<PAGE>   1



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 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, 1999

                                       OR

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


                         Commission file number 0-22725


                            CRESCENT OPERATING, INC.
          ------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


               Delaware                                 75-2701931
  -------------------------------------   ------------------------------------
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
    incorporation or organization)

    306 West 7th Street, Suite 1000
           Fort Worth, Texas                              76102
  -------------------------------------   ------------------------------------
  (Address of principal executive offices)              (Zip Code)

        Registrant's telephone number, including area code (817) 339-2200


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

                                 YES [X] NO [ ]


Number of shares of Common Stock, $.01 par value, outstanding as of November 15,
1999: 11,414,963


<PAGE>   2


                            CRESCENT OPERATING, INC.
                                    FORM 10-Q
                                TABLE OF CONTENTS



                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>           <C>                                                                                            <C>
Item 1.       Financial Statements:

              Consolidated Balance Sheets......................................................................3

              Consolidated Statements of Operations............................................................4

              Consolidated Statement of Changes in Shareholders' Equity (Deficit)..............................6

              Consolidated Statements of Cash Flows............................................................7

              Notes To Consolidated Financial Statements (Unaudited)...........................................8

Item 2.       Management's Discussion and Analysis of Financial Condition and Results of Operations...........17

Item 3.       Quantitative and Qualitative Disclosures About Market Risk......................................31


                                            PART II - OTHER INFORMATION


Item 1.       Legal Proceedings...............................................................................31

Item 2.       Change in Securities and Use of Proceeds........................................................31

Item 3.       Defaults Upon Senior Securities.................................................................31

Item 4.       Submission of Matters to a Vote of Security Holders.............................................31

Item 5.       Other Information...............................................................................31

Item 6.       Exhibits and Reports on Form 8-K................................................................32
</TABLE>


                                       2

<PAGE>   3



                            CRESCENT OPERATING, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                    September 30, 1999   December 31, 1998
                                                                    ------------------   -----------------
                                                                       (unaudited)           (audited)
<S>                                                                 <C>                  <C>
                                                   ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                         $           31,765   $          42,810
  Accounts receivable, net                                                      48,068              35,544
  Inventories                                                                   49,987              34,203
  Real estate                                                                  128,916             109,301
  Prepaid expenses and other current assets                                      9,610               7,508
                                                                    ------------------   -----------------
     Total current assets                                                      268,346             229,366
                                                                    ------------------   -----------------

PROPERTY AND EQUIPMENT, NET                                                    205,337             162,181
                                                                    ------------------   -----------------

INVESTMENTS                                                                     94,004             367,105
                                                                    ------------------   -----------------

OTHER ASSETS
  Real estate                                                                   94,662              68,809
  Intangible assets, net                                                        85,413              82,513
  Other assets                                                                  54,560              27,359
                                                                    ------------------   -----------------
     Total other assets                                                        234,635             178,681
                                                                    ------------------   -----------------

TOTAL ASSETS                                                        $          802,322   $         937,333
                                                                    ==================   =================

                              LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
  Accounts payable and accrued expenses                             $           79,824   $          64,749
  Accounts payable - CEI                                                        10,700               7,731
  Current portion of long-term debt - CEI                                        5,779               7,668
  Current portion of long-term debt                                             83,988              84,539
  Deferred revenue                                                              43,314              46,998
                                                                    ------------------   -----------------
     Total current liabilities                                                 223,605             211,685

LONG-TERM DEBT - CEI, NET OF CURRENT PORTION                                   233,039             220,944

LONG-TERM DEBT, NET OF CURRENT PORTION                                         125,021              57,988

OTHER LIABILITIES                                                               45,966              34,578
                                                                    ------------------   -----------------

     Total liabilities                                                         627,631             525,195
                                                                    ------------------   -----------------

MINORITY INTERESTS                                                             190,917             428,206
                                                                    ------------------   -----------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT)
  Preferred stock, $0.01 par value, 10,000 shares authorized,
      no shares issued or outstanding                                               --                  --
  Common stock, $0.01 par value, 22,500 shares authorized,
      11,414 and 11,402 shares issued, respectively                                114                 114
  Additional paid-in capital                                                    17,713              17,667
  Deferred compensation on restricted shares                                      (250)               (210)
  Accumulated comprehensive income (loss)                                       (9,578)             (9,763)
  Retained deficit                                                             (19,919)            (21,024)
  Treasury stock at cost, 1,103 and 700 shares, respectively                    (4,306)             (2,852)
                                                                    ------------------   -----------------
      Total shareholders' equity (deficit)                                     (16,226)            (16,068)
                                                                    ------------------   -----------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                $          802,322   $         937,333
                                                                    ==================   =================
</TABLE>

    See accompanying notes to the consolidated financial statements.


                                       3
<PAGE>   4

                            CRESCENT OPERATING, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            (Amounts in thousands, except per share data, unaudited)


<TABLE>
<CAPTION>
                                                           For the three            For the three
                                                           months ended             months ended
                                                        September 30, 1999       September 30, 1998
                                                      -----------------------  -----------------------
<S>                                                   <C>                      <C>
 REVENUES
    Equipment sales & leasing                         $                37,163  $                33,461
    Hospitality                                                        65,384                   58,182
    Land development                                                   73,055                   20,183
                                                      -----------------------  -----------------------

       Total revenues                                                 175,602                  111,826
                                                      -----------------------  -----------------------

 OPERATING EXPENSES
    Equipment sales & leasing                                          35,139                   31,372
    Hospitality                                                        50,520                   43,380
    Hospitality properties rent - CEI                                  13,656                   13,579
    Land development                                                   72,565                   25,077
    Corporate general and administrative                                  776                    1,112
                                                      -----------------------  -----------------------

       Total operating expenses                                       172,656                  114,520
                                                      -----------------------  -----------------------

 INCOME (LOSS) FROM OPERATIONS                                          2,946                   (2,694)
                                                      -----------------------  -----------------------

 INVESTMENT INCOME                                                      1,859                    5,738
                                                      -----------------------  -----------------------

 OTHER (INCOME) EXPENSE
    Interest expense                                                    7,789                    4,387
    Interest income                                                      (884)                    (908)
    Other                                                                 182                     (225)
                                                      -----------------------  -----------------------

       Total other (income) expense                                     7,087                    3,254
                                                      -----------------------  -----------------------

 INCOME (LOSS) BEFORE INCOME
     TAXES AND MINORITY INTERESTS                                      (2,282)                    (210)

 INCOME TAX PROVISION (BENEFIT)                                        (1,284)                  (1,320)
                                                      -----------------------  -----------------------

 INCOME (LOSS) BEFORE MINORITY INTERESTS                                 (998)                   1,110

 MINORITY INTERESTS                                                    (1,465)                  (1,021)
                                                      -----------------------  -----------------------

 NET INCOME (LOSS)                                    $                (2,463) $                    89
                                                      =======================  =======================

 EARNINGS (LOSS) PER SHARE
    Basic                                             $                 (0.24) $                  0.01
                                                      =======================  =======================
    Diluted                                           $                 (0.24) $                  0.01
                                                      =======================  =======================

 WEIGHTED AVERAGE SHARES OUTSTANDING
    Basic                                                              10,313                   11,352
                                                      =======================  =======================
    Diluted                                                            10,313                   12,070
                                                      =======================  =======================
</TABLE>

       See accompanying notes to the consolidated financial statements.



                                       4
<PAGE>   5


                            CRESCENT OPERATING, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            (Amounts in thousands, except per share data, unaudited)



<TABLE>
<CAPTION>
                                                           For the nine            For the nine
                                                           months ended            months ended
                                                       September 30, 1999       September 30, 1998
                                                      ----------------------  -----------------------
<S>                                                   <C>                     <C>
 REVENUES
    Equipment sales & leasing                         $              103,858  $                53,000
    Hospitality                                                      183,894                  169,550
    Land development                                                 197,991                   93,462
                                                      ----------------------  -----------------------

       Total revenues                                                485,743                  316,012
                                                      ----------------------  -----------------------

 OPERATING EXPENSES
    Equipment sales & leasing                                         98,737                   49,824
    Hospitality                                                      140,241                  123,791
    Hospitality properties rent - CEI                                 40,450                   38,095
    Land development                                                 188,557                   97,399
    Corporate general and administrative                               1,766                    2,251
                                                      ----------------------  -----------------------

       Total operating expenses                                      469,751                  311,360
                                                      ----------------------  -----------------------

 INCOME FROM OPERATIONS                                               15,992                    4,652
                                                      ----------------------  -----------------------

 INVESTMENT INCOME                                                    15,700                   12,388
                                                      ----------------------  -----------------------

 OTHER (INCOME) EXPENSE
    Interest expense                                                  21,003                   11,639
    Interest income                                                   (2,648)                  (3,124)
    Other                                                                325                     (188)
                                                      ----------------------  -----------------------

       Total other (income) expense                                   18,680                    8,327
                                                      ----------------------  -----------------------

 INCOME BEFORE INCOME
     TAXES AND MINORITY INTERESTS                                     13,012                    8,713

 INCOME TAX PROVISION                                                     60                    2,948
                                                      ----------------------  -----------------------

 INCOME BEFORE MINORITY INTERESTS                                     12,952                    5,765

 MINORITY INTERESTS                                                  (11,847)                  (4,912)
                                                      ----------------------  -----------------------

 NET INCOME                                           $                1,105  $                   853
                                                      ======================  =======================

 EARNINGS PER SHARE
 Basic                                                $                 0.11  $                  0.08
                                                      ======================  =======================
 Diluted                                              $                 0.10  $                  0.07
                                                      ======================  =======================

 WEIGHTED AVERAGE SHARES OUTSTANDING
 Basic                                                                10,380                   11,298
                                                      ======================  =======================
 Diluted                                                              10,993                   12,056
                                                      ======================  =======================
</TABLE>

      See accompanying notes to the consolidated financial statements.


                                       5
<PAGE>   6


                            CRESCENT OPERATING, INC.
       CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
                        (Amounts in thousands, unaudited)



<TABLE>
<CAPTION>
                                               Common stock              Treasury stock
                                         --------------------------- ----------------------------     Additional
                                            Shares        Amount        Shares          Amount     paid-in capital
                                         ------------- ------------- -------------  -------------  ---------------
<S>                                      <C>           <C>           <C>            <C>            <C>
BALANCE at December 31, 1998                    11,402 $         114          (700) $      (2,852) $        17,667

Comprehensive income:

    Net income                                      --            --            --             --               --

    Unrealized gain on Magellan warrants            --            --            --             --               --


Comprehensive income

Stock options exercised                              6            --            --             --                6

Issuance of restricted common stock                  6            --            --             --               40

Purchase of treasury stock                          --            --          (403)       (1,454)               --
                                         ------------- ------------- -------------  ------------   ---------------

BALANCE at September 30, 1999                   11,414 $         114        (1,103) $     (4,306)  $        17,713
                                         ============= ============= =============  ============   ===============



<CAPTION>
                                            Deferred
                                           compensation   Accumulated
                                          on restricted  comprehensive    Retained
                                              shares      income (loss)   deficit        Total
                                          -------------  --------------  -----------  -----------
<S>                                       <C>            <C>             <C>           <C>
BALANCE at December 31, 1998              $        (210) $       (9,763) $   (21,024) $   (16,068)
                                                                                      -----------

Comprehensive income:

    Net income                                       --              --        1,105        1,105

    Unrealized gain on Magellan warrants             --             185           --          185
                                                                                      -----------

Comprehensive income                                                                        1,290

Stock options exercised                              --              --           --            6

Issuance of restricted common stock                 (40)             --           --           --

Purchase of treasury stock                           --              --           --       (1,454)
                                          -------------  --------------  -----------  -----------

BALANCE at September 30, 1999             $        (250) $       (9,578) $   (19,919) $   (16,226)
                                          =============  ==============  ===========  ===========
</TABLE>


      See accompanying notes to the consolidated financial statements.


                                       6
<PAGE>   7

                            CRESCENT OPERATING, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (Amounts in thousands, unaudited)

<TABLE>
<CAPTION>
                                                                                For the nine        For the nine
                                                                                months ended        months ended
                                                                             September 30, 1999   September 30, 1998
                                                                             ------------------   ------------------
<S>                                                                          <C>                  <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                               $            1,105   $              853
    Adjustments to reconcile net income
      to net cash (used in) provided by operating activities:
        Depreciation                                                                     15,432                8,960
        Amortization                                                                     10,349                5,384
        Provision for deferred income taxes                                             (23,902)              (2,493)
        Gain on sale of investments                                                      (1,942)                  --
        Equity in income of unconsolidated subsidiaries                                 (13,758)             (12,388)
        Minority interests in net losses                                                 11,847                4,912
        Deferred compensation                                                                --                   50
        Gain on sale of property and equipment                                           (4,030)                (468)
        Changes in assets and liabilities, net of effects from acquistions:
            Accounts receivable                                                          (9,576)              (1,520)
            Inventories                                                                 (29,973)              (4,802)
            Prepaid expenses and current assets                                          (1,555)              (1,604)
            Real estate                                                                 (47,345)              (1,823)
            Other assets                                                                    987                  (54)
            Accounts payable and accrued expenses                                         9,751               (2,895)
            Accounts payable - CEI                                                        4,033                1,222
            Deferred revenue, current and noncurrent                                      6,789               14,317
            Other liabilities                                                               449                1,550
                                                                             ------------------   ------------------
                 Net cash (used in) provided by operating activities                    (71,339)               9,201
                                                                             ------------------   ------------------

 CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of business interests, net of cash acquired                              (26,047)             (16,479)
   Acquisition of business interests for minority interests                             (10,587)            (122,604)
   Purchases of property and equipment                                                  (38,743)             (26,344)
   Purchase of treasury stock                                                            (1,454)                  --
   Proceeds from sale of investments                                                     22,436                   --
   Proceeds from sale of property and equipment                                          24,065                3,271
   Net (issuance of) proceeds from sale and collection of notes receivable               (1,222)              25,887
   Net distributions from investments                                                     8,942               15,525
   Other                                                                                  1,137                   --
                                                                             ------------------   ------------------
                 Net cash used in investing activities                                  (21,473)            (120,744)
                                                                             ------------------   ------------------

 CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds of long-term debt                                                           248,655               50,845
   Payments on long-term debt                                                           (61,073)             (28,950)
   Proceeds of long-term debt - CEI                                                      36,342               21,706
   Payments on long-term debt - CEI                                                    (166,909)             (49,237)
   Capital contributions by minority interests                                           35,058              124,029
   Distributions to minority interests                                                   (8,133)             (11,091)
   Other                                                                                 (2,173)                  23
                                                                             ------------------   ------------------
                 Net cash provided by financing activities                               81,767              107,325
                                                                             ------------------   ------------------

 NET DECREASE IN CASH AND
   CASH EQUIVALENTS                                                                     (11,045)             (4,218)

 CASH AND CASH EQUIVALENTS,
   BEGINNING OF PERIOD                                                                   42,810               43,401
                                                                             ------------------   ------------------

 CASH AND CASH EQUIVALENTS,
   END OF PERIOD                                                             $           31,765   $           39,183
                                                                             ==================   ==================
</TABLE>

 See accompanying notes to the consolidated financial statements.


                                       7
<PAGE>   8


                            CRESCENT OPERATING, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.       ORGANIZATION AND BASIS OF PRESENTATION:

Crescent Operating, Inc. was formed on April 1, 1997 by Crescent Real Estate
Equities Company ("CEI") and its subsidiary Crescent Real Estate Equities
Limited Partnership ("Crescent Partnership"). Effective June 12, 1997, CEI
distributed shares of Crescent Operating, Inc. common stock to shareholders of
CEI and unit holders of Crescent Partnership of record on May 30, 1997.

Crescent Operating, Inc. ("Crescent Operating" or "COPI") is a diversified
management company that, through various subsidiaries and affiliates
(collectively with Crescent Operating, the "Company"), currently operates
primarily in four business segments: Equipment Sales and Leasing, Hospitality,
Temperature Controlled Logistics (formerly Refrigerated Warehousing) and Land
Development. Through these segments, Crescent Operating does business throughout
the United States.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the audited financial statements and related footnotes of the Company for
the fiscal year ended December 31, 1998 included in the Company's Form 10-K. In
management's opinion, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the consolidated
unaudited interim financial statements have been included and all significant
intercompany balances and transactions have been eliminated. Certain prior
period information has been reclassified to conform to current period
presentation. Due to acquisitions and seasonal fluctuations, operating results
for interim periods reflected are not necessarily indicative of the results that
may be expected for a full fiscal year.

The financial results of the Company include the following:

o   Subsidiaries which are wholly-owned and consolidated:
    o  Crescent Machinery Company ("Crescent Machinery");
    o  Rosestar Management LLC ("Rosestar"); and
    o  COI Hotel Group, Inc. ("COI Hotel").

o   Subsidiaries which are not wholly-owned but the Company controls and
    therefore consolidates:
    o  A 5% economic interest in:

       -   The Woodlands Land Company, Inc. ("LandCo") which has a 42.5% general
           partner interest in The Woodlands Land Development Company, L.P.
           ("Landevco");

       -   Desert Mountain Development Corporation ("Desert Mountain
           Development") which consolidates its 93% general partner interest in
           Desert Mountain Properties Limited Partnership ("DMPLP"); and

       -   CRL Investments, Inc. ("CRL") which beneficially owns 60% of CR Las
           Vegas, LLC ("CR Las Vegas") and 20% of CR License, LLC ("CR
           License").

    o  A 50% general partner interest in COPI Colorado,  L.P. ("COPI Colorado")
       which owns 10% of Crescent Development Management Corp. ("CDMC"). The
       10% interest in CDMC represents 100% of the voting stock, and therefore,
       CDMC is consolidated into COPI Colorado.


