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




                                  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, 2001 OR

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


                         Commission file number 0-23259


                       U.S. TIMBERLANDS KLAMATH FALLS, LLC
                         U.S. TIMBERLANDS FINANCE CORP.
             (Exact name of registrant as specified in its charter)

                    Delaware                              93-1217136
                    Delaware                              91-1851612
 (State or other jurisdiction of incorporation         (I.R.S. Employer
                or organization)                      Identification No.)

     625 Madison Avenue, Suite 10-B, New York, NY              10022
       (Address of principal executive offices)              (Zip Code)


Registrant's  telephone number, including area code:   212-755-1100



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>



                                    Form 10-Q

                                Table of Contents

                                                                           Page
Part I.  Financial Information

         Condensed Consolidated Statements of Operations
                  for the three months ended March 31, 2001 and 2000 . .     3

         Condensed Consolidated Balance Sheets
                  at March 31, 2001 and December 31, 2000  . . . . . . .     4

     Condensed Consolidated Statements of Cash Flows
         for the three months ended March 31, 2001 and 2000  . . . . . .     5

         Notes to Condensed Consolidated Financial Statements . . . . . .    6

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


Part II.  Other Information

         Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . .   13

         Item 2.  Changes in Securities and Use of Proceeds . . . . . . .   13

         Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . .   13

         Item 4.  Submission of Matters to a Vote of Security Holders . .   13

         Item 5.  Other Information . . . . . . . . . . . . . . . . . . .   13

         Item 6.  Exhibits and Reports on Form 8-K . . . . . . . . . . .    14



                                      2 of 15

<PAGE>



PART l.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS
-------


                       U.S. TIMBERLANDS KLAMATH FALLS, LLC
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

                                                      Quarter Ended March 31,
                                                      ----------------------
                                                           2001          2000
                                                        --------     ---------

Revenues                                                 $  9,467      $ 11,924
Cost of timber harvested                                   (4,692)       (3,887)
Depletion, depreciation and road amortization              (4,907)       (3,803)
                                                         --------      --------
      Gross profit (loss)                                    (132)        4,234
                                                         --------      --------

Selling, general and administrative expenses               (2,553)       (1,956)
Equity in net income of affiliate                             275         1,157
                                                         --------      --------
      Operating income (loss)                              (2,410)        3,435
                                                         --------      --------

Interest expense                                           (5,403)       (5,454)
Interest income                                                74           122
Amortization of deferred financing fees                      (168)         (169)
Other income                                                   41           109
                                                         --------      --------

      Net loss                                             (7,866)       (1,957)
                                                         ========      ========


      See accompanying notes to the condensed consolidated financial statements



                                    3 of 15





<PAGE>

                       U.S. TIMBERLANDS KLAMATH FALLS, LLC
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                             March 31, December 31,
                                                              2001        2000
                                                           -----------  --------
                                                           (Unaudited)     *
ASSETS
Current assets:
     Cash and cash equivalents                               $     --   $  3,168
     Accounts and current portion of notes receivable, net      1,406      6,875
     Prepaid expenses and other current assets                     36         35
                                                             --------   --------

         Total current assets                                   1,442     10,078

     Timber and timberlands, net                              253,927    265,109
     Investment in affiliate                                   31,749     20,588
     Property, plant and equipment, net                           895        926
     Notes receivable, less current portion                       328         --
     Deferred financing fees, net                               4,480      4,648
                                                             --------   --------

         Total assets                                        $292,821   $301,349
                                                             ========   ========

LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
     Cash overdraft                                          $  2,056   $     --
     Accounts payable and accrued liabilities                   8,549      4,548
     Payable to general partner and affiliate                   3,382      2,065
     Deferred revenue                                              --      1,474
                                                             --------   --------

         Total current liabilities                             13,987      8,087
                                                             --------   --------

     Long-term debt                                           225,000    225,000
                                                             --------   --------

Members' Equity:
     Managing member's interest                                   538        683
     Nonmanaging member's interest                             53,296     67,579
                                                             --------   --------

                                                               53,834     68,262
                                                             --------   --------

         Total liabilities and members' equity               $292,821   $301,349
                                                             ========   ========



