UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-8885

THE NEWHALL LAND AND FARMING COMPANY

(a California Limited Partnership)

(Exact name of Registrant as specified in its charter)

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

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

(661) 255-4000
(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

24,530,757 partnership units outstanding at September 30, 2001.

Part I. Financial Information

Item 1. Financial Statements

Consolidated Statements of Income

(Unaudited)

(In thousands, except per unit)

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2001				2000				2001				2000
Revenues
Real estate
Residential home and land sales	$		25		$		4,861		$		204		$	23,817
Industrial and commercial sales	19,725				20,711				117,437				49,044
Commercial operations
Income-producing properties	10,097				14,156				32,074				43,110
Valencia Water Company	4,480				4,220				10,012				9,613
	34,327				43,948				159,727				125,584

Agriculture operations	2,889				2,522				5,200				4,569

Total revenues	$		37,216		$		46,470		$		164,927		$	130,153

Contribution to income (loss)
Real estate
Residential home and land sales	$	(1,522		)	$	(3,403		)	$	(3,286		)	$	2,945
Industrial and commercial sales	3,652				4,135				88,569				9,004
Community development	(2,222			)	(2,411			)	(7,996			)	(6,848		)
Commercial operations
Income-producing properties	2,897				7,221				10,298				20,268
Valencia Water Company	1,433				1,237				2,444				2,476
	4,238				6,779				90,029				27,845

Agriculture operations	(197			)	202				404				919

Operating income	4,041				6,981				90,433				28,764

General and administrative expense	(2,423			)	(2,184			)	(8,775			)	(6,707		)
Interest and other, net	(1,132			)	(5,409			)	(4,796			)	(13,124		)

Net income (loss)	$		486		$	(612		)	$		76,862		$	8,933

Net income (loss) per unit	$		0.02		$	(0.02		)	$		3.01		$	0.32

Net income (loss) per unit - diluted	$		0.02		$	(0.02		)	$		2.97		$	0.32

Number of units used in computing per unit amounts:
Net income (loss) per unit	24,691				26,967				25,552				27,942
Net income (loss) per unit - diluted	25,053				26,967				25,842				28,289

Cash distributions per unit:
Regular	$		0.10		$		0.10		$		0.30		$	0.30
Special									0.10				0.35

Consolidated Balance Sheets

(In thousands)

	September 30,		December 31,
	2001		2000
	*(Unaudited)*
ASSETS

Cash and cash equivalents	$	3,260	$	3,717
Accounts and notes receivable	5,870		17,154
Land under development	86,406		63,155
Land held for future development	21,575		22,419
Income-producing properties held for sale, net	7,783		12,720
Income-producing properties, net	146,922		147,785
Property and equipment, net	73,491		67,631
Investment in joint venture	820		591
Other assets and deferred charges	17,079		16,536

	$	363,206	$	351,708

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable	$	24,252	$	28,267
Accrued expenses	54,327		68,932
Deferred revenues	2,301		3,137
Mortgage and other debt	95,751		74,557
Advances and contributions from developers for utility construction	34,045		32,166
Other liabilities	22,838		25,445
Total liabilities	233,514		232,504

Partners' capital

24,531 units outstanding, excluding 12,241 units in treasury (cost-$298,093), at September 30, 2001 and 26,590 units outstanding, excluding 10,182 units in treasury (cost-$242,098), at December 31, 2000	129,692		119,204
	$	363,206	$	351,708

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended
	September 30,
	2001			2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	76,862		$	8,933
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,651			7,442
Increase in land under development	(48,686		)	(51,180		)
Cost of sales and other inventory changes	16,268			34,275
Decrease in accounts and notes receivable	11,284			30,873
Decrease in accounts payable, accrued expenses and deferred revenues	(10,289		)	(3,090		)
Cost of property sold	8,127			15,997
Other adjustments, net	(2,981		)	2,422

Net cash provided by operating activities	59,236			45,672

CASH FLOWS FROM INVESTING ACTIVITIES:
Development of income-producing properties	(7,666		)	(18,701		)
Purchase of property and equipment	(8,577		)	(8,461		)
(Investment in) distribution from joint venture	(229		)	3,974

Net cash used in investing activities	(16,472		)	(23,188		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid	(10,299		)	(18,552		)
Increase in mortgage and other debt	21,194			84,894
Increase in advances and contributions from developers for utility construction	1,879			6,402
Purchase of partnership units	(59,619		)	(81,240		)
Issuance of partnership units	3,624			1,740

Net cash used in financing activities	(43,221		)	(6,756		)

Net (decrease) increase in cash and cash equivalents	(457		)	15,728

Cash and cash equivalents, beginning of period	3,717			1,624

Cash and cash equivalents, end of period	$	3,260		$	17,352

Supplemental schedule of non-cash investing and financing activities:
Divestiture of joint venture				$	16,469
Note payable in connection with investment in joint venture				(12,024		)

Notes to Consolidated Financial Statements

Note 1. Accounting Policies

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

The Company's unaudited interim financial statements have been prepared in conformity with generally accepted accounting principles used in the preparation of the Company's annual financial statements. In the opinion of the Company, all adjustments necessary for a fair statement of the results of operations for the three and nine months ended September 30, 2001 and 2000 have been made. The interim statements are condensed and do not include some of the information necessary for a more complete understanding of the financial data. Accordingly, your attention is directed to the footnote disclosures found on pages 26 through 38 of the December 31, 2000 Annual Report to Partners and particularly to Note 2 therein which includes a summary of significant accounting policies. Certain reclassifications have been made to prior periods’ amounts to conform to the current period presentation.

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

• 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.

• Sales of income properties and non-developable farmland occur irregularly and are recognized upon close of escrow provided profit recognition criteria are met.

Note 2. Details of Land Under Development

	September 30,		December 31,
(In $000)	2001		2000
Residential land development	$	50,517	$	25,154
Industrial and commercial land development	35,318		37,689
Agriculture	571		312
Total land under development	$	86,406	$	63,155

Note 3. Details for Earnings per Unit Calculation

	Income		Units	Per Unit
(in 000's except per unit)	(numerator)		(denominator)
For three months ended September 30, 2001
Net income per unit
Net income available to unitholders	$	486	24,691	$	.02
Effect of dilutive securities
Unit options	-		362	-
Net income per unit - diluted	$	486	25,053	$	.02

	Income (Loss)			Units	Per Unit
(in 000's except per unit)	(numerator)			(denominator)
For three months ended September 30, 2000
Net loss per unit
Net loss available to unitholders	$	(612	)	26,967	$	(.02	)
Effect of dilutive securities
Unit options	-			n/a	-
Net loss per unit - diluted	$	(612	)	26,967	$	(.02	)

For nine months ended September 30, 2001
Net income per unit
Net income available to unitholders	$	76,862		25,552	$	2.97
Effect of dilutive securities
Unit options	-			290	.04
Net income per unit - diluted	$	76,862		25,842	$	3.01

For nine months ended September 30, 2000
Net income per unit
Net income available to unitholders	$	8,933		27,942	$	.32
Effect of dilutive securities
Unit options	-			347	-
Net income per unit - diluted	$	8,933		28,289	$	.32

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

	September 30,			December 31,
(In $000s)	2001			2000
Income-producing properties
Land	$	37,055		$	34,822
Buildings	131,961			106,916
Other	8,334			10,468
Properties under development	4,762			25,780
	182,112			177,986
Accumulated depreciation	(35,190		)	(30,201		)
	$	146,922		$	147,785
Income-producing properties held for sale
Office	$	2,720		$	8,503
Other	6,197			7,311
	8,917			15,814
Accumulated depreciation	(1,134		)	(3,094		)
	$	7,783		$	12,720

Part I. Financial Information

Item 2. Management’s Discussion

	September 30,			December 31,
(In $000s)	2001			2000
Property and equipment
Land	$	3,759		$	3,759
Buildings	5,974			5,974
Equipment	9,820			9,470
Water supply systems, orchards and other	88,760			81,620
Construction in progress	4,628			5,545
	112,941			106,368
Accumulated depreciation	(39,450		)	(38,737		)
	$	73,491		$	67,631

Note 5. Business Segment Reporting

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

	Three months ended September 30, 2001
(In $000s)	Revenues		Contribution to Income			Assets
Real Estate
Residential	$	25	$	(1,498	)	$	41,039
Industrial and commercial	19,725		3,742			50,868
Community development	–		(2,135		)	18,863
Income-producing properties	10,097		2,909			161,330
Valencia Water Company	4,480		1,445			72,942
Agriculture	2,889		(196		)	6,668
Central administration	–		(2,249		)	11,496
	37,216		2,018			363,206
Interest and other, net	–		(1,132		)	–
All other	–		(400		)	–
	$	37,216	$	486		$	363,206

	Three months ended September 30, 2000
(In $000s)	Revenues		Contribution to Income (Loss)			Assets
Real Estate
Residential	$	4,861	$	(3,403	)	$	13,379
Industrial and commercial	20,711		4,135			85,944
Community development	–		(2,411		)	11,536
Income-producing properties	14,156		7,221			282,394
Valencia Water Company	4,220		1,237			66,905
Agriculture	2,522		202			6,553
Central administration	–		(2,184		)	25,951
	46,470		4,797			492,662
Interest and other, net	–		(5,409		)	–
All other	–		-			–
	$	46,470	$	(612	)	$	492,662

	Nine months ended September 30, 2001
(In $000s)	Revenues		Contribution to Income			Assets
Real Estate
Residential	$	204	$	(3,013	)	$	41,039
Industrial and commercial	117,437		89,294			50,868
Community development	–		(7,288		)	18,863
Income-producing properties	32,074		10,418			161,330
Valencia Water Company	10,012		2,629			72,942
Agriculture	5,200		501			6,668
Central administration	–		(6,883		)	11,496
	164,927		85,658			363,206
Interest and other, net	–		(4,796		)	–
All other	–		(4,000		)	–
	$	164,927	$	76,862		$	363,206