                                       8
<PAGE>   9


o   Subsidiaries which the Company reports on the equity method of accounting:

    o   A 42.5% interest in the Woodlands Operating Company, L.P. ("TWOC");

    o   A 40% interest in Vornado Crescent Operations, L.P. ("AmeriCold
        Operations");

    o   A direct 25% common membership interest in Charter Behavioral Health
        Systems, LLC ("CBHS");

    o   An indirect 65% common membership interest in CBHS held through a
        limited partner interest in COPI CBHS Holdings, L.P.; and

    o   A 1% interest in each of Crescent CS Holdings Corporation ("CS I") and
        Crescent CS Holdings II Corporation ("CS II"), (collectively, "AmeriCold
        Logistics").


2.       RECENT DEVELOPMENTS:

EQUIPMENT SALES AND LEASING

Effective July 1, 1999, Crescent Machinery acquired all of the stock of E. L.
Lester and Company ("Lester"), a company engaged in equipment sales, leasing and
servicing, located in Houston, Texas. The purchase price of approximately $18.2
million was comprised of $8.5 million cash, the issuance of notes payable by
Crescent Operating in the amount of $6.0 million and the assumption of
liabilities of $3.7 million. The transaction was treated as a purchase for
accounting purposes, and accordingly, the results of operations have been
included in the Company's consolidated financial statements from the date of
acquisition.

Effective July 1, 1999, Crescent Machinery acquired all of the stock of Solveson
Crane Rental, Inc. ("Solveson"), a company engaged in equipment sales, leasing
and servicing, located in Tracy, California. The purchase price of approximately
$6.4 million was comprised of $3.2 million cash and the assumption of
liabilities of $3.2 million. The transaction was treated as a purchase for
accounting purposes, and accordingly, the results of operations have been
included in the Company's consolidated financial statements from the date of
acquisition.

HOSPITALITY

On July 23, 1999, CRL exercised its option to purchase an additional 10%
economic interest in CR License by paying $2.0 million, bringing CRL's total
economic interest in CR License to 20%. CR License is the entity which owns the
rights to the future use of the "Canyon Ranch" name. CRL has the opportunity
over the next year to pay an additional $3.0 million to obtain an additional 10%
interest in CR License.

LAND DEVELOPMENT

On August 27, 1999 and October 27, 1999, the Company sold its investments in
Hillwood/1642, Ltd. ("Hillwood") and Corporate Arena Associates, Inc.
("Corporate Arena"), respectively, for an aggregate price of approximately $1.4
million. Together, the sales resulted in an approximate $0.2 million gain.

OTHER

On October 25, 1999, the Company received notice from The Nasdaq-Amex Market
Group (the "Nasdaq") that, for the 30 consecutive trading days preceding such
date, the Company's common stock failed to maintain a closing bid price of
greater than or equal to $5.00, the minimum closing bid price required for
continued listing under the Nasdaq National Market maintenance standard
applicable to the Company. The Nasdaq has informed the Company that, in order to
continue to be listed on the Nasdaq National Market, the Company must regain
compliance with the applicable maintenance standard on or before January 24,
2000. The Company will regain compliance if the closing bid price of its common
stock equals or exceeds $5.00 for 10 consecutive trading days. In the event that
the Company does not regain compliance on or before January 24, 2000, the
Company could pursue several options, including requesting a hearing before a
Nasdaq panel on the issue of compliance or applying for listing on the Nasdaq
SmallCap Market.


                                       9
<PAGE>   10


On September 9, 1999, Crescent Operating, Magellan Health Services, Inc.
("Magellan"), Crescent Partnership and CBHS completed a recapitalization of CBHS
and restructuring of the relationships among the parties. In connection with the
restructuring, Magellan transferred its remaining hospital-based assets
(including Charter Advantage, Charter Franchise Services, LLC, the call center
assets, the Charter name and related intellectual property and certain other
assets) to CBHS, and released CBHS from all accrued and future franchise fees.
As a result, Magellan is no longer obligated to provide franchise services to
CBHS. Magellan also transferred 80% of its CBHS common interest and all of its
CBHS preferred interest to CBHS, leaving Magellan with a 10% common membership
interest, Crescent Operating with a 25% common membership interest and 100% of
the preferred membership interest in CBHS, and a limited partnership controlled
by individual officers of Crescent Operating and in which Crescent Operating
owns 100% of the economic interests, with a 65% common interest in CBHS.

In connection with the restructuring, Magellan, CBHS, Crescent Partnership and
Crescent Operating also provided each other with mutual releases of all claims
and disputes against each other, with certain specified exceptions, and Crescent
Partnership deferred the August 1999 rent due from CBHS to the last four months
of 1999. Additionally, in connection with the settlement and mutual release of
the related claims between Magellan and Crescent Operating, the $2.5 million
held in escrow was released to Crescent Operating.

Magellan and CBHS also have modified and extended their existing arrangement
which designates CBHS as a preferred provider of inpatient acute behavioral
health services.

Effective November 10, 1999, Crescent Partnership agreed to defer the November
1999 and December 1999 minimum rent due from CBHS to December 16, 1999. In
addition, CBHS authorized Crescent Partnership to market and sell certain of the
health care facilities currently leased by CBHS under the master lease with
Crescent Partnership. Upon the closing of each sale of the subject facilities,
Crescent Partnership will reduce the amount of monthly minimum rent due under
the master lease by a specified percentage of the net proceeds of any such sale.
Further, Crescent Partnership and CBHS have agreed that, unless extended by
Crescent Partnership, the master lease will terminate on January 31, 2000, with
respect to facilities that can be sold under the master lease, subject to
certain holdover provisions.

Crescent Operating did not record gains or losses with respect to the above
transactions with CBHS. Crescent Operating had previously written off its
investment in CBHS.

As of November 12, 1999, COPI Colorado had purchased approximately 1.1 million
shares of Crescent Operating common stock at a total purchase price of $4.3
million. The average price paid for such shares, excluding brokers' commissions,
was $3.88 per share.


                                       10
<PAGE>   11


3.       INVESTMENTS:

Investments consisted of the following (amounts in thousands):

<TABLE>
<CAPTION>
                                                                         September 30, 1999      December 31, 1998
                                                                        ---------------------  ----------------------
<S>                                                                     <C>                    <C>
    Investment in Landevco..........................................      $      51,524        $        37,880
    Investment in AmeriCold Operations..............................             12,753                     --
    Investment in CDMC projects.....................................             12,559                 22,737
    Investment in CR Las Vegas......................................              8,356                     --
    Investment in AmeriCold Logistics...............................              3,024                293,868
    Investment in Magellan warrants.................................              2,923                  2,737
    Investment in CR License........................................              2,896                  1,000
    Investment in Houston Center Athletic Club Venture..............              1,102                  1,011
    Investment in Corporate Arena ..................................                221                    127
    Investment in Hillwood..........................................                 --                    774
    Investment in Hicks-Muse........................................                 --                  7,802
    Investment in TWOC..............................................             (1,354)                  (831)
                                                                        ---------------------  ----------------------
                                                                          $      94,004          $     367,105
                                                                        =====================  ======================
</TABLE>

Investment income consisted of the following (amounts in thousands):

<TABLE>
<CAPTION>
                                                                         Three months ended      Nine months ended
                                                                         September 30, 1999     September 30, 1999
                                                                        ---------------------  ----------------------
<S>                                                                     <C>                    <C>
    Equity in income of Landevco.....................................      $        4,760          $      13,390
    Gain on sale of Hillwood.........................................                 124                    124
    Equity in income of Houston Center Athletic Club Venture.........                  76                    211
    Equity in income (loss) of AmeriCold Logistics...................                  (2)                   283
    Hicks-Muse income................................................                  --                    239
    Gain on sale of CS I and CS II...................................                  --                  1,493
    Equity in income (loss) of TWOC..................................                 (74)                   752
    Equity in income (loss) of CDMC Projects.........................                (288)                 2,991
    Equity in loss of CR Las Vegas, LLC..............................              (1,047)                (1,047)
    Equity in loss of AmeriCold Operations...........................              (1,690)                (2,736)
                                                                        ---------------------  ----------------------
                                                                           $        1,859          $      15,700
                                                                        =====================  ======================
</TABLE>

Due to a restructuring of the Company's investment in the Temperature Controlled
Logistics segment, Crescent Operating no longer consolidates CS I and CS II for
accounting purposes, which has resulted in a decrease in the investment in
AmeriCold Logistics of approximately $290 million.


                                       11
<PAGE>   12


A summary of financial information for the Company's investments in TWOC and
Landevco, each of which represents a significant unconsolidated investment is
presented below (amounts in thousands). A summary of financial information for
the Company's investment in CBHS has not been provided because the Company's
investment balance is zero and no income or loss has been recognized since
February 1998.

<TABLE>
<CAPTION>
                                                                TWOC                                 Landevco
                                               -------------------------------------- --------------------------------------
                                                   Three months        Nine months     Three months ended     Nine months
                                                      ended                ended            ended               ended
                                                  September 30,        September 30,       September 30,     September 30,
                                                      1999                 1999               1999               1999
                                               -------------------  ----------------- -------------------- -----------------
<S>                                            <C>                  <C>               <C>                  <C>
     Revenues ............................     $            17,347  $          55,061 $             29,664 $          86,739
     Gross profit ........................     $              (178) $           1,752 $             11,631 $          32,290
     Net income (loss)....................     $              (173) $           1,769 $             11,200 $          31,507

     Crescent Operating's equity
         in income (loss) of subsidiary...     $               (74) $             752 $                238 $             670
</TABLE>


4.       INTANGIBLE ASSETS:

Intangible assets consisted of the following (amounts in thousands):

<TABLE>
<CAPTION>
                                                                       September 30, 1999       December 31, 1998
                                                                      ----------------------  ----------------------
<S>                                                                   <C>                     <C>
    Goodwill, net - Crescent Machinery............................         $       8,362           $       7,757
    Goodwill, net - RoseStar......................................                 1,471                   1,632
    Goodwill, net - CDMC..........................................                40,333                  31,016
    Membership intangible, net - DMPLP............................                35,247                  42,108
                                                                      ----------------------  ----------------------
                                                                           $      85,413           $      82,513
                                                                      ======================  ======================
</TABLE>

5.       LONG-TERM DEBT:

The Company's long-term debt facilities are composed of (i) corporate and
wholly-owned debt, and (ii) non wholly-owned debt. Corporate and wholly-owned
debt relates to debt facilities at the Crescent Operating level or owed by
entities which are owned 100% by Crescent Operating. Non wholly-owned debt
represents non-recourse debt owed by entities which are consolidated in the
Company's financial statements but are not 100% owned by the Company; the
Company's economic investment in these entities is 5% or less. Following is a
summary of the Company's debt financing (amounts in thousands):

<TABLE>
<CAPTION>
                                                                         September 30, 1999    December 31, 1998
                                                                        --------------------- ---------------------
<S>                                                                     <C>                   <C>
      LONG-TERM DEBT - CORPORATE AND WHOLLY-OWNED SUBSIDIARIES

      Equipment notes payable to various finance companies, weighted
      average interest of 8.5% due 1999 through 2003 (Crescent              $      93,809         $      70,074
      Machinery)....................................................

      Floor plan  debt payable, three to twelve month terms at 0%
      interest (Crescent Machinery).................................               30,939                 7,958

      Note payable to Crescent Partnership, interest at 9%, due May
      2002 (COPI)...................................................               19,500                    --
</TABLE>


                                       12
<PAGE>   13


<TABLE>
<S>                                                                          <C>                   <C>
      Note payable to Crescent Partnership, interest at 12%, due May
      2002 (COPI)...................................................               15,047                24,223

      Line of credit in the amount of $15.0 million payable to Bank
      of America, interest at LIBOR plus 1%, due August 31, 2001
      (COPI)........................................................               15,000                15,000

      Line of credit in the amount of $17.2 million payable to
      Crescent Partnership, interest at 12%, due May 2002 or five
      years after the last draw (COPI)..............................               10,248                27,733

      Notes payable to the sellers of Western Traction, Harvey
      Equipment and Lester, weighted average interest of 7.8%, due
      2000 through 2003 (COPI)......................................                9,202                 6,670

      Note payable to Crescent Partnership, interest at 12%, due May
      2002 (COPI)...................................................                9,000                 9,000

      Notes payable to Crescent Partnership, weighted average
      interest of 10.1%, due 2002 through 2006 (RoseStar / COI
      Hotel)........................................................                2,713                 3,078
                                                                             ------------          ------------

           Total debt - corporate and wholly-owned subsidiaries.....              205,458               163,736
                                                                             ------------          ------------

      LONG-TERM DEBT - NON WHOLLY-OWNED SUBSIDIARIES

      Junior note payable to Crescent Partnership, interest at 14%,
      due December 2010 (DMPLP).....................................               60,000                60,000

      Line of credit in the amount of $48.2 million payable to
      Crescent Partnership, interest at 11.5%, due August 2004
      (CDMC)........................................................               46,065                35,976

      Construction loans for various East West Resort Development
      projects, interest at 6% to 9%, due 1999 to 2003 (CDMC).......               36,080                32,825

      Senior note payable to Crescent Partnership, interest at 10%,
      due December 2005 (DMPLP).....................................               28,266                50,717

      Line of credit in the amount of $45 million payable to
      National Bank of Arizona, interest at prime to prime plus 1%,
      due June 2000 (DMPLP).........................................               23,978                10,000

      Line of credit in the amount of $40.0 million payable to
      Crescent Partnership, interest at 11.5%, due December 2006
      (CDMC)........................................................               23,372                    --

      Line of credit in the amount of $22.9 million payable to
      Crescent Partnership, interest at 12%, due January 2003
      (CDMC)........................................................               16,294                15,035

      Line of credit in the amount of $7.0 million payable to
      Crescent Partnership, interest at 12%, due August 2003
      (CRL).........................................................                5,666                    --
</TABLE>


                                       13
<PAGE>   14


<TABLE>
<S>                                                                          <C>                   <C>
      Note payable to Crescent Partnership, interest at 12%, due
      June 2005 (CDMC)..............................................                2,648                 2,850
                                                                              -----------           -----------

           Total debt - non wholly-owned subsidiaries...............              242,369               207,403
                                                                              -----------           -----------

           Total long-term debt.....................................          $   447,827           $   371,139
                                                                              ===========           ===========

      Current portion of long-term debt - CEI.......................          $     5,779           $     7,668

      Current portion of long-term debt.............................               83,988                84,539

      Long-term debt - CEI, net of current portion..................              233,039               220,944

      Long-term debt, net of current portion........................              125,021                57,988
                                                                              -----------           -----------

                Total long-term debt................................          $   447,827           $   371,139
                                                                              ===========           ===========
</TABLE>

On August 27, 1999, the $15.0 million line of credit from Bank of America was
renewed for a two year term with terms similar to the previous facility.

6.       OTHER LIABILITIES:

Other liabilities consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                              September 30, 1999    December 31, 1998
                                                              ------------------    -----------------
<S>                                                           <C>                   <C>
   Deferred revenue...................................        $           40,764    $          29,477
   Deferred hospitality rent..........................                     4,268                3,808
   Other..............................................                       934                1,293
                                                              ------------------    -----------------
                                                              $           45,966    $          34,578
                                                              ==================    =================
</TABLE>

7.       EARNINGS PER SHARE:

Earnings per share ("EPS") is calculated as follows (in thousands, except per
share data):

<TABLE>
                                  Three months ended September 30, 1999       Nine months ended September 30, 1999
                                ------------------------------------------  ------------------------------------------
                                    Net           Wtd Avg.      Per Share       Net       Wtd. Avg.        Per Share
                                   Income          Shares        Amount       Income       Shares           Amount
                                ------------    -------------  -----------  -----------  ------------    -------------
<S>                             <C>             <C>            <C>          <C>          <C>             <C>
BASIC EPS...................... $     (2,463)          10,313  $     (0.24) $     1,105        10,380    $        0.11

EFFECT OF DILUTIVE SECURITIES:
Stock Options..................                            --                                     613
                                                -------------                            ------------

DILUTED EPS.................... $     (2,463)          10,313  $     (0.24) $     1,105        10,993    $        0.10
                                                =============  ===========               ============    =============
</TABLE>

The Company had 994,872 and 90,600 options for its common stock outstanding for
the three and nine months ended September 30, 1999, respectively, which were not
included in the calculation of diluted EPS as they were anti-dilutive.


                                       14
<PAGE>   15


8.       INCOME TAXES:

The table below shows the reconciliation of the federal statutory income tax
rate to the effective tax rate.

<TABLE>
<CAPTION>
                                                                   Three months ended           Nine months ended
                                                                   September 30, 1999          September 30, 1999
                                                                -------------------------    ------------------------
<S>                                                             <C>                          <C>
     Federal statutory income tax rate......................               35.0%                       35.0%
     State income taxes, net of federal tax benefit.........                5.0                         5.0
     Minority interests.....................................               16.5                        (7.7)
     Change in valuation allowance..........................                 -                        (31.9)
     Other, net.............................................               (0.2)                        0.1
                                                                -------------------------    ------------------------
            Effective tax rate...............................              56.3%                        0.5%
                                                                =========================    ========================
</TABLE>

During 1999, the Company released its $4.2 million valuation allowance based on
both 1999 transactions and expected future taxable income.


9.   BUSINESS SEGMENT INFORMATION:

Crescent Operating's assets and operations are located entirely within the
United States and are currently comprised primarily of four business segments:
(i) Equipment Sales and Leasing, (ii) Hospitality, (iii) Temperature Controlled
Logistics and (iv) Land Development. In addition to these four business
segments, the Company has grouped its investment in Magellan warrants,
investment in Hicks-Muse (sold in March 1999), interest expense on corporate
debt and general corporate overhead costs such as legal and accounting costs,
insurance costs and corporate salaries as "Other" for segment reporting
purposes. The Company uses net income as the measure of segment profit or loss.

The Company has expensed its entire investment and has no obligation or
commitment to fund CBHS' ongoing operations. As a result of the write-off, and
irrespective of the restructuring transactions described in Note 2 above, the
Company does not anticipate that it will recognize any additional losses from
its investment in CBHS. Because the Company has expensed its CBHS investment
and it is unlikely that the Company will recognize any material income from CBHS
in the near future due to the operating losses currently being incurred by CBHS,
the Company no longer reports the operations of CBHS as a separate segment.

