United States
                       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 March 31, 2000

[ ]    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 Identification No.)
       of incorporation)

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 May 4, 2000: 16,939,894 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>
                                                                                      March 31,          December 31,
                                   Assets                                                2000                1999
                                                                                   -----------------    ----------------
<S>                                                                            <C>                      <C>
Assets:
     Cash                                                                      $         1,655               1,760
     Restricted cash                                                                     7,107               2,987
     Notes Receivable, net of allowance for doubtful accounts, sales
        returns and deferred gross profit                                               79,122              84,802
     Accrued interest and other receivables                                              9,514               8,506
     Residual interest in Notes Receivable sold                                         37,701              36,265
     Receivable from Parent                                                              4,337               3,058
     Inventories                                                                        51,191              45,601
     Property and equipment, net                                                        25,750              24,327
     Deferred income taxes                                                                 497                  --
     Other assets                                                                        3,738               2,657
                                                                                   -----------------    ----------------

                     Total assets                                              $       220,612             209,963
                                                                                   =================    ================

                    Liabilities and Shareholders' Equity

Liabilities:
     Accounts payable                                                                    1,811               1,900
     Accrued liabilities                                                                12,622              12,405
     Accrued construction in progress                                                    1,189                 790
     Borrowing under bank line of credit                                                    --               3,900
     Allowance for recourse liability and deferred gross profit on Notes
        Receivable sold                                                                 17,703              17,211
     Income taxes payable                                                                6,319                  42
                                                                                   -----------------    ----------------

                     Total liabilities                                                  39,644              36,248

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 16,939,834 and 17,041,078 shares at
        March 31, 2000 and December 31, 1999, respectively.                             56,997              59,428
     Accumulated other comprehensive income                                                 14                  --
     Retained earnings                                                                 123,957             114,287
                                                                                   -----------------    ----------------

                     Total shareholders' equity                                        180,968             173,715

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

                     Total liabilities and shareholders' equity                $       220,612             209,963
                                                                                   =================    ================
</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 March 31,
                                                                                         2000                1999
                                                                                   -----------------    ----------------
<S>                                                                            <C>                      <C>
Revenues:
     Vacation Credit sales, net                                                $        62,863              49,016
     Finance income                                                                      4,228               3,951
     Gains on sales of Notes Receivable                                                  3,589               4,350
     Resort management services                                                          1,613                 823
     Other                                                                               1,251               1,765
                                                                                   -----------------    ----------------

                  Total revenues                                                        73,544              59,905
                                                                                   -----------------    ----------------

Costs and operating expenses:
     Vacation Credit cost of sales                                                      14,591              13,621
     Resort management services                                                            422                 397
     Sales and marketing                                                                30,580              23,498
     General and administrative                                                          7,250               5,394
     Provision for doubtful accounts and recourse
        liability                                                                        4,604               3,443
     Interest                                                                               47                  55
                                                                                   -----------------    ----------------

             Total costs and operating expenses                                         57,494              46,408
                                                                                   -----------------    ----------------

             Income before income taxes                                                 16,050              13,497

Income tax expense                                                                       6,380               5,353
                                                                                   -----------------    ----------------

             Net income                                                        $         9,670               8,144
                                                                                   =================    ================

Basic net income per common share                                              $           .57                 .47

Diluted net income per common share                                            $           .57                 .47


Weighted  average  shares of common  stock and dilutive  potential  common stock
   outstanding:
     Basic                                                                          16,969,603          17,158,766

