===============================================================================


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                ________________



                                    FORM 10-K
[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

                                       OR

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

           For the transition period from ____________ to ____________

                        Commission file number 333-26861

                             TRENDWEST RESORTS, INC.
               (Exact name of registrant as specified in charter)

                 Oregon                                  93-1004403
 (State or other jurisdiction of organization) (IRS Employer Identification No.)

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

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

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                           Common stock, no par value
                                (Title of Class)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding  twelve months (or for such shorter period that the registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

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

The  number of  shares  of common  stock  outstanding  on March  26,  2002,  was
38,162,784 shares.

Aggregate market price of shares held by  non-affiliates  at March 26, 2002, was
$142,229,690, consisting of 5,850,666 shares.


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<Page>
                                     PART I
Item 1. Business

We market,  sell, and finance timeshare vacation ownership interests in the form
of vacation  credits and  fractional  ownership  interests.  We also acquire and
develop  resorts.  Our  resorts  (except  fractional  interests)  are  owned and
operated through  WorldMark,  the Club,  (WorldMark) and WorldMark South Pacific
Club  (WorldMark  South  Pacific)  (collectively  "the  Clubs").  WorldMark is a
non-profit  mutual  benefit   corporation   organized  in  1989  to  provide  an
innovative,  flexible vacation  ownership  system.  WorldMark South Pacific is a
registered managed investment scheme regulated by the Australian  Securities and
Investments  Commission ("ASIC"). We presently sell vacation ownership interests
in 48 resorts located in the United States, British Columbia,  Mexico, Fiji, and
Australia  and operate a network of 45 sales  offices in eight  western  states,
Alaska, Kansas,  Missouri,  Australia, and Fiji. At December 31, 2001, the Clubs
had over 149,000 vacation credit owners.

We sell two types of timeshare  vacation ownership  interests:  vacation credits
and fractional ownership interests in vacation  properties.  Our vacation credit
system is a  points-based  system that allows  owners to reserve units at any of
the Clubs'  resorts,  at any time of the year and in  increments as short as one
day. The use of vacation  credits is not tied to any  particular  resort unit or
time period.  We believe that the  combination  of multiple Club resorts and our
vacation  credit  system  provide  owners with an  attractive  range of vacation
planning choices and values.  Our vacation credit system facilitates the sale of
vacation credits at off-site sales offices located in major  metropolitan  areas
and reduces  dependence on on-site  sales centers  located at more remote resort
locations.

Fractional  vacation  ownership  interests  represent  deeded fixed intervals in
timeshare  condominiums  and  are  not  transferred  to  the  Clubs.  Our  first
fractional  interest  program,  the Depoe Bay resort on the Oregon Coast,  began
pre-selling in October 1998. All 377 fractional  interests were  completely sold
by  October  1999  generating  total  revenue of $13.3  million.  Because of the
success of the  fractional  sales program at Depoe Bay, we  constructed a second
phase of Depoe Bay, which has 364 fractional interests. Virtually all fractional
interests were sold by December 2001  generating  revenues of $13.8 million.  At
December 31, 2001,  only one  interest was  remaining.  We intend to continue to
develop fractional ownership programs at strategic locations with high demand as
a complement to our vacation credit product.

Corporate Background

We began our timeshare business as a wholly-owned  subsidiary of JELD-WEN,  inc.
("Parent"  or  "JELD-WEN")  in 1989  with two  condominium  units.  JELD-WEN  is
currently our principal shareholder.  JELD-WEN is a privately owned company that
was founded in 1960 and is a major manufacturer of doors,  windows, and millwork
products.  Headquartered  in Klamath  Falls,  Oregon,  JELD-WEN has  diversified
operations  located  throughout  the  United  States  and  in  numerous  foreign
countries  that  include  manufacturing,  hospitality  and  recreation,  retail,
financial services, and real estate.

We raise  capital for property  acquisitions  and working  capital by selling or
securitizing   notes   receivable   through  six   subsidiaries   (the  "Finance
Subsidiaries")  and  through a  corporate  revolving  credit  facility.  We have
transactions with other JELD-WEN  subsidiaries and related parties.  See note 14
"Related  Party  Transactions"  in  the  notes  to  the  consolidated  financial
statements included herein.

We were  incorporated  in Oregon in 1989.  Our principal  executive  offices are
located at 9805 Willows  Road,  Redmond,  Washington  98052,  and our  telephone
number is (425) 498-2500.

The Clubs

(i) WorldMark, the Club

We  formed  WorldMark,  the  Club  as  a  California  nonprofit  mutual  benefit
corporation in 1989 to own, operate, and manage the real property that we convey
to it. WorldMark is not a part of us, and its operations are not included in our
consolidated financial statements. Owners receive the right to use all WorldMark
resort  units at any  available  time and  interval  selected  by the owner on a
first-come, first-served basis, and the right to vote to elect WorldMark's board
members and with respect to certain major WorldMark matters. The number of votes
that each  Owner has is based on the number of  vacation  credits  owned.  As of
December 31, 2001, there were nearly 144,000 WorldMark  owners.

                                       1
<PAGE>

The resorts are owned by WorldMark free and clear of all monetary  encumbrances.
WorldMark  maintains a replacement  reserve for the WorldMark resorts,  which is
funded from the annual  assessments of the owners.  The  replacement  reserve is
utilized  to  refurbish  and  replace  the  interiors  and  furnishings  of  the
condominium  units and to maintain the  exteriors  and common areas in WorldMark
resorts in which all units are owned by  WorldMark.  As of  December  31,  2001,
WorldMark had a reserve for replacement costs of approximately $18.9 million for
all depreciable  assets (e.g.,  furniture,  appliances,  carpeting,  roofs,  and
decks) of the resorts.

The  WorldMark  concept  provides  owners  significant  flexibility  in planning
vacations.  Depending on how many vacation  credits an owner has purchased,  the
owner may use the  vacation  credits  for one or more  vacations  annually.  The
number of vacation  credits  that are  required  to stay one day at  WorldMark's
units varies,  depending  upon the resort  location,  the size of the unit,  the
vacation  season,  and the day of the week.  For  example,  a Friday or Saturday
night stay at a  one-bedroom  unit may  require 900  vacation  credits per night
off-season and 1,750 vacation  credits per night in peak season.  A midweek stay
at the same one-bedroom unit would require less vacation  credits.  The range of
vacation  credits  that is required to stay one day enables an owner to vary the
number of days at the WorldMark  resorts  depending on the vacation choices made
by the owner. Under this system,  owners can select vacations according to their
schedules,  space needs, and available  vacation  credits.  Vacation credits are
reissued on an  anniversary  date basis and any unused  vacation  credits may be
carried over for one year.  An owner may also borrow  vacation  credits from the
owner's succeeding year's allotment.

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

WorldMark collects  maintenance dues from owners based on the number of vacation
credits owned. Currently,  the annual dues are $340 for the first 6,000 Vacation
Credits owned, plus  approximately $79 for each additional  increment of 2,000 -
3,000 vacation credits owned.  These dues reflect an increase  effective October
1, 2001.  Previously dues were $325 for the first 6,000 vacation  credits owned,
plus  approximately $76 for each additional  increment of 2,000 - 3,000 vacation
credits owned. Dues are intended to cover WorldMark's operating costs, including
condominium association dues at the WorldMark resorts. We pay WorldMark the dues
on the unsold vacation credits we own. These payments totaled $1.7 million, $1.0
million, and $1.4 million in 2001, 2000, and 1999, respectively.

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

We  have  a  management  agreement  with  WorldMark  under  which  we act as the
exclusive  manager and  servicing  agent of  WorldMark  and the  vacation  owner
program.  Our  responsibilities  under the management  agreement include general
management of WorldMark,  overseeing the property  management and service levels
of the resorts, and preparing financial forecasts and budgets for WorldMark. The
management  agreement  provides  for  automatic  one-year  renewals  unless such
renewal is denied by a majority  of the  voting  power of the owners  (excluding
us). As compensation for our services,  we receive the portion of total revenues
received  by  WorldMark  remaining  after  WorldMark  pays or  reserves  for its
expenses plus  reserves for repair and  replacement  of resorts.  This amount is
subject to a ceiling equal to 15% of the budgeted  annual  expenses and reserves
of WorldMark  (exclusive of our fee). Our management revenues from WorldMark for
the years ended  December  31,  2001,  2000,  and 1999 were  approximately  $3.2
million, $3.9 million and $3.0 million, respectively.

WorldMark  has  programs  whereby an owner can use his or her  vacation  credits
toward  other  vacation  options such as package  tours and  cruises.  WorldMark
provides the owner with the package in exchange for the owner's vacation credits
plus cash,  if  necessary.  The vacation  credits are  deposited  into a pool of
credits. The pool of credits is available to us for a fee of $0.07 per credit or
for one-time use to owners for a fee of $0.08 per credit.  In 2001, we purchased
$2.5 million of these one-time use vacation credits from WorldMark for marketing
programs.


                                       2
<PAGE>

(ii) WorldMark South Pacific Club

On October 22, 1999, we formed a wholly-owned  Australian subsidiary,  Trendwest
South Pacific,  Pty. Ltd., to conduct sales,  marketing,  and resort development
activities in Australia and the South Pacific.  Trendwest  South Pacific was the
first  company  licensed  under  the new  timeshare  regulations  in  Australia.
WorldMark  South Pacific was formed by Trendwest South Pacific in 2000 as a unit
trust and a registered managed investment scheme to own, operate, and manage the
real property conveyed to it by Trendwest South Pacific. WorldMark South Pacific
is not part of us,  and its  operations  are not  included  in our  consolidated
financial  statements.  Owners receive the right to use all resort units and the
right to vote with respect to certain  major  matters.  The number of votes that
each owner has is based on the number of vacation credits owned. Trendwest South
Pacific is the manager of  WorldMark  South  Pacific.  As of December  31, 2001,
there were nearly 6,000 owners in WorldMark South Pacific.

The resorts are owned by WorldMark  South Pacific free and clear of all monetary
encumbrances.  The  title to the  resort  properties  are held in trust  for the
benefit of the owners by an independent  custodian,  Permanent Trustee Australia
Limited.  WorldMark  South  Pacific  maintains  a  replacement  reserve  for its
resorts,  which is  funded  from  the  annual  assessments  of the  Owners.  The
replacement  reserve is utilized to  refurbish  and  replace the  interiors  and
furnishings of the condominium  units. As of December 31, 2001,  WorldMark South
Pacific had a reserve for replacement costs of approximately $0.2 million.

The  operation of WorldMark  South  Pacific is similar to the US  operations  of
WorldMark.  WorldMark  South  Pacific  owners  may  also  purchase  bonus  time.
WorldMark and WorldMark  South Pacific have reciprocal  exchange  privileges for
their  respective  owners.  The credit  values in  WorldMark  South  Pacific are
consistent with WorldMark.

WorldMark  South  Pacific  collects  maintenance  dues from owners  based on the
number of vacation  credits owned.  Currently,  the annual dues are AUD $358 for
the first 6,000 Vacation  Credits  owned,  plus  approximately  AUD $82 for each
additional  increment of 2,000 - 3,000 vacation  credits  owned.  These dues are
intended to cover operating costs, including condominium association dues at the
resorts.  Trendwest South Pacific pays the dues on the unsold  vacation  credits
they own.  Such  payments  totaled  $0.2  million and $0.3 million for the years
ended December 31, 2001 and 2000, respectively.

WorldMark South Pacific is managed by Trendwest  South Pacific.  Certain matters
require the approval of a majority of the voting power of the owners represented
(excluding  Trendwest  South  Pacific) to take certain  actions,  including  (i)
incurrence  of capital  expenditures  or  special  assessments  exceeding  5% of
WorldMark  South  Pacific's  budgeted gross expenses  during any fiscal year and
(ii) special  assessments selling property of WorldMark South Pacific during any
fiscal year with an  aggregate  fair market  value in excess of 5% of  WorldMark
South Pacific's budgeted gross expenses for such year.

Through our subsidiary,  Trendwest South Pacific, we have a management agreement
with  WorldMark  South Pacific  under which we act as the exclusive  manager and
servicing agent of WorldMark  South Pacific and the vacation owner program.  Our
responsibilities  under the management  agreement include general  management of
WorldMark South Pacific,  overseeing the property  management and service levels
of the resorts,  and  preparing  financial  forecasts  and budgets for WorldMark
South  Pacific.  The  management  agreement  provides  for  automatic  five-year
renewals  beginning  in 2005 unless such  renewal is denied by a majority of the
voting power of the owners (excluding us). As compensation for our services,  we
receive  a  management  fee of 15% of  WorldMark  South  Pacific's  expenditures
(exclusive of our fee). Our management revenues from WorldMark South Pacific for
the years ended December 31, 2001 and 2000 were  approximately  $0.2 million and
$0 million, respectively.


                                       3
<PAGE>

                                   The Resorts

The  following  table sets forth  certain  information  as of December 31, 2001,
regarding each existing  resort,  planned  expansion at existing resorts through
2002, and planned new resorts through 2003:

<Table>
<Caption>
                                                              Existing
                                                                Units
                                                 Date            in        Planned    Total Units
   Existing Resorts         Location       Contributed(a)      Service    Expansion   Anticipated   II Rating (b)   RCI Rating (c)
-------------------     --------------     ---------------   ----------   ---------   -----------   -------------   --------------
<S>                     <C>                <C>                 <C>        <C>         <C>           <C>             <C>
Arizona
  Pinetop               Pinetop/Lakeside    August 1999           60          --            60        Five Star      Gold Crown
  Vistoso               Tucson              December 1999        110          --           110        Five Star      Gold Crown
  Bison Ranch           Bison Town          May 2001              41          --            41        Five Star      Gold Crown

Australia
  Gold Beach (d)        Caloundra, QLD      June 2000             19          --            19        Five Star         (e)
  Calypso Plaza (d)     Coolangatta, QLD    April 2000            10          --            10           (b)            (e)
  Trinity Links (d)     Cairns, QLD         August 2000           12          --            12        Five Star         (e)
  Horizon (d)           Port Stephens,
                        New South Wales     March 2001            10          --            10        Five Star         (e)
  Pacific Bay (d)       Coffs Harbour,
                        New South Wales     November 2001         15          --            15           (i)            (e)

British Columbia
  Sundance              Whistler            February 1992         25          --            25        Five Star      Gold Crown
  Cascade Lodge         Whistler            September 1999        42          --            42        Five Star      Gold Crown
  The Canadian          Vancouver           April 2000            42          --            42        Five Star      Gold Crown

California
  North Shore Estates   Bass Lake           October 1991          61          --            61        Five Star      Gold Crown
  Beachcomber           Pismo Beach         April 1993            20          --            20           (b)           R.I.D.
  Palm Springs          Palm Springs        July 1995             64          --            64           (b)           R.I.D.
  Big Bear              Big Bear Lake       April 1996            58          57           115        Five Star      Gold Crown
  Clear Lake            Nice                July 1998             88          --            88        Five Star      Gold Crown
  Angels Camp           Angels Camp         September 1998       100          11           111        Five Star      Gold Crown
  Marina                Monterey Bay        November 1999         33          --            33        Five Star      Gold Crown
  Oceanside             Oceanside           September 2001       138          --           138        Five Star      Gold Crown

Colorado
  Steamboat Springs     Steamboat Springs   December 2000         34          --            34        Five Star      Gold Crown

Fiji
  Denarau Island (f)    Denarau Island      December 1999         87          --            87        Five Star      Gold Crown

Hawaii
  Valley Isle           Maui                April 1990            14          --            14        Five Star      Gold Crown
  Kapaa Shores          Kauai               July 1991             49          --            49           (b)           R.I.D.
  Kona                  Hawaii              November 1997         64          --            64        Five Star      Gold Crown
  Kihei                 Maui                December 2001        199          --           199        Five Star      Gold Crown

Idaho
  Arrow Point           Coeur D'Alene       September 2000        40          --            40        Five Star      Gold Crown
  McCall                McCall              September 2001        20          --            20        Five Star      Gold Crown

Mexico
  Coral Baja            San Jose del Cabo   November 1994        136          --           136        Five Star      Gold Crown
  La Paloma             Rosarita Beach      August 2000           37          --            37        Five Star      Gold Crown

Missouri
  Lake of the Ozarks    Ozarks              December 2000         70          --            70        Five Star      Gold Crown
  Branson               Branson             August 2001           80          --            80        Five Star      Gold Crown

Nevada
  Lake Tahoe            Stateline           January 1991          50          --            50           (b)            R.I.D
  Las Vegas             Las Vegas           December 1996         42          --            42        Five Star      Gold Crown
  Reno                  Reno                November 2000         63          --            63        Five Star      Gold Crown



                                       4
<PAGE>

                                                              Existing
                                                                Units
                                                 Date            in        Planned    Total Units
   Existing Resorts         Location       Contributed(a)      Service    Expansion   Anticipated   II Rating (b)   RCI Rating (c)
-------------------     --------------     ---------------   ----------   ---------   -----------   -------------   --------------
Oregon
  Eagle Crest           Redmond             September 1989       111          --           111        Five Star      Gold Crown
  Gleneden Beach        Lincoln City        March 1996            80          --            80        Five Star      Gold Crown
  Running Y Ranch       Klamath Falls       February 1997         94          --            94        Five Star      Gold Crown
  Schooner Landing      Newport             September 1997        13 (g)      --            13        Five Star      Gold Crown
  Depoe Bay             Depoe Bay           April 1999           110          --           110        Five Star      Gold Crown

Utah
  Wolf Creek            Eden                June 1998             71 (h)      --            71        Five Star      Gold Crown
  Harbor Village        Bear Lake           January 1999          26          --            26        Five Star      Gold Crown
  St. George            St. George          December 2000         59          --            59        Five Star      Gold Crown

Washington
  Lake Chelan Shores    Chelan              August 1990           13          --            13        Five Star      Gold Crown
  Surfside              Long Beach          September 1991        25          --            25           (b)           R.I.D.
  Discovery Bay         Sequim              January 1992          47          --            47        Five Star      Gold Crown
  Park Village          Leavenworth         July 1992             72          --            72        Five Star      Gold Crown
  Mariner Village       Ocean Shores        June 1994             32          --            32        Five Star      Gold Crown
  Birch Bay             Blaine              January 1995         103          --           103        Five Star      Gold Crown


</Table>

<Table>
<Caption>
                                                               Existing
                                                                Units
                                            Expected              In       Planned    Total Units
   Planned Resorts           Location       Completion         Service    Expansion   Anticipated
  ------------------    ----------------    ------------       --------   ---------   -----------
  <S>                   <C>                 <C>                <C>        <C>         <C>
  Las Vegas             Las Vegas, NV       August 2002           --         207           407
  Kirra Beach           Kirra Beach,        October 2002          --         104           104
                        Queensland,
                        Australia
  South Lake Tahoe      Lake Tahoe, NV      January 2003          --          51            51
  Victoria              Victoria, B.C.      February 2003         --          91            91
  Seaside               Seaside, Oregon     June 2003             --         171           171
  Solvang               Solvang, CA         September 2003        --          89            89
  Sonoma                Sonoma, CA          September 2003        --         150           228
                                                              ---------- ------------ -------------

                        Total                                  2,789         931         3,998
                                                              ========== ============ =============
</Table>

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

(b)  Five Star is the only resort  rating  awarded by II. These  resorts did not
     attain a Five Star rating.

(c)  Gold Crown and Resort of  International  Distinction  ("R.I.D.") are resort
     ratings awarded annually by RCI. As of December,  2001 approximately 19% of
     all  resorts  reviewed  by RCI  received a Gold Crown  rating,  the highest
     rating awarded by RCI, and approximately 13% of all resorts reviewed by RCI
     received an R.I.D. rating, the second-highest rating awarded by RCI.

(d)  These units are deeded to WorldMark South Pacific Club.

(e)  The units in WorldMark  South Pacific  participate in the exchange  network
     with Interval International and are not rated by RCI.

(f)  66 units were deeded to WorldMark  and 21 units  deeded to WorldMark  South
     Pacific.

(g)  We purchased  659 weeks of time per year from  Schooner  Landing and deeded
     the rights to this time to WorldMark.  This is equivalent to 13 condominium
     units.

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

(i)  This resort has not yet been rated by II.


                                       5
<PAGE>

Sales and Marketing

We use a variety of marketing programs to attract prospective owners,  including
sponsored  promotional  contests offering  vacation packages or gifts,  targeted
mailings and telemarketing  efforts, and various other promotional  programs. We
also  co-sponsor  sweepstakes,  giveaways  and other  promotional  programs with
professional  teams at major  sporting  events (such as Portland  Trail  Blazers
basketball games and Seattle Mariners baseball games) and with supermarkets.  We
continually monitor and adjust our marketing programs to improve efficiency.  We
target  prospective  owners  through  an  analysis  of age,  income  and  travel
interests.

Our sales of  vacation  credits  primarily  occur at 29 off-site  sales  offices
located in metropolitan areas in six regions,  including the South Pacific.  The
remainder of our vacation  credit sales occur at 16 on-site sales  offices.  Our
fractional  interest sales activity  occurs on-site at the Depoe Bay resort.  In
2001, 85% of our vacation credit sales were generated by off-site sales offices.

We believe the  advantages of using  off-site  sales  offices  compared to sales
offices located at more remote resorts include:

>>   access to larger numbers of potential customers

>>   convenience for prospective customers to attend a sales presentation

>>   access to a wider group of qualified sales personnel due to more convenient
     work locations

>>   ability to open new sales offices easily, and

>>   lower marketing costs to attract prospective customers to visit an off-site
     sales office.

Our off-site sales offices  include a theater,  sales area, and reception  area.
Each  off-site  sales  center  is  staffed  by  a  sales   manager,   an  office
administrator,   approximately   10   to   25   salespeople,   two   developer's
representatives,  and  additional  staff for  guest  registration  and  clerical
assistance.  Our salespeople spend  approximately 90 minutes with each potential
owner  viewing  videos  of our  resorts,  answering  customers'  questions,  and
providing detailed information  regarding our vacation ownership  opportunities.
The on-site sales offices  generally  include  similar  facilities and a smaller
number of staff compared to the off-site sales offices.

Printed  information  regarding Trendwest and the resorts, as well as the rights
and  obligations  of owners,  is  provided  to each  prospective  member  before
vacation  ownership  interests are sold.  Prior to  finalizing a sale,  each new
owner meets with one of our developer representatives to discuss the new owner's
reasons  for  joining and to review the rights and  obligations  of owners.  The
purpose of this meeting is to allow prospective  owners to review their proposed
commitment in an environment separate from the sales process.

Under the laws of each state where we sell vacation  ownership  interests,  each
purchaser has a right to rescind the purchase for a period ranging from three to
fifteen calendar days,  depending on the state,  following the later of the date
the  contract  was  signed or the date the  purchaser  received  the last of the
documents  required to be provided by the  Company.  Our current  practice is to
allow all purchasers a minimum  rescission  period of seven days,  even if state
law allows a shorter period.  During 2001 and 2000, the Company had a rescission
rate  of  16.2%  for  both  years,  which  is  consistent  with  our  historical
experience.

