Trendwest Resorts Inc · 10-K · For 12/31/99

Filed On 3/29/00   ·   SEC File 0-22979   ·   Accession Number 891020-0-640

Annual Report   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Form 10-K for Period Ended December 31, 1999          55    240K 
 2: EX-23.1     Consent of Kpmg Llp                                    1      4K 
 3: EX-27       Financial Data Schedule                                1      4K 

10-K   ·   Form 10-K for Period Ended December 31, 1999
Document Table of Contents

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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM 10-K 

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 

[ ]   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 333-26861

TRENDWEST RESORTS, INC. 
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

                                                                [Download Table]
                                                                                
                    OREGON                                 93-1004403           
(STATE OR OTHER JURISDICTION OF ORGANIZATION)  (IRS EMPLOYER IDENTIFICATION NO.)

              9805 WILLOWS ROAD                              98052              
                 REDMOND, WA                               (ZIP CODE)           
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                     

(425) 990-2300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 
COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS)

   Aggregate market price of shares held by non-affiliates at March 20, 2000
was $50,141,385.25, consisting of 2,145,086 shares.                             

The number of shares of common stock outstanding on March 20, 2000 was
16,932,378 shares.                                                              

 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 twelve months (or for such shorter period that the    
registrant was required to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days.  Yes [X]  No [ ]                      

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information          
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K.  [ ]                                               

DOCUMENTS INCORPORATED BY REFERENCE:

  Portions of the Company's Proxy Statement for the 2000 Annual Meeting of
shareholders are incorporated by reference into Part III of this Form 10-K.     

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PART I

ITEM 1. BUSINESS                                                                

  Trendwest Resorts, Inc., (Company) markets, sells and finances timeshare
Vacation Ownership Interests in the form of Vacation Credits and Fractional     
Interests. The Company also acquires, develops and manages timeshare resorts.   
The Company's timeshare resorts (except Fractional Interests) are owned and     
operated through WorldMark, the Club, (WorldMark) a non-profit mutual benefit   
corporation organized by Trendwest in 1989 to provide an innovative, flexible   
vacation ownership system. The Company presently sells Vacation Ownership       
interests in Alaska, Arizona, California, Idaho, Oregon, Utah and Washington    
primarily through off-site sales offices. Fractional Interests are sold on-site 
at the Depoe Bay resort in Oregon.                                              

Trendwest sells Vacation Ownership Interests in the form of Vacation  
Credits, which are created by the transfer to WorldMark of resort units         
purchased or developed by the Company, and Fractional Interests. Vacation       
Credits can be used by Owners to reserve units at any of the WorldMark resorts, 
at any time of the year and in increments as short as one day. The use of       
Vacation Credits is not tied to any particular resort unit or time period as is 
typical in the timeshare industry. The Company believes that the combination of 
multiple WorldMark Resorts and the Company's Vacation Credit system provides    
Owners with an attractive range of vacation planning choices and values not     
generally available within the timeshare industry. The Company's Vacation Credit
system with multiple WorldMark Resorts facilitates the sale of Vacation Credits 
at off-site sales offices located in major metropolitan areas and reduces       
dependence on on-site sales centers located at more remote resort locations. The
Company was formed as a pure Vacation Credit system and its operations          
infrastructure was designed to facilitate such an operation. Often, other       
timeshare operations have overlaid a "points-based" club onto a traditional     
fixed week product.                                                             

     Fractional Vacation Ownership Interests represent deeded fixed intervals in
timeshare condominiums and are not transferred to WorldMark. The Company's first
Fractional program, at the Depoe Bay resort on the Oregon Coast, commenced      
pre-selling in October, 1998 and began recognizing revenue from these sales in  
April, 1999 when the Company took possession of the property. The 377 Fractional
Interests each representing a 13th share ownership in a condominium were        
completely sold out by October, 1999. The Company will continue to develop      
Fractional ownership programs at strategic locations with high demand.          

     The Company sells vacation credits at twenty-four sales offices, fifteen of
which are located off-site in metropolitan areas. The other sales offices are   
located on-site at nine of the WorldMark Resorts.                               

RECENT DEVELOPMENTS                                                             

    On October 22, 1999, the Company formed Trendwest South Pacific, Pty. Ltd.
(Trendwest South Pacific) as a wholly-owned subsidiary. Trendwest South Pacific 
is an Australian corporation formed for the purpose of conducting sales,        
marketing and resort development activities in the South Pacific. As of December
31, 1999, Trendwest South Pacific had no activity other than general and        
administrative expenses associated with the start-up of operations.             

 The Company is currently in the process of registering its product with
Australian regulators. The Company anticipates commencing sales operations in   
April, 2000 following regulatory approval.                                      

CORPORATE BACKGROUND AND CONSOLIDATION OF FINANCE SUBSIDIARIES                  

   The Company commenced its timeshare business as a wholly-owned subsidiary
of JELD-WEN in 1989 with three condominium units. JELD-WEN is currently the     
Company's principal shareholder. JELD-WEN is a privately owned company that was 
founded in 1960 and is a major manufacturer of doors, windows and millwork      
products. Headquartered in Klamath Falls, Oregon, JELD-WEN has diversified      
operations located throughout the United States and in numerous foreign         
countries that include manufacturing, hospitality and recreation, retail,       
financial services and real estate.                                             

     The Company raises capital for property acquisitions and working capital by
selling or securitizing Notes Receivable through four subsidiaries (the "Finance
Subsidiaries"). Prior to June 30, 1997, two of the Finance                      
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Subsidiaries were owned by JELD-WEN. Effective June 30, 1997, the Company       
acquired the two Finance Subsidiaries from JELD-WEN for 5,193,693 shares of the 
Company's Common Stock (the "Consolidation Transactions"). On August 15, 1997,  
the Company consummated its public offering.                                    

   The Company has transactions with other JELD-WEN subsidiaries and related
parties. See note 14 "Related Party Transactions" in the notes to the combined  
and consolidated financial statements included herein.                          

 The Company was incorporated in Oregon in 1989. The Company's principal
executive offices are located at 9805 Willows Road, Redmond, Washington 98052,  
and its telephone number is (425) 498-2500.                                     

WORLDMARK                                                                       

  WorldMark is a California nonprofit mutual benefit corporation formed by
Trendwest in 1989. WorldMark's articles of incorporation provide that the       
specific purpose for which it was formed is to own, operate and manage the real 
property conveyed to it by the Company for the benefit of the WorldMark Owners. 
There are 87,432 Owners at December 31, 1999. Owners receive the right to use   
all WorldMark Resort units and the right to vote to elect WorldMark's board     
members and to vote with respect to certain major WorldMark matters. The number 
of votes that each Owner has is based on the number of Vacation Credits owned.  

The Resorts are owned by WorldMark free and clear of all monetary     
encumbrances. WorldMark maintains a replacement reserve for the WorldMark       
Resorts which is funded from the annual assessments of the Owners. The          
replacement reserve is utilized to refurbish and replace the interiors and      
furnishings of the condominium units and to maintain the exteriors and common   
areas in WorldMark Resorts in which all units are owned by WorldMark.           

  Compared to other timeshare arrangements, the WorldMark concept provides
Owners significant flexibility in planning vacations. Depending on how many     
Vacation Credits an Owner has purchased, the Owner may use the Vacation Credits 
for one or more vacations annually. The number of Vacation Credits that are     
required to stay one day at WorldMark's units varies, depending upon the resort 
location, the size of the unit, the vacation season and the day of the week. For
example, a Friday or Saturday night stay at a one-bedroom unit may require 825  
Vacation Credits per night off-season and 1,450 Vacation Credits per night in   
peak season. A midweek stay at the same one-bedroom unit would require less     
Vacation Credits. The range of Vacation Credits that is required to stay one day
enables an Owner to receive a varying number of days at the WorldMark Resorts   
depending on the vacation choices made by the Owner. Under this system, Owners  
can select vacations according to their schedules, space needs and available    
Vacation Credits. Vacation Credits are reissued on an anniversary date basis and
any unused Vacation Credits may be carried over for one year. An Owner may also 
borrow Vacation Credits from the Owner's succeeding year's allotment.           

     An Owner may also purchase bonus time ("Bonus Time") from WorldMark for use
when space is available. Bonus Time can only be reserved within fourteen days of
use for drive-to locations and within thirty days of use for exotic locations   
(Hawaii, Mexico and Fiji). Bonus Time gives Owners the opportunity to use       
available units on short notice at a reduced rate (generally from $20 to $50 per
night, mid-week in the off-season) and to obtain usage beyond their Vacation    
Credit allotment.                                                               

WorldMark collects maintenance dues from Owners based on the number of
Vacation Credits owned. Currently, the annual dues are $249 for the first 5,000 
Vacation Credits owned, plus approximately $76 for each additional increment of 
2,500 Vacation Credits owned. These dues are intended to cover WorldMark's      
operating costs, including condominium association dues at the WorldMark        
Resorts. The Company pays WorldMark the dues on all unsold Vacation Credits.    
Such payments totaled $1,376,000, $1,107,000 and $793,000 in 1999, 1998 and     
1997, respectively.                                                             

  WorldMark has a five member board of directors that manages its business
and affairs. Three of the directors and principal executive officers of         
WorldMark are also officers of the Company. The Board must obtain the approval  
of a majority of the voting power of the Owners represented (excluding          
Trendwest) to take certain actions, including (i) incurrence of capital         
expenditures exceeding 5% of WorldMark's budgeted gross expenses during any     
fiscal year and (ii) selling property of WorldMark during any fiscal year with  
an aggregate fair market value in excess of 5% of WorldMark's budgeted gross    
expenses for such year.                                                         
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THE WORLDMARK RESORTS 

     The following table sets forth certain information as of December 31, 1999,
regarding each existing WorldMark Resort, planned expansion at existing         
WorldMark Resorts through 2001, and planned new WorldMark Resorts through 2001: 

                                                        [Enlarge/Download Table]

                                                              EXISTING                                        
                                                  DATE         UNITS                                          
                                               CONTRIBUTED       IN       PLANNED   TOTAL UNITS               
   EXISTING RESORTS          LOCATION        TO WORLDMARK(a)  SERVICE    EXPANSION  ANTICIPATED  RCI RATING(b)
   ----------------          --------        ---------------  --------   ---------  -----------  -------------
                                                                                                              
ARIZONA                                                                                                       
  Pinetop                Pinetop/Lakeside   August 1999           60          --          60      (f)         
  Vistoso                Tucson             December 1999         19          85         104      (f)         
BRITISH COLUMBIA                                                                                              
  Sundance               Whistler           February 1992         25          --          25      Gold Crown  
  Cascade Lodge          Whistler           September 1999        42          --          42      (f)         
CALIFORNIA                                                                                                    
  North Shore Estates    Bass Lake          October 1991          61          --          61      Gold Crown  
  Beachcomber            Pismo Beach        April 1993            20          --          20      Gold Crown  
  Palm Springs           Palm Springs       July 1995             64          --          64      R.I.D.      
  Big Bear               Big Bear Lake      April 1996            58          --          58      Gold Crown  
  Clear Lake             Nice               July 1998             88          --          88      Gold Crown  
  Angels Camp            Angels Camp        September 1998       100          --         100      Gold Crown  
  Marina                 Monterey Bay       November 1999         33          --          33      (f)         
FIJI                                                                                                          
  Denarau Island         Denarau Island     December 1999         38          38          76(c)   (f)         
HAWAII                                                                                                        
  Valley Isle            Maui               April 1990            14          --          14      Gold Crown  
  Kapaa Shores           Kauai              July 1991             49          --          49      Gold Crown  
  Kona                   Hawaii             November 1997         64          --          64      Gold Crown  
MEXICO                                                                                                        
  Coral Baja             San Jose del Cabo  November 1994        136          --         136      Gold Crown  
NEVADA                                                                                                        
  Lake Tahoe             Stateline          January 1991          50          --          50      R.I.D       
  Las Vegas              Las Vegas          December 1996         42          --          42      Gold Crown  
OREGON                                                                                                        
  Eagle Crest            Redmond            September 1989        81          --          81      Gold Crown  
  Gleneden Beach         Lincoln City       March 1996            80          --          80      Gold Crown  
  Running Y Ranch        Klamath Falls      February 1997         81          --          81      Gold Crown  
  Schooner Landing       Newport            September 1997        13(d)       --          13      Gold Crown  
  Depoe Bay              Depoe Bay          April 1999            54          60         114      Gold Crown  
UTAH                                                                                                          
  Wolf Creek             Eden               June 1998             71(e)       --          71      Gold Crown  
  Harbor Village         Bear Lake          January 1999           6          20          26      (f)         
WASHINGTON                                                                                                    
  Lake Chelan Shores     Chelan             August 1990           13          --          13      Gold Crown  
  Surfside               Long Beach         September 1991        25          --          25      R.I.D.      
  Discovery Bay          Sequim             January 1992          41           5          46      Gold Crown  
  Park Village           Leavenworth        July 1992             72          --          72      Gold Crown  
  Mariner Village        Ocean Shores       June 1994             32          --          32      Gold Crown  
  Birch Bay              Blaine             January 1995         103          --         103      Gold Crown  

                                            EXPECTED                                                          
PLANNED RESORTS                             COMPLETION                                                        
-----------------------                      --------------                                                   
  The Canadian           Vancouver, BC      April 2000            --          43          43                  
  Lake of the Ozarks     Ozarks, MO         September 2000        --         100         100                  
  Branson                Branson, MO        December 2000         --          81          81                  
  Kihei                  Maui, HI           April 2001            --         200         200                  
  Oceanside              Oceanside, CA      July 2001             --         140         140                  
  Las Vegas              Las Vegas, NV      October 2001          --         200         200                  
  St. George             St. George, UT     December 2000         --          60          60                  
                                                               -----       -----       -----                  
         Total                                                 1,635       1,032       2,667                  
                                                               =====       =====       =====                  

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---------------                                                                 
(a) The dates in this column indicate, for each resort, the month and year in   
which the first completed units at such resort were transferred to      
WorldMark. At certain resorts, additional units were transferred to     
WorldMark at later dates.                                               

(b) Gold Crown and Resort of International Distinction ("R.I.D.") are resort    
   ratings awarded annually by RCI. In February 2000, approximately 19% of the
resorts reviewed by RCI received a Gold Crown rating, the highest rating
awarded by RCI, and approximately 14% of the resorts reviewed by RCI    
received an R.I.D. rating, the second-highest rating awarded by RCI.    

(c) Ten units will be contributed to WorldMark South Pacific (see "Recent       
Developments") when completed.                                          

(d) The Company purchased 659 weeks of time per year from Schooner's Landing and
deeded the rights to this time to WorldMark. This is equivalent to 13   
condominium units.                                                      

(e) The Company purchased 490 weeks of time per year from Wolf Creek and deeded 
 the rights to this time to WorldMark. This is equivalent to 9 condominium
units. The remaining 62 units were constructed by the Company.          

(f) This resort has not yet been rated by RCI.                                  

SALES AND MARKETING                                                             

     The Company's sales of Vacation Credits primarily occur at fifteen off-site
sales offices located in metropolitan areas in four regions. The remainder of   
the Company's sales of Vacation Credits occur at nine on-site sales offices.    
Fractional Interest sales occurred on-site at the Depoe Bay resort in Depoe Bay,
Oregon. In 1999, 80% of the Company's Vacation Credit sales were generated by   
off-site sales offices.                                                         

The Company believes the advantages of using off-site sales offices   
compared to sales offices located at more remote resorts include (i) access to  
larger numbers of potential customers, (ii) convenience for prospective         
customers to attend a sales presentation, (iii) access to a wider group of      
qualified sales personnel due to more convenient work locations, (iv) ability to
open new sales offices quickly and without significant capital expenditures and 
(v) lower marketing costs to attract prospective customers to visit an off-site 
sales office.                                                                   

  The Company's off-site sales offices are approximately 6,000 square feet
and include a theater, sales area and reception area. Each off-site sales center
is staffed by a sales manager, an office administrator, approximately 10 to 25  
salespeople, two developer's representatives, and additional staff for guest    
registration and clerical assistance. The on-site sales offices are             
approximately 3,000 square feet and generally include similar facilities and a  
smaller number of staff compared to the off-site sales offices.                 

 The Company uses a variety of marketing programs to attract prospective
Owners, including sponsored promotional contests offering vacation packages or  
gifts, targeted mailings and telemarketing efforts, and various other           
promotional programs. The Company also co-sponsors sweepstakes, giveaways and   
other promotional programs with professional teams at major sporting events     
(such as Portland Trail Blazers basketball games and Seattle Mariners baseball  
games) and with supermarkets. The Company continually monitors and adjusts its  
marketing programs to improve efficiency. Trendwest targets prospective Owners  
through an analysis of age, income and travel interests. One of the many        
marketing programs used by the Company delivers targeted prospective Owners a   
notice related to the specific promotion, inviting the prospective Owner to call
the Company's toll-free voice mail system to leave a return phone number. Those 
persons who call the Company and leave their phone number receive a call from   
the Company to invite them to visit an off-site sales office and attend a sales 
presentation. As an incentive to attend the presentation, the Company offers    
gifts, such as an overnight trip or electronic equipment.                       

     Printed information regarding Trendwest and WorldMark's properties, as well
as the rights and obligations of Owners, is provided to each prospective member 
before Vacation Ownership Interests are sold. Prior to finalizing a sale, each  
new Owner meets with one of the Company's developer's representatives to discuss
the new Owner's reasons for joining and to review the rights and obligations of 
Owners. The purpose of                                                          

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this meeting is to allow prospective Owners to review their proposed commitment 
in an environment separate from the sales process.                              

 Under the laws of each state where the Company sells Vacation Ownership
Interests, each purchaser has a right to rescind the purchase for a period      
ranging from three to fourteen calendar days following the later of the date the
contract was signed or the date the purchaser received the last of the documents
required to be provided by the Company, depending on the state. The Company's   
current practice is to allow all purchasers a minimum rescission period of seven
days, even if state law allows a shorter period. During 1999 and 1998, the      
Company had a rescission rate of 16.3% and 16.7% respectively, which is         
consistent with the Company's historical experience.                            

     Trendwest offers existing Owners cash awards for referrals of potential new
Owners. The Company maintains a staff of marketing individuals who specialize in
promoting referrals by existing Owners. In addition, as part of the Company's   
ongoing marketing efforts, it offers existing Owners the opportunity to purchase
additional Vacation Credits (Upgrade Sales) generally at a discount from the    
current price. Owners may purchase additional Vacation Credits in increments of 
1,000. Trendwest currently employs 36 sales representatives who specialize in   
Upgrade Sales. Sales of Vacation Credits from the Company's owner referral      
program and Upgrade Sales contributed in the aggregate approximately 27.6% and  
26.5% of the Company's net Vacation Credit sales in 1999 and 1998, respectively.

CUSTOMER FINANCING                                                              

Since an important component of the Company's sales strategy is the   
affordability of Vacation Credits, the Company believes that a significant      
portion of its sales will continue to be financed by the Company. In 1999, the  
average new Owner purchased approximately 6,519 Vacation Credits for a purchase 
price of approximately $8,855 and the Company financed approximately 88% of the 
aggregate purchase price of Vacation Credits sold to new Owners with an average 
new Note Receivable of approximately $7,794. During 1999, the aggregate amount  
of Notes Receivable generated in connection with the sale of Vacation Credits to
new Owners was approximately $175.0 million. Both Vacation Credit and Fractional
Interest sales require a down payment of at least 10% of the purchase price.    
Notes Receivable relating to Vacation Credit sales have a term of up to seven   
years at interest rates of 13.9% or 14.9%. Notes Receivable relating to         
Fractional Interest sales have a term of up to ten years at interest rates of up
to 11.9%.                                                                       

   Existing Owners purchasing additional Vacation Credits must either make a
down payment of 10% of the price of the Upgrade Sale or have sufficient equity  
in their existing Vacation Credits to provide at least 10% of the value of all  
Vacation Credits, including the Upgrade. The amount of the existing receivable  
is cancelled and a new seven-year note secured by an interest in all Vacation   
Credits owned is issued.                                                        

  At December 31, 1999, an aggregate of $389.9 million of Notes Receivable
were outstanding, of which approximately $100.9 million with a weighted average 
interest rate of 14.1% per annum had been retained by the Company. The balance  
of approximately $289.0 million of Notes Receivable had been sold by the Company
prior to that date. The Company retains limited recourse liability for Notes    
Receivable sold. The Company may continue to sell a substantial amount of its   
Notes Receivable. See "Liquidity and Capital Resources -- Finance Subsidiaries",
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations" and "Risk Factors -- Risks Associated with Customer Financing."     

