SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q


[X]    Quarterly report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

       For the quarterly period ended September 30, 2001

[  ]   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 000-22979


                             Trendwest Resorts, inc.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


             Oregon                                      93-1004403
--------------------------------               --------------------------------
  (State or other jurisdiction                        (I.R.S. Employer
        of incorporation)                            Identification No.)

9805 Willows Road
Redmond, Washington                                                      98052
-------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)

(Registrant's telephone number, including area code)    (425) 498-2500


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

The number of shares of the registrant's no-par voting common stock outstanding
as of November 5, 2001: 37,931,826 shares.


<PAGE>




PART I - FINANCIAL INFORMATION

Item I - Financial Statements

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                             (dollars in thousands)
                                   (Unaudited)

<Table>
<Caption>
                                                                                    September 30,        December 31,
                                   Assets                                                2001                2000
                                                                                   -----------------    ----------------
     <S>                                                                       <C>                      <C>
     Cash                                                                      $             653                  404
     Restricted cash                                                                      10,341                7,201
     Notes Receivable, net of allowance for doubtful accounts, sales returns
        and deferred gross profit                                                        114,635               76,197
     Accrued interest and other receivables                                                8,922                8,171
     Residual interest in Notes Receivable sold                                           70,901               52,043
     Inventories                                                                         124,240              104,218
     MountainStar development                                                             66,397               56,536
     Property and equipment, net                                                          36,878               29,948
     Refundable income taxes                                                                  --                5,688
     Other assets                                                                          7,211                6,599
                                                                                   -----------------    ----------------
                     Total assets                                              $         440,178              347,005
                                                                                   =================    ================

                    Liabilities and Shareholders' Equity

     Liabilities:

     Accounts payable and bank overdraft                                       $           4,990                9,706
     Accrued liabilities                                                                  34,573               21,538
     Accrued construction in progress                                                      3,394                2,855
     Due to Parent and Affiliate                                                           7,483                  419
     Note payable to Parent                                                               15,515               17,731
     Borrowing under bank line of credit                                                  77,497               48,441
     Mortgage payable                                                                     11,635               11,696
     Allowance for recourse liability and deferred gross profit on Notes
        Receivable sold                                                                   35,457               26,846
     Current income taxes payable                                                          1,027                   --
     Deferred income taxes                                                                   538                  330
                                                                                   -----------------    ----------------
                     Total liabilities                                                   192,109              139,562

     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 37,885,851 and 37,795,496 shares at
        September 30, 2001 and December 31, 2000, respectively                            54,324               54,119
     Accumulated other comprehensive loss                                                 (1,722)                (522)
     Retained earnings                                                                   195,467              153,846
                                                                                   -----------------    ----------------
                     Total shareholders' equity                                          248,069              207,443

     Commitments and contingencies
                                                                                   -----------------    ----------------

                     Total liabilities and shareholders' equity                $         440,178              347,005
                                                                                   =================    ================

</Table>

See accompanying notes to the condensed consolidated financial statements.


                                       2
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                   Condensed Consolidated Statements of Income
                  (dollars in thousands, except per share data)
                                   (Unaudited)
<Table>
<Caption>
                                                                  Three months ended                  Nine months ended
                                                                    September 30,                       September 30,
                                                          ----------------------------------- -----------------------------------
                                                               2001               2000             2001               2000
                                                          ----------------  ----------------- ----------------   ----------------
<S>                                                     <C>                   <C>                <C>                <C>
Revenues:
     Vacation Credit and Fractional Interest sales, net $       111,955             82,808          314,950            216,410
     Finance income                                               5,467              4,725           14,126             13,001
     Gains on sales of Notes Receivable                           8,896              5,040           21,729             13,096
     Resort management services                                     919              1,081            2,871              3,881
     Other                                                        1,924              1,223            5,368              3,730
                                                          ----------------  ----------------- ----------------   ----------------

             Total revenues                                     129,161             94,877          359,044            250,118
                                                          ----------------  ----------------- ----------------   ----------------

Costs and operating expenses:
     Vacation Credit and Fractional Interest cost of
        sales                                                    30,471             22,253           87,498             53,598
     Resort management services                                     379                424            1,183              1,361
     Sales and marketing                                         53,236             38,529          148,000            102,715
     General and administrative                                  10,817              8,633           31,290             23,687
     Provision for doubtful accounts and recourse
        liability                                                 8,504              6,060           23,188             15,491
     Interest                                                       195                128              418                225
                                                          ----------------  ----------------- ----------------   ----------------

             Total costs and operating expenses                 103,602             76,027          291,577            197,077
                                                          ----------------  ----------------- ----------------   ----------------

             Income before income taxes                          25,559             18,850           67,467             53,041

Income tax expense                                                9,760              7,300           25,846             20,869
                                                          ----------------  ----------------- ----------------   ----------------

             Net income                                 $        15,799             11,550           41,621             32,172
                                                          ================  ================= ================   ================


Basic net income per common share                       $           .42                .30             1.10                .84

Diluted net income per common share                                 .41                .30             1.08                .84

Weighted average shares of common stock and
dilutive potential common stock outstanding:

         Basic                                               37,952,933         38,063,024       37,896,743         38,120,016

         Diluted                                             38,595,893         38,154,720       38,471,154         38,235,254

</Table>

See accompanying notes to the condensed consolidated financial statements.


                                       3
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows
                             (dollars in thousands)
                                   (Unaudited)
<Table>
<Caption>
                                                                                      Nine months ended September 30,
                                                                                 -------------------------------------------
                                                                                        2001                    2000
                                                                                 -------------------     -------------------
<S>                                                                          <C>                           <C>
Cash flows from operating activities:
     Net income                                                              $             41,621                  32,172
     Adjustments to reconcile net income to net cash provided by (used
        in) operating activities:
        Depreciation and amortization                                                        3,281                  2,005
        Amortization of residual interest in Notes Receivable sold                          13,639                  10,283
        Provision for doubtful accounts, sales returns and recourse
           liability                                                                        29,397                  19,685
        Recoveries of Notes Receivable charged off                                             281                     215
        Residual interest in Notes Receivables sold                                        (30,608)                (15,395)
        Unrealized loss (gain) on residual interest in Notes Receivable
           sold                                                                              1,709                    (573)
        Contract servicing liability arising from sale of Notes Receivable                   3,350                      --
        Amortization of servicer liability                                                  (1,340)                   (536)
        Change in deferred gross profit                                                      2,139                     631
        Deferred income tax expense (benefit)                                                  454                  (2,348)
        Issuance of Notes Receivable                                                      (276,490)               (189,663)
        Proceeds from sale of Notes Receivable                                             190,064                 152,224
        Proceeds from repayment of Notes Receivable                                         47,816                  44,789
        Purchase of Notes Receivable                                                       (15,970)                (13,002)
        Purchase of Notes Receivable from Affiliate                                         (8,625)                     --
        Changes in certain assets and liabilities:
              Restricted cash                                                               (3,140)                 (3,130)
              MountainStar development                                                      (9,861)                (29,773)
              Inventories                                                                  (21,941)                (48,382)
              Accounts payable and accrued liabilities                                       6,927                  14,428
              Income taxes payable                                                           1,084                      --
              Refundable income taxes                                                        5,688                      --
              Other                                                                         (1,612)                (7,832)
                                                                                 -------------------     -------------------