	Nine months ended September 30, 2000
(In $000s)	Revenues		Contribution to Income			Assets
Real Estate
Residential	$	23,817	$	2,994		$	13,379
Industrial and commercial	49,044		9,092			85,944
Community development	–		(6,776		)	11,536
Income-producing properties	43,110		20,284			282,394
Valencia Water Company	9,613		2,498			66,905
Agriculture	4,569		930			6,553
Central administration	–		(6,415		)	25,951
	130,153		22,607			492,622
Interest and other, net	–		(13,124		)	–
All other	–		(550		)	–
	$	130,153	$	8,933		$	492,662

Part 1. Financial Information

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

Results of Operations

Comparison of Third Quarter and Nine Months of 2001 to Third Quarter and Nine Months of 2000

Unaudited

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

	Third Quarter					Nine Months
	Increase (Decrease)					Increase (Decrease)
	Amount			%		Amount			%
Revenues
Real Estate
Residential home and land sales	$	(4,836	)	-99	%	$	(23,613	)	-99	%
Industrial and commercial sales	(986		)	-5	%	68,393			139	%
Commercial operations
Income-producing properties	(4,059		)	-29	%	(11,036		)	-26	%
Valencia Water Company	260			6	%	399			4	%
	(9,621		)	-22	%	34,143			27	%
Agriculture
Operations	367			15	%	631			14	%

Total revenues	$	(9,254	)	-20	%	$	34,774		27	%

Contribution to Income
Real Estate
Residential home and land sales	$	1,881		-55	%	$	(6,231	)	-212	%
Industrial and commercial sales	(483		)	-12	%	79,565			884	%
Community development	189			8	%	(1,148		)	-17	%
Commercial operations
Income-producing properties	(4,324		)	-60	%	(9,970		)	-49	%
Valencia Water Company	196			16	%	(32		)	-1	%
	(2,541		)	-37	%	62,184			223	%
Agriculture
Operations	(399		)	-198	%	(515		)	-56	%

Operating income	(2,940		)	-42	%	61,669			214	%

General and administrative expense	(239		)	-11	%	(2,068		)	-31	%
Interest and other, net	4,277			79	%	8,328			63	%

Net income	$	1,098		179	%	$	67,929		760	%

Net income per unit	$	0.04		200	%	$	2.69		841	%
Net income per unit - diluted	$	0.04		200	%	$	2.65		828	%

Number of units used in computing per unit amounts:
Net income per unit	(2,276		)	-8	%	(2,390		)	-9	%
Net income per unit - diluted	(2,240		)	-8	%	(2,447		)	-9	%

For the three months ended September 30, 2001, revenues totaled $37.2 million and net income totaled $486,000 compared to revenues for the 2000 third quarter of $46.5 million and a net loss of $612,000. Revenues for the nine months ended September 30, 2001 totaled $164.9 million and net income totaled $76.9 million compared to the same 2000 period when revenues totaled $130.2 million and net income $8.9 million.

The primary contributors to the 2001 third quarter and nine month results were the sales of four commercial parcels totaling 11.5 net acres, including a 208-unit apartment complex site on 9.6 net acres in the Alta Vista community, and two asset sales. Combined, these sales added $18.4 million to revenues and $5.5 million to income. In addition, the second quarter 2001 sales of the Chiquita Canyon Landfill, an option to purchase approximately 1,800 acres in Broomfield, Colorado and a 7.9 acre commercial parcel contributed a combined total of $88.1 million to revenues and $84.6 million to income for the nine-month results.

Results for the 2000 third quarter included a right-of-way purchase by Caltrans, which contributed $5.1 million to revenues and $4.0 to income. The 2000 third quarter also included a $4.5 million loss as a result of the divestiture of a residential joint venture project. In addition, two accounting charges were recorded in the 2000 third quarter. This included a $2.1 million charge for the Company’s acceptance of a reduced pay-off on a 1998 industrial land sale note in return for the acceleration of the due date. The second charge was a $1.2 million loss related to the leaseback of retail space in four office buildings in Valencia Town Center, which were in escrow at September 30, 2000. The 2000 nine-month period also included the sale of 208 residential lots, revenue recognized under percentage of completion accounting from residential lots sold in the prior year, the sale of an 11.2 acre commercial parcel and the sale of two income properties, which added a combined total of $46.6 million to revenues and $15.9 million to income.

At September 30, 2001, the Company had about 20 acres of industrial land and 56 acres of commercial land in escrow for approximately $52 million, closings for which are expected to occur during the fourth quarter 2001. In addition, the Company is marketing 695 residential lots on about 97 net acres in Valencia Westridge’s golf course community and expects approximately 400 of these lots to be sold in 2002. Due to uncertainties arising from the events of September 11, 2001, the resulting U.S. military actions and the slowing economy, it is difficult to predict how many of the anticipated land sales or commercial and industrial escrows will close in the fourth quarter 2001, or if any escrows will be cancelled or closing dates moved to 2002. The ability to complete sales in 2001 will be dependent upon a variety of factors, including, but not limited to, identification of suitable buyers, agreement with the buyers on definitive terms, successful completion of due diligence work by buyers, availability of financing to suitable buyers, market and other conditions. In addition, 300 lots in Alta Vista that were expected to close escrow in the 2001 fourth quarter, may not be sold until early next year.

Residential Home and Land Sales

No residential lots closed escrow during the 2001 third quarter or nine-month period and no residential lots were in escrow at September 30, 2001. The development and sale of 3,986 residential lots and apartment units are being delayed by the California Public Utilities Commission (PUC) decision to combine its review of Valencia Water Company’s request to expand its service area together with the water company’s water management plan. The total includes 1,650 lots and apartments that the City of Santa Clarita annexed in December 2000 and 2,336 lots and apartments in the Company’s West Creek community approved in January 2001 by the Los Angeles County Board of Supervisors. The number of homes in this project was reduced from the previously reported 2,545 homes due to the relocation of a junior high school to this planning area. The Company expects the PUC’s decision later this year. An adverse decision would likely delay the sale of these lots and apartments.

Opponents to the Los Angeles County Board of Supervisors’ approval of the West Creek community filed a California Environmental Quality Act (CEQA) lawsuit early in 2001. In early November 2001, the court denied the claims made by the opponents. The opponents may appeal the ruling; however, development of the community may proceed during the appeal process, subject to the PUC’s decision discussed in the previous paragraph.

New home sales in the Valencia area continued strong as merchant builders sold 682 homes on lots previously purchased from the Company for the nine months ended September 30, 2001, compared to 278 homes for the prior year nine-month period. At September 30, 2001, merchant builders had 349 homes in escrow, compared to 163 at September 30, 2000. While the Company does not participate directly in profits generated from escrow closings by merchant builders, the sale of these previously sold lots to homebuyers is key to the Company’s future success in selling additional lots.

In the quarter ended September 30, 2000, no residential lots closed escrow, however, revenues of $4.9 million and income of $2.2 million were recognized from previous lot sales in Bridgeport under percentage of completion accounting. The 2000 nine-month period includes the sale of 208 lots in Bridgeport, which contributed $12.2 million to revenues, and $5.5 million to income under percentage of completion accounting. In addition, revenues of $11.4 million and income of $5.2 million were recognized in the nine-month period from lots sold in the prior year. Results also included a $4.5 million loss for the three months and $4.8 million loss for the nine months related to a joint venture, which was divested in September 2000.

Industrial and Commercial Sales

Industrial Land Sales

No industrial land sales closed escrow in the quarter ended September 30, 2001. Results for the nine months ended September 30, 2001 included the sale of a 9.5-acre industrial parcel which contributed $4.7 million to revenues and $1.3 million to income. At September 30, 2001, three parcels totaling 20 acres were in escrow for approximately $10 million with closings scheduled in the fourth quarter. As previously mentioned, due to uncertainties arising from the events of September 11, 2001, the resulting military action, the slowing economy, and a variety of factors outside the Company's control, it is difficult to predict when, if at all, the escrows will close.

At September 30, 2001, the combined vacancy rate in both Valencia Industrial Center and Valencia Commerce Center was 9.6%, compared to 4.7% at the end of September 30, 2000. Higher vacancy rates in Valencia industrial properties are a result of the slowing economy and approximately 1.8 million square feet of new space coming on-line. The Company has approximately 380 acres of entitled industrial land remaining. Planning continues on 500 acres west of I-5 surrounding Six Flags Magic Mountain for mixed-use development.

Two industrial parcels totaling 34.4 acres closed escrow in the 2000 third quarter, adding $12.8 million to revenues and $3.2 million to income for the third quarter under percentage of completion accounting. The nine-month period also included two industrial parcels totaling 4.2 acres for $2.3 million contributing $700,000 to income. At September 30, 2000, a total of 15.1 acres was in escrow for $8.4 million.

Commercial Land Sales

Four commercial parcels totaling 11.5 acres closed escrow in the third quarter 2001 contributing $11.2 million to revenues and $5.0 million to income. The parcels include a 9.6 acre site for a 208-unit apartment complex in the Alta Vista community and three small parcels totaling 1.9 net acres combined. The 2001 nine-month period also included a 7.9 acre parcel for a 341-unit apartment complex with 10,000 square feet of ground floor retail space contributing $10.1 million to revenues and $7.7 million to income. A total of 56 net acres of commercial land was in escrow at September 30, 2001 for approximately $42 million, with closings scheduled for the fourth quarter 2001. As previously mentioned, due to uncertainties arising from the events of September 11, 2001, the resulting military action, the slowing economy, and a variety of factors outside the Company's control, it is difficult to predict when, if at all, the escrows will close.