   Notes Receivable become delinquent when a scheduled payment is 30 days or
more past due and reservation privileges are suspended when a scheduled payment 
is 60 days or more past due. At December 31, 1999, approximately $7.5 million,  
or 1.91% of the Company's total receivables portfolio of $389.9 million,        
including Notes Receivable previously sold by the Company, were past due 60 days
or more. The Notes Receivable are secured by a security interest in the related 
Vacation Credits or Fractional Interest. The Company's practice has been to     
continue to accrue interest on Notes Receivable until such accounts are deemed  
uncollectible (generally when the receivable becomes 180 days past due), at     
which time the Company writes off such Notes Receivable and reverses any        
interest that had been accrued, reclaims the related Vacation Credits that      
secure such Notes Receivable and returns such Vacation Credits to inventory as  

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available for resale. In the event of default of a Fractional Interest, the     
Company would foreclose on the title and re-market the interest.                

    The Company maintains an allowance for doubtful accounts in respect of the
Notes Receivable owned by the Company and an allowance for recourse liability in
respect of the Notes Receivable that have been sold by the Company. The         
aggregate amount of these allowances at December 31, 1999 and 1998 were $29.1   
million and $20.9 million, respectively, representing approximately 7.5% and    
6.8%, respectively, of the total portfolio of Notes Receivable at those dates,  
including the Notes Receivable that had been sold by the Company. The increase  
in the provision as a percentage of the total portfolio reflects sales growth in
new regions with anticipated future default rates higher than the Company's     
historical average. No assurance can be given that these allowances will be     
adequate, and if the amount of the Notes Receivable that is ultimately written  
off materially exceeds the related allowances, the Company's business, results  
of operations and financial condition could be materially adversely affected.   

The Company estimates its allowance for doubtful accounts and recourse
liability by analysis of bad debts by each sales site by year of Note Receivable
origination. The Company uses this historical analysis, in conjunction with     
other factors such as local economic conditions and industry trends. The Company
also utilizes experience factors of more mature sales sites in establishing the 
allowance for bad debts at new sales offices. The Company generally charges off 
all receivables when they become 180 days past due and returns the reclaimed    
credits associated with such charge-offs to inventory. At December 31, 1999 and 
1998, 1.91% and 1.97%, respectively, of the Company's total receivables         
portfolio of $389.9 million and $307.7 million, respectively, were more than 60 
days past due (with reservation privileges suspended).                          

Sage Systems, Inc. ("Sage"), a licensed escrow company, services the  
Company's entire portfolio of Notes Receivable under an Escrow Agreement with   
the Company. Under the Escrow Agreement, contracts for the sale of Vacation     
Credit and Fractional Interest sales by the Company, and the monthly contract   
payments from such sales, are placed in escrow with Sage. Sage disburses the    
escrowed funds to the Company, in the case of Notes Receivable owned by the     
Company, or to the purchasers of the Company's Notes Receivable, in the case of 
Notes Receivable sold by the Company (see "Management's Discussion and Analysis 
of Financial Condition and Results of Operations -- Finance Subsidiaries"). The 
Company handles billing inquiries and all other personal interaction with the   
Owners, including collections on its Notes Receivable.                          

PROPERTY OWNERSHIP                                                              

(i) Vacation Credits                                                        

    Unlike many "right-to-use" timeshare operations in which a developer sells
timeshare interests in properties it owns, the Company does not own the         
properties designated for timeshare use. Rather, when the Company purchases     
resort property, it vests in WorldMark title to the property free and clear of  
any debt encumbrance. With respect to property developed by the Company, the    
Company may initially obtain title in the undeveloped property and then deed the
developed resort property to WorldMark. At the time the Company vests title to  
the property in WorldMark, a "Declaration of Vacation Owner Program" is recorded
against the property. This declaration establishes the usage rights of Owners as
a covenant on title, thus protecting those rights against the effect of any     
future encumbrance. This ownership structure is designed to protect the         
timeshare usage rights of the Owners and comply with statutory regulations.     

The Company's only consideration for paying for the properties and for
arranging for the seller of the property to transfer title of the property      
directly to WorldMark is the exclusive right to sell Vacation Credits and to add
new properties and additional units at the Company's discretion. The Company's  
rights to sell Vacation Credits against the deeded properties are protected by a
security interest in the unsold inventory of Vacation Credits. This lien        
prevents WorldMark from revoking such rights or transferring them to another    
party.                                                                          

     Vacation Credits are allocated to each unit based on its vacation use value
relative to existing properties. Vacation Credits are assigned for weeks of     
peak, shoulder and off-peak use, reserving time for Bonus Time,                 

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repairs and maintenance. At non-exotic resorts (exotic resorts are Hawaii,      
Mexico and Fiji), only 48 weeks of time of each unit are available for sale to  
Owners leaving 4 weeks for Bonus Time and maintenance and upkeep on the units.  
At exotic locations, 51 weeks of time of each unit are available for sale to    
Owners leaving the remaining time for maintenance and upkeep. The aggregate     
Vacation Credits assigned to each unit may not be changed in the future, and the
actual number of Credits assigned are contained in the recorded declaration.    
This system of irrevocable allocation and registration with the state protects  
the Owners by preventing dilution in the usage value of the Owner's Vacation    
Credits.                                                                        

   As of December 31, 1999, WorldMark had a reserve for replacement costs of
approximately $12.2 million for all depreciable assets (e.g., furniture,        
appliances, carpeting, roofs and decks) of the WorldMark Resorts. In those      
WorldMark Resorts where WorldMark owns only a small percentage of the units in a
complex and belongs to an independent homeowners' association, the dues paid to 
such association by WorldMark are partially used to provide adequate reserves   
for replacement costs relating to such properties.                              

(ii) Fractional Interests                                                   

   Fractional Interests represent deeded intervals in condominium units. The
purchaser of a Fractional Interest owns an equal share of the condominium and   
pays maintenance dues to a Homeowner's Association made up of other Fractional  
Owners.                                                                         

 Fractional Owners have been deeded specific weeks of time spaced evenly
throughout the year. The current Fractional Project at Depoe Bay in Oregon are  
13th shares. Each share represents four one-week intervals thirteen weeks apart.
These intervals rotate forward one week each year allowing a Fractional Owner to
have access to every calendar week over a thirteen year period.                 

PARTICIPATION IN VACATION INTERVAL EXCHANGE NETWORK                             

The Company believes that the sale of Vacation Credits is made more   
attractive by the Company's participation in the vacation interval exchange     
network operated by Resort Condominiums International, LLC (RCI). For a         
membership fee (currently $84 per year with no commitment beyond one year),     
Owners may participate in RCI, which allows Owners to exchange Vacation Credits 
for an occupancy right at a participating resort in RCI based upon availability 
and the payment of an additional exchange fee (currently $124 for exchanges in  
North America and $162 for International exchanges). The Company pays the RCI   
annual membership fee for the Owner's first year. An Owner may exchange Vacation
Credits for an occupancy right in a resort participating in the RCI network by  
requesting occupancy and specifying the desired unit size and time period. RCI  
provides an Owner hotline with direct phone access to representatives who are   
knowledgeable about WorldMark and are responsible for assisting Owners with an  
exchange. RCI assigns a weekly exchange value for Vacation Credits. This        
exchange value is based upon a number of factors. If RCI is unable to meet the  
Owner's initial request, it suggests alternative resorts based on availability. 

COMPETITION                                                                     

The Company is subject to significant competition from other entities 
engaged in the business of resort development, sales and operation, including   
vacation interval ownership, condominiums, hotels and motels. See "Risk         
Factors -- Competition".                                                        

EMPLOYEES                                                                       

As of December 31, 1999, Trendwest had 1,494 full-time employees. The 
Company believes that its employee relations are good. None of the Company's    
employees are represented by a labor union.                                     

The Company prefers to fill promotional opportunities from within the 
existing staff. To support this philosophy, a full array of training curriculums
have been designed and offered. These "in-house" training courses range from    
curriculums including management training, product knowledge, recruiting and    
interviewing, employee orientation, and job specific training such as Best Sales
Practices, and Customer Service.                                                

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In 1999, the Company introduced as a new benefit, the Employee Stock  
Purchase Plan. This program allows employees to purchase company stock through a
payroll deduction, with certain provisions, at a discount.                      

RISK FACTORS

In addition to the other information contained in this Form 10-K, the 
following risk factors should be carefully considered in evaluating the Company 
and its business. The Company cautions the reader that this list of risk factors
may not be exhaustive. This document contains forward-looking statements which  
involve risks and uncertainties. The Company's actual results and the timing of 
certain events could differ materially from those anticipated by such           
forward-looking statements as a result of certain factors, including the factors
set forth below and in "Management's Discussion and Analysis of Financial       
Condition and Results of Operations" and "Business," as well as those discussed 
elsewhere in the Form 10-K.                                                     

DEPENDENCE ON ACQUISITIONS OF ADDITIONAL RESORT UNITS FOR GROWTH; NEED FOR      
ADDITIONAL CAPITAL                                                              

  The Company purchases or develops resort units for WorldMark in exchange
for the exclusive right to sell the Vacation Credits assigned to these units.   
When the Company purchases or develops a new resort or additional units at an   
existing WorldMark Resort, the Company causes the units to be conveyed directly 
to WorldMark free of any monetary encumbrances, and therefore must purchase its 
properties without any financing secured by the properties. The Company can only
sell additional Vacation Credits to the extent that it acquires or develops     
additional resort units for WorldMark. The Company's future growth and financial
success therefore will depend to a significant degree on the availability of    
attractive resort locations and the Company's ability to acquire and develop    
additional resort units on favorable terms and to obtain additional debt and    
equity capital to fund such acquisitions and development. There can be no       
assurance that the Company will be successful in this regard. As of December 31,
1999, the Company had purchase agreements, developments in progress or plans to 
obtain 1,032 additional resort units by the end of 2001. No assurance can be    
given that all of such units will be acquired or completed on a timely basis or 
at all. There are numerous potential buyers of resort real estate competing to  
acquire resort properties which the Company may consider attractive resort      
acquisition opportunities. There can be no assurance that the Company will be   
able to compete against such other buyers successfully.                         

 Since the Company generally finances approximately 88% of the aggregate
purchase price of Vacation Credits sold to new Owners, it does not generate     
sufficient cash from sales to provide the necessary capital to purchase         
additional resort units. No assurance can be given that the Company will be able
to obtain debt or equity capital through the sale or securitization of its Notes
Receivable, or otherwise, in order to continue to acquire additional properties 
or that such future financing can be obtained on terms favorable to the Company.
See "Liquidity and Capital Resources -- Finance Subsidiaries".                  

RISKS ASSOCIATED WITH DEVELOPMENT AND CONSTRUCTION ACTIVITIES                   

  The Company intends to expand its acquisition, development, construction
and expansion of timeshare resorts. There can be no assurance that the Company  
will complete current or future development or expansion projects. Risks        
associated with these activities include the risk that (i) acquisition or       
development opportunities may be abandoned; (ii) construction costs may exceed  
original estimates, possibly making the development or expansion uneconomical or
unprofitable; (iii) financing may not be available on favorable terms or at all;
and (iv) construction may not be completed on schedule, resulting in increased  
interest expense and delays in the availability for sale of Vacation Credits.   
Development activities are also subject to risks relating to inability to       
obtain, or delays in obtaining, all necessary zoning, land-use, building,       
occupancy and other required governmental permits and authorizations, the       
ability of the Company to coordinate construction activities with the process of
obtaining such permits and authorizations, and the ability of the Company to    
obtain the financing necessary to complete the necessary acquisition,           
construction and conversion work. In addition, the Company's construction       
activities are generally performed by third-party contractors. These third-party
contractors generally control the timing, quality and completion of the         
construction                                                                    

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activities. Nevertheless, construction claims may be asserted against the       
Company for construction defects and such claims may give rise to liabilities.  
New development activities, regardless of whether or not they are ultimately    
successful, typically require a substantial portion of management's time and    
attention. The ability of the Company to expand its business to include new     
resorts will in part depend upon the availability of suitable properties at     
reasonable prices and the availability of financing for the acquisition and     
development of such properties. In the future, the Company may undertake the    
development of larger resort complexes. No assurance can be given that any such 
larger resort complexes will be developed in a profitable manner, if at all.    

FACTORS AFFECTING SALES VOLUME                                                  

As the number of potential customers in the geographic area of a sales
office who have attended a sales presentation increases, the Company may have   
increasing difficulty in attracting additional potential customers to a sales   
presentation at that office and it may become increasingly difficult for the    
Company to maintain current sales levels at its existing sales offices.         
Accordingly, the Company anticipates that a substantial portion of its future   
sales growth will depend on the opening of additional sales offices. No         
assurance can be given, however, that sales from existing or new sales offices  
will meet management's expectations. If the Company does not open additional    
sales offices or if existing or new sales offices do not perform as expected,   
the Company's business, results of operations and financial condition could be  
materially adversely affected.                                                  

    The Company's marketing is dependent on outbound telemarketing activity to
contact prospects and invite guests to attend a sales presentation. Any         
disruption in the Company's ability to utilize outbound telemarketing, in the   
short term, could have a material adverse affect on attendance at sales         
presentations and sales volume until suitable substitute programs could be      
developed.                                                                      

GEOGRAPHIC CONCENTRATION IN THE WESTERN UNITED STATES                           

The Company presently sells Vacation Credits in Alaska, Arizona,      
California, Idaho, Oregon, Utah and Washington primarily to residents of those  
states and of British Columbia. The Company intends to continue to sell Vacation
Credits and Fractional Interests in these seven states and to increase the      
number of its sales offices. Since all of the Company's sales offices are in the
western United States, any economic downturn in this area of the country could  
have a material adverse effect on the Company's business, results of operations 
and financial condition. In addition, the appeal of becoming an Owner may       
decrease if residents of the western United States and British Columbia do not  
continue to view the locations of WorldMark's Resorts (which are primarily      
located in these areas) as attractive vacation destinations.                    

GENERAL ECONOMIC CONDITIONS; CONCENTRATION IN TIMESHARE INDUSTRY                

Any downturn in economic conditions or significant price increases or 
adverse events related to the travel and tourism industry, such as the cost and 
availability of fuel, could depress discretionary consumer spending and have a  
material adverse effect on the Company's business, results of operations and    
financial condition. Any such economic conditions, including recession, may also
adversely affect the future availability of attractive financing rates for the  
Company or its customers and may materially impact the Company's business.      
Furthermore, adverse changes in general economic conditions may adversely affect
the collectibility of the Notes Receivable. Because the Company's operations are
conducted solely within the timeshare industry, any adverse changes affecting   
the timeshare industry could have a material adverse effect on the Company's    
business, results of operations and financial condition.                        

RISKS ASSOCIATED WITH CUSTOMER FINANCING                                        

   The Company obtains a security interest in the purchased Vacation Credits
and Fractional Interests and it does not verify a prospective Owner's credit    
history for Vacation Credit sales. At December 31, 1999, an aggregate of $389.9 
million of Notes Receivable were outstanding, of which approximately $100.9     
million had been retained by the Company. The remaining balance of approximately
$289.0 million of Notes Receivable had been sold by the Company prior to that   
date. The Company retains limited recourse liability for Notes                  

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Receivable sold. This recourse is limited to the retained and residual interest 
in Notes Receivable sold. As of December 31, 1999 and 1998, total retained      
interest in Notes Receivable sold of $36,782 and $37,063, respectively, was     
included in Notes Receivable in the accompanying consolidated balance sheets    
relating to Notes Receivable sold of $288,950 and $200,840, respectively.       
Although it is not required to do so, the Company's historical practice has been
to repurchase defaulted sold Notes Receivable up to certain limits, generally   
10% to 17% of the face amount of the original balance of Notes Receivable sold. 

   Notes Receivable become delinquent when a scheduled payment is 30 days or
more past due and reservation privileges are suspended when a scheduled payment 
is 60 days or more past due. At December 31, 1999, approximately $7.5 million,  
or 1.91% of the Company's total receivables portfolio of $389.9 million,        
including Notes Receivable previously sold by the Company, were past due 60 days
or more. The Notes Receivable are secured by a security interest in the related 
Vacation Credits or Fractional Interests. The Company's practice has been to    
continue to accrue interest on Notes Receivable until such accounts are deemed  
uncollectible, at which time the Company writes off such Notes Receivable and   
records an expense for any interest that had been accrued, reclaims the related 
Vacation Credits that secure such Notes Receivable and returns such Vacation    
Credits or Fractional Interests to inventory available for sale. However, the   
associated marketing costs and sales commissions are not recovered by the       
Company and these expenses must be incurred again to resell the Vacation Credits
or Fractional Interests.                                                        

    The Company maintains an allowance for doubtful accounts in respect of the
Notes Receivable owned by the Company and an allowance for recourse liability   
for the Company's limited recourse in Notes Receivable sold. These allowances   
are estimates and if the amount of the Notes Receivable that is ultimately      
uncollectible materially exceeds the related allowances, the Company's business,
results of operations and financial condition could be materially adversely     
affected. See "Business -- Customer Financing."                                 

INTEREST RATE RISK                                                              

   The Company generally provides financing for a significant portion of the
aggregate purchase price of Vacation Credits and Fractional interests sold at a 
fixed interest rate. In order to provide liquidity, the Company through the     
Finance Subsidiaries, sells or securitizes its Notes Receivable. Although a     
significant portion of the existing financing of the Notes Receivable through   
the Finance Subsidiaries is at a fixed rate, if interest rates were to increase 
significantly, the Company's future cost of funds would also likely increase    
significantly. The Company has the ability to respond to rising interest rates  
by increasing the interest rate offered to finance Vacation Credit and          
Fractional Interest purchases. However, such an increase could have a material  
adverse effect on sales or on the percentage of Owners who finance their        
purchases through the Company, which could have a material adverse effect on the
Company's business, results of operations and financial condition. See          
"Business -- Customer Financing" and "Liquidity and Capital Resources -- Finance
Subsidiaries."                                                                  

    The Company may be exposed to credit losses in the event of nonperformance
by the counterparties to its interest rate caps and forward swap agreements used
to hedge interest rate risk in securitization transactions. The Company does not
obtain collateral to support financial instruments but monitors the credit      
standing of the counterparties.                                                 

FOREIGN EXCHANGE RISK                                                           

The Company is subject to foreign currency exchange rate risk when    
developing resort properties denominated in a foreign currency and future sales 
operations in the South Pacific. While the Company intends to mitigate its      
foreign exchange risk through swap agreements and borrowings denominated in     
foreign currencies, no assurance can be given that these strategies will be     
successful and that changes in foreign currency exchange rates could have a     
material adverse effect on the Company's business, results of operations and    
financial condition                                                             

    The Company may be exposed to losses in the event of nonperformance by the
counterparties to its forward swap agreements used to hedge foreign exchange    
risks. The Company does not obtain collateral to support financial instruments  
but monitors the credit standing of the counterparties.                         
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RISKS ASSOCIATED WITH OVERSEAS DEVELOPMENT                                      

   The Company is subject to risks arising from developing resort properties
and sales and marketing activities in the South Pacific. The Company is in the  
process of registering its product under Australian regulations. Unlike the     
United States, Australian law requires a vacation ownership interest to be sold 
as a security. No assurance can be given that the Company will be successful in 
its efforts to register its product under Australian law.                       

The Company's Vacation Credit system is not widely known in the South 
Pacific. No assurance can be given that consumers in that market will find the  
benefits of the Company's Vacation Credit program or the resort locations       
desirable.                                                                      

    Many, if not all of the risks described herein, are potential risk factors
for development activities in the South Pacific.                                

COMPETITION                                                                     

The Company is subject to significant competition from other entities 
engaged in the business of resort development, sales and operation, including   
vacation interval ownership, condominiums, hotels and motels. Major companies   
that now operate or are developing or planning to develop vacation interval     
resorts include Marriott International, Inc., The Walt Disney Company, Hilton   
Hotels Corporation and Starwood Hotels and Resorts, Inc. In addition, other     
companies in the timeshare industry, such as Sunterra Corp., Westgate Resorts,  
Fairfield Communities, Inc. and Silverleaf Resorts, Inc., currently compete or  
may in the future compete with the Company.                                     