We offer existing  Owners cash awards for referrals of potential new owners.  We
maintain a staff of marketing  individuals who specialize in promoting referrals
by existing owners. In addition,  as part of our ongoing marketing  efforts,  we
offer existing owners the opportunity to purchase  additional  vacation  credits
generally at a discount from the current price.  Owners may purchase  additional
vacation  credits in increments of 1,000 credits.  We currently  employ 61 sales
representatives  who specialize in upgrade sales.  Many customers  purchase more
than one upgrade  over time,  generally at a discount  from the purchase  price.
These sales provide a higher gross margin than other  vacation  credit sales due
to  substantially  lower marketing costs and lower sales  commissions.  Sales of
vacation credits from our owner referral program and upgrade sales  contributed,
in the aggregate, approximately 26.0% and 26.9% of our net vacation credit sales
in 2001 and 2000, respectively.


                                       6
<PAGE>

Customer Financing

Since an  important  component  of our sales  strategy is the  affordability  of
vacation  credits,  we believe  that we will  continue to finance a  significant
portion of our sales.  In 2001,  the average new owner  purchased  approximately
6,528 vacation credits for a purchase price of approximately $9,172. We financed
approximately  87% of the aggregate  purchase price of vacation  credits sold to
new owners with an average new note receivable of approximately  $8,256.  During
2001, the aggregate amount of notes receivable  generated in connection with the
sale of vacation credits to new owners was  approximately  $302.3 million.  Both
vacation credit and fractional interest sales require a down payment of at least
10% of the purchase price.  Notes  receivable  relating to vacation credit sales
have  terms of up to seven  years at  interest  rates of 11.9% to  14.9%.  Notes
receivable  relating to fractional  interest sales have terms of up to ten years
at interest rates of up to 11.9%.

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

At December 31, 2001, an aggregate of $665.9  million of notes  receivable  were
outstanding.  Of this amount,  $61.7 million is unencumbered  and $604.2 million
has been  transferred  into special purpose finance  entities in  securitization
transactions  which qualify as sales of notes  receivable.  We receive  proceeds
from these securitization  transactions upon transfer of the notes receivable to
the  finance  entities  and,   subsequently  as  we  receive  an  interest  rate
differential  and cash  collections on the  overcollateralized  component of the
transferred  receivables.  At December 31, 2001,  the fair value of the interest
rate  differential of notes  receivable  securitized was $74.2 million,  and the
gross amount of the  overcollateralized  component was $74.9  million.  Our loss
exposure for notes receivable securitized is limited to the residual interest in
notes  receivable  securitized.  Although  we are  not  required  to do so,  our
historical  practice  has  been  to  repurchase   defaulted   securitized  notes
receivable up to certain limits,  generally 10% to 17% of the face amount of the
original balance of notes receivable securitized.  We expect to continue to sell
a substantial amount of our notes receivable in the future.

Notes receivable  become  delinquent when a scheduled payment is 30 days or more
past due and reservation privileges are suspended when a scheduled payment is 60
days or more past due. At December 31, 2001,  approximately  $16.1  million,  or
2.42% of our total receivables  portfolio serviced of $665.9 million,  were past
due 60 days or more.  Our  practice is to accrue  100% of the  interest on notes
receivable up to 60 days past due and 50% of the interest on notes receivable 60
to 90 days past due.  Interest is not accrued on notes  receivable  more than 90
days past due. When we write off uncollectible notes receivable  (generally when
the receivable becomes 180 days past due), we reverse any interest that had been
accrued, reclaim the related vacation credits that secure such notes receivable,
and return such vacation  credits to inventory as available  for resale.  In the
event of default of a fractional interest,  we foreclose or offer a deed in lieu
of foreclosure on the title and remarket the interest.

We maintain an  allowance  for  doubtful  accounts on all notes  receivable.  We
estimate our  allowance  for doubtful  accounts by analysis of bad debts by each
sales  site by  year of note  receivable  origination.  We use  this  historical
analysis in conjunction with other factors such as local economic conditions and
industry trends. We also utilize  experience  factors of more mature sales sites
in establishing the allowance for bad debts at new sales offices.  The aggregate
amount  of this  allowance,  excluding  an  allowance  for sales  reversals,  at
December 31, 2001 and 2000 was $51.9  million and $38.9  million,  respectively,
representing  approximately 7.8% and 7.7%, respectively,  of the total portfolio
of notes receivable outstanding at those dates. The increase in the provision as
a percentage of the total  portfolio  reflects sales growth in new sales offices
with expected default rates higher than our historical average. No assurance can
be given that this  allowance  will be adequate,  and if the amount of the notes
receivable  that is  ultimately  written  off  materially  exceeds  the  related
allowance, our business,  results of operations and financial condition could be
materially adversely affected.

Loan Servicing

We perform our note servicing  function  in-house.  We have retained other third
parties to provide many functions including the lockbox function,  custodial and
statement  rendering  services.   As  servicer,   we  are  responsible  for  the
maintenance  of  the  accounts  receivable  file,  all  billing  and  collection
activities,  including daily disbursements of


                                       7
<PAGE>

collected funds to the Trustees of the various securitizations.  In addition, we
handle all  personal  interaction  with the  owners,  including  the  collection
process.

Property Ownership

(i) Vacation Credits

We transfer, or arrange for the seller of the property to transfer, title to the
property to the Clubs in return for vacation  credits and the exclusive right to
sell vacation credits. The Clubs are contractually prohibited from revoking such
rights or transferring them to another party.

When we  purchase  resort  property,  we vest the title to the  property  in the
Clubs, free and clear of any debt encumbrance. For properties we develop, we may
initially  obtain title in the undeveloped  property and then deed the developed
resort  property  to the  Clubs.  At the time we vest title to the  property  in
WorldMark,  the Club,  a  "Declaration  of Vacation  Owner  Program" is recorded
against the property. This declaration establishes the usage rights of owners as
a covenant on title,  thus  protecting  those  rights  against the effect of any
future  encumbrance.  This  ownership  structure  is  designed  to  protect  the
timeshare  usage  rights of the owners and comply  with  statutory  regulations.
Title to the  properties  in  WorldMark  South  Pacific is held by a third party
custodian for the benefit of the owners. This preserves the title against future
encumbrance and protects the owners' usage rights.

Vacation  credits are  allocated  to each unit based on its  vacation  use value
relative to existing  properties.  Vacation  credits are  assigned  for weeks of
peak,  shoulder and off-peak  use,  reserving  time for bonus time,  repairs and
maintenance. At non-exotic resorts (exotic resorts are Hawaii, Mexico and Fiji),
only 48 weeks of time of each unit are  available  for sale to owners  leaving 4
weeks  for  bonus  time and  maintenance  and  upkeep  on the  units.  At exotic
locations,  51  weeks  of time of each  unit are  available  for sale to  owners
leaving the remaining time for  maintenance and upkeep.  The aggregate  vacation
credits assigned to each unit may not be increased in the future, and the actual
number of credits  assigned  are  contained in the  recorded  declaration.  This
system of irrevocable  allocation and  registration  with the state protects the
owners  by  preventing  dilution  in the  usage  value of the  owner's  vacation
credits.

(ii) Fractional Interests

Fractional  interests  represent  deeded  intervals in  condominium  units.  The
purchaser of a fractional  interest owns an equal share of the  condominium  and
pays maintenance  dues to a homeowner's  association made up of other fractional
owners.

Fractional  owners  have  been  deeded  specific  weeks  of time  spaced  evenly
throughout  the year. The current  fractional  project at Depoe Bay in Oregon is
sold in 13th share  increments.  Each share  represents four one-week  intervals
thirteen weeks apart. These intervals rotate forward one week each year allowing
a fractional  owner to have access to every  calendar  week over a thirteen year
period.

Participation in Vacation Interval Exchange Networks

We  believe  that the  sale of our  vacation  ownership  products  is made  more
attractive  by our  participation  in the vacation  interval  exchange  networks
operated by Interval  International (II) and Resort Condominiums,  International
(RCI).  U.S.  vacation  credit  owners  participate  in II and  RCI;  fractional
interest owners and South Pacific Owners participate in II.

Competition

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

Employees

As of December 31, 2001, we had  approximately  4,000  full-time  employees.  We
believe  that  our  employee  relations  are  good.  None of our  employees  are
represented by a labor union.

We prefer to fill promotional  opportunities  from within our existing staff. To
support this philosophy, a full array of training curriculums have been designed
and offered.  These "in-house" training courses range from curriculums


                                       8
<PAGE>

including management training,  product knowledge,  recruiting and interviewing,
employee orientation, and job specific training such as Best Sales Practices and
Customer Service.

We maintain several  employee  benefits such as a 401(k) plan, an Employee Stock
Purchase Plan,  and an incentive  stock option plan for certain  employees.  Our
Employee Stock Purchase Plan allows  employees to purchase company stock through
a payroll deduction, with certain provisions, at a discount.

                                  RISK FACTORS

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

Dependence  on  Acquisitions  of  Additional  Resort Units for Growth;  Need for
Additional Capital

Because  the units are  conveyed  directly  to the  Clubs  free of any  monetary
encumbrances,  we must  pay the  full  cost of a resort  prior  to  selling  any
vacation  credits  attributable  to that  resort.  Likewise,  we incur sales and
marketing  expenses  prior to realizing  cash proceeds from the sale of vacation
credits. Since we generally finance a large percentage of the aggregate purchase
price of the vacation  credits we sell, we do not generate  sufficient cash from
sales to provide the necessary capital to pay the costs of developing additional
resorts and to replenish  working capital.  Our principal source of funding cash
requirements is borrowing  against and selling the receivables  from the sale of
vacation credits. It is possible that we may not be able to borrow against or to
sell these receivables in the future,  particularly if we suffer any significant
decline in the credit quality of these  receivables.  If we are unable to obtain
sufficient debt or equity  financing,  our ability to acquire  additional resort
units will be adversely  affected and our  profitability  from sales of vacation
credits may be reduced or eliminated.

Risks Associated with Development and Construction Activities

Our future growth and financial success depend, to a significant  degree, on the
availability  of  attractive  resort  locations  and our  ability to acquire and
develop  additional  resort  units on  favorable  terms.  The number of vacation
credits  we can sell  depends  upon the  number  of  resort  units  that we have
transferred to the Clubs.  If we do not  continually  add resort units or if the
new  units  are  not  located  in  vacation  areas  desired  by our  prospective
customers,  our sales of vacation  credits  will  suffer.  The  acquisition  and
development of resorts  involve risks,  including  that  construction  costs may
exceed original  estimates or construction or permitting may not be completed on
schedule, resulting in increased interest expense and delays in the availability
for sale of vacation credits. In addition,  although our construction activities
are  generally  performed  by  third-party  contractors,  it  is  possible  that
construction claims may be asserted against us for construction defects and such
claims may give rise to  liabilities.  If we are unable to acquire  and  develop
additional  resorts,  or face delays or excessive costs in doing so, our ability
to sell  vacation  credits will be impaired and our profits will be reduced.  We
currently have purchase agreements,  developments in progress or plans to obtain
additional  resort  units that will  satisfy our  anticipated  sales  volumes of
vacation  credits  through the end of 2003. It is possible that not all of these
units will be acquired or  completed  on a timely  basis or at all,  which would
adversely affect our ability to sell vacation credits.

Risks Associated with Developing MountainStar

We are  currently  developing  7,400  acres  located 80 miles  east of  Seattle,
Washington.  We plan to develop  the  property  as two  separate  projects:  the
MountainStar Master Planned Resort and the City of Cle Elum Urban Growth Area, a
Master Planned Community.

Plans  for the  6,300  acre  Master  Planned  Resort  include  at least two golf
courses, numerous recreational amenities and 3,785 dwelling units. Before we can
begin  development  of  the  Master  Planned  Resort,  we  must  finalize  sewer
availability  with the City of Cle Elum and  transfer  our water  rights for the
project.  The Master  Planned Resort land use plan has been approved by Kittitas
County, and all appeals have been settled.  We are working on several strategies
to


                                       9
<PAGE>

transfer  our water  rights  to  develop  the  proposed  projects.  If we cannot
transfer our water rights, development of the property may not occur as planned.

The 1,100 acre Urban Growth Area  project is planned as a mixed-use  development
including a primary home community with single-family  homes,  condominiums,  an
office  park,  a golf  course  and  apartment  units.  The city of Cle Elum will
release  the  Final  Environmental  Impact  Statement  on March  18,  2002.  The
entitlement  process for the project is independent from the entitlement process
for the  Master  Planned  Resort  except  for water  rights  transfer  and sewer
availability.  Without the  necessary  governmental  approvals  and water rights
transfers, development of the Urban Growth Area may not occur as planned.

In the event that we cannot  develop  either or both  projects as planned due to
our inability to obtain final government approvals,  our inability to secure the
necessary  water rights  transfers or for other  reasons,  we have  developed an
alternative strategy for disposition by selling large lot parcels.

We  have  not  previously  developed  projects  of the  scope  and  cost  of the
MountainStar  Master Planned Resort and the Urban Growth Area in the City of Cle
Elum.  We  have  hired  project  managers  with  extensive   experience  in  the
development of master planned resorts and communities. As development activities
increase,  we will need to hire  other  experienced  managers,  contractors  and
consultants in order to successfully complete the project. Even with experienced
development  managers,  we may encounter  design,  development  or  construction
problems and delays that are not  anticipated  and that may cause the total cost
and actual development time of the projects to exceed our current estimates.

The  MountainStar  Master  Planned Resort and the Urban Growth Area project will
require substantial capital over the life of these projects.  We anticipate that
we will borrow a substantial portion of the required capital. If the development
is delayed or if we do not generate the anticipated  revenues from the projects,
the increased  interest  expense as a result of these borrowings will affect our
net income and the related indebtedness may affect our financial position.

Factors Affecting Sales Volume

As the number of potential  customers in the  geographic  area of a sales office
who have attended a sales presentation rises, we may have increasing  difficulty
in attracting  additional  potential  customers to a sales  presentation at that
office,  and it may become  increasingly  difficult  to maintain  current  sales
levels at our existing sales offices.  We anticipate that a substantial  portion
of our future  sales  growth  will  depend on the  opening of  additional  sales
offices. Sales from existing or new sales offices may not meet our expectations.
In such event,  fixed  expenses  and excess  inventory  will need to be promptly
reduced in order to avoid significant harm to our business.  Our efforts in this
respect  may  not  be  successful.   Further,   since  we  presently  depend  on
telemarketing  activity to contact prospects and invite guests to attend a sales
presentation,  our sales volume could also be reduced if our ability to use this
marketing  technique is disrupted by government  regulation,  decreased customer
acceptance or otherwise.

Geographic Concentrations

We intend to expand our resort locations and our sales offices into market areas
where we presently do not have  operations.  Due to our lack of familiarity with
these new markets,  we could encounter problems in locating and acquiring resort
units or in marketing  vacation credits that we did not foresee.  These problems
could lead to decreased  sales growth and  increased  operating  costs,  thereby
decreasing our net income.

General Economic Conditions; Concentration in Timeshare Industry

A prolonged  economic  slowdown or a lengthy or severe  recession could hurt our
operations. The risks associated with our business are more acute during periods
of economic  slowdown or recession  because these periods may be  accompanied by
decreased  discretionary  consumer  spending,  adversely  affecting our sales of
vacation ownership interests.  Any significant  worsening in economic conditions
or price increases or adverse events related to the travel and tourism  industry
could also reduce our sales.  These same economic  conditions may also limit the
future availability of attractive  financing rates for us or our customers which
may also  materially  impact  our  business.  We may also  experience  decreased
collectibility  and  saleability  of our notes  receivable  used to finance  our
operations.  Since our  target  customers  include  those with  moderate  income
levels,  these  individuals  may be  affected  more  negatively  by an  economic
downturn  than higher income  individuals.  We presently  sell vacation  credits
primarily   through  off-site  sales


                                       10
<PAGE>

offices  in  the  western  United  States.   Accordingly,  we  are  particularly
vulnerable to regional  conditions,  such as energy  costs,  in this area of the
country.  Further,  as our operations are conducted  solely within the timeshare
industry,  any adverse  changes  affecting the timeshare  industry  could have a
material  adverse effect on our business,  results of operations,  and financial
condition.

Risks Associated with Customer Financing

We face certain  credit risks  related to our  customer  financing.  Although we
obtain a security  interest in the  vacation  credits and  fractional  interests
purchased  by our  customers,  we do not  verify a  prospective  owner's  credit
history for  vacation  credit  sales.  Our loss  exposure  for notes  receivable
securitized is limited to the residual interest in notes receivable securitized.
The  value  of our  residual  interest  in  securitizations,  net  may  also  be
diminished if actual prepayments exceed our estimates. As general interest rates
decrease  and  remain at  historically  low  levels for  extended  periods,  the
likelihood of early prepayments will probably increase.  Trends in our portfolio
during  January and  February  2002  indicate  increased  prepayment  rates over
historical amounts.

Our historical practice has been to voluntarily repurchase defaulted securitized
notes receivable.  We then write off any notes receivable  deemed  uncollectible
and reclaim and return to inventory the related  vacation  credits or fractional
interests that secure such notes receivable. However, we are not able to recover
the associated  marketing costs and sales commissions and these expenses must be
incurred again to resell the vacation credits or fractional interests.

We maintain an allowance for doubtful accounts on all notes receivable. However,
these  allowances  are  estimates and if the amount of our interest in the notes
receivable  that is  ultimately  uncollectible  materially  exceeds  the related
allowances, our results of operations and financial condition could be harmed.

Interest Rate Risk

We  generally  provide  financing  for a  significant  portion of the  aggregate
purchase  price of vacation  credits and  fractional  interests  sold at a fixed
interest rate. We then sell the notes receivable in order to provide  liquidity.
If interest rates were to increase  significantly  our net income from financing
would be reduced, since we would probably not increase the interest rate offered
to finance vacation credit and fractional  interest  purchases.  Conversely,  if
interest  rates  were to  decrease  and  remain at  historically  low levels for
extended periods,  the likelihood of early  prepayments will probably  increase,
and  customers  will seek  alternative  financing,  reducing our net income from
financing.

Risk Associated with Rapid Growth

We have  grown  rapidly  and  plan to  continue  to  grow in the  future.  Rapid
increases in the number of owners, the amount of notes receivable and the number
of  resorts  and sales  offices  will  require  the  acquisition  of  additional
management,  administrative and sales personnel and sophisticated technology and
control  systems to service the increased  number of Club owners and prospective
customers and to manage our  business,  which we may not be able to do. If we do
not  properly  manage  the  Clubs'  operations  or the  servicing  of the  notes
receivable,  we could experience increased dissatisfaction by the Clubs' owners,
which could lead to lower  sales  volumes  and  increased  defaults on the notes
receivable or in extreme cases, efforts to replace us as manager of the Clubs.

Foreign Exchange Risk

We are subject to foreign  currency  exchange rate risk when  developing  resort
properties and incurring  costs  denominated in a foreign  currency and on sales
operations  in the  South  Pacific.  While we  intend to  mitigate  our  foreign
exchange risk through swap  agreements  and  borrowings  denominated  in foreign
currencies,  no assurance can be given that these  strategies will be successful
and changes in foreign currency exchange rates could therefore have a materially
adverse effect on our business, results of operations, and financial condition.

From time to time, we may be exposed to losses in the event of nonperformance by
the counterparties to our forward swap agreements used to hedge foreign exchange
risks. We do not obtain collateral to support financial  instruments but monitor
the credit standing of the counterparties.


                                       11
<PAGE>

Risks Associated with International Development

We are subject to risks arising from developing  resort properties and sales and
marketing  activities in the South Pacific. We have registered our product under
Australian  regulations  and are currently  engaged in sales  operations  there.
Unlike the United States,  Australian law requires a vacation ownership interest
to be sold as a security.  Many, if not all of the risks described  herein,  are
potential risk factors for development activities in the South Pacific.

Competition

We compete with other  entities  engaged in the business of resort  development,
sales and operation, including vacation interval ownership, condominiums, hotels
and  motels,  for  the  sales  of  vacation  ownership  interests  and  for  the
acquisition of resale units. We may not be able to successfully  compete against
these entities.  In addition,  resales of vacation credits by owners may compete
with our sales of new  vacation  credits and may inhibit our ability to increase
the market price of our vacation credits.

Regulation of Marketing and Sales of Vacation Credits; Other Laws

Our marketing and sales of vacation credits and other operations are extensively
regulated by the federal government and by the states and foreign  jurisdictions
in which the Clubs'  resorts  are  located  and in which  vacation  credits  are
marketed and sold.

State and Provincial  Regulations.  Most U.S. states and Canadian provinces have
adopted  specific laws and regulations  regarding the sale of vacation  interval
ownership programs.  We have registered our resorts,  our vacation program,  and
the  number  of  vacation  credits  available  for  sale  within  the  following
jurisdictions: Alaska, Arizona, Arkansas, California, Colorado, Idaho, Illinois,
Iowa, Kansas, Kentucky, Louisiana,  Minnesota,  Mississippi,  Missouri, Montana,
Nevada, Oklahoma, Oregon, Tennessee, Utah, Washington,  Wisconsin,  Wyoming, and
British  Columbia.  We are  required  to deliver a detailed  offering  statement
describing  Trendwest  and all  material  aspects  of the  project  and  sale of
vacation  credits to all new  purchasers  of  vacation  credits,  together  with
certain additional information concerning the terms of the purchase.  State laws
grant the purchaser  from three to fifteen  calendar days following the later of
the date the contract was signed or the date the purchaser  received the last of
the  documents we are required to provide to rescind the  contract.  Most states
also  have  other  laws  which  regulate  our  activities,  such as real  estate
licensure laws, laws relating to the use of public accommodations and facilities
by  disabled  persons,  sellers  of  travel  licensure  laws,  anti-fraud  laws,
advertising laws and labor laws.

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

Foreign  Regulation.  The sale of interval  ownership  programs in  Australia is
regulated by the  Australian  Securities and  Investment  Commission.  Trendwest
South  Pacific is required to provide a  prospectus  to potential  buyers.  This
prospectus must be updated at least annually.

Although we believe that we are in material compliance with all federal,  state,
local and foreign laws and  regulations  to which we are currently  subject,  we
cannot assure you that we are in fact, in compliance. Any failure to comply with
applicable laws or regulations could materially harm our business.  In addition,
we will  continue  to incur  significant  costs to  remain  in  compliance  with
applicable laws and regulations,  and such costs could increase substantially in
the future.

Possible Environmental Liabilities

We may be subject to liability under various federal,  state,  local and foreign
environmental  laws.  These laws  generally  hold the owner or  operator of real
property liable for the costs of removal or remediation of certain  hazardous or
toxic substances located on or in, or emanating from, such property,  as well as
related costs of investigation and property


                                       12
<PAGE>

damage.  These laws often impose such  liability  without  regard to whether the
owner  or  operator  knew of,  or was  responsible  for,  the  presence  of such
hazardous or toxic substances. Further, other federal and state laws require the
removal or encapsulation of asbestos  containing  material when such material is
in poor  condition or in the event of  construction,  demolition,  remodeling or
renovation,   or  may  require  the  removal  of   underground   storage  tanks.
Noncompliance with these and other environmental,  health or safety requirements
may result in the need to cease or alter operations at our properties.  Although
we conduct an environmental assessment with respect to the properties we acquire
for the Clubs,  we have not  received a Phase I  environmental  report for every
resort.  Further,  it is possible  that the  environmental  assessments  we have
undertaken have not revealed all potential environmental liabilities, or that an
environmental condition otherwise exists.