     Diluted                                                                        17,035,757          17,179,327
</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>
                                                                                       Three months ended March 31,
                                                                                   -------------------------------------
                                                                                         2000                1999
                                                                                   -----------------    ----------------
<S>                                                                            <C>                      <C>
Cash flows from operating activities:
     Net income                                                                $          9,670               8,144
     Adjustments to reconcile net income to net cash provided by operating
        activities:
        Depreciation and amortization                                                       594                 406
        Gain on sale of property and equipment                                               --                (896)
        Amortization of residual interest in Notes Receivable sold                        3,125               2,247
        Provision for doubtful accounts, sales returns and recourse liability             5,620               4,722
        Recoveries of Notes Receivable charged off                                           52                  53
        Residual interest in Notes Receivables sold                                      (3,674)             (4,350)
        Amortization of servicer liability                                                 (186)                 --
        Change in deferred gross profit                                                     (30)               (171)
        Deferred income tax (benefit) expense                                              (539)                568
        Issuance of Notes Receivable                                                    (54,338)            (42,060)
        Proceeds from sale of Notes Receivable                                           42,332              32,244
        Proceeds from repayment of Notes Receivable                                      16,596               8,096
        Purchase of Notes Receivable                                                     (4,950)               (595)
        Changes in certain assets and liabilities:
           Restricted cash                                                               (4,120)               (903)
           Inventories                                                                   (6,405)              3,900
           Accounts payable and accrued liabilities                                         713                 237
           Income taxes payable                                                           6,319               4,060
           Other                                                                         (2,154)                140
                                                                                   -----------------    ----------------

     Net cash provided by operating activities                                            8,625              15,842
                                                                                   -----------------    ----------------

Cash flows from investing activities:
     Purchase of property and equipment                                                  (1,178)             (1,577)
     Proceeds from sale of property and equipment                                             --               4,412
                                                                                   -----------------    ----------------

     Net cash provided by (used in) investing activities                                 (1,178)              2,835
                                                                                   -----------------    ----------------

Cash flows from financing activities:
     Net change in bank line of credit                                                   (3,900)            (11,000)
     Increase in receivable from Parent                                                  (1,279)               (320)
     Decrease in due to Parent                                                               --              (5,688)
     Issuance of common stock                                                               166                  --
     Repurchase of common stock                                                          (2,597)                 --
                                                                                   -----------------    ----------------

     Net cash used in financing activities                                               (7,610)            (17,008)
                                                                                   -----------------    ----------------

     Net (decrease) increase in cash                                                       (163)              1,669

Effect of foreign currency exchange rates on cash                                            58                  --

Cash at beginning of period                                                               1,760                   9
                                                                                   -----------------    ----------------

Cash at end of period                                                          $          1,655               1,678
                                                                                   =================    ================
</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>
                                                                                       Three months ended March 31,
                                                                                   -------------------------------------
                                                                                         2000                1999
                                                                                   -----------------    ----------------
<S>                                                                                <C>                  <C>

Supplemental disclosures of cash flow information -
   cash paid during the period for:
        Interest (excluding capitalized amounts of $102 and $388,
          respectively)                                                        $             47                 480
        Income taxes                                                                         --                 725
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       6

<PAGE>

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

Note 1 - Background

Trendwest Resorts, Inc. and subsidiaries  (Company) markets,  sells and finances
timeshare  ownership  interests  in the  form  of  perpetual  timeshare  credits
(Vacation  Credits) in WorldMark,  the Club  (WorldMark).  Vacation  Credits are
created  through the transfer to WorldMark of resort units acquired or developed
by the Company.  The Company  derives  revenues  primarily from Vacation  Credit
sales and, to a lesser extent,  from the financing of Vacation  Credit sales and
from its management agreement with WorldMark.

These  condensed  consolidated  financial  statements  do  not  include  certain
information and footnotes required by generally accepted  accounting  principles
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 months ended
March  31,  2000  are not  necessarily  indicative  of the  results  that may be
expected for the fiscal year ending December 31, 2000.

These  statements  should  be read in  conjunction  with the  audited  financial
statements and footnotes included in the Company's 1999 Form 10-K filed with the
Securities  and Exchange  Commission  (SEC).  The  accounting  policies  used in
preparing  these  condensed  consolidated  financial  statements are the same as
those described in such Form 10-K.

Note 2 - New Accounting Pronouncements

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 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 second  quarter of 2000.  Compliance  with SAB No.  101 is not  expected  to
result in any material change to the Company's revenue recognition policies.