  Resales of Vacation Credits by Owners may compete with sales of Vacation
Credits by the Company and may inhibit the Company's ability to increase the    
market price of Vacation Credits it sells.                                      

REGULATION OF MARKETING AND SALES OF VACATION CREDITS; OTHER LAWS               

  The Company's marketing and sales of Vacation Credits and certain of its
other operations are subject to extensive regulation by the states and foreign  
jurisdictions in which the WorldMark Resorts are located and in which Vacation  
Credits are marketed and sold and also by the federal government.               

   State and Provincial Regulations. Most U.S. states and Canadian provinces
have adopted specific laws and regulations regarding the sale of vacation       
interval ownership programs. Alaska, Arizona, California, Hawaii, Idaho, Oregon,
Utah, Washington and British Columbia require the company to register WorldMark 
Resorts, the Company's vacation program and the number of Vacation Credits      
available for sale in such state or province with a designated state or         
provincial authority. The Company must amend its registration if it desires to  
increase the number of Vacation Credits registered for sale in that state or    
province. Either the Company or the state or provincial authority assembles a   
detailed offering statement describing the Company and all material aspects of  
the project and sale of Vacation Credits. The company is required to deliver the
offering statement to all new purchasers of Vacation Credits, together with     
certain additional information concerning the terms of the purchase. Hawaii     
imposes particularly stringent and broad regulation requirements for the sale of
interests in interval ownership programs that have resort units located in      
Hawaii. The Company has incurred substantial expenditures over an extended      
period of time in the registration process in Hawaii and still has not completed
this process. Hawaii has allowed the use of WorldMark units in Hawaii, provided 
that the company continues in good faith to pursue registration in Hawaii. Laws 
in each state where the Company sells Vacation Credits grant the purchaser from 
three to fourteen calendar days following the later of the date the contract was
signed or the date the purchaser received the last of the documents required to 
be provided by the Company to rescind the contract. Most states have other laws 
which regulate the Company's activities, such as real estate licensure laws,    
laws relating to the use of public accommodations, and facilities by disabled   
persons, sellers of travel licensure laws, anti-fraud laws, advertising laws and
labor laws.                                                                     

Federal Regulations. The Federal Trade Commission has taken an active 
regulatory role in the interval ownership industry through the Federal Trade    
Commission Act, which prohibits unfair or deceptive acts or                     
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competition in interstate commerce. Other federal legislation to which the      
Company is or may be subject includes the Truth-In-Lending Act and Regulation Z,
the Equal Opportunity Credit Act and Regulation B, the Interstate Land Sales    
Full Disclosure Act, the Real Estate Standards Practices Act, the Telephone     
Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse         
Prevention Act, the Civil Rights Act of 1964 and 1968, the Fair Housing Act and 
the Americans with Disabilities Act.                                            

  Although the Company believes that it is in material compliance with all
federal, state, local and foreign laws and regulations to which it is currently 
subject, there can be no assurance that it is in fact, in compliance. Any       
failure by the Company to comply with applicable laws or regulations could have 
a material adverse effect on the Company's business, results of operations and  
financial condition. In addition, the Company will continue to incur significant
costs to remain in compliance with applicable laws and regulations, and such    
costs could increase substantially in the future.                               

POSSIBLE ENVIRONMENTAL LIABILITIES                                              

Under various federal, state, local and foreign laws, ordinances and  
regulations, the owner or operator of real property generally is liable for the 
costs of removal or remediation of certain hazardous or toxic substances located
on or in, or emanating from, such property, as well as related costs of         
investigation and property damage. Such laws often impose such liability without
regard to whether the owner or operator knew of, or was responsible for, the    
presence of such hazardous or toxic substances. Other federal and state laws    
require the removal or encapsulation of asbestos-containing material when such  
material is in poor condition or in the event of construction, demolition,      
remodeling or renovation. Other statutes may require the removal of underground 
storage tanks. Noncompliance with these and other environmental, health or      
safety requirements may result in the need to cease or alter operations at the  
property. Although the Company conducts an environmental assessment with respect
to the properties it acquires for WorldMark, the Company has not received a     
Phase I environmental report for every WorldMark Resort. There can be no        
assurance that any environmental assessments undertaken by the Company with     
respect to the WorldMark Resorts have revealed all potential environmental      
liabilities, or that an environmental condition does not otherwise exist as to  
any one or more of the WorldMark Resorts that could have a material adverse     
effect on the Company's business, results of operations and financial condition.

NATURAL DISASTERS; UNINSURED LOSS                                               

WorldMark maintains property insurance and liability insurance for the
units at the WorldMark Resorts, with certain policy specifications, insured     
limits and deductibles. Certain types of losses, such as losses arising from war
or military action, nuclear hazard or pollution, are generally excluded from    
WorldMark's insurance coverage. Should an uninsured loss or loss in excess of   
insured limits occur, WorldMark has the option to either (i) remove such units  
from the Vacation Credit system, which would result in a proportional dilution  
of vacation time available for the Vacation Credits which have been sold, or    
(ii) pay the related costs of replacement. Although WorldMark's board of        
directors may impose a limited amount of special assessments to pay for capital 
improvements or major repairs, there can be no assurance that WorldMark would be
able to increase assessments to provide sufficient funds to pay for all possible
capital improvements and major repairs of the units at the WorldMark Resorts.   

    In such event, the Company may need to advance funds to WorldMark in order
to maintain the quality of the WorldMark Resorts or WorldMark may be required to
defer certain improvements or repairs. In addition, the Company may advance     
funds to WorldMark if WorldMark does not have sufficient funds to pay its       
obligations in a timely manner. See "Business -- Insurance; Legal Proceedings." 

EFFECTIVE VOTING CONTROL BY MAJORITY SHAREHOLDER                                

    JELD-WEN owns approximately 80% of the outstanding shares of the Company's
common stock. This concentration of ownership gives JELD-WEN control of the     
election of directors and the management and affairs of the Company and         
sufficient voting power to determine the outcome of all matters submitted to the

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shareholders for approval, including mergers, consolidations and the sale of    
all, or substantially all, of the Company's assets.                             

ITEM 2. PROPERTIES                                                              

    The Company owns its corporate headquarters in Redmond, Washington. In the
ordinary course of business, the Company purchases property for development and 
deeds said property to WorldMark upon completion of the project. See            
"Business -- WorldMark".                                                        

ITEM 3. LEGAL PROCEEDINGS                                                       

    The Company is not aware of any material legal proceedings pending against
it. The Company may be subject to claims and legal proceedings from time to time
in the ordinary course of business.                                             

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS                   

   There were no matters submitted to a vote of the Company's equity holders
during the fourth quarter of 1999.                                              

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PART II 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS   

  The Company's common stock is quoted on the Nasdaq National Market under
the symbol "TWRI". The following table sets forth for the periods indicated, the
high and low sales price for Common Stock, as quoted on the Nasdaq National     
Market:                                                                         

                                                                [Download Table]

                                                              HIGH      LOW   
                                                              ----      ---   
                                                                              
YEAR ENDED DECEMBER 31, 1999:                                                 
First quarter...............................................   19 1/4   11 3/4
Second quarter..............................................   24 1/4   15    
Third quarter...............................................   28 1/2   19 7/8
Fourth quarter..............................................   26 1/4   17 1/2
YEAR ENDED DECEMBER 31, 1998:                                                 
First quarter...............................................   23 3/8   18    
Second quarter..............................................   19 3/4   12 1/8
Third quarter...............................................   14        7 3/4
Fourth quarter..............................................   15 3/8    4 7/8

    On February 28, 2000, there were approximately 47 holders of record of the
Company's common stock and approximately 1,539 beneficial shareholders.         

  The Company has never declared or paid any cash dividends on its capital
stock and does not anticipate paying cash dividends on its Common Stock. The    
Company currently intends to retain future earnings to finance its operations   
and fund the growth of the business. Any payment of future dividends will be at 
the discretion of the Board of Directors of the Company and will depend on,     
among other things, the Company's earnings, financial condition, contractual    
restrictions in respect of the payment of dividends and other factors the Board 
of Directors deems relevant.                                                    

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ITEM 6. SELECTED FINANCIAL DATA                                                 

The selected data presented below under the captions "Statement of    
Operations Data" and "Balance Sheet Data" are derived from the audited financial
statements of Trendwest Resorts, Inc. and subsidiaries. The information set     
forth below should be read in conjunction with "Management's Discussion and     
Analysis of Financial Condition and Results of Operations" and the combined and 
consolidated financial statements for the Company and the notes thereto which   
are contained elsewhere herein. The information presented below under the       
captions "Operating Data" and "Selected Quarterly Financial Data" is unaudited. 

                                                        [Enlarge/Download Table]

                                                        YEAR ENDED DECEMBER 31,                      
                                  -------------------------------------------------------------------
                                     1999          1998          1997          1996          1995    
                                  -----------   -----------   -----------   -----------   -----------
                                      (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)    
                                                                                                     
STATEMENT OF OPERATIONS DATA:                                                                        
Revenues:                                                                                            
  Vacation Credit and Fractional                                                                     
     Interest sales, net........  $   234,665   $   170,817   $   128,835   $   100,040   $    77,783
  Finance income................       15,243        13,790        11,989         7,143         5,368
  Gains on sales of notes                                                                            
     receivable.................       16,265        10,959         6,582         5,673         3,222
  Resort management services....        3,710         2,328         2,032         1,501         1,579
  Other.........................        4,593         3,063         2,149         2,552         1,226
                                  -----------   -----------   -----------   -----------   -----------
          Total revenues........      274,476       200,957       151,587       116,909        89,178
                                  -----------   -----------   -----------   -----------   -----------
Costs and operating expenses:                                                                        
  Vacation Credit and Fractional                                                                     
     Interest cost of sales.....       68,611        48,059        34,569        27,400        20,484
  Resort management services....        1,656         1,399         1,108           859         1,283
  Sales and marketing...........      104,952        83,347        59,448        47,810        36,374
  General and administrative....       25,234        17,180        13,449        10,904         8,391
  Provision for doubtful                                                                             
     accounts and recourse                                                                           
     liability..................       16,450        11,865         9,077         7,467         6,522
Interest........................          442           353         1,739         2,445         2,380
                                  -----------   -----------   -----------   -----------   -----------
          Total costs and                                                                            
            operating                                                                                
            expenses............      217,345       162,203       119,390        96,885        75,434
                                  -----------   -----------   -----------   -----------   -----------
Income before income taxes......       57,131        38,754        32,197        20,024        13,744
  Income tax expense............       22,258        14,723        11,588         7,348         4,979
                                  -----------   -----------   -----------   -----------   -----------
Net income......................  $    34,873   $    24,031   $    20,609   $    12,676   $     8,765
                                  ===========   ===========   ===========   ===========   ===========
Net income per share of common                                                                       
  stock:                                                                                             
  Basic.........................  $      2.04   $      1.38   $      1.32   $      0.88   $      0.61
  Diluted.......................  $      2.03   $      1.38   $      1.32   $      0.88   $      0.61
Shares used in computing net                                                                         
  income per share of common                                                                         
  stock(1):                                                                                          
  Basic.........................   17,129,900    17,412,818    15,596,419    14,417,116    14,387,169
  Diluted.......................   17,176,954    17,416,691    15,596,419    14,417,116    14,387,169
OPERATING DATA:                                                                                      
Number of WorldMark Resorts (at                                                                      
  end of period)................           31            24            22            19            16
Number of units (at end of                                                                           
  period).......................        1,635         1,272           928           746           499
Number of Vacation Credits sold                                                                      
  (in thousands)................      165,829       131,058        99,911        82,270        65,308
Average price per Vacation                                                                           
  Credit sold...................  $      1.34   $      1.28   $      1.27   $      1.24   $      1.21
Average cost per Vacation Credit                                                                     
  sold..........................  $      0.37   $      0.37   $      0.35   $      0.33   $      0.31
Number of Owners (at end of                                                                          
  period).......................       87,432        67,982        51,778        38,997        27,965
Average purchase price for new                                                                       
  Owners........................  $     8,855   $     8,477   $     8,507   $     8,432   $     8,325

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                                                        [Enlarge/Download Table]

                                                       YEAR ENDED DECEMBER 31,                      
                                 -------------------------------------------------------------------
                                    1999          1998          1997          1996          1995    
                                 -----------   -----------   -----------   -----------   -----------
                                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)    
                                                                                                    
BALANCE SHEET DATA:                                                                                 
Cash, including restricted                                                                          
  cash.......................... $     4,747   $     2,360   $     1,289   $       802   $       516
Total assets....................     209,963       198,498       151,750        89,330        71,289
Indebtedness(2).................       3,900        35,688         1,947        22,371        24,826
Shareholders' equity............     173,715       141,262       122,125        49,744        36,753

---------------                                                                 
(1) Includes the 5,193,693 shares issued to JELD-WEN in connection with the     
Consolidation Transactions for all periods presented.                   

(2) Indebtedness is comprised of notes payable to JELD-WEN and others.          

SELECTED QUARTERLY FINANCIAL DATA                                               

                                                        [Enlarge/Download Table]

                                                              1999 QUARTERS ENDED                
                                               --------------------------------------------------
                                               MARCH 31    JUNE 30    SEPTEMBER 30    DECEMBER 31
                                               --------    -------    ------------    -----------
                                                                                                 
Total revenue................................. $59,905     $73,295      $71,994         $69,282  
Total costs and operating expenses............  46,408      57,850       57,422          55,665  
Net income....................................   8,144       9,510        8,864           8,355  
Net income per common share:                                                                     
  Basic....................................... $   .47     $   .55      $   .52         $   .49  
  Diluted..................................... $   .47     $   .55      $   .52         $   .49  

                                                        [Enlarge/Download Table]

                                                              1998 QUARTERS ENDED                
                                               --------------------------------------------------
                                               MARCH 31    JUNE 30    SEPTEMBER 30    DECEMBER 31
                                               --------    -------    ------------    -----------
                                                                                                 
Total revenue................................. $42,828     $47,993      $53,193         $56,944  
Total costs and operating expenses............  33,645      39,715       43,801          45,043  
Net income....................................   5,864       5,164        5,884           7,119  
Net income per Common Share Basic............. $   .33     $   .29      $   .34         $   .41  
  Diluted..................................... $   .33     $   .29      $   .34         $   .41  

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS                                                                   

  The statements below and other statements herein contain forward looking
information which include future financing transactions, acquisition of         
properties, and the Company's future prospects and other forecasts and          
statements of expectations. Actual results may differ materially from those     
expressed in any forward-looking statement made by the Company, due among other 
things, to the Company's ability to develop or acquire additional resort        
properties, find acceptable debt or equity capital to fund such development, as 
well as other risk factors as outlined in the "Risk Factors" section of this    
Form 10-K.                                                                      

OVERVIEW                                                                        

    Trendwest markets, sells and finances timeshare ownership interests in the
form of Vacation Credits and Fractional Interests and acquires, develops and    
manages the WorldMark Resorts. The Company derives revenue primarily from the   
sale of Vacation Credits and Fractional Interests, from the financing of        
Vacation Credits and Fractional Interests and from management fees generated    
from its management agreement with WorldMark.                                   

   Vacation Credit, Fractional Interests and Upgrade Sales are recognized on
the accrual basis after the Company has received an executed sales contract and 
a minimum 10% down payment, and the rescission period (generally three to       
fourteen days) has passed. In instances where the Company finances an Upgrade   
Sale and the customer does not make an additional cash down payment of at least 
10% of the Upgrade Sale, the Company uses the installment method to recognize   
revenue. Under the installment method, gross profit on such Upgrade Sale is     
deferred and thereafter recognized in relation to each principal payment        
received.                                                                       
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Revenue is fully recognized on the Upgrade Sale when the principal collected    
related to the Upgrade Sale totals 10% of the amount of the Upgrade sale. In    
1999, 72% of Upgrade Sales had the additional 10% cash down payment, as compared
to 74% in 1998.                                                                 

    The Company acquires or develops additional resort units for WorldMark and
contributes those units to WorldMark free of monetary encumbrances, thereby     
creating additional Vacation Credits for sale by the Company. The Company also  
acquires or develops resort units for Fractional Interest sales. These units are
not contributed to WorldMark. The Company assigns each WorldMark Resort unit a  
specific number of Vacation Credits based on its vacation use value relative to 
existing WorldMark Resort units. Acquisition and construction costs associated  
with the resort units are recorded as inventory. Vacation Credit and Fractional 
Interest cost of sales are allocated as sales are recognized.                   

  Financing is provided by Trendwest at an interest rate of 13.9% or 14.9%
per annum for a term of up to seven years for Vacation Credits and an interest  
rate of up to 11.9% per annum for a term of up to ten years for Fractional      
Interest sales. The Company routinely sells Notes Receivable to financial       
institutions and other investors to generate liquidity to acquire or develop new
resort units and for working capital. The Company recognizes a gain on the sale 
of Notes Receivable at the time of sale equal to the excess of the proceeds     
received (cash plus residual interest in Notes Receivable sold) over the        
allocated carrying value of the Notes Receivable sold. Residual interest in     
Notes Receivable sold represents the present value of the estimated net future  
cash flows of the payment streams, resulting from the sale of Notes Receivable, 
and is carried at fair value with the changes in fair value included in finance 
income.                                                                         

RESULTS OF OPERATIONS                                                           

   The following discussion of the results of operations relates to entities
comprising the Company on a combined historical basis.                          

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED DECEMBER 31, 
                                                             ----------------------- 
                                                             1999     1998     1997  
                                                             -----    -----    ----- 
                                                                                     
AS A PERCENTAGE OF TOTAL REVENUES:                                                   
  Vacation Credit and Fractional Interest sales, net........  85.5%    85.0%    85.0%
  Finance income............................................   5.5      6.9      7.9 
  Gains on sales of notes receivable........................   5.9      5.5      4.3 
  Resort management services................................   1.3      1.1      1.3 
  Other.....................................................   1.8      1.5      1.5 
                                                             -----    -----    ----- 
                                                             100.0%   100.0%   100.0%
                                                             =====    =====    ===== 
AS A PERCENTAGE OF VACATION CREDIT AND FRACTIONAL INTEREST                           
  SALES, NET:                                                                        
  Vacation Credit and Fractional Interest cost of sales.....  29.2%    28.2%    26.8%
  Sales and marketing.......................................  44.7     48.8     46.1 
  Provision for doubtful accounts and recourse liability....   7.0      7.0      7.0 
AS A PERCENT OF RESORT MANAGEMENT REVENUES:                                          
  Cost of resort management services........................  45.9%    60.9%    54.5%
AS A PERCENTAGE OF TOTAL REVENUES:                                                   
  General and administrative................................   9.2%     8.6%     8.9%
  Total costs and operating expenses........................  79.2     80.7     78.8 

 Comparison of the year ended December 31, 1999 to the year ended December 31,
1998                                                                            

     For the year ended December 31, 1999 the Company achieved total revenues of
$274.5 million compared to $201.0 million for the year ended December 31, 1998, 
an increase of 36.6%. The principal reasons for the overall improvement was     
Vacation Credit sales increasing to $221.4 million for the year ended December  
31, 1999 from $170.8 million for the year ended December 31, 1998, Fractional   
Interest Sales of $13.3 million and additional gains on sales of Notes          
Receivable. The Fractional Interest sales program commenced pre-selling of      

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Fractional Interests at the Depoe Bay resort on the Oregon Coast in October     
1998. The Company exercised its purchase option in April of 1999 and began      
recognizing revenue from the pre-sales at that time and competed the sale of all
377 interests by October, 1999. The increase in Vacation Credit sales was       
primarily the result of an increase in Vacation credits sold to 165.8 million   
for the year ended December 31, 1999 from 131.1 million for the year ended      
December 31, 1998, a 26.5% increase. The increase in Vacation Credits sold was  
largely attributable to the maturation of seven sales offices opened in 1998,   
opening four new sales offices during 1999, continued strong improvement at more
mature sales offices and increased Upgrade sales. The following table summarizes
the sales offices opened during 1999:                                           

                                                                [Download Table]

                     LOCATION                          OPENED       ON/OFF SITE
                     --------                          ------       -----------
                                                                               
Bear Lake, UT.....................................   July, 1999       on-site  
Vistoso, AZ.......................................  August, 1999      on-site  
Anchorage, AK..................................... September, 1999   off-site  
Boise, ID......................................... November, 1999    off-site  

   Revenues from Upgrade Sales increased 22.7% to $30.3 million for the year
ended December 31, 1999 from $24.7 million for the year ended December 31, 1998 
due to the continued growth of resorts, the Owners' continued satisfaction with 
the WorldMark product and effective sales efforts. The average price per        
Vacation Credit sold increased to $1.34 for the year ended December 31, 1999    
from $1.28 for the year ended December 31, 1998, reflecting the increase in the 
selling price of vacation credits effective June 28, 1999.                      