*    Derived from audited Consolidated Balance Sheet as of December 31, 2000

     See accompanying notes to the condensed consolidated financial statements


                                    4 of 15

<PAGE>

                       U.S. TIMBERLANDS KLAMATH FALLS, LLC
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   Three Months Ended March 31,
                                                                            ----------------------------------------
                                                                                  2001                   2000
                                                                            -----------------     ------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>                  <C>
Net cash provided by operating activities                                        $  5,884             $  7,469
                                                                                 --------             --------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Timber, timberlands and road additions                                       (4,546)                (417)
      Purchase of property, plant and equipment - net                                  --                   (6)
      Proceeds from sale of assets                                                     --                   46
                                                                                 --------             --------
Net cash used in investing activities                                              (4,546)                (377)
                                                                                 --------             --------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Cash overdraft                                                                2,056                   --
      Distributions to members                                                     (6,562)              (6,561)
                                                                                 --------             --------
Net cash used in financing activities                                              (4,506)              (6,561)
                                                                                 --------             --------

Decrease in cash and cash equivalents                                              (3,168)                 531
Cash and cash equivalents - beginning of period                                     3,168                2,798
                                                                                 --------             --------

Cash and cash equivalents - end of period                                        $     --             $  3,329
                                                                                 ========             ========

Noncash activities:
      Contribution of timber cutting rights for investment in affiliate          $ 10,886             $     --
</TABLE>


      See accompanying notes to the condensed consolidated financial statements



                                    5 of 15

<PAGE>







                          U.S. TIMBERLANDS COMPANY, LP
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  (In thousands, except as otherwise indicated)
                                   (Unaudited)

1.  Business and Basis of Presentation:

Business

The accompanying  consolidated financial statements include the accounts of U.S.
Timberlands  Klamath Falls, LLC ("USTK"),  a Delaware limited liability company,
and its wholly  owned  subsidiary,  U.S.  Timberlands  Finance  Corp.  ("Finance
Corp"),  collectively referred to hereafter as the Company. Finance Corp. serves
as the co-obligator for USTK's notes. It has nominal assets and does not conduct
operations. All intercompany transactions have been eliminated in consolidation.

U.S. Timberlands Company, LP (the "MLP") owns a 99% non-managing member interest
in USTK.  The MLP was formed on June 27, 1997 to acquire  and own  substantially
all of the equity  interests  in USTK and to acquire  and own the  business  and
assets of U.S.  Timberlands  Management  Company,  LLC,  formerly  known as U.S.
Timberlands  Services  Company,  LLC.  U.S.  Timberlands  Services  Company (the
"Manager")  manages the  business  of the Company and owns a 1% managing  member
interest in USTK.

The primary activity of the Company is the growing of trees and the sale of logs
and standing  timber to third party wood  processors.  The  Company's  timber is
located  in  Oregon,  east  of  the  Cascade  Range.  Logs  harvested  from  the
timberlands are sold to unaffiliated domestic conversion facilities.  These logs
are processed for sale as lumber, plywood and other wood products, primarily for
use in new residential home construction, home remodeling and repair and general
industrial applications.

Basis of Presentation
These  condensed  consolidated  financial  statements  have been prepared by the
Company, without audit by independent public accountants,  pursuant to the rules
and regulations of the United States Securities and Exchange Commission.  In the
opinion of management,  the accompanying  unaudited financial statements include
all normal  recurring  adjustments  necessary to present fairly the  information
required  to be set forth  therein.  Certain  information  and note  disclosures
normally included in financial  statements prepared in accordance with Generally
Accepted  Accounting  Principles  have been  condensed  or  omitted  from  these
statements  pursuant  to such  rules  and  regulations  and,  accordingly  these
condensed  consolidated  financial statements should be read in conjunction with
the  consolidated  financial  statements  included in the Company's  2000 Annual
Report on Form 10-K.  Operating results for the quarter ended March 31, 2001 are
not necessarily indicative of the results that may be expected for the full year
or any other period.

There  have  been no  significant  changes  in the  accounting  policies  of the
Company.  There were no  significant  changes in the Company's  commitments  and
contingencies as previously described in the 2000 Annual Report on Form 10-K.

Reclassifications
Certain  amounts  presented for 2000 have been  reclassified  for  comparability
purposes and have no impact on net loss.



