SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 Commission file number 1-7585 The Newhall Land and Farming Company Employee Savings Plan The Newhall Land and Farming Company (A California Limited Partnership) 23823 Valencia Boulevard Valencia, CA 91355 REQUIRED INFORMATION Statements of Net Assets Available for Plan Benefits With Fund Information as of December 31, 1998 and 1997, Statements of Changes in Net Assets Available for Plan Benefits With Fund Information for each of the years in the two-year period ended December 31, 1998, Notes to Financial Statements, Schedule of Assets Held for Investment Purposes as of December 31, 1998, Schedule of Reportable Transactions for the year ended December 31, 1998, together with the Report and Consent of Independent Auditors, are attached and filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Newhall Management Corporation has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. The Newhall Land and Farming Company Employee Savings Plan Newhall Management Corporation, Trustee June 25, 1999 By: /S/ Donald L. Kimball ------------------------------------------- Donald L. Kimball Vice President - Finance and Controller THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN Financial Statements and Schedules December 31, 1998 and 1997 (With Independent Auditors' Report Thereon) THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN INDEX TO FINANCIAL STATEMENTS AND SCHEDULES PAGE Independent Auditors' Report 1 Statement of Net Assets Available for Plan Benefits with Fund Information - December 31, 1998 2 Statement of Net Assets Available for Plan Benefits with Fund Information - December 31, 1997 3 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information - Year ended December 31, 1998 4 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information - Year ended December 31, 1997 5 Notes to Financial Statements 6 SCHEDULE 1 Line 27a - Schedule of Assets Held for Investment Purposes - December 31, 1998 9 2 Line 27d - Schedule of Reportable Transactions - Year ended December 31, 1998 10 Other schedules are omitted as they are not applicable or not required by Department of Labor Regulations. INDEPENDENT AUDITORS' REPORT The Compensation Committee of the Board of Directors of Newhall Management Corporation: We have audited the accompanying statements of net assets available for Plan benefits with fund information of The Newhall Land and Farming Company Employee Savings Plan as of December 31, 1998 and 1997 and the related statements of changes in net assets available for Plan benefits with fund information for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for Plan benefits of The Newhall Land and Farming Company Employee Savings Plan as of December 31, 1998 and 1997 and the changes in those net assets for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included in Schedules 1 and 2 is presented for purposes of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplementary schedules are the responsibility of the Plan's management. The fund information in the statements of net assets available for Plan benefits and the statements of changes in net assets available for Plan benefits is presented for purposes of additional analysis rather than to present the net assets available for Plan benefits and changes in net assets available for Plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. April 30, 1999 /S/ KPMG LLP THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN Statement of Net Assets Available for Plan Benefits with Fund Information December 31, 1998 PARTNERSHIP BALANCED FIXED INCOME DEPOSITARY INVESTMENT EQUITY INDEX PARTICIPANT ASSETS FUND UNIT FUND FUND FUND LOANS TOTAL ------------ ------------ ------------ ------------ ------------ ------------ Cash $ -- -- -- 4,852 -- 4,852 Investments 3,001,272 635,977 1,574,742 8,637,533 -- 13,849,524 Loans to participants -- -- -- -- 764,531 764,531 ------------ ------------ ------------ ------------ ------------ ------------ Net assets available for Plan Benefits $ 3,001,272 635,977 1,574,742 8,642,385 764,531 14,618,907 ============ ============ ============ ============ ============ ============ See accompanying notes to financial statements. 