Natural Disasters; Uninsured Loss

Although the Clubs  maintain  property and liability  insurance for the units at
the  resorts,  this  insurance  coverage  is subject  to policy  specifications,
insured limits and deductibles.  In addition,  certain types of losses,  such as
losses arising from war or military  action,  nuclear  hazard or pollution,  are
generally excluded from the insurance coverage. Should an uninsured loss or loss
in excess of insured  limits  occur,  the Clubs will be  required  to either (i)
remove such units from the  vacation  credit  system,  which  would  result in a
proportional  dilution of vacation time available for the vacation credits which
have been sold, or (ii) pay the related costs of replacement. Although the Clubs
may  impose  a  limited  amount  of  special  assessments  to  pay  for  capital
improvements  or major repairs,  the Clubs may not be able to obtain  sufficient
funds to pay for all  possible  capital  improvements  and major  repairs of the
units at the resorts  through these  assessments.  In such event, we may need to
advance  funds to the Clubs to  maintain  the quality of the resorts in order to
maintain owner satisfaction.

Effective Voting Control by Majority Shareholder

JELD-WEN, inc. owns approximately 81% of the outstanding shares of common stock.
This  concentration  of  ownership  gives  JELD-WEN  control of the  election of
directors and the management  and affairs of the company and  sufficient  voting
power to determine the outcome of all matters  submitted to the shareholders for
approval,   including   mergers,   consolidations   and  the  sale  of  all,  or
substantially all, of our assets.

Item 2. Properties

We own our corporate headquarters in Redmond, Washington, and lease office space
at various locations for sales offices,  regional  administration  and marketing
purposes.  We also own some  condominiums at WorldMark  properties that are used
for sales and marketing  purposes.  We believe that these  facilities along with
additional  leased  office  space will be  sufficient  to meet our needs for the
foreseeable future.

In the ordinary  course of business,  we purchase  property for  development and
deed said property to the Club(s) upon completion of the project.  See "Business
- WorldMark".

Item 3. Legal Proceedings

We are not aware of any material legal proceedings pending against us. We may be
subject to claims and legal proceedings from time to time in the ordinary course
of business.

Item 4. Submission of Matters to a Vote of Securities Holders

There  were no matters  submitted  to a vote of our  equity  holders  during the
fourth quarter of 2001.



                                       13
<PAGE>

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters

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

<Table>
<Caption>
                                                             High             Low
                                                        --------------- ----------------
         <S>                                            <C>              <C>
         Year ended December 31, 2001
         First quarter...............................     $    16.22     $     10.19
         Second quarter..............................     $    19.23     $     14.50
         Third quarter...............................     $    17.94     $     13.80
         Fourth quarter..............................     $    28.10     $     16.67

         Year ended December 31, 2000
         First quarter...............................     $    11.33     $      8.45
         Second quarter..............................     $    11.83     $      7.09
         Third quarter...............................     $     9.33     $      7.11
         Fourth quarter..............................     $    12.67     $      6.72

</Table>

On March 26, 2002,  there were  approximately 52 holders of record of our common
stock and approximately 2,022 beneficial shareholders.

We have never  declared or paid any cash  dividends on our capital  stock and do
not anticipate paying cash dividends on our common stock. We currently intend to
retain  future  earnings  to finance our  operations  and fund the growth of our
business. Any payment of future dividends will be at the discretion of the Board
of Directors  and will depend on, among other things,  our  earnings,  financial
condition,  contractual restrictions in respect of the payment of dividends, and
other factors the Board of Directors deems relevant.

On February 21, 2001, the Board of Directors  declared a 3 for 2 stock split for
shareholders of record on March 15, 2001, payable on March 29, 2001. On November
8,  2001,  the  Board of  Directors  declared  another  3 for 2 stock  split for
shareholders  of record on November 29, 2001,  payable on December 14, 2001.  In
accordance with accounting principles generally accepted in the United States of
America,  all share data and earnings per share  figures  contained in this Form
10-K have been  adjusted to reflect the stock  splits as if they were  effective
for all periods presented.






                                       14
<PAGE>

Item 6. Selected Financial Data

           (dollars in thousands, except per share and operating data)

The selected data  presented  below under the captions  "Statement of Operations
Data" and "Balance Sheet Data" is derived from the audited financial  statements
of Trendwest  Resorts,  Inc. and  subsidiaries.  The information set forth below
should be read in  conjunction  with  "Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations" and the  consolidated  financial
statements  for the Company and the notes thereto which are contained  elsewhere
herein. The information  presented below under the captions "Operating Data" and
"Selected  Quarterly  Financial Data" is derived from unaudited data. Share data
and earnings per share figures for all periods  presented  have been adjusted to
reflect the 3 for 2 stock splits  declared by the Board of Directors on February
21, 2001, and November 8, 2001.


<Table>
<Caption>
                                                                   Year Ended December 31,
                                               --------------------------------------------------------------
                                                   2001        2000        1999        1998         1997
                                               ----------  -----------  ----------  ----------   ------------
<S>                                            <C>         <C>          <C>         <C>          <C>
  Statement of Operations Data:
  Revenues:
    Vacation credit and fractional interest
     sales, net..............................  $  406,137  $   293,130  $  234,315  $  170,817    $   128,835
    Finance income...........................      20,629       15,562      15,243      13,790         11,989
    Gains on sales of notes receivable.......      30,268       18,903      16,265      10,959          6,582
    Resort management services...............       4,607        4,763       3,710       2,328          2,032
    Other....................................       7,527        5,280       4,593       3,063          2,149
                                               ----------  -----------  ----------  ----------   ------------
      Total revenues.........................     469,168      337,638     274,126     200,957        151,587
                                               ----------  -----------  ----------  ----------   ------------
  Costs and operating expenses:
    Vacation credit and fractional  interest
     cost of sales...........................     112,288      74,714       68,611      48,059         34,569
    Resort management services...............       1,588       1,759        1,656       1,399          1,108
    Sales and marketing......................     193,531     137,752      104,952      83,347         59,448
    General and administrative...............      43,481      31,686       25,234      17,180         13,449
    Provision for doubtful accounts..........      30,276      21,148       16,100      11,865          9,077
    Interest.................................         591         479          442         353          1,739
                                               ----------  -----------  ----------  ----------   ------------
      Total costs and operating expenses.....     381,755     267,538      216,995     162,203        119,390
                                               ----------  -----------  ----------  ----------   ------------
  Income before income taxes.................      87,413      70,100       57,131      38,754         32,197
    Income tax expense.......................      32,211      27,241       22,258      14,723         11,588
                                               ----------  -----------  ----------  ----------   ------------
  Net income.................................  $  55,202    $  42,859    $  34,873  $   24,031    $    20,609
                                               ==========  ===========  ==========  ==========   ============

  Net income per share of common stock:
    Basic....................................  $    1.46   $    1.13    $    0.90   $     0.61    $      0.59
    Diluted..................................  $    1.43   $    1.12    $    0.90   $     0.61    $      0.59

  Shares used in computing net income per
    share of common stock :
    Basic....................................  37,915,714   38,058,093  38,542,275  39,178,841     35,091,944
    Diluted................................... 38,558,418   38,181,791  38,648,147  39,187,556     35,091,944

  Operating Data:
  Number of resorts (at end of period).......          48          41           31          24             22
  Number of units (at end of period).........       2,789       2,093        1,635       1,272            928
  Number of vacation credits sold (in
    thousands)...............................     284,386      215,115     165,829     131,058         99,911
  Average price per vacation credit sold.....  $     1.38  $      1.36  $     1.34  $     1.28    $      1.27
  Average cost per vacation credit sold......  $     0.37  $      0.35  $     0.37  $     0.37    $      0.35
  Number of owners (at end of period)........     149,648      112,384      87,432      67,982         51,778
  Average purchase price for new owners......  $    9,172  $     9,193  $    8,855  $    8,477    $     8,507

  Balance Sheet Data:
  Cash, including restricted cash............  $    9,659  $     7,605  $    4,747  $    2,360    $     1,289
  Total assets (1)...........................     427,029      320,159     192,752     187,248        142,993
  Indebtedness to Parent and Affiliate ......      24,951       18,150         --        5,688          1,947
  Other indebtedness.........................      85,934       60,137       3,900      30,000             --
  Shareholders' equity.......................     265,511      207,443     173,715     141,262        122,125

</Table>
(1)  Certain   reclassifications   have  been  made  to   conform  to  the  2001
     presentation.


                                       15
<PAGE>

Selected Quarterly Financial Data (1)

<Table>
<Caption>
                                                            2001 quarters ended
                                          March 31         June 30       September 30     December 31
                                      -------------   --------------   -------------   --------------
   <S>                                <C>             <C>              <C>             <C>
   Total revenues...................  $     104,962   $     124,894    $     129,087   $     110,225
   Total costs and operating                 85,788         102,161          103,528          90,278
   expenses.........................
   Net income.......................         11,780          14,041           15,799          13,582
   Net income per common share:
       Basic........................  $        0.31   $        0.37    $        0.42   $        0.36
       Diluted......................  $        0.31   $        0.36    $        0.41   $        0.35

                                                            2000 quarters ended
                                          March 31         June 30       September 30     December 31
                                        -------------   --------------   -------------   --------------
   Total revenues...................  $      73,194   $      82,048    $      94,877   $      87,519
   Total costs and operating                 57,144          63,907           76,027          70,460
   expenses.........................
   Net income.......................          9,670          10,952           11,550          10,687
   Net income per common share:
       Basic........................  $        0.25   $        0.29    $        0.31   $        0.28
       Diluted......................  $        0.25   $        0.29    $        0.30   $        0.28


</Table>

(1)  Certain   reclassifications  have  been  made  to  the  selected  quarterly
     financial data above to conform to the annual presentation.


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

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

Overview

We market,  sell,  and  finance  timeshare  ownership  interests  in the form of
vacation  credits and  fractional  interests  and acquire,  develop,  and manage
resorts.  We derive  revenue  primarily  from the sale of  vacation  credits and
fractional  interests,  from the  financing of vacation  credits and  fractional
interests,  and from  management  fees generated from our management  agreements
with the Clubs.

Sales of vacation credits, fractional interests, and additional vacation credits
to current owners  (upgrade  sales) are recognized on the accrual basis after we
have  received an executed  sales  contract and a minimum 10% cash down payment,
and the  rescission  period  (generally  three to fifteen  days) has passed.  In
instances  where we finance an upgrade  sale and the  customer  does not make an
additional  cash down  payment of at least 10% of the upgrade  sale,  we use the
installment method to recognize  revenue.  Under the installment  method,  gross
profit on such upgrade sale is deferred and thereafter  recognized in proportion
to each principal payment  received.  Revenue is fully recognized on the upgrade
sale when the principal  collected related to the upgrade sale totals 10% of the
amount of the upgrade sale. In 2001,  77.5% of Upgrade Sales had the  additional
10% cash down payment, as compared to 76.1% in 2000.

We acquire or develop  additional resort units and contribute those units to the
Clubs,  free of monetary  encumbrances,  thereby  creating  additional  vacation
credits  for sale.  We also  acquire  or  develop  resort  units for  fractional
interest  sales.  Fractional  interests  represent  deeded  fixed  intervals  in
condominium  units which we sell directly and are not  contributed to the Clubs.
We assign each new resort unit a specific  number of vacation  credits  based on
its  vacation  use value  relative to existing  resort  units.  Acquisition  and
construction costs associated with the resort units are recorded as construction
in process  inventory until their transfer to the Clubs,  when they are recorded
as vacation credit  inventory.  Vacation credit and fractional  interest cost of
sales are recorded as sales are recognized.

We provide  financing at fixed  interest rates from 11.9% to 14.9% per annum for
terms  of up to  seven  years  for  vacation  credits  and up to ten  years  for
fractional  interest  sales.  We routinely  sell notes  receivable  to financial
institutions and other investors through securitization transactions to generate
liquidity  to acquire or develop new resort  units and for working  capital.  We
recognize  a gain on the sale of notes  receivable  at the time of sale equal to
the excess of the  proceeds  received  (cash  plus  residual  interest  in notes
receivable   securitized)  over  the  allocated  carrying  value  of  the


                                       16
<PAGE>

notes  receivable  securitized.   Residual  interest  in  securitizations,   net
represents  the  overcollateralized  component of notes  receivable  securitized
reduced by an allowance for doubtful  accounts and deferred gross profit related
to the notes  receivable  securitized  plus the fair value of the interest  rate
differential of the notes receivable  securitized.  Changes in the fair value of
the interest rate differential are included in finance income.

We  are  currently  working  through  the  final  entitlement   process  on  the
MountainStar project and are capitalizing all direct costs and interest incurred
relating to the development.  We do not anticipate  generating  revenue from the
project during 2002.

Critical Accounting Policies and Significant Estimates

The discussion and analysis of our financial condition and results of operations
are based upon our consolidated  financial statements,  which have been prepared
in accordance with accounting principles generally accepted in the United States
of America.  The preparation of these financial  statements  requires us to make
estimates and judgments that affect the reported amount of assets,  liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities.  On an on-going basis,  we evaluate our estimates,  including those
related to bad debts and the residual interest in notes receivable  securitized.
We base our estimates on historical  experience and on various other assumptions
that we believe are  reasonable  under the  circumstances.  The results form the
basis for making  judgments  about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

Our critical accounting  policies and the related  significant  estimates are as
follows:

Revenue Recognition

(i) Vacation Credits

Substantially all vacation credits we sell generate installment notes receivable
secured by an interest in the related vacation  credits.  These notes receivable
are payable in monthly installments,  including interest,  with maturities up to
seven  years.  Vacation  credit  sales are  included  in  revenues  when we have
received an executed sales contract, at least a 10% down payment requirement has
been met and any rescission period has expired. Upgrade sales are subject to the
same rescission period as vacation credit sales.

Vacation credit cost of sales and direct selling  expenses related to a vacation
credit sale are  recorded at the time the sale is  recognized.  Vacation  credit
costs include the cost of land, improvements to the property, including costs of
amenities constructed for the use and benefit of the vacation credit owners, and
other direct  acquisition  costs.  Direct selling expenses are recorded as sales
and marketing expenses.

We also finance sales of upgrades which often result in the  cancellation  of an
existing  note  receivable  and the  issuance  of a new note for a term of up to
seven  years and  secured by an  interest  in all  vacation  credits  owned.  No
additional  down payment is required as long as the owner's  equity  interest in
the  original  vacation  credits  is equal to 10% of the  value of all  vacation
credits,  including  those  from  the  upgrade  sale,  and the  customer  is not
delinquent  in payments on the existing note  receivable.  Because the resulting
note receivable is secured by an interest in all vacation credits owned, when we
finance  an  upgrade  sale and the  customer  does not make an  additional  down
payment  of at least 10% of the  upgrade  sale  amount,  we use the  installment
method to recognize  revenue  whereby  profit is recognized as a portion of each
principal payment is received on the upgrade. Revenue is fully recognized on the
upgrade sale when the cash collected  relating to the upgrade sale totals 10% of
the upgrade sale. Cash collected relating to a financed upgrade sale is measured
as the sum of any  additional  down payment  received at the time of the upgrade
sale and the principal  repayment of the new note receivable  which is allocable
to the upgrade  sale.  Principal  repayments  are  allocated to the upgrade sale
component of the new note receivable and the  pre-upgrade  sale component of the
new note  receivable  based on the ratio of such  components  at the time of the
upgrade sale.

(ii) Fractional Interests

Fractional  interest  sales are  included in revenues  when we have  received an
executed sales contract,  at least a 10% down payment  requirement has been met,
and any rescission period has expired.


                                       17
<PAGE>

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

(iii) Sales of Notes Receivable

Periodically,  we sell our notes receivable through securitization  transactions
which we account for according to the provisions of SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.

When  we sell  notes  receivable  through  securitization  transactions,  we use
special purpose  finance  companies and retain  interest rate  differentials,  a
subordinated principal tranche, servicing rights (and obligations),  and in some
cases a cash  reserve  account,  all of  which  are  residual  interests  in the
securitized receivables. Gain or loss on sale of the receivables depends in part
on  the  previous  carrying  amount  of the  financial  assets  involved  in the
transfer,  allocated between the assets sold and the residual interests based on
their  relative  fair values at the date of  transfer.  To obtain  fair  values,
quoted market prices are used if  available.  However,  quotes are generally not
available for retained interests, so we estimate fair value based on the present
value of future expected cash flows estimated using  management's best estimates
of the key  assumptions--credit  losses,  prepayment  speeds and discount  rates
commensurate with the risks involved.

While we believe that our estimates  reflect our best  judgements  for these key
assumptions,  small  changes in these  estimates  can  significantly  effect the
initial measurement of these transactions and the subsequent  measurement of the
asset carrying values. We base our judgements on numerous factors, including our
own historical experience, recent trends, and available market information. Note
4 to our  consolidated  financial  statements  presents the  sensitivity  of our
determination  of the fair value of the future  cash  flows  resulting  from the
interest rate differential to small changes in our key assumptions. For example,
a 10% adverse change in any of our three key  assumptions  would reduce the fair
value by $1.1 to $1.7 million.  A 20% adverse change would reduce the fair value
by $2.2 to $3.4 million.

We provide for estimated credit losses related to uncollectible notes receivable
securitized  through our allowance for doubtful accounts.  Our loss exposure for
notes  receivable  securitized  is limited to the  residual  interests  in notes
receivable  securitized.  Although we are not required to do so, our  historical
practice has been to repurchase  defaulted  securitized  notes  receivable up to
certain limits,  generally 10% to 17% of the face amount of the original balance
of notes receivable securitized.

Gains on  sales of notes  receivable  primarily  represent,  net of  transaction
costs,  the  present  value of the  estimated  cash  flow  differential  between
contractual interest rates charged to borrowers on notes receivable  securitized
and  the  interest  rates  to be  received  by  the  purchasers  of  such  notes
receivable,  after considering the effects of estimated prepayments and the fair
value of servicing  costs. We recognize such gains on sales of notes  receivable
on the  settlement  date.  Gains on the sale of notes  receivable are determined
based on the relative fair market value of the  components  of notes  receivable
portions sold and retained.

Income from the interest rate differential  retained is subsequently recorded in
finance income using the interest method.  In addition,  finance income includes
interest  income on notes  receivable  and the  overcollateralized  component of
notes  receivable  securitized.   The  residual  interest  in  notes  receivable
securitized  arising from the interest  rate  differential  is  classified  as a
trading  security  in  accordance  with SFAS No.  115,  Accounting  for  Certain
Investments  in Debt or Equity  Securities,  and is carried at market value with
changes in the market value recognized as finance income.

The interest rate differential component of our residual interest in securitized
notes  receivable is subject to significant  prepayment risk. To the extent that
notes  receivable  pay off prior to their  contractual  maturity  at a rate more
rapid than we have  estimated,  the fair market value of our residual  interests
will be reduced.  While our experience through December 31, 2001 with historical
prepayment  speeds has been  slightly  higher  than in prior  years,  there is a
reasonable possibility that such rates may increase in the near term if the U.S.
economy  is  perceived  by our  customers  to be  improving  at the same time as
interest  rates remain at  historically  low levels and our customers  refinance
their indebtedness to us with funds from third party lenders. Conversely, if the
U.S.  economy is perceived as not  improving,  our customers may be unwilling or
less able to refinance their obligations to us in order to reduce their interest
costs,  resulting  in slower  prepayment  rates than we have  estimated.  Recent
economic  forecasts suggest a greater  likelihood of


                                       18
<PAGE>

increased  prepayment rates than those evidenced at December 31, 2001.  Further,
trends in our portfolio  during  January and February  2002  indicate  increased
prepayment rates over historical amounts.

Allowance for Doubtful Accounts

Our allowance for doubtful accounts is one of our most significant estimates. We
estimate our  allowance  for doubtful  accounts by analysis of bad debts by each
sales site by year of notes  receivable  origination  and our estimate is net of
anticipated  cost recoveries of the underlying  vacation  credits and fractional
interests.  We use this  historical  analysis in conjunction  with other factors
such  as  local  economic  conditions  and  industry  trends.  We  also  utilize
experience  factors of more mature sales sites in establishing the allowance for
bad debts at new sales offices. Management believes that all such allowances are
adequate; however, such amounts are based on estimates and there is no assurance
that the  actual  amounts  incurred  will not be more or less  than the  amounts
recorded.

We charge off notes receivable when deemed to be uncollectible.  Interest income
previously  accrued  and unpaid is  reversed.  Vacation  credits  recovered  are
recorded  at the  weighted  average  cost of  credits  at the time of  recovery.
Fractional  interests  recovered are recorded at historical  cost at the time of
the recovery. All collection costs are expensed as incurred.

Results of Operations

Comparison of the year ended  December 31, 2001, to the year ended  December 31,
2000

We achieved  total  revenues of $469.2  million for the year ended  December 31,
2001,  compared  to $337.6  million for the year ended  December  31,  2000,  an
increase of 39.0%. The principal reason for the overall  improvement was a 38.6%
increase in vacation credit and fractional  interest sales to $406.1 million for
the year  ended  December  31,  2001,  from  $293.1  million  for the year ended
December 31, 2000. Of the $406.1  million in sales,  $13.8 million is related to
fractional  interest sales recognized during 2001. No fractional  interest sales
were recognized in 2000. The increase in vacation credit sales was primarily the
result of a 20.5%  increase in  vacation  credits  sold in the United  States to
252.3 million for the year ended  December 31, 2001,  from 209.4 million for the
year ended  December 31, 2000. In addition,  vacation  credits sold in the South
Pacific  increased  463.2% to 32.1 million for the year ended December 31, 2001,
from 5.7 million for the year ended  December 31,  2000.  These  increases  were
largely  attributable  to  continued  improvement  in  existing  sales  offices,
improved  performance  in the new offices  opened  during  2001,  and  increased
upgrade sales. We opened the following sales offices during 2001:

                         Location                Opened           On/off site
                  ----------------            ---------------     -----------
                  Roslyn, WA                  January, 2001        Off-site
                  Steamboat, CO               January, 2001        Off-site
                  Englewood, CO                 March, 2001        Off-site
                  Overland Park                 March, 2001        Off-site
                  Branson, MO                   March, 2001         On-site
                  Sydney 1, NSW*                March, 2001        Off-site
                  Issaquah, WA                  April, 2001        Off-site
                  Bison Ranch, AZ                 May, 2001         On-site
                  Couer D'Alene, ID              June, 2001        Off-site
                  Sydney 2, NSW*                 June, 2001        Off-site
                  Broomfield, CO               August, 2001        Off-site
                  Seaside, OR               September, 2001        Off-site

                  *Trendwest South Pacific sales offices

Revenues from upgrade sales  increased 34.3% to $57.6 million for the year ended
December 31, 2001,  from $42.9 million for the year ended December 31, 2000. The
increase in upgrade sales reflects the Club owners' continuing  satisfaction and
the ongoing growth in the owner base.

In the United  States,  the average price per vacation  credit sold increased to
$1.44 per credit for the year ended  December 31, 2001, up from $1.36 per credit
for the year ended  December  31, 2000,  reflecting  the increase in the selling
price of vacation credits for new sales effective May 1, 2001. The average price
per vacation credit sold in the South Pacific  increased to AUD $1.83 per credit
for the year ended  December 31, 2001, up from AUD $1.65 per credit for the year
ended  December  31, 2000  reflecting  two  increases  in the  selling  price of
vacation credits for new sales effective April 1, 2001 and September 1, 2001.