Escrow closed on 4.3 commercial acres during 2000 third quarter for $2.8 million and contributed $1.8 to income. The results for the nine month period in 2000 also included the sale of an 11.2 acre parcel for $6.4 million which contributed $1.5 million to income under percentage of completion accounting. Partially offsetting these results for the 2000 third quarter was a $2.1 million charge against earnings for a note reserve on a 1998 industrial land sale. At September 30, 2000, a total of 72.0 commercial acres was in escrow for $51 million.

Income Property and Other Sales

In the third quarter 2001, the Company closed escrow on its Bank of America building and a small office building. The two sales contributed $7.2 million to revenues and $506,000 to income. Results for the 2001 nine-month period also include the sale of the Chiquita Canyon Landfill for $65 million contributing $64 million to income and the sale of an option on 1,800 acres in Colorado for $13 million adding $12.9 million to income. In the 2001 third quarter, the 26,000 square foot Town Center Plaza mixed-use building in Valencia Town Center was added to the asset sale program and is expected to be sold and close escrow within the next six months. A 35,310 square foot building in Valencia Commerce Center also was added to the asset sale program and is being marketed for sale. As previously mentioned, due to uncertainties arising from the events of September 11, 2001, the resulting military action, the slowing economy, and a variety of factors outside the Company's control, it is difficult to predict when, if at all, the escrows will close.

No income property sales were completed in the 2000 third quarter. However, a $1.2 million accounting loss was recorded related to the leaseback of retail space in four office buildings along Town Center Drive, which were in escrow at September 30, 2000. During the nine months ended September 30, 2000, the Company closed escrow on two retail properties in the Company’s asset sale program, Castaic Shopping Center and Plaza del Rancho, adding $18.8 million to revenues and $3.7 million to income in the nine-month period.

During the 2001 third quarter, an easement was sold contributing $600,000 to revenues and income. In the 2000 third quarter, a right-of-way parcel was sold to Caltrans, which contributed $5.1 million to revenues and $4.0 million to income.

Community Development

Community development expenses decreased by 8% for the three-month period primarily due to expenses in the prior year related to preliminary entitlement efforts on the 1,800-acre parcel in Colorado held under option, which was sold in the 2001 second quarter. An increase of 17% in community development expenses for the nine-month period ended September 30, 2001 compared to the same 2000 period is primarily due to higher administrative expenses and entitlement expenses partially offset by the reduction in expenses related to the option on land in Colorado. Community development expenses for the year are expected to increase over 20% from the 2000 level.

On October 24, 2001, the Los Angeles County Regional Planning Commission approved the analyses with respect to six issues that had been under further review in connection with the Company’s Newhall Ranch Environmental Impact Report. The Company anticipates the Los Angeles County Board of Supervisors’ approval of the additional analysis in early 2002, and that development is expected to commence during 2004.

The Company reported in January 2001 that housing affordability proponents filed an appeal of the Kern County Superior Court’s March 2000 decision to dismiss their challenges to the Newhall Ranch Environmental Impact Report. The court rejected arguments asserting alleged inconsistencies with Los Angeles County’s General Plan on affordable housing requirements and the impact created by such inconsistencies on certain required California Environmental Quality Act (CEQA) analyses such as traffic and air quality. An appellate court hearing date has been set for November 13, 2001. An adverse decision will likely further delay the commencement of development beyond 2004.

The length of time that the public hearings and judicial process will take is difficult to predict, and circumstances beyond the Company’s control could further delay resolution of the issues. In addition, an adverse decision by the County or court and/or additional legal action could further delay the start of development.

In the 2001 fourth quarter, California Governor Gray Davis signed into law two bills (commonly known as SB 221 and SB 610). Both bills require cities and counties to assess and verify water availability for proposed new projects. The new legislation does not affect Newhall Ranch’s specific plan (which has recently undergone additional analyses and which soon will be reconsidered by the Los Angeles County Board of Supervisors). The legislation will affect subsequent subdivision map filings for Newhall Ranch. The bills encourage developers to work with local government officials in order to identify and finance a supplemental supply of water, if one is needed, to serve proposed development projects. The bills will likely make the process for seeking project approvals more complicated; however the Company believes that the Newhall Ranch project will be able to comply with the new requirements.

Income-Producing Properties

For the 2001 third quarter, revenues and income decreased 29% and 60%, respectively, and for the 2001 nine-month period, revenues and income decreased 26% and 49%, respectively, from the same prior year periods primarily due to: 1) the sale of income properties late in 2000 and in the second and third quarters of 2001; and 2) the recording of depreciation expense on properties that were previously classified as held for sale and reclassified as held for investment as of September 30, 2001.

Income for the current and prior year third quarters include the effects of the cessation of depreciation on Properties Held for Sale and Sold Properties of $81,000 and $1,234,000, respectively, and for the current and prior nine-month periods of $300,000 and $4,215,000, respectively. These amounts include depreciation expense suspended on Valencia Town Center regional mall and Entertainment Center, and Spectrum Club because they were classified as held for sale as of September 30, 2000. When these properties were reclassified as held for investment in the 2000 fourth quarter for the mall and entertainment center, and in the 2001 second quarter for Spectrum Club building, depreciation expense was recorded in amounts equal to the suspended depreciation during the entire period the properties were classified as held for sale.

Retained income-producing properties produced slightly lower net operating income in the third quarter 2001 versus the same period in 2000 primarily due to higher operating costs at the Company’s two hotels. For the nine months ended September 30, 2001, net operating income was 10% higher than the same period in 2000 primarily due to increased revenues and lower operating expenses at Valencia Town Center mall.

Income-Producing Properties

(Dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Net Operating Income	2001			2000			2001			2000
Retained Properties¹	$	5,253		$	5,235		$	16,239		$	14,420
Properties Held for Sale²	153			176			476			486
Sold Properties³	17			3,780			1,417			11,312

Net Operating Income⁴	5,423			9,191			18,132			26,218
Admin/Depreciation	(2,526		)	(1,970		)	(7,834		)	(5,950		)
Total Contribution to Income	$	2,897		$	7,221		$	10,298		$	20,268

¹Includes NorthPark Village Square and River Oaks shopping centers, Valencia Town Center regional mall and entertainment center, retail along Town Center Drive, Hyatt Valencia and Valencia Hilton hotels, restaurants, leases, etc.

²Includes a 35,310 sq. ft. building in Valencia Commerce Center and the 26,000 square foot Town Center Plaza mixed-use building in Valencia Town Center.

³For 2000, includes Castaic Shopping Center and Plaza del Rancho (sold in second quarter), and a 3-story office building, three office buildings for Princess Cruises, and four apartment complexes (sold in fourth quarter). For 2001, includes the Chiquita Canyon landfill (sold in second quarter), and the Bank of America building and a small office building (sold in third quarter).

⁴Before depreciation. Maintenance expensed as incurred.

Occupancy rates at the Company’s various income properties were as follows at September 30, 2001 and 2000:

Occupancy Rates^(a):	September 30, 2001	September 30, 2000
Valencia Town Center Mall^(b)	83%	99%
Entertainment Center^(c)	96%	91%
Valencia Town Center Master Lease^(d)	71%	N/A
Town Center Plaza	100%	84%
NorthPark/River Oaks Shopping Centers	100%	100%
Hotels	79%	73%

^(a) Includes signed lease space and leases to short-term tenants.

^(b)Includes 334,470 sq. ft. of leasable retail space and 8,400 sq. ft. of office space.

^(c) Includes 126,050 sq. ft. of leasable space.

^(d) Includes 50,000 sq. ft. of retail space from a 12-1/2 year lease-back agreement that was part of the sale of four office buildings along Town Center Drive that closed in early December 2000.

The occupancy rate at September 30, 2001 at the Valencia Town Center regional shopping mall was 83% versus 99% on the same date in 2000. The primary contributor to the decrease was the closure on September 4, 2001 of Edwards Theaters’ 39,426 square foot, 10-screen theater located in the shopping center. In conjunction with its filing for Chapter 11 bankruptcy in 2000, Edwards Theaters Circuit, Inc. rejected the lease for this location effective June 25, 2001. The Company is in the process of reviewing alternative uses for the space.

Valencia Water Company

Valencia Water Company is a regulated utility and a wholly-owned subsidiary of the Company serving over 23,000 metered connections. Third-quarter income rose 16% on a 6% increase in revenues over the same year-earlier period. Income for the 2001 third quarter benefited from a property tax refund relating to tax law changes. For the first nine months of 2001, Valencia Water Company recorded an increase of 4% in revenues and a 1% decrease in income over the corresponding period in 2000. The decrease in income was primarily due to higher administrative expenses and expenses relating to legal proceedings in which Valencia Water Company is involved. Increased revenues in the three- and nine-month periods were primarily due to an expanded customer base.

Agricultural Operations and Ranch Sales

Revenues from agriculture operations, including the Company’s energy operations, for the three and nine months ended September 30, 2001, were 15% and 14% higher, respectively, than the same periods in 2000 primarily due to increased acreage for tomatoes and higher gas prices. The increases were offset by loss reserves taken on oranges, grapes and other crops, which were partially offset by improved alfalfa prices and higher gas prices resulting in decreases in income of 198% and 56% for the three and nine months ended September 30, 2001, respectively, compared to the same periods in 2000.

General and Administrative Expense

Increases in general and administrative expenses of 11% for the three-month period and 31% for the nine-month period from the prior year same periods are primarily for expenses related to the increased difference between the exercise price of unit appreciation rights on employee non-qualified options and the market price of partnership units, and higher incentive compensation expense accrued based on the timing of land and asset sales. All outstanding appreciation rights expired in July 2001. For all of 2001, general and administrative expenses are expected to decrease about 17% from 2000 levels due to lower compensation expense.