Business segment information is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                              Three months ended                      Nine months ended
                                     -------------------------------------  --------------------------------------
                                      September 30,       September 30,       September 30,       September 30,
                                           1999               1998                1999                1998
                                     -----------------  ------------------  ------------------  ------------------
<S>                                  <C>                <C>                 <C>                 <C>
Revenues:
   Equipment Sales and Leasing...... $          37,163  $           33,461  $          103,858  $           53,000
   Hospitality......................            65,384              58,182             183,894             169,550
   Temperature Controlled Logistics.                --                  --                  --                  --
   Land Development.................            73,055              20,183             197,991              93,462
   Other............................                --                  --                  --                  --
                                     -----------------  ------------------  ------------------  ------------------
   Total revenues................... $         175,602  $          111,826  $          485,743  $          316,012
                                     =================  ==================  ==================  ==================

Net income (loss):
   Equipment Sales and Leasing...... $              65  $              730  $              312  $              959
   Hospitality......................               719                 787               1,960               4,630
   Temperature Controlled Logistics.            (1,015)                 61                (577)                (30)
   Land Development.................              (577)                199                (192)                884
   Other............................            (1,655)             (1,688)               (398)             (5,590)
                                     -----------------  ------------------  ------------------  ------------------
   Total net income (loss).......... $          (2,463) $               89  $            1,105  $              853
                                     =================  ==================  ==================  ==================
</TABLE>


                                       15
<PAGE>   16


<TABLE>
<CAPTION>
                                      September 30, 1999  December 31, 1998
                                      ------------------  -----------------
Identifiable assets:
<S>                                   <C>                 <C>
   Equipment Sales and Leasing......  $          185,315  $         127,215
   Hospitality......................              49,390             38,536
   Temperature Controlled Logistics.              13,846            293,780
   Land Development.................             548,346            464,634
   Other............................               5,425             13,168
                                      ------------------  -----------------
   Total identifiable assets........  $          802,322  $         937,333
                                      ==================  =================
</TABLE>


                                       16
<PAGE>   17


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The information in this Item 2 should be read in conjunction with the interim
consolidated financial statements and the accompanying notes presented in Item 1
to this Form 10-Q. The financial statements include all adjustments which
management believes are necessary to reflect a fair statement of the financial
results for the interim periods presented. All such adjustments are of a normal
and recurring nature. The information contained in this Item 2 should also be
read in conjunction with the more detailed information included in the Company's
Form 10-K for the year ended December 31, 1998. Capitalized terms used but not
otherwise defined in this Item 2 have the meanings given to them in the notes to
the financial statements included in Item 1.

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Although the Company believes that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, the Company's actual results could differ materially
from those the Company expects to achieve. Some of the factors that might cause
such a difference include (i) the impact of changes in the industries in which
the Company's businesses and investments operate (including equipment sales and
leasing, hospitality, temperature controlled logistics, land development and
behavioral healthcare) and the economic, demographic and other competitive
conditions affecting those industries, the Company's cash flows and the value of
the Company's investments, (ii) the relatively high levels of debt that the
Company maintains and the Company's ability to generate revenue sufficient to
meet debt service payments and other operating expenses, (iii) the possibility
that the Company's outstanding debt (some of which requires so-called "balloon"
payments of principal) may be refinanced at higher interest rates or otherwise
on terms less favorable to the Company, (iv) the continued availability of
equity and debt financing that may be necessary or advantageous to expand or
maintain the Company's operations and investments, (v) the underperformance or
non-performance of the Company's existing business investments, (vi) the
Company's inability to identify or pursue suitable business or investment
opportunities, and (vii) the high levels of debt and rental payments that
certain of the Company's investments are subject to make the earnings of those
investments extremely sensitive to changes in operations or business activity.

Given these uncertainties, readers are cautioned not to place undue reliance on
such statements. The Company is not obligated to update these forward-looking
statements to reflect any future events or circumstances.

                                    OVERVIEW

Crescent Operating is a diversified management company that, through various
subsidiaries and affiliates, currently operates primarily in four business
segments: (i) Equipment Sales and Leasing, (ii) Hospitality, (iii) Temperature
Controlled Logistics (formerly Refrigerated Warehousing) and (iv) Land
Development. Within these segments, the Company, through various entities, owned
the following as of September 30, 1999 (collectively referred to as the
"Assets"):

o    THE EQUIPMENT SALES AND LEASING SEGMENT consisted of a wholly-owned
     interest in Crescent Machinery, a construction equipment sales, leasing and
     service company with 18 locations in seven states.

o    THE HOSPITALITY SEGMENT consisted of (i) the Company's lessee interests in
     the Denver Marriott City Center, the Hyatt Regency Beaver Creek, the Hyatt
     Regency Albuquerque, Canyon Ranch-Tucson, Canyon Ranch-Lenox, the Ventana
     Inn and Spa, the Sonoma Mission Inn and Spa, the Sonoma Mission Inn Golf
     and


                                       17
<PAGE>   18


     Country Club, the Four Seasons Hotel in Houston, Texas and the Renaissance
     Hotel in Houston, Texas (the "Hospitality Properties"), (ii) a two-thirds
     interest in the Houston Center Athletic Club Venture, and (iii) a 5%
     economic interest in CRL Investments, Inc. ("CRL") that participates in the
     future use of the "Canyon Ranch" name.

o    THE TEMPERATURE CONTROLLED LOGISTICS SEGMENT consisted primarily of a 40%
     interest in the operations of Vornado Crescent Operations, L.P. ("AmeriCold
     Operations"), which currently operates 103 refrigerated storage properties
     with an aggregate storage capacity of approximately 514.4 million cubic
     feet, and a 0.4% interest in AmeriCold Logistics.

o    THE LAND DEVELOPMENT SEGMENT consisted of (i) a 4.65% economic interest in
     Desert Mountain, a master planned, luxury residential and recreational
     community in northern Scottsdale, Arizona, (ii) a 42.5% general partner
     interest in TWOC, which provides management, advisory, landscaping and
     maintenance services to The Woodlands, Texas and is the lessee of The
     Woodlands Resort and Conference Center, (iii) a 2.125% economic interest in
     Landevco, which owns approximately 9,000 acres for commercial and
     residential development as well as a realty office, an athletic center, and
     interests in both a title company and a mortgage company, (iv) a 50%
     economic interest in COPI Colorado, a company that has a 10% economic
     interest in Crescent Development Management Corp. ("CDMC"), which invests
     in entities that develop or manage residential and resort properties
     (primarily in Colorado) and provides support services to such properties,
     and (v) a 5% economic interest in an entity which owns a 6.19% interest in
     the construction and operation of a new multipurpose entertainment and
     sports center (the "Arena Project") in downtown Dallas, Texas and manages
     the operations of the existing arena. The Company's interest in the Arena
     Project was subsequently sold during the fourth quarter of 1999. See Land
     Development Segment - Recent Developments.

The Company has written-off its entire investment and has no obligation or
commitment to fund CBHS' ongoing operations. As a result of the write-off, and
irrespective of the transactions described in Note 2 to the Company's financial
statements, the Company does not anticipate that it will recognize any
additional losses from its investment in CBHS. Because the Company has
written-off its CBHS investment and it is unlikely that the Company will
recognize any material income from CBHS in the near future due to the operating
losses currently being incurred by CBHS, the Company no longer reports its
operations related to CBHS as a separate segment. See Other - Recent
Developments.

                       EQUIPMENT SALES AND LEASING SEGMENT

RECENT DEVELOPMENTS

On August 1, 1999, Crescent Machinery opened a new location located in Fort
Worth, Texas. This location offers new equipment sales, equipment rental, parts
and services. A full assortment of rental equipment is available and products
from JCB, Ingersoll Rand, Terex Cranes, Target and Pioneer are available for new
equipment sales. The Fort Worth location is part of Crescent Machinery's overall
strategy to capitalize on existing markets with potential growth such as the
Dallas-Fort Worth metroplex area.

Effective July 1, 1999, Crescent Machinery acquired all of the stock of E. L.
Lester and Company ("Lester"), a company engaged in equipment sales, leasing and
servicing, located in Houston, Texas. Lester specializes in the sales and rental
of 8 to 300 ton conventional and hydraulic cranes to highway, building and
industrial contractors. The purchase price of approximately $18.2 million was
comprised of $8.5 million cash, the issuance of notes payable by Crescent
Operating in the amount of $6.0 million and the assumption of liabilities of
$3.7 million.

Effective July 1, 1999, Crescent Machinery acquired all of the stock of Solveson
Crane Rental, Inc. ("Solveson"), a company engaged in equipment sales, leasing
and servicing, located in Tracy, California. Solveson specializes in the rental
of 40 to 90 ton rough terrain cranes to highway, building and industrial
contractors. The purchase price of approximately $6.4 million was comprised of
$3.2 million cash and the assumption of liabilities of $3.2 million.


                                       18
<PAGE>   19


FINANCIAL ACTIVITY

<TABLE>
<CAPTION>
(in thousands)                          Three months ended September 30,          Nine months ended September 30,
                                       ------------------------------------     ------------------------------------
                                             1999                1998                1999                1998
                                       ------------------    --------------     ----------------    ----------------
<S>                                    <C>                   <C>                <C>                 <C>
Revenue:
   New and used equipment..........    $           21,049    $       21,257     $         64,649    $         31,921
   Rental equipment................                 8,932             5,795               20,355              10,864
   Parts, service and supplies.....                 7,182             6,409               18,854              10,215
                                       ------------------    --------------     ----------------    ----------------
Total revenue......................                37,163            33,461              103,858              53,000

Expenses:
   Cost of sales:
      New and used equipment.......                18,395            18,138               55,174              27,506
      Rental equipment.............                 4,249             3,276               11,597               6,295
      Parts, service and supplies..                 4,683             3,818               11,863               6,485
                                       ------------------    --------------     ----------------    ----------------
Total cost of sales................                27,327            25,232               78,634              40,286

Gross profit.......................                 9,836             8,229               25,224              12,714

   Operating expenses..............                 7,812             6,140               20,103               9,538
                                       ------------------    --------------     ----------------    ----------------

Income from operations.............    $            2,024    $        2,089     $          5,121    $          3,176
                                       ==================    ==============     ================    ================

EBITDA.............................    $            5,961    $        5,214     $         15,928    $          8,731
                                       ==================    ==============     ================    ================
</TABLE>

Crescent Machinery has grown substantially in 1999 through acquisitions and
same-store growth since the prior year. Earnings before interest expense, income
taxes, depreciation and amortization ("EBITDA") for the Equipment Sales and
Leasing segment for the three months ended September 30, 1999 was $6.0 million
as compared to $5.2 million for the three months ended September 30, 1998.
EBITDA for the Equipment Sales and Leasing segment for the nine months ended
September 30, 1999 was $15.9 million as compared to $8.7 million for the nine
months ended September 30, 1998. Management believes that EBITDA can be a
meaningful measure of operating performance, cash generation and the ability to
service debt. However, EBITDA should not be considered as an alternative to: (i)
net income (determined in accordance with GAAP); (ii) operating cash flow
(determined in accordance with GAAP); or (iii) liquidity. There can be no
assurance that the Company's EBITDA is comparable to similarly titled items
reported by other companies.

                               HOSPITALITY SEGMENT

RECENT DEVELOPMENTS

Crescent Partnership has committed over $40 million towards capital projects at
certain of the Hospitality Properties to further enhance the guests' experience.
The projects are expected to be substantially completed during the first half of
2000 and include: (i) 30 new suites and the spa expansion at the Sonoma Mission
Inn and Spa, (ii) renovation of the guestrooms at the Four Seasons Hotel in
Houston, (iii) renovation of the newly leased Renaissance Hotel in Houston and
(iv) four new suites and a new spa which were completed at the Ventana Inn and
Spa during September 1999. Certain of these projects generate increased rent and
the related construction causes a temporary reduction in the average daily rate
of the hotel due to the negative impact on the guests' experience during
construction.

On July 23, 1999, CRL exercised its option to purchase an additional 10%
economic interest in CR License LLC ("CR License") by paying $2.0 million,
bringing CRL's total economic interest in CR License to 20%. CR License is the
entity which owns the rights to the future use of the "Canyon Ranch" name. CRL
has the opportunity over the next year to pay an additional $3.0 million to
obtain an additional 10% interest in CR License.


                                       19
<PAGE>   20


FINANCIAL ACTIVITY

The following table sets forth certain information about the Hospitality
Properties for the nine months ended September 30, 1999 and 1998. The
information for the Hospitality Properties is based on available rooms, except
for Canyon Ranch-Tucson and Canyon Ranch-Lenox, which are destination health and
fitness resorts that measure performance based on available guest nights.

<TABLE>
<CAPTION>
                                                                     For the Nine Months Ended September 30,
                                                            ----------------------------------------------------------
                                       Year                                                          Revenue Per
                                    Completed/                  Average          Average Daily      Available Room
                                       Last                  Occupancy Rate      Rate ("ADR")         ("REVPAR")
                                     Renovated     Rooms      1999     1998      1999      1998      1999      1998
                                     ---------    --------- --------- ------- ----------- -------- --------- ---------
<S>                                  <C>          <C>       <C>       <C>     <C>         <C>      <C>       <C>
Full-Service/Luxury Hotels
Hyatt Regency Beaver Creek....       1989/1998       276(1)    75%      72%   $   254      $236    $ 191     $ 173
Denver Marriott City Center...       1982/1994       613       81       81        125       126      100       102
Hyatt Regency Albuquerque.....       1990/1998       395       69       70        105       102       72        71
Sonoma Mission Inn & Spa......       1927/1999       178(3)    82       84        218       230      178       193
Four Seasons Hotel Houston....       1982/1999       399       65       65        197       179      128       116
Ventana Inn & Spa.............       1975/1999        62       80       58(2)     371       380      297       221(2)
Renaissance Houston...........         1974          389       63       68         94        92       59        63
                                                  --------- --------- ------- ----------- -------- --------- ---------
    Total/Weighted Average                         2,312       72%      73%   $   161      $155    $ 117     $ 113
                                                  ========= ========= ======= =========== ======== ========= =========

Destination Health & Fitness Resorts
Canyon Ranch-Tucson...........         1980          250(4)
Canyon Ranch-Lenox............         1989          212(4)
                                                  --------- --------- ------- ----------- -------- --------- ---------
    Total/Weighted Average                           462      88%(5)   87%(5) $   529(6)  $ 493(6) $  446(7) $ 414(7)
                                                  ========= ========= ======= =========== ======== ========= =========
</TABLE>

(1) In 1998, the number of rooms at Hyatt Regency Beaver Creek was reduced to
    276 due to 19 rooms being converted into a 20,000 square foot spa.
(2) Average occupancy and REVPAR decreased in 1998 due to the closing of the
    Ventana Inn and Spa for approximately three months as a result of the major
    access road leading to the property being washed out.
(3) In February 1999, 20 rooms were taken out of commission during the
    construction of the spa.
(4) Represents available guest nights, which is the maximum number of guests
    that the resort can accommodate per night.
(5) Represents the number of paying and complimentary guests for the period,
    divided by the maximum number of available guest nights for the period.
(6) Represents the average daily "all-inclusive" guest package charges for the
    period, divided by the average daily number of paying guests for the period.
(7) Represents the total "all-inclusive" guest package charges for the period,
    divided by the maximum number of available guest nights for the period.

                    TEMPERATURE CONTROLLED LOGISTICS SEGMENT

FINANCIAL ACTIVITY

As a result of the restructuring of the Temperature Controlled Logistics
segment, as of September 30, 1999, the Company had a 40% economic interest in
AmeriCold Operations and a 0.4% interest in AmeriCold Logistics. Because the
restructuring did not become effective until March 12, 1999, the Company's
economic share of the operations of AmeriCold Logistics for the nine months
ended September 30, 1999 included a 2% economic interest for the period from
January 1, 1999 through March 11, 1999 and a 0.4% economic interest for the
period from March 12, 1999 through September 30, 1999. The Company's economic
share of the operations of AmeriCold Operations for the nine months ended
September 30, 1999 includes a 40% economic interest for the period from March
12, 1999 through September 30, 1999.


                                       20
<PAGE>   21


The Company's share of the net loss from AmeriCold Operations for the three and
nine months ended September 30, 1999 was $1.7 million and $2.7 million,
respectively. During these periods, margins of AmeriCold Operations were lower
than anticipated, in part, from changes in product mix and delays in two
start-up warehouse operations. The Company's share of net income from AmeriCold
Logistics for each of the three months ended September 30, 1999 and 1998 was
less than $0.1 million. The Company's share of net income (loss) from AmeriCold
Logistics for the nine months ended September 30, 1999 and 1998 was $0.3 million
and $(0.1) million, respectively. Also included in net income (loss) for the
Temperature Controlled Logistics segment for the three and nine months ended
September 30, 1999 was the $1.5 million gain on sale of 80% of the Company's
interest in AmeriCold Logistics.

                            LAND DEVELOPMENT SEGMENT

RECENT DEVELOPMENTS

On August 27, 1999 and October 27, 1999, the Company sold its investments in
Hillwood and Corporate Arena, respectively, for an aggregate price of
approximately $1.4 million. Together, the sales resulted in an approximate $0.2
million gain.

FINANCIAL ACTIVITY

Net loss for the Land Development Segment was $0.6 million and $0.2 million for
the three and nine months ended September 30, 1999, respectively. The Company's
share of Desert Mountain Development's net loss for the three and nine months
ended September 30, 1999 was $0.2 million and $0.1 million, respectively. The
Company's share of net income from both The Woodlands Land Company and WOCOI
Investment Company for the three and nine months ended September 30, 1999 was
$0.1 million and $0.9 million, respectively. The Company's share of COPI
Colorado's net loss for the three and nine months ended September 30, 1999 was
$0.5 million and $1.0 million, respectively.

The following table sets forth certain information as of September 30, 1999
relating to the residential development properties in which the Company owns an
interest.