     Finance income increased 10.1% to $15.2 million for the year ended December
31, 1999 from $13.8 million for the year ended December 31, 1998. Gains on sales
of Notes Receivable increased 48.2% to $16.3 million for the year ended December
31, 1999 from $11.0 million for the year ended December 31, 1998. This reflects 
a similar increase in the principal balance of Notes Receivable sold in 1999, up
49.4% to $156.3 in 1999 from $104.6 million in 1998. In August 1999, the Company
completed a $160 million asset backed securitization to fix interest rates on a 
significant portion of the Notes Receivable portfolio. The securitization       
reduced the Company's interest rate risk in the future, if interest rates were  
to increase. Both gains on sales of Notes Receivable and finance income were    
negatively impacted during the year because of rising interest rates reducing   
the net interest spread.                                                        

  Vacation Credit and Fractional Interest cost of sales increased to $68.6
million for the year ended December 31, 1999 from $48.1 million for the year    
ended December 31, 1998, an increase of 42.6%. As a percentage of Vacation      
Credit and Fractional Interest sales, Vacation Credit and Fractional Interest   
cost of sales increased to 29.2% for the year ended December 31, 1999 from 28.2%
for the year ended December 31, 1998. This increase is due to Fractional        
interest sales which have a higher product cost offset by lower sales and       
marketing costs.                                                                

  Sales and marketing costs increased 26.1% to $105.0 million for the year
ended December 31, 1999 from $83.3 million for the year ended December 31, 1998.
As a percentage of Vacation Credit and Fractional Interest sales, sales and     
marketing costs decreased to 44.7% for the year ended December 31, 1999 from    
48.8% for the year ended December 31, 1998. This decrease is attributable to    
several factors. First, Fractional Interest sales have lower sales and marketing
costs which are offset by higher product cost. Second, the seven sales offices  
opened in 1998 continue to season and all have higher sales closing percentages 
in 1999 which reduces marketing costs as a percentage of sales. Finally, the    
Company's more mature sales offices continued to perform strongly in terms of   
sales closing percentages.                                                      

  General and administrative expenses increased 46.5% to $25.2 million for
the year ended December 31, 1999 from $17.2 million for the year ended December 
31, 1998. As a percentage of total revenues, general and administrative expenses
increased to 9.2% for the year ended December 31, 1999 from 8.6% for the year   
ended December 31, 1998. This increase is the result of increases in the        
infrastructure, both at the Corporate and Regional levels, to support the       
continued growth of the Company; increased expenditures in Information Systems  
to remediate the Year 2000 issue and start-up costs for the Midwest, Las Vegas  
and South Pacific regions.                                                      

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   Provision for doubtful accounts and recourse liability increased 38.7% to
$16.5 million for the year ended December 31, 1999 from $11.9 million for the   
year ended December 31, 1998. As a percentage of Vacation Credit and Fractional 
Interest sales, the provision remained comparable at 7.0% for the two periods.  

 Comparison of the year ended December 31, 1998 to the year ended December 31,
1997                                                                            

     For the year ended December 31, 1998 the Company achieved total revenues of
$201.0 million compared to $151.6 million for the year ended December 31, 1997, 
an increase of 32.6%. The principal reason for the overall improvement was      
Vacation Credit sales increasing to $170.8 million for the year ended December  
31, 1998 from $128.8 million for the year ended December 31, 1997, a 32.6%      
increase. The increase in Vacation Credit sales was primarily the result of an  
increase in Vacation credits sold to 131.1 million for the year ended December  
31, 1998 from 99.9 million for the year ended December 31, 1997, a 31.2%        
increase. The increase in Vacation Credits sold was largely attributable to     
opening seven new sales offices during 1998. The following table summarizes the 
sales offices opened during the year:                                           

                                                                [Download Table]

                     LOCATION                          OPENED       ON/OFF SITE
                     --------                          ------       -----------
                                                                               
Burlingame, CA....................................   March, 1998     off-site  
Scottsdale, AZ....................................    May, 1998      off-site  
Wolf Creek, UT....................................   June, 1998       on-site  
San Diego, CA.....................................   June, 1998      off-site  
Angels Camp, CA................................... September, 1998    on-site  
Salt Lake City, UT................................ September, 1998   off-site  
Big Bear, CA...................................... September, 1998    on-site  

 Additionally, the maturation of the Costa Mesa and Woodland Hills sales
offices, opened in February and October 1997, and increased Upgrade sales also  
contributed to the increase in Vacation Credit sales. Revenues from Upgrade     
Sales increased 24.1% to $24.7 million for the year ended December 31, 1998 from
$19.9 million for the year ended December 31, 1997. The number of Vacation      
Credits sold as Upgrades increased by approximately 28.9% in the year ended     
December 31, 1998 compared to the year ended December 31, 1997 due to the       
continued growth of resorts and effective sales efforts. The average price per  
Vacation Credit sold increased to $1.28 for the year ended December 31, 1998    
from $1.27 for the year ended December 31, 1997, reflecting the increase in the 
selling price of vacation credits effective June 29, 1998. The percentage       
increase in the average selling price of Vacation Credits was less than the     
percentage increase in the selling price of Vacation Credits because of the     
recognition of sales made prior to the price increase.                          

     Finance income increased 15.0% to $13.8 million for the year ended December
31, 1998 from $12.0 million for the year ended December 31, 1997, due to        
increased carrying balances of Notes Receivable. Gains on sales of Notes        
Receivable increased 66.7% to $11.0 million for the year ended December 31, 1998
from $6.6 million for the year ended December 31, 1997. This is due to increased
sales of Notes Receivable in the fourth quarter of 1998 to generate cash and the
asset backed securitization consummated during the first quarter of 1998. The   
securitization in the first quarter of 1998 resulted in recording gains of $3.1 
million for Notes Receivable sold and reduced the Company's interest rate risk  
in the future, if interest rates were to increase, on $130.4 million of sold    
notes receivable.                                                               

     Vacation Credit cost of sales increased to $48.1 million for the year ended
December 31, 1998 from $34.6 million for the year ended December 31, 1997, an   
increase of 39.0%. As a percentage of Vacation Credit sales, Vacation Credit    
cost of sales increased to 28.2% for the year ended December 31, 1998 from 26.8%
for the year ended December 31, 1997. This increase is the result of the Clear  
Lake and Angels Camp resorts in California which came on line in the third      
quarter. Clear Lake experienced construction delays and cost overruns due to    
inclement weather and the Angels Camp resort had a product cost higher than the 
historical average. In addition, higher carrying balances of inventory resulted 
in increased developer dues expense paid to WorldMark, the Club.                

 Sales and marketing costs increased 40.2% to $83.3 million for the year
ended December 31, 1998 from $59.4 million in the year ended December 31, 1997. 
As a percentage of Vacation Credit sales, sales and                             

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marketing costs increased to 48.8% for the year ended December 31, 1998 from    
46.1% for the year ended December 31, 1997. Sales and marketing costs for the   
year ended December 31, 1998, as compared to the same period last year, were    
impacted by four new off site and three on site sales offices opened during the 
year as compared to two off site and one on site sales office last year. The    
Scottsdale, San Diego, Wolf Creek and Salt Lake sales offices experienced lower 
closing percentages, which initially occur in a new sales office less than one  
year old, resulting in higher marketing costs as a percentage of Vacation Credit
sales. The payment of minimum compensation amounts to sales representatives     
during this initial period resulted in higher commission costs as a percentage  
of Vacation Credit sales. Effective July 6, 1998 management initiated changes to
the sales commission program for New and Upgrade Sales and raised performance   
targets for additional bonuses which has resulted in an overall decrease in     
sales and marketing costs, for the second half of the year, when expressed as a 
percentage of Vacation Credit sales.                                            

  General and administrative expenses increased 28.4% to $17.2 million for
the year ended December 31, 1998 from $13.4 million for the year ended December 
31, 1997 primarily reflecting the increased sales growth. As a percentage of    
total revenues, general and administrative expenses decreased slightly to 8.6%  
for the year ended December 31, 1997 from 8.9% for the year ended December 31,  
1997, due primarily to the higher gains on sales of notes receivable. The       
Company believes that general and administrative expenses as a percentage of    
total revenues would have increased slightly for the year ended December 31,    
1998 absent the increase in gains on sales of notes receivable during the year. 

  Interest expense decreased to $.3 million for 1998 from $1.7 million for
1997, a decrease of 82.4% due primarily to the reduction in the average         
borrowings from the Parent and proceeds from the sale of Notes Receivable in    
1998. In addition, the Company capitalized interest of $704,000 and $637,000 for
the year ended December 31, 1998 and 1997 respectively.                         

   Provision for doubtful accounts and recourse liability increased 30.8% to
$11.9 million for the year ended December 31, 1998 from $9.1 million for the    
year ended December 31, 1997. As a percentage of Vacation Credit sales, the     
provision remained comparable at 7.0% for the two periods compared.             

LIQUIDITY AND CAPITAL RESOURCES 

   The Company generates cash from operations from down payments on sales of
Vacation Credits and Fractional Interests which are financed, cash sales of     
Vacation Credits and Fractional Interests, management fees, principal and       
interest on Notes Receivable, proceeds from sales of Notes Receivable and       
borrowings on the $30.0 million unsecured line of credit. The Company also      
generates cash on the interest differential between the interest charged on the 
Notes Receivable and the interest paid on Notes Receivable sold.                

During the year ended December 31 1999, cash provided by operating    
activities was $39.6 million. Cash flows from operating activities resulted     
primarily from the sale and repayment of Notes Receivable of $207.5 million and 
net income of $34.9 million. Cash used in operating activities was principally  
due to issuance of Notes Receivable of $204.5 million to finance the purchase of
Vacation Credits and Fractional Interests, purchases of Notes Receivable of     
$14.2 million and an increase in inventory of $5.2 million.                     

     Net cash used in investing activities for the year ended December 31, 1999,
was $.6 million. Cash used in investing activities consisted of the completion  
of the new corporate headquarters and purchases of additional furniture,        
fixtures and data processing equipment to support the growth of the Company.    
Cash provided by investing activities was primarily from the sale of the former 
corporate headquarters building in Bellevue, Washington for $4.4 million.       

   Net cash used in financing activities for the year ended December 31 1999
was $37.3 million. Cash used in financing activities consisted primarily of     
repayment on net borrowings under the bank line of credit of $26.1 million, a   
decrease in due to Parent of $5.7 million, an increase in receivable from Parent
of $3.1 million and repurchases of the Company's common stock on the open market
of $2.8 million.                                                                

The Company continually needs to acquire and develop additional resort
units for WorldMark in order to provide additional Vacation Credits for sale by 
the Company and to provide a greater variety of resort                          

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locations for Owners. The continued growth of the Company and increase in the   
owner base allows for the development of larger resorts which provides certain  
economies of scale to the Company and to WorldMark from an operating cost       
standpoint. The permitting process for larger resorts can be lengthy at times   
and necessitates the need to acquire land as much as 18 to 24 months before a   
resort is completed. The Company's investment in inventory remained comparable  
at $45.6 and $42.3 million at December 31, 1999 and 1998, respectively.         

  At December 31, 1999, there were 39.7 million Vacation Credits available
for sale. With the completion of current projects in progress, the acquisition  
of new resorts and the expansion of existing resorts, the Company believes it   
will have an adequate supply of credits available to meet its planned growth    
through the early part of the year 2002. Since all Vacation Credits have the    
same use rights and the same listed selling price, the Company does not         
experience a buildup of inventory of less desirable resort units or interval    
dates which are difficult to sell.                                              

Since completed units at various resort properties are acquired or    
developed in advance and a significant portion of the purchase price of Vacation
Credits is financed by the Company, the Company continually needs funds to      
acquire and develop property, to carry Notes Receivable contracts and to provide
working capital. The Company has historically secured additional funds through  
the sale of Notes Receivable through the Finance Subsidiaries, borrowings on the
$30.0 million line of credit and loans from the Parent. See "Risk Factors --    
Dependence on Acquisitions of Additional Resort Units for Growth; Need for      
Additional Capital."                                                            

FINANCE SUBSIDIARIES                                                            

     TW Holdings, Inc. ("TW") was organized in 1993 to purchase Notes Receivable
at face value plus accrued interest. TW transfers these Notes Receivable to a   
group of banks led by Bank of America NT&SA (the "Bank Group") pursuant to a    
receivables transfer agreement. On June 17, 1999, the Company chose not to renew
the revolving portion of the $98 million Receivable Transfer Agreement from the 
Bank Group. In conjunction with the private placement of Notes Receivable in    
August 1999, the sold Notes Receivable were acquired by TRI Funding III, the    
credit facility was retired and the corporation was dissolved.                  

   Subsequent financing of Notes Receivable has been accomplished by the use
of a $75 million Receivables Warehouse facility from Prudential Securities      
Credit Corporation ("Prudential") through TW Holdings II ("TW II"). As of       
December 31, 1999, total Notes Receivable of $40.0 million were outstanding and 
transferred through TW II. TW II's credit agreement is subject to annual        
renewals with the present commitment expiring on April 13, 2000. In the event of
non-renewal of the commitment, the Company would not be able to transfer        
additional Notes Receivable through TW II.                                      

In 1996, the Company sold through Trendwest Funding I, certain Notes  
Receivable to a limited liability corporation (LLC) in exchange for cash, a     
subordinated note payable from the LLC and a residual interest in the excess    
cash flows of the LLC. The LLC issued $70.0 million of senior notes, series     
1996-1 to private institutional investors. The notes were rated "A' by Fitch    
IBCA, Inc., and were issued at a fixed rate of 7.42%.                           

   In March 1998, the Company formed a wholly-owned special purpose company,
Trendwest Funding II, Inc. At the same time, the Company sold certain Notes     
Receivable to TRI Funding II for cash, a subordinated note payable from TRI     
Funding II and a residual interest in the excess cash flows of TRI Funding II.  
TRI Funding II issued $130.4 million in two classes of senior and subordinated  
notes to institutional investors. The 1998-1, Class A notes were issued for     
$125.0 million and the 1998-1, Class B notes were issued for $5.4 million. The  
Class A notes and Class B notes were rated "A" and "BBB' by Fitch IBCA, Inc.,   
and were issued at fixed rates of 6.88% and 7.98%, respectively.                

     In August 1999, the Company formed TRI Funding III, Inc. (TRI Funding III),
a special purpose finance company. At the same time, the Company sold certain   
Notes Receivable to TRI Funding III, for cash, a subordinated note payable from 
TRI Funding III and a residual interest in the excess cash flows of TRI Funding 
III. TRI Funding III issued six classes of fixed-rate notes for a ten-year term 
purchased by institutional investors. Duff & Phelps Credit Rating Agency and    
Fitch IBCA, Inc rated the Class A, B, and C Notes, with Fitch IBCA rating the   
Class D Notes. The Notes consisted of three time-tranched Class A Notes,        

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$104.4 million rated "AAA", Class B Notes, $18.2 million rated "AA", Class C    
Notes, $19.9 million rated "A", and Class D Notes, $17.4 million rated "BBB".   
The notes were issued at a weighted average interest rate of 7.49%.             

 In January 2000, the Company formed TW Holdings III, Inc. ("TW III"), a
wholly-owned special purpose finance Company. At the same time, the Company     
entered into a 364 day $75.0 million Receivables Warehouse Facility ("Facility")
funded by a commercial paper conduit with Banc One Capital Markets ("Banc One").
The Facility has an interest rate based on the commercial paper rate plus 50    
basis points.                                                                   

   The Company has limited involvement with derivative financial instruments
and uses them only to manage well-defined interest rate risks. They are not used
for trading purposes. The Company enters into forward interest rate swap        
agreements, interest rate cap agreements and forward exchange contracts to hedge
the effects of fluctuations in interest rates and foreign currency exchange     
rates related to anticipated sales of Notes Receivable and purchases of resort  
properties, respectively. These transactions meet the requirements for hedge    
accounting, including designation to a specific transaction and high            
correlation.                                                                    

The Company has a $30.0 million unsecured revolving credit agreement  
(Credit Agreement) with a group of banks. The credit agreement provides for     
borrowings at the reference rate as announced by Bank of America, NT&SA or at   
LIBOR plus 100 basis points and a commitment fee to the banks of 30 basis points
per annum on the total unused amount of the commitment. Availability under the  
line of credit is subject to a borrowing base which is a percentage of          
unencumbered Notes Receivable and inventory, including property under           
development. Under the terms of the Credit Agreement, the Company is required to
maintain certain interest coverage ratios and capitalization ratios and also    
imposes limitations on certain liens and carrying amounts of inventory. The     
Credit Agreement matures on February 12, 2001. Borrowings outstanding at        
December 31, 1999 and 1998 were $3,900 and $30,000 respectively, at weighted    
average interest rates of 8.50% and 6.64%, respectively.                        

 The Company has a $10 million open line of credit with the Parent which
bears interest at prime plus 1% (9.50% at December 31, 1999) per annum and is   
payable on demand. As of December 31, 1999 and 1998 outstanding borrowings under
this agreement were $0 and $5,688, respectively. The Company periodically lends 
excess funds to the Parent at the prime rate minus 2% (currently 6.50%).        
Outstanding lendings under this agreement were $3,058 and $0 at December 31,    
1999 and 1998, respectively.                                                    

 Through the end of 2001, the Company anticipates spending approximately
$156.0 million for acquisitions and development of new resort properties and for
expansion and development activities at the existing WorldMark Resorts. The     
Company plans to fund these expenditures from the net proceeds of further sales 
or securitizations of Notes Receivable and a $30 million revolving credit       
facility. The Company believes that the above credit facilities, together with  
cash generated from financing transactions and the $10 million line of credit   
with Parent should be sufficient to meet the Company's working capital and      
capital expenditure needs through 2001. At December 31, 1999, the Company has   
outstanding purchase commitments of $75.8 million related to properties under   
development.                                                                    

In the future, the Company may negotiate additional credit facilities,
issue corporate debt or equity securities. Any debt incurred or issued by the   
Company may be secured or unsecured, at a fixed or variable interest rate, and  
may be subject to such additional terms as management deems appropriate.        

RECENT ACCOUNTING PRONOUNCEMENTS                                                

In April, 1998, the Accounting Standards Executive Committee of the   
American Institute of Certified Public Accountants (AICPA) issued Statement of  
Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities. This SOP was
effective on January 1, 1999, and has not impacted the Company's financial      
position or results of operations.                                              

     In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments   
and Hedging Activities. This Statement, as amended, is effective as of the      
beginning of the first quarter of the fiscal year beginning after June 15, 2000.

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The Company does not anticipate a material impact on its financial position or  
results of operations from the future adoption of this standard.                

In December, 1999, The Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition", to be effective as of 
the first quarter of 2000. The Company does not anticipate that compliance with 
SAB No. 101 will result in any material change to the Company's revenue         
recognition policies.                                                           

YEAR 2000                                                                       

    We have completed our Year 2000 preparedness activities and, to date, have
not experienced any material disruption due to the onset of the Year 2000. The  
Company has not received any notification from key suppliers or regulators of   
incidence of Year 2000 disruptions. We cannot assure that we will not experience
disruptions in the future as a consequence of the Year 2000 issue, however, we  
do not expect such disruptions, if any, to be material.                         

  The Company has incurred approximately $1.0 million to date to modify or
replace software in order to remediate the Year 2000 issue.                     