                                       19
<PAGE>

For the year ended December 31, 2001,  financing  activities (finance income and
gains on sale of notes receivable) generated $50.9 million in revenues, compared
to $34.5 million for the year ended  December 31, 2000, a 47.5%  increase.  This
growth is largely  attributable to increased gains on sales of notes  receivable
due to greater  sales of notes  receivable.  In  addition,  interest  rates fell
during the year,  increasing the net interest spread and thus increasing finance
income and gains recognized.

For the year ended December 31, 2001,  resort  management  services  contributed
$4.6  million to total  revenues,  down from the same  period  last year of $4.8
million as higher  utility  costs at western  resorts  and  higher  labor  costs
negatively affected the Clubs' profits on which the management fee is based.

For the year ended  December 31,  2001,  other  income  increased  41.5% to $7.5
million  compared to $5.3 million for the year ended  December  31,  2000.  This
increase  is due to  additional  servicing  fee income  from  securitized  notes
receivable  resulting from the securitizations  that occurred during 2001 and at
the end of 2000.

Vacation  credit and  fractional  interest  cost of sales,  as a  percentage  of
vacation  credit and  fractional  interest  sales,  was 27.6% for the year ended
December 31, 2001,  compared to 25.5% for the year ended December 31, 2000. This
increase  is a result of the  higher  cost of sales  percentage  for  fractional
interests  sold during 2001,  as well as the lower cost of the units at Fiji and
at Rancho  Vistoso in Arizona  contributed to the Clubs during the first quarter
of 2000, both of which had product costs lower than our historical average.

Sales and  marketing  costs as a percentage  of vacation  credit and  fractional
interest  sales were 47.6% for the year ended  December 31, 2001, as compared to
47.0% for the year ended  December 31, 2000.  This increase is was due to higher
tour costs and lower closing percentages.

General and  administrative  expenses  increased  37.2% to $43.5 million for the
year ended December 31, 2001, from $31.7 million for the year ended December 31,
2000. As a percentage of total  revenues,  general and  administrative  expenses
were 9.3% for the year ended December 31, 2001,  comparable to 9.4% for the year
ended  December 31, 2000.  Provision for doubtful  accounts,  as a percentage of
vacation  credit  and  fractional  interest  sales,  was 7.5% for the year ended
December 31, 2001 versus 7.2% for the comparable period last year. This increase
was the result of a higher mix of sales in newer  sales  offices  with  expected
default rates higher than our average historical experience.

We maintain an allowance  for  doubtful  accounts on all notes  receivable.  The
aggregate amount of these allowances, excluding sales reversals, at December 31,
2001 and 2000, were $51.9 million and $38.9 million, respectively,  representing
approximately  7.8% and  7.7%,  respectively,  of the total  portfolio  of notes
receivable  outstanding  at those dates.  No  assurance  can be given that these
allowances will be adequate,  and if the amount of the notes receivable that are
ultimately written off materially exceed the related  allowances,  our business,
results of operations  and  financial  condition  could be materially  adversely
affected.

We estimate our allowance for doubtful accounts by analysis of bad debts by each
sales  site by  year of note  receivable  origination.  We use  this  historical
analysis,  in conjunction  with other factors such as local economic  conditions
and industry trends in estimating the allowance for doubtful  accounts.  We also
utilize  experience  factors of more  mature  sales  sites in  establishing  the
allowance  for bad debts at new  sales  offices.  We  generally  charge  off all
receivables when they become 180 days past due and return the credits associated
with such  charge-offs  to inventory.  At December 31, 2001 and 2000,  2.42% and
2.29% of the total  receivables  portfolio  outstanding  of $665.9  million  and
$502.8 million, respectively, were more than 60 days past due.

Our effective tax rate decreased  from 38.9% to 36.8% due to Australia  reducing
its  statutory tax rate from 34% to 30% and Trendwest  South  Pacific's  taxable
income making up a greater percentage of consolidated taxable income in 2001. In
addition,  we implemented  state tax planning to reduce our effective  state tax
rate.

Comparison of the year ended  December 31, 2000, to the year ended  December 31,
1999

For the year ended  December  31,  2000,  we achieved  total  revenues of $337.6
million  compared to $274.1  million for the year ended  December 31,  1999,  an
increase  of 23.2%.  The  principal  reasons  for the  overall  improvement  was
vacation credit and fractional interest sales increasing 25.1% to $293.1 million
for the year ended  December  31, 2000,  from $234.3  million for the year ended
December 31, 1999,  and  additional  gains on sales of notes  receivable.  Total
revenue  in 2000 and 1999  included  fractional  interest  sales of $0 and $13.3
million,  respectively.  The increase in


                                       20
<PAGE>

vacation  credit  sales was  primarily  the result of an  increase  in  vacation
credits sold to 215.1 million for the year ended  December 31, 2000,  from 165.8
million for the year ended December 31, 1999, a 29.7% increase.  The increase in
vacation  credits sold was largely  attributable to the maturation of four sales
offices  opened in 1999,  the opening of eleven new sales  offices  during 2000,
continued  strong  improvement  at more mature sales offices,  and  considerably
increased Upgrade sales.

The following table summarizes the sales offices opened during 2000:

                         Location                Opened           On/off site
                  Oceanside, CA                 January, 2000        Off-site
                  Pinetop, AZ                  February, 2000         On-site
                  Fiji*                           March, 2000         On-site
                  Novato, CA                        May, 2000        Off-site
                  Las Vegas, NV                     May, 2000        Off-site
                  St. Louis, MO                     May, 2000        Off-site
                  St. George, UT                   June, 2000         On-site
                  Brisbane 1, QLD*                 June, 2000        Off-site
                  Brisbane 2, QLD*              October, 2000        Off-site
                  Reno, NV                     November, 2000         On-site
                  Fairbanks, AK                December, 2000        Off-site

                  *Trendwest South Pacific sales offices

Revenues from upgrade sales  increased 41.6% to $42.9 million for the year ended
December 31, 2000,  from $30.3 million for the year ended  December 31, 1999. We
believe this  increase was due to the continued  growth of resorts,  the owners'
continued  satisfaction with the WorldMark product, and effective sales efforts.
The average price per vacation credit sold increased to $1.36 for the year ended
December 31, 2000,  from $1.34 for the year ended December 31, 1999,  reflecting
the increase in the selling  price of vacation  credits for new sales  effective
July 1, 2000,  and in the selling price of upgrade  vacation  credits  effective
September 1, 2000.

For the year ended December 31, 2000,  financing  activities (finance income and
gains on sale of notes receivable) generated $34.5 million in revenues, compared
to $31.5 million for the year ended December 31, 2000, a 9.5% increase.  This is
primarily  due to increased  gains on sales of notes  receivable  as a result of
increased sales of notes receivable.

Vacation credit and fractional interest cost of sales increased to $74.7 million
for the year ended  December  31,  2000,  from $68.6  million for the year ended
December 31, 1999, an increase of 8.9%.  As a percentage of Vacation  Credit and
Fractional Interest sales, Vacation Credit and Fractional Interest cost of sales
decreased to 25.5% for the year ended December 31, 2000, from 29.3% for the year
ended December 31, 1999.  This decrease is due to the higher product cost of the
Fractional  interest sales recognized in 1999, as well as below-average  product
cost for the Fiji and Vistoso projects completed in 2000.

Sales and marketing  costs  increased 31.2% to $137.8 million for the year ended
December 31, 2000,  from $105.0 million for the year ended December 31, 1999. As
a  percentage  of  Vacation  Credit and  Fractional  Interest  sales,  sales and
marketing  costs  increased  to 47.0% for the year ended  December 31, 2000 from
44.8% for the year ended December 31, 1999. This increase is attributable to two
factors.  First,  the  Fractional  Interest  sales in 1999 had  lower  sales and
marketing  costs which are offset by higher product cost.  Second,  the start-up
costs for the eleven sales offices  opened in 2000 were all absorbed  during the
year,  and these sales offices have a lower  closing rate during their  start-up
phase than our seasoned offices, which increases marketing costs as a percentage
of sales.

General and  administrative  expenses  increased  25.8% to $31.7 million for the
year ended December 31, 2000, from $25.2 million for the year ended December 31,
1999. As a percentage of total  revenues,  general and  administrative  expenses
increased to 9.4% for the year ended  December 31, 2000,  from 9.2% for the year
ended  December  31,  1999.  This  increase  is the result of  increases  in the
infrastructure,  both at the  Corporate  and  Regional  levels,  to support  the
continued  growth of the company and fully expensing  start-up costs for the new
regions and sales offices opened during the year.

Provision for doubtful  accounts  increased  31.1% to $21.1 million for the year
ended  December 31,  2000,  from $16.1  million for the year ended  December 31,
1999. As a percentage of vacation  credit and  fractional  interest  sales,  the


                                       21
<PAGE>

provision increased to 7.2% versus 6.9% in 1999. This increase was the result of
a higher mix of sales in newer sales offices with expected  default rates higher
than our historical experience.


                         LIQUIDITY AND CAPITAL RESOURCES

We generate cash principally  from down payments on sales of vacation  ownership
interests  which are  financed,  cash  sales of  vacation  ownership  interests,
principal and interest  payments on notes receivable  including notes receivable
securitized, and proceeds from sales of notes receivable and other borrowings.

During the year ended December 31, 2001,  net cash used in operating  activities
was $11.6 million.  Cash flows from operating activities resulted primarily from
the sale and repayment of notes  receivable of $328.2  million and net income of
$55.2 million. Cash used in operating activities was principally due to issuance
of notes  receivable  of $345.7  million to finance  the  purchase  of  vacation
credits  and  fractional  interests,  purchases  of  notes  receivable  of $47.3
million,  the continuing  development of the  MountainStar  development of $13.8
million,  and an  increase  in  inventory  of $30.0  million  due to  additional
construction in progress to meet increasing sales demand.

During the year ended December 31, 2001,  net cash used in investing  activities
was $17.9  million.  Cash used in  investing  activities  was for  purchases  of
furniture, fixtures and data equipment to support our expansion and growth.

During  the year  ended  December  31,  2001,  net cash  provided  by  financing
activities  was  $29.9  million.  Cash  provided  by  financing  activities  was
principally the result of increased borrowings under our bank line of credit and
other of $25.2 million,  a $6.6 million increase in due to Parent and Affiliate,
and issuance of common stock of $5.0 million.  Cash used in financing activities
was  principally  for  repayments  of note payable to Parent of $4.4 million and
$2.4 million to repurchase common stock.

We are developing a resort in central  Washington  state known as  MountainStar.
Prior to June 2000, our Parent, JELD-WEN, inc. owned the land and we were acting
as the developer. In June of 2000, we acquired the MountainStar development from
our Parent. The purchase price was $47.6 million, consisting of $25.0 million in
cash, a $17.7 million  unsecured  note payable to Parent and the settlement of a
$4.9 million  intercompany  receivable  from Parent.  The excess of the purchase
price over  Parent's  historical  cost was  treated as a non-cash  reduction  to
retained  earnings due to the accounting  requirement to use historical  cost on
such a  transfer  from a  controlling  shareholder.  We  recorded  the  asset at
Parent's  historical  cost of $44.3  million;  the  excess  $3.3  million of the
purchase price over this amount reduced retained earnings.  The cash payment was
funded primarily  through our existing credit  facilities.  We do not anticipate
generating revenue from the project during 2002.

On September  28, 2001,  we entered  into an  agreement  with Eagle Crest,  Inc.
(Eagle Crest) and Running Y Resort,  Inc. (Running Y) (collectively  Affiliate),
wholly-owned   subsidiaries  of  Parent,  to  acquire  $12.1  million  of  notes
receivable at Affiliate's historical cost of face value plus accrued interest in
exchange for a cash payment of $8.6 million and a $3.5 million  promissory note.
The  promissory  note  is  non-interest   bearing,   payable  in  equal  monthly
installments,  and is due in full on the  earlier of  September  28, 2002 or the
closing date of our next  securitization  transaction  following the acquisition
date. Under the agreement,  any remaining  principal balance on notes receivable
acquired from Affiliate which default,  reduce the outstanding amount owed under
the  promissory  note. In addition,  we acquired land from  Affiliate for future
development in McCall,  Idaho, in exchange for a non-interest bearing promissory
note of $1.3 million. This note matures on the earlier of September 28, 2003, or
commencement of  construction  on the property.  At December 31, 2001, the total
amount due to Affiliate was $4.5 million

Based on our current sales  projections  for 2002,  we anticipate  spending $158
million for inventory during 2002. We plan to fund these  expenditures with cash
generated  from  operations,  borrowings  on the bank line of credit and further
sales  and   securitizations   of  notes  receivable.   The  amount  of  capital
expenditures  with respect to the  MountainStar  development  will depend on the
timing of  approval  of our water  rights  transfers  and  final  resolution  of
litigation  regarding  our  entitlements.  We  anticipate  that we will fund the
MountainStar development through a traditional bank loan. The acquisition of new
resort sites and properties is an ongoing  process and  availability  of certain
properties in desired locations could result in increased  expenditures for such
activities.  We believe  that,  with  respect to our  current  operations,  cash
generated from operations, future borrowings and sales of notes receivable, will
be sufficient to meet our working capital and capital  expenditure needs through
the end of 2002. If these are not sufficient,  we have the ability to adjust our
spending on inventory.



                                       22
<PAGE>

Our plan for meeting our liquidity needs may be affected by, but not limited to,
the  following:  demand for our  product,  our ability to  securitize  our notes
receivable,  our  ability  to  secure  borrowings  under our  current  borrowing
arrangements and capacities,  an increase in prepayment speeds and default rates
on our notes receivable, and limitations on our ability to conduct telemarketing
activities.

Our principal method of funding our cash  requirements is borrowing  against and
selling the notes  receivable  originating  from the sale of  vacation  credits.
Historically,  we have been able to  securitize  our notes  receivable  at terms
favorable to us and anticipate that in the future we will be able to continue to
do so.  Our most  recent  securitization  was  completed  in August  2001,  with
favorable  terms.  If we are  unable  to  borrow  against  or to sell our  notes
receivable in the future,  particularly if we suffer any significant  decline in
the  credit  quality  of our notes  receivable  or if the  market  for our notes
receivable  declines,  our ability to acquire  additional  resort  units will be
adversely  affected and our profitability  from sales of vacation credits may be
reduced or eliminated.  Similarly,  if we are unable to secure  borrowings under
our current borrowing arrangements and capacities, or if we are unable to obtain
sufficient alternative financing,  such as debt or equity financing, our ability
to meet our cash flow needs would be negatively impacted.

Recent economic forecasts suggest a greater  likelihood of increased  prepayment
rates  than  those  evidenced  at  December  31,  2001.  Further,  trends in our
portfolio during January and February 2002 indicate  increased  prepayment rates
over historical  amounts.  To the extent that notes  receivable pay off prior to
their contractual maturity at a rate more rapid than we have estimated, the fair
value  of our  residual  interests  will be  reduced  and  cash  flows  would be
negatively impacted.

At December 31, 2001, there were 101.7 million  vacation  credits  available for
sale.  With the completion of current  projects in progress,  the acquisition of
new resorts,  and the expansion of existing resorts,  we believe we will have an
adequate  supply of credits  available  to meet our planned  growth  through the
early part of the year 2003.

Since completed units at various resort  properties are acquired or developed in
advance and we finance a significant  portion of the purchase  price of vacation
credits,  we continually  need funds to acquire and develop  property,  to carry
notes receivable contracts, and to provide working capital. We have historically
secured  additional funds through the sale of notes receivable,  borrowings on a
revolving line of credit, and loans from our parent, JELD-WEN, inc.

Corporate Finance

Overview

Since we generally finance a large percentage of the aggregate purchase price of
the vacation  credits we sell, we do not generate  sufficient cash from sales to
provide the necessary capital to pay the costs of developing  additional resorts
and to replenish working capital.  We finance our business  principally from the
sale of notes  receivable  and borrowings  under our bank line of credit.  Notes
receivable are sold to our short-term  warehouse  facility monthly.  These sales
occur at variable  interest rates. The warehouse  facility is used to accumulate
an efficient  size of contracts  (generally  $125 million to $175 million) for a
private placement.  Once an adequate size is reached, a private placement of the
notes  receivable  previously  sold is undertaken  through the use of qualifying
special purpose finance companies.  The proceeds from the private placements are
used to pay down the  warehouse  facility and fix interest  rates at the time of
the  placement  so that the Company is match funded on that portion of the notes
receivable portfolio.  We use our revolving line of credit to fill in cash needs
between sales of notes receivable to the warehouse facility.

Notes Receivable Securitizations

We account for the sale of our notes  receivable to our  warehouse  facility and
through private  placements  ("securitization  transactions") in accordance with
SFAS No. 140,  Accounting  for Transfers  and Servicing of Financial  Assets and
Extinguishment  of  Liabilities,   as  the  transfer  of  our  notes  receivable
represents, amongst other things, a surrender of control over those receivables,
which  includes  meeting the  definition  of a "true sale" under the  Bankruptcy
Code, II U.S.C.

We use special purpose finance  companies for our  securitization  transactions.
The cash proceeds  received in the  securitizations  are less than the full face
amount  of the notes  receivable  transferred  to the  special  purpose  finance
companies as a result of deal specific over collateralization  requirements. The
difference continues to be recorded as an asset on our balance sheet included in
residual interest in  securitizations.  The residual interest in securitizations


                                       23
<PAGE>

primarily  represents the excess of the principal  balances of notes  receivable
sold to the finance subsidiaries over the principal balances of the notes issued
to institutional investors (over collateralization) and the "strip" which is the
interest  differential of discounted cash flows resulting from interest receipts
on notes receivable sold and interest  payments on notes issued to institutional
investors  and servicing  payments,  net of allowances  for credit  losses.  Our
residual   interests  in   securitizations   are  subordinated  to  the  payment
requirements  of  the  holders  of  the  securitized   interests  under  certain
conditions.  In calculating the gain on sale of receivables sold, the components
comprising the total pool of receivables  are measured at fair value in order to
allocate the carrying  value of the  receivables  sold against the proceeds from
the sale.

Gains on sales of notes receivable  primarily represent the present value of the
estimated cash flow differential  between contractual  interest rates charged to
borrowers on notes receivable  securitized and the interest rates to be received
by the purchasers of such notes  receivable,  after  considering  the effects of
estimated  prepayments  and the fair value servicing  costs,  net of transaction
costs.  We recognize  such gains on sales of notes  receivable on the settlement
date. Gains on the sale of Notes Receivable are determined based on the relative
fair  market  value of the  components  of notes  receivable  portions  sold and
retained.

Management  reviews on a  quarterly  basis the  underlying  assumptions  used to
determine the fair value of the residual interest and adjusts the carrying value
based on actual  experience  and trends in the  industry.  To determine the fair
value of the interest rate differential component of our residual interests,  we
estimate the fair value based on the present value of future expected cash flows
using the following assumptions at the dates of the securitizations:


<Table>
<Caption>
                                                                           2001                  2000
                                                                     ------------------    -----------------
             <S>                                                     <C>                   <C>
             Weighted-average annual prepayment speed and expected
               annual gross defaults                                      10.00%                 9.00%
             Weighted-average life (in years)                              2.24                  2.35
             Residual cash flows discounted at                            13.50%                12.25%
             Weighted-average interest rate on warehouse facility          6.16%                 7.95%

</Table>

During the third quarter of 2001,  after  performing a normal,  timely review of
our key  assumptions,  we increased  the weighted  annual  prepayment  speed and
default  estimate to 10.6%,  up from 9%,  resulting in lower  residual  interest
valuations.  The increase in the weighted  annual  prepayment  speed and default
assumption did not significantly impact our results of operations.

In  each  transaction,  we  retain  servicing  responsibilities,  interest  rate
differentials  and subordinated  interests.  We receive annual servicing fees of
between  1.0% and  1.75% of the  outstanding  balance  of the  notes  receivable
securitized  and rights to future cash flows  arising after the investors in the
securitization  trusts have received the return for which they  contracted.  The
investors and the securitization trusts have no recourse to our other assets for
failure of debtors to pay when due. Our retained  interests are  subordinate  to
investors' interests.

We provide for estimated credit losses related to uncollectible notes receivable
securitized  through our allowance for doubtful accounts.  Our loss exposure for
notes  receivable  securitized  is limited to the  residual  interests  in notes
receivable  securitized.  Although we are not required to do so, our  historical
practice has been to repurchase  defaulted  securitized  notes  receivable up to
certain limits,  generally 10% to 17% of the face amount of the original balance
of notes receivable securitized.

The following  table sets forth the cash flows  relating to our  securitizations
for the periods indicated:

<Table>
<Caption>
                                                                      2001            2000
                                                                  ------------    -------------
             <S>                                              <C>                 <C>
             Proceeds to us from:
                  New securitizations                         $      215,045     $   174,500
                  Reinvested collections                      $       40,094     $    37,267
             Purchases of defaulted notes receivable          $      (21,058)    $   (17,420)
             Cash received from residual interests            $       57,207     $    52,212
             Servicing fees received                          $        6,230     $     3,505

</Table>

                                       24
<PAGE>

The Financial Accounting Standards Board (FASB) and other accounting  regulatory
bodies  are  currently   discussing   potential  new  accounting  standards  for
off-balance sheet arrangements.  Although it is considered likely that these new
standards will affect us, management is unable to determine the potential impact
on our financial position and results of operations given the preliminary nature
of the discussions.

(i) Warehouse Facility

TW Holdings III, Inc. (TW III), a wholly-owned  special purpose finance Company,
was  formed  in  January  2000.  We have a  364-day,  $175  million  receivables
warehouse  facility funded by a commercial paper conduit.  At December 31, 2001,
the amount of receivables  outstanding and transferred through TW III were $83.6
million.  TW III's  credit  agreement  is  subject to annual  renewals  with the
present  commitment  expiring on September 26, 2002. In the event of non-renewal
of the commitment,  we would not be able to sell additional  notes receivable to
TW III.

(ii) Private Placements

In 1996,  we sold through  Trendwest  Funding I, certain  notes  receivable to a
limited  liability  corporation  (LLC) in exchange for cash, a subordinated note
payable  from  the  LLC,  and a  residual  interest  in the  excess  cash  flows
(primarily representing the excess of notes receivable interest collections over
contractual  servicing  payments and  interest  disbursements  to  institutional
investors)  of the LLC. The LLC issued  $70.0  million of senior  notes,  series
1996-1 to  private  institutional  investors.  The notes were rated `A' by Fitch
IBCA, Inc., and were issued at a fixed rate of 7.42%.

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

In August 1999,  we formed TRI Funding III,  Inc.  (TRI Funding  III), a special
purpose finance  company.  At the same time, we sold certain notes receivable to
TRI Funding III, for cash, a subordinated  note payable from TRI Funding III and
a residual interest in the excess cash flows (primarily  representing the excess
of notes receivable interest collections over contractual servicing payments and
interest  disbursements  to  institutional  investors)  of TRI Funding  III. TRI
Funding III issued six classes of fixed-rate notes for a ten-year term purchased
by institutional  investors.  Duff & Phelps Credit Rating Agency and Fitch IBCA,
Inc.  rated the Class A, B, and C Notes,  with  Fitch  IBCA  rating  the Class D
Notes. The notes consisted of three  time-tranched Class A Notes, $104.4 million
rated "AAA",  Class B Notes,  $18.2  million  rated "AA",  Class C Notes,  $19.9
million rated "A", and Class D Notes,  $17.4 million rated "BBB". The notes were
issued at a weighted average interest rate of 7.49%.