Note 3 - 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.  Translation  gains and  losses  are not  included  in the
determination  of net income but are  accumulated  in a  separate  component  of
shareholders'  equity. These translation gains and losses are the only component
of  accumulated  other  comprehensive  income on the  accompanying  consolidated
balance  sheets.  Transaction  gains or losses are  recorded  in the  results of
operations  and were  insignificant  for the three month  period ended March 31,
2000.

                                       7

<PAGE>

Note 4 - Basic and Diluted Net Income Per Common Share

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

<TABLE>
<CAPTION>
                                                                              Three months ended March 31,
                                                                         ----------------------------------------
                                                                               2000                  1999
                                                                         -----------------     ------------------
<S>                                                                      <C>                   <C>
         Basic
         Basic weighted average shares                                      16,969,603            17,158,766

         Diluted
         Effect of dilutive securities                                          66,154                20,561
                                                                         -----------------     ------------------
         Diluted weighted average shares outstanding                        17,035,757            17,179,327
                                                                         =================     ==================
</TABLE>

Net income  available to common  shareholders for basic net income per share was
$9,670  and  $8,144  for the  three  months  ended  March  31,  2000  and  1999,
respectively.

At March 31, 2000 and 1999,  there were options to purchase  446,000 and 492,500
shares of common stock  outstanding,  respectively,  which were antidilutive and
therefore not included in the computation of diluted net income per share.

Note 5 - Inventories

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

<TABLE>
<CAPTION>
                                                                          March 31,           December 31,
                                                                             2000                 1999
                                                                       -----------------     ----------------
<S>                                                                 <C>                      <C>
        Vacation Credits                                            $         7,639                13,247
        Construction in progress                                             43,552                32,354
                                                                       -----------------     ----------------

                 Total inventories                                  $        51,191                45,601
                                                                       =================     ================
</TABLE>

                                       8

<PAGE>

Note 6 - Notes Receivable,  Allowance For  Doubtful Accounts, Recourse Liability
         and Sales Returns

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

<TABLE>
<CAPTION>
                                                                          March 31,           December 31,
                                                                             2000                 1999
                                                                       -----------------    ------------------
<S>                                                                 <C>                  <C>
        Total Notes Receivable                                      $       412,268      $       389,901
        Less Notes Receivable sold                                         (315,287)            (288,950)
                                                                       -----------------    ------------------

        Gross on balance sheet Notes Receivable                              96,981              100,951
                                                                       =================    ==================

        Unencumbered Notes Receivable                                        59,984               64,169
        Retained interest in Notes Receivable sold                           36,997               36,782
                                                                       -----------------    ------------------

        Gross on balance sheet Notes Receivable                              96,981              100,951

        Less: Deferred gross profit                                            (963)                (970)
               Allowance for doubtful accounts and sales returns            (16,896)             (15,179)
                                                                       -----------------    ------------------

        Notes Receivable, net                                       $        79,122      $        84,802
                                                                       =================    ==================
</TABLE>

The activity in the  allowance  for doubtful  accounts,  recourse  liability and
sales  returns is as follows for the three  months  ended March 31, 2000 and the
year ended December 31, 1999:

<TABLE>
<CAPTION>
                                                                               2000                  1999
                                                                         -----------------     ------------------
<S>                                                                 <C>                        <C>
         Balances at beginning of period                            $          29,087                20,935

         Provision for doubtful accounts, sales returns and
             recourse liability                                                 5,620                21,407
         Notes receivable charged-off and sales returns net of
             Vacation Credits recovered                                        (3,440)              (13,515)
         Recoveries                                                                52                   260
                                                                         -----------------     ------------------

         Balances at end of period                                  $          31,319                29,087
                                                                         =================     ==================


         Allowance for doubtful accounts and sales returns          $          16,896                15,179
         Recourse Liability on notes receivable sold                           14,423                13,908
                                                                         -----------------     ------------------
                                                                    $          31,319                29,087
                                                                         =================     ==================

</TABLE>

Total notes receivable outstanding, including notes receivable sold, amounted to
$412,268 and $389,901 at March 31, 2000 and December 31, 1999, respectively.

                                       9

<PAGE>

Note 7 - Commitments and Contingencies

(a) Purchase Commitments
The Company  routinely  enters into purchase  agreements with various parties to
acquire  and  build  resort  properties.  At  March  31,  2000 the  Company  had
outstanding  purchase  commitments of $96.5 million related to properties  under
development.