                                    6 of 15

<PAGE>

2.  Timber and Timberlands:
Timber and timberlands consisted of the following:



                                                       March 31,    December 31,
                                                          2001          2000
                                                   --------------  ------------

Timber and logging roads                                $311,259    $317,651
Timberlands                                               39,111      39,111
Seed orchard and nursery stock                             1,416       1,364
                                                        --------    --------

                                                         351,786     358,126
Less accumulated depletion and road amortization          97,859      93,017
                                                        --------    --------

                                                        $253,927    $265,109
                                                        ========    ========


3.  Investment In Affiliate:
The following is summarized  financial  information for U.S. Timberlands Yakima,
LLC, ("USTY") the MLP's equity basis affiliate as of March 31:


                                    2001           2000
                                  --------      ---------

        Net sales                 $ 4,651       $ 4,785
        Gross profit                2,937         3,111
        Net income                  1,230         1,401


On February 26, 2001, the Company  contributed  cutting rights on  approximately
31,000 acres of timberland located in Central Oregon to its affiliate, USTY. The
cutting  rights have an agreed upon value of $12.0 million and were added to the
Company's  Preferred  Interest in USTY. Terms of the additional senior preferred
interest  include  a  cumulative  annual  guaranteed  return  of 5% of the $12.0
million  agreed  upon  value.  The  additional  senior  preferred   interest  is
redeemable at the Company's  option on December 31, 2004 or at USTY's option any
time prior thereto for a redemption  price equal to the agreed upon value of the
Preferred Interest,  either in cash or by returning the contributed timberlands,
plus any  portion  of the  guaranteed  return  not yet paid by USTY prior to the
redemption date. The Company recorded its additional  preferred  interest at its
basis for the timber of approximately $10.9 million.

On March 30, 2001, the Company purchased timber cutting rights for approximately
17.2 million board feet from USTY for $4.5 million.  These timber cutting rights
expire in March 2004

4.  Short-Term Debt:
The  Company  has a  credit  facility  with an  affiliate  of the  Manager  (the
"Affiliate Credit  Facility")  consisting of a revolving line of credit of up to
$12.0 million.  Borrowings  under the Affiliate Credit Facility bear interest at
the prime lending rate as published in the Wall Street  Journal plus  applicable
margin  (2.25%  at March 31,  2001),  which is based on the  Company's  leverage
ratio.  The  prime-lending  rate was  8.00% at March  31,  2001.  There  were no
outstanding  borrowings  under the Affiliate  Credit Facility at March 31, 2001.
The Affiliate  Credit  Facility  expires June 30, 2001 and any amounts  borrowed
thereunder shall then be due and payable.



                                    7 of 15

<PAGE>


6.  Subsequent Events:

On May 10, 2001,  the MLP  announced the receipt of an offer from a group led by
senior  management to take the MLP private.  The offer from an entity controlled
by  management  contemplates  a cash tender offer for  approximately  32% of the
outstanding  common limited  partnership  units of the MLP for $7.75 per unit in
cash.  Unitholders will receive 9.625%,  seven-year senior subordinated notes of
the entity  controlled by management in the principal  amount of $7.75 per unit,
for the remaining common limited partnership units. This offer is subject to the
consummation  of  financing  with respect to which an oral  commitment  has been
received,  the  execution  of the  definitive  agreements  and  other  customary
conditions.

On May 10, 2001,  the Board of Directors of the Manager  announced an indefinite
suspension  of  the  quarterly  distribution  to  Members  of  the  Company  and
Unitholders of the MLP due to current conditions in the timber market.





                                    8 of 15

<PAGE>



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


Forward-Looking Statements

     Certain information contained in this report may constitute forward-looking
statements  within the  meaning of the federal  securities  laws.  Although  the
Company believes that expectations reflected in such forward-looking  statements
are  based  upon  reasonable  assumptions,  it can  give no  assurance  that its
expectations will be achieved. Forward-looking information is subject to certain
risks,  trends and  uncertainties  that  could  cause  actual  results to differ
materially from those projected.  Such risks,  trends and uncertainties  include
the highly  cyclical nature of the forest products  industry,  general  economic
conditions,  competition, price conditions or trends for the Company's products,
the possibility that timber supply could increase if governmental, environmental
or endangered  species policies change, and limitations on the Company's ability
to  harvest  its  timber  due  to  adverse   natural   conditions  or  increased
governmental restrictions.  These and other risks are described in the Company's
other reports and registration  statements,  which are available from the United
States Securities and Exchange Commission.