Interest and Other

Interest and other expense for the 2001 three-month and nine-month periods decreased 79% and 63%, respectively, from the comparable prior year periods. Interest expense in the 2000 three-month and nine-month periods was greater than the 2001 periods primarily due to the Company’s strategy in 2000 of utilizing existing debt capacity to fund unit repurchases until the sale of income properties were completed later that year. Interest expense in 2001 for the total year is expected to be substantially lower than in the previous year due to lower anticipated borrowings outstanding compared to 2000 and favorable interest rates.

Financial Condition

Liquidity and Capital Resources

At September 30, 2001, the Company had cash and cash equivalents of $3.3 million and had $149.2 million available under bank lines, net of $12.0 million in letters of credit. Borrowings outstanding totaled $32.8 million against unsecured lines of credit. No borrowings were outstanding against a revolving mortgage facility. The Company believes it has adequate sources of cash from operations and debt capacity to finance future operations on both a short- and long-term basis and, combined with anticipated land sales, to fund its authorized unit repurchases. The Company ended the 2001 third quarter with a debt to income portfolio ratio of 36% which provides adequate debt capacity to fund operations and complete the current repurchase program as discussed below.

In May 2001, the Company completed the repurchase program authorized by the Board of Directors in September 1999 of 6,384,446 units (including 884,446 units under a previous authorization), equal to approximately 20% of the outstanding units in September 1999. The total cost of the unit repurchases was $167.3 million, of which 1,484,944 units were repurchased in 2001 for $38.6 million. Also in May 2001, the Company’s Board of Directors authorized a new unit repurchase program of up to 2,520,000 units, or 10% of the then outstanding units. As of September 30, 2001, a total of 736,518 units had been repurchased under this program for a total of $21.1 million, or an average price of $28.59 per unit, and a total of 1,783,482 units remained to be repurchased. However, with fewer residential lots expected to close escrow in the fourth quarter, uncertainty as to how many commercial and industrial land sales will close escrow by year-end and the relatively low number of units available for purchase, it is anticipated that the completion of the current repurchase program may be delayed until sometime in 2002.

The Company repurchases units from time-to-time at prevailing prices and, depending on market conditions, either through open market or unsolicited private transactions. Factors that could affect the Company’s ability to complete the current program include, but are not limited to, changing market and economic conditions, changing interest rates, challenges to governmental approvals, and finding suitable buyers for certain properties.

At September 30, 2001, there were no material commitments for capital expenditures. The Company expects to invest over $25 million in major roads and freeway improvements in 2001 to enable the Company to continue its land sales program for Valencia of which $9.3 has been expended as of September 30, 2001.

The following discussion relates to principal items on the Consolidated Statement of Cash Flows for the nine months ended September 30, 2001:

Operating Activities

Net cash provided by operating activities totaled $59.2 million for the nine months ended September 30, 2001. Cash generated from operating activities included the sale of 33.0 industrial/commercial acres; the sale of Chiquita Canyon Landfill and two asset sales; sale of an option on 1,800 acres in Broomfield, Colorado; the income-property portfolio; collection of $10.5 million of land sale notes; and $600,000 from a sale of an easement. These transactions combined generated cash totaling $126.1 million. Cash used by operating activities included $48.7 million of expenditures for land under development inventories mostly related to land preparation and infrastructure improvements to ready land for sale. Additional uses of cash included the Company’s general and administrative, community development and interest expenses.

Investing Activities

Expenditures for development of income-producing properties totaled $7.7 million and were primarily to complete the construction of two office buildings that were sold in December 2000. Purchase of property and equipment was primarily for water utility construction.

Financing Activities

Quarterly distributions totaling $10.3 million have been paid year-to-date consisting of three quarterly distributions of $.10 per unit each and a $.10 per unit special distribution. An additional $.10 per unit distribution was declared on October 23, 2001 payable December 10, 2001 to unitholders of record November 2, 2001. The Company’s policy is to provide sufficient distributions, including special distributions, to pay the taxes associated with Company earnings. The declaration of distributions, and the amount declared, are determined by the Board of Directors on a quarterly basis taking into account the Company’s earnings, financial condition and prospects.

For the nine-month period ended September 30, 2001, a total of 2,221,462 units was repurchased for $59.6 million, or an average price of $26.84 per unit.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued two new pronouncements: Statement of Financial Accounting Standards No. 141, Business Combinations, effective for business combinations initiated after June 30, 2001, and Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. These pronouncements are not expected to have a material impact on the Company’s financial position or results of operations.

In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, effective for fiscal years beginning after December 15, 2001. This Statement supercedes FASB Statement No. 121 and creates a single accounting model for long-lived assets (including discontinued operations) to be disposed of. FASB No. 144 retains the requirements of FASB No. 121 for measuring impairment loss and ceasing depreciation for assets held for sale. The Company does not expect this new pronouncement to have a material impact on the Company’s financial position or results of operations.

Inflation, Risks And Related Factors Affecting Forward-Looking Information

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

We caution you not to place undue reliance on these forward-looking statements, which reflect our current beliefs and are based on information currently available to us. We expressly undertake no obligation to publicly revise or update these forward-looking statements to reflect future events or changes in circumstances.

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

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

Economic Conditions: Real estate development and commercial income property can be 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 north Los Angeles County. The Southern California economy is profoundly affected by the entertainment, technology, defense and certain other segments. Consequently, all sectors of the Company’s real estate operations tend to be cyclical. The regional economy, like that of the state and nationally, has slowed. There can be no assurances that the economic slowdown will not worsen or the slowdown will not result in a recession.

Inflation: The Company believes it is well positioned against the effects of inflation. Historically, during periods of inflation, the Company has been able to increase selling prices of properties to offset rising costs of land development and construction. A portion of the commercial income portfolio is protected from inflation since percentage rent clauses and Consumer Price Index increases in the Company’s leases tend to adjust rental receipts for inflation, while the underlying value of commercial properties has tended to rise over the long term.

Interest Rates and Financing: Fluctuations in interest rates and the availability of financing have an important impact on the Company’s performance. Sales of the Company’s properties could be adversely 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 comparable to that sold and leased by the Company and the level of demand for such real estate. Currently, the residential market in the Santa Clarita Valley, including Valencia, is strong and has been capturing an increasing portion of Los Angeles County’s new home sales. However, there is no assurance that this trend will continue. The industrial market in Valencia is experiencing declining demand and rising vacancy rates as the national and regional economy slows and concerns linger over California’s power crisis. In addition, local competition has intensified as local business parks have opened or are in the planning stages.

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

Exposure to Natural Occurrences and Acts of Terror: The Company’s assets and real estate operations may be adversely affected by natural occurrences such as earthquakes, weather conditions and acts of terrorism or armed conflict that may cause damage to assets or delay progress of infrastructure construction and land development, and the pace of sales.

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

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

Part 1. Financial Information

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Company is exposed to market risk primarily due to fluctuations in interest rates. The Company utilizes both fixed rate and variable rate debt. At September 30, 2001, the Company had $32.8 million of variable debt with interest rates ranging from 3.9% to 4.9% and $63.0 million of fixed rate debt with interest rates ranging from 7.25% to 8.45%.

The table below presents principal cash flows and related weighted average interest rates of the Company's long-term fixed rate and variable rate debt, as of September 30, 2001, by expected maturity dates:

	Expected Maturity Date																					Fair
*(In $000s)*	2001			2002			2003			2004			2005			Thereafter			Total			Value
Mortgage and Other Debt
Fixed Rate Debt	$	1,069		$	4,164		$	10,968		$	1,512		$	1,655		$	43,583		$	62,951		$	68,648	⁽²⁾
Weighted Average Interest Rate	7.61		%	7.36		%	8.32		%	7.35		%	7.37		%	7.55		%	7.67		%


Variable Rate Debt⁽¹⁾				$	32,800														$	32,800		$	32,800
Weighted Average Interest Rate				4.69		%													4.69		%

⁽¹⁾The Company has a $50 million revolving mortgage facility which bears interest at LIBOR plus 1.25% against which no borrowings were outstanding at September 30, 2001. The Company also has unsecured lines of credit consisting of a $130 million line and a $10 million line on which the interest rate is LIBOR plus 1.25% - 1.45% and a $2 million line on which the rate is LIBOR plus 1.35%, against which borrowings of $30.8 million, 0 and $2.0 million were outstanding, respectively, at September 30, 2001. The amounts set forth in the table above assume that the outstanding amounts under the variable rate credit facilities will be repaid at the facilities’ respective maturity dates. The $10 million line of credit is scheduled to mature mid-November 2001, and the Company does not anticipate the need to renew the line of credit. Management believes that remaining facilities will be renewed at the respective maturity.

⁽²⁾The fair values of the Company's fixed rate debt either approximate carrying value or are estimated using discounted cash flow analyses based on the Company's current incremental borrowing rates for similar types of borrowing arrangements ranging from 4.75% to 7.5%.

There is inherent rollover risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and the Company's future financing requirements. The Company manages its interest rate risk by maintaining a conservative ratio of fixed-rate, long-term debt to total debt in order to maintain variable rate exposure at an acceptable level and by taking advantage of favorable market conditions for long-term debt. In addition, the Company’s guideline for total debt is up to approximately 60% of the appraised value of its income portfolio. As of September 30, 2001, the Company’s debt to income portfolio ratio was 36%.

Part II. Other Information

Item 1. Legal Proceedings.

Please refer to “Residential Home and Land Sales” and “Community Development” under Part I, Item 2. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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):

10 (a) Retention Agreement effective March 31, 2001 between The Newhall Land and Farming Company and Gary M. Cusumano.

10 (b) Retention Agreement effective March 31, 2001 between The Newhall Land and Farming Company and Thomas E. Dierckman.

10 (c) Retention Agreement effective March 31, 2001 between The Newhall Land and Farming Company and Stuart R. Mork.