<TABLE>
<CAPTION>
                                                  Total
                                                Lots/Units          Total            Average
                                  Total          Developed       Lots/Units        Closed Sale
                                Lots/Units        Since            Closed             Price           Range of Proposed
  Land Development               Planned        Inception      Since Inception     Per Lot/Unit     Sale Prices Per Lot(1)
  ----------------               -------        ---------      ---------------     ------------     ----------------------
<S>                             <C>             <C>            <C>                 <C>              <C>
  Desert Mountain............       2,665          2,155            1,900          $ 470,000(2)     $375,000 - $3,000,000
  The Woodlands..............      36,845         21,356           21,356          $  49,554          $15,300 - $500,000
  CDMC.......................       2,600            135              132          $ 683,467         $18,000 - $4,075,000
                                -----------     -----------    ----------------

  Total Land Development.....      42,110         23,646           23,388
                                ===========     ===========    ================
</TABLE>

(1) Based on existing inventory of developed lots and lots to be developed.
(2) Includes golf membership, which for 1999 is approximately $175,000.

                                      OTHER

RECENT DEVELOPMENTS

On October 25, 1999, the Company received notice from The Nasdaq-Amex Market
Group (the "Nasdaq") that, for the 30 consecutive trading days preceding such
date, the Company's common stock failed to maintain a closing bid price of
greater than or equal to $5.00, the minimum closing bid price required for
continued listing under the Nasdaq National Market maintenance standard
applicable to the Company. The Nasdaq has informed the Company that, in order to
continue to be listed on the Nasdaq National Market, the Company must regain
compliance with the applicable maintenance standard on or before January 24,
2000. The Company will regain compliance if the closing


                                       21
<PAGE>   22


bid price of its common stock equals or exceeds $5.00 for 10 consecutive trading
days. In the event that the Company does not regain compliance on or before
January 24, 2000, the Company could pursue several options, including requesting
a hearing before a Nasdaq panel on the issue of compliance or applying for
listing on the Nasdaq SmallCap Market. Management believes that the Company
currently meets or exceeds all requirements for listing on the Nasdaq SmallCap
Market; however, there can be no assurance that the Company's common stock would
be accepted for listing on the Nasdaq SmallCap Market if the Company decided to
seek listing on that market.

On September 9, 1999 Crescent Operating, Magellan, Crescent Partnership and CBHS
completed a recapitalization of CBHS and restructuring of the relationships
among the parties pursuant to the parties' binding Letter Agreement dated August
10, 1999. In connection with the restructuring, Magellan transferred its
remaining hospital-based assets (including Charter Advantage, Charter Franchise
Services, LLC, the call center assets, the Charter name and related intellectual
property and certain other assets) to CBHS, and released CBHS from all accrued
and future franchise fees. As a result, Magellan is no longer obligated to
provide franchise services to CBHS. Magellan also transferred 80% of its CBHS
common interest and all of its CBHS preferred interest to CBHS, leaving Magellan
with a 10% common membership interest, Crescent Operating with a 25% common
membership interest and 100% of the preferred membership interest in CBHS, and a
limited partnership controlled by individual officers of Crescent Operating and
in which Crescent Operating owns 100% of the economic interests, with a 65%
common interest in CBHS.

In connection with the restructuring, Magellan, CBHS, Crescent Partnership and
Crescent Operating also provided each other with mutual releases of all claims
and disputes against each other, with certain specified exceptions, and Crescent
Partnership deferred the August 1999 rent due from CBHS to the last four months
of 1999. Additionally, in connection with the settlement and mutual release of
the related claims between Magellan and Crescent Operating, the $2.5 million
held in escrow was released to Crescent Operating.

Magellan and CBHS also have modified and extended their existing arrangement
which designates CBHS a preferred provider of inpatient acute behavioral health
services.

Effective November 10, 1999, Crescent Partnership agreed to defer the November
1999 and December 1999 minimum rent due from CBHS to December 16, 1999. In
addition, CBHS authorized Crescent Partnership to market and sell certain of the
health care facilities currently leased by CBHS under the master lease with
Crescent Partnership. Upon the closing of each sale of the subject facilities,
Crescent Partnership will reduce the amount of monthly minimum rent due under
the master lease by a specified percentage of the net proceeds of any such sale.
Further, Crescent Partnership and CBHS have agreed that, unless extended by
Crescent Partnership, the master lease will terminate on January 31, 2000, with
respect to facilities that can be sold under the master lease, subject to
certain holdover provisions.

Crescent Operating did not record gains or losses with respect to the above
transactions with CBHS. Crescent Operating had previously expensed its
investment in CBHS.

As of November 12, COPI Colorado had purchased approximately 1.1 million shares
of Crescent Operating common stock at a total purchase price of $4.3 million.
The average price paid for such shares, excluding brokers' commissions, was
$3.88 per share.


                                       22
<PAGE>   23

                         SEGMENT FINANCIAL INFORMATION
                   (Amounts in thousands, except share data)


The following is a summary of Crescent Operating's financial information
reported by segment for the three months ended September 30, 1999:


<TABLE>
<CAPTION>
                                                EQUIPMENT                           TEMPERATURE
                                                 SALES                               CONTROLLED
                                               AND LEASING        HOSPITALITY        LOGISTICS
                                            ----------------   ----------------   ----------------
<S>                                         <C>                <C>                <C>
Revenues.................................   $         37,163   $         65,384   $             --

Operating expenses.......................             35,139             64,176                  1

                                            ----------------   ----------------   ----------------
Income (loss) from operations............              2,024              1,208                 (1)
                                            ----------------   ----------------   ----------------
Investment income (loss).................                 --               (972)            (1,692)
                                            ----------------   ----------------   ----------------
Other (income) expense
     Interest expense....................              1,976                232                 --
     Interest income.....................                (24)               (38)                --
     Other...............................                (41)                --                 --
                                            ----------------   ----------------   ----------------
Total other (income) expense.............              1,911                194                 --
                                            ----------------   ----------------   ----------------
Income (loss) before income
     taxes and minority interest.........                113                 42             (1,693)
Income tax provision (benefit)...........                 48                 17               (678)
                                            ----------------   ----------------   ----------------
Income (loss) before minority interests..                 65                 25             (1,015)
Minority interests.......................                 --                694                 --
                                            ----------------   ----------------   ----------------
Net income (loss)........................   $             65   $            719   $         (1,015)
                                            ================   ================   ================

Net income (loss) per share, basic.......   $           0.01   $           0.07   $          (0.10)
                                            ================   ================   ================

Net income (loss) per share, diluted.....   $           0.01   $           0.07   $          (0.10)
                                            ================   ================   ================

EBITDA Calculation: (1)
     Net income (loss)...................   $             65   $            719   $         (1,015)
     Interest expense, net...............              1,952                 36                192
     Income tax provision (benefit)......                 48                480               (670)
     Depreciation and amortization.......              3,896                285                646
                                            ----------------   ----------------   ----------------
EBITDA...................................   $          5,961   $          1,520   $           (847)
                                            ================   ================   ================





<CAPTION>
                                                   LAND
                                                 DEVELOPMENT           OTHER              TOTAL
                                              ----------------   ----------------   -----------------
<S>                                           <C>                <C>                <C>
Revenues.................................     $         73,055   $             --   $         175,602

Operating expenses.......................               72,565                775             172,656

                                              ----------------   ----------------   -----------------
Income (loss) from operations............                  490               (775)              2,946
                                              ----------------   ----------------   -----------------
Investment income (loss).................                4,523                 --               1,859
                                              ----------------   ----------------   -----------------
Other (income) expense
     Interest expense....................                3,567              2,014               7,789
     Interest income.....................                 (804)               (18)               (884)
     Other...............................                  220                  3                 182
                                              ----------------   ----------------   -----------------
Total other (income) expense.............                2,983              1,999               7,087
                                              ----------------   ----------------   -----------------
Income (loss) before income
     taxes and minority interest.........                2,030             (2,774)             (2,282)
Income tax provision (benefit)...........                  448             (1,119)             (1,284)
                                              ----------------   ----------------   -----------------
Income (loss) before minority interests..                1,582             (1,655)               (998)
Minority interests.......................               (2,159)                --              (1,465)
                                              ----------------   ----------------   -----------------
Net income (loss)........................     $           (577)  $         (1,655)  $          (2,463)
                                              ================   ================   =================

Net income (loss) per share, basic.......     $          (0.06)  $          (0.16)  $           (0.24)
                                              ================   ================   =================

Net income (loss) per share, diluted.....     $          (0.06)  $          (0.16)  $           (0.24)
                                              ================   ================   =================

EBITDA Calculation: (1)
     Net income (loss)...................     $           (577)  $         (1,655)  $          (2,463)
     Interest expense, net...............                  132              1,996               4,308
     Income tax provision (benefit)......                   38             (1,119)             (1,223)
     Depreciation and amortization.......                  358                (19)              5,166
                                              ----------------   ----------------   -----------------
EBITDA...................................     $            (49)  $           (797)  $           5,788
                                              ================   ================   =================
</TABLE>


(1)  EBITA represents earnings before interest, income taxes, depreciation and
     amortization. Amounts are calculated based on the Company's ownership
     percentage of the EBITDA components. Management believes that EBITDA can be
     a meaningful measure of the Company's operating performance, cash
     generation and ability to service debt. However, EBITDA should not be
     considered as an alternative to either: (i) net earnings (determined in
     accordance with GAAP); (ii) operating cash flow (determined in accordance
     with GAAP); or (iii) liquidity. There can be no assurance that the
     Company's calculation of EBITDA is comparable to similarly titled items
     reported by other companies.


                                       23
<PAGE>   24

                          SEGMENT FINANCIAL INFORMATION
                    (Amounts in thousands, except share data)


The following is a summary of Crescent Operating's financial information
reported by segment for the nine months ended September 30, 1999:


<TABLE>
<CAPTION>
                                                EQUIPMENT                            TEMPERATURE
                                                  SALES                              CONTROLLED
                                                AND LEASING        HOSPITALITY         LOGISTICS
                                             ----------------   ----------------   ----------------
<S>                                          <C>                <C>                <C>
Revenues.................................    $        103,858   $        183,894   $             --

Operating expenses.......................              98,737            180,691                  2
                                             ----------------   ----------------   ----------------
Income (loss) from operations............               5,121              3,203                 (2)
                                             ----------------   ----------------   ----------------
Investment income (loss).................                  --               (837)              (960)
                                             ----------------   ----------------   ----------------
Other (income) expense
     Interest expense....................               4,683                489                 --
     Interest income.....................                 (51)               (96)                --
     Other...............................                 (54)                --                 --
                                             ----------------   ----------------   ----------------
Total other (income) expense.............               4,578                393                 --
                                             ----------------   ----------------   ----------------
Income (loss) before income
     taxes and minority interest.........                 543              1,973               (962)
Income tax provision (benefit)...........                 231                789               (385)
                                             ----------------   ----------------   ----------------
Income (loss) before minority interests..                 312              1,184               (577)
Minority interests.......................                  --                776                 --
                                             ----------------   ----------------   ----------------
Net income (loss)........................    $            312   $          1,960   $           (577)
                                             ================   ================   ================

Net income (loss) per share, basic.......    $           0.03   $           0.19   $          (0.05)
                                             ================   ================   ================

Net income (loss) per share, diluted.....    $           0.03   $           0.18   $          (0.05)
                                             ================   ================   ================

EBITDA Calculation: (1)
     Net income (loss)...................    $            312   $          1,960   $           (577)
     Interest expense, net...............               4,632                101                425
     Income tax provision (benefit)......                 231              1,306               (508)
     Depreciation and amortization.......              10,753                808              1,645
                                             ----------------   ----------------   ----------------
EBITDA...................................    $         15,928   $          4,175   $            985
                                             ================   ================   ================

<CAPTION>
                                                   LAND
                                               DEVELOPMENT           OTHER              TOTAL
                                             ----------------   ----------------   -----------------
<S>                                          <C>                <C>                <C>
Revenues.................................    $        197,991   $             --   $         485,743

Operating expenses.......................             188,557              1,764             469,751
                                             ----------------   ----------------   -----------------
Income (loss) from operations............               9,434             (1,764)             15,992
                                             ----------------   ----------------   -----------------
Investment income (loss).................              17,257                240              15,700
                                             ----------------   ----------------   -----------------
Other (income) expense
     Interest expense....................               9,690              6,141              21,003
     Interest income.....................              (2,425)               (76)             (2,648)
     Other...............................                 378                  1                 325
                                             ----------------   ----------------   -----------------
Total other (income) expense.............               7,643              6,066              18,680
                                             ----------------   ----------------   -----------------
Income (loss) before income
     taxes and minority interest.........              19,048             (7,590)             13,012
Income tax provision (benefit)...........               6,617             (7,192)                 60
                                             ----------------   ----------------   -----------------
Income (loss) before minority interests..              12,431               (398)             12,952
Minority interests.......................             (12,623)                --             (11,847)
                                             ----------------   ----------------   -----------------
Net income (loss)........................    $           (192)  $           (398)  $           1,105
                                             ================   ================   =================

Net income (loss) per share, basic.......    $          (0.02)  $          (0.04)  $            0.11
                                             ================   ================   =================

Net income (loss) per share, diluted.....    $          (0.02)  $          (0.04)  $            0.10
                                             ================   ================   =================

EBITDA Calculation: (1)
     Net income (loss)...................    $           (192)  $           (398)  $           1,105
     Interest expense, net...............                 321              6,065              11,544
     Income tax provision (benefit)......                 657             (7,192)             (5,506)
     Depreciation and amortization.......               1,105               (115)             14,196
                                             ----------------   ----------------   -----------------
EBITDA...................................    $          1,891   $         (1,640)  $          21,339
                                             ================   ================   =================
</TABLE>



(1)  EBITA represents earnings before interest, income taxes, depreciation and
     amortization. Amounts are calculated based on the Company's ownership
     percentage of the EBITDA components. Management believes that EBITDA can be
     a meaningful measure of the Company's operating performance, cash
     generation and ability to service debt. However, EBITDA should not be
     considered as an alternative to either: (i) net earnings (determined in
     accordance with GAAP); (ii) operating cash flow (determined in accordance
     with GAAP); or (iii) liquidity. There can be no assurance that the
     Company's calculation of EBITDA is comparable to similarly titled items
     reported by other companies.


                                       24
<PAGE>   25

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999,
COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998

REVENUES

Total revenue increased $63.8 million, or 57.1%, to $175.6 million for the three
months ended September 30, 1999, compared with $111.8 million for the three
months ended September 30, 1998. Total revenue increased $169.7 million, or
53.7%, to $485.7 million for the nine months ended September 30, 1999, compared
with $316.0 million for the nine months ended September 30, 1998. The increase
in total revenue is attributable to the factors discussed in the following
paragraphs.

Equipment Sales and Leasing Segment

Equipment sales and leasing revenue increased $3.7 million, or 11.0%, for the
three months ended September 30, 1999, compared with the three months ended
September 30, 1998. Revenues increased $50.9 million, or 96.0%, for the nine
months ended September 30, 1999, compared with the nine months ended September
30, 1998. Significant components of the overall increases were:

o    the Company's acquisitions since January 1, 1998 and the opening of a new
     location on August 1, 1999 resulting in incremental revenue of $7.9 and
     $46.4 million during the three and nine months ended September 30, 1999,
     respectively;

o    same store revenue decreased $4.3 million for the three months ended
     September 30, 1999 as compared to the same period in the prior year due to
     lower new and used equipment sales; and

o    same store revenue increased $4.4 million for the nine months ended
     September 30, 1999 as compared to the same period in the prior year due to
     increased rental revenue.


Hospitality Segment

Hospitality revenue increased $7.2 million, or 12.4%, to $65.4 million for the
three months ended September 30, 1999, compared with $58.2 million for the three
months ended September 30, 1998. Revenues increased $14.3 million, or 8.4%, to
$183.9 million for the nine months ended September 30, 1999, compared with
$169.6 million for the nine months ended September 30, 1998. Significant
components of the overall increases were:

o    revenue derived from the operations of the Sonoma Mission Inn Golf and
     Country Club and the Renaissance Hotel, neither of which was leased by the
     Company during the three or nine months ended September 30, 1998;

o    revenue derived from the newly constructed Allegria Spa at the Hyatt
     Regency Beaver Creek, which conducted operations for the full nine months
     ended September 30, 1999 as compared to only one month during the first
     nine months of 1998;

o    increased rates at certain of the Hospitality Properties resulted in higher
     revenues during 1999 as compared to the corresponding period in 1998; and

o    the elimination of the Austin Omni Hotel rental income, resulting from the
     termination of the lease effective December 31, 1998.

Land Development Segment

Land Development revenue, which represents revenue from Desert Mountain
Development and COPI Colorado prior to the elimination of the Minority
Interests, increased $52.9 million, or 261.9%, to $73.1 million for the three
months ended September 30, 1999, compared with $20.2 million for the three
months ended September 30, 1998. Land Development revenues increased $104.5
million, or 111.8%, to $198.0 million for the nine months ended


                                       25
<PAGE>   26


September 30, 1999, compared with $93.5 million for the nine months ended
September 30, 1998. Significant components of the overall increases were:

o    revenues of COPI Colorado, which the Company did not include during the
     three or nine months ended September 30, 1998, and which resulted in
     incremental revenues of $53.4 and $97.2 million during the three and nine
     months ended September 30, 1999, respectively; and

o    a $0.5 million decrease in revenue and a $7.3 million increase in revenue
     from Desert Mountain Development during the three and nine months ended
     September 30, 1999, respectively. The decrease for the three months can be
     attributed to fewer home sales as compared to the prior period, whereas the
     increase for the nine months reflects overall higher sales prices for lots.

OPERATING EXPENSES

Total operating expenses increased $58.2 million, or 50.8%, to $172.7 million
for the three months ended September 30, 1999, compared with $114.5 million for
the three months ended September 30, 1998. Total operating expenses increased
$158.4 million, or 50.9%, to $469.8 million for the nine months ended September
30, 1999, compared with $311.4 million for the nine months ended September 30,
1998. The increase in operating expenses is attributable to the factors
discussed in the following paragraphs.