Overview

The Company's principal  operations consist of growing and harvesting timber and
selling  logs,  standing  timber and  related  by-products  to third  party wood
processors. These logs and by-products are processed for sale as lumber; molding
products; doors; mill work; commodity, specialty, and overlaid plywood products;
laminated  veneer lumber;  engineered  wood I-beams;  particleboard;  hardboard;
paper  and  other  wood  products.  These  products  are  used  in  residential,
commercial,  and industrial  construction;  home remodeling and repair;  general
industrial  applications;  and a variety of paper  products.  The results of the
Company's  operations  and its  ability to pay  quarterly  distributions  to its
Members  depend upon a number of factors,  many of which are beyond its control.
These factors include  general  economic and industry  conditions,  domestic and
export prices,  supply and demand for timber and logs,  seasonality,  government
regulations  affecting  the  manner  in  which  timber  may  be  harvested,  and
competition from other supplying regions and substitute products.

Seasonality
     The Company's log and standing  timber sales volumes are generally at their
lowest  levels  in the first  and  second  quarter  of each  year.  In the first
quarter,  heavy snowfalls in higher  elevations  prevent access to many areas of
the  Company's  timberlands.  This limited  access,  along with spring  break-up
conditions (when warming weather thaws and softens  roadbeds) in March or April,
restricts  logging  operations to lower  elevations  and areas with rockier soil
types.  As a result  of these  constraints,  the  Company's  sales  volumes  are
typically at their lowest in the first quarter,  improving in the second quarter
and at their highest during the third and fourth quarters. Most customers in the
region react to this seasonality by carrying  sufficiently  high log inventories
at the end of the  calendar  year to carry  them to the  second  quarter  of the
following year.



                                    9 of 15

<PAGE>


Current Market Conditions

     First  quarter  2001  prices for  finished  wood  products  (e.g.,  lumber,
plywood,  and engineered wood products) declined slightly from fourth quarter of
2000 and are down  significantly  from the same period in 2000.  The Company has
experienced significant decreases in log and timber prices for all species, with
White  Fir,  Ponderosa  Pine and  Lodgepole  Pine all being down over 15% in the
first quarter of 2001 as compared to the same period in 2000.

Results of Operations

         Selected operating statistics for the Company:


<TABLE>
<CAPTION>
                                     Sales Volume (MBF)                 Price Realization (MBF)
                                     ------------------                 -----------------------
                                                             Timber                              Timber
             Period                   Logs      Stumpage      Deeds      Logs       Stumpage      Deeds
             ------                   ----      --------      -----      ----       --------      -----
              2001
<S>                                  <C>             <C>       <C>       <C>           <C>         <C>
Three Months Ended March 31           20,939           --      14,744     $ 357        $  --        $ 133

              2000
Three Months Ended March 31           20,564          503       8,701     $ 425         $ 379       $ 325
</TABLE>


Quarter Ended March 31, 2001 Compared to Quarter Ended March 31, 2000

     Revenues Revenues for the quarter ended March 31, 2001 were $9.5 million, a
decrease  of $2.4  million or 20% from  revenues  of $11.9  million for the same
period in 2000.  Revenues  during  the  first  quarter  of 2001  were  below the
Company's expectations due to the continued industry price declines. Pricing for
some of the Company's species is at or near 15-year lows.

     Timber  deed and  stumpage  sales for the first  quarter  of 2001 were $2.0
million on volume of 14.7 million board feet  ("MMBF"),  as compared to the same
period in 2000,  when timber deed and  stumpage  sales were $3.0  million on 9.2
MMBF.  The average  timber deed and stumpage  price was $133 per thousand  board
feet ("MBF")  during the first  quarter of 2001, as compared to $325 per MBF for
the same  period in 2000.  The  decrease  in deed and  stumpage  value  reflects
deteriorating  market conditions as well as a lower quality sales mix during the
first quarter of 2001 as compared to the same period in 2000.

     Log sales for the quarter  ended March 31, 2001 were $7.5 million on volume
of 20.9 MMBF,  as  compared  to the same period in 2000 when log sales were $8.7
million on 20.6 MMBF.  The  average  sales  price was $357 per MBF for the first
quarter of 2001,  as  compared to an average of $425 per MBF for the same period
in 2000. The decline in log prices reflects a general decrease in log prices and
a  significant  shift to a lower value species mix sold during the first quarter
of 2001 as compared to the same period in 2000.  The decrease in the average log
sales price was primarily  attributable to a 24%, 19%, and 15% decrease in sales
realization on Ponderosa Pine, White Fir, and Lodgepole Pine, respectively.  The
decrease  in  realization  is a  combination  of  pricing  and the fact that the
Company sold a higher  percentage of smaller  diameter,  lower grade logs in the
first quarter of 2001 as compared to the first quarter of 2000.