(b) The following report on Form 8-K was filed in the third quarter ended September 30, 2001.

Item Reported Date of Report

Change in Certifying Accountants for The July 9, 2001

Newhall Land and Farming Company’s Employee

Savings Plan effective for the year ended

December 31, 2000.

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


Date: November 9, 2001	By	/S/ Gary M. Cusumano
		Gary M. Cusumano, President and Chief Executive Officer of Newhall Management Corporation
		(Principal Executive Officer)


Date: November 9, 2001	By	/S/ Stuart R. Mork
		Stuart R. Mork, Senior Vice President and Chief Financial
		Officer of Newhall Management Corporation
		(Principal Financial Officer)


Date: November 9, 2001	By	/S/ Donald L. Kimball
		Donald L. Kimball, Vice President - Finance
		and Controller of Newhall Management Corporation
		(Principal Accounting Officer)

Exhibit 10(b)

RETENTION AGREEMENT

This Retention Agreement ("Agreement") is entered into and effective as of March 31, 2001 (“Effective Date”), between The Newhall Land and Farming Company (a California Limited Partnership) ("NLF") and Thomas E. Dierckman ("Employee"). NLF's ultimate managing general partner is Newhall Management Corporation ("NMC") and where appropriate will be referred together with NLF as the "Company." The Company and Employee are referred to in this Agreement as the "Parties."

RECITALS

WHEREAS, Employee is employed as NLF’s and NMC's Senior Vice President-Valencia Division;

WHEREAS, the retention of Employee in such management position is consistent with the Company's policy of establishing and maintaining a sound and vital management to protect and enhance the best interests of the Company and the holders of its depository units;

NOW, THEREFORE, the Parties, in consideration of the mutual covenants contained herein, and for other valuable consideration received, hereby agree as follows:

1) Retention and Responsibilities:

a) The Company will continue to retain Employee as Senior Vice President of NLF and NMC during the term of this Agreement. Employee agrees to serve in such capacity as well as on such standing committees and in such other capacities as the Board may determine. Employee will have duties, responsibilities and authorities commensurate with those capacities and/or as the Board may determine. Employee will use his best efforts to promote the interests of the Company and its unit holders and will devote his working time to the business and affairs of the Company. Employee will effectively and competently perform his duties and responsibilities to enhance the Company's profitability and the value of the depository units held by the Company's unit holders.

2) Compensation:

a) Except as otherwise provided in this Agreement, Employee will continue to receive his current salary, subject to adjustments by the Board, medical, dental, life, disability insurance, retirement plan benefits, 401(k) plan benefits, employee savings plan benefits, expense reimbursement benefits, Company automobile benefits and bonuses, including those benefits provided under the NLF Executive Incentive Compensation Plan, Unit options or Unit based rights agreements under the Company's 1995 Option/Award Plan or the Company’s Option, Appreciation Rights and Restricted Plan, the NLF Retirement Plan, the NLF Pension Restoration Plan, the NLF Employee Savings Plans, the NLF Employee Savings Restoration Plan, the Change of Control Severance Program, as amended, the NLF Retention Incentive Program (adopted in March 2001) and any other fringe benefits as described in the Company Employee Handbook in accordance with the eligibility participation requirements and the terms set forth therein and/or the applicable benefit policies or plans ("Company Benefits").

3) Term of Agreement and Termination:

a) Term: Unless earlier terminated as provided in (b) through (f) of this Paragraph 3, this Agreement shall be for a term of three (3) years. On the first anniversary of the Effective Date and on each anniversary date thereafter, this Agreement will be automatically extended for an additional year, unless either Party gives the other Party at least thirty (30) days advance written notice of his or its desire not to extend this Agreement for an additional year. So as to avoid any doubt, at the time such a notice is effective, the remaining term on this Agreement will be two years.

b) Death: This Agreement, including the severance compensation provided for in Paragraph 5, and Employee's employment will terminate upon the death of Employee. In such event, the Company will pay to Employee's estate or other authorized representative, his salary for the month in which he dies, as well as any other Company Benefits, including bonuses, retirement payments, medical benefits, and accrued but unused vacation due him or his spouse through the date of his death in accordance with the terms and conditions of applicable Company policies and/or plans. Thereafter, the Company will have no further obligation whatsoever to his estate or other authorized representative.

c) Disability: This Agreement, including the severance compensation provided for in Paragraph 5, will terminate upon Employee's disability. Unless otherwise prohibited by any State or Federal law, this Agreement and Employee's employment hereunder will terminate on the date that he, is determined, as defined by reference to the Company's Long-Term Disability Plan ("LTD Plan"), then in effect, to be "disabled" from performing any material portion of his current duties, due to physical or mental illness or injury. In such event, Employee will be solely compensated in accordance with the LTD Plan and any other applicable Company policies and/or plans.

d) Termination for Cause: This Agreement, including the severance compensation provided for in Paragraph 5, and Employee's employment may be immediately terminated if any of the following events occur during the term of his employment hereunder ("Termination for Cause"): (1) Employee is convicted of any misdemeanor involving moral turpitude, any felony, is engaged in any willful conduct for which the Company could incur civil liability to any other employee or third party or commits any act of fraud, forgery, intentional misrepresentation, embezzlement or dishonesty; (2) Employee commits gross negligence in the performance or nonperformance of his duties, habitually neglects to perform those duties or otherwise breaches any of his obligations under this Agreement; (3) Employee breaches his duty of loyalty to the Company; (4) Employee engages in unethical conduct or conduct injurious to the reputation of the Company; or (5) Employee fails or refuses to perform the services called for by this Agreement or assignments given to him by the Board. If Termination for Cause occurs, then the Company will pay Employee his salary for the month in which termination occurs, any accrued but unused vacation and any other Company Benefits that are due him under applicable Company policies or plans through the end of the month of his termination. Thereafter, the Company will have no further obligations whatsoever to Employee.

e) Termination Without Cause: The Company shall have the right, at any time, to terminate this Agreement and Employee's employment, without cause, by written notice to Employee ("Termination Without Cause"). Employee's Termination Without Cause will be effective on the date specified in the written notice ("Termination Date"). In the event of a Termination Without Cause, the Company will pay Employee the severance benefits provided in Paragraph 5 of this Agreement. Additionally, Employee will be paid all earned but unused vacation as of the Termination Date.

f) Change of Control: Neither (b), (c), (d) or (e) of this Paragraph 3 shall apply to a change of control as defined in the Change of Control and Severance Program executed between Employee and the Company, dated November 19, 1997 ("Change of Control Program"). In the event of such a change of control, the Change of Control Program shall become effective, as provided therein, this Agreement shall be terminated and superceded, and Employee shall be solely compensated as provided therein.

4) Execution of Addendums A, B and C: In the event that Employee is Terminated Without Cause under Paragraph 3 (e) of this Agreement, Employee must fully comply with all of the requirements of this Paragraph 4 to be entitled to the severance benefits provided in Paragraph 5, including specifically the payment of the Lump Sum provided in Paragraph 5(a).

a) Resignation: Employee agrees to tender the resignation of his employment with the Company along with all of the positions that he holds at that time with the Company or any of its affiliated entities, partnerships or divisions, including specifically: Senior Vice President of NLF and NMC, Member of the Company's Management Committee, Director of Valencia Water Company, Director in the Valencia Town Center Hotel Company and Director in the TP Golf Company. In addition, Employee will sell or exchange all partnership and membership interests that he may have, as the case may be, in Newhall General Partnership and its affiliated entities, including but not limited to Valencia Town Center Hotel Company and TP Golf Company, under the terms of the respective shareholder agreements, partnership agreements or other governing documents. Employee agrees to execute whatever documents are necessary to effect his resignation from all of those positions as well as any other positions that he holds with the Company or any affiliated entities, partnerships, or divisions as of the Termination Date under Paragraph 3(e). Employee's letter of resignation, which is attached hereto as Addendum A and by this reference incorporated herein, will be accepted by the Company effective the close of business on his Termination Date.

b) Mutual General Releases: In further consideration for the compensation provided for in Paragraph 5 of this Agreement and as a condition precedent to receipt of the Lump Sum Payment provided for therein, Employee agrees to execute a document that conforms to Addendum B which is attached hereto and by this reference incorporated herein ("Mutual General Releases"). The Company reserves, the right within its sole discretion, to amend, delete or otherwise revise the Mutual General Releases to comply with any changes in applicable laws and/or to make the Mutual General Releases fully effective in releasing and forever discharging Company Releases from the Claims as defined therein. If Employee fails to execute the Mutual General Releases on the Termination Date, or any other subsequent date mutually agreed to by the Parties, then this Agreement and the Consulting Agreement shall become null and void and non-enforceable and Employee shall not be entitled to nor shall he be paid any of the benefits provided for in this Agreement, including specifically, the Lump Sum Payment provided in Paragraph 5(a) of this Agreement.

5) Severance Compensation: If Employee is Terminated Without Cause and he fully complies with all of the requirements of Paragraph 4 of this Agreement, then he shall be entitled to receive the following severance benefits:

a) Lump Sum Payment. Within five (5) business days of the lapse of the seven (7) day revocation period provided in Paragraph 11 of the Mutual General Releases, the Company shall pay Employee a lump sum payment equal to two times: (i) the yearly base salary Employee is making on the Termination Date; plus (ii) an amount equal to the average of the bonuses paid to Employee pursuant to the NLF Executive Incentive Compensation Plan ("Bonus Plan") for the three Company fiscal years preceding the Termination Date, less applicable withholding taxes ("Lump Sum Payment"). The Lump Sum Payment shall be deemed to have been made under this Paragraph 5 on the date the payment is tendered to Employee. The Company and Employee shall mutually agree on the method and timing of the Lump Sum Payment delivery to Employee.

b) Additional Services Payment: In the event the Termination Date occurs during the third or fourth calendar quarter, then Employee will be paid a pro-rated bonus under the Bonus Plan in effect for the fiscal year in which the Termination Date occurs. The pro-rated amount will be calculated by using the number of calendar days from January 1 of the year in which the Termination Date occurs through the Termination Date as the numerator and 360 as the denominator, multiplied by the amount of the bonus that would have been paid as determined under the Bonus Plan. The determination of the amount will be made at the same time as the bonuses are determined under the Bonus Plan for Company employees. The payment ("Additional Services Payment") will be made to Employee within the same month that payment is made to Company employees; provided, however, that Employee, as a condition precedent to payment of the Additional Services Payment executes and returns to the Company a document that conforms to Addendum C, which is by this reference incorporated herein ("Acknowledgement of Payment"). The Additional Services Payment will be made to Employee coincident with the execution and delivery of Acknowledgment of Payment to the Company.