Equipment Sales and Leasing Segment

Equipment sales and leasing expenses increased $3.7 million, or 11.8%, to $35.1
million for the three months ended September 30, 1999, compared with $31.4
million for the three months ended September 30, 1998. Expenses increased $48.9
million, or 98.2% to $98.7 million for the nine months ended September 30, 1999,
compared with $49.8 million for the nine months ended September 30, 1998.
Significant components of the overall increases were:

o    the Company's acquisitions since January 1, 1998 and the opening of a new
     location on August 1, 1999 resulting in incremental operating expenses of
     $8.2 and $46.9 million during the three and nine months ended September 30,
     1999, respectively;

o    decreased costs of $4.4 million incurred during the three months ended
     September 30, 1999, consistent with the changes in equipment sales and
     leasing revenue that is not attributable to acquisitions; and

o    increased costs of $2.0 million incurred during the nine months ended
     September 30, 1999 due to increased equipment sales and leasing revenue
     that is not attributable to acquisitions and to increased depreciation
     expense.

Hospitality Segment

Hospitality expenses increased $7.2 million, or 12.6%, to $64.2 million for the
three months ended September 30, 1999, compared with $57.0 million for the three
months ended September 30, 1998. Expenses increased $18.8 million, or 11.6%, to
$180.7 million for the nine months ended September 30, 1999, compared with
$161.9 million for the nine months ended September 30, 1998. Significant
components of the overall increases were:

o    rent and expenses associated with the Sonoma Mission Inn Golf and Country
     Club and the Renaissance Hotel, neither of which was leased by the Company
     during the three or nine months ended September 30, 1998;

o    additional rent for the three and nine months ended September 30, 1999,
     resulting from increased revenue generated by the Hospitality Properties,
     partially offset by a decrease in rent for the three and nine months ended
     September 30, 1999 due to the termination of the lease of the Austin Omni
     Hotel effective December 31, 1998;

o    rent and expenses associated with the newly constructed Allegria Spa at the
     Hyatt Regency Beaver Creek, which was leased for only one month for the
     period ended September 30, 1998; and


                                       26
<PAGE>   27


o    additional rent associated with capital projects at the Hospitality
     Properties that were incurred during the three and nine months ended
     September 30, 1999.


Land Development Segment

Land development expenses, which primarily represent operating costs incurred by
Desert Mountain Development and COPI Colorado prior to the elimination of the
Minority Interests, increased $47.5 million, or 189.2%, to $72.6 million for the
three months ended September 30, 1999, compared with $25.1 million for the three
months ended September 30, 1998. Expenses increased $91.2 million, or 93.6%, to
$188.6 million for the nine months ended September 30, 1999, compared with $97.4
million for the nine months ended September 30, 1998. Significant components of
the overall increases were:

o    operating expenses of COPI Colorado, which the Company did not include
     during the three or nine months ended September 30, 1998, and which
     resulted in incremental expenses of $48.2 and $88.6 million during the
     three and nine months ended September 30, 1999, respectively, and

o    a $0.9 million decrease in expenses and a $2.2 million increase in expenses
     incurred by Desert Mountain Development during the three and nine months
     ended September 30, 1999, respectively. The decrease for the three months
     is primarily attributable to fewer home sales as compared to the prior
     period, and the increase for the nine months represents overall higher
     development costs associated with selling higher valued lots.

Corporate General and Administrative Expenses

Corporate general and administrative expenses, totaling $0.8 million and $1.8
million for the three and nine months ended September 30, 1999, respectively,
were comparable with such costs for the three and nine months ended September
30, 1998. These expenses consisted of general corporate overhead costs, such as
legal and accounting costs, insurance costs and corporate salaries.

INVESTMENT INCOME

Investment income decreased $3.8 million or 66.7%, to $1.9 million for the three
months ended September 30, 1999, compared with $5.7 million for the three months
ended September 30, 1998. Significant components of the overall decrease were:

o    equity in loss of CR Las Vegas, LLC in the amount of $1.0 million due to
     the pre-opening expenses related to the opening of the Venetian Spa in Las
     Vegas in June 1999.

o    a decrease in income of AmeriCold Logistics in the amount of $1.1 million
     due to the fact that the Company no longer consolidates CSI and CSII as a
     result of the restructuring of the Temperature Controlled Logistics
     segment;

o    equity in loss of AmeriCold Operations in the amount of $1.7 million due to
     the acquisition of AmeriCold Operations in March 1999; and

For the nine months ended September 30, 1999, investment income increased $3.3
million, or 26.6%, to $15.7 million, compared with $12.4 million for the nine
months ended September 30, 1998. Significant components of the overall increase
were:

o    no losses associated with CBHS have been recorded in 1999 because the
     investment in CBHS was expensed during 1998, as compared to $5.4 million
     of losses recognized in the prior year;

o    equity in income of CDMC projects in the amount of $3.0 million, which the
     Company did not include during the three or nine months ended September 30,
     1998; and


                                       27
<PAGE>   28


o    the gain on sale of 80% of the Company's interest in AmeriCold Logistics in
     the amount of $1.5 million; partially offset by

o    a decrease in investment income from Hicks-Muse in the amount of $3.1
     million as a result of the Company's sale of its investment in Hicks-Muse
     in March 1999; and

o    equity in loss of AmeriCold Operations in the amount of $2.7 million due to
     the acquisition of AmeriCold Operations in March 1999.

OTHER (INCOME) EXPENSE

Other (Income) Expense increased $3.8 million, or 115.2%, to $7.1 million for
the three months ended September 30, 1999, compared with $3.3 million for the
three months ended September 30, 1998. For the nine months ended September 30,
1999, other (income) expense increased $10.4 million, or 125.3%, to $18.7
million, compared with $8.3 million for the nine months ended September 30,
1998. The increases are primarily attributable to:

o    an increase in interest expense in the amount of $3.4 and $9.4 million for
     the three and nine months ended September 30, 1999, respectively, resulting
     from (i) an increase in outstanding indebtedness in connection with
     acquisitions, (ii) the inclusion of interest expense of COPI Colorado (in
     the amount of $2.7 and $6.7 million, for the three and nine months ended
     September 30, 1999, respectively) in the Company's operating results
     (operations of CDMC were not included during the corresponding period in
     1998) offset by (iii) a decrease in indebtedness at Desert Mountain
     Development.


MINORITY INTERESTS

Minority Interests increased $0.5 million, or 50%, to $1.5 million for the three
months ended September 30, 1999, compared to $1.0 million for the three months
ended September 30, 1998. Minority Interests increased $6.9 million, or 140.8%,
to $11.8 million for the nine months ended September 30, 1999, compared to $4.9
million for the nine months ended September 30, 1998. Minority Interests consist
of the non-voting interests in the Land Development segment and in CRL
Investments. The increase in Minority Interests is primarily attributable to the
Company's investment in COPI Colorado, which was not acquired until September
1998.

INCOME TAX PROVISION (BENEFIT)

Income tax benefit of $1.3 million for the three months ended September 30, 1999
represents no change from the three months ended September 30, 1998. Income tax
benefit consisted of a $1.1 million benefit at the corporate level, a $0.7
million benefit for the Temperature Controlled Logistics segment, offset by a
$0.5 million provision for the Land Development segment.

Income tax provision of approximately $0.1 million for the nine months ended
September 30, 1999, consisted primarily of a $7.2 million benefit at the
corporate level offset by a $6.6 million provision for the Land Development
segment. These amounts represent a $2.8 million decrease in tax provision from
the tax benefit of $2.9 million for the nine months ended September 30, 1998.

The Company generally provides for taxes using a 40% effective rate on the
Company's share of income or loss. Additionally, for the nine months ended
September 30, 1999, the Company released $4.2 million of its net deferred tax
asset valuation allowance, based on 1999 transactions and expected future
taxable income. Management continues to evaluate the realizability of the
deferred tax assets quarterly by assessing the need for a valuation allowance.
Inability of the Company to execute business plans for certain of the Company's
segments could affect the ultimate realization of the deferred tax assets.

LIQUIDITY AND CAPITAL RESOURCES

Approximately $89.8 million (including regularly scheduled payments of
principal) is payable pursuant to existing financing arrangements of the Company
during the twelve months ending September 30, 2000. The Company anticipates that
the $89.8 million (all regularly scheduled payments plus payments due on
maturity of $24.0 million) will be paid from the Company's cash flow from
operating activities or proceeds from refinancings.


                                       28
<PAGE>   29


The Company expects to meet its short-term liquidity requirements primarily
through cash flow provided by operating activities. The Company believes that
cash flow provided by operating activities will be adequate to fund normal
recurring operating expenses and, as discussed above, regular debt service
requirements (including debt service relating to any additional or replacement
debt). The Company anticipates that it will fund the remaining amounts due
pursuant to existing financing arrangements, as well as any acquisitions or
other investments during the next 12 months, with proceeds of refinancings, cash
flow provided by operating activities, by additional debt financing secured by
the assets acquired in any acquisition transaction, by additional issuance of
common stock of the Company or by proceeds of equity offerings.

The Company expects to meet its long-term liquidity requirements (which consist
primarily of amounts due at maturity of its debt) through operating cash flows
of the Company, refinancing of existing debt or obtaining additional debt with
long-term maturities.

For a listing of the Company's primary debt financing arrangements, see Note 5
to the Financial Statements included in Part I.

The Company believes that debt and equity financing alternatives currently
available to it include public or private issuances of equity to existing
holders, issuances of equity in connection with acquisitions of additional
assets, obtaining additional secured debt in connection with acquisitions of
assets, additional secured borrowings from Crescent Partnership, and additional
proceeds from the refinancing of existing secured debt. However, there can be no
assurances that any of these sources will be available to the Company or that
the amount of capital available from these sources will be adequate to meet the
Company's needs or requests.

The $15.0 million line of credit from Bank of America, which was due on August
27, 1999, was renewed in August 1999. As a result of the renewal, the Bank of
America line of credit is due on August 31, 2001. No other material terms of the
line of credit were changed in connection with the renewal.

CASH FLOWS

Cash and cash equivalents include amounts from all consolidated subsidiaries,
including subsidiaries not wholly-owned. Changes, therefore, do not necessarily
represent increases or decreases in cash directly available to the Company.

Cash and cash equivalents were $31.8 million and $42.8 million at September 30,
1999 and December 31, 1998, respectively. The 25.7% decrease is attributable to
$71.3 million and $21.5 million of cash used in operating and investing
activities, respectively, offset by $81.8 million of cash provided by financing
activities.

OPERATING ACTIVITIES

The Company's outflow of cash used in operating activities of $71.3 million was
primarily attributable to outflows from:

o  a decrease in deferred income taxes of $23.9 million;
o  equity in income from unconsolidated subsidiaries of $13.8 million;
o  purchases of real estate of $47.3 million; and
o  increases in accounts receivable and inventory of $39.5 million.

The outflow of cash used by operating activities was partially offset by inflows
from:

o  net income of $1.1 million;
o  non-cash depreciation and amortization of $25.8 million;
o  Minority Interests of $11.8 million;
o  increases in accounts payable and accrued expenses of $9.8 million; and
o  increases in deferred revenue of $6.8 million.


                                       29
<PAGE>   30


INVESTING ACTIVITIES

The Company's outflow of cash used in investing activities of $21.5 million was
primarily attributable to outflows from:

o  acquisitions of business interests of $26.0 million;
o  acquisitions of business interests by Minority Interests of $10.6 million;
o  purchases of property and equipment of $38.7 million.

The outflow of cash used in investing activities was partially offset by inflows
from:

o  proceeds from the sale of investments of $22.4 million;
o  proceeds from the sale of property and equipment of $24.1 million; and
o  net distributions from investments of $8.9 million.

FINANCING ACTIVITIES

The Company's inflow of cash provided by financing activities of $81.8 million
was primarily attributable to inflows from:

o  proceeds of all long-term debt of $285.0 million; and
o  capital contributions attributable to Minority Interests of $35.1 million.

The inflow of cash provided by financing activities was partially offset by
outflows from:

o  payments of all long-term debt of $228.0 million; and
o  distributions to Minority Interests of $8.1 million.

YEAR 2000 READINESS

The Company, along with an independent firm, continues to review information
technology systems (such as accounting systems and network operating systems)
and non-information technology systems (such as microcontrollers). The Company
believes that the assessment phase for both information technology and
non-information technology systems is 100% complete.

As the assessment phase was completed at each of the locations, the Company
began implementing the modification phase to address any issues discovered in
the assessment phase. The modification phase was followed by a testing phase to
determine that the appropriate corrective action has been taken. Substantially
all testing has been completed for the Company's locations, and the Company has
not identified any significant concerns and believes that the mission-critical
systems are or can be made compliant with minor upgrades.

Based on the assessment and modifications of information technology and
non-information technology systems, the Company believes that the total cost to
specifically assess and remediate both information technology and
non-information technology systems if necessary will not be material to the
Company. To date, the Company's share of costs related to Year 2000 compliance
has been less than $1.0 million and the Company does not anticipate that
significant additional costs will be incurred. All Year 2000 compliance costs
are being expensed as incurred.

The Company believes that its greatest economic exposure lies with its
Temperature Controlled Logistics, Hospitality and Equipment Sales and Leasing
segments. Specifically, within the Hospitality and Equipment Sales and Leasing
segments, management believes that the most significant risk associated with
Year 2000 compliance issues relates to any inability of the Company's principal
vendors and suppliers to become Year 2000 compliant in a timely manner. For
example, if the computer systems used by the Company's principal equipment
vendors or hotel suppliers were to fail as a result of a failure to achieve Year
2000 compliance, the Company may experience inventory shortages. Consequently,
the Company could experience business interruptions which potentially could


                                       30
<PAGE>   31


have a material adverse effect on the Company's operating results and financial
position. The Company has requested from its principal vendors and suppliers
information regarding their Year 2000 issues and their plans to assure timely
Year 2000 compliance. The Equipment Sales and Leasing segment has received
letters from JCB, Ingersoll Rand, Terex and Link-Belt, its major suppliers, that
the respective suppliers are Year 2000 compliant. The Hospitality and
Temperature Controlled Logistics segments have received responses from key
vendors that they are Year 2000 compliant. The Company will continue working
with its remaining vendors, suppliers and other third-party contractors to
assure that the Company will not be subjected to substantial business
interruptions as a result of Year 2000 issues. There can be no assurance,
however, that vendors, suppliers and other third parties will achieve Year 2000
compliance in a timely manner or that any non-compliance on the part of such
persons will not have an adverse effect on the Company's operations. Within the
Temperature Controlled Logistics segment, management believes that the most
significant risk associated with Year 2000 compliance issues relates to any
inability of the refrigerated storage locations to control the climate of the
individual facilities. For example, if a refrigerated warehouse compressor which
is used to control the climate of the facility could not function or could not
be controlled as a result of Year 2000 issues, the Company could experience loss
in revenues related to that location. Based on the assessment of the Temperature
Controlled Logistics facilities thus far, the Company has noted only minor
problems with the facility systems and such problems have been or will be
corrected with minimal cost.

Where risks have been identified, the Company is in the process of developing
contingency plans to ensure critical operations continue uninterrupted in the
event either the Company, key suppliers or customers fail to resolve their
respective Year 2000 issues in a timely manner. Such plans will be in place by
December 31, 1999.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Since December 31, 1998, there have been no material changes to the information
regarding market risk that was provided in the Company's Form 10-K for the year
ended December 31, 1998.

                           PART II - OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

All claims involved in or related to the arbitration proceeding between Magellan
and the Company as reported in the Company's Form 10-Q for the quarter ended
March 31, 1999, were settled and released; see Other - Recent Developments under
Item 2, Part I of this Form 10-Q.

ITEM 2.        CHANGE IN SECURITIES AND USE OF PROCEEDS

Not Applicable

ITEM 3.        DEFAULTS UPON SENIOR SECURITIES

Not Applicable

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

Not Applicable

ITEM 5.        OTHER INFORMATION

On October 25, 1999, the Company received notice from The Nasdaq-Amex Market
Group (the "Nasdaq") that, for the 30 consecutive trading days preceding such
date, the Company's common stock failed to maintain a closing bid price of
greater than or equal to $5.00, the minimum closing bid price required for
continued listing under the


                                       31
<PAGE>   32


Nasdaq National Market maintenance standard applicable to the Company. The
Nasdaq has informed the Company that, in order to continue to be listed on the
Nasdaq National Market, the Company must regain compliance with the applicable
maintenance standard on or before January 24, 2000. The Company will regain
compliance if the closing bid price of its common stock equals or exceeds $5.00
for 10 consecutive trading days. In the event that the Company does not regain
compliance on or before January 24, 2000, the Company could pursue several
options, including requesting a hearing before a Nasdaq panel on the issue of
compliance or applying for listing on the Nasdaq SmallCap Market. Management
believes that the Company currently meets or exceeds all requirements for
listing on the Nasdaq SmallCap Market; however, there can be no assurance that
the Company's common stock would be accepted for listing on the Nasdaq SmallCap
Market if the Company decided to seek listing on that market.