          Net cash used in operating activities                                           (22,137)                (34,202)
                                                                                 -------------------     -------------------

Cash flows from investing activities:
     Purchase of property and equipment                                                    (7,631)                 (4,596)
                                                                                 -------------------     -------------------

          Net cash used in investing activities                                            (7,631)                 (4,596)
                                                                                 -------------------     -------------------

Cash flows from financing activities:
     Net borrowing under bank line of credit and other                                      28,927                  42,056
     Repayments of note payable to Parent                                                   (2,216)                     --
     Repayments of mortgage payable                                                            (61)                     --
     Increase (decrease) in due to Parent and Affiliate                                      2,823                  (1,330)
     Repurchase of common stock                                                             (2,380)                 (3,948)
     Issuance of common stock                                                                2,585                     476
                                                                                 -------------------     -------------------

          Net cash provided by financing activities                                         29,678                  37,254
                                                                                 -------------------     -------------------

Net decrease in cash                                                                           (90)                 (1,544)

Effect of foreign currency exchange rates on cash                                              339                     (93)

Cash at beginning of period                                                                    404                   1,760
                                                                                 -------------------     -------------------

Cash at end of period                                                        $                653                     123
                                                                                 ===================     ===================

</Table>

See accompanying notes to the condensed consolidated financial statements.


                                       4
<PAGE>
                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows
                                   (continued)
                             (dollars in thousands)
                                   (unaudited)
<Table>
<Caption>
                                                                                      Nine months ended September 30,
                                                                                 -------------------------------------------
                                                                                        2001                    2000
                                                                                 -------------------     -------------------
<S>                                                                              <C>                      <C>
Supplemental disclosures of cash flow information - cash paid during the period
     for:
        Interest (excluding capitalized amounts of $5,463 and $1,485,
          respectively)                                                          $             53                      --
        Income taxes, net of refunds received                                              21,203                  23,787

Supplemental schedule of noncash investing and financing activities:
   Issuance of note payable to parent in connection with the MountainStar
     development acquisition                                                                   --                  17,731
   Reduction in retained earnings for the excess of the purchase price of
     the MountainStar development over the parent's historical cost                            --                   3,300
   Extinguishment of receivable from parent in connection with the
     MountainStar development acquisition                                                      --                   4,869
   Issuance of note payable to affiliate in connection with the
     acquisition of certain notes receivable and inventory                                  4,241                      --

</Table>

See accompanying notes to the condensed consolidated financial statements.



                                       5
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES
                       Notes to the Condensed Consolidated
                              Financial Statements
                 (dollars in thousands except per share amounts)
                                   (Unaudited)

Note 1 - Background

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) and WorldMark South Pacific
Club  (WorldMark  South  Pacific)  (collectively  "The  Clubs").  WorldMark is a
non-profit mutual benefit corporation  organized by Trendwest in 1989 to provide
an innovative,  flexible vacation ownership system. WorldMark South Pacific is a
registered managed investment scheme regulated by the Australian  Securities and
Investments  Commission ("ASIC"). The Company presently sells Vacation Ownership
interests in the United States, Fiji, and Australia,  primarily through off-site
sales offices.  Fractional Interests are sold on-site at the Depoe Bay resort in
Oregon.

These  condensed  consolidated  financial  statements  do  not  include  certain
information and footnotes required by accounting  principles  generally accepted
in the United States of America for complete financial  statements.  However, in
the opinion of  management,  all  adjustments  considered  necessary  for a fair
presentation have been included and are of a normal recurring nature.  Operating
results  for the  three  and nine  months  ended  September  30,  2001,  are not
necessarily  indicative  of the results that may be expected for the fiscal year
ending December 31, 2001.

These  statements  should  be read in  conjunction  with the  audited  financial
statements and footnotes included in the Company's 2000 Form 10-K filed with the
Securities  and Exchange  Commission  (SEC).  The  accounting  policies  used in
preparing  these  financial  statements are the same as those  described in such
Form 10-K, unless otherwise noted herein.

Note 2 - New Accounting Pronouncements

Effective  January 1, 2001, the Company adopted Financial  Accounting  Standards
Board  Statement No. 133  "Accounting  for  Derivative  Instruments  and Hedging
Activities,"  ("FAS 133") which  requires  that all  derivative  instruments  be
recorded on the balance  sheet at fair  value.  The  adoption of FAS 133 did not
have a material  effect as of the adoption date of January 1, 2001,  nor for the
three and nine month  periods ended  September 30, 2001. On the date  derivative
contracts are entered into, the Company  designates the derivative as either (a)
a  hedge  of  the  fair  value  of a  recognized  asset  or  liability  or of an
unrecognized  firm  commitment  (fair value hedge),  (b) a hedge of a forecasted
transaction  or of the  variability of cash flows to be received or paid related
to a  recognized  asset or  liability  (cash flow  hedge),  (c) a hedge of a net
investment  in  a  foreign   operation  (net   investment   hedge),   or  (d)  a
non-accounting hedge. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive  income,  depending on whether
the  derivative  is  designated  as part of a hedge  transaction  and, if it is,
depending on the type of hedge transaction.  For fair value hedge  transactions,
changes in fair value of the derivative  instrument are generally  offset in the
income  statement  by changes in the fair  value of the item being  hedged.  For
cash-flow  hedge  transactions,  changes  in the fair  value  of the  derivative
instrument  are  reported  in  other  comprehensive  income  to  the  extent  of
effectiveness. For net investment hedge transactions,  changes in the fair value
are recorded as a component of the foreign currency  translation account that is
also included in other comprehensive income.

The gains and losses on cash flow hedge  transactions that are reported in other
comprehensive  income  are  reclassified  to  earnings  in the  periods in which
earnings are affected by the  variability  of the cash flows of the hedged item.
The  ineffective  portions  of all  hedges  are  recognized  in  current  period
earnings.  From time to time, the Company acquires resorts outside of the United
States, where payment for the resort is denominated in a foreign currency. It is
the  Company's  policy to assess such  transactions  and ensure that any foreign
exchange risks associated with the transaction are appropriately  managed.  As a
result  of this,  the  Company  periodically  enters  into  economic  hedges  by
purchasing  foreign  exchange  contracts as a hedge against foreign  denominated
commitments to purchase resort properties. As of September 30, 2001, the Company
had a foreign exchange contract with a notional amount of approximately  $16,919
CDN at a rate of $1.4905  CDN/US for fixed purchase  commitments.  The impact of
recording the fair value of the forward  contract was a loss of $417, net of tax
benefit, and has been included in other comprehensive income for the nine months
ended September 30, 2001.