(b) Litigation
The Company is involved in various claims and lawsuits arising from 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 8 - Segment Reporting

The Company has two reportable segments;  sales and financing. The sales segment
markets  and sells  timeshare  memberships.  The  finance  segment is  primarily
responsible  for  servicing  and  collecting  Notes  Receivable   originated  in
conjunction with the financing of sales of Vacation Credits. The finance segment
does not include TW Holdings, TW Holdings II, TW Holdings III, Trendwest Funding
I,  Trendwest  Funding II, TRI Funding III or Trendwest  Resorts South  Pacific.
Management evaluates the business based on U.S. 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:

<TABLE>
<CAPTION>
                                                                                                   Segment
Three months ended March 31, 2000:                   Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
<S>                                           <C>                 <C>             <C>            <C>
External revenue                              $        62,811          1,036          1,613           65,460
Interest revenue - net                                     --          1,311             --            1,311
Interest revenue-intersegment                              --          1,531             --            1,531
Intersegment revenue                                       --            296             --              296
                                                   -----------    -----------     -----------    -------------
Segment revenue                               $        62,811          4,174          1,613           68,598

Segment profit                                $        11,889          2,868          1,191           15,948

Significant non-cash items:
Provision for doubtful accounts, sales
returns and recourse liability                          5,614             --             --            5,614
</TABLE>

                                       10

<PAGE>

<TABLE>
<CAPTION>
                                                                                                   Segment
Three months ended March 31, 1999:                   Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
<S>                                           <C>                 <C>             <C>            <C>
External revenue                              $        49,016          1,722            823           51,561
Interest revenue - net                                     --          1,199             --            1,199
Interest revenue-intersegment                              --            726             --              726
Intersegment revenue                                       --            429             --              429
                                                   -----------    -----------     -----------    -------------
         Segment revenue                      $        49,016          4,076            823           53,915

Segment profit                                $         7,483          3,101            426           11,010

Significant non-cash items:
Provision for doubtful accounts, sales
  returns and recourse liability                        4,722             --             --            4,722
Gain on sale of property and equipment                     --            896             --              896

</TABLE>

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

<TABLE>
<CAPTION>
                                                        Three months ended March 31,
                                                         2000                    1999
                                                    ----------------        ---------------
<S>                                               <C>                       <C>
Segment revenue                                   $       68,598                 53,915
Interest expense reported net of interest
    income                                                    47                     55
Elimination of intersegment revenue                       (1,827)                (1,155)
Other subsidiaries revenue                                 6,726                  7,090
                                                    ----------------        ---------------
                 Consolidated revenue             $       73,544                 59,905
                                                    ================        ===============

Segment profit                                    $       15,948                 11,010
Corporate overhead not included in segment
    reporting                                             (4,212)                (3,431)
Other subsidiaries profit                                  4,314                  5,918
                                                    ----------------        ---------------
             Consolidated pre-tax income          $       16,050                 13,497
                                                    ================        ===============

</TABLE>

The  Company's  revenue from  external  customers  is mainly  derived from sales
within the United  States.  The  Company  has no  long-lived  assets  other than
financial instruments.

                                       11

<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 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 the
Company's Form 10-K.

The Company  achieved total revenues of $73.5 million for the three months ended
March 31, 2000,  compared to $59.9  million for the three months ended March 31,
1999, an increase of 22.7%. The principal reason for the overall improvement was
a 28.4% increase in Vacation  Credit sales to $62.9 million for the three months
ended March 31, 2000 from $49.0  million  for the three  months  ended March 31,
1999. The increase in Vacation  Credit sales was primarily the result of a 23.8%
increase in the number of Vacation  Credits  sold to 45.8  million for the three
months ended March 31, 2000,  from 37.0 million for the three months ended March
31, 1999.  The increase in Vacation  Credits  sold was largely  attributable  to
continued improvement in existing sales offices, opening four new offices in the
second half of 1999 and  increased  Upgrade  Sales.  Revenues from Upgrade Sales
increased 40.8% to $10.0 million for the three months ended March 31, 2000, from
$7.1 million for the three months ended March 31, 1999.  The increase in Upgrade
sales is the result of continuing  satisfaction on the part of WorldMark  Owners
and the ongoing growth in the owner base. The average price per Vacation  Credit
sold  increased  to $1.37 per credit for the three  months  ended March 31, 2000
versus $1.32 per credit for the three months ended March 31, 1999 primarily as a
result of an  approximate  4% increase in the selling price of Vacation  Credits
effective June, 1999.