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits        Description

<TABLE>
       <S>             <C>
       3.1             First Amended and Restated  Certificate of  Incorporation  (filed as Exhibit 3.3
                       to the Company's  registration  statement on Form S-1 dated July 12, 1997 ("Form
                       S-1") and incorporated by reference herein)

       3.2             First  Amended  and  Restated  Bylaws  (filed  as  Exhibit  3.4 to Form  S-1 and
                       incorporated by reference herein)

       3.3             Amendment of Article V of First  Amended and Restated  Bylaws  (filed as Exhibit
                       3.3 to the  Company's  June 30,  1998 Form 10-Q  ("June 30, 1998 Form 10-Q") and
                       incorporated by reference herein)

       3.4             Repeal of Amendment of Article V of First Amended and Restated  Bylaws (filed as
                       Exhibit 3.4 to the Company's  September 30, 1998 Form 10-Q  ("September 30, 1998
                       Form 10-Q") and incorporated by reference herein)

       4.1             Specimen stock  certificate  (filed as Exhibit 4.1 to Form S-1 and  incorporated
                       by reference herein)

       4.2             Preferred  Share  Purchase  Rights  Plan  (filed as Exhibit  4.2 to Form S-1 and
                       incorporated by reference herein)

       4.3             First Amendment to Preferred Share Purchase Rights
                       Agreement dated as of September 25, 1998, between
                       Crescent Operating, Inc. and Bank Boston, N.A., as
                       Rights Agent (filed as Exhibit 4.3 to September 30, 1998
                       Form 10-Q and incorporated by reference herein)

       4.4             Second Amendment to Preferred Share Purchase Rights
                       Agreement dated as of March 4, 1999, between Crescent
                       Operating, Inc. and Bank Boston, N.A., as Rights Agent
                       (filed as Exhibit 4.4 to March 31, 1999 Form 10-Q
                       ("March 31, 1999 Form 10-Q") and incorporated by
                       reference herein)

       10.1            Amended  Stock   Incentive   Plan  (filed  as  Exhibit  10.1  to  Form  S-1  and
                       incorporated by reference herein)

       10.2            Intercompany Agreement between Crescent Operating, Inc.
                       and Crescent Real Estate Equities Limited Partnership
                       (filed as Exhibit 10.2 to the Company's Quarterly Report
                       on Form 10-Q for the Quarter Ended June 30, 1997 ("June
                       30, 1997 Form 10-Q") and incorporated by reference
                       herein)

       10.3            Amended and Restated  Operating  Agreement of Charter Behavioral Health Systems,
                       LLC  (filed as  Exhibit  10.3 to June 30,  1997 Form  10-Q and  incorporated  by
                       reference herein)

       10.5            Amended and Restated  Credit and Security  Agreement,  dated as of May 30, 1997,
                       between  Crescent  Real  Estate  Equities   Limited   Partnership  and  Crescent
                       Operating,  Inc.,  together  with  related  Note  (filed as Exhibit  10.5 to the
                       Company's  September  30,  1997 Form 10-Q  ("September  30, 1997 Form 10-Q") and
                       incorporated by reference herein)
</TABLE>






<PAGE>   33
<TABLE>
       <S>             <C>
       10.6            Line of Credit and Security Agreement, dated as of May 21, 1997, between
                       Crescent Real Estate Equities Limited Partnership and Crescent Operating, Inc.,
                       together with related Line of Credit Note (filed as Exhibit 10.6 to September
                       30, 1997 Form 10-Q and incorporated by reference herein)

       10.7            Acquisition Agreement, dated as of February 10, 1997, between Crescent Real
                       Estate Equities Limited Partnership and Carter-Crowley Properties, Inc. (filed
                       as Exhibit 10.7 to Form S-1 and incorporated by reference herein)

       10.10           Security Agreement dated September 22, 1997 between COI Hotel Group, Inc., as
                       debtor, and Crescent Real Estate Equities Limited Partnership, as lender,
                       together with related $1 million promissory note (filed as Exhibit 10.10 to
                       September 30, 1997 Form 10-Q and incorporated by reference herein)

       10.11           Security Agreement dated September 22, 1997 between COI Hotel Group, Inc., as
                       debtor, and Crescent Real Estate Equities Limited Partnership, as lender,
                       together with related $800,000 promissory note (filed as Exhibit 10.11 to
                       September 30, 1997 Form 10-Q and incorporated by reference herein)

       10.12           Amended and Restated Asset Management dated August 31, 1997, to be effective
                       July 31, 1997, between Wine Country Hotel, LLC and The Varma Group, Inc. (filed
                       as Exhibit 10.12 to September 30, 1997 Form 10-Q and incorporated by reference
                       herein)

       10.13           Amended and Restated Asset Management Agreement dated August 31, 1997, to be
                       effective July 31, 1997, between RoseStar Southwest, LLC and The Varma Group,
                       Inc. (filed as Exhibit 10.13 to September 30, 1997 Form 10-Q and incorporated by
                       reference herein)

       10.14           Amended and Restated Asset Management Agreement dated August 31, 1997, to be
                       effective July 31, 1997, between RoseStar Management LLC and The Varma Group,
                       Inc. (filed as Exhibit 10.14 to September 30, 1997 Form 10-Q and incorporated by
                       reference herein)

       10.15           Agreement for Financial Services dated July 1, 1997, between Crescent Real
                       Estate Equities Company and Petroleum Financial, Inc. (filed as Exhibit 10.15 to
                       September 30, 1997 Form 10-Q and incorporated by reference herein)

       10.16           Credit Agreement dated August 27, 1997, between Crescent Operating, Inc. and
                       NationsBank of Texas, N.A. together with related $15.0 million promissory note
                       (filed as Exhibit 10.16 to September 30, 1997 Form 10-Q and incorporated by
                       reference herein)

       10.17           Support Agreement dated August 27, 1997, between Richard E. Rainwater, John Goff
                       and Gerald Haddock in favor of Crescent Real Estate Equities Company and
                       NationsBank of Texas, N.A. (filed as Exhibit 10.17 to September 30, 1997 Form
                       10-Q and incorporated by reference herein)

       10.18           1997 Crescent Operating, Inc. Management Stock Incentive Plan (filed as Exhibit
                       10.18 to the Company's Annual Report on Form 10-K for the year ended December
                       31, 1997 ("December 31, 1997 Form 10-K") and incorporated by reference herein)

       10.19           Memorandum of Agreement executed November 16, 1997, among Charter Behavioral
                       Health Systems, LLC, Charter Behavioral Health Systems, Inc. and Crescent
                       Operating, Inc. (filed as Exhibit 10.19 to December 31, 1997 Form 10-K and
                       incorporated by reference herein)
</TABLE>


<PAGE>   34
<TABLE>
       <S>             <C>
       10.20           Purchase Agreement dated August 31, 1997, by and among Crescent Operating, Inc.,
                       RoseStar Management LLC, Gerald W. Haddock, John C. Goff and Sanjay Varma (filed
                       as Exhibit 10.20 to December 31, 1997 Form 10-K and incorporated by reference
                       herein)

       10.21           Stock Purchase Agreement dated August 31, 1997, by and among Crescent Operating,
                       Inc., Gerald W. Haddock, John C. Goff and Sanjay Varma (filed as Exhibit 10.21
                       to December 31, 1997 Form 10-K and incorporated by reference herein)

       10.22           Amended and Restated Lease Agreement, dated June 30, 1995 between Crescent Real
                       Estate Equities Limited Partnership and RoseStar Management LLC, relating to the
                       Denver Marriott City Center (filed as Exhibit 10.17 to the Annual Report on Form
                       10-K of Crescent Real Estate Equities Company for the Fiscal Year Ended December
                       31, 1995 (the "1995 CEI 10-K") and incorporated by reference herein)

       10.23           Lease Agreement, dated December 19, 1995 between Crescent Real Estate Equities
                       Limited Partnership and RoseStar Management LLC, relating to the Hyatt Regency
                       Albuquerque (filed as Exhibit 10.16 to the 1995 CEI 10-K and incorporated by
                       reference herein)

       10.24           Form of Amended and Restated Lease Agreement, dated January 1, 1996, among
                       Crescent Real Estate Equities Limited Partnership, Mogul Management, LLC and
                       RoseStar Management LLC, relating to the Hyatt Regency Beaver Creek (filed as
                       Exhibit 10.12 to the 1995 CEI 10-K and incorporated by reference herein)

       10.25           Lease Agreement, dated July 26, 1996, between Canyon Ranch, Inc. and Canyon
                       Ranch Leasing, L.L.C., assigned by Canyon Ranch, Inc. to Crescent Real Estate
                       Equities Limited Partnership pursuant to the Assignment and Assumption Agreement
                       of Master Lease, dated July 26, 1996 (filed as Exhibit 10.24 to the Quarterly
                       Report on Form 10-Q/A of Crescent Real Estate Equities Company for the Quarter
                       Ended June 30, 1997 (the "1997 CEI 10-Q") and incorporated by reference herein)

       10.26           Lease Agreement, dated November 18, 1996 between Crescent Real Estate Equities
                       Limited Partnership and Wine Country Hotel, LLC (filed as Exhibit 10.25 to the
                       Annual Report on Form 10-K of Crescent Real Estate Equities Company for the
                       Fiscal Year Ended December 31, 1996 and incorporated by reference herein)

       10.27           Lease Agreement, dated December 11, 1996, between Canyon Ranch-Bellefontaine
                       Associates, L.P. and Vintage Resorts, L.L.C., as assigned by Canyon
                       Ranch-Bellefontaine Associates, L.P. to Crescent Real Estate Funding VI, L.P.
                       pursuant to the Assignment and Assumption Agreement of Master Lease, dated
                       December 11, 1996 (filed as Exhibit 10.26 to the 1997 CEI 10-Q and incorporated
                       by reference herein)

       10.28           Master Lease Agreement, dated June 16, 1997, between Crescent Real Estate
                       Funding VII, L.P. and Charter Behavioral Health Systems, LLC and its
                       subsidiaries, relating to the Facilities (filed as Exhibit 10.27 to the 1997 CEI
                       10-Q and incorporated by reference herein)

       10.29           Form of Indemnification Agreement (filed as Exhibit 10.29 to December 31, 1997
                       Form 10-K and incorporated by reference herein)
</TABLE>


<PAGE>   35
<TABLE>
       <S>             <C>
       10.30           Purchase Agreement, dated as of September 29, 1997, between Crescent Operating,
                       Inc. and Crescent Real Estate Equities Limited Partnership, relating to the
                       purchase of Desert Mountain Development Corporation (filed as Exhibit 10.30 to
                       December 31, 1997 Form 10-K and incorporated by reference herein)

       10.31           Lease Agreement dated December 19, 1997, between Crescent Real Estate Equities
                       Limited Partnership, as Lessor, and Wine Country Hotel, as Lessee, for lease of
                       Ventana Inn (filed as Exhibit 10.31 to the Company's March 31, 1998 Form 10-Q
                       ("March 31, 1998 Form 10-Q") and incorporated by reference herein)

       10.32           Lease Agreement dated September 22, 1997, between Crescent Real Estate Equities
                       Limited Partnership, as Lessor, and COI Hotel Group, Inc., as lessee, for lease
                       of Four Seasons Hotel, Houston (filed as Exhibit 10.32 to March 31, 1998 Form
                       10-Q and incorporated by reference herein)

       10.33           Asset Purchase Agreement dated December 19, 1997, among Crescent Operating, Inc.
                       Preco Machinery Sales, Inc., and certain individual Preco shareholders (filed as
                       Exhibit 10.33 to March 31, 1998 Form 10-Q and incorporated by reference herein)

       10.34           Asset Purchase Agreement dated April 30, 1998, among Crescent Operating, Inc.,
                       Central Texas Equipment Company, and certain individual Central Texas
                       shareholders (filed as Exhibit 10.34 to March 31, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.35           Credit Agreement dated August 29, 1997 between Crescent Real Estate Equities
                       Limited Partnership, as lender, and Desert Mountain Properties Limited
                       Partnership, as borrower, together with related Senior Note, Junior Note and
                       deed of trust (filed as Exhibit 10.35 to March 31, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.36           Buy-Out Agreement dated April 24, 1998, between Crescent Operating, Inc. and
                       Crescent Real Estate Equities Limited Partnership (filed as Exhibit 10.36 to
                       March 31, 1998 Form 10-Q and incorporated by reference herein)

       10.37           Stock Acquisition Agreement and Plan of Merger dated June 4, 1998, among
                       Machinery, Inc., Oklahoma Machinery, Inc., Crescent Machinery Company, Crescent
                       Operating, Inc. and certain individual Machinery shareholders (filed as Exhibit
                       10.37 to June 30, 1998 Form 10-Q and incorporated by reference herein)

       10.38           Master Revolving Line of Credit Loan Agreement (Borrowing Base and Warehouse)
                       dated May 14, 1998, between Desert Mountain Properties Limited Partnership and
                       National Bank of Arizona (filed as Exhibit 10.38 to June 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.39           1997 Management Stock Incentive Plan (filed as Exhibit 10.39 to June 30, 1998
                       Form 10-Q and incorporated by reference herein)

       10.40           Credit and Security Agreement, dated as of September 21, 1998, between Crescent
                       Real Estate Equities Limited Partnership and Crescent Operating, Inc., together
                       with related Note (filed as Exhibit 10.40 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.41           First Amendment to Amended and Restated Pledge Agreement, dated as of September
                       21, 1998, between Crescent Real Estate Equities Limited Partnership and Crescent
                       Operating, Inc. (filed as Exhibit 10.41 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)
</TABLE>


<PAGE>   36
<TABLE>
       <S>             <C>
       10.42           First Amendment to Line of Credit and Security Agreement, dated as of August 11,
                       1998, between Crescent Real Estate Equities Limited Partnership and Crescent
                       Operating, Inc., together with related Note (filed as Exhibit 10.42 to September
                       30, 1998 Form 10-Q and incorporated by reference herein)

       10.43           First Amendment to Amended and Restated Credit and Security Agreement, dated as
                       of August 11, 1998, between Crescent Real Estate Equities Limited Partnership
                       and Crescent Operating, Inc. (filed as Exhibit 10.43 to September 30, 1998 Form
                       10-Q and incorporated by reference herein)

       10.44           Second Amendment to Amended and Restated Credit and Security Agreement, dated as
                       of September 21, 1998, between Crescent Real Estate Equities Limited Partnership
                       and Crescent Operating, Inc. (filed as Exhibit 10.44 to September 30, 1998 Form
                       10-Q and incorporated by reference herein)

       10.45           Second Amendment to Line of Credit and Security Agreement, dated as of September
                       21, 1998, between Crescent Real Estate Equities Limited Partnership and Crescent
                       Operating, Inc. (filed as Exhibit 10.45 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.46           Agreement of Limited Partnership of COPI Colorado, L.P. (filed as Exhibit 10.1
                       to that Schedule 13D Statement dated September 28, 1998, filed by COPI Colorado,
                       L.P., Crescent Operating, Inc., Gerald W. Haddock, John C. Goff and Harry H.
                       Frampton, III, and incorporated by reference herein)

       10.47           Contribution Agreement effective as of September 11, 1998, by and among Crescent
                       Operating, Inc., Gerald W. Haddock, John C. Goff and Harry H. Frampton, III
                       (filed as Exhibit 10.2 to that Schedule 13D Statement dated September 28, 1998,
                       filed by COPI Colorado, L.P., Crescent Operating, Inc., Gerald W. Haddock, John
                       C. Goff and Harry H. Frampton, III, and incorporated by reference herein)

       10.48           Agreement Regarding Schedules and Other Matters made as of September 11, 1998,
                       by and among Crescent Operating, Inc., Gerald W. Haddock, John C. Goff and Harry
                       H. Frampton, III (filed as Exhibit 10.3 to that Schedule 13D Statement dated
                       September 28, 1998, filed by COPI Colorado, L.P., Crescent Operating Inc.,
                       Gerald W. Haddock, John C. Goff and Harry H. Frampton, III, and incorporated by
                       reference herein)

       10.49           Stock Purchase Agreement dated as of August 7, 1998 by and among Western
                       Traction Company, The Carlston Family Trust, Ronald D. Carlston and Crescent
                       Operating, Inc. (filed as Exhibit 10.49 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.50           Stock Purchase Agreement dated as of July 31, 1998 by and among Harvey Equipment
                       Center, Inc., L and H Leasing Company, William J. Harvey, Roy E. Harvey, Jr.,
                       Betty J. Harvey and Crescent Operating, Inc. (filed as Exhibit 10.50 to
                       September 30, 1998 Form 10-Q and incorporated by reference herein)

       10.51           Credit Agreement dated as of July 28, 1998, between Crescent Real Estate
                       Equities Limited Partnership and CRL Investments, Inc., together with the
                       related Note (filed as Exhibit 10.51 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.52           Security Agreement dated as of July 28, 1998, between Crescent Real Estate
                       Equities Limited Partnership and CRL Investments, Inc. (filed as Exhibit 10.52
                       to September 30, 1998 Form 10-Q and incorporated by reference herein)
</TABLE>


<PAGE>   37
<TABLE>
       <S>             <C>
       10.53           First Amendment to Credit Agreement effective as of August 27, 1998, among
                       Crescent Operating, Inc., NationsBank, N. A., and the Support Parties identified
                       therein (filed as Exhibit 10.53 to September 30, 1998 Form 10-Q and incorporated
                       by reference herein)

       10.54           Lease Agreement dated as of October 13, 1998, between Crescent Real Estate
                       Equities Limited Partnership and Wine Country Golf Club, Inc., relating to
                       Sonoma Golf Club (filed as Exhibit 10.54 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.55           First Amendment to Lease Agreement effective December 31, 1998, between Canyon
                       Ranch Leasing, L.L.C., and Crescent Real Estate Equities Limited Partnership,
                       relating to Canyon Ranch - Tucson (filed as Exhibit 10.55 to the Company's
                       Annual Report on Form 10-K for the year ended December 31, 1998 ("December 31,
                       1998 Form 10-K") and incorporated by reference herein)

       10.56           First Amendment to Lease Agreement effective April 1, 1996; Second Amendment to
                       Lease Agreement effective November 22, 1996; Third Amendment to Lease Agreement
                       effective August 12, 1998; and Fourth Amendment to Lease Agreement effective
                       December 31, 1998 between RoseStar Southwest, LLC, and Crescent Real Estate
                       Funding II L.P., relating to Hyatt Regency Albuquerque (filed as Exhibit 10.56
                       to December 31, 1998 Form 10-K and incorporated by reference herein)

       10.57           First Amendment to Lease Agreement effective December 31, 1998, between Wine
                       Country Hotel, LLC, and Crescent Real Estate Equities Limited Partnership,
                       relating to Sonoma Mission Inn & Spa (filed as Exhibit 10.57 to December 31,
                       1998 Form 10-K and incorporated by reference herein)

       10.58           First Amendment to Amended and Restated Lease Agreement effective December 31,
                       1998, between RoseStar Management, LLC, and Crescent Real Estate Equities
                       Limited Partnership, relating to Marriott City Center, Denver (filed as Exhibit
                       10.58 to December 31, 1998 Form 10-K and incorporated by reference herein)

