing projects under development.

A total of 146,737 units were purchased for $2.5 million during the 1997 first
quarter under the Company's unit repurchase program. For additional information
on this repurchase program, refer to the Liquidity and Capital Resources
section.

New Accounting Pronouncement

The Company anticipates that the adoption of SFAS No. 128 - Earnings Per Share
for the year ending December 31, 1997, will not result in disclosures that are
materially different than those presently required by generally accepted
accounting principles contained in this quarterly report. This new statement
simplifies the standards for computing earnings per share (unit) and makes them
comparable to international standards.


Inflation, Risks and Related Factors

This report and other published documents contain forward-looking statements
regarding the status of proposed or pending sales and rental activity, future
planned development, future results of operations and financial condition, the
long-term growth of the Southern California economy and other matters. These
forward-looking statements are based on present trends the Company is
experiencing in residential, industrial and commercial markets. Also, the
Company's success in obtaining entitlements, governmental and environmental
regulations, timing of escrow closings, expansion of its income portfolio and
marketplace acceptance of its business strategies are factors that could affect
results. The following risks and related factors, among others, should be taken
into consideration in evaluating the future prospects for the Company. Actual
results may materially differ from those projected.

Sales of Real Estate: The majority of the Company's revenues are generated by
its real estate operations. The ability of the Company to consummate sales of
real estate is dependent upon various factors, including but not


<PAGE>   12
Part I. Financial Information                                                12.
-----------------------------
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
         of Operations
         -------------


limited to availability of financing to the buyer, 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 will ultimately 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 and certain other segments, which have been known to affect the
region's demographics. Consequently, all sectors of real estate development for
the Company tend to be cyclical. While the economy of Southern California has
shown improvements recently, there can be no assurances that present trends will
continue.

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 projects could be adversely 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.

Geographic Concentration: With the 1996 sale of McDowell Mountain Ranch, the
Company's real estate development activities currently are focused on its 20,000
acres in Los Angeles County, 30 miles north of Los Angeles. 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
or environmental factors which cannot be predicted with certainty, could affect
future results.

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 providing 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 complying with these requirements and dealing with
the process. 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.
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.


Part II. Other Information

Item 6 - Exhibits and Reports on Form 8-K

(a)      Exhibits (listed by numbers corresponding to the Exhibit Table of Item
         601 in Regulation S-K):

         27     Financial Data Schedule

(b)      No report was filed on Form 8-K in the first quarter ended March 31,
         1997



<PAGE>   13
                                   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 Newhall Management Limited Partnership,
                            Managing General Partner

                       By Newhall Management Corporation,
                            Managing General Partner


<TABLE>
<S>                           <C>
Date: May 5, 1997             By  /s/ THOMAS L. LEE
                                 -----------------------------------------------
                                   Thomas L. Lee, Chairman and Chief Executive
                                   Officer of Newhall Management Corporation
                                   (Principal Executive Officer)



Date: May 5, 1997             By  /s/ STUART R. MORK
                                 -----------------------------------------------
                                   Stuart R. Mork, Senior Vice President and 
                                   Chief Financial Officer of Newhall Management
                                   Corporation
                                   (Principal Financial Officer)



Date: May 5, 1997             By  /s/ DONALD L. KIMBALL
                                 -----------------------------------------------
                                   Donald L. Kimball, Vice President - Finance
                                   and Controller of Newhall Management
                                   Corporation
                                   (Principal Accounting Officer)
</TABLE>