In November  2000,  we formed TRI Funding IV, Inc.  (TRI  Funding IV), a special
purpose finance  company.  At the same time, we sold certain notes receivable to
TRI Funding IV for cash, a subordinated  note payable from TRI Funding IV, and a
residual interest in the excess cash flows (primarily representing the excess of
notes receivable  interest  collections over contractual  servicing payments and
interest  disbursements  to  institutional  investors)  of TRI  Funding  IV. TRI
Funding IV issued four classes of fixed-rate notes for a ten-year term purchased
by institutional investors. Moody's Investor Service, Inc. and Fitch, Inc. rated
the Class A, B, and C Notes.  The notes consisted of two  time-tranched  Class A
Notes,  $98.5 million rated "Aaa" by Moody's and "AAA" by Fitch,  Class B Notes,
$39.4 million rated "A2" by Moody's and "AA-" by Fitch, and Class C Notes, $25.1
million rated "Baa3" by Moody's and "BBB+" by Fitch.  The notes were issued at a
weighted average interest rate of 7.76%.

In August 2001, we formed TRI Funding V, Inc. (TRI Funding V), a special purpose
finance  company.  At the same time,  we sold certain  notes  receivable  to TRI
Funding V for cash,  a  subordinated  note  payable  from TRI  Funding  V, and a
residual interest in the excess cash flows (primarily representing the excess of
notes receivable  interest  collections over contractual  servicing payments and
interest disbursements to institutional investors) of TRI Funding V. TRI Funding
V issued four  classes of  fixed-rate  notes for a ten-year  term  purchased  by
institutional  investors.  Moody's Investor Service,  Inc. and Fitch, Inc. rated
the Class A, B, and C Notes.  The notes consisted of two  time-tranched  Class A
Notes,  $102.6 million rated "Aaa" by Moody's and "AAA" by Fitch, Class B Notes,
$37.8 million rated "A2" by


                                       25
<PAGE>


Moody's and "AA-" by Fitch,  and Class C Notes,  $23.4  million  rated "Baa3" by
Moody's  and  "BBB+"  by Fitch.  The notes  were  issued at a  weighted  average
interest rate of 5.69%.

(iii) Revolving Credit Facilities and Other

We are party to a three-year $85 million revolving credit agreement  (Agreement)
with a group of banks that allows for  borrowings in Australian  dollars up to a
maximum  of $25  million  US  dollar  equivalent.  The  Agreement  provides  for
borrowings  at either a  reference  rate or at LIBOR  rates plus the  applicable
margin for the level of borrowings  outstanding.  The Agreement  also requires a
quarterly commitment fee of 0.30% to 0.50% based on the usage level of the total
commitment.  Available borrowings under the Agreement are subject to a borrowing
base which is a percentage of notes receivable and inventory, including property
under  development,  and are  secured by a first  mortgage  on the  MountainStar
property. The Agreement expires on August 14, 2003. Borrowings outstanding under
the  agreement at December 31, 2001 and 2000,  were $74.3  million at a weighted
average  interest rate of 4.43% and $48.4 million at a weighted average interest
rate of 8.48%, respectively.

We have a $10 million open line of credit with our parent corporation, JELD-WEN,
inc.,  which bears  interest at prime plus 1% (5.75% at December  31,  2001) per
annum and is payable on demand.  As of December  31, 2001 and 2000,  outstanding
borrowings   under  this   agreement   were  $7.1  million  and  $0.4   million,
respectively.  We periodically lend excess funds to the Parent at the prime rate
minus 2% (2.75% at December 31, 2001). There were no outstanding  lendings under
this agreement at December 31, 2001 and 2000.

We have a  ten-year  mortgage  payable  secured  by our  corporate  headquarters
building.  The mortgage carries an interest rate of 8.29%, with monthly interest
and  principal  payments due. The  outstanding  balance at December 31, 2001 and
2000, was $11.6 million and $11.7 million, respectively.

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

Future payments due under debt and lease obligations as of December 31, 2001 (in
thousands):

<Table>
<Caption>
                                                                       Payment Due by Period
                                           ------------------------------------------------------------------------------
         Contractual Obligations              Total          1 year        2 - 3 years    4 - 5 years      After 5 years
                                        -------------  --------------  --------------  --------------    ----------------
    <S>                                 <C>            <C>             <C>             <C>               <C>
    Note payable to Parent..........    $      13,298  $        8,865  $        4,433  $           --    $           --
    Due to Parent and Affiliate.....    $      11,653  $       10,360  $        1,293  $           --    $           --
    Mortgage payable................    $      11,616  $           80  $          191  $          228    $       11,117
    Noncancelable operating leases..    $      30,507  $        8,210  $       14,018  $        7,662    $          617

</Table>

<Table>
<Caption>
                                                                       Payment Due by Period
                                        ---------------------------------------------------------------------------------
            Other Commitments                 Total          1 year        2 - 3 years    4 - 5 years      After 5 years
                                        -------------  --------------  --------------  --------------    ----------------
    <S>                                 <C>            <C>             <C>             <C>               <C>
    Credit facility..................   $      74,318  $       74,318  $           --  $           --    $           --
    Cancelable purchase commitments..   $     136,305  $       66,190  $       70,115  $           --    $           --

</Table>

(iv) Derivatives

We utilize derivative financial  instruments,  which have historically  included
foreign exchange  contracts,  forward interest rate swaps, and interest rate cap
agreements,  to manage  well-defined  interest and foreign  currency rate risks.
Derivative  financial  instruments  are not  used  for  trading  or  speculative
purposes.  Counterparties to our derivative financial  instruments are generally
major financial institutions.  We manage the risk of counterparty default on our
derivative   financial   instruments   through  the  use  of  credit  standards,
counterparty   diversification   and   monitoring  of   counterparty   financial
conditions. We have not experienced any losses due to counterparty default.

During  January 2001, we entered into two foreign  exchange  contracts to manage
our exposure to foreign  exchange rate risk associated with the development of a
resort property in Canada.  The foreign exchange purchase contracts had


                                       26
<PAGE>

notional  amounts  of $2.1  million  CDN at a rate of $1.4955  CDN/US  which was
settled on July 3, 2001 and $16.9 million CDN at a rate of $1.4905  CDN/US to be
settled on September 30, 2002 corresponding to the anticipated dates of payments
on the resort  development.  The foreign exchange contracts have been designated
as cash flow  hedges  and  accordingly  in 2001 we  recognized  $0.4  million of
unrealized losses, net of $0.3 million tax effect, in other comprehensive income
representing the change in the fair value of the effective portion of the hedge.
The  related  liability  for the losses of $0.7  million is  included in accrued
liabilities.  Changes in the fair value of the ineffective  portion of the hedge
were  immaterial in 2001.  The  unrealized  gains or losses  resulting  from the
foreign exchange  contracts will be reclassified into earnings once the vacation
credits  associated with the resort property under  development are sold and the
related costs are recognized in earnings.

No derivative financial instruments were outstanding at December 31, 2000.

Recent Accounting Pronouncements

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

In August 2001, the FASB issued SFAS No. 143,  Accounting  for Asset  Retirement
Obligations, which is applicable for fiscal years beginning after June 15, 2002.
SFAS No.  143  requires  an  enterprise  to  record  the fair  value of an asset
retirement  obligation  as a liability  in the period in which it incurs a legal
obligation  associated with the retirement of a tangible long-lived asset. Since
the  requirement is to recognize the obligation  when incurred,  approaches that
have been used in the past to accrue the asset  retirement  obligation  over the
life of the asset are no longer acceptable.  Statement No. 143 also requires the
enterprise to record the contra to the initial  obligation as an increase to the
carrying  amount of the related  long-lived  asset (i.e.,  the associated  asset
retirement  costs) and to depreciate that cost over the remaining useful life of
the asset.  The  liability  is changed at the end of each  period to reflect the
passage of time (i.e.,  accretion  expense) and changes in the estimated  future
cash flows underlying the initial fair value measurement. The provisions of SFAS
No. 143 are not expected to have a material impact on our financial  position or
operating results.

In September  2001, the FASB issued SFAS No. 144,  Accounting for the Impairment
or Disposal of Long-Lived Assets, which is applicable for fiscal years beginning
after December 15, 2001.  SFAS No. 144 supersedes  SFAS No. 121,  Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
and portions of APB Opinion 30,  Reporting the Results of  Operations.  SFAS No.
144 provides a single  accounting model for long-lived  assets to be disposed of
and significantly  changes the criteria that would have to be met to classify an
asset  as  held-for-sale.   Classification  as  held-for-sale  is  an  important
distinction since such assets are not depreciated and are stated at the lower of
fair value and  carrying  amount.  SFAS No. 144 also  requires  expected  future
operating losses from  discontinued  operations to be displayed in the period(s)
in which the losses are  incurred,  rather  than as of the  measurement  date as
presently required.  The provisions of SFAS No. 144 generally are required to be
applied  prospectively  after  the  adoption  date to newly  initiated  disposal
activities. Therefore, management cannot determine the potential effect that the
adoption of SFAS No. 144 will have on the Company's financial statements.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to interest  rate changes  primarily as a result of its financing
of timeshare  purchases,  the sale and  securitization of notes receivable,  and
borrowings  under revolving  lines of credit.  Our interest rate risk management
objective  is to limit the impact of interest  rate changes on earnings and cash
flows and to reduce  overall  borrowing  costs.  To achieve our  objectives,  we
borrow  funds or sell notes  receivable  primarily  at fixed rates and may enter
into  derivative  financial  instruments  such as interest rate swaps,  caps and
treasury  locks  in  order to  mitigate  our  interest  rate  risk on a  related
financial instrument.

The functional  currency of our Australian  operations is the Australian dollar.
The Australian  operations  are funded through the $85 million credit  facility,
which has an  Australian  dollar  sub-limit  of up to $25  million  U.S.  dollar



                                       27
<PAGE>

equivalent.  We are also  subject to foreign  currency  exchange  rate risk when
developing resort properties with costs denominated in a foreign currency. As we
continue expanding our operations  worldwide,  there will be additional exposure
to foreign currency exchange rate risk.

The tables below provide information as of December 31, 2001 and 2000, about our
financial instruments that are sensitive to changes in interest rates. The table
presents  estimated  principal cash flows and related  weighted average interest
rates by expected  maturity  dates.  The actual cash flows may differ from these
amounts due to prepayments, sales and defaults of notes receivable.

<Table>
                                                          By Expected Maturity
2001:                                                   Year ended December 31,
                                           ---------------------------------------------------
                                                                                                After              Fair
                                             2002       2003       2004      2005      2006      2006     Total    Value
                                           ---------  ---------  --------   -------  --------  --------  -------  --------
<S>                                        <S>        <C>        <C>        <C>       <C>       <C>      <C>      <C>
Cash:
  Amounts maturing.....................    $     821         --        --        --        --        --       821      821
  Weighted average interest rate.......           --         --        --        --        --        --       --        --

Restricted cash:
  Amounts maturing.....................    $   8,838         --        --        --        --        --     8,838    8,838
  Weighted average interest rate.......           --         --        --        --        --        --       --        --

Notes receivable (1):

  Amounts maturing.....................    $   6,125     6,639      7,117     7,750     8,565    18,129    54,325   54,325
  Weighted average interest rate.......       13.56%    13.56%     13.56%    13.56%    13.56%    13.56%    13.56%   13.56%

Residual interest in securitizations,
  net:
  Fair value of interest rate
  differential:
     Fixed rate (2):
       Amounts maturing................    $  19,544    15,011     11,325     8,165     5,628     1,372    61,045   61,045
       Weighted average interest rate..        6.95%     6.95%      6.95%     6.95%     6.95%     6.95%     6.95%    6.95%

     Variable rate (3):

       Amounts maturing................    $   3,567     3,010      2,487     1,941     1,363       823    13,191   13,191
       Weighted average interest rate..        5.95%     5.95%      5.95%     5.95%     5.95%     5.95%     5.95%    5.95%

  Overcollateralized notes receivable
  (1):

     Amounts maturing..................    $   4,124     4,473      4,736     4,869     4,636     5,681    28,519   28,519
     Weighted average interest rate....       14.08%    14.08%     14.08%    14.08%    14.08%    14.08%    14.08%   14.08%

Due to Parent and Affiliate:
  Amounts maturing.....................    $  10,360     1,293         --        --        --        --    11,653   11,653
  Weighted average interest rate.......        3.52%     3.52%         --        --        --        --     3.52%    3.52%

Note payable to Parent

  Amounts maturing.....................    $   8,865      4,433        --        --        --        --    13,298   13,298
  Weighted average interest rate.......         9.0%       9.0%        --        --        --        --      9.0%     9.0%

Mortgage payable

  Amounts maturing.....................    $      80         93        98       109       119    11,117    11,616   11,616
  Weighted average interest rate.......        8.29%      8.29%     8.29%     8.29%     8.29%     8.29%     8.29%    8.29%

Borrowings under bank line of credit:
  Amount maturing......................    $  74,318        --         --        --        --        --    74,318   74,318
  Weighted average interest rate.......        4.43%        --         --        --        --        --     4.43%    4.43%

__________________________________________________________________________________________________

</Table>

(1)  Net of  allowance  for doubtful  accounts,  but prior to  consideration  of
     deferred gross profit.

(2)  Fixed  interest  rates  represent  the  differential  between the  contract
     interest rate on notes receivable securitized and the interest rate paid to
     purchasers of the notes receivable.

(3)  Variable  interest rates  represent the  differential  between the contract
     interest rate on notes receivable securitized and the required yield.


                                       28
<PAGE>

<Table>
<Caption>
                                                          By Expected Maturity
2000:                                                   Year ended December 31,
                                           ---------------------------------------------------
                                                                                                  After               Fair
                                               2002       2003       2004      2005      2006      2006     Total     Value
                                            ---------  ---------  --------   -------  --------   --------   -------  --------
<S>                                        <S>        <C>        <C>        <C>       <C>       <C>      <C>      <C>
Cash:
  Amounts maturing.....................      $    404         --        --        --        --        --        404     404
  Weighted average interest rate.......            --         --        --        --        --        --        --       --

Restricted cash:
  Amounts maturing.....................      $  7,201         --        --        --        --        --      7,201   7,201
  Weighted average interest rate.......            --         --        --        --        --        --        --       --

Notes receivable (1):
  Amounts maturing.....................      $  3,644     4,148      4,477     4,740     5,029    10,943     32,981  32,981
  Weighted average interest rate.......        14.01%    14.01%     14.01%    14.01%    14.01%    14.01%     14.01%  14.01%

Residual interest in securitizations, net:
  Fair value of interest rate
  differential:
     Fixed rate (2):
       Amounts maturing................      $ 12,603    11,670      8,942     6,269     3,634     2,140     45,258  45,258
       Weighted average interest rate..         6.54%     6.54%      6.54%     6.54%     6.54%     6.54%      6.54%   6.54%

     Variable rate (3):
       Amounts maturing................      $  1,619     1,532      1,283     1,097       678       576      6,785   6,785
       Weighted average interest rate..         6.80%     6.80%      6.80%     6.80%     6.80%     6.80%      6.80%   6.80%

  Overcollateralized notes receivable (1):
     Amounts maturing..................      $  3,224     3,535      3,737     3,796     3,625     4,357     22,274  22,274
     Weighted average interest rate....        14.06%    14.06%     14.06%    14.06%    14.06%    14.06%     14.06%  14.06%

Due to Parent:
  Amounts maturing.....................      $    419        --         --        --        --        --        419     419
  Weighted average interest rate.......        10.50%        --         --        --        --        --     10.50%  10.50%

Note payable to Parent
  Amounts maturing.....................      $  4,433      8,865     4,433        --        --        --     17,731  17,731
  Weighted average interest rate.......         9.00%      9.00%     9.00%        --        --        --      9.00%   9.00%

Mortgage payable
  Amounts maturing.....................      $     78         85        93        98       109    11,233     11,696  11,696
  Weighted average interest rate.......         8.29%      8.29%     8.29%     8.29%     8.29%     8.29%      8.29%   8.29%

Borrowings under bank line of credit:
  Amount maturing......................      $ 48,441        --         --        --        --        --     48,441  48,441
  Weighted average interest rate.......         8.48%        --         --        --        --        --      8.48%   8.48%
__________________________________________________________________________________________________

</Table>

(1)  Net of  allowance  for doubtful  accounts,  but prior to  consideration  of
     deferred gross profit.

(2)  Fixed  interest  rates  represent  the  differential  between the  contract
     interest rate on notes receivable securitized and the interest rate paid to
     purchasers of the notes receivable.

(3)  Variable  interest rates  represent the  differential  between the contract
     interest rate on notes receivable securitized and the required yield.



                                       29
<PAGE>

Item 8. Financial Statements and Supplementary Data

See the information set forth on Index to Financial Statements appearing on page
F-1 of this report on Form 10-K.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

None
                                    PART III

Item 10. Directors and Executive Officers of the Registrant

The following is a brief description of our directors and officers:

Directors

William F. Peare, age 64, has served as President,  Chief Executive Officer, and
a director since 1989.  Prior to founding  Trendwest in 1989,  Peare served as a
management consultant for Eagle Crest Resort in Redmond,  Oregon ("Eagle Crest")
and for Elkhorn  Resort in Sun  Valley,  Idaho.  From 1985 to 1987,  Peare was a
Senior Vice President at Horizon Airlines.

Jeffery  P.  Sites,  age 45,  has  served as  Executive  Vice  President,  Chief
Operating  Officer,   Secretary  and  a  director  since  1989.  Sites  oversees
day-to-day  operations  of the Company.  Sites served as Treasurer  from 1989 to
1997. Prior to 1998, Sites served as director and Treasurer of WorldMark.

Jerol E.  Andres,  age 58, has served as a director of the  Company  since 1989.
Andres  is Chief  Executive  Officer  of Eagle  Crest,  Inc.,  having  served as
President  and CEO from 1988 through 2001. He also serves as director of Cascade
Bancorp, a publicly-traded bank company headquartered in Bend, Oregon.

Douglas P.  Kintzinger,  age 41, has served as a director of the  Company  since
1994 and  currently is a member of the  compensation  committee.  Kintzinger  is
Senior Vice President,  CFO, Director and Secretary of JELD-WEN,  inc., where he
is responsible for all administrative functions, including accounting,  finance,
information systems, benefits, legal, and risk management. Kintzinger is also an
officer/director  of various  JELD-WEN  affiliates and  subsidiaries,  including
JELD-WEN  HOLDINGS,  inc.,  AmeriTitle,  Inc. and Eagle Crest,  Inc. Since 1990,
Kintzinger  has also  served as a director of South  Valley  State Bank and as a
Regent of Luther College.

Roderick C. Wendt,  age 47, has served as a director of the Company  since 1989.
Wendt is also  President,  CEO, and  Corporate  Director of JELD-WEN,  inc. with
responsibility for the overall day-to-day operating  activities of JELD-WEN.  In
addition,  Wendt also serves as an officer and/or  director of various  JELD-WEN
affiliates and subsidiaries, including Eagle Crest, Inc. Wendt sits on the Board
of South Valley State Bank,  having served in this capacity  since 1996 and from
1983 to 1995.

Harry L.  Demorest,  age 60, has served as a director of the Company  since 1997
and currently is a member of the audit  committee.  Demorest is Chief  Executive
Officer of Columbia Forest  Products,  Inc. having served in this capacity since
March 1996.  Previously,  he served as President  from March 1994 to March 1996,
and as Executive Vice  President from April 1992 to February 1994.  Prior to his
employment by Columbia Forest Products, Inc., Demorest was a partner with Arthur
Andersen & Co.,  serving as Office  Managing  Partner for the  Portland,  Oregon
office  from 1981 to 1991 and as  Partner-in-Charge  of the tax  division of the
Portland office from 1979 to 1985.

Michael P.  Hollern,  age 63, has served as a director of the Company since 1997
and currently is a member of both the audit and compensation committees. Hollern
is  Chairman  and CEO of Brooks  Resources  Corporation,  having  served in this
capacity since 1999 and previously as President since 1983.  Hollern also serves
on the boards of several corporate, civic and charitable organizations.

Linda M. Tubbs,  age 54, has served as a director of the Company  since 1997 and
currently is a member of both the compensation and audit committees,  serving as
chairperson of the latter.  Ms. Tubbs retired from Wells Fargo Bank as Executive
Vice President,  having served as Division Manager for the Northwest  Commercial
Banking Group in Oregon,  Washington,  Idaho and Utah since 1996. Prior to their
merger with Wells Fargo Bank, Ms. Tubbs was Senior Vice


                                       30
<PAGE>

President and Manager of First Interstate's Portland, Oregon, Commercial Banking
Administration.  Ms.  Tubbs  also  serves  on the  boards of  several  civic and
charitable organizations.

Executive Officers

Gene F.  Hensley,  age 49, is Executive  Vice  President,  having served in this
capacity since 1998. Previously,  Hensley served as Vice President of Operations
from 1995.  Hensley's  current  responsibilities  include  oversight of domestic
sales,  marketing,  and WorldMark operations.  Since 1996, Hensley has served as
President  of  WorldMark  the Club.  He also  serves as a  director  of  various
Trendwest subsidiaries.

Alan B.  Schriber,  age 50, is Executive Vice  President,  having served in this
capacity  since January 1999.  Previously  Schriber  served as Vice  President -
Administration  and  Finance  from 1994 to 1997.  Schriber  is  responsible  for
accounts   receivable,   data   processing,   contract   processing,   corporate
communications, and human resources functions for Trendwest.

Timothy P. O'Neil,  age 39, is Executive Vice  President,  having served in this
capacity  since January 2002 and Chief  Financial  Officer and  Treasurer  since
April 2000.  Previously  O'Neil served as Vice President - Finance from February
1999 to April 2000. Prior to joining Trendwest, O'Neil was Vice President - Loan
Sales & Syndications at Bank One Capital Markets.

Item 11. Executive Compensation

                           SUMMARY COMPENSATION TABLE

The following  table and related notes set forth all  compensation  received for
the three fiscal years ended December 31, 2001 by the Company's  Chief Executive
Officer ("CEO") and the four most highly paid executive officers (other than the
CEO) who were  serving as executive  officers at the end of 2001  (collectively,
together with the CEO, the "Named Executive Officers").

<Table>
<Caption>
                                                                                                            Long-Term
                                                                                                           Compensation
                                                                                                       ---------------------
                                                                                      Other Annual          Securities
                                                                                    Compensation ($)        Underlying
           Name and Principal Position          Year     Salary ($)    Bonus ($)          (1)               Options(#)
     ---------------------------------------- --------- ------------- ------------ ------------------- ---------------------
     <S>                                      <C>       <C>           <C>           <C>                <C>
     William F. Peare                         2001        $150,000      $299,999           $22,088              12,000
         President and CEO                    2000         130,000       260,202            13,450               6,000
                                              1999         115,000       195,522            12,276               6,000

     Jeffery P. Sites                         2001         127,000       245,519            19,600              12,000
         Chief Operating Officer              2000         105,000       210,002            19,450               6,000
                                              1999          90,000       159,359            18,560               6,000

     Gene F. Hensley                          2001         100,000       200,001            21,724              12,000
         Executive Vice President             2000          90,000       180,000            20,950               6,000
                                              1999          80,000       136,183            19,597               6,000

     Alan B. Schriber                         2001         100,000       200,001            20,193              12,000
         Executive Vice President             2000          90,000       180,000            18,668               6,000
                                              1999          80,000       136,183            17,545               6,000

     Timothy P. O'Neil                        2001          85,000       180,190            20,177              12,000
         Executive Vice President, Chief      2000          77,000       143,197            16,934              13,500
          Financial Officer and Treasurer     1999          64,167        99,313            35,252              10,500

</Table>

(1)  Other annual  compensation  is  comprised  of various  items such as 401(k)
     contributions and auto allowance.