       10.59           First Amendment to Lease Agreement effective December 31, 1998, between Wine
                       Country Hotel, LLC, and Crescent Real Estate Equities Limited Partnership,
                       relating to Ventana Inn (filed as Exhibit 10.59 to December 31, 1998 Form 10-K
                       and incorporated by reference herein)

       10.60           First Amendment to Amended and Restated Lease Agreement effective April 1, 1996
                       and Second Amendment to Amended and Restated Lease Agreement effective December
                       31, 1998, between RoseStar Southwest, LLC, and Crescent Real Estate Funding II,
                       L.P., relating to Hyatt Regency Beaver Creek (filed as Exhibit 10.60 to December
                       31, 1998 Form 10-K and incorporated by reference herein)

       10.61           First Amendment to Lease Agreement effective December 31, 1998, between COI
                       Hotel Group, Inc. and Crescent Real Estate Equities Limited Partnership,
                       relating to Four Seasons - Houston (filed as Exhibit 10.61 to December 31, 1998
                       Form 10-K and incorporated by reference herein)

       10.62           First Amendment to Lease Agreement effective December 31, 1998, between Wine
                       Country Hotel, LLC and Crescent Real Estate Funding VI, L.P., relating to Canyon
                       Ranch - Lenox (filed as Exhibit 10.62 to March 31, 1999 Form 10-Q and
                       incorporated by reference herein)
</TABLE>


<PAGE>   38
<TABLE>
       <S>             <C>
       10.63           Master Guaranty effective December 31, 1998, by Crescent Operating, Inc. for the
                       benefit of Crescent Real Estate Equities Limited Partnership, Crescent Real
                       Estate Funding II, L.P., and Crescent Real Estate Funding VI, L.P., relating to
                       leases for Hyatt Regency Albuquerque, Hyatt Regency Beaver Creek, Canyon
                       Ranch-Lenox, Sonoma Mission Inn & Spa, Canyon Ranch - Tucson, and Marriott City
                       Center Denver (filed as Exhibit 10.63 to December 31, 1998 Form 10-K and
                       incorporated by reference herein)

       10.64           Guaranty of Lease effective December 19, 1997, by Crescent Operating, Inc. for
                       the benefit of Crescent Real Estate Equities Limited Partnership, relating to
                       Ventana Inn (filed as Exhibit 10.64 to December 31, 1998 Form 10-K and
                       incorporated by reference herein)

       10.65           Amended and Restated Guaranty of Lease effective December 31, 1998, by Crescent
                       Operating, Inc. for the benefit of Crescent Real Estate Equities Limited
                       Partnership, relating to Four Seasons Hotel - Houston (filed as Exhibit 10.65 to
                       December 31, 1998 Form 10-K and incorporated by reference herein)

       10.66           Amended and Restated Guaranty of Lease effective December 31, 1998, by Crescent
                       Operating, Inc. for the benefit of Crescent Real Estate Equities Limited
                       Partnership, relating to Sonoma Golf Club (filed as Exhibit 10.66 to December
                       31, 1998 Form 10-K and incorporated by reference herein)

       10.67           Credit Agreement dated August 11, 1995, between Crescent Development Management
                       Corp., as borrower, and Crescent Real Estate Equities Limited Partnership, as
                       lender; First Amendment to Credit Agreement dated as of April 15, 1997; Second
                       Amendment to Credit Agreement dated as of May 8, 1998; and related Note and
                       Security Agreement (filed as Exhibit 10.67 to December 31, 1998 Form 10-K and
                       incorporated by reference herein)

       10.68           Credit Agreement dated January 1, 1998, between Crescent Development Management
                       Corp., as borrower, and Crescent Real Estate Equities Limited Partnership, as
                       lender, and related Note and Security Agreement (filed as Exhibit 10.68 to
                       December 31, 1998 Form 10-K and incorporated by reference herein)

       10.69           $3,100,000 Note dated February 29, 1996, made by Crescent Development Management
                       Corp. payable to Crescent Real Estate Equities Limited Partnership (filed as
                       Exhibit 10.69 to December 31, 1998 Form 10-K and incorporated by reference
                       herein)

       10.70           Credit Agreement dated January 1, 1999, between Crescent Development Management
                       Corp., as borrower, and Crescent Real Estate Equities Limited Partnership, as
                       lender, and related Line of Credit Note and Security Agreement (filed as Exhibit
                       10.70 to March 31, 1999 Form 10-Q and incorporated by reference herein)

       10.71           Amended and Restated Credit Agreement dated January 1, 1999, between Crescent
                       Development Management Corp., as borrower, and Crescent Real Estate Equities
                       Limited Partnership, as lender, and related Line of Credit Note and Amended and
                       Restated Security Agreement (filed as Exhibit 10.71 to March 31, 1999 Form 10-Q
                       and incorporated by reference herein)

       10.72           Purchase Agreement dated March 12, 1999, between Crescent Operating, Inc. and
                       Crescent Real Estate Equities Limited Partnership, relating to sale of interests
                       in Crescent CS Holdings Corp., and Crescent CS Holdings II Corp., and related
                       Put Agreement of same date (filed as Exhibit 10.72 to March 31, 1999 Form 10-Q
                       and incorporated by reference herein)
</TABLE>


<PAGE>   39
<TABLE>
       <S>             <C>
       10.73           Second Amendment to Lease Agreement effective April 1, 1999, between Wine
                       Country Hotel, LLC, and Crescent Real Estate Funding VI, L.P., relating to
                       Canyon Ranch-Lenox (filed as Exhibit 10.73 to March 31, 1999 Form 10-Q and
                       incorporated by reference herein)

       10.74           Master Revolving Line of Credit Loan Agreement (Borrowing Base and Warehouse)
                       dated May 14, 1998, between Desert Mountain Properties Limited Partnership, as
                       borrower, and National Bank of Arizona, as lender; Modification Agreement dated
                       December 30, 1998; second Modification Agreement dated March 31, 1999; and
                       related Promissory Note (Borrowing Base), Promissory Note (Warehouse), Pledge
                       Agreement, Deed of Trust, and Amendment to Deed of Trust (filed as Exhibit 10.74
                       to March 31, 1999 Form 10-Q and incorporated by reference herein)

       10.75           Lease Agreement dated as of June 15, 1999, between Crescent Real Estate Funding
                       III, L.P. and COI Hotel Group, Inc., relating to the Renaissance Houston Hotel
                       (filed as Exhibit 10.75 to June 30, 1999 Form 10-Q and incorporated by reference
                       herein)

       10.76           Guaranty of Lease dated June 15, 1999, by Crescent Operating, Inc. for the
                       benefit of Crescent Real Estate Funding III, L.P., relating to Renaissance
                       Houston Hotel (filed as Exhibit 10.76 to June 30, 1999 Form 10-Q and incorporated by
                       reference herein)

       10.77           Asset Management Agreement dated as of January 1, 1999, between Crescent Real Estate
                       Equities Limited Partnership and COI Hotel Group, Inc., relating to the Omni Austin
                       Hotel (filed as Exhibit 10.77 to June 30, 1999 Form 10-Q and incorporated by reference
                       herein)

       10.78           Agreement dated June 11, 1999, by and between Gerald W. Haddock and Crescent Operating,
                       Inc. and its subsidiaries and affiliates (filed as Exhibit 10.78 to June 30, 1999 Form
                       10-Q and incorporated by reference herein)

       10.79           Stock Purchase Agreement dated as of July 15, 1999, by and among E. L. Lester & Company,
                       Incorporated, E. L. Lester, Jr., Howard T. Tellepsen II, Karen Tellepsen, Tom Tellepsen
                       II, Linda Lester Griffen, Crescent Operating, Inc. and Crescent Machinery Company (filed
                       herewith)

       10.80           Stock Purchase Agreement dated as of July 8, 1999, by and among Solveson Crane Rental,
                       Inc., Solveson Family Revocable Trust, and Crescent Machinery Company (filed herewith)

       10.81           Second Amendment to Credit Agreement effective as of August 27, 1999, among Crescent
                       Operating, Inc., Bank of America, N. A. (formerly NationsBank, N. A.), and the Support
                       Parties identified therein (filed herewith)

       27              Financial Data Schedule
</TABLE>

(b)      Reports on Form 8-K

         Not Applicable
<PAGE>   40



                                   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, on the 15th day of November, 1999.

                            CRESCENT OPERATING, INC.
                            (Registrant)


                                 By /s/ John C. Goff
                                    ---------------------------------------
                                    John C. Goff, President and Chief
                                    Executive Officer and Vice-Chairman
                                    (Principal Executive Officer)


                                 By /s/ Richard P. Knight
                                    ---------------------------------------
                                    Richard P. Knight, Chief Financial Officer
                                    (Principal Financial and Accounting Officer)



<PAGE>   41
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       Exhibit
       Number          Description of Exhibits
       ------------    ---------------------------------------------------------
       <S>             <C>
       3.1             First Amended and Restated  Certificate of  Incorporation  (filed as Exhibit 3.3
                       to the Company's  registration  statement on Form S-1 dated July 12, 1997 ("Form
                       S-1") and incorporated by reference herein)

       3.2             First  Amended  and  Restated  Bylaws  (filed  as  Exhibit  3.4 to Form  S-1 and
                       incorporated by reference herein)

       3.3             Amendment of Article V of First  Amended and Restated  Bylaws  (filed as Exhibit
                       3.3 to the  Company's  June 30,  1998 Form 10-Q  ("June 30, 1998 Form 10-Q") and
                       incorporated by reference herein)

       3.4             Repeal of Amendment of Article V of First Amended and Restated  Bylaws (filed as
                       Exhibit 3.4 to the Company's  September 30, 1998 Form 10-Q  ("September 30, 1998
                       Form 10-Q") and incorporated by reference herein)

       4.1             Specimen stock  certificate  (filed as Exhibit 4.1 to Form S-1 and  incorporated
                       by reference herein)

       4.2             Preferred  Share  Purchase  Rights  Plan  (filed as Exhibit  4.2 to Form S-1 and
                       incorporated by reference herein)

       4.3             First Amendment to Preferred Share Purchase Rights
                       Agreement dated as of September 25, 1998, between
                       Crescent Operating, Inc. and Bank Boston, N.A., as
                       Rights Agent (filed as Exhibit 4.3 to September 30, 1998
                       Form 10-Q and incorporated by reference herein)

       4.4             Second Amendment to Preferred Share Purchase Rights
                       Agreement dated as of March 4, 1999, between Crescent
                       Operating, Inc. and Bank Boston, N.A., as Rights Agent
                       (filed as Exhibit 4.4 to March 31, 1999 Form 10-Q
                       ("March 31, 1999 Form 10-Q") and incorporated by
                       reference herein)

       10.1            Amended  Stock   Incentive   Plan  (filed  as  Exhibit  10.1  to  Form  S-1  and
                       incorporated by reference herein)

       10.2            Intercompany Agreement between Crescent Operating, Inc.
                       and Crescent Real Estate Equities Limited Partnership
                       (filed as Exhibit 10.2 to the Company's Quarterly Report
                       on Form 10-Q for the Quarter Ended June 30, 1997 ("June
                       30, 1997 Form 10-Q") and incorporated by reference
                       herein)

       10.3            Amended and Restated  Operating  Agreement of Charter Behavioral Health Systems,
                       LLC  (filed as  Exhibit  10.3 to June 30,  1997 Form  10-Q and  incorporated  by
                       reference herein)

       10.5            Amended and Restated  Credit and Security  Agreement,  dated as of May 30, 1997,
                       between  Crescent  Real  Estate  Equities   Limited   Partnership  and  Crescent
                       Operating,  Inc.,  together  with  related  Note  (filed as Exhibit  10.5 to the
                       Company's  September  30,  1997 Form 10-Q  ("September  30, 1997 Form 10-Q") and
                       incorporated by reference herein)
</TABLE>


<PAGE>   42
<TABLE>
       <S>             <C>
       10.6            Line of Credit and Security Agreement, dated as of May 21, 1997, between
                       Crescent Real Estate Equities Limited Partnership and Crescent Operating, Inc.,
                       together with related Line of Credit Note (filed as Exhibit 10.6 to September
                       30, 1997 Form 10-Q and incorporated by reference herein)

       10.7            Acquisition Agreement, dated as of February 10, 1997, between Crescent Real
                       Estate Equities Limited Partnership and Carter-Crowley Properties, Inc. (filed
                       as Exhibit 10.7 to Form S-1 and incorporated by reference herein)

       10.10           Security Agreement dated September 22, 1997 between COI Hotel Group, Inc., as
                       debtor, and Crescent Real Estate Equities Limited Partnership, as lender,
                       together with related $1 million promissory note (filed as Exhibit 10.10 to
                       September 30, 1997 Form 10-Q and incorporated by reference herein)

       10.11           Security Agreement dated September 22, 1997 between COI Hotel Group, Inc., as
                       debtor, and Crescent Real Estate Equities Limited Partnership, as lender,
                       together with related $800,000 promissory note (filed as Exhibit 10.11 to
                       September 30, 1997 Form 10-Q and incorporated by reference herein)

       10.12           Amended and Restated Asset Management dated August 31, 1997, to be effective
                       July 31, 1997, between Wine Country Hotel, LLC and The Varma Group, Inc. (filed
                       as Exhibit 10.12 to September 30, 1997 Form 10-Q and incorporated by reference
                       herein)

       10.13           Amended and Restated Asset Management Agreement dated August 31, 1997, to be
                       effective July 31, 1997, between RoseStar Southwest, LLC and The Varma Group,
                       Inc. (filed as Exhibit 10.13 to September 30, 1997 Form 10-Q and incorporated by
                       reference herein)

       10.14           Amended and Restated Asset Management Agreement dated August 31, 1997, to be
                       effective July 31, 1997, between RoseStar Management LLC and The Varma Group,
                       Inc. (filed as Exhibit 10.14 to September 30, 1997 Form 10-Q and incorporated by
                       reference herein)

       10.15           Agreement for Financial Services dated July 1, 1997, between Crescent Real
                       Estate Equities Company and Petroleum Financial, Inc. (filed as Exhibit 10.15 to
                       September 30, 1997 Form 10-Q and incorporated by reference herein)

       10.16           Credit Agreement dated August 27, 1997, between Crescent Operating, Inc. and
                       NationsBank of Texas, N.A. together with related $15.0 million promissory note
                       (filed as Exhibit 10.16 to September 30, 1997 Form 10-Q and incorporated by
                       reference herein)

       10.17           Support Agreement dated August 27, 1997, between Richard E. Rainwater, John Goff
                       and Gerald Haddock in favor of Crescent Real Estate Equities Company and
                       NationsBank of Texas, N.A. (filed as Exhibit 10.17 to September 30, 1997 Form
                       10-Q and incorporated by reference herein)

       10.18           1997 Crescent Operating, Inc. Management Stock Incentive Plan (filed as Exhibit
                       10.18 to the Company's Annual Report on Form 10-K for the year ended December
                       31, 1997 ("December 31, 1997 Form 10-K") and incorporated by reference herein)

       10.19           Memorandum of Agreement executed November 16, 1997, among Charter Behavioral
                       Health Systems, LLC, Charter Behavioral Health Systems, Inc. and Crescent
                       Operating, Inc. (filed as Exhibit 10.19 to December 31, 1997 Form 10-K and
                       incorporated by reference herein)
</TABLE>


<PAGE>   43
<TABLE>
       <S>             <C>
       10.20           Purchase Agreement dated August 31, 1997, by and among Crescent Operating, Inc.,
                       RoseStar Management LLC, Gerald W. Haddock, John C. Goff and Sanjay Varma (filed
                       as Exhibit 10.20 to December 31, 1997 Form 10-K and incorporated by reference
                       herein)

       10.21           Stock Purchase Agreement dated August 31, 1997, by and among Crescent Operating,
                       Inc., Gerald W. Haddock, John C. Goff and Sanjay Varma (filed as Exhibit 10.21
                       to December 31, 1997 Form 10-K and incorporated by reference herein)

       10.22           Amended and Restated Lease Agreement, dated June 30, 1995 between Crescent Real
                       Estate Equities Limited Partnership and RoseStar Management LLC, relating to the
                       Denver Marriott City Center (filed as Exhibit 10.17 to the Annual Report on Form
                       10-K of Crescent Real Estate Equities Company for the Fiscal Year Ended December
                       31, 1995 (the "1995 CEI 10-K") and incorporated by reference herein)

       10.23           Lease Agreement, dated December 19, 1995 between Crescent Real Estate Equities
                       Limited Partnership and RoseStar Management LLC, relating to the Hyatt Regency
                       Albuquerque (filed as Exhibit 10.16 to the 1995 CEI 10-K and incorporated by
                       reference herein)

       10.24           Form of Amended and Restated Lease Agreement, dated January 1, 1996, among
                       Crescent Real Estate Equities Limited Partnership, Mogul Management, LLC and
                       RoseStar Management LLC, relating to the Hyatt Regency Beaver Creek (filed as
                       Exhibit 10.12 to the 1995 CEI 10-K and incorporated by reference herein)

       10.25           Lease Agreement, dated July 26, 1996, between Canyon Ranch, Inc. and Canyon
                       Ranch Leasing, L.L.C., assigned by Canyon Ranch, Inc. to Crescent Real Estate
                       Equities Limited Partnership pursuant to the Assignment and Assumption Agreement
                       of Master Lease, dated July 26, 1996 (filed as Exhibit 10.24 to the Quarterly
                       Report on Form 10-Q/A of Crescent Real Estate Equities Company for the Quarter
                       Ended June 30, 1997 (the "1997 CEI 10-Q") and incorporated by reference herein)

       10.26           Lease Agreement, dated November 18, 1996 between Crescent Real Estate Equities
                       Limited Partnership and Wine Country Hotel, LLC (filed as Exhibit 10.25 to the
                       Annual Report on Form 10-K of Crescent Real Estate Equities Company for the
                       Fiscal Year Ended December 31, 1996 and incorporated by reference herein)