In the event Termination Date occurs during the first two calendar quarters, then Employee will not be eligible to receive an Additional Services Payment for the Company's fiscal year during which the Termination Date occurs.

c) Unit Options and other Unit-Based Rights: Employee will not be granted any additional Unit options or Unit-based rights beyond those granted through the Termination Date. Any existing options or Unit-based rights, including any granted to Employee prior to the Termination Date, will be exercisable or distributed as the case may be, in accordance with the respective Unit options or Unit-based rights agreements and the Company's respective Plans under which the options or rights were granted. Any Unit options or Unit-based rights granted to Employee prior to the Termination Date that are not 100% vested on that date, shall become 100% vested upon the fifth business day following the seven day revocation period in Paragraph 11 of the Mutual General Releases.

d) Retirement/Savings Plans: Any benefits or payments due Employee under the NLF Retirement Plan, the NLF Pension Restoration Plan, the NLF Employee Savings Restoration Plan, the NLF Employee Savings Plan and any employee benefit plans qualified under Section 401(a) of the Internal Revenue Code will be paid in accordance with the provisions contained in each of those plans.

e) Purchase of Car: Employee will have the option to purchase the Company car assigned to him on the Termination Date at the low wholesale bluebook price for that car. If Employee chooses not to exercise that option, then he shall return the car and his keys to the car to the Company on or before the Termination Date.

f) No Other Payments or Benefits: Except as otherwise provided in this Paragraph 5, Employee shall not earn or be entitled to receive any other wages and/or benefits whatsoever after the Termination Date. Benefits payable under this Paragraph 5 will terminate, supersede and be in lieu of any severance pay benefits, Change of Control Program benefits or any other wage and/or benefits provided for in any employment agreement, the Change of Control Program, severance policy or benefit agreement between Employee and the Company or any other policy, agreement, practice or plan (including the NLF Retention Incentive Program adopted in March 2001) of the Company.

g) Medical Benefits: As part of Company's early retirement benefits, the Company's medical and dental HMO plans will be provided at no cost to Employee and his eligible dependents until Employee's sixty-fifth (65th) birthday, provided that Employee is eligible for those benefits on and after the Termination Date. If Employee selects a medical plan other than the HMO plan, he and his eligible dependents will pay the difference between the amount of the premiums charged for the coverage selected and the premiums for the same coverage under the Company's HMO plan. Should Employee die before age 65, his surviving spouse and eligible dependents will continue to receive the medical benefits until the date Employee would have reached age sixty-five (65).

6) Recitals: The Recital's stated above are incorporated herein by this reference as part of the Agreement.

7) Indemnification Agreement: The Mutual General Releases, when executed by Employee, as provided in Paragraph 4(b) of this Agreement shall not in any manner amend the terms of, or affect NLF's obligations, under that certain amended Indemnification Agreement dated November 14, 1990 between Employee and NLF.

8) Attorney Consultation: Employee acknowledges that he has been advised to consult with an attorney before signing this Agreement and the Mutual General Releases incorporated herein as Addendum B, and that he has voluntarily and knowingly executed this Agreement after having had the opportunity to consult with an attorney. Employee further acknowledges that he has had an adequate opportunity to consult with an attorney and that he has had an adequate opportunity to make whatever investigation or inquiry he or his counsel may deem necessary or desirable in conjunction with the subject matter of this Agreement prior to signing it. Employee further acknowledges that he has been advised that he may consider the terms of this Agreement for twenty-one (21) days before signing it. This Agreement was provided to Employee on August 31, 2001. Accordingly, Employee has until September 21, 2001 to decide whether he will sign the Agreement. To the extent that Employee takes less than twenty-one (21) days to consider this Agreement prior to signing it, he acknowledges that he has had sufficient time to consult with an attorney and that he does not desire additional time.

9) Revocation Period: This Agreement is revocable by Employee for a period of seven (7) days following execution and return of the Agreement to the Company. The revocation must be in writing, must specifically revoke this Agreement, and must be delivered to Trude Tsujimoto, Corporate Secretary, at The Newhall Land and Farming Company, 23823 Valencia Boulevard, Valencia, California, 91355, prior to the end of the seventh (7th) day following execution and delivery of this Agreement to the Company. Upon expiration of the seven (7) day period, this Agreement becomes effective, enforceable and irrevocable.

10) Mediation/Arbitration:

a) Employee and the Company agree that any Arbitrable Claims that arise between them will be submitted first to mediation and then to binding arbitration. Employee and the Company further agree that neither of them will commence any demand for arbitration without first submitting a formal written demand to the other Party for mediation of the dispute. When such a demand is made, the dispute will be submitted to mediation before a mutually agreeable mediator in the Los Angeles area. The cost of the mediation shall be borne equally by the Parties.

b) Any controversy, dispute or claim between the Parties which may arise from, out of, or relate to this Agreement, or its subject matter or the Addendums, including the validity, enforceability, construction or application of any of the terms, provisions, or conditions of this Agreement or the arbitrability of any such matter (collectively referred to herein as "Arbitrable Claims") shall be submitted: (i) first to Mediation under Paragraph 10(a), and if it is not resolved through Mediation, then (ii) to final and binding arbitration in Los Angeles, California, or such other location as the Parties shall mutually agree in writing under the auspices of the American Arbitration Association ("AAA"). The Parties agree that neither of them may initiate in any way or prosecute any claim, charge, lien, demand, right of action or cause of action of any nature whatsoever arising out of or related to this Agreement before any court, tribunal, or administrative agency against the other Party, and that they each acknowledge that their agreement to the mediation/arbitration provisions under this Paragraph 10 shall constitute an effective waiver of any right to have any Arbitrable Claims determined by judge or jury. The Parties further agree to be bound by the Employment Dispute Resolution Rules of AAA ("Rules") and that all Arbitrable Claims will be heard by the AAA pursuant to those Rules. The Parties further agree that in the event this Agreement, or any part thereof is not enforceable, all other provisions shall remain in force.

c) The arbitrator shall have jurisdiction to determine all Arbitrable Claims and may grant any relief authorized in law or equity for such claim. However, the arbitrator may not modify or change the terms of this Agreement or the Addendums. The Parties agree that the decision of the arbitrator shall not be appealable and that judgment upon an award rendered by the arbitrator may be entered for enforcement in any court of competent jurisdiction. All Arbitrable Claims must be submitted to mediation within thirty (30) days of the date such claim first arose to be arbitrable.

d) Except as otherwise stated above, neither Party may initiate in any way or prosecute any claim, charge, lien, demand, right of action or cause of action of any nature whatsoever arising out of or related to this Agreement or the Addendums before any court, tribunal or administrative agency against the other Party. A Party who initiates litigation or asserts Arbitrable Claims in any court or before any tribunal or administrative body, shall pay all reasonable attorneys' fees and costs incurred by the opposing Party in defending such litigation and/or claims.

11) Confidential Information:

a) Employee shall not (nor will Employee assist any other person to do so) during or after the termination of his employment with the Company, directly or indirectly reveal, report, publish or disclose Confidential Information to any person, firm or corporation not expressly authorized by the Company to receive such Confidential Information, or use (or assist any person to use) such Confidential Information except for the benefit of the Company. This provision shall not preclude disclosures required by law, nor shall it apply to information which has entered the public domain other than by reason of the action of Employee. The term "Confidential Information," as used herein, means all information or material not generally known by non-Company personnel which (i) gives the Company some competitive business advantage or the opportunity of obtaining such advantage or the disclosure of which could be detrimental to the interests of the Company; (ii) which is owned by the Company or in which the Company has an interest in; and (iii) which is either marked "Confidential Information," "Proprietary Information," or other similar marking, known by Employee to be considered confidential and proprietary by the Company or from all the relevant circumstances should reasonably be assumed by Employee to be confidential and proprietary to the Company. Confidential Information includes, but is not limited to, the following types of information and other information of a similar nature (whether or not reduced to writing): trade secrets, inventions, drawings, file data, documentation, diagrams, specifications, know how, processes, formulas, models, flow charts, software in various stages of development, source codes, object codes, research and development procedures, research or development and test results, marketing techniques and materials, marketing and development plans, price lists, pricing policies, business plans, information relating to customers and/or suppliers' identities, characteristics and agreements, financial information and projections, and employee files. Confidential Information also includes any information described above which the Company obtains from another party and which the Company treats as proprietary information or designates as Confidential Information, whether or not owned or developed by the Company. Notwithstanding the above, however, no information constitutes Confidential Information if it is generic information or general knowledge which Employee would have learned in the course of similar employment elsewhere in the trade or if it is otherwise publicly known and in the public domain.

