================================================================================
                                  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,
                       2002
                                       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         (I.R.S. Employer Identification No.)
    incorporation or organization)

     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, 2002 and 2001 .......  3


         Condensed Consolidated Balance Sheets
                  at March 31, 2002 and December 31, 2001 ..................  4

     Condensed Consolidated Statements of Cash Flows
         for the three months ended March 31, 2002 and 2001 ................  5

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

         Management's Discussion and Analysis of Financial
                  Condition and Results of Operations ......................  8


Part II.  Other Information

         Item 1.  Legal Proceedings ........................................  12

         Item 2.  Changes in Securities and Use of Proceeds ................  12

         Item 3.  Defaults Upon Senior Securities ..........................  12

         Item 4.  Submission of Matters to a Vote of Security Holders ......  12

         Item 5.  Other Information.........................................  12

         Item 6.  Exhibits and Reports on Form 8-K .........................  13



<PAGE>



PART l.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

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


                                               Three Months Ended March 31,
                                                --------------------------
                                                   2002      2001
                                                ---------  ------------
Revenues                                        $ 2,155    $ 9,467
Cost of timber harvested                         (1,037)    (4,692)
Depletion, depreciation and road amortization    (1,066)    (4,907)
                                                -------    -------
      Gross profit (loss)                            52       (132)

Selling, general and administrative expenses     (1,381)    (2,553)
Equity in net income (loss) of affiliate         (2,327)       275
                                                -------    -------
      Operating loss                             (3,656)    (2,410)

Interest expense                                 (5,384)    (5,403)
Interest income                                       3         74
Amortization of deferred financing fees            (169)      (168)
Other income, net                                    43         41
                                                -------    -------
      Net loss                                  $(9,163)   $(7,866)
                                                =======    =======



      See accompanying notes to the condensed consolidated financial statements


                                    3 of 14

<PAGE>


                       U.S. TIMBERLANDS KLAMATH FALLS, LLC
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                                  March 31,   December 31,
                                                    2002          2001
                                                 ----------   -----------
                                                 (Unaudited)        *
ASSETS
Current assets:
     Cash and cash equivalents                   $    490   $  1,070
     Accounts receivable, net                         125        311
     Other receivables                                165        280
     Notes receivable                                 -        1,153
     Prepaid expenses and other current assets        200        225
                                                 --------   --------

         Total current assets                         980      3,039

     Timber and timberlands, net                  213,552    214,511
     Investment in affiliate                       29,282     31,609
     Property, plant and equipment, net               799        811
     Notes receivable, less current portion           825        428
     Deferred financing fees, net                   3,805      3,973
                                                 --------   --------

         Total assets                            $249,243   $254,371
                                                 ========   ========

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
     Accounts payable                                 197      1,334
     Accrued liabilities                            8,442      3,331
     Payable to general partner and affiliate         102         41
                                                 --------   --------
         Total current liabilities                  8,741      4,706
                                                 --------   --------

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

Members' equity:
     Managing member's interest                       156        248
     Nonmanaging member's interest                 15,346     24,417
                                                 --------   --------

                                                   15,502     24,665
                                                 --------   --------

         Total liabilities and member's equity   $249,243   $254,371
                                                 ========   ========


*    Derived from audited Consolidated Balance Sheet as of December 31, 2001.

     Timber and  timberlands,  net and  Members'  equity  have been  restated to
     reflect  reductions  of  $787  from  amounts  previously  reported.   These
     reductions  reflect  eliminations  not previously  recorded of intercompany
     profits on  purchases  of timber and timber  deeds from an  affiliate.  The
     Company will file a form 10k/a for 2001 to reflect these restatements.


     See accompanying notes to the condensed consolidated financial statements



                                     4 of 14

<PAGE>

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

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                            -------------------------
                                                                2002         2001
                                                            ----------   ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                           <C>         <C>
Net cash (used in) provided by operating activities           $   (473)   $  5,884
                                                              --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Timber, timberlands and road additions                      (103)     (4,546)
      Purchase of property, plant and equipment - net               (4)       --
                                                              --------    --------
Net cash used in investing activities                             (107)     (4,546)
                                                              --------    --------

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

Decrease in cash and cash equivalents                             (580)     (3,168)
Cash and cash equivalents - beginning of period                  1,070       3,168
                                                              --------    --------

Cash and cash equivalents - end of period                     $    490    $   --
                                                              ========    ========

Noncash activities:
      Contribution of timber cutting rights and timberlands
            for investment in affiliate                       $   --      $ 10,886


Cash paid for interest:                                       $   --
</TABLE>






      See accompanying notes to the condensed consolidated financial statements


                                     5 of 14

<PAGE>




                       U.S. TIMBERLANDS KLAMATH FALLS, LLC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
        (In thousands, except per Unit amounts or 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 in 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 accounting
principles  generally  accepted  in the  United  States  of  America  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 2001 Annual Report on Form 10-K. Operating results for
the three month period ended March 31, 2002 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.