                                    10 of 15

<PAGE>


     Gross  Profit  (Loss) The Company  had a gross loss of $0.1  million in the
first quarter of 2001 as compared to a gross profit of $4.2 million for the same
period in 2000, a decrease of $4.3  million.  As a percentage of sales the gross
loss was (1.4%) as compared to a gross profit  percentage of 35.5 % in the first
quarter  of 2000.  The  decrease  in gross  profit  (loss) in  dollars  and as a
percentage  of sales is a result  of  significant  decreases  in the  amount  of
realization on timber deed sales combined with  deteriorating  market conditions
and  increases in log and haul costs.  Log and haul costs have  increased as the
Company has had longer haul  distances  due to its normal  customer base scaling
back production in the current market.

     Selling,   General  and  Administrative   Expenses  Selling,   general  and
administrative expenses increased by $0.6 million from $2.0 million in the first
quarter of 2000 to $2.6 million in the first  quarter of 2001.  The increase was
primarily due to a $0.5 million  increase in  professional  services  during the
first quarter of 2001 as compared to the same period in 2000.

     Equity in Net Income of Affiliate  Equity in net income of affiliate during
the first quarter of 2001  represents  the Company's  accrual of its  guaranteed
return from a preferred  investment in an affiliate of $0.3 million.  During the
first quarter of 2000 the Company  recaptured $0.6 million of losses absorbed in
1999  and had an  accrual  of $0.6  million  for its  preferred  return  on such
investment.


Financial Condition and Liquidity

     Operating Activities Cash flows provided by operating activities during the
three months ended March 31, 2001 were $5.9 million, as compared to $7.5 million
during the same  period in 2000.  The $1.6  million  decrease is due to net loss
increasing  $5.9  million for the first three  months of 2001 as compared to the
same period in 2000 partially offset with an increase in cash flows provided due
to changes in working capital components.

     Investing  Activities  Cash flows used in  investing  activities  were $4.5
million  during the first three  months of 2001,  as  compared  to $0.4  million
during the same period in 2000.  The increase is primarily  attributable  to the
Company's  purchase of cutting rights from its affiliate for approximately  $4.5
million  partially  offset by a decrease in general capital  spending during the
first quarter of 2001 as compared to the same period in 2000.

     Financing  Activities  Cash flows used in financing  activities  during the
first quarter of 2001 were $4.5 million.  Cash flows used in financing consisted
of distributions to its members totaling $6.6 million for the first three months
of 2001,  partially offset by a cash overdraft of $2.1. During the first quarter
of 2000,  cash flows  used in  financing  were $6.6  million  consisting  of the
distributions to its members.

     The Company has a credit  agreement  with an  affiliate of the Manager (the
"Affiliate Credit  Facility").  The Affiliate Credit Facility allows the Company
to borrow up to $12.0 million under certain terms and  covenants.  The covenants
include restrictions on the Company's ability to make cash distributions,  incur
certain additional indebtedness or incur certain liens. In addition, the Company
is required to maintain certain financial ratios.  The Affiliate Credit Facility
will expire on June 30, 2001. At that time, any amounts borrowed will be due and
payable.  As of March 31, 2001 there were no  outstanding  borrowings  under the
Affiliate  Credit  Facility.  The Company has the ability to generate  cash flow
through the acceleration of planned log and timber deed sales. In addition,  the
Company's  plan is to use  investment  and  commercial  banks to raise funds for
acquisitions.



                                    11 of 15

<PAGE>

     The  agreements  governing the Company's  9-5/8% senior notes (the "Notes")
and the Affiliate  Credit  Facility  contain  restrictive  covenants,  including
limitations on harvest levels,  land sales, cash distributions and the amount of
future  indebtedness.  In  addition,  these  agreements  require  the Company to
maintain certain financial ratios. Under the Notes, the Company's average annual
adjusted harvest volume over any period of four consecutive  years cannot exceed
a volume  of  approximately  147  MMBF as  adjusted  for  timberland  sales  and
purchases.  The Notes also limit  one-year  harvest  levels and  average  annual
harvest levels for consecutive  two-and three-year periods. As of March 31, 2001
the Company was in compliance  with the  covenants and ratios  pertaining to the
Notes and Affiliate Credit Facility.

     Through the first three months of 2001,  the Company  funded its operations
and met its cash  requirements for distributions to its Members and debt service
from cash on hand, cash generated from current  operations and borrowings  under
its Affiliate Credit Facility.