                                       31
<PAGE>

                        OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth  information on stock option grants during fiscal
2001 to the Named Executive  Officers.  The options set forth in the table below
were granted in 2001, as part of recipient's 2001 compensation:

<Table>
<Caption>
                                                                                                   Potential Realized Value
                                                                                                   at Assumed Annual Rates
                                   Number of     Percent of Total                                 of Stock Appreciation for
                                   Securities     Options Granted     Exercise                         Option Term (2)
                                   Underlying           to                                        ---------------------------
Name                                Options        Employees in         Price       Expiration
                                  Granted (1)       Fiscal Year       ($/Share)        Date          5% ($)       10% ($)
-------------------------------- --------------- ------------------ -------------- -------------- ------------- -------------
<S>                              <C>              <C>                <C>           <C>            <C>           <C>

William F. Peare                      12,000            3.42%            $25.20       12/18/09      $190,178      $481,948
Jeffery P. Sites                      12,000            3.42%             25.20       12/18/09       190,178       481,948
Gene F. Hensley                       12,000            3.42%             25.20       12/18/09       190,178       481,948
Alan B. Schriber                      12,000            3.42%             25.20       12/18/09       190,178       481,948
Timothy P. O'Neil                     12,000            3.42%             25.20       12/18/09       190,178       481,948

</Table>

(1)  Each of the options reflected in these tables was granted to the respective
     Named  Executive  Officer  pursuant to our 1997 Employee Stock Option Plan.
     The exercise  price of each option is equal to the fair market value of the
     common  stock on the date of grant.  The  options  vest  ratably  in annual
     installments over five years beginning on the first anniversary of the date
     of grant.

(2)  These  assumed rates of  appreciation  are provided in order to comply with
     the requirements of the Securities and Exchange  Commission (the "SEC") and
     do not  represent  our  expectation  or projection as to the actual rate of
     appreciation of the common stock. These gains are based on assumed rates of
     annual  compound stock price  appreciation  of 5% and 10% from the date the
     options were  granted  over the full option  term.  The actual value of the
     options  will  depend on the  performance  of the  common  stock and may be
     greater or less than the amounts shown.


               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR-END OPTION VALUES

The  following  table sets forth  information  on the exercise of stock  options
during fiscal year 2001 by each of the Named Executive Officers and the value of
unexercised options at December 31, 2001.

<Table>
<Caption>
                                                                                                    Value of Unexercised
                                                              Number of Unexercised Options    In-the-Money Options at Fiscal
                                                                  at Fiscal Year-End (#)                Year-End ($)
                               Shares                       --------------------------------- --------------------------------
                             Acquired on    Value Realized
Name                        Exercise (#)          ($)         Exercisable     Unexercisable     Exercisable    Unexercisable
-------------------------- ---------------- ---------------- -------------- ------------------ -------------- -----------------
<S>                        <C>              <C>              <C>            <C>                <C>            <C>
William F. Peare                   --               --           46,800           37,200          $673,200        $382,590
Jeffery P. Sites                   --               --           46,800           37,200           673,200         382,590
Gene F. Hensley                    --               --           46,800           37,200           673,200         382,590
Alan B. Schriber                   --               --           46,800           37,200           673,200         382,590
Timothy P. O'Neil                  --               --           14,400           33,600           174,123         412,542

</Table>



                                       32
<PAGE>

Compensation of Directors

Directors  who are not  employees  of our Parent or us received  $25,000 each in
fees for fiscal year 2001. All non-employee  directors are reimbursed for out of
pocket expenses for each Board meeting attended.

Employment, Termination and Change of Control Agreements

Messrs.  William Peare and Jeffery Sites have entered into employment agreements
with us. For 2002 under the employment agreements, Mr. Peare will receive a base
annual  salary of $180,000 and Mr.  Sites will  receive a base annual  salary of
$150,000.  In addition,  each will have the  opportunity to receive  performance
bonuses.  The  agreements  contain a covenant not to compete for a period of two
years in the event of termination of employment for any reason. If employment is
terminated by us without cause,  the employee will receive his base salary for a
period of one year  following the date of  termination  plus the amount of bonus
earned during the preceding twelve months.






























                                       33
<PAGE>

                      REPORT OF THE COMPENSATION COMMITTEE

The  Compensation  Committee  of the  Board  of  Directors  is  responsible  for
establishing  policies and  programs  which govern  compensation  for  executive
officers and for  administering  these  programs to determine  bonus amounts and
option awards.

COMPENSATION POLICY

Our  executive  compensation  policy is designed  to attract,  reward and retain
management who will achieve our business  objectives.  Our  compensation  policy
seeks to align  executive  compensation  with corporate  performance,  both on a
short-term and long-term basis. In this regard,  the base salaries of executives
are  established  at levels which are considered  lower than might  otherwise be
warranted in light of the duties and scope of responsibilities of each officer's
position.  Executive  officers  are afforded the  opportunity  to  substantially
increase  their  income  through a bonus  system that is based  primarily on our
annual sales. A smaller  portion of the bonus of executive  officers is based on
our net income exceeding a 20% annual return on equity.

The  Compensation  Committee  also awarded  stock  options to various  executive
officers following our initial public offering.  The purpose of these awards was
to provide key  officers  with an equity  incentive  to  reinforce  management's
commitment to enhancement of profitability and Shareholder  value. These options
granted were based primarily on the executive  officer's level of responsibility
and the length of time such officer had been employed.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

Mr.  William Peare,  our Chief  Executive  Officer,  is a party to an employment
agreement  with us and his  compensation  for 2001 was  determined in accordance
with the employment agreement. Mr. Peare's base compensation was set at $150,000
and he was  eligible to receive a  performance  bonus,  based  primarily  on our
annual  sales,  up to  approximately  two times his base salary.  For 2001,  Mr.
Peare's bonus was $299,999.  The Compensation Committee also awarded Mr. Peare a
grant of options to acquire  12,000  shares of common  stock.  As with the other
grants to executive  officers,  Mr.  Peare's  grant was based on his position as
chief executive officer and his length of service with us.

                                         COMPENSATION COMMITTEE

                                         Michael P. Hollern
                                         Douglas P. Kintzinger
                                         Linda M. Tubbs












                                       34
<PAGE>

                                PERFORMANCE GRAPH

The following  graph compares the  cumulative  total  Shareholder  return (stock
price appreciation plus dividends) on the common stock with the cumulative total
return  of the S&P 500 Index and the  group of peer  companies  set forth  below
(based on weighted market capitalization) selected by the Company.

                     COMPARED CUMULATIVE TOTAL RETURN AMONG
           TRENDWEST RESORTS, INC., S&P 500 INDEX AND PEER GROUP INDEX

                              [PERFORMANCE GRAPH]

<Table>
<Caption>
                                  Aug 1997             1997             1998             1999              2000             2001
                                  --------             ----             ----             ----              ----             ----
<S>                   <C>         <C>              <C>                <C>             <C>              <C>               <C>
Trendwest Resorts     Cum $        $100.00          $127.08           $69.44          $125.00           $150.00          $316.49


S & P 500             Cum $        $100.00          $102.43          $131.70          $159.42           $144.90          $127.68


Peer Group            Cum $        $100.00           $95.85           $71.07           $67.84            $85.87           $73.29


</Table>

                                PEER GROUP DETAIL

         American Skiing                   Candlewood Hotels
         Choice Hotels Co.                 Four Season Hotels
         Host Marriott Corp.               Intrawest Corp.
         Lodgian, Inc.                     Sholodge Inc.
         Suburban Lodges


Three  companies  that were  included  in the 2000 Peer  Group  results  are not
included  in the 2001 Peer  Group  results,  as the  companies  are no longer in
existence.  The  following  table lists the  companies  and the reason for their
omission:

          Fairfield Communities             Acquired
          Silverleaf Resorts                Filed for bankruptcy; stock delisted
          Sunburst Hospitality Corp.        Acquired



                                       35
<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information  regarding  ownership of common stock
by each person known to us to own more than 5% of the outstanding  shares of the
common stock on March 26, 2002.

<Table>
<Caption>
                                                         Shares of Common
                                                        Stock Beneficially        Percent of
      Name and Address of Beneficial Owner                    Owned                  Class
      ---------------------------------------------    ---------------------    ----------------
      <S>                                              <C>                      <C>
         JELD-WEN, inc.                                     30,883,097               80.9%
         3250 Lakeport Blvd.
         Klamath Falls, Oregon 97601

         Richard L. Wendt                                    2,218,686                5.8%
         3250 Lakeport Blvd.
         Klamath Falls, Oregon 97601

</Table>

The following table sets forth information regarding the beneficial ownership of
common stock on March 26, 2002, by (i) each director,  (ii) our Chief  Executive
Officer and the other  executive  officers  named in the executive  compensation
table set forth  herein and (iii) all  directors  and  executive  officers  as a
group. The following is based on information  furnished by such owners.  Each of
the persons named below has sole voting and investment power with respect to the
shares shown, except as noted below.


<Table>
<Caption>
                                                         Shares of Common
                                                        Stock Beneficially        Right to          Percent of
      Name of Beneficial Owner                                Owned              Acquire (1)          Class
      ---------------------------------------------    ---------------------    ---------------  --------------
      <C>                                               <C>                     <C>               <C>
      William F. Peare                                          600,494            46,800              1.7%
      Jeffery P. Sites                                          104,718            46,800               *
      Gene F. Hensley                                               450            46,800               *
      Alan B. Schriber                                            4,163            46,800               *
      Timothy P. O'Neil                                           4,725            14,400               *
      Jerol E. Andres                                             4,500                                 *
      Douglas P. Kintzinger (6)                                  15,264 (2)                             *
      Roderick C. Wendt (6)                                     672,775 (3)                            1.8%
      Michael Hollern                                             4,500 (4)                             *
      Harry Demorest                                             22,250 (5)                             *
      Linda M. Tubbs                                              4,500                                 *
      All directors and executive officers as a
      group (11 persons)                                      1,438,339           201,600              4.3%

</Table>
*    Less than 1%

(1)  Shares that can be acquired through stock option exercises  through May 26,
     2002.

(2)  Includes 2,700 shares held by spouse.

(3)  Includes 9,263 shares held by Mr. Wendt's minor children.

(4)  Shares held by Hollybrook & Co., a nominee  partnership holding shares in a
     trust of which Mr. Hollern is a beneficiary.

(5)  Shares held by spouse.

(6)  Messrs.  Kintzinger  and Wendt are  executive  officers  and  directors  of
     JELD-WEN,  inc. and disclaim any beneficial  ownership in the shares of the
     Company owned by JELD-WEN, inc.

Section 16(a) Beneficial Ownership Reporting Compliance

Under SEC rules, our directors, executive officers and beneficial owners of more
than 10% of any Trendwest  equity security are required to file periodic reports
of their ownership, and changes in that ownership, with the SEC. Based solely on
our review of copies of these  reports  and  representations  of such  reporting
persons,  we believe  during  fiscal  2001,  such SEC filing  requirements  were
satisfied,  except Roderick C. Wendt, Director,  filed a late Form 4 detailing a
stock disposition transaction for March 2001.


                                       36
<PAGE>

Item 13. Certain Relationships and Related Transactions

Relationship with JELD-WEN, inc.

Background.  JELD-WEN,  inc.  ("Parent" or "JELD-WEN") owns approximately 81% of
the outstanding shares of our common stock as of March 26, 2002.  Roderick Wendt
and Douglas  Kintzinger  are directors  and Richard  Wendt was a director  until
March  1997.  Richard  Wendt,  Roderick  Wendt and  Douglas  Kintzinger  are all
directors of JELD-WEN.  In addition,  Richard Wendt,  Roderick Wendt and Douglas
Kintzinger own 34.8%, 1.1% and 0.5%, respectively,  of the outstanding shares of
JELD-WEN as of December 31, 2001.

Administrative  Services.  JELD-WEN  provides a  self-insured  health,  life and
disability  benefits plan to its  employees,  in which we  participate.  We paid
JELD-WEN  approximately $6.2 million in 2001 to include our employees within the
JELD-WEN plan. JELD-WEN also self-insures its worker's  compensation  liability,
and we also  participate  in that  plan.  We paid  JELD-WEN  approximately  $1.2
million in 2001 to include our employees within the JELD-WEN plan.

Credit  Facility.  We maintain an unsecured,  open,  revolving  credit line with
JELD-WEN of $10 million which is payable on demand.  We pay JELD-WEN interest at
prime plus one percent. As of December 31, 2001, borrowings under this agreement
were  $7.1  million.  To the  extent  we have  excess  funds  available  to loan
JELD-WEN,  such loans earn  interest at prime minus two  percent.  There were no
lendings to JELD-WEN  during 2001.  The terms of the line of credit are the same
as JELD-WEN  provides to its other  subsidiaries and divisions.  We believe that
the terms of the line of credit as a whole are no less  favorable  than could be
obtained from an unaffiliated third party.

MountainStar Development. We are developing a resort in central Washington state
known as MountainStar.  Prior to June 2000,  JELD-WEN owned the land and we were
acting  as the  developer.  In  June  of  2000,  we  acquired  the  MountainStar
development from JELD-WEN.  The purchase price was $47.6 million,  consisting of
$25 million in cash, a $17.7  million  unsecured  note payable to Parent and the
settlement of a $4.9 million intercompany  receivable from JELD-WEN.  The excess
of the purchase price over JELD-WEN's  historical cost was treated as a non-cash
reduction  to  retained  earnings  due  to  the  accounting  requirement  to use
historical cost on such a transfer from a controlling  shareholder.  We recorded
the asset at  JELD-WEN's  historical  cost of $44.3  million;  the  excess  $3.3
million of the purchase price over this amount reduced  retained  earnings.  The
cash payment was funded primarily through our existing credit facilities.

Relationship  with  Affiliate  (collectively,  Eagle  Crest,  Inc. and Running Y
Resort, Inc.)

Receivables  Purchase.  On September 28, 2001, we entered into an agreement with
Eagle  Crest,  Inc.  (Eagle  Crest)  and  Running Y  Resort,  Inc.  (Running  Y)
(collectively  Affiliate),  wholly-owned  subsidiaries  of JELD-WEN,  to acquire
$12.1 million of notes  receivable at Affiliate's  historical cost of face value
plus accrued  interest in exchange for a cash payment of $8.6 million and a $3.5
million promissory note. The promissory note is non-interest bearing, payable in
equal monthly  installments,  and is due in full on the earlier of September 28,
2002 or the closing date of our next  securitization  transaction  following the
acquisition date. Under the agreement,  any remaining principal balance on notes
receivable  acquired from Affiliate which default reduce the outstanding  amount
owed by us under the promissory note.

Land  Acquisition.  In  addition,  we acquired  land from  Affiliate  for future
development in McCall,  Idaho, in exchange for a non-interest bearing promissory
note of $1.3 million. This note matures on the earlier of September 28, 2003, or
commencement of construction on the property by us.

At December 31, 2001, the total amount due to Affiliate was $4.5 million.

Marketing  Agreement.  In  conjunction  with the above  transactions,  Affiliate
entered into an agreement with us and WorldMark to transfer all of its developed
unsold  resort  properties  to  WorldMark  in  exchange  for the  right  to sell
WorldMark  vacation  credits  equal to the credit  value of the  properties.  We
agreed to  purchase  notes  receivable  resulting  from the  subsequent  sale of
vacation  credits by  Affiliate at face value.  Affiliate  will refund to us any
remaining  principal  balance on notes receivable  purchased from Affiliate that
default.  Additionally, we receive a fee from Affiliate for each vacation credit
sale  made by  Affiliate  and must pay a  commission  fee to  Affiliate  for any
upgrades  of vacation  credit  sales  originated  by  Affiliate.  During 2001 we
purchased  $5.7  million of  receivables  and  received $.2 million of fees from
Affiliate and paid $.2 million of commission fees to Affiliate. Through 1999, we
acquired certain notes receivable from Affiliate under a similar agreement which
expired in 1999.



                                       37
<PAGE>

Relationship with Creative Media Development

Servicing  Agreement.  We  purchase  merchandise,  including  incentives  and/or
promotional products, from Creative Media Development,  Inc. (CMD), a subsidiary
of JELD-WEN,  pursuant to the Servicing  Agreement dated August 21, 2001. Except
for work in process,  this agreement is terminable at will by either party at no
cost. During 2001, we purchased  merchandise totaling  approximately $.1 million
from CMD.

Employment Relationships

Frederick C. Peare,  the brother of Mr.  William  Peare,  is employed by us as a
manager of one of our sales  offices.  During 2001,  Frederick C. Peare received
salary (based on  commissions),  bonus,  and 401(k)  contributions  of $251,436.
Gregory  Farnum,  the son-in-law of Mr.  William  Peare,  is employed by us in a
sales capacity.  During 2001, Mr. Farnum received salary (based on commissions),
bonus, and 401(k) contributions of $101,036. Deborah Hamilton, the sister of Mr.
William Peare,  is employed by us in an  administrative  role.  During 2001, Ms.
Hamilton received salary,  bonus, and 401(k)  contributions of $79,564.  Rebecca
Benavides,   the  sister  of  Mr.  William  Peare,  is  employed  by  us  in  an
administrative capacity.  During 2001, Ms. Benavides received salary, bonus, and
401(k)  contributions of $73,772.  Vicente Benavides,  the nephew of Mr. William
Peare,  is  employed  by us in a sales  capacity.  During  2001,  Mr.  Benavides
received  salary (based on  commissions),  bonus,  and 401(k)  contributions  of
$65,838.  Michael Holz, the  brother-in-law of Mr. William Peare, is employed by
us in an administrative capacity.  During 2001, Mr. Holz received salary, bonus,
and 401(k) contributions of $68,337.

Thomas F. Sites, the brother of Mr. Jeffery Sites, is employed by us as the Vice
President of a business unit. During 2001, Thomas Sites received a salary, bonus
and 401(k)  contributions  of $290,885.  Scott Sites, the brother of Mr. Jeffery
Sites,  is employed  by us in a marketing  capacity.  During  2001,  Scott Sites
received a salary, bonus and 401(k) contributions of $198,419.













                                       38
<PAGE>


                          Index to Financial Statements
                    Trendwest Resorts, Inc. and Subsidiaries


<Table>
<Caption>
                                                                                                                       Page
<S>                                                                                                                    <C>
Independent Auditors' Report.......................................................................................     F-2

Consolidated Balance Sheets........................................................................................     F-3

Consolidated Statements of Income..................................................................................     F-4

Consolidated Statements of Shareholders' Equity and Comprehensive Income...........................................     F-5

Consolidated Statements of Cash Flows..............................................................................     F-6

Notes to Consolidated Financial Statements.........................................................................     F-8

</Table>



<PAGE>











                          INDEPENDENT AUDITORS' REPORT



The Shareholders
Trendwest Resorts, Inc.:


We have audited the accompanying consolidated balance sheets of Trendwest
Resorts, Inc. and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of income, shareholders' equity and comprehensive
income, and cash flows for each of the years in the three-year period ended
December 31, 2001. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Trendwest Resorts,
Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.




/s/ KPMG LLP

Seattle, Washington
January 30, 2002







<PAGE>
                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets

                             (dollars in thousands)

<Table>
<Caption>

                                                                                                December 31,
                                                                                    --------------------------------------
                                    Assets                                                2001                 2000
                                                                                    -----------------    -----------------

<S>                                                                                <C>                   <C>
     Cash....................................................................       $       821          $       404
     Restricted cash.........................................................             8,838                7,201
     Notes Receivable, net...................................................            53,802               32,570
     Accrued interest and other receivables..................................             8,499                8,171
     Residual interest in securitizations, net...............................            95,733               68,824
     Inventories.............................................................           134,745              104,218
     MountainStar development................................................            70,382               56,536
     Property and equipment, net.............................................            43,798               29,948
     Refundable income taxes.................................................                --                5,688
     Other assets............................................................            10,411                6,599
                                                                                    -----------------    -----------------
                     Total assets............................................       $   427,029          $   320,159
                                                                                    =================    =================

                     Liabilities and Shareholders' Equity

Liabilities:
     Accounts payable and bank overdraft.....................................       $     5,582          $     9,706
     Accrued liabilities.....................................................            34,265               21,538
     Accrued construction in progress........................................             7,153                2,855
     Due to Parent and Affiliate.............................................            11,653                  419
     Note payable to Parent..................................................            13,298               17,731
     Borrowings under bank line of credit....................................            74,318               48,441
     Current income taxes payable............................................             1,383                  --
     Mortgage payable........................................................            11,616               11,696
     Deferred income taxes...................................................             2,250                  330
                                                                                    -----------------    -----------------
                     Total liabilities.......................................           161,518              112,716

Shareholders' equity:
     Preferred stock, no par value.  Authorized  10,000,000  shares; no shares
        issued or outstanding................................................                --                  --
     Common stock,  no par value.  Authorized  90,000,000  shares;  issued and
        outstanding  38,094,589 and 37,795,496 shares at December 31, 2001 and
        2000, respectively...................................................            57,917               54,119
     Accumulated other comprehensive loss....................................            (1,454)               (522)
     Retained earnings.......................................................           209,048              153,846
                                                                                    -----------------    -----------------
                     Total shareholders' equity..............................           265,511              207,443
                                                                                    -----------------    -----------------

Commitments and contingencies

                     Total liabilities and shareholders' equity..............       $   427,029          $   320,159
                                                                                    =================    =================

</Table>
See accompanying notes to the consolidated financial statements.

                                      F-3
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                        Consolidated Statements of Income

                  (dollars in thousands, except per share data)

<Table>
<Caption>
                                                                                       Year ended December 31,
                                                                          2001                  2000                  1999
                                                                    ------------------    ------------------    ------------------
<S>                                                                 <C>                   <C>                   <C>
Revenues:
     Vacation Credit and Fractional Interest sales, net......       $       406,137       $       293,130       $       234,315
     Finance income..........................................                20,629                15,562                15,243
     Gains on sales of Notes Receivable......................                30,268                18,903                16,265
     Resort management services..............................                 4,607                 4,763                 3,710
     Other...................................................                 7,527                 5,280                 4,593
                                                                    ------------------    ------------------    ------------------

             Total revenues..................................               469,168               337,638               274,126
                                                                    ------------------    ------------------    ------------------

Costs and operating expenses:
     Vacation Credit and Fractional Interest cost of sales                  112,288                74,714                68,611
     Resort management services..............................                 1,588                 1,759                 1,656
     Sales and marketing.....................................               193,531               137,752               104,952
     General and administrative..............................                43,481                31,686                25,234
     Provision for doubtful accounts.........................                30,276                21,148                16,100
     Interest................................................                   591                   479                   442
                                                                    ------------------    ------------------    ------------------

             Total costs and operating expenses..............               381,755               267,538               216,995
                                                                    ------------------    ------------------    ------------------

             Income before income taxes .....................                87,413                70,100                57,131

Income tax expense...........................................                32,211                27,241                22,258
                                                                    ------------------    ------------------    ------------------

             Net income......................................       $        55,202       $        42,859       $        34,873
                                                                    ==================    ==================    ==================


Basic net income per common share............................       $          1.46       $          1.13       $          0.90

Diluted net income per common share..........................       $          1.43       $          1.12       $          0.90


Weighted average shares of common stock and dilutive
    potential common stock outstanding:
Basic........................................................            37,915,714            38,058,093            38,542,275

Diluted .....................................................            38,558,418            38,181,791            38,648,147

</Table>
See accompanying notes to the consolidated financial statements.