2 THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN Statement of Net Assets Available for Plan Benefits with Fund Information December 31, 1997 PARTNERSHIP BALANCED FIXED INCOME DEPOSITARY INVESTMENT EQUITY INDEX PARTICIPANT ASSETS FUND UNIT FUND FUND FUND LOANS TOTAL ------------ ------------ ------------ ------------ ------------ ------------ Cash $ -- 535 -- 5,257 -- 5,792 Investments 2,881,960 500,027 1,229,572 6,960,686 -- 11,572,245 Loans to participants -- -- -- -- 665,173 665,173 ------------ ------------ ------------ ------------ ------------ ------------ Total assets 2,881,960 500,562 1,229,572 6,965,943 665,173 12,243,210 LIABILITIES Reimbursements due to Plan sponsor (11,936) -- -- -- -- (11,936) ------------ ------------ ------------ ------------ ------------ ------------ Net assets available for Plan Benefits $ 2,870,024 500,562 1,229,572 6,965,943 665,173 12,231,274 ============ ============ ============ ============ ============ ============ See accompanying notes to financial statements. 3 THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN Statement of Changes in Net Assets Available for Plan Benefits with Fund Information Year ended December 31, 1998 PARTNERSHIP BALANCED FIXED INCOME DEPOSITARY INVESTMENT EQUITY INDEX PARTICIPANT FUND UNIT FUND FUND FUND LOANS TOTAL ------------ ------------ ------------ ------------ ------------ ------------ Dividend and interest income $ 210,378 -- 113 354 -- 210,845 Realized gains -- -- 25,927 123,196 49,524 198,647 Unrealized gain (loss) 19,141 (95,088) 281,748 1,827,180 -- 2,032,981 ------------ ------------ ------------ ------------ ------------ ------------ 229,519 (95,088) 307,788 1,950,730 49,524 2,442,473 ------------ ------------ ------------ ------------ ------------ ------------ Contributions: From participants 100,366 50,448 86,516 393,649 -- 630,979 From the Company 55,153 21,336 38,214 185,247 -- 299,950 ------------ ------------ ------------ ------------ ------------ ------------ 155,519 71,784 124,730 578,896 -- 930,929 ------------ ------------ ------------ ------------ ------------ ------------ Interfund transfers 259,965 159,291 156,012 (625,102) 49,834 -- Participant withdrawals (513,755) (572) (243,360) (228,082) -- (985,769) ------------ ------------ ------------ ------------ ------------ ------------ Increase in net assets 131,248 135,415 345,170 1,676,442 99,358 2,387,633 Net assets available for Plan benefits: Beginning of year 2,870,024 500,562 1,229,572 6,965,943 665,173 12,231,274 ------------ ------------ ------------ ------------ ------------ ------------ End of year $ 3,001,272 635,977 1,574,742 8,642,385 764,531 14,618,907 ============ ============ ============ ============ ============ ============ See accompanying notes to financial statements. 4 THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN Statement of Changes in Net Assets Available for Plan Benefits with Fund Information Year ended December 31, 1997 PARTNERSHIP BALANCED FIXED INCOME DEPOSITARY INVESTMENT EQUITY INDEX PARTICIPANT FUND UNIT FUND FUND FUND LOANS TOTAL ------------ ------------ ------------ ------------ ------------ ------------ Dividend and interest income $ 176,802 3,310 1,145 428 46,190 227,875 Realized gains -- -- 23,177 66,234 -- 89,411 Unrealized gains 883 199,160 211,959 1,541,042 -- 1,953,044 ------------ ------------ ------------ ------------ ------------ ------------ 177,685 202,470 236,281 1,607,704 46,190 2,270,330 ------------ ------------ ------------ ------------ ------------ ------------ Contributions: From participants 146,787 36,354 275,973 151,492 -- 610,606 From the Company 73,525 13,534 29,972 158,569 -- 275,600 ------------ ------------ ------------ ------------ ------------ ------------ 220,312 49,888 305,945 310,061 -- 886,206 ------------ ------------ ------------ ------------ ------------ ------------ Interfund transfers (509,803) 65,663 (315,156) 757,334 1,962 -- Participant withdrawals (407,783) (1,170) (36,722) (994,072) -- (1,439,747) ------------ ------------ ------------ ------------ ------------ ------------ Increase (decrease) in net assets (519,589) 316,851 190,348 1,681,027 48,152 1,716,789 Net assets available for Plan benefits: Beginning of year 3,389,613 183,711 1,039,224 5,284,916 617,021 10,514,485 ------------ ------------ ------------ ------------ ------------ ------------ End of year $ 2,870,024 500,562 1,229,572 6,965,943 665,173 12,231,274 ============ ============ ============ ============ ============ ============ See accompanying notes to financial statements. 