     Cash  required to meet the Company's  debt service and the  quarterly  cash
distributions will be significant. To meet its working capital requirements, the
Company has been selling logs and making timber sales at a rate in excess of the
Manager's  estimate of the current  annual board footage growth on the Company's
timberlands.  The debt service and quarterly cash distributions have been funded
from  operations and borrowings.  Given projected  volumes for sales of logs and
timber,  estimated  current  board  footage  growth on the  timberlands  and the
harvest restrictions in the Notes, unless prices improve, costs are reduced, new
markets are developed or the Company makes accretive acquisitions, the Company's
ability in the future to make distributions's will be adversely affected. On May
10, 2001 the Company announced an indefinate  suspension of  distributions.  The
Company continues to evaluate means to improve cash flows, including the factors
mentioned above.  There can be no assurance that prices will improve or that the
Company will be able to take any of these actions and it is unlikely prices will
improve or any of these actions will take effect within a short-term horizon.





                                    12 of 15

<PAGE>


PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings

         In November  2000,  six  purported  class  action  lawsuits  were filed
against the  Manager and the Board of  Directors  of the Manager  (the  "Board")
alleging breach of fiduciary duty and  self-dealing by the Manager and the Board
in  connection  with an  announcement  on  November  2, 2000 that a group led by
senior  management  has begun the process to explore taking the MLP private (the
"Going-Private Transaction").

         All six  lawsuits  were filed in the Court of  Chancery of the State of
Delaware for the County of New Castle. Each lawsuit was filed by a Unitholder of
the  MLP,  on  behalf  of all  other  Unitholders  of the MLP who are  similarly
situated,  and seeks to have the class certified and the Unitholder bringing the
lawsuit named as representative of the class. In addition,  the lawsuits seek to
enjoin the Going-Private  Transaction,  to rescind the Going-Private Transaction
if it is consummated, and to recover damages and attorneys' fees. In addition to
naming the Manager and the Board as defendants, all six lawsuits name the MLP as
a defendant.

         In the opinion of management,  after consultation with outside counsel,
the pending  lawsuits are not expected to have a material  adverse effect on the
Company's financial position or results of operations.


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




                                    13 of 15

<PAGE>




Item 6.  Exhibits and Reports on Form 8-K

 (a.) Exhibits

<TABLE>
<CAPTION>

<S>     <C>
      +3.1      Amended and Restated Agreement of Limited Partnership of U.S. Timberlands Company, LP

      +3.2      Second Amended and Restated Operating Agreement of U.S. Timberlands Klamath Falls, LLC

     +10.2      Indenture among U.S. Timberlands Klamath Falls, LLC, U.S. Timberlands Finance Corp.
                and State Street Bank and Trust Company, as trustee
     +10.3      Contribution, Conveyance and Assumption Agreement among U.S. Timberlands Company, LP
                and certain other parties
     *10.4      Form of U.S. Timberlands Company, LP 1997 Long-Term Incentive Plan

     *10.5      Employment Agreement for Mr. Rudey

     *10.9      Supply Agreement between U.S. Timberlands Klamath Falls, LLC and Collins Products LLC

   ++10.10      Operating Agreement of U.S. Timberlands Yakima, LLC

     *21.1      List of Subsidiaries
</TABLE>



*    Incorporated by reference to the same numbered  Exhibit to the Registrant's
     Registration Statement on Form S-1 filed November 13, 1997.

+    Incorporated by reference to the same numbered  Exhibit to the Registrant's
     Current  Report on Form 8-K filed  January 15,  1998.  ++  Incorporated  by
     reference to the same numbered exhibit to the Registrant's  Form 10-Q filed
     on May 15, 2000.



(b.) Reports on Form 8-K


         The Company filed no reports on Form 8-K during the quarter ended March
31, 2001.


                                    14 of 15

<PAGE>



                                   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.




     Date: May 21, 2001         U.S. TIMBERLANDS COMPANY, LLC
                                U.S. TIMBERLANDS FINANCE CORP.
                                By: U.S. Timberlands Services Company, LLC
                                        as Manager



                                By: /s/  Thomas C. Ludlow
                                    ----------------------------------
                                     Thomas C. Ludlow
                                     Chief Financial Officer
                                     (Chief Financial Officer
                                       and Duly Authorized Officer)


                                By:  /s/  Toby A. Luther
                                    ----------------------------------
                                     Toby A. Luther
                                     Corporate Controller - Western Operations
                                     (Principal Accounting Officer)