                                    6 of 14

<PAGE>

2.  Timber and Timberlands:

Timber and timberlands consisted of the following:
<TABLE>
<CAPTION>
                                                                       March 31,     December 31,
                                                                          2002           2001
                                                                   --------------  --------------
<S>                                                                   <C>             <C>
        Timber and logging roads                                      $  308,546      $  309,759
        Timberlands                                                       34,566          34,566
        Seed orchard and nursery stock                                     1,499           1,437
                                                                   --------------  --------------
                                                                         344,611         345,762
        Less accumulated depletion and road amortization                 131,059         131,251
                                                                   --------------  --------------
                                                                      $  213,552      $  214,511
                                                                   ==============  ==============
</TABLE>

3.  Short-Term Debt:

The Company had a credit  facility with an affiliate of the General Partner (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  (1.50%  at March 31,  2002),  which is based on the  Company's  leverage
ratio. The prime-lending rate was 4.75% at March 31, 2002. The Company had $0 in
outstanding  borrowings  under the Affiliate  Credit Facility at March 31, 2002.
The Affiliate Credit Facility  expired,  by its terms, at the end of April 2002.
The Company is seeking to replace the Affiliate  Credit  Facility with a working
capital  facility from an  unaffiliated  third party.  However,  there can be no
assurance  that the  Company  will be able to  obtain a working  capital  credit
facility  in  amounts  sufficient  to fund  its  working  capital  needs  from a
traditional  commercial  lender. The Company and the affiliated lender have also
initiated discussions with respect to a further extension of the credit facility
on  terms  comparable  to those  that  would be  obtained  from an  unaffiliated
financing source.

4.  Long-Term Debt and Distributions:

As of March 31, 2002, the Company was not permitted to make any distributions as
it had not exceeded the  requisite  Consolidated  Fixed  Charge  Coverage  Ratio
within the  Restricted  Payments  provisions of the Senior Notes.  . An interest
payment of  $10,828,125  was due under the Notes on May 15,  2002.  The  Company
expected to complete a timberland  sale and to pay a portion of the interest due
with the proceeds of such sale.  While the sale was not completed,  as expected,
before May 15,  2002,  the Company  expects the sale to be completed in the next
several  weeks and expects to pay the  interest  within the 30 day grace  period
provided in the  Indenture.  If the Company  fails to make the interest  payment
within the  applicable  grace  period,  the Trustee  under the Indenture and the
holders of 25% of the notes can declare the principal  and all accrued  interest
to be due and payable.


5.  Other Matters:

On April 23, 2002,  the Company  announced the receipt of a revised offer from a
group led by senior  management to take the Company  private.  The revised offer
contemplates  a cash tender  offer for 100% of the  outstanding  common  limited
partnership  units not already owned by the entity or its  affiliates  for $2.75
per unit in cash.  This offer is subject to receipt of financing,  the execution
of the definitive  agreements  and other  customary  conditions,  as well as the
dismissal or satisfactory settlement of any outstanding litigation.


                                    7 of 14

<PAGE>

On April 25, 2002,  the Company  announced that several  purported  class action
lawsuits were filed against the general  partner of the Company and the board of
directors  of the  general  partner  alleging,  among  other  things,  breach of
fiduciary  duty  and  self-dealing  by the  general  partner  and the  board  in
connection  with the receipt by the Company of a revised offer,  dated April 23,
2002,  from a group led by senior  management of the Company to take the Company
private.

     The  lawsuits  were filed in the Court of Chancery of the State of Delaware
for the County of New Castle.  The lawsuits were filed by purported  unitholders
of the Company, on behalf of all other similarly situated unitholders,  and seek
to have the class  certified and the purported  unitholders  bringing the action
named as a 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. The lawsuits also name
the Company 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

Through the first three months of 2002,  the Company  funded its  operations and
met its cash  requirements  for debt  service  from  cash on hand.  An  interest
payment of  $10,828,125  was due under the Notes on May 15,  2002.  The  Company
expected to complete a timberland  sale and to pay a portion of the interest due
with the proceeds of such sale.  While the sale was not completed,  as expected,
before May 15,  2002,  the Company  expects the sale to be completed in the next
several  weeks and expects to pay the  interest  within the 30 day grace  period
provided in the Indenture.