5 THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (1) DESCRIPTION OF THE PLAN The Newhall Land and Farming Company Employee Savings Plan (the Plan) is a defined contribution plan under the Internal Revenue Code of 1986 (the Code) Section 401(k) and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan permits eligible employees of The Newhall Land and Farming Company and subsidiaries (the Company) to contribute up to $10,000 in 1998 and $9,500 in 1997. Employee contributions reduce an employee's currently taxable compensation and, therefore, are not subject to income taxes until the amounts are withdrawn from the Plan. An employee must complete one year of service as defined in the plan and reach age 19 to become eligible to participate. For employee contributions of up to 6% of compensation, the Company may contribute an amount ranging from 25% to 75% of the employee's contribution depending upon the employee's length of service with the Company. Company contributions may be suspended if it is deemed appropriate by the Company's Board of Directors. Participants select the investment funds in which their contributions are to be invested from the four available funds of the Plan. The investment funds are the Fixed Income Fund, the Equity Index Fund, the Partnership Depositary Unit Fund and the Balanced Investment Fund. Company contributions, when made, are invested proportionately in the same funds as the employee contributions. Participants are fully vested in the Plan upon enrollment; accordingly, there are no forfeitures resulting from participant withdrawals. Normal distributions are made in full upon (1) retirement, (2) total and permanent disability, (3) death or (4) termination of employment. Participants showing hardship may withdraw part or all of their contributions and accumulated earnings or losses, limited to earnings and losses incurred prior to January 1, 1990, at the end of a calendar quarter. An employee who withdraws any amount of his or her contributions is not permitted to resume participation for twelve months. Employer contributions and the related accumulated earnings may be withdrawn only upon one of the four above-listed occurrences. Distributions and withdrawals are made in cash. The Plan permits loans to Plan participants, secured by the borrowing participant's interest in the Plan, on such nondiscriminatory terms and conditions as the Plan's administrative committee shall determine, provided, however, that such loans comply with applicable requirements of ERISA and the Code (including such restrictions as are necessary to prevent loans from being treated as distributions under Section 72(p) of the Code). The loans are treated as earmarked investments of the participants with interest repayments credited proportionately to the investment funds originally liquidated to provide the principal. Contributions by employees are voluntary and are determined as a specified percentage of base compensation, overtime and incentive compensation excluding that portion of compensation imputed for tax purposes as a result of fringe benefits and other similar forms of compensation. The Plan permits eligible rollover contributions from other qualified plans. 6 (Continued) THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 In the event of Plan termination, all payments will be made as soon as practicable from the assets of the Plan based on the amount in each participant's individual and employer contribution accounts. Newhall Management Corporation is the sole trustee for the Plan. Participants should refer to the Plan document for a more complete description of the Plan's provisions. (2) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND PRACTICES (a) BASIS OF ACCOUNTING The financial statements for the Plan are prepared on an accrual basis, primarily from data submitted to the Plan administrator by the companies that function as investment managers: Connecticut General Life Insurance Company (CIGNA), Newhall Depositary Company and Wells Fargo Bank. (b) INVESTMENTS All investment income is allocated to individual participant accounts. The Fixed Income Fund, held by CIGNA, represents a deposit with an insurance company and is stated at contract value, which represents contributions and income earned, less