b) Employee agrees on or before the last date of his employment under this Agreement to surrender to the Company all notes, data, sketches, drawings, manuals, documents, records, data bases, programs, blueprints, memoranda, specifications, customer lists, financial reports, equipment and all other physical forms of expression incorporating or containing any Confidential Information, it being distinctly understood that all such writings, physical forms of expression and other things are the exclusive property of the Company. Employee acknowledges that the unauthorized taking of any of the Company's trade secrets is a crime under California Penal Code Section 499(c) and is punishable by imprisonment. Employee further acknowledges that such unauthorized taking of the Company's trade secrets could also result in civil liability under California Civil Code Section 3426, and that willful misappropriation may result in an award against him for triple the amount of the Company's damages and the Company's attorneys fees in collecting such damages.

c) If Employee breaches, or threatens to commit a breach of, any of these non-disclosure provisions (collectively, the "Restrictive Covenants"), the Company shall have the following rights and remedies, each of which shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity: the right and remedy to have the Restrictive Covenants specifically enforced or to have any actual or threatened breach thereof enjoined by any court having equity jurisdiction, all without the need to prove any amount of actual damage or that monetary damages would not provide an adequate remedy, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that monetary damages will not provide an adequate remedy to the Company; and the right and remedy to require Employee to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by him or any associated party deriving such benefits as a result of any such breach of the Restrictive Covenants.

d) Nothing in this Agreement or any other agreement between Employee and the Company shall prohibit or impede or be construed to prohibit or impede Employee from lawfully competing with the Company, lawfully working for any competitor of the Company or otherwise lawfully pursuing his career in the residential and commercial development industry, so long as Employee complies with these non-disclosure provisions. The Parties agree that these non-disclosure provisions shall continue in effect after Employee's employment with the Company has terminated and notwithstanding any termination of this Agreement.

12) Non-Solicitation of Employees or Customers: For a period of one (1) year following the last date of Employee's employment with the Company, Employee agrees not to solicit or induce any employee or supplier of the Company to terminate his/her employment or relationship with the Company or to, directly or indirectly, solicit the trade of or otherwise do business with any customer or supplier of the Company and/or any one of its affiliated entities so as to offer or sell any product or service which would be competitive with any product or service sold by the Company or its affiliates during that period.

13) Employee Benefit Plans: Except as otherwise specifically provided in this Agreement to the contrary, all of the health and other employee benefit or compensation plans or programs referred to and contemplated by this Agreement (collectively referred to as "Plans") shall be governed solely by the terms of the underlying plan documents and by applicable law. Except as otherwise specifically provided in this Agreement to the contrary, nothing in this Agreement shall impair the Company's right to amend, modify, replace, and/or terminate any and all such Plans in its sole discretion or in accordance with the terms thereof. This Agreement is for the sole benefit of Employee and the Company, and is not intended to create a Plan, or, except as otherwise provided herein, to modify the terms of existing Plans. Also, any payments made pursuant to this Agreement shall not be taken into account (i.e., as "compensation") for purposes of determining the amount of benefits payable under any other Plans.

14) Entire Agreement: This Agreement is the only agreement and understanding between the Parties pertaining to the subject matter hereof, and supercedes and nullifies all prior agreements, summaries of agreement, descriptions of compensation packages, discussions, negotiations, understandings, representations or warranties, whether verbal or written between the Parties pertaining to such subject matter. This Agreement is binding on Employee's heirs and shall not be assignable by Employee for any purpose. This Agreement will be binding on any successors and assigns of the Company.

15) Severability: If any provision of this Agreement or any portion of such provision is held to be invalid or unenforceable, the remaining provisions or portions shall nevertheless be given effect. It is the intent of the Parties that all provisions shall be construed so as to be valid and enforceable, and if it should be determined that any provision is not valid and enforceable, a provision which would effectuate the intent of the Parties and would be valid and enforceable shall be substituted for the invalid and unenforceable provision.

16) Amendment and Waiver: This Agreement may be amended, modified or supplemented only by a writing executed by Employee and a designee of the Board. Either Party may, in writing, waive any provision of this Agreement to the extent that such provision is for the benefit of the waiving Party. No waiver by either Party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a Party to seek a remedy for non-compliance or breach by the other Party shall be construed as a waiver of any right or remedy with respect to such non-compliance and/or breach.

17) Construction and Applicable Law: The language of this Agreement and the Addendums have been approved by the Parties after the opportunity to consult with legal counsel and the language of these documents shall be construed as a whole according to their fair meaning and not strictly for or against either Party. This Agreement and the Addendums shall in all respects be interpreted, enforced and governed by and under the laws of the State of California.

18) Notice: Except as otherwise provided in this Agreement or any amendments subsequently executed between the Parties, any notice required or permitted to be given hereunder shall be in writing and shall be deemed to have been given upon personal delivery, or on the date it is postmarked, by certified or registered mail, postage pre-paid, addressed to Employee at the address on file with the Company and to the Company at its corporate headquarters. The Company's current corporate headquarters is located at The Newhall Land and Farming Company, 23823 Valencia Boulevard, Valencia, CA 91355, Attention: Secretary. It shall be Employee's responsibility to keep the Company advised in writing of any change in his address under this Paragraph of the Agreement.

(signature page to follow)

WHEREFORE, the Parties have executed this Agreement on the dates provided hereinafter.

DATED: September 4, 2001	EMPLOYEE:


				/s/ Thomas E. Dierckman
				Thomas E. Dierckman



DATED: August 30, 2001	THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership)
	By:	Newhall Management Limited Partnership, its
		Managing General Partner
	By:	Newhall Management Corporation, its
		Managing General Partner

	By:		/s/ Gary M. Cusumano
	Name:		Gary M. Cusumano
	Title:		Chief Executive Officer

	By:		/s/ Trude A. Tsujimoto
	Name:		Trude A. Tsujimoto
	Title:		Secretary

[NEWHALL LAND LETTERHEAD]

ADDENDUM A

Date_________

PERSONAL AND CONFIDENTIAL

The Board of Directors

The Newhall Land and Farming Company

and Newhall Management Corporation

23823 Valencia Boulevard

Valencia, California 91355

Re: Resignation

Dear Ladies and Gentlemen:

I hereby tender to you my resignation of employment along with my resignation of all positions that I hold effective the close of business on ____________.

Should you need me to sign any additional documents or paperwork to cause the foregoing to be completed, I will be happy to do so.

Very truly yours,

Thomas E. Dierckman

ADDENDUM B

MUTUAL GENERAL RELEASES

This Addendum to the Retention Agreement of Thomas E. Dierckman ("Agreement") is made and entered into this ____ day of _____________ by and between Thomas E. Dierckman ("Employee"), and The Newhall Land and Farming Company (a California Limited Partnership) ("Company") and by this reference the Agreement is incorporated herein. Employee and the Company are hereinafter sometimes referred to collectively as "the Parties." This agreement ("Mutual General Releases") is made for the purpose of settling and compromising all of the claims, disputes and controversies between the Parties arising from any cause whatsoever on or prior to the date of Employee's execution of the Mutual General Releases. So as to avoid any doubt, the mutual releases contained herein, do not in any manner amend the terms of, or affect the Company's obligations, under that certain amended Indemnification Agreement dated November 14, 1990 between Employee and the Company.

NOW, THEREFORE, the Parties hereto for the consideration set forth in the Agreement, which is by this reference incorporated herein, mutually agree as follows:

1. Consideration. In consideration of the benefits provided for in the Agreement as well as the Mutual General Releases and, for other good and valuable consideration, the Parties give the releases, promises and commitments contained herein.

2. Scope of Settlement. The compensation and benefits provided for in the Agreement are in full and complete settlement of all of Employee's Claims against Company Releasees and fully compensates Employee for any and all such Claims. Employee further acknowledges that he has received all wages and benefits due him through the last date of his employment with the Company, except as otherwise provided in Paragraph 5 of the Agreement. Employee specifically acknowledges that he has received the Lump Sum Payment and that the Company has fully complied with the provisions of Paragraph 5(a) of the Agreement.

3. General Release of Company Releasees. Employee, for himself and for his heirs, spouse, executors, administrators and assigns, acknowledges complete satisfaction of and unconditionally releases and forever discharges the Company, Newhall Management Corporation, and any and all of its respective affiliated companies, subsidiaries, divisions, affiliated entities, shareholders, partnerships, successors and assigns, and any and all of its past, present and/or future officers, directors, members, partners, unit holders, agents, employees, administrators and assigns (hereinafter collectively referred to as "Company Releasees"), from any and all claims, demands, causes of action, costs, charges, fees and liabilities of any kind whatsoever, whether known or unknown, unsuspected or latent, which Employee or any of his heirs, guardians, administrators, executors, successors in interest, and/or assigns have incurred or expect to incur, or now own or hold or have at any time heretofore owned or held, or may at any time own, hold or claim by reason of any matter or thing against Company Releasees, and each of them, arising from or by reason of any actual or alleged act, omission, transaction, practice, conduct or occurrence, or any other matter whatsoever on or prior to the date of Employee's execution of the Mutual General Releases. Without limiting the generality of the foregoing, Employee specifically waives and fully releases Company Releasees, and each of them, from any and all claims arising out of Employee's employment with the Company and/or the termination of that employment, any positions Employee held or services Employee rendered as well as Employee's resignation of all positions held with the Company, including but not limited to: (a) any claim under the Americans with Disabilities Act, the California Fair Employment and Housing Act, the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967 or the Older Workers Benefit Protection Act; Employee Retirement Income Security Act of 1974; (b) any other claim of employment discrimination (whether based on federal, state or local, statutory or decisional law; (c) any claim arising out of the terms and conditions of Employee's employment and/or any of the events relating directly or indirectly to or surrounding the termination of his employment; (d) any claims for severance, pension, bonuses, profit sharing or severance/termination payments; (e) any claim regarding any claimed employment or benefit agreement or contract whether written or oral; (f) any claim for any alleged injuries incurred during Employee's employment with the Company including any claims for rehabilitation; and (g) any other matter or claim whatsoever between the Parties (jointly "Claims"). These releases do not include or release Company Releases or any of them, from providing the benefits or making the payments provided for in Paragraph 5 (b), (c), (d), and (g) of the Agreement.