                                      F-4
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

    Consolidated Statements of Shareholders' Equity and Comprehensive Income
                             (dollars in thousands)

<Table>
<Caption>
                                                    Common
                                                    Stock                   Accumulated Other                         Total
                                        -------------------------------       Comprehensive     Retained          shareholders
                                            Shares           Amount                Loss         Earnings              Equity
                                        ----------------   ------------  -------------------  --------------    --------------
<S>                                      <C>             <C>             <C>                 <C>                <C>
     Balance at December 31, 1998           38,607,224     $   61,848    $            --      $    79,414      $     141,262
  Repurchase of common stock........          (303,912)        (2,780)                --               --             (2,780)
  Issuance  of common  stock  under the
     Employee Stock Purchase Plan...            39,114            360                 --               --                360
  Net income........................                --             --                 --           34,873             34,873
                                        ----------------   ------------  -------------------  --------------    --------------
     Balance at December 31, 1999           38,342,426         59,428                 --          114,287            173,715
  Repurchase of common stock........          (628,200)        (5,926)                --               --             (5,926)
  Issuance  of common  stock  under the
     Employee Stock Purchase Plan...            76,320            588                 --               --                588
  Issuance   of   common   stock   from
     exercise of employee stock options          4,950             29                 --               --                 29
  Reduction  in retained  earnings  for
     the excess of the  purchase  price
     of  the  MountainStar  development
     over the Parent's historical cost              --             --                 --           (3,300)            (3,300)
  Comprehensive Income:

     Net income.....................                --             --                 --           42,859             42,859
     Other comprehensive loss:
       Change in  cumulative  effect of
          foreign currency translation              --             --               (522)                               (522)
                                                                                                                --------------
      Total comprehensive income                                                                                      42,337
                                        ----------------   ------------  -------------------  --------------    --------------
     Balance at December 31, 2000           37,795,496     $   54,119    $          (522)     $   153,846       $    207,443
  Repurchase of common stock...........       (149,615)        (2,379)                --               --             (2,379)
  Issuance  of common  stock  under the
     Employee Stock Purchase Plan......         39,808            257                 --               --                257
  Issuance   of   common   stock   from
     exercise of employee stock options        408,900          4,726                 --               --              4,726
  Tax  benefit  from   employee   stock
     option exercises..................                         1,077                                                  1,077
  Stock compensation...................                           117                                                    117
  Comprehensive Income:

     Net income.....................                --             --                 --           55,202             55,202
     Other comprehensive loss:
       Change in  cumulative  effect of
          foreign currency translation.             --             --               (488)                               (488)
       Unrealized   derivative  losses,
          net of $267 tax effect......                                              (444)                               (444)
                                                                                                                ---------------
      Total comprehensive income                                                                                      54,270
                                        ----------------   ------------  -------------------  --------------    --------------
     Balance at December 31, 2001           38,094,589     $   57,917    $        (1,454)     $   209,048       $    265,511
                                        ================   ============  ===================  ==============    ===============

</Table>
See accompanying notes to the consolidated financial statements.

                                      F-5

<PAGE>




                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                             (dollars in thousands)

<Table>
<Caption>
                                                                                             Year ended December 31,
                                                                                   --------------------------------------------
                                                                                      2001            2000            1999
                                                                                   ------------    ------------    ------------
<S>                                                                                <C>              <C>            <C>
Cash flows from operating activities:
     Net income................................................................    $    55,202      $   42,859     $  34,873
     Adjustments to reconcile net income to net cash (used in) provided by
           operating activities:
        Depreciation and amortization..........................................          4,447           2,743         1,758
        Gain on sale of property and equipment.................................             --              --          (869)
        Amortization of residual interest in Notes Receivable sold.............         20,208          14,801        10,931
        Provision for doubtful accounts and sales returns......................         38,886          27,015        21,407
        Recoveries of Notes Receivable charged off.............................            447             251           260
        Residual interest in Notes Receivable securitized......................        (43,665)        (30,762)      (23,727)
        Unrealized loss (gain) on residual interest in securitizations.........          1,990             337         1,139
        Contract servicing liability arising from sale of Notes Receivable.....          4,129           3,554         2,847
        Amortization of contract servicing liability...........................         (1,943)           (869)         (321)
        Change in deferred gross profit........................................          1,641           1,631           419
        Deferred income tax expense............................................          2,174             290           744
        Stock compensation.....................................................            117              --            --
        Issuance of Notes Receivable...........................................       (345,678)       (258,452)     (201,766)
        Proceeds from sale of Notes Receivable.................................        255,139         211,767       156,303
        Proceeds  from  repayment of Notes  Receivable  and  overcollateralized
          component of Notes Receivable securitized............................         73,095          57,974        51,198
        Purchase of Notes Receivable from related parties......................        (14,272)             --          (650)
        Purchase of Notes Receivable...........................................        (33,040)        (22,201)      (13,576)
        Changes in certain assets and liabilities:
             Restricted cash...................................................         (1,637)         (4,214)         (636)
             MountainStar development..........................................        (13,846)        (37,236)           --
             Inventories.......................................................        (29,951)        (60,396)       (5,159)
             Accounts payable and accrued liabilities..........................         11,098          12,534         3,424
             Income taxes payable..............................................          2,490              --        (1,153)
             Refundable income taxes...........................................          5,688          (5,088)         (600)
             Other ............................................................         (4,344)         (4,403)        2,733
                                                                                   ------------    ------------    ------------
          Net cash (used in) provided by operating activities..................        (11,625)        (47,865)       39,579
                                                                                   ------------    ------------    ------------

Cash flows used in investing activities:
     Purchase of property and equipment........................................        (17,879)         (6,621)       (4,974)
     Proceeds from sale of property and equipment..............................             --              --         4,412
                                                                                   ------------    ------------    ------------
          Net cash used in investing activities                                        (17,879)         (6,621)         (562)
                                                                                   ------------    ------------    ------------

Cash flows from financing activities:
     Net borrowings (repayments) under bank line of credit and other...........         25,154          48,394        (26,100)
     Issuance of mortgage payable..............................................             --          11,700            --
     Repayments of mortgage payable............................................            (80)             (4)           --
     Repayments of note payable to Parent......................................         (4,432)             --            --
     Increase (decrease) in Due to Parent and Affiliate........................          6,620          (1,392)        (5,688)
     Increase in Receivable from Parent........................................             --              --         (3,058)
     Proceeds from issuance of common stock....................................          4,983             617            360
     Repurchase of common stock................................................         (2,379)         (5,926)        (2,780)
                                                                                   ------------    ------------    ------------
          Net cash provided by (used in) financing activities..................         29,866          53,389        (37,266)
                                                                                   ------------    ------------    ------------

Net increase (decrease) in cash                                                            362          (1,097)         1,751

Effect of foreign currency exchange rates on cash                                           55            (259)            --

Cash at beginning of year......................................................            404           1,760              9
                                                                                   ------------    ------------    ------------

Cash at end of year............................................................    $       821     $       404     $    1,760
                                                                                   ============    ============    ============
</Table>

See accompanying notes to the consolidated financial statements.

                                      F-6
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                   (continued)

                             (dollars in thousands)
<Table>
<Caption>
                                                                                              Year ended December 31,

                                                                                      2001            2000            1999
                                                                                    ------------    ------------    ------------
<S>                                                                                 <C>             <C>             <C>
Supplemental disclosures of cash flow information - Cash paid during the period
     for:
        Interest (excluding capitalized amounts of $7,146, $2,951 and $1,188,
           respectively)..........................................................  $     240       $     378       $     179
        Income taxes..............................................................     22,789          32,201          22,542

Supplemental schedule of noncash investing and financing activities:
     Issuance  of note  payable to Parent in  connection  with the  MountainStar
        development acquisition...................................................         --          17,731              --
     Reduction in retained  earnings for the excess of the purchase price of the
        MountainStar development over the Parent's historical cost................         --           3,300              --
     Extinguishment   of  receivable   from  Parent  in   connection   with  the
        MountainStar development acquisition......................................         --           4,869              --
     Issuance of note payable to Affiliate in  connection  with the  acquisition
        of certain notes receivable and inventory.................................      4,806              --              --

</Table>

See accompanying notes to the consolidated financial statements.



                                      F-7
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


(1)  Description of Business and Basis of Presentation

Description of Business

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

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

Basis of Presentation

Trendwest  is a majority  owned  subsidiary  of  JELD-WEN,  inc.  (Parent).  The
consolidated  financial  statements  include the accounts of  Trendwest  and its
wholly-owned  subsidiaries,  including  Trendwest  South  Pacific,  Pty. Ltd, an
Australian  corporation  formed in October 1999. All  intercompany  balances and
transactions have been eliminated in consolidation.

Stock Split

All share and earnings  per share  information  contained in these  consolidated
financial statements have been adjusted to reflect 3 for 2 stock splits declared
on both  February 21, 2001 and November 8, 2001,  as if they were  effective for
all periods presented.

Capital Transactions

In March 1999 and July 1998,  the Board of Directors  authorized  the Company to
repurchase  up to 1,125,000,  and 981,000  shares,  respectively,  of its common
stock on the open market or in privately negotiated transactions based on market
conditions.  During the years ended  December  31,  2001,  2000,  and 1999,  the
Company repurchased  149,615,  628,200,  and 303,912 shares,  respectively.  The
Board of Directors may at its discretion authorize additional repurchases in the
future.

                                      F-8
<Page>
                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


Basic and Diluted Net Income Per Common Share

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

<Table>
<Caption>
                                                                                   Year ended December 31,
                                                                     -----------------------------------------------------
                                                                          2001               2000               1999
                                                                     ---------------    ---------------    ---------------
        <S>                                                          <C>                <C>                <C>
        Basic
        Basic weighted average shares outstanding..................      37,915,714        38,058,093         38,542,275

        Diluted
        Effect of dilutive securities..............................         642,704           123,698            105,872
                                                                     ---------------    ---------------    ---------------

        Diluted weighted average shares outstanding................      38,558,418        38,181,791         38,648,147
                                                                     ===============    ===============    ===============
</Table>

Net income available to common shareholders for basic and diluted net income per
share was $55,202,  $42,859,  and $34,873 for the years ended December 31, 2001,
2000, and 1999, respectively.

At December 31, 2001,  2000, and 1999,  there were options to purchase  346,500,
1,749,375 and 1,345,500 shares of common stock outstanding,  respectively, which
were  anti-dilutive and therefore not included in the computation of diluted net
income per share.


(2)  Summary of Significant Accounting Policies

Restricted Cash

Restricted  cash  consists  primarily of deposits  received on sales of Vacation
Credits and  Fractional  Interests,  that are held in trust or escrow  until the
applicable  statutory  rescission  period of three to fifteen  calendar days has
expired and the related  customer Note  Receivable  has been  recorded.  It also
consists  of  amounts  received  prior to  attainment  of the 10%  down  payment
required to recognize a sale and refundable reservation deposits on MountainStar
vacation home sites.

Allowance for Doubtful Accounts

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

                                      F-9
<Page>
                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

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

Inventories

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

<Table>
<Caption>
                                                                                       December 31,
                                                                            -----------------------------------
                                                                                 2001               2000
                                                                            ----------------   ----------------
                     <S>                                                    <C>                <C>
                     Vacation Credits..................................     $     35,098       $     16,829
                     Construction in progress..........................           99,647             87,389
                                                                            ----------------   ----------------

                              Total inventories........................     $    134,745       $    104,218
                                                                            ================   ================
</Table>

Vacation Credits represent the costs of unsold ownership interests in the Clubs.
These  costs  represent  the  actual  costs to  develop  the  resort  properties
including the cost of the land, improvements to the property, including costs of
amenities constructed for the use and benefit of the Vacation Credit owners, and
other direct acquisition costs. Resort properties are completed, and the Company
transfers  ownership  to the  Clubs in return  for the right to sell a  discrete
number of Vacation Credits.  Actual costs of the completed resort properties are
transferred from  construction in progress to Vacation Credits  inventory at the
time such  properties  are  transferred  to the Clubs.  The  discrete  number of
Vacation  Credits  that  result  from  each  transfer  of  resort  property  are
determined using a formula based on the number of user days available as well as
the relative value of each property.  Vacation  Credits are carried at the lower
of cost,  based on the moving  weighted  average of property  cost per  Vacation
Credit established, or net realizable value.

Construction in progress is valued at the lower of cost or net realizable value.
Interest, taxes and other carrying costs incurred during the construction period
are capitalized.  The amount of interest capitalized on resort properties during
the years ended December 31, 2001, 2000, and 1999 amounted to $3,319,  $610, and
$1,188, respectively.

MountainStar Development

The  MountainStar  development is valued at the lower of the carrying  amount or
fair value less costs to sell.  The  Company  capitalizes  all direct  costs and
interest incurred relating to the development. During 2001 and 2000, the Company
capitalized $3,827 and $2,341,  respectively,  in interest cost on MountainStar.
All selling expenses relating to refundable reservation deposits associated with
MountainStar are capitalized and included in other assets.

                                      F-10
<Page>
                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

Revenue Recognition

     (i) Vacation Credits

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

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


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

     (ii) Fractional Interests

Fractional Interest sales are included in revenues when the Company has received
an executed sales contract, at least a 10% down payment requirement has been met
and any rescission period has expired.

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

                                      F-11
<Page>
                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

     (iii) Sales of Notes Receivable


Periodically,  the  Company  sells its Notes  Receivable  through  securitzation
transactions  which the Company accounts for according to the provisions of SFAS
No.  140,  Accounting  for  Transfers  and  Servicing  of  Financial  Assets and
Extinguishment of Liabilities.  The Company adopted SFAS No. 140 effective March
31, 2001.  SFAS No. 140  supercedes  SFAS No. 125 and rescinds SFAS No. 127. The
disclosure-only  provisions  of SFAS No. 140 were  adopted by the  Company as of
December 31, 2000.  The adoption of SFAS No. 140 did not have a material  impact
on the Company's accounting for its securitization transactions.

In the accompanying  consolidated  financial statements and related notes, Notes
Receivable sold by the Company in  securitization  transactions are termed Notes
Receivable  securitized and Notes  Receivable held by the Company which have not
been securitized are termed Notes Receivable.

When the Company sells Notes Receivable through securitization transactions,  it
uses special purpose finance companies and retains interest rate  differentials,
a subordinated  principal tranche,  servicing rights (and  obligations),  and in
some cases a cash reserve  account,  all of which are residual  interests in the
securitized  Notes  Receivable.  Gain  or  loss  on  sale  of  Notes  Receivable
securitized  depends in part on the previous  carrying  amount of the  financial
assets  involved  in the  transfer,  allocated  between  the assets sold and the
residual  interests based on their relative fair values at the date of transfer.
To obtain fair values,  quoted  market  prices are used if  available.  However,
quotes are  generally  not  available  for  retained  interests,  so the Company
estimates  fair value based on the present  value of future  expected cash flows
estimated  using  management's  best  estimates  of the key  assumptions--credit
losses,  prepayment  speeds  and  discount  rates  commensurate  with the  risks
involved.  The  Company  estimates  prepayment  speeds  based on its  historical
experience.

The Company provides for estimated credit losses related to uncollectible  Notes
Receivable   securitized  through  its  allowance  for  doubtful  accounts.  The
Company's  loss  exposure  for Notes  Receivable  securitized  is limited to the
residual interests in Notes Receivable securitized.  Although it is not required
to do so, the Company's  historical  practice has been to  repurchase  defaulted
securitized  Notes Receivable up to certain limits,  generally 10% to 17% of the
face amount of the original balance of Notes Receivable securitized.

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

Income from the interest rate differential  retained is subsequently recorded in
finance income using the interest method.  In addition,  finance income includes
interest  income on Notes  Receivable  and the  overcollateralized  component of
Notes Receivable securitized. The residual interest in Notes Receivable

                                      F-12
<Page>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


securitized  arising from the interest  rate  differential  is  classified  as a
trading  security  in  accordance  with SFAS No.  115,  Accounting  for  Certain
Investments  in Debt or Equity  Securities,  and is carried at market value with
changes in the market value recognized as finance income.


Property and Equipment

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


           Building and improvements...................20 to 45 years
           Equipment, furniture and fixtures...........3 to 12 years
           Leasehold improvements......................Lesser of estimated
                                                       useful life or the
                                                       remaining lease term


Direct internal and external costs of computer  software  developed for internal
use  are  capitalized  subsequent  to the  preliminary  stage  of  the  project.
Capitalized   costs  are  amortized   over  the  estimated   useful  life  on  a
straight-line  basis  beginning  when each module is complete  and ready for its
intended use.

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

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

Advertising

Advertising costs,  included in sales and marketing expenses in the accompanying
statements of income, are expensed as incurred and amounted to $10,840,  $9,956,
and $7,337 for the years ended December 31, 2001, 2000, and 1999, respectively.

Income Taxes

Income taxes are accounted for under the asset and  liability  method.  Deferred
tax assets  and  liabilities  are  recognized  for the  future tax  consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and  liabilities  and their  respective tax bases and operating
loss and tax credit  carryforwards.  Deferred  tax assets  and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized  in income in the period that  includes the enactment  date.
The Company intends to reinvest unremitted  earnings of its non-U.S.  subsidiary
in the foreign jurisdiction and thereby postpone their remittance  indefinitely.
Accordingly,  no provision for additional  U.S. or foreign income taxes has been
recorded.


                                      F-13
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

Stock-Based Compensation

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

Foreign Currency Translation


The  functional  currency  of the  Company's  foreign  subsidiary  is the  local
currency  of the  country  in  which  the  subsidiary  is  located.  Assets  and
liabilities in foreign  operations are translated into U.S.  dollars using rates
of exchange  in effect at the end of the  reporting  period.  Income and expense
accounts are  translated  into U.S.  dollars using average rates of exchange for
the  period.  The net  gain or loss  resulting  from  translation  is shown as a
translation   adjustment   and  included  in  other   comprehensive   income  in
shareholders'  equity.  Gains and losses from foreign currency  transactions are
included in the  consolidated  statements of operations and were not significant
in any of the periods presented.


Derivative Financial Instruments


The Company utilizes derivative financial  instruments,  which have historically
included foreign exchange  contracts,  forward interest rate swaps, and interest
rate cap agreements,  to manage well-defined  interest and foreign currency rate
risks.  Derivative financial instruments are not used for trading or speculative
purposes.  Counterparties to the Company's derivative financial  instruments are
generally  major  financial  institutions.  The  Company  manages  the  risk  of
counterparty default on its derivative financial  instruments through the use of
credit standards,  counterparty  diversification  and monitoring of counterparty
financial  conditions.  The  Company  has  not  experienced  any  losses  due to
counterparty default.

Effective  January 1, 2001, the Company  adopted the provisions of SFAS No. 133,
Accounting for  Derivative  Financial  Instruments  and Hedging  Activities,  as
amended.  SFAS No. 133 requires all  derivative  instruments to be recognized as
assets  or  liabilities  at fair  value.  Accordingly,  on the  date  derivative
contracts are entered into, the Company designates the derivatives as either (i)
a  hedge  of  the  fair  value  of a  recognized  asset  or  liability  or of an
unrecognized  firm commitment  (fair value hedge),  (ii) a hedge of a forecasted
transaction  or of the  variability  of future cash flows to be received or paid
related to a recognized asset or liability (cash flow hedge), (iii) a hedge of a
net  investment  in a  foreign  operation  (net  investment  hedge),  or  (iv) a
derivative  not  designated as a hedging  instrument.  The effective  portion of
changes in the fair value of  derivatives  designated  as hedges are recorded in
other  comprehensive  income, net of tax, until the hedged item is recognized in
earnings.  The  ineffective  portion of the changes in fair value are recognized
currently in earnings.  Changes in the fair value of  derivatives  which are not
designated as hedges are recognized currently in earnings.  The adoption of SFAS
No. 133 did not have a material impact on the consolidated financial statements.


                                      F-14
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

New Accounting Pronouncements

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

In August 2001, the FASB issued SFAS No. 143,  Accounting  for Asset  Retirement
Obligations, which is applicable for fiscal years beginning after June 15, 2002.
SFAS No.  143  requires  an  enterprise  to  record  the fair  value of an asset
retirement  obligation  as a liability  in the period in which it incurs a legal
obligation  associated  with the  retirement  of a  tangible  long-lived  asset.
Statement  No.  143 also  requires  the  enterprise  to record the contra to the
initial  obligation  as an  increase  to the  carrying  amount  of  the  related
long-lived asset (i.e., the associated asset retirement costs) and to depreciate
that cost over the remaining  useful life of the asset. The liability is changed
at the end of each  period to  reflect  the  passage  of time  (i.e.,  accretion
expense) and changes in the estimated  future cash flows  underlying the initial
fair value measurement.  The provisions of SFAS No. 143 are not expected to have
a material impact on the Company's financial position or operating results.

In September  2001, the FASB issued SFAS No. 144,  Accounting for the Impairment
or Disposal of Long-Lived Assets, which is applicable for fiscal years beginning
after December 15, 2001.  SFAS No. 144 supersedes  SFAS No. 121,  Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
and portions of APB Opinion 30,  Reporting the Results of  Operations.  SFAS No.
144 provides a single  accounting model for long-lived  assets to be disposed of
and significantly  changes the criteria that would have to be met to classify an
asset  as  held-for-sale.   Classification  as  held-for-sale  is  an  important
distinction since such assets are not depreciated and are stated at the lower of
fair value and  carrying  amount.  SFAS No. 144 also  requires  expected  future
operating losses from  discontinued  operations to be displayed in the period(s)
in which the losses are  incurred,  rather  than as of the  measurement  date as
presently required.  The provisions of SFAS No. 144 generally are required to be
applied  prospectively  after  the  adoption  date to newly  initiated  disposal
activities. Therefore, management cannot determine the potential effect that the
adoption of SFAS No. 144 will have on the Company's financial statements.

Reclassifications

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

Use of Estimates

Management  of the  Company  has  made a number  of  estimates  and  assumptions
relating  to the  reporting  of assets and  liabilities  and the  disclosure  of
contingent assets and liabilities at the date of the financial


                                      F-15
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting  period to prepare  these  financial  statements  in  conformity  with
accounting principles generally accepted in the United States of America. Actual
results could differ from those estimates and assumptions.

(3)  Notes Receivable

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

Maturities of Notes Receivable at December 31, 2001, are as follows:

                       2002..........................     $      6,953
                       2003..........................            7,536
                       2004..........................            8,079
                       2005..........................            8,798
                       2006..........................            9,723
                       Thereafter....................           20,580
                                                          ---------------

                                                          $     61,669
                                                          ===============



                                      F-16
<PAGE>



                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

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

<Table>
<Caption>
                                                                              2001                2000
                                                                         ---------------     ---------------
        <S>                                                              <C>                 <C>
        Total Notes Receivable portfolio............................     $    665,871        $    502,762
        Less:  Notes Receivable securitized.........................         (604,202)           (464,889)
                                                                         ---------------     ---------------
        Total Notes Receivable......................................           61,669              37,873
                                                                         ---------------     ---------------

        Less:  Deferred gross profit related to Notes Receivable....             (523)               (411)
        Less:  Allowance for doubtful accounts and sales returns on
            Notes Receivable........................................           (7,344)             (4,892)
                                                                         --------------      ---------------
        Notes Receivable, net                                            $     53,802        $     32,570
                                                                         ===============     ===============
</Table>

Customers over 60 days past due on monthly  payments are considered  delinquent.
Delinquent  Notes  Receivable  represent  2.42%  and  2.29% of the  total  Notes
Receivable portfolio at December 31, 2001 and 2000, respectively.