                                       6
<PAGE>

In September  2000,  the FASB issued SFAS No. 140,  which replaces SFAS No. 125,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities  and rescinds SFAS No. 127,  Deferral of the  Effective  Date of
Certain  Provisions  of FASB  Statement  No. 125.  SFAS 140  revises  SFAS 125's
standards for accounting for  securitizations  and other  transfers of financial
assets and collateral and requires certain disclosures, but it carries over most
of SFAS 125's  provisions  without  reconsideration.  SFAS 140 is effective  for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring  after March 31, 2001, and for  recognition  and  reclassification  of
collateral  and for  disclosures  relating to  securitization  transactions  and
collateral for fiscal years ending after December 15, 2000. The Company  adopted
the new disclosure  provisions  required under SFAS 140 as of December 31, 2000,
and the  remaining  provisions  as of April 1,  2001.  SFAS 140 is to be applied
prospectively with certain  exceptions.  The adoption of SFAS 140 did not have a
material impact on the Company's consolidated results of operations or financial
position.

In July, 2001, the FASB issued  Statement No. 141,  Business  Combinations,  and
Statement No. 142, Goodwill and Other Intangible Assets.  Statement 141 requires
that all business  combinations  be  accounted  for under a single  method,  the
purchase method. Use of the pooling-of-interests  method is no longer permitted.
Statement  141  requires   that  the  purchase   method  be  used  for  business
combinations initiated after June 30, 2001. Statement 142 requires that goodwill
no longer be amortized to earnings, but instead be reviewed for impairment.  The
amortization  of goodwill  ceases upon adoption of the Statement,  which will be
adopted by the Company on January 1, 2002. The adoption of this statement is not
expected to have a material impact on the Company's financial statements.

Note 3 - Impairment  of  Long-Lived  Assets  and  Long-Lived  Assets
         to be  Disposed  of

Long-lived  assets are reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison  of the  carrying  amount of the  assets to the future net cash flows
expected  to be  generated  by the asset.  If such assets are  considered  to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying  amount exceeds the fair value of the assets.  Assets to be disposed of
are reported at the lower of the carrying amount or the fair value of the assets
less the costs to sell.

Note 4 -- Foreign Currency Translation

Assets and liabilities in foreign functional currencies are translated into U.S.
dollars  based  upon the  prevailing  currency  exchange  rates in effect at the
balance sheet date,  while revenues and expenses are translated at average rates
prevailing  during the period.  Translation gains and losses are not included in
the  determination of net income but are accumulated in a separate  component of
shareholders' equity. Transaction gains or losses are recorded in the results of
operations  and were  insignificant  for the three and nine month  periods ended
September 30, 2001.

Note 5 -- Comprehensive Income

The following  illustrates  the  reconciliation  of net income to  comprehensive
income:

<Table>
<Caption>
                                                                  Three months ended               Nine months ended
                                                                     September 30,                   September 30,
                                                              ----------------------------    ----------------------------
                                                                 2001            2000            2001            2000
                                                              ------------    ------------    ------------    ------------
<S>                                                          <C>               <C>             <C>              <C>
Net income                                                   $     15,799          11,550          41,621          32,172
Other comprehensive loss:
     Change in cumulative effect of foreign currency
         translation                                                (272)           (515)           (783)           (607)
     Unrealized derivative losses, net of tax effect                (307)              --           (417)              --
                                                              ------------    ------------    ------------    ------------
Comprehensive income                                       $       15,220          11,035          40,421          31,565
                                                              ============    ============    ============    ============
</Table>

                                       7
<PAGE>

Note 6 - Stock Split

On February  21, 2001,  the Board of Directors  authorized a 3 for 2 stock split
for  shareholders  of record on March 15, 2001,  payable on March 29,  2001.  On
November 8, 2001,  the Board of  Directors  authorized a 3 for 2 stock split for
shareholders  of record on November  29,  2001,  payable on December  14,  2001.
Shares  outstanding and earnings per share figures  contained in this Form 10-Q,
including the condensed  consolidated financial statements have been adjusted to
reflect both stock splits as if they were  effective for all periods  presented.
See Note 15 - Subsequent Events.

Note 7 - Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the
current presentation.

Note 8 - Basic and Diluted Net Income Per Common Share

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

<Table>
<Caption>
                                                       Three months ended                    Nine months ended
                                                          September 30,                        September 30,
                                                ----------------------------------  ------------------------------------
                                                     2001               2000             2001                2000
                                                ----------------   ---------------  ---------------     ----------------
<S>                                             <C>                 <C>              <C>                 <C>
Basic
Weighted average shares outstanding                37,952,933         38,063,024       37,896,743          38,120,016

Diluted
Effect of dilutive securities                         642,960             91,696          574,411             115,238
                                                ----------------   ---------------  ---------------     ----------------
Diluted weighted average shares outstanding        38,595,893         38,154,720       38,471,154          38,235,254
                                                ================   ===============  ===============     ================
</Table>

Net income available to common shareholders for basic and diluted net income per
share was $15,799 and $11,550 for the three months ended  September 30, 2001 and
2000, and $41,621 and $32,172 for the nine months ended  September 30, 2001, and
2000, respectively.

For the three  months  ended  September  30, 2001 and 2000,  there were  options
outstanding  to purchase 0 and 1,371,375  shares of common stock,  respectively,
which were  anti-dilutive  and  therefore  not  included in the  computation  of
diluted net income per common  share.  For the nine months ended  September  30,
2001 and 2000,  there were options  outstanding  to purchase 4,500 and 1,323,000
shares of common stock, respectively, which were anti-dilutive and therefore not
included in the computation of diluted net income per common share.

Note 9 - Inventories

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

<Table>
<Caption>
                                                                          September 30,          December 31,
                                                                               2001                  2000
                                                                         -----------------     ------------------
         <S>                                                            <C>                     <C>
         Vacation Credits and Fractional Interests                      $      29,078                16,829
         Construction in progress                                              95,162                87,389
                                                                         -----------------     ------------------

                  Total inventories                                     $     124,240               104,218
                                                                         =================     ==================

</Table>
                                       8
<PAGE>



Note 10 - Allowance For Doubtful Accounts, Recourse Liability and Sales Returns

The following table summarizes the Company's total Notes Receivable portfolio at
September 30, 2001, and December 30, 2000:

<Table>
<Caption>
                                                                        September 30,        December 31,
                                                                             2001                2000
                                                                       -----------------   ------------------
        <S>                                                            <C>                  <C>
        Total Notes Receivable                                        $     641,308             502,762
        Less Notes Receivable sold                                         (502,849)           (407,215)
                                                                       -----------------   ------------------

        Gross on balance sheet Notes Receivable                             138,459              95,547
                                                                       =================   ==================

        Unencumbered Notes Receivable                                        64,587              37,873
        Retained interest in Notes Receivable sold                           73,872              57,674
                                                                       -----------------   ------------------

        Gross on balance sheet Notes Receivable                             138,459              95,547

        Less: Deferred gross profit                                          (2,183)             (1,340)
               Allowance for doubtful accounts and sales returns            (21,641)            (18,010)
                                                                       -----------------   ------------------

        Notes Receivable, net                                       $       114,635              76,197
                                                                       =================   ==================
</Table>

The activity in the  allowance  for doubtful  accounts,  recourse  liability and
sales returns is as follows for the nine months ended  September  30, 2001,  and
the year ended December 31, 2000:

<Table>
<Caption>
                                                                         Nine months ended       Year ended December
                                                                         September 30, 2001           31, 2000
                                                                       -----------------------  ----------------------
         <S>                                                            <C>                        <C>
         Balances at beginning of period                                $           40,292                  29,087

         Provision for doubtful accounts, sales returns and
             recourse liability                                                     29,397                  27,015
         Notes Receivable charged-off and sales returns net of
             Vacation Credits recovered                                            (18,688)                (16,061)
         Recoveries                                                                    281                     251
                                                                       -----------------------  ----------------------

         Balances at end of period                                      $           51,282                  40,292
                                                                       =======================  ======================

         Allowance for doubtful accounts and sales returns              $           21,641                  18,010
         Recourse liability on Notes Receivable sold                                29,641                  22,282
                                                                       -----------------------  ----------------------
                                                                        $           51,282                  40,292
                                                                       =======================  ======================
</Table>

Note 11 - Commitments and Contingencies

(a) Purchase Commitments
The Company  routinely  enters into purchase  agreements with various parties to
acquire and build  resort  properties.  At September  30, 2001,  the Company had
outstanding  purchase  commitments  of  $118,001  related  to  properties  under
development.