       10.27           Lease Agreement, dated December 11, 1996, between Canyon Ranch-Bellefontaine
                       Associates, L.P. and Vintage Resorts, L.L.C., as assigned by Canyon
                       Ranch-Bellefontaine Associates, L.P. to Crescent Real Estate Funding VI, L.P.
                       pursuant to the Assignment and Assumption Agreement of Master Lease, dated
                       December 11, 1996 (filed as Exhibit 10.26 to the 1997 CEI 10-Q and incorporated
                       by reference herein)

       10.28           Master Lease Agreement, dated June 16, 1997, between Crescent Real Estate
                       Funding VII, L.P. and Charter Behavioral Health Systems, LLC and its
                       subsidiaries, relating to the Facilities (filed as Exhibit 10.27 to the 1997 CEI
                       10-Q and incorporated by reference herein)

       10.29           Form of Indemnification Agreement (filed as Exhibit 10.29 to December 31, 1997
                       Form 10-K and incorporated by reference herein)
</TABLE>


<PAGE>   44
<TABLE>
       <S>             <C>
       10.30           Purchase Agreement, dated as of September 29, 1997, between Crescent Operating,
                       Inc. and Crescent Real Estate Equities Limited Partnership, relating to the
                       purchase of Desert Mountain Development Corporation (filed as Exhibit 10.30 to
                       December 31, 1997 Form 10-K and incorporated by reference herein)

       10.31           Lease Agreement dated December 19, 1997, between Crescent Real Estate Equities
                       Limited Partnership, as Lessor, and Wine Country Hotel, as Lessee, for lease of
                       Ventana Inn (filed as Exhibit 10.31 to the Company's March 31, 1998 Form 10-Q
                       ("March 31, 1998 Form 10-Q") and incorporated by reference herein)

       10.32           Lease Agreement dated September 22, 1997, between Crescent Real Estate Equities
                       Limited Partnership, as Lessor, and COI Hotel Group, Inc., as lessee, for lease
                       of Four Seasons Hotel, Houston (filed as Exhibit 10.32 to March 31, 1998 Form
                       10-Q and incorporated by reference herein)

       10.33           Asset Purchase Agreement dated December 19, 1997, among Crescent Operating, Inc.
                       Preco Machinery Sales, Inc., and certain individual Preco shareholders (filed as
                       Exhibit 10.33 to March 31, 1998 Form 10-Q and incorporated by reference herein)

       10.34           Asset Purchase Agreement dated April 30, 1998, among Crescent Operating, Inc.,
                       Central Texas Equipment Company, and certain individual Central Texas
                       shareholders (filed as Exhibit 10.34 to March 31, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.35           Credit Agreement dated August 29, 1997 between Crescent Real Estate Equities
                       Limited Partnership, as lender, and Desert Mountain Properties Limited
                       Partnership, as borrower, together with related Senior Note, Junior Note and
                       deed of trust (filed as Exhibit 10.35 to March 31, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.36           Buy-Out Agreement dated April 24, 1998, between Crescent Operating, Inc. and
                       Crescent Real Estate Equities Limited Partnership (filed as Exhibit 10.36 to
                       March 31, 1998 Form 10-Q and incorporated by reference herein)

       10.37           Stock Acquisition Agreement and Plan of Merger dated June 4, 1998, among
                       Machinery, Inc., Oklahoma Machinery, Inc., Crescent Machinery Company, Crescent
                       Operating, Inc. and certain individual Machinery shareholders (filed as Exhibit
                       10.37 to June 30, 1998 Form 10-Q and incorporated by reference herein)

       10.38           Master Revolving Line of Credit Loan Agreement (Borrowing Base and Warehouse)
                       dated May 14, 1998, between Desert Mountain Properties Limited Partnership and
                       National Bank of Arizona (filed as Exhibit 10.38 to June 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.39           1997 Management Stock Incentive Plan (filed as Exhibit 10.39 to June 30, 1998
                       Form 10-Q and incorporated by reference herein)

       10.40           Credit and Security Agreement, dated as of September 21, 1998, between Crescent
                       Real Estate Equities Limited Partnership and Crescent Operating, Inc., together
                       with related Note (filed as Exhibit 10.40 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.41           First Amendment to Amended and Restated Pledge Agreement, dated as of September
                       21, 1998, between Crescent Real Estate Equities Limited Partnership and Crescent
                       Operating, Inc. (filed as Exhibit 10.41 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)
</TABLE>


<PAGE>   45
<TABLE>
       <S>             <C>
       10.42           First Amendment to Line of Credit and Security Agreement, dated as of August 11,
                       1998, between Crescent Real Estate Equities Limited Partnership and Crescent
                       Operating, Inc., together with related Note (filed as Exhibit 10.42 to September
                       30, 1998 Form 10-Q and incorporated by reference herein)

       10.43           First Amendment to Amended and Restated Credit and Security Agreement, dated as
                       of August 11, 1998, between Crescent Real Estate Equities Limited Partnership
                       and Crescent Operating, Inc. (filed as Exhibit 10.43 to September 30, 1998 Form
                       10-Q and incorporated by reference herein)

       10.44           Second Amendment to Amended and Restated Credit and Security Agreement, dated as
                       of September 21, 1998, between Crescent Real Estate Equities Limited Partnership
                       and Crescent Operating, Inc. (filed as Exhibit 10.44 to September 30, 1998 Form
                       10-Q and incorporated by reference herein)

       10.45           Second Amendment to Line of Credit and Security Agreement, dated as of September
                       21, 1998, between Crescent Real Estate Equities Limited Partnership and Crescent
                       Operating, Inc. (filed as Exhibit 10.45 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.46           Agreement of Limited Partnership of COPI Colorado, L.P. (filed as Exhibit 10.1
                       to that Schedule 13D Statement dated September 28, 1998, filed by COPI Colorado,
                       L.P., Crescent Operating, Inc., Gerald W. Haddock, John C. Goff and Harry H.
                       Frampton, III, and incorporated by reference herein)

       10.47           Contribution Agreement effective as of September 11, 1998, by and among Crescent
                       Operating, Inc., Gerald W. Haddock, John C. Goff and Harry H. Frampton, III
                       (filed as Exhibit 10.2 to that Schedule 13D Statement dated September 28, 1998,
                       filed by COPI Colorado, L.P., Crescent Operating, Inc., Gerald W. Haddock, John
                       C. Goff and Harry H. Frampton, III, and incorporated by reference herein)

       10.48           Agreement Regarding Schedules and Other Matters made as of September 11, 1998,
                       by and among Crescent Operating, Inc., Gerald W. Haddock, John C. Goff and Harry
                       H. Frampton, III (filed as Exhibit 10.3 to that Schedule 13D Statement dated
                       September 28, 1998, filed by COPI Colorado, L.P., Crescent Operating Inc.,
                       Gerald W. Haddock, John C. Goff and Harry H. Frampton, III, and incorporated by
                       reference herein)

       10.49           Stock Purchase Agreement dated as of August 7, 1998 by and among Western
                       Traction Company, The Carlston Family Trust, Ronald D. Carlston and Crescent
                       Operating, Inc. (filed as Exhibit 10.49 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.50           Stock Purchase Agreement dated as of July 31, 1998 by and among Harvey Equipment
                       Center, Inc., L and H Leasing Company, William J. Harvey, Roy E. Harvey, Jr.,
                       Betty J. Harvey and Crescent Operating, Inc. (filed as Exhibit 10.50 to
                       September 30, 1998 Form 10-Q and incorporated by reference herein)

       10.51           Credit Agreement dated as of July 28, 1998, between Crescent Real Estate
                       Equities Limited Partnership and CRL Investments, Inc., together with the
                       related Note (filed as Exhibit 10.51 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.52           Security Agreement dated as of July 28, 1998, between Crescent Real Estate
                       Equities Limited Partnership and CRL Investments, Inc. (filed as Exhibit 10.52
                       to September 30, 1998 Form 10-Q and incorporated by reference herein)
</TABLE>


<PAGE>   46
<TABLE>
       <S>             <C>
       10.53           First Amendment to Credit Agreement effective as of August 27, 1998, among
                       Crescent Operating, Inc., NationsBank, N. A., and the Support Parties identified
                       therein (filed as Exhibit 10.53 to September 30, 1998 Form 10-Q and incorporated
                       by reference herein)

       10.54           Lease Agreement dated as of October 13, 1998, between Crescent Real Estate
                       Equities Limited Partnership and Wine Country Golf Club, Inc., relating to
                       Sonoma Golf Club (filed as Exhibit 10.54 to September 30, 1998 Form 10-Q and
                       incorporated by reference herein)

       10.55           First Amendment to Lease Agreement effective December 31, 1998, between Canyon
                       Ranch Leasing, L.L.C., and Crescent Real Estate Equities Limited Partnership,
                       relating to Canyon Ranch - Tucson (filed as Exhibit 10.55 to the Company's
                       Annual Report on Form 10-K for the year ended December 31, 1998 ("December 31,
                       1998 Form 10-K") and incorporated by reference herein)

       10.56           First Amendment to Lease Agreement effective April 1, 1996; Second Amendment to
                       Lease Agreement effective November 22, 1996; Third Amendment to Lease Agreement
                       effective August 12, 1998; and Fourth Amendment to Lease Agreement effective
                       December 31, 1998 between RoseStar Southwest, LLC, and Crescent Real Estate
                       Funding II L.P., relating to Hyatt Regency Albuquerque (filed as Exhibit 10.56
                       to December 31, 1998 Form 10-K and incorporated by reference herein)

       10.57           First Amendment to Lease Agreement effective December 31, 1998, between Wine
                       Country Hotel, LLC, and Crescent Real Estate Equities Limited Partnership,
                       relating to Sonoma Mission Inn & Spa (filed as Exhibit 10.57 to December 31,
                       1998 Form 10-K and incorporated by reference herein)

       10.58           First Amendment to Amended and Restated Lease Agreement effective December 31,
                       1998, between RoseStar Management, LLC, and Crescent Real Estate Equities
                       Limited Partnership, relating to Marriott City Center, Denver (filed as Exhibit
                       10.58 to December 31, 1998 Form 10-K and incorporated by reference herein)

       10.59           First Amendment to Lease Agreement effective December 31, 1998, between Wine
                       Country Hotel, LLC, and Crescent Real Estate Equities Limited Partnership,
                       relating to Ventana Inn (filed as Exhibit 10.59 to December 31, 1998 Form 10-K
                       and incorporated by reference herein)

       10.60           First Amendment to Amended and Restated Lease Agreement effective April 1, 1996
                       and Second Amendment to Amended and Restated Lease Agreement effective December
                       31, 1998, between RoseStar Southwest, LLC, and Crescent Real Estate Funding II,
                       L.P., relating to Hyatt Regency Beaver Creek (filed as Exhibit 10.60 to December
                       31, 1998 Form 10-K and incorporated by reference herein)

       10.61           First Amendment to Lease Agreement effective December 31, 1998, between COI
                       Hotel Group, Inc. and Crescent Real Estate Equities Limited Partnership,
                       relating to Four Seasons - Houston (filed as Exhibit 10.61 to December 31, 1998
                       Form 10-K and incorporated by reference herein)

       10.62           First Amendment to Lease Agreement effective December 31, 1998, between Wine
                       Country Hotel, LLC and Crescent Real Estate Funding VI, L.P., relating to Canyon
                       Ranch - Lenox (filed as Exhibit 10.62 to March 31, 1999 Form 10-Q and
                       incorporated by reference herein)
</TABLE>


<PAGE>   47
<TABLE>
       <S>             <C>
       10.63           Master Guaranty effective December 31, 1998, by Crescent Operating, Inc. for the
                       benefit of Crescent Real Estate Equities Limited Partnership, Crescent Real
                       Estate Funding II, L.P., and Crescent Real Estate Funding VI, L.P., relating to
                       leases for Hyatt Regency Albuquerque, Hyatt Regency Beaver Creek, Canyon
                       Ranch-Lenox, Sonoma Mission Inn & Spa, Canyon Ranch - Tucson, and Marriott City
                       Center Denver (filed as Exhibit 10.63 to December 31, 1998 Form 10-K and
                       incorporated by reference herein)

       10.64           Guaranty of Lease effective December 19, 1997, by Crescent Operating, Inc. for
                       the benefit of Crescent Real Estate Equities Limited Partnership, relating to
                       Ventana Inn (filed as Exhibit 10.64 to December 31, 1998 Form 10-K and
                       incorporated by reference herein)

       10.65           Amended and Restated Guaranty of Lease effective December 31, 1998, by Crescent
                       Operating, Inc. for the benefit of Crescent Real Estate Equities Limited
                       Partnership, relating to Four Seasons Hotel - Houston (filed as Exhibit 10.65 to
                       December 31, 1998 Form 10-K and incorporated by reference herein)

       10.66           Amended and Restated Guaranty of Lease effective December 31, 1998, by Crescent
                       Operating, Inc. for the benefit of Crescent Real Estate Equities Limited
                       Partnership, relating to Sonoma Golf Club (filed as Exhibit 10.66 to December
                       31, 1998 Form 10-K and incorporated by reference herein)

       10.67           Credit Agreement dated August 11, 1995, between Crescent Development Management
                       Corp., as borrower, and Crescent Real Estate Equities Limited Partnership, as
                       lender; First Amendment to Credit Agreement dated as of April 15, 1997; Second
                       Amendment to Credit Agreement dated as of May 8, 1998; and related Note and
                       Security Agreement (filed as Exhibit 10.67 to December 31, 1998 Form 10-K and
                       incorporated by reference herein)

       10.68           Credit Agreement dated January 1, 1998, between Crescent Development Management
                       Corp., as borrower, and Crescent Real Estate Equities Limited Partnership, as
                       lender, and related Note and Security Agreement (filed as Exhibit 10.68 to
                       December 31, 1998 Form 10-K and incorporated by reference herein)

       10.69           $3,100,000 Note dated February 29, 1996, made by Crescent Development Management
                       Corp. payable to Crescent Real Estate Equities Limited Partnership (filed as
                       Exhibit 10.69 to December 31, 1998 Form 10-K and incorporated by reference
                       herein)

       10.70           Credit Agreement dated January 1, 1999, between Crescent Development Management
                       Corp., as borrower, and Crescent Real Estate Equities Limited Partnership, as
                       lender, and related Line of Credit Note and Security Agreement (filed as Exhibit
                       10.70 to March 31, 1999 Form 10-Q and incorporated by reference herein)

       10.71           Amended and Restated Credit Agreement dated January 1, 1999, between Crescent
                       Development Management Corp., as borrower, and Crescent Real Estate Equities
                       Limited Partnership, as lender, and related Line of Credit Note and Amended and
                       Restated Security Agreement (filed as Exhibit 10.71 to March 31, 1999 Form 10-Q
                       and incorporated by reference herein)

       10.72           Purchase Agreement dated March 12, 1999, between Crescent Operating, Inc. and
                       Crescent Real Estate Equities Limited Partnership, relating to sale of interests
                       in Crescent CS Holdings Corp., and Crescent CS Holdings II Corp., and related
                       Put Agreement of same date (filed as Exhibit 10.72 to March 31, 1999 Form 10-Q
                       and incorporated by reference herein)
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       <S>             <C>
       10.73           Second Amendment to Lease Agreement effective April 1, 1999, between Wine
                       Country Hotel, LLC, and Crescent Real Estate Funding VI, L.P., relating to
                       Canyon Ranch-Lenox (filed as Exhibit 10.73 to March 31, 1999 Form 10-Q and
                       incorporated by reference herein)

       10.74           Master Revolving Line of Credit Loan Agreement (Borrowing Base and Warehouse)
                       dated May 14, 1998, between Desert Mountain Properties Limited Partnership, as
                       borrower, and National Bank of Arizona, as lender; Modification Agreement dated
                       December 30, 1998; second Modification Agreement dated March 31, 1999; and
                       related Promissory Note (Borrowing Base), Promissory Note (Warehouse), Pledge
                       Agreement, Deed of Trust, and Amendment to Deed of Trust (filed as Exhibit 10.74
                       to March 31, 1999 Form 10-Q and incorporated by reference herein)

       10.75           Lease Agreement dated as of June 15, 1999, between Crescent Real Estate Funding
                       III, L.P. and COI Hotel Group, Inc., relating to the Renaissance Houston Hotel
                       (filed as Exhibit 10.75 to June 30, 1999 Form 10-Q and incorporated by reference
                       herein)

       10.76           Guaranty of Lease dated June 15, 1999, by Crescent Operating, Inc. for the
                       benefit of Crescent Real Estate Funding III, L.P., relating to Renaissance
                       Houston Hotel (filed as Exhibit 10.76 to June 30, 1999 Form 10-Q and incorporated by
                       reference herein)

       10.77           Asset Management Agreement dated as of January 1, 1999, between Crescent Real Estate
                       Equities Limited Partnership and COI Hotel Group, Inc., relating to the Omni Austin
                       Hotel (filed as Exhibit 10.77 to June 30, 1999 Form 10-Q and incorporated by reference
                       herein)

       10.78           Agreement dated June 11, 1999, by and between Gerald W. Haddock and Crescent Operating,
                       Inc. and its subsidiaries and affiliates (filed as Exhibit 10.78 to June 30, 1999 Form
                       10-Q and incorporated by reference herein)

       10.79           Stock Purchase Agreement dated as of July 15, 1999, by and among E. L. Lester & Company,
                       Incorporated, E. L. Lester, Jr., Howard T. Tellepsen II, Karen Tellepsen, Tom Tellepsen
                       II, Linda Lester Griffen, Crescent Operating, Inc. and Crescent Machinery Company (filed
                       herewith)

       10.80           Stock Purchase Agreement dated as of July 8, 1999, by and among Solveson Crane Rental,
                       Inc., Solveson Family Revocable Trust, and Crescent Machinery Company (filed herewith)

       10.81           Second Amendment to Credit Agreement effective as of August 27, 1999, among Crescent
                       Operating, Inc., Bank of America, N. A. (formerly NationsBank, N. A.), and the Support
                       Parties identified therein (filed herewith)

       27              Financial Data Schedule
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