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

  The Company is exposed to interest rate changes primarily as a result of
its financing of timeshare purchases, the sale and securitization of notes      
receivable and borrowing under revolving lines of credit. The Company's interest
rate risk management objective is to limit the impact of interest rate changes  
on earnings and cash flows and to reduce overall borrowing costs. To achieve its
objectives, the Company borrows funds, sells or securitizes Notes Receivable    
primarily at fixed rates and may enter into derivative financial instruments    
such as interest rate swaps, caps and treasury locks in order to mitigate its   
interest rate risk on a related financial instrument. The Company is also       
subject to foreign currency exchange rate risk when developing resort properties
denominated in a foreign currency. As the Company expands its operations        
worldwide, there will be additional exposure to foreign currency exchange risk. 
The Company does not maintain a trading account for any class of financial      
instrument, it does not purchase high risk derivative instruments and it is not 
directly subject to commodity price risk.                                       

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The tables below provide information as of December 31, 1999 and 1998,
about the Company's financial instruments that are sensitive to changes in      
interest rates. The table presents estimated principal cash flows and related   
weighted average interest rates by expected maturity dates. The actual cash     
flows may differ from these amounts due to prepayments, sales and defaults of   
notes receivable.                                                               

                                                        [Enlarge/Download Table]

                                                    BY EXPECTED MATURITY                                            
                                                  YEAR ENDED DECEMBER 31,                                           
                                       ----------------------------------------------   AFTER                FAIR   
                                        2000      2001      2002      2003      2004     2004    TOTAL      VALUE   
                                       ------    ------    ------    ------    ------   ------   ------   ----------
                                                                                                                    
1999:                                                                                                               
Cash:                                                                                                               
  Amounts Maturing...................   1,760        --        --        --        --       --    1,760      1,760  
  Weighted average interest rate.....      --        --        --        --        --       --       --         --  
Restricted cash:                                                                                                    
  Amounts Maturing...................   2,987        --        --        --        --       --    2,987      2,987  
  Weighted average interest rate.....      --        --        --        --        --       --       --         --  
Notes receivable(1):                                                                                                
  Amounts Maturing...................  10,363    11,504    12,568    13,127    13,267   24,943   85,772     85,772  
  Weighted average interest rate.....   14.10%    14.10%    14.10%    14.10%    14.10%   14.10%   14.10%     14.10% 
Residual interest in Notes Receivable                                                                               
  sold:                                                                                                             
  Fixed rate(2):                                                                                                    
    Amounts Maturing.................   9,675     8,027     6,037     4,220     2,498    2,039   32,496     32,496  
    Weighted average interest rate...    7.07%     7.07%     7.07%     7.07%     7.07%    7.07%    7.07%      7.07% 
  Variable rate(3):                                                                                                 
    Amounts Maturing.................     994       920       745       563       372      175    3,769      3,769  
    Weighted average interest rate...    7.28%     7.28%     7.28%     7.28%     7.28%    7.28%    7.28%      7.28% 
Due from Parent:                                                                                                    
  Amounts Maturing...................   3,058        --        --        --        --       --    3,058      3,058  
  Weighted average interest rate.....    6.50%       --        --        --        --       --     6.50%      6.50% 
Recourse liability on notes sold:                                                                                   
  Amounts Maturing...................   4,092     3,432     2,601     1,834     1,101      849   13,908     13,908  
  Weighted average interest rate.....      --        --        --        --        --       --       --         --  
Borrowings under bank line of credit:                                                                               
  Amount Maturing....................   3,900        --        --        --        --       --    3,900      3,900  
  Weighted average interest rate.....    8.50%       --        --        --        --       --     8.50%      8.50% 

---------------                                                                 
(1) Excludes deferred gross profit.                                             

(2) Fixed interest rates represent the differential between the contract        
interest rate on Notes Receivable sold and the interest rate paid to    
purchasers of the Notes Receivable.                                     

(3) Variable interest rates represent the differential between the contract     
 interest rate on Notes Receivable sold and the required yield (LIBOR plus
100 basis points).                                                      

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                                                        [Enlarge/Download Table]

                                                      BY EXPECTED MATURITY                                       
                                                    YEAR ENDED DECEMBER 31,                                      
                                         ----------------------------------------------   AFTER             FAIR 
                                          1999      2000      2001      2002      2003     2003    TOTAL   VALUE 
                                         ------    ------    ------    ------    ------   ------   ------  ------
                                                                                                                 
1998:                                                                                                            
Cash:                                                                                                            
  Amounts Maturing......................      9        --        --        --        --       --        9       9
  Weighted Average interest rate........     --        --        --        --        --       --                 
Restricted cash:                                                                                                 
  Amounts Maturing......................  2,351        --        --        --        --       --    2,351   2,351
  Weighted Average interest rate........     --        --        --        --        --       --                 
Notes receivable(1):                                                                                             
  Amounts Maturing...................... 11,137    12,474    13,821    14,978    15,523   26,604   94,538  94,538
  Weighted Average interest rate........   14.1%     14.1%     14.1%     14.1%     14.1%    14.1%                
Residual interest in notes receivable                                                                            
  sold:                                                                                                          
  Fixed rate(2):                                                                                                 
    Amounts Maturing....................  5,307     4,175     2,819     1,802       776       --   14,879  14,879
    Weighted Average interest rate......   7.07%     7.07%     7.07%     7.07%     7.07%    7.07%                
  Variable rate(3):                                                                                              
    Amounts Maturing....................  2,491     2,129     1,737     1,308     1,139       --    8,804   8,804
    Weighted Average interest rate......   7.91%     7.91%     7.91%     7.91%     7.91%    7.91%                
Due to Parent:                                                                                                   
  Amounts Maturing......................  5,688        --        --        --        --       --    5,688   5,688
  Weighted Average interest rate........   8.75%       --        --        --        --       --                 
Recourse liability on notes sold:                                                                                
  Amounts Maturing......................  2,823     2,282     1,649     1,126       693       --    8,572   8,572
  Weighted Average interest rate........     --        --        --        --        --       --                 
Borrowings under bank line of credit:                                                                            
  Amount Maturing....................... 30,000        --        --        --        --       --   30,000  30,000
  Weighted Average interest rate........   6.64%       --        --        --        --       --                 

---------------                                                                 
(1) Excludes deferred gross profit.                                             

(2) Fixed interest rates represent the differential between the contract        
interest rate on Notes Receivable sold and the interest rate paid to    
purchasers of the Notes Receivable.                                     

(3) Variable interest rates represent the differential between the contract     
 interest rate on Notes Receivable sold and the required yield (LIBOR plus
112.5 basis points).                                                    

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                             

     See the information set forth on Index to Financial Statements appearing on
page 28 of this report on Form 10-K.                                            

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE                                                            

None                                                                  

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                     

  The information required by this Item will be set forth under "Directors
and Executive Officers" and "Proxy Statement -- Compliance with Section 16(a)   
Under the Securities Exchange Act of 1934" in the Company's Proxy Statement and 
reference is expressly made thereto for specific information incorporated herein
by reference.                                                                   

ITEM 11. EXECUTIVE COMPENSATION                                                 

  The information required by this Item will be set forth under "Executive
Compensation" in the Company's Proxy Statement and reference is expressly made  
thereto for the specific information incorporated herein by the aforesaid       
reference.                                                                      

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

The information required by this Item will be set forth under "Proxy  
Statement -- Share Ownership of Directors and Executive Officers," and "Other   
information -- Certain Shareholders" in the Company's Proxy Statement and       
reference is expressly made thereto for the specific information incorporated   
herein by the aforesaid reference.                                              

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

The information required by this item will be set forth under "Proxy  
Statement -- Certain Relationships and Related Transactions" in the Company's   
Proxy Statement and reference is expressly made thereto for the specific        
information incorporated herein by the aforesaid reference.                     

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TRENDWEST RESORTS, INC., AND SUBSIDIARIES 

INDEX TO FINANCIAL STATEMENTS 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
Independent Auditors' Report................................   29 
Consolidated Balance Sheets.................................   30 
Combined and Consolidated Statements of Income..............   31 
Combined and Consolidated Statements of Shareholders'             
  Equity....................................................   32 
Combined and Consolidated Statements of Cash Flows..........   33 
Notes to Combined and Consolidated Financial Statements.....   34 

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INDEPENDENT AUDITORS' REPORT

The Shareholders                                                                
Trendwest Resorts, Inc.:                                                        

   We have audited the accompanying consolidated balance sheets of Trendwest
Resorts, Inc., and subsidiaries as of December 31, 1999 and 1998, and the       
related combined and consolidated statements of income, shareholders' equity and
cash flows for each of the years in the three-year period ended December 31,    
1999. These combined and consolidated financial statements are the              
responsibility of the Company's management. Our responsibility is to express an 
opinion on these combined and consolidated 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 combined and consolidated financial statements referred
to above present fairly, in all material respects, the financial position of    
Trendwest Resorts, Inc., and subsidiaries as of December 31, 1999 and 1998, and 
the results of their operations and their cash flows for each of the years in   
the three-year period ended December 31, 1999, in conformity with generally     
accepted accounting principles.                                                 

            KPMG LLP

Seattle, Washington                                                             
February 1, 2000                                                                

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TRENDWEST RESORTS, INC.,
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 
(DOLLARS IN THOUSANDS)

ASSETS

                                                                [Download Table]

                                                                  DECEMBER 31,    
                                                              --------------------
                                                                1999        1998  
                                                              --------    --------
                                                                                  
Assets:                                                                           
  Cash......................................................  $  1,760    $      9
  Restricted cash...........................................     2,987       2,351
  Notes Receivable, net of allowance for doubtful accounts,                       
     sales returns and deferred gross profit................    84,802      93,361
  Accrued interest and other receivables....................     8,506      11,399
  Residual interest in Notes Receivable sold................    36,265      23,683
  Receivable from Parent....................................     3,058          --
  Inventories...............................................    45,601      42,309
  Property and equipment, net...............................    24,327      20,343
  Deferred income taxes.....................................        --         702
  Other assets..............................................     2,657       4,341
                                                              --------    --------
          Total assets......................................  $209,963     198,498
                                                              ========    ========

                       LIABILITIES AND SHAREHOLDERS' EQUITY                       
Liabilities:                                                                      
  Accounts payable..........................................  $  1,900    $  1,436
  Accrued liabilities.......................................    12,405       6,645
  Accrued construction in progress..........................       790       1,064
  Borrowing under bank line of credit.......................     3,900      30,000
  Due to Parent.............................................        --       5,688
  Allowance for recourse liability and deferred gross profit                      
     on Notes Receivable sold...............................    17,211      11,250
  Deferred income taxes.....................................        42          --
  Income taxes payable......................................        --       1,153
                                                              --------    --------
          Total liabilities.................................    36,248      57,236
Shareholders' equity:                                                             
  Preferred stock, no par value. Authorized 10,000,000                            
     shares; no shares issued or outstanding................        --          --
  Common stock, no par value. Authorized 90,000,000 shares;                       
     issued and outstanding 17,041,078 and 17,158,766 shares                      
     at December 31, 1999 and 1998, respectively............    59,428      61,848
  Retained earnings.........................................   114,287      79,414
                                                              --------    --------
          Total shareholders' equity........................   173,715     141,262
Commitments and contingencies                                                     
                                                              --------    --------
          Total liabilities and shareholders' equity........  $209,963    $198,498
                                                              ========    ========

See accompanying notes to the combined and consolidated financial statements. 
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TRENDWEST RESORTS, INC.,
AND SUBSIDIARIES

COMBINED AND CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                               YEAR ENDED DECEMBER 31,         
                                                      -----------------------------------------
                                                         1999           1998           1997    
                                                      -----------    -----------    -----------
                                                                                               
Revenues:                                                                                      
  Vacation Credit and Fractional Interest sales,                                               
     net............................................  $   234,665    $   170,817    $   128,835
  Finance income....................................       15,243         13,790         11,989
  Gains on sales of Notes Receivable................       16,265         10,959          6,582
  Resort management services........................        3,710          2,328          2,032
  Other.............................................        4,593          3,063          2,149
                                                      -----------    -----------    -----------
          Total revenues............................      274,476        200,957        151,587
                                                      -----------    -----------    -----------
Costs and operating expenses:                                                                  
  Vacation Credit and Fractional Interest cost of                                              
     sales..........................................       68,611         48,059         34,569
  Resort management services........................        1,656          1,399          1,108
  Sales and marketing...............................      104,952         83,347         59,448
  General and administrative........................       25,234         17,180         13,449
  Provision for doubtful accounts and recourse                                                 
     liability......................................       16,450         11,865          9,077
  Interest..........................................          442            353          1,739
                                                      -----------    -----------    -----------
          Total costs and operating expenses........      217,345        162,203        119,390
                                                      -----------    -----------    -----------
Income before income taxes..........................       57,131         38,754         32,197
Income tax expense..................................       22,258         14,723         11,588
                                                      -----------    -----------    -----------
          Net income................................  $    34,873    $    24,031    $    20,609
                                                      ===========    ===========    ===========
Basic net income per common share...................  $      2.04    $      1.38    $      1.32
Diluted net income per common share.................  $      2.03    $      1.38    $      1.32
Weighted average shares of common stock and dilutive                                           
  potential common stock outstanding:                                                          
Basic...............................................   17,129,900     17,412,818     15,596,419
Diluted.............................................   17,176,954     17,416,691     15,596,419

See accompanying notes to the combined and consolidated financial statements. 
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TRENDWEST RESORTS, INC.,
AND SUBSIDIARIES

COMBINED AND CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                            CLASS A              CLASS B                               
                                          COMMON STOCK         COMMON STOCK                   TOTAL    
                                      --------------------   ----------------   RETAINED  SHAREHOLDERS'
                                        SHARES     AMOUNT    SHARES   AMOUNT    EARNINGS     EQUITY    
                                      ----------   -------   ------   -------   --------  -------------
                                                                                                       
BALANCE AT DECEMBER 31, 1996.........  9,224,623   $ 6,470     100    $ 8,500   $ 34,774    $ 49,744   
  Consolidation transactions                                                                           
     (5,193,693 shares of Trendwest                                                                    
     common stock issued in exchange                                                                   
     for all of the outstanding                                                                        
     shares of TW Holdings and                                                                         
     Trendwest Funding I)............  5,192,493     8,500    (100)    (8,500)        --          --   
  Issuance of common stock, net of                                                                     
     issuance costs of $5,401........  3,176,250    51,772      --         --         --      51,772   
  Net income.........................         --        --      --         --     20,609      20,609   
                                      ----------   -------    ----    -------   --------    --------   
  BALANCE AT DECEMBER 31, 1997....... 17,593,366    66,742      --         --     55,383     122,125   
  Repurchase of common stock.........   (434,600)   (4,894)     --         --         --      (4,894)  
  Net income.........................         --        --      --         --     24,031      24,031   
                                      ----------   -------    ----    -------   --------    --------   
  BALANCE AT DECEMBER 31, 1998....... 17,158,766    61,848      --         --     79,414     141,262   
  Repurchase of common stock.........   (135,072)   (2,780)     --         --         --      (2,780)  
  Issuance of common stock under the                                                                   
     Employee Stock Purchase Plan....     17,384       360      --         --         --         360   
  Net income.........................         --        --      --         --     34,873      34,873   
                                      ----------   -------    ----    -------   --------    --------   
  BALANCE AT DECEMBER 31, 1999....... 17,041,078   $59,428      --    $    --   $114,287    $173,715   
                                      ==========   =======    ====    =======   ========    ========   

See accompanying notes to the combined and consolidated financial statements. 
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TRENDWEST RESORTS, INC.,
AND SUBSIDIARIES

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                   YEAR ENDED DECEMBER 31,       
                                                             ----------------------------------- 
                                                               1999         1998         1997    
                                                             ---------    ---------    --------- 
                                                                                                 
Cash flows from operating activities:                                                            
  Net income................................................ $  34,873    $  24,031    $  20,609 
  Adjustments to reconcile net income to net cash provided                                       
    by (used in) operating activities:                                                           
    Depreciation and amortization...........................     1,758        1,079          681 
    Gain on sale of property and equipment..................      (869)          --           -- 
    Amortization of residual interest in Notes Receivable                                        
      sold..................................................    10,931        6,877        4,089 
    Provision for doubtful accounts, sales returns and                                           
      recourse liability....................................    21,407       15,435       11,755 
    Recoveries of Notes Receivable charged off..............       260          179          132 
    Residual interest in Notes Receivable sold..............   (21,019)     (11,949)      (6,729)
    Unrealized loss (gain) on residual interest in Notes                                         
      Receivable sold.......................................     1,139         (779)      (1,044)
    Contract servicing liability arising from sale of Notes                                      
      Receivable............................................     2,847           --           -- 
    Amortization of contract servicing liability............      (321)          --           -- 
    Change in deferred gross profit.........................       419       (1,301)        (684)
    Deferred income tax expense.............................       744          222        1,436 
    Issuance of Notes Receivable............................  (204,474)    (148,720)    (112,170)
    Proceeds from sale of Notes Receivable..................   156,303      104,573       42,292 
    Proceeds from repayment of Notes Receivable.............    51,198       33,831       28,781 
    Purchase of Notes Receivable from related parties.......      (650)     (17,397)     (12,888)
    Purchase of Notes Receivable............................   (13,576)      (6,990)      (3,683)
    Changes in certain assets and liabilities:                                                   
      Restricted cash.......................................      (636)      (1,132)        (510)
      Inventories...........................................    (5,159)       2,225      (28,287)
      Accounts payable and accrued liabilities..............     3,424       (6,141)      10,060 
      Income taxes payable to Parent........................        --       (2,755)         846 
      Income taxes payable..................................    (1,153)         273          880 
      Other.................................................     2,133       (6,236)      (2,044)
                                                             ---------    ---------    --------- 
         Net cash provided by (used in) operating                                                
           activities.......................................    39,579      (14,675)     (46,478)
                                                             ---------    ---------    --------- 
Cash flows used in investing activities:                                                         
  Purchase of property and equipment........................    (4,974)     (14,233)      (1,696)
  Proceeds from sale of property and equipment..............     4,412           --           -- 
                                                             ---------    ---------    --------- 
         Net cash used in investing activities..............      (562)     (14,223)      (1,696)
                                                             ---------    ---------    --------- 
Cash flows from financing activities:                                                            
  Proceeds from notes payable...............................        --           --       16,803 
  Payments on notes payable.................................        --           --       (1,055)
  Net (repayments) borrowings under bank line of credit and                                      
    other...................................................   (26,100)      30,000           -- 
  Increase (decrease) in Due to Parent......................    (5,688)       3,741      (19,369)
  Increase in Receivable from Parent........................    (3,058)          --              
  Proceeds from issuance of common stock....................       360           --       51,772 
  Repurchase of common stock................................    (2,780)      (4,894)          -- 
                                                             ---------    ---------    --------- 
         Net cash (used in) provided by financing                                                
           activities.......................................   (37,266)      28,847       48,151 
                                                             ---------    ---------    --------- 
         Net increase (decrease) in cash....................     1,751          (61)         (23)
Cash at beginning of year...................................         9           70           93 
                                                             ---------    ---------    --------- 
Cash at end of year......................................... $   1,760    $       9    $      70 
                                                             =========    =========    ========= 
Supplemental disclosures of cash flow information -- cash                                        
  paid during the period for:                                                                    
  Interest (excluding capitalized amounts of $1,188, $704                                        
    and $637, respectively)................................. $     179    $     864    $   1,951 
  Income taxes..............................................    22,542       16,983        8,010 
Supplemental schedule of noncash investing and financing                                         
  activities:                                                                                    
  Reduction of notes payable through transfer of Notes                                           
    Receivable..............................................        --           --       16,803 
  Issuance of Notes Receivable in exchange for other assets                                      
    sold....................................................        --           --          489 

See accompanying notes to the combined and consolidated financial statements. 
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TRENDWEST RESORTS, INC. 
AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

(1) DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION                           

DESCRIPTION OF BUSINESS                                                         

    Trendwest Resorts, Inc., and subsidiaries (Company) generate revenues from
the sale and financing of Vacation Credits in WorldMark, The Club (WorldMark)   
and Fractional Interests in resort condominium units. Vacation Credits entitle  
the owner to use a fully furnished vacation resort unit in WorldMark based on   
the number of Vacation Credits purchased. Vacation Credits are created through  
the transfer to WorldMark of resort units developed or purchased by the Company.
The Company also manages resort properties under a management agreement with    
WorldMark. WorldMark is a separate entity which owns the transferred properties 
for the benefit of Vacation Credit owners (Members or Owners). Fractional       
Interest sales are deeded intervals in condominium units and are not transferred
to WorldMark.                                                                   

    The Company sells Vacation Credits and Fractional Interests to individuals
principally in the Western United States. Sales to new owners are typically     
financed by the Company after requiring a minimum 10% down payment. Sales to    
existing Vacation Credit owners (Upgrades) are typically financed by the Company
and require down payments to the extent that the owner's equity interest in     
Vacation Credits owned, including the Upgrade, is less than 10%. All note       
balances are secured by the Vacation Credits or Fractional Interests sold.      