(b) Surety and Performance Bonds
The Company utilizes surety and performance  bonds as part of developing  resort
properties.  As of  September  30,  2001,  there  were  $4,575 in  surety  bonds
outstanding.


                                       9
<PAGE>


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

Note 12 - Transaction with Eagle Crest, Inc.

Eagle Crest,  Inc.  (Affiliate),  a  wholly-owned  subsidiary  of the  Company's
majority shareholder,  JELD-WEN, inc. (Parent), was the developer of Eagle Crest
Vacation Club (ECVC), a points-based  timeshare club. In May 2001, the owners of
ECVC  voted to  dissolve  their  club and  contribute  their  real  property  to
WorldMark, The Club, in exchange for WorldMark Credits,  effective September 28,
2001. As part of an agreement between the Company and Affiliate,  Affiliate also
began selling  WorldMark,  The Club  ownership  interests at its Eagle Crest and
Running Y locations,  with the Company  purchasing the related Notes  Receivable
from these sales from Affiliate at face value.  Affiliate refunds to the Company
any remaining  principal  balance on defaulted  Notes  Receivable  originated at
Eagle  Crest or  Running Y through  the sale of  WorldMark,  The Club  ownership
interests under this agreement.

In  conjunction  with this  transaction,  on  September  28,  2001,  the Company
acquired Notes  Receivable  from Affiliate in exchange for cash and a promissory
note.  The  company   purchased  $11,573  of  Notes  Receivable  at  Affiliate's
historical cost of face value plus accrued  interest,  in exchange for $8,625 in
cash and a $2,948 promissory note. The promissory note is non-interest  bearing,
and matures on the earlier of  September  28,  2002,  or the closing date of the
Company's next private placement of Notes Receivable.

In addition,  the Company acquired land from Affiliate for future development in
McCall, Idaho, in exchange for a non-interest bearing promissory note of $1,293.
This note  matures on the earlier of  September  28, 2003,  or  commencement  of
construction on the property by the Company.

Note 13 - Financing

In August  2001,  the  Company  formed TRI  Funding V, Inc.  (TRI  Funding V), a
special  purpose  finance  company.  At the same time,  the Company sold certain
Notes Receivable to TRI Funding V for cash, a subordinated note payable from TRI
Funding V and a residual interest in the excess cash flows of TRI Funding V. The
subordinated  note payable from TRI Funding V 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 on the accompanying balance sheets.

On September 28, 2001, the Company increased its Receivables  Warehouse Facility
with  Banc One to $175  million  from $150  million.  In  conjunction  with this
amendment,  Fleet Bank entered the  agreement as a  co-purchaser  with Banc One,
purchasing $75 million of the $175 million limit.

At September  30, 2001,  after  performing  a normal,  timely  review of its key
assumptions, the Company changed its prepayment and default rate assumption used
in calculating  gains on sales of Notes  Receivable and residual  interest.  The
Company  increased its weighted annual  prepayment and default rate to 10.6%, up
from  9%,  resulting  in  lower  residual  interest  valuations  and a  negative
mark-to-market  adjustment for the quarter.  The increase in the weighted annual
prepayment and default rate did not  significantly  impact the Company's results
of operations.

Note 14 - 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 Interests. The finance segment does not include the activities of the
Company's finance subsidiaries. Management evaluates the business based on sales
and marketing activities as these are the primary drivers of the business.



                                       10
<PAGE>
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies in the Company's 2000 Form 10-K. 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:


<Table>
<Caption>
                                                                                                   Segment
Three months ended September 30, 2001:               Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
<S>                                                <C>               <C>             <C>           <C>
External revenue                                   $  111,955          1,631            919          114,505
Interest revenue - net                                     --          1,624              --           1,624
Interest revenue-intersegment                              --          1,691              --           1,691
Intersegment revenue                                       --            305              --             305
                                                   -----------    -----------     -----------    -------------
Segment revenue                                    $  111,955          5,251            919          118,125

Segment profit                                     $   17,929          3,769            540           22,238

Significant non-cash items:
Provision for doubtful accounts, sales
returns and recourse liability                     $   11,708             --              --          11,708

                                                                                                   Segment
Three months ended September 30, 2000:               Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
External revenue                                   $   82,808            867          1,081           84,756
Interest revenue - net                                     --          1,039              --           1,039
Interest revenue-intersegment                              --          1,778              --           1,778
Intersegment revenue                                       --            700              --             700
                                                   -----------    -----------     -----------    -------------
Segment revenue                                    $   82,808          4,384          1,081           88,273

Segment profit                                     $   14,175          2,871            657           17,703

Significant non-cash items:
Provision for doubtful accounts, sales
returns and recourse liability                     $    7,619             --             --            7,619

                                                                                                   Segment
Nine months ended September 30, 2001:                Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
External revenue                                   $  314,950          4,020          2,871          321,841
Interest revenue - net                                     --          4,333             --            4,333
Interest revenue-intersegment                              --          5,502             --            5,502
Intersegment revenue                                       --          1,131             --            1,131
                                                   -----------    -----------     -----------    -------------
Segment revenue                                   $  314,950         14,986          2,871          332,807

Segment profit                                    $   50,443          9,918          1,688           62,049

Significant non-cash items:
Provision for doubtful accounts, sales
returns and recourse liability                    $   29,397             --              --          29,397

</Table>


                                       11
<PAGE>

<Table>
<Caption>

                                                                                                   Segment
Nine months ended September 30, 2000:                Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
<S>                                                <C>              <C>            <C>             <C>
External revenue                                   $  216,410          2,877          3,881          223,168
Interest revenue - net                                     --          3,590             --            3,590
Interest revenue-intersegment                              --          4,840             --            4,840
Intersegment revenue                                       --          1,505             --            1,505
                                                   -----------    -----------     -----------    -------------
Segment revenue                                    $  216,410         12,812          3,881          233,103

Segment profit                                     $   39,818          8,537          2,520           50,875

Significant non-cash items:
Provision for doubtful accounts, sales
returns and recourse liability                     $   19,685             --              --          19,685