The Company will need to sell logs, timber deeds and excess  timberlands to meet
its short term cash  needs.  While the  Company  believes  the  timberland  sale
discussed  in  the  preceding  paragraph  will  be  completed,  the  Company  is
evaluating  the sale of  certain  other  assets  to meet its  current  liquidity
requirements.  While the Company believes it can meet these  requirements in the
normal  course of business,  there can be no assurance  that the Company will be
able to complete asset sales on terms acceptable to the Company


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. The Company is
currently not permitted to make any distributions to its members. (see Financial
Condition and Liquidity)


                                    8 of 14

<PAGE>

Seasonality

     The Company's log and standing  timber sales volumes are generally at their
lowest  levels in the first  and  second  quarters  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.

Current Market Conditions

     First  quarter  2002  prices for  finished  wood  products  (e.g.,  lumber,
plywood,  and engineered wood products) were higher than fourth quarter 2001 and
higher than the same period in 2001.  First quarter  prices for Douglas Fir were
up 7% from fourth quarter 2001 and up 18% from year ago levels. White Fir was up
8% and 6% from last year's levels. Ponderosa and Lodgepole Pine were up 26% from
the same period in 2001.

     Average log prices were down 1% from fourth  quarter  2001 and down 5% from
first  quarter 2001 levels.  This was due to an oversupply of logs in UST market
areas,  and selling first quarter  production at previously  contracted  amounts
based on fourth quarter prices, which were lower. Product price increases led to
an increase  in the amount of logs  available  from other  sources in UST market
areas. Many of our customer's  facilities carried high log inventories into 2002
and were purchasing at lower prices to try to attain profitability.

Second quarter log prices are expected to be higher reflecting the finished wood
product prices experience during first quarter 2001.

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
              ------                    ----      --------      -----        ----      --------      -----

               2002
<S>                                      <C>                       <C>        <C>            <C>       <C>
Three Months Ended March 31              5,024            -        2,333      $ 349          $ -       $ 169

               2001
Three Months Ended March 31             20,939            -       14,744      $ 357          $ -       $ 133
</TABLE>



                                    9 of 14

<PAGE>



Quarter Ended March 31, 2002 Compared to Quarter Ended March 31, 2001

     Revenues Revenues for the quarter ended March 31, 2002 were $2.2 million, a
decrease  of $7.3  million or 77% from  revenues  of $9.5  million  for the same
period in 2001. The significant decrease in revenues during the first quarter of
2002 was caused by the continuation of weak industry  conditions,  which has led
the Company to voluntarily curtail sales at price it considers unattractive.

     Timber  deed and  stumpage  sales for the first  quarter  of 2002 were $0.4
million on volume of 2.3 million  board feet  ("MMBF"),  as compared to the same
period in 2001,  when timber deed and  stumpage  sales were $2.0 million on 14.7
MMBF.  The average  timber deed and stumpage  price was $169 per thousand  board
feet ("MBF")  during the first  quarter of 2002, as compared to $133 per MBF for
the same period in 2001.

     Log sales for the quarter  ended March 31, 2002 were $1.8 million on volume
of 5.0 MMBF,  as  compared  to the same  period in 2001 when log sales were $7.5
million on 20.9 MMBF.  The  average  sales  price was $349 per MBF for the first
quarter of 2002,  as  compared to an average of $357 per MBF for the same period
in 2001. The decline in log prices reflects a general decrease in log prices and
a  continuation  in 2001 of weak markets that  accelerated in the latter half of
2000.

     Gross  Profit The Company had a gross  profit of $0.1  million in the first
quarter of 2002 as compared to a gross loss of $0.1  million for the same period
in 2001. As a percentage of sales the gross profit was 2% as compared to a gross
loss percentage of 1% in the first quarter of 2001. The increase in gross profit
as a percentage  of sales is a result of increases in the amount of  realization
on timber deed sales partially  offset by  deteriorating  market  conditions for
logs and increases in depletion rates over the same period in 2001.

     Selling,   General  and  Administrative   Expenses  Selling,   general  and
administrative expenses decreased by $1.2 million from $2.6 million in the first
quarter of 2001 to $1.4 million in the first  quarter of 2002.  The decrease was
primarily attributable to decreases in professional services of $0.9 million and
wages and wage related  expenses of $0.2 million  resulting  from the  Company's
efforts to reduce expenses.

     Equity  in Net  Loss of  Affiliate  Equity  in net  loss of  affiliate  was
approximately  $2.3 million for the first quarter of 2002.  This amount reflects
the Company's  common  interest share of the net loss of an affiliate  accounted
for under the equity  method as well as losses in excess of common equity of the
affiliate absorbed by the Company's  preferred  interest in the affiliate.  This
compares  to equity in net  income of  affiliate  of $0.3  million  in the first
quarter of 2001.