BASIS OF PRESENTATION                                                           

    For periods prior to June 30, 1997, the financial statements are presented
on a combined basis and include the accounts of Trendwest Resorts, Inc., TW     
Holdings, Inc. (TW Holdings) and Trendwest Funding I, Inc. (Trendwest Funding   
I). The financial statements of these three entities have been combined as they 
were entities under the common control of JELD-WEN, inc. (Parent).              

  Trendwest is a majority owned subsidiary of the Parent and prior to June
30, 1997, TW Holdings and Trendwest Funding I were wholly-owned subsidiaries of 
the Parent. Effective June 30, 1997, the Parent transferred to Trendwest all of 
the outstanding common stock of TW Holdings and Trendwest Funding I in exchange 
for 5,193,693 shares of Trendwest common stock (Consolidation Transactions)     
resulting in TW Holdings and Trendwest Funding I becoming wholly-owned          
subsidiaries of Trendwest. The financial statements for periods beginning June  
30, 1997 are presented on a consolidated basis and include the accounts of      
Trendwest, TW Holdings and Trendwest Funding I. Trendwest Funding II, a wholly  
owned subsidiary, is included in the financial statements from March 12, 1998   
(inception). TW Holdings II, a wholly owned subsidiary, is included from April, 
1999 (inception); TRI Funding III, Inc., a wholly-owned subsidiary, is included 
from August, 1999 (inception); and Trendwest South Pacific, a wholly-owned      
subsidiary, is included from October 1999 (inception).                          

    The Consolidation Transactions are considered a reorganization of entities
under common control and have been accounted for in a manner similar to a       
pooling of interests. The assets and liabilities of the combining entities      
continue to be recorded at their historical cost basis and the results of       
operations continue to include the same components in consolidation as were     
included in combination.                                                        

All intercompany balances and transactions have been eliminated in    
combination and consolidation.                                                  

CAPITAL TRANSACTIONS AND PUBLIC OFFERING                                        

On August 15, 1997, the Company consummated the offering of 3,176,250 
shares of the Company's common stock at $18 per share resulting in net proceeds 
of $51,772, after deducting the related issuance costs.                         

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

In March, 1999 and July, 1998, the Board of Directors authorized the  
Company to repurchase up to 500,000 and 436,000 shares, respectively, of its    
common stock on the open market or in privately negotiated transactions based on
market conditions. During the years ended December 31, 1999 and 1998, the       
Company repurchased 135,072 and 434,600 shares, respectively.                   

BASIC AND DILUTED NET INCOME PER COMMON SHARE                                   

  Basic and diluted net income per common share has been computed based on
the number of shares of Trendwest common stock outstanding and assumes the      
5,193,693 shares issued to the Parent in connection with the Consolidation      
Transactions have been outstanding for all periods presented.                   

   The following presents the reconciliation of weighted average shares used
for basic and diluted net income per share:                                     

                                                        [Enlarge/Download Table]

                                                       YEAR ENDED DECEMBER 31,        
                                                --------------------------------------
                                                   1999          1998          1997   
                                                ----------    ----------    ----------
                                                                                      
BASIC                                                                                 
Weighted average shares -- Trendwest........... 17,129,900    17,412,818    10,402,726
Effect of consolidation transactions...........         --            --     5,193,693
                                                ----------    ----------    ----------
Basic weighted average shares outstanding...... 17,129,900    17,412,818    15,596,419
DILUTED                                                                               
Effect of dilutive securities..................     47,054         3,873            --
                                                ----------    ----------    ----------
Diluted weighted average shares outstanding.... 17,176,954    17,416,691    15,596,419
                                                ==========    ==========    ==========

Net income available to common shareholders for basic and diluted net 
income per share was $34,873, $24,031 and $20,609 for the years ended December  
31, 1999, 1998 and 1997, respectively.                                          

At December 31, 1999, 1998 and 1997, there were options to purchase   
598,000, 491,500 and 490,000 shares of common stock outstanding, respectively,  
which were antidilutive and therefore not included in the computation of diluted
net income per share.                                                           

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

RESTRICTED CASH                                                                 

Restricted cash consists primarily of deposits received on sales of   
Vacation Credits and Fractional Interests that are held in trust or escrow until
the applicable statutory rescission period of three to fourteen calendar days   
has expired and the related customer Note Receivable has been recorded; it also 
consists of amounts received prior to the attainment of the 10% down payment    
required to recognize the sale.                                                 

ALLOWANCE FOR DOUBTFUL ACCOUNTS AND RECOURSE LIABILITY                          

  The Company provides for estimated losses related to uncollectible Notes
Receivable and Notes Receivable sold with limited recourse. The Company's       
recourse for Notes Receivable sold is limited to the retained and residual      
interest in Notes Receivable sold. As of December 31, 1999 and 1998, total      
retained interest in Notes Receivable sold of $36,782 and $37,063, respectively,
was included in Notes Receivable in the accompanying consolidated balance sheets
relating to Notes Receivable sold of $288,950 and $200,840, respectively.       
Although it is not required to do so, the Company's historical practice has been
to repurchase defaulted sold Notes Receivable up to certain limits, generally   
10% to 17% of the face amount of the original                                   

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TRENDWEST RESORTS, INC. 
AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

balance of Notes Receivable sold. The provision for credit losses is charged to 
income in amounts sufficient to maintain the allowance and the recourse         
liability at levels considered adequate to cover losses resulting from          
liquidation of Notes Receivable and Notes Receivable sold.                      

The Company estimates its allowance for doubtful accounts and recourse
liability by analysis of bad debts by each sales site by year of Notes          
Receivable origination and are net of anticipated cost recoveries of the        
underlying Vacation Credits and Fractional Interests. The Company uses this     
historical analysis in conjunction with other factors such as local economic    
conditions and industry trends. The Company also utilizes experience factors of 
more mature sales sites in establishing the allowance for bad debts at new sales
offices. Management believes that all such allowances and estimated liabilities 
are adequate; however, such amounts are based on estimates and there is no      
assurance that the actual amounts incurred will not be more or less than the    
amount recorded.                                                                

   The Company charges off Notes Receivable when deemed to be uncollectible.
Interest income previously accrued and unpaid is reversed. Vacation Credits     
recovered are recorded at the weighted average cost of credits at the time of   
recovery. Fractional Interests recovered are recorded at historical cost at the 
time of the recovery. All collection costs are expensed as incurred.            

INVENTORIES                                                                     

 Inventories consist of Vacation Credits and construction in progress as
follows:                                                                        

                                                                [Download Table]

                                                              DECEMBER 31,   
                                                           ------------------
                                                            1999       1998  
                                                           -------    -------
                                                                             
Vacation Credits.........................................  $13,247    $11,342
Construction in progress.................................   32,354     30,967
                                                           -------    -------
          Total inventories..............................  $45,601    $42,309
                                                           =======    =======

Vacation Credits represent the costs of unsold ownership interests in 
WorldMark. Resort properties are completed and ownership is transferred by the  
Company to WorldMark in return for the right to sell Vacation Credits based on  
the number of credits available for the properties. Credits available are       
determined using a formula based on the number of user days available as well as
the relative value of each property. Vacation Credits are carried at the lower  
of cost, based on the moving weighted average of property cost per Vacation     
Credit established, or net realizable value.                                    

   Construction in progress is valued at the lower of cost or net realizable
value. Interest, taxes and other carrying costs incurred during the construction
period are capitalized. The amount of interest capitalized during the years     
ended December 31, 1999, 1998 and 1997 amounted to $1,188, $552 and $637,       
respectively.                                                                   

REVENUE RECOGNITION                                                             

(i) Vacation Credits                                                        

     Substantially all Vacation Credits sold by the Company generate installment
Notes Receivable secured by an interest in the related Vacation Credits. These  
Notes Receivable are payable in monthly installments, including interest, with  
maturities up to seven years. Vacation Credit sales are included in revenues    
when at least a 10% down payment requirement has been met and any rescission    
period has expired.                                                             

Vacation Credit cost of sales and direct selling expenses related to a
Vacation Credit sale are recorded at the time the sale is recognized. Vacation  
Credit costs include the cost of land, improvements to the property,            

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

including costs of amenities constructed for the use and benefit of the Vacation
Credit owners, and other direct acquisition costs. Direct selling expenses are  
recorded as sales and marketing expenses.                                       

The Company also finances sales of Upgrades which often result in the 
cancellation of any existing note receivable and the issuance of a new          
seven-year note secured by an interest in all Vacation Credits owned. No        
additional down payment is required by the Company as long as the owner's equity
interest in the original Vacation Credits is equal to 10% of the value of all   
Vacation Credits, including those from the Upgrade sale, and the customer is not
delinquent in his payments on his existing note receivable. When the Company    
finances an Upgrade sale and the customer does not make an additional down      
payment of at least 10% of the Upgrade sale amount, the Company uses the        
installment method to recognize revenue whereby profit is recognized as a       
portion of each principal payment is received on the Upgrade. Revenue is fully  
recognized on the Upgrade sale when the cash collected relating to the Upgrade  
sale totals 10% of the Upgrade sale. Cash collected relating to a financed      
Upgrade sale is measured as the sum of any additional down payment received at  
the time of the Upgrade sale and the principal repayment of the new note        
receivable which is allocable to the Upgrade sale. Principal repayments are     
allocated to the Upgrade sale component of the new note receivable and the      
pre-Upgrade sale component of the new note receivable based on the ratio of such
components at the time of the Upgrade sale.                                     

(ii) Fractional Interests                                                   

     Fractional Interest sales are included in revenues when at least a 10% down
payment requirement has been met and any rescission period has expired.         

    Fractional Interest cost of sales and direct selling expenses related to a
Fractional Interest sale are recorded at the time the sale is recognized.       
Fractional Interest costs include the cost of land, improvements to the         
property, including costs of amenities constructed and other direct acquisition 
costs. Direct selling expenses are recorded as sales and marketing expenses.    

(iii) Sales of Notes Receivable                                             

Gains on sales of Notes Receivable represent the present value of the 
differential between contractual interest rates charged to borrowers on Notes   
Receivable sold by the Company and the interest rates to be received by the     
purchasers of such Notes Receivable, after considering the effects of estimated 
prepayments and the costs of servicing, net of transaction costs. The Company   
recognizes such gains on sales of Notes Receivable on the settlement date. Gains
on the sale of a portion of Notes Receivable are based on the relative fair     
market value of the note receivable portions sold and retained.                 

 The Company discounts cash flows on its Notes Receivable sold at a rate
which it believes a purchaser would require as a rate of return. The Company    
develops its assumptions based on experience with its own portfolio, available  
market data and ongoing consultation with its investment bankers (see note 13). 

   Income from the differential retained is recorded in finance income using
the interest method. In addition, finance income includes interest income on    
Notes Receivable retained by the Company. The residual interest in Notes        
Receivable sold is classified as a trading security in accordance with SFAS No. 
115, Accounting for Certain Investments in Debt or Equity Securities, and is    
carried at market value with changes in the fair market value (see note 13) of  
the residual interest in Notes Receivable sold recognized as finance income.    

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

PROPERTY AND EQUIPMENT                                                          

  Property and equipment are recorded at cost and depreciated or amortized
using the straight-line method over the following assets' estimated useful      
lives:                                                                          

                                                                [Download Table]
                                                                            
Building and improvements...................................  20 to 45 years
Equipment, furniture and fixtures...........................   3 to 12 years
Leasehold improvements......................................    2 to 5 years

ADVERTISING                                                                     

Advertising costs, included in sales and marketing expenses in the    
accompanying combined statements of income, are expensed as incurred and        
amounted to $7,337, $5,655 and $4,204 for the years ended December 31, 1999,    
1998 and 1997, respectively.                                                    

INCOME TAXES                                                                    

Income taxes are accounted for under the asset and liability method.  
Deferred tax assets and liabilities are recognized for the future tax           
consequences attributable to differences between the financial statement        
carrying amounts of existing assets and liabilities and their respective tax    
bases and operating loss and tax credit carryforwards. Deferred tax assets and  
liabilities are measured using enacted tax rates expected to apply to taxable   
income in the years in which those temporary differences are expected to be     
recovered or settled. The effect on deferred tax assets and liabilities of a    
change in tax rates is recognized in income in the period that includes the     
enactment date.                                                                 

The Company was included in the Federal consolidated tax return of the
Parent prior to August 15, 1997. The Parent allocated the combined current and  
deferred tax expense to the Company as if the Company had filed on a stand-alone
basis.                                                                          

Subsequent to August 15, 1997, the Company files its Federal and State
consolidated tax returns on a stand-alone basis.                                

STOCK-BASED COMPENSATION                                                        

 The Company accounts for stock option plans for employees in accordance
with the provisions of Accounting Principles Board (APB) Opinion No. 25,        
Accounting for Stock Issued to Employees, and related interpretations. As such, 
compensation expense related to employee stock options is recorded if, on the   
date of grant, the fair value of the underlying stock exceeds the exercise      
price. The Company applies the disclosure-only requirements of SFAS No. 123,    
Accounting for Stock-Based Compensation, which allows entities to continue to   
apply the provisions of APB Opinion No. 25 for transactions with employees, and 
to provide pro forma results of operations disclosures for employee stock option
grants as if the fair-value-based method of accounting in SFAS No. 123 had been 
applied to those transactions.                                                  

USE OF ESTIMATES                                                                

  Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of       
contingent assets and liabilities at the date of the financial statements and   
the reported amounts of revenues and expenses during the reporting period to    
prepare these financial statements in conformity with generally accepted        
accounting principles. Actual results could differ from those estimates and     
assumptions.                                                                    

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TRENDWEST RESORTS, INC. 
AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

DERIVATIVE FINANCIAL INSTRUMENTS                                                

   The Company has limited involvement with derivative financial instruments
and uses them only to manage well-defined interest and foreign currency rate    
risks. They are not used for trading purposes.                                  

 The Company enters into forward interest rate swap agreements, interest
rate cap agreements and forward exchange contracts to hedge the effects of      
fluctuations in interest rates and foreign currency rates related to anticipated
sales of Notes Receivables and purchases of resort properties, respectively.    
These transactions meet the requirements for hedge accounting, including        
designation to a specific transaction and high correlation. Gains and losses on 
these agreements are deferred and recognized upon completion of the sale of     
Notes Receivable or the purchase of the resort property and included in the     
basis of the related asset.                                                     

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS                                         

In April, 1998, the Accounting Standards Executive Committee of the   
American Institute of Certified Public Accountants (AICPA) issued Statement of  
Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities. This SOP was
effective on January 1, 1999, and has not impacted the Company's financial      
position or results of operations.                                              

     In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments   
and Hedging Activities. This Statement, as amended, is effective as of the      
beginning of the first quarter of the fiscal year beginning after June 15, 2000.
The Company does not anticipate a material impact on its financial position or  
results of operations from the future adoption of this standard.                

In December, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition", to be effective as of 
the first quarter of 2000. The Company does not anticipate that compliance with 
SAB No. 101 will result in any material change to the Company's revenue         
recognition policies.                                                           

(3) NOTES RECEIVABLE                                                            

  The Company provides financing to the purchasers of Vacation Credits and
Fractional Interests. The notes resulting from sales of Vacation Credits bear   
interest at 13.9% or 14.9%, depending on the method of payment, and are written 
with initial terms of up to 84 months. Notes resulting from the sale of         
Fractional Interests bear interest rates of up to 11.9% for a term of up to 120 
months. Once a 10% down payment has been received, the Company has no obligation
under the notes to refund monies or provide further services to the Owners in   
the event membership is terminated for nonpayment of the notes.                 

Maturities of Notes Receivable at December 31, 1999 are as follows:   

                                                                [Download Table]
                                                                    
2000......................................................  $ 12,197
2001......................................................    13,540
2002......................................................    14,792
2003......................................................    15,450
2004......................................................    15,615
Thereafter................................................    29,357
                                                            --------
                                                            $100,951
                                                            ========

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TRENDWEST RESORTS, INC. 
AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

The following table summarizes the Company's total Notes Receivable   
portfolio at December 31:                                                       

                                                                [Download Table]

                                                               1999        1998    
                                                             ---------   --------- 
                                                                                   
Total Notes Receivable...................................... $ 389,901   $ 307,740 
Less Notes Receivable sold..................................  (288,950)   (200,840)
                                                             ---------   --------- 
Gross on balance sheet Notes Receivable.....................   100,951     106,900 
                                                             =========   ========= 
Unencumbered Notes Receivable...............................    64,169      69,837 
Retained interest in Notes Receivable sold..................    36,782      37,063 
                                                             ---------   --------- 
Gross on balance sheet Notes Receivable.....................   100,951     106,900 
Less:                                                                              
  Deferred gross profit.....................................      (970)     (1,176)
  Allowance for doubtful accounts and sales returns.........   (15,179)    (12,363)
                                                             ---------   --------- 
Notes Receivable, net....................................... $  84,802   $  93,361 
                                                             =========   ========= 

Customers over 60 days past due on monthly payments are considered    
delinquent. Delinquent Notes Receivable represent 1.91% and 1.97% of Notes      
Receivable at December 31, 1999 and 1998, respectively.                         

     The activity in the allowance for doubtful accounts, recourse liability and
sales returns is as follows for the years ended December 31:                    

                                                                [Download Table]

                                                         1999      1998      1997   
                                                       --------   -------   ------- 
                                                                                    
Balances at beginning of period......................  $ 20,935   $15,240   $11,241 
Provision for doubtful accounts, sales returns and                                  
  recourse liability.................................    21,407    15,435    11,755 
Notes Receivable charged-off and sales returns net of                               
  Vacation Credits recovered.........................   (13,515)   (9,919)   (7,888)
Recoveries...........................................       260       179       132 
                                                       --------   -------   ------- 
Balances at end of period............................  $ 29,087   $20,935   $15,240 
                                                       ========   =======   ======= 
Allowance for doubtful accounts and sales returns....  $ 15,179   $12,363   $ 9,935 
Recourse liability on Notes Receivable sold..........    13,908     8,572     5,305 
                                                       --------   -------   ------- 
                                                       $ 29,087   $20,935   $15,240 
                                                       ========   =======   ======= 

(4) SALES OF NOTES RECEIVABLE                                                   

TW HOLDINGS                                                                     

The Company sold through TW Holdings, an 80% interest in certain Notes
Receivable to outside investors primarily through an agreement, as amended on   
June 18, 1998, expiring June 17, 1999 with Bank of America and other purchasers 
(Bank Group).                                                                   

   On June 17, 1999, the Company chose not to renew the revolving portion of
the $98 million Receivable Transfer Agreement with the Bank Group. In           
conjunction with the private placement of Notes Receivable in August 1999, the  
sold Notes Receivable were acquired by TRI Funding III, the credit facility was 
retired and the corporation was dissolved.                                      

   Total Notes Receivable sold and outstanding under this agreement amounted
to $0 and $61,000 at December 31, 1999 and 1998, respectively. The Company's    
retained interest included in Notes Receivable                                  

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

under this agreement in the accompanying consolidated balance sheets amounted to
$0 and $15,250 at December 31, 1999 and 1998, respectively.                     

    Subsequent to January 1, 1997 and prior to the Consolidation Transactions,
the Company's transfer of Notes Receivable under the agreement did not qualify  
for sales treatment under SFAS No. 125 and were treated as secured borrowings.  

     In conjunction with the Consolidation Transactions, the bylaws and articles
of incorporation of TW Holdings were amended such that the transfer of Notes    
Receivable from Trendwest to TW Holdings met the sales recognition criteria of  
SFAS No. 125 resulting in the transferred Notes Receivable no longer being      
assets of Trendwest. At June 30, 1997, Notes Receivable previously transferred  
and treated as secured borrowings aggregating $16.8 million were accounted for  
as sales of Notes Receivable.                                                   

TW HOLDINGS II                                                                  

 On April 15, 1999, the Company formed TW Holdings II and simultaneously
entered into a $75 million 364 day Receivables Purchase Agreement (Agreement)   
with Prudential Securities Credit Corporation (Prudential). The Agreement has a 
90% advance rate and is priced at LIBOR plus 100 basis points. The Agreement is 
subject to annual renewals with the current commitment expiring on April 13,    
2000. The 10% retained interest is recorded as Notes Receivable whereas the     
residual interest in the excess cash flows of Notes Receivable sold is          
classified as residual interest in Notes Receivable sold and is measured at fair
value.                                                                          

   Total Notes Receivable sold and outstanding under this Agreement amounted
to $40,000 and $0 at December 31, 1999 and 1998, respectively.                  