</Table>

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

<Table>
<Caption>
                                                         Three Months                    Nine Months
                                                     Ended September 30,             Ended September 30,
                                                     2001           2000            2001            2000
                                                   -----------    -----------    ------------    -------------
<S>                                                <C>             <C>            <C>              <C>
Segment revenue                                    $ 118,125         88,273         332,807          233,103
Interest expense reported net of interest
    income                                               195            128             418              225
Elimination of intersegment revenue                   (2,824)        (2,478)         (7,461)          (6,345)
Finance subsidiaries revenue                          13,665          8,954          33,280           23,135
                                                   -----------    -----------    ------------    -------------
               Consolidated revenue                $ 129,161         94,877         359,044          250,118
                                                   ===========    ===========    ============    =============

Segment profit                                     $  22,238         17,703          62,049           50,875
Corporate overhead not included in segment
    reporting                                         (7,806)        (5,178)        (21,371)         (14,223)
Finance subsidiaries profit                           11,127          6,325          26,789           16,389
                                                   -----------    -----------    ------------    -------------
            Consolidated pre-tax income            $  25,559         18,850          67,467           53,041
                                                   ===========    ===========    ============    =============
</Table>

The  Company's  revenue from  external  customers  derived from sales within the
United States totaled  $103,042 and $81,089 for the three months ended September
30, 2001 and 2000,  respectively.  The Company's revenue from external customers
derived from sales within the United  States  totaled  $294,293 and $214,321 for
the nine months ended  September 30, 2001 and 2000,  respectively.  Revenue from
external  customers  derived from sales in all foreign  countries totaled $8,913
and $1,819 for the three months ended September 30, 2001 and 2000, respectively,
and  totaled  $20,657 and $2,689 for nine months  ended  September  30, 2001 and
2000,  respectively.  Revenue from external customers is attributed to countries
based  on the  location  where  the  sale  was  made.  Substantially  all of the
Company's long-lived assets are located within the United States. The net assets
of foreign operations totaled $7,553 at September 30, 2001.

Note 15 - Subsequent Events

On November 8, 2001, the Board of Directors authorized a 3 for 2 stock split for
shareholders  of record on November 29, 2001,  payable on December 14, 2001. All
share data and  earnings  per share  figures  presented  have been  adjusted  to
reflect the stock split as if it were effective for all periods presented.

On November 14, 2001, the Company  requested the withdrawal of its  registration
statement under review with the Securities and Exchange Commission (SEC) for the
sale by it and certain shareholders of $75 million of common stock.


                                       12
<PAGE>


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

                              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 to, among
other things,  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 the
Company's Form 10-K.

Comparison  of the three months ended  September  30, 2001,  to the three months
ended September 30, 2000

The Company achieved total revenues of $129.2 million for the three months ended
September  30,  2001,  compared  to $94.9  million  for the three  months  ended
September 30, 2000, an increase of 36.1%. The principal  reasons for the overall
improvement were a 32.9% increase in Vacation Credit sales to $110.0 million for
the three months ended  September  30,  2001,  from $82.8  million for the three
months ended September 30, 2000,  including a $7.1 million  increase in Vacation
Credit  sales in the  South  Pacific,  from $1.8  million  to $8.9  million.  In
addition, $2.0 million in Fractional Interest sales from the second phase of the
Depoe Bay, Oregon,  resort were recognized during the third quarter of 2001. The
increase in Vacation  Credit sales was primarily the result of a 37.6%  increase
in the number of Vacation  Credits sold to 83.0 million  during the three months
ended  September  30,  2001,  from 60.3  million  during the three  months ended
September  30,  2000.  The  increase  in  Vacation   Credits  sold  was  largely
attributable  to improved  performance in the eleven sales offices opened during
2000,  an increase in Vacation  Credits sold in the South Pacific of 8.7 million
over the same period in 2000, and continued increases in Upgrade Sales. Revenues
from Upgrade sales  increased  29.8% to $15.7 million for the three months ended
September 30, 2001,  from $12.1 million for the three months ended September 30,
2000.

The Company opened the following sales offices during the third quarter of 2001,
which had no material effect on revenues during the quarter:

        Location                  Opened                 On/Off-Site
        ------------------------ ----------------------- ---------------------
        Broomfield, CO            September, 2001        Off-Site
        Seaside, OR               September, 2001        Off-Site

In addition,  as part of its normal process of analyzing  individual  markets to
optimize operating results, the Company closed the St. Louis,  Missouri,  office
at the end of September.

In the United  States,  the average price per Vacation  Credit sold increased to
$1.40 per credit for the three months ended September 30, 2001, versus $1.39 per
credit  for the three  months  ended  September  30,  2000.  This  increase  was
primarily a result of a $0.05 increase in the price of Upgrade  Vacation Credits
effective September 1, 2000, and a $0.05 per credit increase in the price of new
Vacation  Credit sales on May 1, 2001. The effect of these  increases was offset
by increased  sales reversals and discounts  quarter over quarter.  In the South
Pacific,  the average price per Vacation  Credit sold  decreased  from $0.99 per
credit to $0.84 per  credit,  due  largely to the  weakening  of the  Australian
dollar (AUD) versus the US dollar during the quarter and an increase in deferred
gross profit over the prior  quarter.  The price per new Vacation  Credit in the
South Pacific increased $0.10 AUD on September 10, 2001.

For the quarter ended September 30, 2001,  financing  activities generated $14.4
million in  revenues,  compared to $9.8 million in the same quarter last year, a
46.9% increase.  This increase consists of a 78.0% increase in gains on sales of
Notes Receivable and a 17.0% increase in finance income.  Finance income for the
third  quarter of 2000  included a favorable  mark-to-market  adjustment  on the
residual  interest  in Notes  Receivable,  while  finance  income  for the third
quarter of 2001 included an unfavorable mark-to-market adjustment.

Vacation Credit and Fractional Interest cost of sales increased to $30.5 million
for the three months ended  September 30, 2001, from $22.3 million for the three
months ended September 30, 2000, an increase of 36.8%,  primarily reflecting the
increase in sales of Vacation  Credits.  As a percentage of Vacation  Credit and


                                       13
<PAGE>


Fractional  Interest  sales,  cost of sales  increased  to 27.2%  from  26.9% of
Vacation Credit and Fractional Interest sales for the two periods compared. This
increase is attributable to the higher cost of sales of the Fractional Interests
sales which are included in 2001 results.

Sales and marketing  costs increased 38.2% to $53.2 million for the three months
ended  September  30,  2001,  from  $38.5  million  for the three  months  ended
September 30, 2000. As a percentage of Vacation  Credit and Fractional  Interest
sales,  sales and marketing  costs increased to 47.5% for the three months ended
September  30, 2001,  from 46.5% for the three months ended  September 30, 2000,
due to an increase in the marketing  cost per tour and a slight  decrease in the
sales closing rate.

General and  administrative  expenses  increased  25.6% to $10.8 million for the
three months ended  September  30, 2001,  from $8.6 million for the three months
ended  September  30,  2000.  As a  percentage  of total  revenue,  general  and
administrative  costs  decreased  to 8.4%  compared to 9.1% for the three months
ended  September  30, 2000.  This  decrease is reflective of the large growth in
total revenue over the two periods.