Finance  income for the three months  ended March 31, 2000  increased 5% to $4.2
million  from $4.0  million  for the three  months  ended  March 31, 1999 due to
increased  average  carrying  balances of Notes  Receivable  for the two periods
compared.  Gains on sales of Notes  Receivable  decreased 18.2% in 2000 over the
comparable  period last year because of higher  interest rates which reduced the
net interest spread.

Vacation  Credit cost of sales,  as a percentage of Vacation  Credit sales,  was
23.2% for the three  months  ended  March 31,  2000  versus  27.8% for the three
months  ended March 31, 1999.  This  decrease  resulted  from the addition of 28
units at Fiji and 17 units at  Rancho  Vistoso  in  Arizona,  both of which  had
product  costs  much  lower  than the  Company's  historical  average.  Over the
remainder of 2000, the Company expects product cost, as a percentage of Vacation
Credit sales, to trend toward the historical average.

Sales and marketing costs, as a percentage of Vacation Credit sales,  were 48.6%
for the three  months  ended  March 31,  2000 as compared to 48.0% for the three
months ended March 31, 1999.  This was the result of increased  marketing  costs
per tour which was partially offset by higher sales closing percentages.

General and  administrative  expenses  increased  35.2% to $7.3  million for the
three  months  ended March 31, 2000 from $5.4 million for the three months ended
March 31, 1999. The increase  resulted from fully  expensing  start-up costs for
the new Midwest,  Las Vegas and South Pacific regions without the  corresponding
benefit of sales.

Provision  for  doubtful  accounts and recourse  liability,  as a percentage  of
Vacation  Credit sales,  was 7.3% of Vacation Credit sales for the first quarter
of 2000 versus 6.9% for the comparable  period last year.  This increase was the
result of a higher mix of sales in newer  regions with  expected  default  rates
higher than the Company's historical experience.

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 March 31, 2000 and  December 31, 1999
were $31.3 million, and $29.1 million, respectively,  representing approximately

                                       12

<PAGE>

7.6% and 7.5%, 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  exceed 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 March 31,
2000 and December 31, 1999,  1.81% and 1.91% of the Company's total  receivables
portfolio of $412.3 million and $389.9 million, respectively,  were more than 60
days past due.

                         LIQUIDITY AND CAPITAL RESOURCES

The  Company  generates  cash from  operations  from down  payments  on sales of
Vacation Credits which are financed,  cash sales of Vacation Credits,  principal
and  interest  payments  on  Notes  Receivable,  and  proceeds  from  sales  and
borrowings  collateralized by Notes Receivable.  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 three  months  ended  March  31,  2000 and 1999,  cash  provided  by
operating activities was $8.6 million and $15.8 million,  respectively.  For the
three  months  ended  March 31,  2000,  cash  provided by  operating  activities
resulted  primarily  from  sales and  repayments  of Notes  Receivable  of $58.9
million,  an  increase in taxes  payable of $6.3  million and net income of $9.7
million.  For the three  months  ended March 31,  2000,  cash used in  operating
activities was principally for the issuance and purchase of Notes  Receivable of
$59.3  million to finance the  purchase of  Vacation  Credits by Owners,  and an
increase in inventory of $6.4 million. For the three months ended March 31, 1999
cash  provided by  operating  activities  resulted  primarily  from the sale and
repayment of Notes Receivable of $40.3 million,  a decrease in inventory of $3.9
million,  an  increase in taxes  payable of $4.1  million and net income of $8.1
million.  Cash used in operating  activities  was primarily for the issuance and
purchase  of Notes  Receivable  of $42.7  million to  finance  the  purchase  of
Vacation Credits by Owners.