     Prudential has limited recourse to the Company's retained interest in Notes
Receivable sold under certain default provisions related primarily to           
representations and warranties that do not relate to credit defaults by the     
underlying obligors. The Company's retained interest included in Notes          
Receivable in the accompanying balance sheets amounted to $7,822 and $0 at      
December 31, 1999 and 1998, respectively.                                       

TRENDWEST FUNDING I                                                             

In 1996, the Company sold through Trendwest Funding I, certain Notes  
Receivable to a limited liability corporation (LLC) in exchange for cash, a     
subordinated note payable from the LLC and a residual interest in the excess    
cash flows of the LLC. The subordinated note payable from the LLC represents the
Company's retained interest in Notes Receivable which provide collateral to     
holders of notes issued by the LLC (the LLC noteholders) and is classified as   
Notes Receivable in the accompanying balance sheet. The residual interest in the
excess cash flows of the LLC is classified as residual interest in Notes        
Receivable sold and is measured at fair value.                                  

   The LLC noteholders and the LLC outside investor have recourse limited to
the Company's retained interest in Notes Receivable sold under certain default  
provisions related primarily to the delinquency status of the Notes Receivable  
sold. The Company's retained interest is included in Notes Receivable in the    
accompanying balance sheets, and amounted to approximately $4,386 and $8,146 at 
December 31, 1999 and 1998, respectively.                                       

   The LLC is controlled and 99% owned by an independent third party who has
made a substantial capital investment and has substantial risks and rewards of  
the assets of the LLC.                                                          

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TRENDWEST RESORTS, INC. 
AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

TRENDWEST FUNDING II                                                            

In 1998, the Company sold through Trendwest Funding II certain Notes  
Receivable to a special purpose entity (Entity) wholly-owned by Trendwest       
Funding II (TFI II) for cash, subordinated notes payable from the Entity and a  
residual interest in the excess cash flows of the Entity. TFI II issued two     
classes of senior and subordinated notes to institutional investors. The        
subordinated notes payable from the Entity represent the Company's retained     
interest in Notes Receivable which provides collateral to the holders of the    
notes issued by the Entity and is classified as Notes Receivable in the         
accompanying balance sheets. The residual interest in the excess cash flows of  
the Entity is classified as residual interest in Notes Receivable sold and is   
measured at fair value.                                                         

The Company's retained interest is included in Notes Receivable in the
accompanying balance sheets, and amounted to approximately $10,139 and $13,667  
at December 31, 1999 and 1998, respectively.                                    

TRI FUNDING III                                                                 

  In August 1999, the Company sold certain Notes Receivable to TRI Funding
III, Inc. (TRI Funding III), for cash, a subordinated note payable from TRI     
Funding III and a residual interest in the excess cash flows of TRI Funding III.
TRI Funding III issued six classes of senior notes to institutional investors.  
The subordinated note payable from TRI Funding III represents the Company's     
retained interest in Notes Receivable which provides collateral to the holders  
of the notes issued by the entity and is classified as Notes Receivable on the  
accompanying balance sheets. The residual interest in the excess cash flows is  
classified as residual interest in Notes Receivable sold and is measured at fair
value.                                                                          

The Company's retained interest is included in Notes Receivable in the
accompanying balance sheets, and amounted to approximately $14,435 and $0 at    
December 31, 1999 and 1998, respectively.                                       

(5) PROPERTY AND EQUIPMENT                                                      

Property and equipment, net, consists primarily of the following at   
December 31:                                                                    

                                                                [Download Table]

                                                               1999      1998  
                                                              -------   -------
                                                                               
Land........................................................  $ 2,379   $   877
Building and improvements...................................   15,846     3,612
Equipment, furniture and fixtures...........................    6,873     5,628
Leasehold improvements......................................    2,397     1,986
Construction in Progress....................................       78    11,120
                                                              -------   -------
                                                               27,573    23,223
Less accumulated depreciation and amortization..............    3,246     2,880
                                                              -------   -------
                                                              $24,327   $20,343
                                                              =======   =======

     Construction in progress at December 31, 1999 and 1998 includes capitalized
interest of $0 and $152, respectively.                                          

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TRENDWEST RESORTS, INC. 
AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

(6) DEFERRED GROSS PROFIT                                                       

  The Company accounts for certain Upgrade sales on the installment method
prior to satisfaction of minimum down payment requirements. Information for     
those transactions follows for the years ended December 31:                     

                                                                [Download Table]

                                                          1999    1998      1997  
                                                         ------  -------   ------ 
                                                                                  
Gross sales value....................................... $7,227  $ 6,496   $9,023 
                                                         ======  =======   ====== 
Gross profit deferred................................... $3,597  $ 3,043   $4,277 
Gross profit recognized.................................  3,178    4,344    4,961 
                                                         ------  -------   ------ 
Net gross profit deferred (recognized) during period.... $  419  $(1,301)  $ (684)
                                                         ======  =======   ====== 

Notes Receivable is presented net of deferred gross profit in the     
accompanying balance sheets. Such deferred amounts aggregated $970 and $1,176 at
December 31, 1999 and 1998, respectively.                                       

 Deferred gross profit related to Notes Receivable sold is combined with
allowance for recourse liability on Notes Receivable sold in the accompanying   
balance sheets. Such deferred amounts aggregated $3,303 and $2,678 at December  
31, 1999 and 1998, respectively.                                                

(7) CREDIT FACILITY                                                             

The Company has a $30,000 unsecured revolving credit agreement (Credit
Agreement) with a group of banks. The credit agreement provides for borrowings  
at the reference rate as announced by Bank of America, NT&SA or at LIBOR plus   
100 basis points and a commitment fee to the banks of 30 basis points per annum 
on the total unused amount of the commitment. Availability under the line of    
credit is subject to a borrowing base which is a percentage of unencumbered     
Notes Receivable and inventory, including property under development. Under the 
terms of the Credit Agreement, the Company is required to maintain certain      
interest coverage ratios and capitalization ratios; the Credit Agreement also   
imposes limitations on certain liens and carrying amounts of inventory. The     
Credit Agreement matures on February 12, 2001. Borrowings outstanding at        
December 31, 1999 and 1998 were $3,900 and $30,000 respectively, at weighted    
average interest rates of 8.50% and 6.64%, respectively.                        

(8) INCOME TAXES                                                                

     The provision for income taxes consist of the following for the years ended
December 31:                                                                    

                                                                [Download Table]

                                                        1999     1998      1997   
                                                       -------  -------   ------- 
                                                                                  
Federal:                                                                          
  Current............................................. $18,988  $12,731   $ 9,173 
  Deferred............................................     299      247     1,749 
                                                       -------  -------   ------- 
                                                        19,287   12,978    10,922 
                                                       -------  -------   ------- 
State:                                                                            
  Current.............................................   2,526    1,770       980 
  Deferred............................................     445      (25)     (314)
                                                       -------  -------   ------- 
                                                         2,971    1,745       666 
                                                       -------  -------   ------- 
          Total....................................... $22,258  $14,723   $11,588 
                                                       =======  =======   ======= 

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented  
below at December 31:                                                           

                                                                [Download Table]

                                                               1999       1998  
                                                              -------    -------
                                                                                
Deferred tax assets:                                                            
  Allowance for credit losses...............................  $ 9,853    $ 6,492
  Deferred gross profit.....................................    1,616      1,478
  Retained interest in Notes Receivable sold................    1,310      1,844
  Contract Servicing liability arising from Notes Receivable                    
     sold...................................................      962         --
  Other.....................................................      694        296
                                                              -------    -------
          Total deferred tax assets.........................   14,435     10,110
                                                              -------    -------
Deferred tax liability:                                                         
  Residual interest in Notes Receivable sold................   12,829      8,289
  Other assets..............................................       32        112
  Property and equipment....................................      840        418
  Other.....................................................      776        589
                                                              -------    -------
          Total deferred tax liability......................   14,477      9,408
                                                              -------    -------
          Total deferred (liability) asset, net.............  $   (42)   $   702
                                                              =======    =======

     In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax 
assets will not be realized. The ultimate realization of deferred tax assets is 
dependent upon the generation of future taxable income during the periods in    
which those temporary differences become deductible. Management considers the   
scheduled reversal of deferred tax liabilities, tax previously paid, projected  
future taxable income, and tax planning strategies in making this assessment.   

Based upon the level of historical taxable income and projections for 
future taxable income over the periods which the deferred tax assets are        
deductible, management believes it is more likely than not that the Company will
realize the benefits of these deferred tax assets.                              

    Income tax expense differed from the amounts computed by applying the U.S.
Federal income tax rate of 35% to pretax income as a result of the following for
the years ended December 31:                                                    

                                                                [Download Table]

                                                             1999   1998   1997 
                                                             ----   ----   ---- 
                                                                                
Income tax at Federal statutory rate........................ 35.0%  35.0%  35.0%
State tax, net of Federal benefit...........................  3.4    2.9    1.3 
Other.......................................................  0.6     .1    (.3)
                                                             ----   ----   ---- 
                                                             39.0%  38.0%  36.0%
                                                             ====   ====   ==== 

As the Company continues to expand sales operations and development   
activities into new tax jurisdictions, both domestic and international, it      
becomes subject to new tax rules and tax authorities. Often tax law and taxation
criteria require interpretation with regards to the Company's timeshare         
business, and while it is management's intent to investigate and comply with all
applicable tax laws, no assurance can be provided that taxing authorities in    
such jurisdictions will agree with the Company's assessment of the appropriate  
filing requirements and liability determinations.                               

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

(9) 401(k) PLANS                                                                

 Prior to August 15, 1997, the Company participated in the Parent 401(k)
plan. Company contributions, which are invested in Parent common stock, were at 
the discretion of the Board of Directors of the Parent and totaled $1,124 for   
the period from January 1, 1997 to August 15, 1997.                             

   On August 15, 1997, the Company ceased participation in the Parent 401(k)
plan and sponsored a new plan (Trendwest plan) covering all Trendwest employees.
Company contributions totaled $2,708, $2,402 and $765 for the years ended       
December 31, 1999 and 1998, and the period from August 15, 1997 to December 31, 
1997, respectively.                                                             

(10) EMPLOYEE STOCK PURCHASE PLAN                                               

   In July, 1999, the Shareholders of the Company approved the 1999 Employee
Stock Purchase Plan (Plan). The Plan allows employees to purchase up to $2,500  
of the Company's common stock at a 15% discount from the market price on the    
last business day of a quarter. There is no lookback provision for determining  
market value. Under the Plan, the Company issued 17,384 shares of common stock  
for the year ended December 31, 1999.                                           

(11) FOREIGN EXCHANGE CONTRACT                                                  

In October 1999, the Company entered into a forward exchange contract,
accounted for as a hedge, to receive $6,638 CDN at a rate of $1.4752 CDN/US on  
February 15, 2000.                                                              

   The Company is exposed to credit losses in the event of nonperformance by
the counterparties to its foreign exchange contracts. The Company does not      
obtain collateral to support financial instruments but monitors the credit      
standing of the counterparties.                                                 

(12) STOCK OPTION PLAN                                                          

     In 1997, the Board of Directors approved the adoption of an incentive stock
option plan providing for the award of incentive stock options to employees of  
the Company at the discretion of the Board of Directors. Under the plan, on the 
date of grant, the exercise price of the option must be at least equal to the   
market value of common stock for shares issued. The plan provides for grants up 
to 5% of the Company's outstanding shares (852,054 at December 31, 1999). Stock 
options vest ratably over five years and expire three years after becoming fully
vested.                                                                         

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

The following table summarizes stock option activity:                 

                                                        [Enlarge/Download Table]

                                                           NUMBER OF  WEIGHTED AVERAGE
                                                            SHARES     EXERCISE PRICE 
                                                           ---------  ----------------
                                                                                      
Options granted...........................................  492,000        $26.88     
Expired or canceled.......................................   (2,000)        26.88     
                                                            -------        ------     
BALANCE AT DECEMBER 31, 1997..............................  490,000        $26.88     
Options granted...........................................  122,500         12.02     
Expired or canceled.......................................   (7,500)        26.88     
                                                            -------        ------     
BALANCE AT DECEMBER 31, 1998..............................  605,000        $23.87     
Options granted...........................................  155,000         21.26     
Expired or canceled.......................................  (43,500)        23.67     
                                                            -------        ------     
BALANCE AT DECEMBER 31, 1999..............................  716,500        $23.32     
                                                            =======        ======     

    The following table summarizes information about stock options outstanding
under the Company's stock option plan at December 31, 1999:                     

                                                        [Enlarge/Download Table]

                                 OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE     
                  -------------------------------------------------  ----------------------------
                                WEIGHTED-AVERAGE                                     WEIGHTED-   
                                   REMAINING          WEIGHTED-                       AVERAGE    
   RANGE OF         NUMBER      CONTRACTUAL LIFE   AVERAGE EXERCISE    NUMBER      EXERCISE PRICE
EXERCISE PRICES   OUTSTANDING      (IN YEARS)      PRICE PER SHARE   EXERCISABLE     PER SHARE   
---------------   -----------   ----------------   ----------------  -----------   --------------
                                                                                                 
$11.38 - $13.00..   109,500           6.88              $11.41          20,900         $11.38    
$20.19 - $23.00..   155,000           7.74               21.44           1,800          20.19    
$23.19 - $26.88..   452,000           5.82               26.84         179,200          26.88    
---------------     -------           ----              ------         -------         ------    
$11.38 - $26.88..   716,500           6.40              $23.32         201,900         $25.21    

   At December 31, 1999 and 1998, exercisable options of 201,900 and 96,500,
respectfully, were outstanding at weighted average exercise prices of $25.21 and
$26.88, respectively. There were no exercisable options outstanding at December 
31, 1997.                                                                       

The Company applies APB Opinion No. 25 in accounting for its plan and,
accordingly, no compensation cost has been recognized for its stock options in  
the accompanying financial statements as the options had no intrinsic value at  
the grant date. Had the Company determined compensation cost based on the fair  
value of the options at the grant date, the Company's net income would have been
reduced to the pro forma amounts indicated below:                               

                                                                [Download Table]

                                                          YEAR ENDED DECEMBER 31,   
                                                       -----------------------------
                                                        1999       1998       1997  
                                                       -------    -------    -------
                                                                                    
Net income, as reported............................... $34,873    $24,031    $20,609
Net income, pro forma.................................  33,511     22,748     20,377
Basic EPS, as reported................................    2.04       1.38       1.32
Diluted EPS, as reported..............................    2.03       1.38       1.32
Basic EPS, pro forma..................................    1.96       1.31       1.31
Diluted EPS, pro forma................................    1.95       1.31       1.31

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

 The fair value of the options granted is estimated on the date of grant
using the Black-Scholes method with the following weighted average assumptions  
used:                                                                           

                                                        [Enlarge/Download Table]

                                                            YEAR ENDED DECEMBER 31,      
                                                         -----------------------------   
                                                          1999       1998       1997     
                                                         -------    -------    -------   
                                                                                         
Annual dividend yield...................................    0.0%       0.0%          0.0%
Volatility..............................................   54.3%      58.2%         45.0%
Risk free interest rate.................................    5.8%       4.5%          6.4%
Expected life........................................... 6 years    6 years    6 years   

 The weighted average grant date fair value per share of options granted
during the years ended December 31, 1999, 1998 and 1997 were $12.31, $6.15 and  
$12.94, respectively.                                                           

(13) FAIR VALUES OF FINANCIAL INSTRUMENTS                                       

SFAS No. 107, Disclosures About Fair Value of Financial Instruments,  
requires disclosure of fair value information about financial instruments,      
whether or not recognized in the balance sheet. The fair values of financial    
instruments are based on estimates using present value or other valuation       
techniques in cases where quoted market prices are not available. Those         
techniques are significantly affected by the assumptions used, including the    
discount rate and estimates of future cash flows. In that regard, the derived   
fair value estimates cannot be substantiated by comparison to independent       
markets and, in many cases, could not be realized in immediate settlement of the
instrument. SFAS No. 107 excludes certain financial instruments and all         
nonfinancial instruments from its disclosure requirements. Accordingly, the     
aggregate fair value amounts presented do not represent the underlying value of 
the Company.                                                                    

    Estimated fair values, carrying values and various methods and assumptions
used in valuing the Company's financial instruments are set forth below at      
December 31:                                                                    

                                                        [Enlarge/Download Table]

                                                                   1999                   1998         
                                                           ---------------------  ---------------------
                                                           CARRYING   ESTIMATED   CARRYING   ESTIMATED 
                                                            VALUE     FAIR VALUE   VALUE     FAIR VALUE
                                                           --------   ----------  --------   ----------
                                                                                                       
Financial assets:                                                                                      
  Cash(a)................................................. $ 1,760     $ 1,760    $     9     $     9  
  Restricted cash(a)......................................   2,987       2,987      2,351       2,351  
  Notes Receivable(a).....................................  85,772      85,772     94,537      94,537  
  Residual interest in Notes Receivable sold(b)...........  36,265      36,265     23,683      23,683  
  Due from Parent(c)......................................   3,058       3,058         --          --  
Financial liabilities:                                                                                 
  Due to Parent(c)........................................      --          --      5,688       5,688  
  Borrowing under bank line of credit(c)..................   3,900       3,900     30,000      30,000  
  Recourse liability on notes sold(a).....................  13,908      13,908      8,572       8,572  

---------------                                                                 
(a) The carrying value, prior to consideration of deferred gross profit in the  
   case of Notes Receivable, is considered to be a reasonable estimate of fair
value.                                                                  

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

(b) Fair value is determined using estimated discounted future cash flows taking
 into consideration anticipated prepayment rates. The Company utilizes the
    following assumptions in determining the fair value of its residual interest
in Notes Receivable sold at December 31:                                

                                                                [Download Table]

                                              1999            1998    
                                          ------------    ------------
                                                                      
Discount rate...........................     12.25%          12.25%   
Annual prepayment rate..................  7.2% to 9.0%    6.0% to 7.2%

(c) The carrying value reported approximates fair value due to the variable     
interest rates charged on the borrowings.                               

   Because no market exists for a portion of the financial instruments, fair
value estimates may be based on judgments regarding future instruments and other
factors. These estimates are subjective in nature and involve uncertainties and 
matters of significant judgment and therefore cannot be determined with         
precision. Changes in assumptions could significantly affect the estimates.     

The fair value of the Company's forward exchange contract was $92 at  
December 31, 1999, representing the difference between the currency trading     
value and the strike price of the forward exchange at that date.                

(14) RELATED PARTY TRANSACTIONS                                                 

NOTES RECEIVABLE                                                                

    The Company, on an ongoing basis, acquires from and sells Notes Receivable
to related parties at face value with full recourse. A summary of these         
transactions follows for the years ended December 31:                           

                                                                [Download Table]

                                                             1999   1998     1997 
                                                             ----  -------  ------
                                                                                  
Sale of Notes Receivable:                                                         
  Members of the Board of Directors of the Parent........... $ --  $   928  $  917
  I&I Holdings, a subsidiary of the Parent..................   --        7      55
Purchases of Notes Receivable:                                                    
  Eagle Crest Partners, Ltd., a subsidiary of the Parent....  473    2,709   7,134
  Running Y Resorts, Ltd., a subsidiary of the Parent.......  177    2,537   3,218
  Parent foundation.........................................   --       --   2,536
  I&I Holdings, a subsidiary of the Parent..................   --      843      --
  Members of the Board of Directors of the Parent...........   --   11,308      --

    With respect to Notes Receivable sold to members of the Board of Directors
of the Parent and I&I Holdings, the Company serviced such receivables without   
compensation.                                                                   

The outstanding balance of Notes Receivable sold to related parties   
amounted to $0 at December 31, 1999 and 1998.                                   