The provision for doubtful  accounts and recourse  liability  increased 39.3% to
$8.5 million for the three months ended  September  30, 2001,  from $6.1 million
for the three  months ended  September  30,  2000.  As a percentage  of Vacation
Credit and Fractional  Interest sales,  the provision  increased to 7.6% for the
three months  ended  September  30,  2001,  from 7.4% for the three months ended
September  30,  2000.  This  increase was the result of a higher mix of sales in
sales  offices with expected  default  rates higher than the Company's  previous
experience.

Comparison of the nine months ended September 30, 2001, to the nine months ended
September 30, 2000

The Company  achieved total revenues of $359.0 million for the nine months ended
September  30,  2001,  compared  to $250.1  million  for the nine  months  ended
September 30, 2000, an increase of 43.5%. The principal  reasons for the overall
improvement  were a 39.6%  increase  in total  Vacation  Credit  sales to $302.2
million for the nine months ended September 30, 2001, compared to $216.4 million
for the nine  months  ended  September  30,  2000,  including  an $18.0  million
increase in Vacation  Credit  sales in the South  Pacific,  from $2.7 million to
$20.7 million. In addition,  $12.8 million in Fractional Interest sales from the
second phase of the Depoe Bay,  Oregon,  resort were recognized  during the nine
months of 2001.  No  Fractional  Interest  sales were  recognized  in 2000.  The
remaining  revenue  from the sale of  Fractional  Interests  at  Depoe  Bay,  is
expected to be recognized during the fourth quarter of 2001.

The  increase  in  Vacation  Credit  sales was  primarily  the result of a 41.0%
increase in the number of Vacation Credits sold to 224.4 million during the nine
months ended September 30, 2001, from 159.1 million during the nine months ended
September  30,  2000.  The  increase  in  Vacation   Credits  sold  was  largely
attributable  to improved  performance in the eleven sales offices opened during
2000, improved efficiency at sales offices opened during the first half of 2001,
a 20.9  million  increase in Vacation  Credits  sold in the South  Pacific,  and
continued  increases in Upgrade  Sales.  Revenues from Upgrade  sales  increased
33.0% to $44.3  million for the nine months ended  September 30, 2001 from $33.3
million for the nine months ended  September  30, 2000.  The increase in Upgrade
sales  demonstrates  WorldMark owners' continued  satisfaction with its products
and service.



                                       14
<PAGE>

The Company  opened the following  sales offices during the first nine months of
2001:

    Location                                  Opened             On/Off-Site
    ------------------------------------ -------------------- -----------------
    Steamboat, CO....................        January, 2001        On-site
    Roslyn, WA.......................        January, 2001       Off-site
    Englewood, CO....................          March, 2001       Off-site
    Overland Park, KS................          March, 2001       Off-site
    Branson, MO......................          March, 2001        On-site
    Parramatta (Sydney 1), QLD*......          March, 2001       Off-site
    Issaquah, WA.....................          April, 2001       Off-site
    Bison Ranch, AZ..................            May, 2001        On-site
    Coeur d'Alene, ID................           June, 2001       Off-site
    Hurstville (Sydney 2), QLD*......           June, 2001       Off-site
    Broomfield, CO...................      September, 2001       Off-site
    Seaside, OR......................      September, 2001       Off-site

    *Trendwest South Pacific sales office

In addition,  as part of its normal process of analyzing  individual  markets to
optimize operating results, the Company closed the St. Louis,  Missouri,  office
at the end of September.

In the United  States,  the average price per Vacation  Credit sold increased to
$1.40 per credit for the nine months ended September 30, 2001,  versus $1.37 per
credit for the nine months ended September 30, 2000. This increase was primarily
a result of a $0.05 increase in the price of new Vacation Credits effective July
1, 2000, a $0.05  increase in the price of Upgrade  Vacation  Credits  effective
September 1, 2000, and a $0.05 per credit  increase in the price of new Vacation
Credits on May 1, 2001. The effect of these increases was offset by increases in
sales  reversals and discounts  period over period.  In the South  Pacific,  the
average price per Vacation  Credit sold decreased from $0.96 per credit to $0.87
per credit,  due largely to the weakening of the Australian  dollar (AUD) versus
the US dollar during the year and an increase in deferred  gross profit over the
prior period.  The price per new Vacation Credit in the South Pacific  increased
$0.10 AUD on September 10, 2001.

For the nine months ended  September 30, 2001,  financing  activities  generated
$35.9  million in  revenues,  compared to $26.1  million in the same period last
year,  a 37.5%  increase.  This  increase  is  largely  attributable  to a 65.6%
increase  in gains on the sale of Notes  Receivable.  The  decrease  in interest
rates  over the year has  increased  net  interest  spreads on the sale of Notes
Receivable and thus the gain recognized.

Vacation  Credit and Fractional  Interest cost of sales increased 63.2% to $87.5
million for the nine months ended September 30, 2001, from $53.6 million for the
nine months ended  September 30, 2000.  As a percentage  of Vacation  Credit and
Fractional Interests sales, cost of sales increased to 27.8% for the nine months
ended September 30, 2001,  compared to 24.8% for the nine months ended September
30, 2000.  This increase  resulted from  comparatively  low  construction  costs
associated  with the  addition of Fiji and Rancho  Vistoso,  Arizona  properties
during the first six months of 2000 and higher costs associated with the sale of
Fractional  Interests  during 2001.  Fractional  Interests have a higher product
cost than Vacation Credits which is offset by lower sales and marketing costs.

Sales and marketing  costs increased 44.1% to $148.0 million for the nine months
ended  September  30,  2001,  from  $102.7  million  for the nine  months  ended
September 30, 2000. As a percentage of Vacation  Credit and Fractional  Interest
sales,  sales and marketing  costs  decreased to 47.0% for the nine months ended
September 30, 2001, from 47.5% for the nine months ended September 30, 2000. The
difference is primarily  attributable  to the lower sales and marketing costs of
the Fractional Interest sales program which are included in 2001 results.

General and  administrative  expenses  increased  32.1% to $31.3 million for the
nine months ended  September  30, 2001,  from $23.7  million for the nine months
ended  September  30,  2000.  As a  percentage  of total  revenue,  general  and
administrative  costs  decreased to 8.7% for the nine months ended September 30,
2001,  from 9.5% of total revenue for the nine months ended  September 30, 2000.
The decrease is attributable in large part to the increase in total revenue.  In
addition,  during 2000 all start-up  costs for the new Midwest and South Pacific
regions which were expensed as incurred,  with no similar costs expensed  during
2001.

                                       15
<PAGE>

The provision for doubtful  accounts and recourse  liability  increased 49.7% to
$23.2 million for the nine months ended  September 30, 2001,  from $15.5 million
for the nine months ended September 30, 2000. As a percentage of Vacation Credit
and Fractional Interest sales, the provision increased to 7.4% from 7.2% for the
nine months ended September 30, 2001 and 2000,  respectively.  This increase was
the result of a higher mix of sales in sales offices with expected default rates
higher than the Company's previous experience.