                                    10 of 14

<PAGE>

Financial Condition and Liquidity

     Operating Activities Cash flows provided by operating activities during the
three months ended March 31, 2002 were a negative $0.5  million,  as compared to
cash provided by operating  activities of $5.9 million during the same period in
2001. The $6.4 million  decrease is due primarily to the Company's  decreases in
revenues and in non-cash add backs for depletion in 2002 as compared to 2001.

     Investing  Activities  Cash flows used in  investing  activities  were $0.1
million  during the first three  months of 2002,  as  compared to $4.5  million,
related to the purchase of a timber deed, during the same period in 2001.

     Financing  Activities Cash flows used in financing activities for the first
three  months of 2002 were $0.0  million as compared  to cash used in  financing
activities of $4.5 million for the same period in 2001. The change is due to the
fact that the company did not make any distributions during the first quarter of
2002, compared to $6.6 million in the comparable period of the prior year.

     The Company had a credit agreement with an affiliate of the General Partner
(the "Affiliate  Credit  Facility").  The Affiliate  Credit Facility allowed the
Company to borrow up to $12.0 million.  The Affiliate Credit Facility expired on
April 30,  2002.  The Company has  endeavored  to replace the  Affiliate  Credit
Facility with a new credit facility.

     The agreement  governing  the  Company's  9-5/8% senior notes (the "Notes")
contains restrictive  covenants,  including  limitations on harvest levels, land
sales,  cash  distributions  and the  amount of future  indebtedness.  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, 2002, the Company was in compliance with the
covenants  requirements  pertaining  to the  Notes.  As of March 31,  2002,  the
Company was not permitted to make any  distributions  as it had not exceeded the
requisite  Consolidated  Fixed  Charge  Coverage  Ratio  within  the  Restricted
Payments provisions of the Notes.

     Through the first three months of 2002,  the Company  funded its operations
and met its cash  requirements  for debt service from cash on hand.  An interest
payment of  $10,828,125  was due under the Notes on May 15,  2002.  The  Company
expected to complete a timberland  sale and to pay a portion of the interest due
with the proceeds of such sale.  While the sale was not completed,  as expected,
before May 15,  2002,  the Company  expects the sale to be completed in the next
several  weeks and expects to pay the  interest  within the 30 day grace  period
provided in the Indenture.

     Cash required to meet the Company's debt service and any 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 General
Partner's  estimate of the current  annual board footage growth on the Company's
timberlands.  The  debt  service  and,  prior  to  April  2001,  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 will be adversely affected.  On May 10, 2001 the Company announced
an indefinite  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.  Accordingly,  the Company
will need to sell logs,  timber deeds and excess  timberlands  to meet its short
term cash needs. While the Company believes the timberland sale discussed in the
preceding  paragraph  will be completed,  the Company is evaluating  the sale of
certain other assets to meet the meet its current liquidity requirements.  While
the Company  believes  it can meet these  requirements  in the normal  course of
business,  there can be no  assurance  that the Company will be able to complete
asset sales on terms acceptable to the Company.


                                    11 of 14

<PAGE>


PART ll.  OTHER INFORMATION




Item 1.  Legal Proceedings

     On April 25, 2002 the Company announced that several purported class action
lawsuits were filed against the general  partner of the Company and the board of
directors  of the  general  partner  alleging,  among  other  things,  breach of
fiduciary  duty  and  self-dealing  by the  general  partner  and the  board  in
connection  with the receipt by the Company of a revised offer,  dated April 23,
2002,  from a group led by senior  management of the Company to take the Company
private.

     The  lawsuits  were filed in the Court of Chancery of the State of Delaware
for the County of New Castle.  The lawsuits were filed by purported  unitholders
of the Company, on behalf of all other similarly situated unitholders,  and seek
to have the class  certified and the purported  unitholders  bringing the action
named as a 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. The lawsuits also name
the Company 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.




                                    12 of 14


<PAGE>



Item 6.  Exhibits and Reports on Form 8-K

 (a.) Exhibits


    +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

*    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


     On May 2,  2002,  the  Company  filed a Form  8-K  containing  the  revised
privatization  offer and the related  news  release as well as the news  release
relating to the filing of new purported class action law suits.


                                    13 of 14

<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 20, 2002                 U.S. TIMBERLANDS KLAMATH FALLS, LLC
                                   By: U.S. Timberlands Services Company, LLC
                                                    as General Partner


                                       By: /s/  Thomas C. Ludlow
                                           ---------------------------------
                                            Thomas C. Ludlow
                                            Chief Financial Officer
                                            (Chief Financial Officer,
                                             Duly Authorized Officer,
                                             And Principal Accounting Officer)



                                    14 of 14