Net cash (used in) provided by investing  activities  for the three months ended
March 31, 2000 and 1999 was ($1.2) and $2.8 million, respectively.  Cash used in
investing  activities for the three months ended March 31, 2000, of $1.2 million
was the result of furniture  and  equipment  purchases to support the  Company's
ongoing  growth.  Cash  provided  for the same period in 1999 of $4.4 million in
proceeds  from  the  sale  of the  Bellevue  corporate  building.  Cash  used in
investing  activities of $1.6 million was the result of final retention payments
on the new Corporate  headquarters and other furniture and equipment  related to
the new building

Net cash used in financing  activities for the three months ended March 31, 2000
and 1999, was $7.6 million and $17.0 million, respectively. For the three months
ended March 31, 2000,  cash used in financing  activities  was  principally  the
result of a  decrease  in net  borrowings  under the bank line of credit of $3.9
million,  repurchase of common stock of $2.6 million, and increase in receivable
from Parent of $1.3  million.  For the three months  ended March 31, 1999,  cash
used in financing  activities  was  principally  the result of a decrease in net
borrowings  under the bank line of credit of $11.0  million and  payments to the
Parent on the revolving line of credit of $5.7 million.

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 March 31, 2000 and December 31,

                                       13

<PAGE>

1999 were $0 and $3,900  respectively,  at weighted average interest rates of 0%
and 8.50%, respectively.

The Company has a $10  million  open line of credit with the Parent  which bears
interest  at prime plus 1%  (currently  10.0%) per annum.  The line of credit is
payable on demand.  As of March 31, 2000, there was no outstanding  indebtedness
to the Parent.  The Company may advance  excess funds to the Parent at the prime
rate minus 2% (currently  7.0%) per annum.  At March 31, 2000,  there was a $4.3
million Receivable from Parent.

For the remainder of 2000, the Company anticipates spending approximately $102.0
million  for  acquisitions  and  development  of new resort  properties  and for
expansion  and  development   activities.   The  Company  plans  to  fund  these
expenditures with cash generated from operations, borrowings on the bank line of
credit and further sales and securitizations of Notes. 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, will be sufficient to meet
the Company's  working capital and capital  expenditure needs through the end of
2000.

WorldMark  maintains a replacement  reserve for the  WorldMark  Resorts which is
funded from the annual  assessments of the Owners. At March 31, 2000, the amount
of such reserve was  approximately  $13.3 million.  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. The Company may advance funds
to WorldMark from time to time.

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 under the $30.0
million  revolving  line of credit and loans from the Parent.  See "Risk Factors
Dependence  on  Acquisitions  of  Additional  Resort Units for Growth;  Need for
Additional Capital" of the Company's 1999 Form 10-K.

In the future, the Company may negotiate additional credit facilities,  or 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.


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  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. There have been no material changes to
the Company's exposure to market risk since December 31, 1999.

                                       14

<PAGE>

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings
                  Incorporated by  reference.  See Note 7 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 dated  as  of  January  7,  2000 Among
         Registrant,  TW Holdings III, Inc.,  Sage Systems,  Inc.  International
         Securitization Corporation and Bank One, NA
    10.2 Receivables Sale Agreement dated as of January 7, 2000 Among Registrant
         and TW Holdings III, Inc.
    11   Statement re:  Computation of Earnings per share - See note 4 of "Notes
         to Condensed Consolidated Financial Statements."
    27   Financial Data Schedule

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

(a)      Reports on Form 8-K
                  None

                                       15

<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:      May 12, 2000              /s/ WILLIAM F. PEARE
           ---------------------     -------------------------------------------
                                     William F. Peare
                                     President, Chief Executive Officer and
                                     Director (Principal Executive Officer)


Date:      May 12, 2000              /s/ TIMOTHY P. O'NEIL
           ---------------------     -------------------------------------------
                                     Timothy P. O'Neil
                                     Vice President, Chief Financial Officer
                                     (Principal Financial Officer)