The Company maintains an allowance for doubtful accounts in respect to the Notes
Receivable  owned by the Company and an  allowance  for  recourse  liability  in
respect  to the  Notes  Receivable  that  have  been  sold by the  Company.  The
aggregate  amount of these  allowances at September  30, 2001,  and December 31,
2000,  were  $49.7  million  and  $38.9  million,   respectively,   representing
approximately  7.8% and  7.7%,  respectively,  of the total  portfolio  of Notes
Receivable at those dates,  including the Notes Receivable that had been sold by
the Company.  No assurance can be given that these  allowances will be adequate,
and if the  amount of the  Notes  Receivable  that are  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,  in
estimating  the  allowance  for doubtful  accounts and recourse  liability.  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 credits  associated  with such  charge-offs  to  inventory.  At both
September  30,  2001,  and  December  31,  2000,  2.3%  of the  Company's  total
receivables portfolio of $641.3 million and $502.8 million,  respectively,  were
more than 60 days past due.

                           FORWARD LOOKING STATEMENTS

o    We anticipate vacation credit revenue and overall  profitability to compare
     favorably with last year's 4th quarter.

o    System-wide  September occupancy at WorldMark,  the Club was 83%, down from
     86% last year. October occupancy was at 80%, compared to 83% last year, due
     largely  to  decreased  occupancy  at  fly-to,   exotic  and  international
     locations.  We expect occupancy to be at normal levels for the remainder of
     the year based on current reservation activity.

o    The portion of the notes  receivable  portfolio  more than 60 days past due
     increased to 2.3% at September  30th from 2.0% at June 30, 2001. At October
     31st,  the over 60 day portion of the portfolio had not changed  materially
     from September 30th levels.

o    Product  cost as a  percentage  of vacation  credit sales is expected to be
     slightly lower than last year's levels in the fourth quarter.

o    Sales and marketing  costs for the fourth quarter are expected to be at the
     high end of the Company's  historical  range.

o    On  November 8, 2001,  the Board of  Directors  authorized  a 3 for 2 stock
     split for shareholders of record on November 29, 2001,  payable on December
     14, 2001.

o    On November 14, 2001, after reviewing the current economic environment, the
     Company  requested the withdrawal its  registration  statement under review
     with the  Securities and Exchange  Commission  (SEC) for the sale by it and
     certain shareholders of $75 million of common stock.

                         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,  collection of principal and interest
on  Notes  Receivable,  proceeds  from  sales  of Notes  Receivable,  and  other
borrowings. The Company also generates cash on the interest differential between
the interest  charged on the Notes  Receivable  and the  interest  paid on loans
collateralized by Notes Receivable.

During the nine months ended September 30, 2001 and 2000, cash used in operating
activities  was $22.1  million  and $34.2  million,  respectively.  Cash used in
operating  activities  decreased  principally  due to the decreased  spending on
inventories  when compared to 2000. For the first nine months of 2001, cash used
in operating

                                       16
<PAGE>

activities was principally for the issuance and purchase of Notes  Receivable of
$292.5  million to finance  the  purchase  of  Vacation  Credits by Owners,  the
purchase of Notes  Receivable  from  Affiliate of $8.6  million,  an increase in
inventories of $21.9 million,  and spending on the  MountainStar  resort of $9.9
million, primarily related to the on-going entitlement process. Cash provided by
operating  activities  during the first nine months of 2001  resulted  primarily
from sales and repayments of Notes Receivable of $237.9 million,  an increase in
accounts  payable and accrued  liabilities  of $6.9  million,  and net income of
$41.6  million.  For the  first  nine  months of 2000,  cash  used in  operating
activities was principally for the issuance and purchase of Notes  Receivable of
$202.7  million  to finance  the  purchase  of  Vacation  Credits by Owners,  an
increase in  inventories  of $48.4  million due to  additional  construction  in
progress to meet  increasing  sales demand,  and the  acquisition and continuing
development of the MountainStar  development of $29.8 million.  Cash provided by
operating  activities  resulted  primarily  from sales and  repayments  of Notes
Receivable of $197.0 million and net income of $32.2 million.

Net cash used in investing  activities  for the nine months ended  September 30,
2001 and 2000,  was $7.6 million and $4.6  million,  respectively.  Cash used in
investing  activities  for the nine months ended  September  30,  2001,  was the
result of  leasehold  and  equipment  purchases  related to the twelve new sales
offices opened, and increased  information  systems  expenditures to support the
growth of the  Company.  Cash used in investing  activities  for the nine months
ended  September 30, 2000 was the result of purchases of furniture and equipment
to support the Company's new regions and sales offices opened during the period.

Net cash provided by financing  activities  for the nine months ended  September
30, 2001 and 2000,  was $29.7 million and $37.3 million,  respectively.  For the
nine months ended September 30, 2001, cash provided by financing  activities was
the result of an  increase in net  borrowings  under the bank line of credit and
other of $28.9  million,  issuance  of  common  stock  of $2.6  million,  and an
increase in due to Parent and Affiliate of $2.8 million.  Cash used by financing
activities  was  principally  the result of  repayments  of the note  payable to
Parent of $2.2 million,  and repurchase of common stock of $2.4 million. For the
nine months ended September 30, 2000, cash provided by financing  activities was
principally the result of increased  borrowings under the Company's bank line of
credit and other of $42.1  million.  Cash used in financing  activities  was the
result  of a $1.3  million  decrease  in due  to  Parent  and  $3.9  million  of
repurchases of common stock.

In August  2001,  the  Company  formed TRI  Funding V, Inc.  (TRI  Funding V), a
special  purpose  finance  company.  At the same time,  the Company sold certain
Notes Receivable to TRI Funding V for cash, a subordinated note payable from TRI
Funding V and a residual interest in the excess cash flows of TRI Funding V. TRI
Funding V issued four classes of fixed-rate  notes for a ten-year term purchased
by institutional investors. Moody's Investor Service, Inc. and Fitch, Inc. rated
the Class A, B, and C Notes.  The Notes consisted of two  time-tranched  Class A
Notes,  $102.6 million rated "AAA" by Moody's and "Aaa" by Fitch, Class B Notes,
$37.8 million rated "A2" by Moody's and "AA-" by Fitch, and Class C Notes, $23.4
million rated "Baa3" by Moody's and "BBB+" by Fitch.  The notes were issued at a
weighted average interest rate of 5.69%.

On September 28, 2001, the Company increased its Receivables  Warehouse Facility
with  Banc One to $175  million  from $150  million.  In  conjunction  with this
amendment,  Fleet Bank entered the  agreement as a  co-purchaser  with Banc One,
purchasing $75 million of the $175 million limit.

The Company has a three-year,  $85.0 million  revolving  credit agreement with a
group of  banks,  which  is  secured  by a first  mortgage  on the  MountainStar
property.  The agreement  allows for  borrowings  in Australian  dollars up to a
maximum  of $25  million  US  dollar  equivalent.  The  agreement  provides  for
borrowings  at either a  reference  rate or at LIBOR  rates plus the  applicable
margin for the level of  borrowings  outstanding.  In  addition,  the  agreement
requires a quarterly  commitment  fee of 0.30% to 0.50% based on the usage level
of the total commitment. Available borrowings under the agreement are subject to
a  borrowing  base which is a  percentage  of Notes  Receivable  and  inventory,
including  property  under  development.  The agreement  requires the Company to
maintain certain  interest  coverage ratios and  capitalization  ratios and also
imposes  limitations  on  certain  liens  and  carrying  amounts  of  inventory.
Borrowings  outstanding at September 30, 2001 and December 31, 2000,  were $77.5
million and $48.4 million,  respectively,  at weighted average interest rates of
6.11% and 8.48%.