distributions and expenses charged. The Partnership Depositary Unit Fund is invested in partnership units in the Company. The Equity Index Fund, held by Wells Fargo Bank, is a collective trust invested primarily in the common stocks that comprise the Standard & Poor's 500 Index. The Balanced Investment Fund, held by Wells Fargo Bank, is a collective trust invested primarily in common stocks that comprise the Standard & Poor's 500 Index and in U.S. Treasury Bonds. The Plan shares in the investment gains and losses of the securities underlying the Equity Index Fund, the Partnership Depositary Unit Fund and the Balanced Investment Fund, which are stated at fair value based on quoted market prices. Purchases and sales of securities are recorded on a trade-date basis. Loans to participants are stated at cost, which approximates fair value. (c) PLAN EXPENSES Expenses incurred in the administration of the Plan are borne by the Company. (d) MANAGEMENT ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of net assets and changes therein and the amount of any contingent assets or liabilities disclosed in the financial statements. Actual results could differ from estimates made. 7 (Continued) THE NEWHALL LAND AND FARMING COMPANY EMPLOYEE SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (3) INCOME TAXES The Company received a favorable determination letter from the Internal Revenue Service in September 1995 which stated that the Plan, as then designed, including certain proposed amendments, is in compliance with applicable requirements of the Internal Revenue Code. The proposed amendments were adopted by the Plan subsequent to receipt of the determination letter. (4) COMMITMENTS Included in net assets available for Plan benefits in the accompanying financial statements as of December 31, 1998 and 1997 are amounts totaling $67,109 and $26,404, respectively, allocated to accounts of persons who have requested withdrawal of their accounts from the Plan. (5) INVESTMENTS REPRESENTING 5% OR MORE OF NET ASSETS The fair value of individual investments representing 5% or more of the Plan's net assets as of December 31, 1998 and 1997 is: 1998 1997 ------------ ------------ Wells Fargo Bank Equity Index Fund $ 8,637,533 6,958,572 CIGNA Fixed Income Fund 3,001,272 2,847,952 Wells Fargo Balanced Investment Fund 1,574,742 1,229,380 ============ ============ 8 (Continued) SCHEDULE 1 THE NEWHALL LAND AND FARMING EMPLOYEE SAVINGS PLAN Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998 IDENTITY OF ISSUER, BORROWER, LESSOR OR SIMILAR PARTY DESCRIPTION OF INVESTMENT COST CURRENT VALUE - ---------------------------- -------------------------------------- ------------- ------------- Wells Fargo Money Market * Money market shares, $1 par $ 4,852 4,852 Connecticut General Life Insurance Company (CIGNA) * Fixed Income Fund 3,001,272 3,001,272 The Newhall Land and Farming Company* Partnership Units 508,123 635,977 Wells Fargo Bank Equity Index Fund 6,823,986 8,637,533 Wells Fargo Bank Balanced Investment Fund 1,292,799 1,574,742 Loans to Plan participants Notes secured by vested interest (77 total loans with interest rates ranging from 6.88 % to 8.64 %) -- 764,531 ------------- ------------- $11,631,032 14,618,907 ============= ============= * Party in interest. See accompanying notes to financial statements. 9 SCHEDULE 2 THE NEWHALL LAND AND FARMING EMPLOYEE SAVINGS PLAN Line 27d - Schedule of Reportable Transactions Year ended December 31, 1998 CURRENT VALUE OF ASSET TOTAL ON EXPENSES IDENTITY OF DESCRIPTION NUMBER OF PURCHASE TRANSACTION SALES COST OF INCURRED WITH NET GAIN PARTY INVOLVED OF ASSETS TRANSACTIONS PRICE DATE PRICE ASSET TRANSACTION (LOSS) - ---------------- ----------------- ------------ ---------- -------------- --------- --------- ------------- -------- Wells Fargo Bank Equity Index Fund 33 $1,073,128 1,073,128 -- 1,073,128 -- -- Wells Fargo Bank Equity Index Fund 22 -- 1,210,505 1,333,333 681,546 -- 651,787 Wells Fargo Bank Money Market Fund 14 -- 369,053 369,053 369,053 -- -- Wells Fargo Bank Money Market Fund 29 362,410 362,410 -- 362,410 -- -- ============ ========== ============== ========= ========= ============= ======== See accompanying independent auditors' report. 10 THE NEWHALL LAND AND FARMING COMPANY INDEX TO EXHIBITS Exhibit Number Description -------- ----------- 23 Independent Auditors' Consent