4. General Release of Employee's Releasees. The Company fully releases and discharges forever Employee and his spouse, children, agents, heirs and administrators and assigns ("Employee Releasees") from any and all liabilities, claims, causes of action, charges, complaints, obligations, costs, losses, damages, injuries and attorneys' fees, of any form whatsoever, whether known or unknown, unsuspected or latent, which the Company or any of its officers, employees, agents, administrators, successors in interest, and/or assigns have incurred or expect to incur, or now own or hold, or have at any time heretofore owned or held, or may at any time own, hold, or claim to hold by reason of any matter or thing, arising from any cause whatsoever on or prior to the date of Company's execution of the Mutual General Releases. Without limiting the generality of the foregoing, the Company fully releases and discharges each and all of Employee's Releasees from any and all claims, demands and causes of action in connection with any and all matters pertaining to Employee's employment by the Company, including, but not limited to, any and all damages of every kind whatsoever, express or implied duties or obligations, express or implied covenants, and promises on any and all of the above, any other matter between the Parties, and any claims relating to and arising out of Employee's performance of his duties as an officer of the Company.

5. Non-Admission of Liability. This Agreement shall not in any way be construed as an admission by either Party of any liability whatsoever, or as an admission by either Party of any illegal or improper act or acts, of any kind or nature whatsoever, against the other Party.

6. Releases Include Unknown Claims. It is the intention of the Parties in executing the Mutual General Releases and in paying and receiving the monetary and other consideration called for by the Agreement that the Mutual General Releases shall be effective as a full and final accord and satisfaction and general release of and from all liabilities, disputes, claims and matters, known or unknown, suspected or unsuspected arising from any cause whatsoever on or prior to the date of Employee's execution of the Mutual General Releases. In furtherance of this intention, the Parties, and each of them, acknowledge that they are familiar with Section 1542 of the Civil Code of the State of California, which provides as follows:

"A general release does not extend to claims which the creditor does now know or suspect to exist in his favor at the time of executing the release which if known by him must have materially affected his settlement with the debtor."

The Parties, and each of them, waive and relinquish any right or benefit which they have or may have under Section 1542 of the Civil Code of the State of California or any similar provision of statutory or non-statutory law of this or any other jurisdiction to the full extent that they may lawfully waive all such rights and benefits pertaining to the subject matter of the Agreement and the Mutual General Releases. In connection with such waiver and relinquishment, the Parties, and each of them, acknowledge that they are aware that any legal counsel that they may retain may hereafter discover claims or facts in addition to or different from those which they now know or believe to exist with respect to the subject matter of the Mutual General Releases, but that it is their intention hereby to fully, finally and forever settle and release all the released matters, disputes and differences, known and unknown, suspected or unsuspected, which now exist, may exist, or heretofore has existed, between them. In furtherance of this intention, the releases herein given shall be and remain in effect as full and complete general releases notwithstanding the discovery and existence of any such additional or different claims or facts.

7. Successors and Assigns. This Agreement shall bind, and inure to the benefit of, the respective heirs, legal representatives, successors, and assigns of the Parties hereto.

8. Covenant Not to Sue. The Parties, and each of them, represent and warrant that they have no action, claim, charge or lawsuit intended, filed, prepared or pending against the other Party or their respective released parties and that they will not individually or as a member of any class file any action, claim, charge or lawsuit against the other Party, or any of their respective released parties, concerning the subject matter of the Agreement, the Mutual General Releases and/or any of the claims released under the Mutual General Releases.

9. Construction. The language of the Mutual General Releases has been approved by all Parties after the opportunity to consult with legal counsel and the language of the Mutual General Releases shall be construed as a whole according to its fair meaning and not strictly for or against either Party.

10. Entire Agreement and Governing Law. The Mutual General Releases shall in all respects be interpreted, enforced, and governed by and under the laws of the State of California. The Mutual General Releases constitutes the entire agreement between the Parties and supercedes all prior agreements, whether verbal or written, between the Parties pertaining to the subject matter hereof.

11. Legal Consultation and Revocability Periods: The Parties expressly intend, and Employee acknowledges and agrees, that as part of the potential claims released in Paragraphs 3 and 4 of the Mutual General Releases, Employee is herein releasing the Company Releasees from any claims that he has or may have under the Age Discrimination in Employment Act of 1967, 29 U.S.. § 621 et seq. Accordingly, Employee has been advised to review the Mutual General Releases and represents and agrees: (a) that he has been advised to consult with an attorney prior to executing the Mutual General Releases; (b) that he has had up to twenty-one (21) days to consider executing the Mutual General Releases and that he is knowingly and voluntarily entering into the Mutual General Releases; (c) that he received a copy of the Mutual General Releases on , 2001; (d) that he has seven (7) days from the date of execution of the Mutual General Releases to rescind it by doing so in writing addressed to the General Counsel and/or Secretary of the Company, at its corporate headquarters located at The Newhall Land and Farming Company, 23823 Valencia Boulevard, Valencia, California 91355; and (e) that the Mutual General Releases will not be effective until the end of the seven (7) day revocation period.

DATED:	EMPLOYEE:


	Thomas E. Dierckman

DATED:	THE NEWHALL LAND AND FARMING COMPANY
	(a California Limited Partnership)
	By:	Newhall Management Limited Partnership, its Managing General Partner
	By:	Newhall Management Corporation, its Managing General Partner

	By:
	Name:
	Title:

	By:
	Name:
	Title:

ADDENDUM C

ACKNOWLEDGMENT OF PAYMENT

This Addendum to the Retention Agreement of Thomas E. Dierckman dated March 31, 2001 ("Agreement") is made and entered into this ____ day of ______________ by and between Thomas E. Dierckman ("Employee"), and The Newhall Land and Farming Company (a California Limited Partnership) ("Company") and by this reference the Agreement is incorporated herein. Employee and the Company are hereinafter sometimes referred to collectively as "the Parties." This Acknowledgment of Payment ("Acknowledgment") is made and entered into on the date set forth above.

NOW, THEREFORE, the Parties hereto for the consideration set forth in the Agreement initially agree as follows:

1. Receipt of Payment. Employee hereby acknowledges that he has been paid the Additional Services Payment provided for in paragraph 5(b) of the Agreement and that the Company has fully complied with all the requirements of Paragraph 5(b) of the Agreement.

2. Successors and Assigns. This Acknowledgment shall bind, inure to the benefit of, the respective heirs, legal representatives, successors, and assigns of the Parties hereto.

3. Covenant Not To Sue. The Parties, and each of them, represent and warrant that they have no action, claim, charge or lawsuit intended, filed, prepared or pending against the other Party or their respective released parties and that they will not individually or as a member of any class file any action, claim, charge or lawsuit against the other Party, or any of their respective released parties, concerning the subject matter of the Agreement, the Acknowledgment and/or any of the claims released under the Mutual General Releases.

4. Construction. The language of the Acknowledgment has been approved by all Parties after the opportunity to consult with legal counsel and the language of the Acknowledgment shall be construed as a whole according to its fair meaning and not strictly for or against either Party.

5. Entire Agreement and Governing Law. The Acknowledgment shall in all respects be interpreted, enforced, and governed by and under the laws of the State of California. The Acknowledgment constitutes the entire agreement between the Parties and supersedes all prior agreements, whether verbal or written, between the Parties pertaining to the subject matter hereof.

DATED:	, 2001	EMPLOYEE:


		Thomas E. Dierckman

DATED:	, 2001	THE NEWHALL LAND AND FARMING COMPANY
		(a California Limited Partnership)
		By:	Newhall Management Limited Partnership, its Managing General Partner
		By:	Newhall Management Corporation, its Managing General Partner

		By:
		Name:
		Title:

		By:
		Name:
		Title:

DATED: September 10, 2001	EMPLOYEE:


	/s/ Gary M. Cusumano
	Gary M. Cusumano



DATED: August 28, 2001	THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership)

	By:	Newhall Management Limited Partnership, its Managing General Partner
	By:	Newhall Management Corporation, its Managing General Partner


	By:	/s/ Stuart R. Mork
	Name:	S.R. Mork
	Title:	Chief Financial Officer

	By:	/s/ Trude A. Tsujimoto
	Name:	Trude A. Tsujimoto
	Title:	Secretary

DATED:____________________	EMPLOYEE:



	Gary M. Cusumano



DATED:____________________	THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership)
	By:	Newhall Management Limited Partnership, its Managing General Partner
	By:	Newhall Management Corporation, its Managing General Partner


	By:
	Name:
	Title:

	By:
	Name:
	Title:

CONSULTANT:		THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership) By: Newhall Management Limited Partnership, its Managing General Partner By: Newhall Management Corporation, its Managing General Partner


By:		By:
	Gary M. Cusumano	Name:
		Title:


		By:
		Name:
		Title:

DATED:_________________, 2001	EMPLOYEE:



	Gary M. Cusumano



DATED:_________________, 2001	THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership)
	By:	Newhall Management Limited Partnership, its Managing General Partner
	By:	Newhall Management Corporation, its Managing General Partner


	By:
	Name:
	Title:

	By:
	Name:
	Title:

DATED: September 5, 2001	EMPLOYEE:


				/s/ Stuart R. Mork
				Stuart R. Mork



DATED: August 30, 2001	THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership)
	By:	Newhall Management Limited Partnership, its Managing General Partner
	By:	Newhall Management Corporation, its Managing General Partner

	By:		/s/ Gary M. Cusumano
	Name:		Gary M. Cusumano
	Title:		Chief Executive Officer

	By:		/s/ Trude A. Tsujimoto
	Name:		Trude A. Tsujimoto
	Title:		Secretary