WORLDMARK                                                                       

(i) Management Contract                                                     

  The Company manages the resort properties transferred to WorldMark under
the terms of a management agreement which is subject to annual approval by the  
Members. Under the terms of the management agreement, the Company receives a    
management fee equal to the lesser of 15% of WorldMark's budgeted expenditures  
or the full net profit of WorldMark and is reimbursed for certain expenses. In  
addition, the                                                                   

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

Company is responsible for paying annual dues on Vacation Credits which it owns 
prior to their sale to customers and reimburses WorldMark for delinquent dues on
canceled memberships. A summary of these transactions for the years ended       
December 31 follows:                                                            

                                                                [Download Table]

                                                          1999     1998    1997 
                                                         -------  ------  ------
                                                                                
WorldMark:                                                                      
  Management fee income................................. $ 2,972  $1,707  $1,488
  Dues expense incurred by Trendwest....................   1,376   1,107     793
  Delinquent dues expense incurred by Trendwest.........     727     500     389
  Reimbursed salaries...................................  10,417   7,145   5,448
  Other reimbursed expenses.............................     763     779     612

(ii) Financial Information (Unaudited)                                      

  A summary of financial information for WorldMark as of and for the years
ended December 31, 1999 and 1998 is as follows:                                 

                                                                [Download Table]

                                                               1999      1998  
                                                             --------  --------
                                                                               
Cash and investment securities.............................. $ 13,762  $ 10,154
Member dues receivable......................................   15,977    12,607
Other assets................................................    2,618     2,336
                                                             --------  --------
          Total assets......................................   32,357    25,097
                                                             --------  --------
Deferred revenue............................................   18,158    13,647
Other liabilities...........................................    2,020     3,187
                                                             --------  --------
          Total liabilities.................................   20,178    16,834
                                                             --------  --------
          Net assets........................................ $ 12,179  $  8,263
                                                             ========  ========
Annual member assessments................................... $ 28,213  $ 20,978
                                                             ========  ========
Excess of revenues over expenses............................ $  3,915  $  2,957
                                                             ========  ========
Condominiums owned, at Developers' unamortized historical                      
  cost...................................................... $236,885  $181,196
                                                             ========  ========

    WorldMark maintains a reserve for replacement costs of depreciable assets.
Such reserves at December 31, 1999 and 1998, were $12.2 million and $8.3        
million, respectively.                                                          

PARENT AND OTHER RELATED PARTIES                                                

The Company has an open revolving credit line with its Parent to meet 
operating needs and invest excess funds. The credit line is $10 million and is  
payable on demand. It bears interest at the prime rate plus 1% per annum (9.50% 
and 8.75% at December 31, 1999 and 1998, respectively). Outstanding borrowings  
under this credit agreement were $0 and $5,688 at December 31, 1999 and 1998,   
respectively. The Company periodically lends excess funds to the Parent at the  
prime rate minus 2% (currently 6.50%). Outstanding lendings under this agreement
were $3,058 and $0 at December 31, 1999 and 1998, respectively.                 

     The Company also reimburses the Parent for administrative services received
and its share of insurance expenses. Also, through June 30, 1997 the Parent was 
named as the master servicer under the terms of certain sales of Notes          
Receivable and received a servicing fee of 1.75% per annum of the sold          
receivables to service the receivable. The Parent subcontracted the servicing to
Trendwest for a servicing fee of 1.25% per annum of                             

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

the sold receivable balance. Trendwest also received a servicing fee from TRI   
Funding Company I, LLC of 1.75% per annum of the sold receivables' balance and  
subsequent to June 30, 1997 is the named master servicer under the terms of     
certain sales of Notes Receivable. Trendwest, in turn, subcontracts components  
of the servicing to a third-party servicer. A summary of these transactions     
follows for the years ended December 31:                                        

                                                                [Download Table]

                                                           1999    1998    1997 
                                                          ------  ------  ------
                                                                                
Parent:                                                                         
  Interest income........................................ $   31  $  141  $  159
  Interest expense.......................................    129      26   1,945
  Insurance expense......................................  3,927   2,624   1,865
  Servicing fee expense, net.............................     --      --     240
TRI Funding Company I, LLC:                                                     
  Servicing fee income...................................     --      --   1,157

The Company is developing a resort in central Washington known as     
MountainStar in conjunction with its Parent. The Parent owns the land and the   
Company is acting as the developer. On behalf of its Parent, the Company has    
incurred costs of approximately $10,898 and $5,869 in 1999 and 1998,            
respectively, related to the project. All costs incurred to date will be        
reimbursed by the Parent.                                                       

 In 1998, the Company purchased 25 condominium units at a cost of $3,462
from Running Y Resorts.                                                         

(15) COMMITMENTS AND CONTINGENCIES                                              

PURCHASE COMMITMENTS                                                            

    The Company routinely enters into purchase agreements with various parties
to acquire and build resort properties. At December 31, 1999, the Company has   
outstanding purchase commitments of $75,845 related to properties under         
development.                                                                    

LITIGATION                                                                      

The Company is involved in various claims and lawsuits arising in the 
ordinary course of business. Management believes the outcome of these matters   
will not have a material adverse effect on the Company's financial position,    
results of operations or liquidity.                                             

LEASE COMMITMENTS                                                               

     The Company has various operating lease agreements, primarily for
 sales offices. These obligations generally have remaining noncancelable
   terms of five years or less. Future minimum lease payments are as follows
for the years ending December 31:                                     

                                                                [Download Table]
                                                                    
2000........................................................  $3,938
2001........................................................   3,327
2002........................................................   2,206
2003........................................................     876
2004........................................................     367
Thereafter..................................................      70

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TRENDWEST RESORTS, INC. 
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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

  Rental expense amounted to $4,225, $3,262 and $2,018 for the years ended
December 31, 1999, 1998 and 1997, respectively.                                 

(16) SEGMENT REPORTING                                                          

 The Company has two reportable segments; sales and financing. The sales
segment markets and sells Vacation Credits and Fractional Interests. The finance
segment is primarily responsible for servicing and collecting Notes Receivable  
originated in conjunction with the financing of sales of Vacation Credits and   
Fractional interest Sales. The finance segment does not include TW Holdings, TW 
Holdings II, Trendwest Funding I, Trendwest Funding II or Trendwest Funding III.
Management has chosen to evaluate the business based on sales and marketing     
activities as these are the primary drivers of the business.                    

    The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates           
performance based on profits or losses from sales and marketing activities on a 
pre-tax basis. Intersegment revenues are recorded at market rates as if the     
transactions occurred with third parties. Assets are not reported by segment.   

The following tables summarize the segment activity of the Company:   

                                                        [Enlarge/Download Table]

                                                                                     SEGMENT 
                                                           SALES    FINANCE  OTHER    TOTAL  
                                                          --------  -------  ------  --------
                                                                                             
YEAR ENDED DECEMBER 31, 1999:                                                                
External revenue......................................... $234,665  $ 4,463  $3,710  $243,838
Interest revenue -- net..................................       --    5,552      --     5,552
Interest revenue -- intersegment.........................       --    3,839      --     3,839
Intersegment revenue.....................................       --    1,605      --     1,605
                                                          --------  -------  ------  --------
  Segment revenue........................................ $234,665  $15,459  $3,710  $253,834
Segment profit........................................... $ 40,035  $10,890  $2,054  $ 52,979
SIGNIFICANT NON-CASH ITEMS:                                                                  
Provision for doubtful accounts, sales returns and                                           
  recourse liability..................................... $ 21,407       --      --  $ 21,407
Gain on sale of property and equipment...................       --  $   869      --  $    869

                                                        [Enlarge/Download Table]

                                                                                     SEGMENT 
                                                           SALES    FINANCE  OTHER    TOTAL  
                                                          --------  -------  ------  --------
                                                                                             
YEAR ENDED DECEMBER 31, 1998:                                                                
External revenue......................................... $170,817  $ 2,985  $2,329  $176,131
Interest revenue -- net..................................       --    4,132      --     4,132
Interest revenue -- intersegment.........................       --    2,870      --     2,870
Intersegment revenue.....................................       --      976      --       976
  Segment revenue........................................ $170,817  $10,963  $2,329  $184,109
                                                          --------  -------  ------  --------
Segment profit........................................... $ 25,205  $ 7,651  $  929  $ 33,785
SIGNIFICANT NON-CASH ITEMS:                                                                  
Provision for doubtful accounts, sales returns and                                           
  recourse liability..................................... $ 15,435       --      --  $ 15,435

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TRENDWEST RESORTS, INC. 
AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
DECEMBER 31, 1999, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS) 

                                                        [Enlarge/Download Table]

                                                                                      SEGMENT 
                                                            SALES    FINANCE  OTHER    TOTAL  
                                                           --------  -------  ------  --------
                                                                                              
YEAR ENDED DECEMBER 31, 1997:                                                                 
External revenue.......................................... $128,835  $1,769   $2,032  $132,636
Interest revenue -- net...................................       --   3,563       --     3,563
Interest revenue -- intersegment..........................       --     681       --       681
Intersegment revenue......................................       --     960       --       960
                                                           --------  ------   ------  --------
  Segment revenue......................................... $128,835  $6,973   $2,032  $137,840
Segment profit............................................ $ 23,779  $4,412   $  924  $ 29,115
SIGNIFICANT NON-CASH ITEMS:                                                                   
Provision for doubtful accounts, sales returns and                                            
  recourse liability...................................... $ 11,755      --       --  $ 11,755

The following table provides a reconciliation of segment revenues and 
profits to the consolidated amounts:                                            

                                                        [Enlarge/Download Table]

                                                           YEAR ENDED DECEMBER 31,     
                                                        ------------------------------ 
                                                          1999       1998       1997   
                                                        --------   --------   -------- 
                                                                                       
Segment revenue........................................ $253,834   $184,109   $137,840 
Interest expense reported net of interest income.......      442        353      1,739 
Elimination of intersegment revenue....................   (5,444)    (3,846)    (1,641)
Finance subsidiaries revenue...........................   25,644     20,341     13,649 
                                                        --------   --------   -------- 
     CONSOLIDATED REVENUE.............................. $274,476   $200,957   $151,587 
                                                        ========   ========   ======== 
Segment profit......................................... $ 52,979   $ 33,785   $ 29,115 
Corporate overhead not included in segment reporting...  (15,091)   (11,463)    (8,699)
Finance subsidiaries profit............................   19,243     16,432     11,781 
                                                        --------   --------   -------- 
  CONSOLIDATED PRE-TAX INCOME.......................... $ 57,131   $ 38,754   $ 32,197 
                                                        ========   ========   ======== 

    All of the Company's revenue from external customers is derived from sales
within the United States.                                                       

(17) SUBSEQUENT EVENT                                                           

On January 4, 2000, the Company created a wholly-owned special purpose
finance company, TW Holdings III, Inc. At the same time, the Company entered    
into a 364-day $75 million commercial paper-backed Receivables Warehouse        
facility (Facility) with Banc One Capital Markets. The Facility has an interest 
rate based on the commercial paper rate plus 50 basis points.                   

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PART IV 

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K       

(a). The following documents are filed as part of this report:        

                                                                [Download Table]

EXHIBIT                                                              
NUMBER                           DESCRIPTION                         
-------                          -----------                         
                                                                     
 3.1     Amended and Restated Articles of Incorporation of the       
         Registrant, dated July 2, 1997.(1)                          
 3.2     Amended and Restated Bylaws of the Registrant.(1)           
10.1     Management Agreement (Fourth Amended) between the Registrant
         and WorldMark, the Club ("WorldMark"), dated September 30,  
         1994.(1)                                                    
10.2     Software Support and Maintenance Agreement between the      
         Registrant and Sage Systems, Inc. ("Sage"), dated           
                             , 1994.(1)                              
10.3     Service Agreement between the Registrant and Sage, dated    
         January 1, 1996.(1)                                         
10.4     Software Transfer Agreement between the Registrant, Sage and
         James McBride, Sr., dated August, 1994.(1)                  
10.5     Escrow Agreement between the Registrant, Club Esprit        
         (predecessor to WorldMark) and Sage, dated as of October 25,
         1990.(1)                                                    
10.6     Form of WorldMark Retail Installment Contract Vacation Owner
         Agreement.(1)                                               
10.7     Indenture among the Registrant, TRI Funding Company I,      
         L.L.C. and LaSalle National Bank, dated as of March 1,      
         1996.(1)                                                    
10.8     Servicing Agreement among the Registrant, TRI Funding       
         Company I, L.L.C., Sage and LaSalle National Bank, dated as 
         of March 1, 1996.(1)                                        
10.9     Purchase and Sale Agreement among the Registrant, Trendwest 
         Funding I, Inc., TWH Funding I, Inc. and TRI Funding Company
         I, L.L.C., dated March 1, 1996.(1)                          
10.10    Nonexclusive Limited Assignment among the Registrant, Eagle 
         Crest Partners, Ltd. and WorldMark, dated September 20,     
         1996.(1)                                                    
10.11    Nonexclusive Limited Assignment among the Registrant,       
         Running Y, Inc. and WorldMark dated September 20, 1996.(1)  
10.13    Articles of Incorporation of WorldMark, the Club, dated     
         December 10, 1992.(1)                                       
10.14    Bylaws of WorldMark, dated December 2, 1994.(1)             
10.15    Form of Employment Agreement between William F. Peare and   
         the Registrant.(1)                                          
10.16    Form of Employment Agreement between Jeffery P. Sites and   
         the Registrant.(1)                                          
10.17    Trendwest Resorts, Inc. 1997 Employee Stock Option Plan.(1) 
10.18    Indenture among the Registrant, TRI Funding II, Inc. and    
         LaSalle National Bank, dated as of March 1, 1998.(3)        
10.19    Series 1998-1 Supplement Dated as of March 1, 1998 to       
         Indenture Dated as of March 1, 1998 among the Registrant,   
         Trendwest Funding II, Inc. and LaSalle National Bank.(3)    
10.20    Servicing Agreement among the Registrant, TRI Funding II,   
         Inc., Sage Systems, Inc. and LaSalle National Bank, dated as
         of March 1,1998.(3)                                         
10.21    Purchase and Sale Agreement between the Registrant,         
         Trendwest Funding II, Inc. and TRI Funding II, Inc.(3)      
10.22    Receivables purchase agreement among the Registrant, TRI    
         Funding Company I, L.L.C., TW Holdings Inc. and Trendwest   
         Funding II, Inc., Dated as of March 1, 1998.(3)             
10.23    Credit Agreement among the Registrant, Bank of America      
         National Trust and Savings Association as Agent, and Other  
         Financial Institutions Party Hereto, Dated as of February   
         12, 1998.(3)                                                
10.24    Amendment Number Two Dated June 18, 1998 to the Second      
         Amended and Restated Receivables Transfer Agreement between 
         the Registrant, Seafirst Bank and other purchasers, TW      
         Holdings, and Bank of America Dated June 18, 1998.(3)       
10.25    Purchase Agreement among Registrant, Roderick C. Wendt, and 
         Richard L. Wendt, dated September 22, 1998.(3)              
10.26    Purchase Agreement among Registrant, Roderick C. Wendt, and 
         Richard L. Wendt, dated October 13, 1998.(3)                

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                                                                [Download Table]

EXHIBIT                                                              
NUMBER                           DESCRIPTION                         
-------                          -----------                         
                                                                     
10.27    Amendment to Non Exclusive Limited Assignment agreement     
         among Registrant and Eagle Crest, Inc. dated September 20,  
         1998.                                                       
10.28    Receivable Sale Agreement between Registrant and TW Holdings
         II Dated as of April 15, 1999.(4)                           
10.29    Credit Agreement between Registrant, TW Holdings II as      
         Borrower and Prudential Securities Credit Corporation as    
         lender dated as of April 15, 1999.(4)                       
10.30    Trust Indenture between Registrant, TW Holdings II, Sages   
         Systems, Inc., and LaSalle National Bank Dated as of April  
         15, 1999.(4)                                                
10.31    Receivables Purchase Agreement among Registrant, TRI Funding
         II, Inc., TRI Funding Company I, LLC, TW Holdings, Inc., TW 
         Holdings II, Inc., and TRI Funding III, Inc., dated as of   
         August 1, 1999.(4)                                          
10.32    Indenture among Registrant, TRI Funding III, Inc. and       
         Norwest Bank Minnesota, National Association Dated as of    
         August 1, 1999.(4)                                          
10.33    Servicing Agreement among Registrant, TRI Funding III, Inc. 
         and Norwest Bank Minnesota, National Association Dated as of
         August 1, 1999.(4)                                          
10.34    Purchase Agreement Between TRI Funding III, Inc., and       
         Prudential Securities Incorporated Dated August 18, 1999.(4)
11.1     Statement re Computation of Earnings per Share -- See note 1
         of "Notes to Combined and Consolidated financial            
         Statements."                                                
13.1     Annual Report to Shareholders.(2)                           
21.1     List of all Subsidiaries of the Registrant.(1)              
23.1     Consent of KPMG LLP.                                        
24.1     Power of Attorney from officers and directors (contained on 
         signature page).                                            
27.1     Financial Data Schedule (one year).                         

---------------                                                                 
(1) Incorporated by reference to the Company's Registration Statement on Form   
S-1 (File No. 333-26861).                                               

(2) Incorporated by reference to the Company's Annual Report to Shareholders.   

(3) Incorporated by reference to the Company's 1998 quarterly filings on Form   
10-Q (File No. 333-26861).                                              

(4) Incorporated by reference to the Company's 1999 quarterly filings on Form   
10-Q (File No. 333-26861).                                              

(b) Reports on Form 8-K                                               

No reports on Form 8-K were filed by the Company during the year ended
December 31, 1999.                                                              

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SIGNATURES

 Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Trendwest Resorts, Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Redmond,   
State of Washington, on March 29, 2000.                                         

                           TRENDWEST RESORTS, INC.

                                By:     /s/ JEFFERY P. SITES
                                            ------------------------------------
                                            Jeffery P. Sites
                                            Executive Vice President

                                                        [Enlarge/Download Table]
                                                                                                    
                /s/ WILLIAM F. PEARE                     Executive Vice President,    March 29, 2000
-----------------------------------------------------     Chief Executive Officer                   
                  William F. Peare                             and Director                         
                                                       (Principal Executive Officer)                

                /s/ JEFFERY P. SITES                     Executive Vice President,    March 29, 2000
-----------------------------------------------------     Chief Operating Officer                   
                  Jeffery P. Sites                             and Director                         

                /s/ GARY A. FLORENCE                   Vice President, Treasurer and  March 29, 2000
-----------------------------------------------------     Chief Financial Officer                   
                  Gary A. Florence                     (Principal Financial Officer)                

                 /s/ JEROL E. ANDRES                             Director             March 29, 2000
-----------------------------------------------------                                               
                   Jerol E. Andres                                                                  

                /s/ HARRY L. DEMOREST                            Director             March 29, 2000
-----------------------------------------------------                                               
                  Harry L. Demorest                                                                 

               /s/ MICHAEL P. HOLLERN                            Director             March 29, 2000
-----------------------------------------------------                                               
                 Michael P. Hollern                                                                 

              /s/ DOUGLAS P. KINTZINGER                          Director             March 29, 2000
-----------------------------------------------------                                               
                Douglas P. Kintzinger                                                               

                 /s/ LINDA M. TUBBS                              Director             March 29, 2000
-----------------------------------------------------                                               
                   Linda M. Tubbs                                                                   

                /s/ RODERICK C. WENDT                            Director             March 29, 2000
-----------------------------------------------------                                               
                  Roderick C. Wendt                                                                 

55

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		12/10/92		53
		9/30/94		53
		12/2/94		53
		1/1/96		53
		3/1/96		53
		9/20/96		53
		12/31/96		32
		1/1/97		41		45
		6/30/97		2		50
		7/2/97		53
		8/15/97		3		45			424B4
		12/31/97		20		52
		2/12/98		53
		3/1/98		53
		3/12/98		34
		6/18/98		40		53
		6/29/98		20
		7/6/98		21
		9/20/98		54
		9/22/98		53
		10/13/98		53
		12/31/98		7		52			10-K
		1/1/99		23		39
		4/15/99		41		54
		6/17/99		22		40
		6/28/99		19
		8/1/99		54
		8/18/99		54
		10/22/99		2
For The Period Ended		12/31/99		1		54			10-K/A
		1/4/00		52
		2/1/00		29
		2/15/00		45
		2/28/00		15
		3/20/00		1
Filed On		3/29/00		55
Filed As Of		3/30/00							10-K/A
		4/13/00		22		41
		6/15/00		23		39
		2/12/01		23		43
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