The  Company  has  a  $10  million  open  line  of  credit  with  its  principal
shareholder,  JELD-WEN,  inc.  (Parent) which bears interest at prime plus 1.25%
(currently  7.25%)  per annum.  The line of credit is  payable on demand.  As of
September 30, 2001,  there was $3.3 million in indebtedness  to the Parent.  The
Company  may  advance  excess  funds to the Parent at the prime rate minus 1.75%
(currently 4.25%) per annum. At September 30, 2001, there was no receivable from
Parent.

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<PAGE>

In connection with the purchase of certain Notes  Receivable and land for future
development from Eagle Crest,  Inc.  (Affiliate),  a wholly-owned  subsidiary of
Parent,  the Company issued  promissory notes to Affiliate in the amount of $4.2
million.  Both notes are  non-interest  bearing.  The note in the amount of $2.9
million  related to the purchase of Notes  Receivable  matures on the earlier of
September 28, 2002, or the completion of the Company's next private placement of
Notes  Receivable.  The $1.3 million  promissory note related to the purchase of
land for  development  matures on the  earlier of  September  28,  2003,  or the
commencement of construction on the property.

In addition,  the Company has a note payable outstanding to Parent in the amount
of $15.5  million.  This note was issued in connection  with the purchase of the
MountainStar  development.  The note carries a 9% interest rate,  with quarterly
interest  payments due starting  September 1, 2000. The first of eight quarterly
principal payments of $2.2 million was made in September 2001.

The Company  anticipates  spending  approximately $42.6 million for acquisitions
and  development  of new resort  properties  and for expansion  and  development
activities  during the fourth  quarter of 2001,  including  $4.6 million for the
continued  development of the MountainStar  property.  The Company plans to fund
these expenditures with cash generated from operations,  including further sales
and  securitizations  of Notes Receivable and borrowings under the $85.0 million
revolving credit agreement. Acquisition of new resort sites and properties is an
ongoing  process and  availability  of certain  properties in desired  locations
could result in increased expenditures for such activities. The Company believes
that, with respect to its current operations, cash generated from operations and
future borrowings available under existing agreements will be sufficient to meet
the Company's  working capital and capital  expenditure needs through the end of
2001.

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 its
revolving  credit  facility,  loans  from  the  Parent  and the  sale  of  Notes
Receivable  through the  Finance  Subsidiaries.  The Company may also  negotiate
additional  credit  facilities,  or issue  corporate  debt or additional  equity
securities  in the  future.  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.  See "Risk Factors -
Dependence  on  Acquisitions  of  Additional  Resort Units for Growth;  Need for
Additional Capital" of the Company's 2000 Form 10-K.

Both WorldMark and WorldMark South Pacific maintain replacement reserves for the
resorts,  which  are  funded  from the  annual  assessments  of the  Owners.  At
September 30, 2001, the amount of The Clubs'  reserves was  approximately  $17.9
million.  The  replacement  reserves are  utilized to refurbish  and replace the
interiors and furnishings of the condominium units and to maintain the exteriors
and  common  areas in The  Clubs'  resorts  in which  all units are owned by The
Clubs. The Company may advance funds to either Club from time to time.

Item 3 - 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 functional currency of the Company's Australian operations is the Australian
dollar.  The  Australian  operations  are funded  through the $85 million credit
facility,  which has an  Australian  dollar  sub-limit  of up to $25  million US
dollar equivalent. The Company is also subject to foreign currency exchange rate
risk when developing resort properties denominated in a foreign currency. As the
Company continues expanding its operations  worldwide,  there will be additional
exposure to foreign currency exchange rate risk. The Company occasionally enters
into foreign  exchange  contracts to reduce  exposure to exchange  rate risk. In
January 2001, the Company entered into a forward exchange  contract,  to receive
$2,081 CDN at a rate of $1.4955  CDN/US on July 3, 2001,  and  $16,919  CDN at a
rate of $1.4905  CDN/US on  September  30, 2002.  On July 3, 2001,  and again on
August 2, 2001,  the July 2001  contract  was rolled over into new  contracts to

                                       18
<PAGE>

receive $2,081 CDN at a rate of $1.4958 CDN/US.  The August contract  matured on
September  4,  2001,  at which  time the  Canadian  dollars  were  purchased  as
contracted.  The contract  maturing on September 30, 2002 is still  outstanding.
The Company is also 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.  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.

There have been no  material  changes to the  Company's  exposure to market risk
since December 31, 2000.





















                                       19
<PAGE>



PART II - OTHER INFORMATION

Item 1 - Legal Proceedings
                  The Company is not aware of any material legal proceeding
                  pending against it. The Company may be subject to claims and
                  legal proceedings from time to time in the ordinary course of
                  business. See Note 10 of "Notes to Condensed Consolidated
                  Financial Statements."

Item 2 - Changes in Securities and Use of Proceeds
                  None

Item 3 - Defaults Upon Senior Securities
                  None

Item 4 - Submission of Matter to a Vote of Security Holders
                  None

Item 5 - Other Information
                  None

Item 6 - Exhibits and Reports on Form 8-K

(a)      Exhibits
         -------------------------------------------------------------------
2.1      Restated Articles of Incorporation (1)
2.2      Restated Bylaws (1)
10.1     Receivables Purchase Agreement Among Trendwest Resorts, Inc. and
          TW Holdings III, Inc. and TRI Funding V, Inc.
          Dated as of August 1, 2001
10.2     Servicing Agreement Among TRI Funding V, Inc. and Trendwest
          Resorts, Inc. and Wells Fargo Bank Minnesota, National
          Association Dated as of August 1, 2001
10.3     Indenture Among TRI Funding V, Inc. And Trendwest Resorts, Inc. and
          Wells Fargo Bank Minnesota, National Association Dated
          as of August 1, 2001.
10.4     Receivables Purchase Agreement Among Trendwest Resorts, Inc.,
          TW Holdings III, Inc., Wells Fargo Bank Minnesota, Jupiter
          Securitization Corporation, Blue Keel Funding, LLC,
          Fleet Securities, Inc., Bank One, NA, and Bank One Trust
          Company, Dated as of September 28, 2001
11       Statement re: Computation of Earnings per share - See note 8 of
          "Notes to Condensed Consolidated Financial Statements".

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

(b)      Reports on Form 8-K
         --------------------------------------------------------------------
         FORM 8-K dated September 26, 2001, on Item 7. Financial
          Statements, Pro Forma Financial Information and Exhibits -
          Exhibits - relating to the settlement reached between
          Trendwest Resorts, Inc. and RIDGE citizens group related to
          the MountainStar Master Planned Resort.


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<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.




                                     TRENDWEST RESORTS, INC.



Date:      November 14, 2001         /s/ WILLIAM F. PEARE
           --------------------      -------------------------------------
                                     William F. Peare
                                     President, Chief Executive Officer and
                                     Director (Principal Executive Officer)


Date:      November 14, 2001         /s/ TIMOTHY P. O'NEIL
           --------------------      -------------------------------------
                                     Timothy P. O'Neil
                                     Vice President, Chief Financial Officer
                                     And Treasurer
                                    (Principal Financial Officer)














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