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

<Table>
<Caption>
                                                                           2001              2000                1999
                                                                      --------------   ----------------    ---------------
        <S>                                                           <C>              <C>                 <C>
        Balances at beginning of period.........................      $     40,292     $     29,087        $     20,935
        Provision for doubtful accounts and sales returns.......            38,886           27,015              21,407
        Notes Receivable charged-off and sales returns net of
            Vacation Credits recovered..........................           (25,840)         (16,061)            (13,515)
        Recoveries..............................................               447              251                 260
        Effect of foreign currency translation..................               (41)              --                  --
                                                                      --------------   ----------------    ---------------
        Balances at end of period...............................      $     53,744     $     40,292        $     29,087
                                                                      ==============   ================    ===============
        Allowance for doubtful accounts and sales returns on
            Notes Receivable....................................      $      7,344     $      4,892        $      5,487
        Allowance for doubtful accounts on residual interest in
            Notes Receivable securitized........................            46,400           35,400              23,600
                                                                      --------------   ----------------    ---------------
                                                                      $     53,744     $     40,292        $     29,087
                                                                      ==============   ================    ===============
</Table>


                                      F-17
<PAGE>



                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)



(4)  Sales of Notes Receivable and Residual Interest in Securitizations


During  2001,  2000,  and  1999,  the  Company  sold  Notes  Receivable  through
securitization transactions. In each transaction, the Company retained servicing
responsibilities,  interest rate differentials and subordinated  interests.  The
Company  receives  annual  servicing  fees of  between  1.0%  and  1.75%  of the
outstanding  balance of the Notes  Receivable  securitized  and rights to future
cash  flows  arising  after the  investors  in the  securitization  trusts  have
received  the  return  for  which  they   contracted.   The  investors  and  the
securitization trusts have no recourse to the Company's other assets for failure
of debtors to pay when due. The Company's  retained interests are subordinate to
investors' interests.

On September 28, 2001, the Company increased its Receivables  Warehouse Facility
with  Banc One to $175  million  from $150  million.  In  conjunction  with this
amendment,  Fleet Bank entered the  agreement as a  co-purchaser  with Banc One,
purchasing  $75 million of the $175 million  limit.  At December  31, 2001,  the
amount of Notes Receivable outstanding under the facility was $83.6 million.

When the Company  enters into a  securitization  transaction  which provides for
other than fair  compensation for the related  servicing of the Notes Receivable
securitized,  the Company records a servicing asset or liability.  In connection
with  the  Company's   securitizations,   the  Company  has  recorded  servicing
liabilities  which are measured by discounting  the difference  between the cash
flows  relating to the  contractual  servicing  fee  stipulated in the servicing
agreement  and the cash flows  from the  estimated  fair value of the  servicing
activities,  over the servicing period. For all periods  presented,  the Company
has estimated  the fair value  compensation  for its servicing  activities to be
1.75% of the outstanding balance of the Notes Receivable  securitized.  The fair
value was determined  based on the Company's  experience with servicing rates it
has paid to other  servicers  from time to time and the nature of the  servicing
activities provided.  The resulting servicing liability reduces the gain on sale
of notes  receivable.  The future  cash flow  assumptions  used to  measure  the
servicing  liability  are the same as those used to measure  the  interest  rate
differential as disclosed below. The cash flow  differentials  are discounted at
8%.  The  carrying  value,  which  approximates  fair  value,  of the  servicing
liability  at December 31, 2001 and 2000,  was $7,397 and $5,211,  respectively,
which is included in accrued  liabilities  and is being amortized into income as
services are performed.

In 2001 and 2000, the Company  recognized  pre-tax gains of $30,268 and $18,903,
respectively, on the securitization of its Notes Receivable.



                                      F-18
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)




The composition of residual  interest in  securitizations,  net is as follows at
December 31:

<Table>
<Caption>
                                                                                2001               2000
                                                                            --------------     --------------
        <S>                                                                 <C>                <C>
        Gross Notes Receivable securitized............................      $    604,202       $     464,889
        Less:  Outstanding securitized borrowings.....................          (529,283)           (407,215)
                                                                            --------------     --------------
        Overcollateralization of  Notes Receivable securitized........            74,919              57,674
        Less:  Allowance for doubtful accounts on Notes Receivable
            securitized...............................................           (46,400)            (35,400)
        Less:  Deferred gross profit related to Notes Receivable
            securitized...............................................            (7,022)             (5,493)
        Add:  Fair value of interest rate differential................            74,236              52,043
                                                                            --------------     --------------
        Residual interest in securitizations, net.....................      $     95,733       $      68,824
                                                                            ==============     ==============
</Table>


The  following  are the key  assumptions  used in 2001 and 2000 in measuring the
fair   value  of  the   interest   rate   differential   at  the  dates  of  the
securitizations.  During the third quarter of 2001,  after  performing a normal,
timely review of its key assumptions,  the Company adjusted its prepayment speed
and  default  rate  assumption  used in  calculating  gains  on  sales  of Notes
Receivable  and residual  interest.  The Company  increased its weighted  annual
prepayment  speed and default  estimate to 10.6%, up from 9%, resulting in lower
residual  interest  valuations.  The increase in the weighted annual  prepayment
speed and default assumption did not significantly  impact the Company's results
of operations.  The Receivables  Warehouse  Facility is the only  securitization
that has a variable interest rate.


<Table>
<Caption>
                                                                                2001                  2000
                                                                         --------------------    ----------------
             <S>                                                          <C>                     <C>
             Weighted-average  annual  prepayment  speed  and  expected
                 annual gross defaults                                         10.00%                   9.00%
             Weighted-average life (in years)                                   2.24                    2.35
             Residual cash flows discounted at                                 13.50%                  12.25%
             Weighted-average  interest rate on  Receivables  Warehouse
                 Facility                                                       6.16%                   7.95%
</Table>


                                      F-19

<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


During  2001 and 2000,  the  following  cash  flows  relating  to the  Company's
securitizations occurred:

<Table>
<Caption>
                                                                              2001                 2000
                                                                         ----------------     ---------------
             <S>                                                         <C>                  <C>
             Proceeds to the Company from:
                     New securitizations                                 $    215,045         $   174,500
                     Reinvested collections                              $     40,094         $    37,267
             Purchases of defaulted Notes Receivable                     $    (21,058)        $   (17,420)
             Cash received from residual interests                       $     57,207         $    52,212
             Servicing fees received                                     $      6,230         $     3,505

</Table>

At December 31, 2001, the key economic  assumptions  and the  sensitivity of the
current  fair value of  residual  cash flows to  immediate  10% and 20%  adverse
changes in those assumptions are as follows:

<Table>
<Caption>
                                                                                  2001
                                                                            -----------------
             <S>                                                            <C>
             Carrying amount/fair value of interest rate differential          $  74,236
             Weighted average life (in years)                                       2.06
             Weighted   prepayment   speed  and  expected  gross  defaults          10.5%
                 (annual rate)
                  Impact on fair value of 10% adverse change                   $  (1,241)
                  Impact on fair value of 20% adverse change                   $  (2,436)
             Residual cash flows discount rate (annual)                             13.5%
                  Impact on fair value of 10% adverse change                   $  (1,657)
                  Impact on fair value of 20% adverse change                   $  (3,254)
             Annual interest rate on Receivables Warehouse Facility                 5.95%
                  Impact on fair value of 10% adverse change                   $  (1,133)
                  Impact on fair value of 20% adverse change                   $  (2,247)

</Table>

Amounts  expressed as annual rates  represent  the monthly  rates  multiplied by
twelve. These sensitivities are hypothetical and should be used with caution. As
the figures  indicate,  changes in fair value based on a 10 percent variation in
assumptions  generally  cannot be extrapolated  because the  relationship of the
change in  assumption  to the change in fair value may not be linear.  Also,  in
this table the effect of a  variation  in a  particular  assumption  on the fair
value  of the  residual  interest  is  calculated  without  changing  any  other
assumption;  in reality,  changes in one factor may result in changes in another
(for example, increases in market interest rates may result in lower prepayments
and  increased   credit   losses),   which  might  magnify  or  counteract   the
sensitivities.

Actual and projected gross defaults for Notes Receivable securitized during 2001
were  approximately  9.8% as of December 31, 2001.  Actual and  projected  gross
defaults for Notes Receivable  securitized  during 2000 were  approximately 9.8%
and 9.0% as of December 31, 2001 and 2000, respectively.



                                       F-20
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


Information  regarding  delinquency and defaults for the year ended December 31,
2001 are as follows:

<Table>
<Caption>
                                                      Principal         Principal amount
                                                      balance of         of notes 60 or
                                                        Notes            more days past      Notes Receivable
                                                      Receivable               due           charged-off, net
                                                    ---------------     ----------------    -------------------
       <S>                                          <C>                 <C>                   <C>
       Total Notes Receivable portfolio             $  665,871         $   16,088             $  17,177
                                                                                            ===================
       Less:  Notes Receivable securitized             604,202             14,641
                                                    ---------------     ----------------
       Total Notes Receivable                       $   61,669         $    1,447
                                                    ===============     ================
</Table>

Information  regarding  delinquency and defaults for the year ended December 31,
2000 are as follows:

<Table>
<Caption>
                                                      Principal         Principal amount
                                                      balance of         of notes 60 or
                                                        Notes            more days past       Notes Receivable
                                                      Receivable               due           charged-off, net
                                                    ---------------     ----------------    -------------------
       <S>                                          <C>                 <C>                    <C>
       Total Notes Receivable portfolio             $  502,762          $   11,528             $  11,147
                                                                                            ===================
       Less:  Notes Receivable securitized             464,889               6,393
                                                    ---------------     ----------------
       Total Notes Receivable                       $   37,873          $    5,135
                                                    ===============     ================
</Table>

(5)  Property and Equipment

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

<Table>
<Caption>
                                                                                    2001              2000
                                                                               ---------------   ----------------
               <S>                                                             <C>               <C>
               Land.......................................................     $      2,895      $      2,467
               Building and improvements..................................           25,159            16,745
               Equipment, furniture and fixtures..........................           17,135            10,263
               Leasehold improvements.....................................            6,672             3,726
               Construction in Progress...................................            2,201             2,574
                                                                               ---------------   ----------------
                                                                                     54,062            35,775
               Less accumulated depreciation and amortization.............           10,264             5,827
                                                                               ---------------   ----------------
                                                                               $     43,798      $     29,948
                                                                               ===============   ================
</Table>


                                       F-21
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

(6)  Deferred Gross Profit

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

<Table>
<Caption>
                                                                            2001               2000               1999
                                                                       ---------------    ---------------    ---------------
                  <S>                                                  <C>                <C>                <C>
                  Gross sales value...............................     $     12,572       $      9,388       $      7,227
                                                                       ===============    ===============    ===============

                  Gross profit deferred...........................     $      6,739       $      5,094       $      3,597
                  Gross profit recognized.........................            5,098              3,463              3,178
                                                                       ---------------    ---------------    ---------------
                  Net gross profit deferred (recognized) during
                      period......................................     $      1,641       $      1,631       $        419
                                                                       ===============    ===============    ===============
</Table>

Notes  Receivable is presented net of deferred gross profit in the  accompanying
balance sheets.  Such deferred amounts  aggregated $523 and $411 at December 31,
2001 and  2000,  respectively.  Deferred  gross  profit  associated  with  Notes
Receivable  securitized is netted against residual  interest in the accompanying
balance sheets and  aggregated  $7,022 and $5,493 at December 31, 2001 and 2000,
respectively.

(7)  Debt

     (i) Credit Facility


The Company has an $85,000  revolving credit agreement  (Agreement) with a group
of banks which allows for  borrowings in  Australian  dollars up to a maximum of
$25 million U.S.  dollar  equivalent.  The Agreement  provides for borrowings at
either a  reference  rate or at LIBOR rates plus the  applicable  margin for the
level of  borrowings  outstanding.  The  Agreement  also  requires  a  quarterly
commitment  fee of  0.30%  to  0.50%  based  on the  usage  level  of the  total
commitment.  Available borrowings under the Agreement are subject to a borrowing
base which is a percentage of Notes Receivable and inventory, including property
under  development,  and are  secured by a first  mortgage  on the  MountainStar
property. The Agreement expires on August 14, 2003. Borrowings outstanding under
the  Agreement  at  December  31,  2001 and  2000,  were  $74,318  and  $48,441,
respectively at weighted  average  interest rates of 4.43% and 8.48% at December
31, 2001 and 2000, respectively.



                                      F-22
<PAGE>
                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

     (ii) Note Payable to Parent

In connection with the acquisition of the MountainStar development,  the Company
issued an unsecured  promissory note payable to Parent in the amount of $17,731.
The note bears an interest rate of 9.0%,  with quarterly  interest  payments due
starting on September 1, 2000. Eight quarterly  principal payments of $2,216 are
due starting on September 1, 2001. The note matures on June 1, 2003.

Maturities of the Note Payable to Parent at December 31, 2001, are as follows:

                           2002                              $    8,865
                           2003                                   4,433
                                                             ------------
                           Total                             $   13,298
                                                             ============
     (iii) Mortgage Payable

On November 21, 2000, the Company closed a ten-year  mortgage payable secured by
its corporate  headquarters  building.  The mortgage carries an interest rate of
8.29%,  with monthly  interest and  principal  payments due starting  January 1,
2001. Maturities of the Mortgage Payable at December 31, 2001, are as follows:

                           2002                              $       80
                           2003                                      93
                           2004                                      98
                           2005                                     109
                           2006                                     119
                           Thereafter                            11,117
                                                             ------------
                           Total                             $   11,616
                                                             ============
     (8) Income Taxes

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

<Table>
<Caption>
                                                              2001               2000               1999
                                                         ---------------    ---------------    ---------------
                <S>                                      <C>                <C>                <C>
                Current
                    Federal.........................     $     24,449       $     22,630       $     18,988
                    State...........................            2,100              3,930              2,526
                    Tax effect of employee stock
                      option exercises..............            1,077                 --                 --
                    Foreign.........................            2,411                391                 --
                                                         ---------------    ---------------    ---------------
                Total current.......................           30,037             26,951             21,514
                                                         ---------------    ---------------    ---------------
                Deferred
                    Federal.........................            2,538                326                299
                    State...........................              140                171                445
                    Foreign.........................             (504)              (207)                --
                                                         ---------------    ---------------    ---------------
                Total deferred.....................             2,174                290                744
                                                         ---------------    ---------------    ---------------

                           Total....................     $     32,211       $     27,241       $     22,258
                                                         ===============    ===============    ===============
</Table>

                                       F-23
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


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

<Table>
<Caption>
                                                                                2001               2000
                                                                           ----------------   ----------------
                <S>                                                        <C>                <C>
                Deferred tax assets:
                    Allowance for doubtful accounts on Notes Receivable    $        966       $      1,212
                    Contract servicing liability arising from Notes
                      Receivable securitized..........................            2,782              2,025
                    Other.............................................            1,114                955
                                                                           ----------------   ----------------
                           Total deferred tax assets..................            4,862              4,192
                                                                           ----------------   ----------------
                Deferred tax liabilities:

                    Residual interest in securitizations, net.........            3,053              2,229
                    Property and equipment............................            1,603              1,186
                    Other assets......................................            1,316                 --
                    Other.............................................            1,140              1,107
                                                                           ----------------   ----------------

                           Total deferred tax liabilities.............            7,112              4,522
                                                                           ----------------   ----------------
                           Net deferred tax liabilities...............     $     (2,250)      $       (330)
                                                                           ================   ================
</Table>



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

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



                                      F-24
<PAGE>
                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

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

<Table>
<Caption>
                                                                          2001              2000               1999
                                                                     ---------------   ----------------   ----------------
               <S>                                                   <C>               <C>                <C>
               Income tax at Federal statutory rate................       35.0%             35.0%              35.0%
               State tax, net of Federal benefit...................        2.3               3.8                3.4
               Other...............................................       (0.5)              0.1                0.6
                                                                     ---------------   ----------------   ----------------
                                                                          36.8%             38.9%              39.0%
                                                                     ===============   ================   ================
</Table>

The Company had $6,185,  $(895),  and $0 of pre-tax income (losses) from foreign
operations for the years ended December 31, 2001, 2000, and 1999, respectively.

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

(9)  401(k) Plan

The Company  sponsors a 401(k) plan  covering all Trendwest  employees.  Company
contributions  totaled $4,995,  $3,792,  and $2,708 for the years ended December
31, 2001, 2000, and 1999, respectively.

(10) Employee Stock Purchase Plan

In July,  1999, the Shareholders of the Company approved the 1999 Employee Stock
Purchase Plan (Plan).  The Plan allows  employees to purchase up to two thousand
five hundred dollars worth of the Company's  common stock at a 15% discount from
the market  price on the last  business  day of a quarter.  There is no lookback
provision for  determining  market  value.  Under the Plan,  the Company  issued
39,808, 76,320 and 39,114 shares of common stock during the years ended December
31, 2001, 2000, and 1999 respectively. The 15% discount from the market price is
considered compensation expense for SFAS No. 123 disclosure purposes only and is
included in the SFAS No. 123 disclosures in note 12.






                                       F-25
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)



(11) Derivative Financial Instruments

During January 2001, the Company entered into two foreign exchange  contracts to
manage the Company's  exposure to foreign exchange rate risk associated with the
development  of a resort  property  in Canada.  The  foreign  exchange  purchase
contracts had notional  amounts of $2,081 CDN at a rate of $1.4955  CDN/US which
was settled on July 3, 2001 and  $16,919  CDN at a rate of $1.4905  CDN/US to be
settled on September 30, 2002 corresponding to the anticipated dates of payments
on the resort  development.  The foreign exchange contracts have been designated
as cash flow hedges and  accordingly in 2001 the Company has recognized  $444 of
unrealized  losses,  net of $267  tax  effect,  in  other  comprehensive  income
representing the change in the fair value of the effective portion of the hedge.
The related liability for the losses of $711 is included in accrued liabilities.
Changes  in the  fair  value  of the  ineffective  portion  of  the  hedge  were
immaterial in 2001.  The unrealized  gains or losses  resulting from the foreign
exchange  contracts will be reclassified into earnings once the Vacation Credits
associated with the resort  property under  development are sold and the related
costs are recognized in earnings.

No derivative financial instruments were outstanding at December 31, 2000.

(12) Stock Option Plan

In 1997,  the Board of Directors  approved  the  adoption of an incentive  stock
option plan  providing for the award of incentive  stock options to employees of
the Company at the discretion of the Board of Directors.  Under the plan, on the
date of grant,  the  exercise  price of the option must be at least equal to the
market value of the underlying  common stock. The plan provides for grants up to
10% of the Company's  outstanding shares (3,809,459 at December 31, 2001). Stock
options vest ratably over five years and expire three years after becoming fully
vested.

The following table summarizes stock option activity:

<Table>
<Caption>
                                                                                                 Weighted
                                                                          Number of              average
                                                                           Shares             exercise price
                                                                      ------------------     -----------------
                    <S>                                                <C>                   <C>
                    Balance at December 31, 1998.................        1,361,250           $      10.61
                    Granted......................................          348,750                   9.45
                    Expired or canceled..........................          (97,875)                 10.52
                                                                      ------------------     -----------------

                    Balance at December 31, 1999.................        1,612,125           $      10.37
                    Granted......................................          454,500                  10.91
                    Exercised....................................           (4,950)                  5.87
                    Expired or canceled..........................          (51,975)                 10.67
                                                                      ------------------     -----------------

                    Balance at December 31, 2000.................        2,009,700           $      10.49
                    Granted......................................          350,325                  25.08
                    Exercised....................................         (408,900)                 11.56
                    Expired or canceled..........................          (28,350)                 10.39
                                                                      ------------------     -----------------

                    Balance at December 31, 2001.................        1,922,775           $      12.92
                                                                      ==================     =================

</Table>


                                      F-26
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


The following table summarizes information about stock options outstanding under
the Company's stock option plan at December 31, 2001:

<Table>
<Caption>
                                                  Options outstanding                                Options exercisable
                             --------------------------------------------------------------   ----------------------------------
                                                Weighted-average
                                                    remaining            Weighted-average                     Weighted-average
      Range of exercise          Number         contractual life          exercise price         Number        exercise price
           prices             outstanding           (in years)              per share          exercisable        per share
   ------------------------  ---------------  ----------------------    -------------------   --------------  ------------------
    <S>                      <C>               <C>                       <C>                  <C>             <C>
          $5.05 - $10.10          526,875              5.49                    $8.05              193,200             $7.53
         $10.31 - $11.05          371,925              6.94                   $11.04               72,225            $11.05
         $11.95 - $11.95          672,975              3.81                   $11.95              486,450            $11.95
         $16.00 - $25.20          351,000              7.96                   $25.08                   --                --
   ------------------------  ---------------  ----------------------    -------------------   --------------  ------------------
          $5.05 - $25.20        1,922,775              5.63                   $12.92              751,875            $10.73
</Table>

At December 31, 2001, 2000, and 1999,  exercisable  options of 751,875,  750,375
and 454,275, respectively,  were outstanding at weighted average exercise prices
of $10.73, $10.88, and $11.21 per share, respectively.


The  Company  applies  APB  Opinion  No.  25 in  accounting  for its  plan  and,
accordingly,  no  compensation  cost has  been  recognized  in the  accompanying
financial  statements as all options were granted with exercise  prices equal to
the fair market value of the underlying  common stock on the grant date. Had the
Company  determined  compensation cost based on the fair value of the options on
the grant date under SFAS No.  123,  the  Company's  net income  would have been
reduced to the pro forma amounts indicated below. For disclosure  purposes,  the
Company recognizes  compensation  expense related to employee stock options on a
straight-line basis.

<Table>
<Caption>
                                                                                     Year ended December 31,
                                                                        ---------------------------------------------------
                                                                             2001              2000              1999
                                                                        ---------------   ----------------   --------------
                <S>                                                     <C>               <C>                <C>
                Net income, as reported...............................  $    55,202       $    42,859        $    34,873
                Net income, pro forma.................................       52,952            41,047             33,511

                Basic EPS, as reported................................        1.46              1.13               0.90
                Diluted EPS, as reported..............................        1.43              1.12               0.90

                Basic EPS, pro forma..................................        1.40              1.08               0.87
                Diluted EPS, pro forma................................        1.37              1.08               0.87

</Table>


                                       F-27
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


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

<Table>
<Caption>
                                                                                       Year ended December 31,
                                                                            -----------------------------------------------
                                                                                 2001             2000            1999
                                                                            ---------------  ---------------   ------------
                <S>                                                          <C>              <C>              <C>
                Annual dividend yield.....................................       0.0%             0.0%             0.0%
                Volatility................................................      58.0%            50.9%            54.3%
                Risk free interest rate...................................       4.9%             5.2%             5.8%
                Expected life ............................................     6.5 years        6 years          6 years
</Table>

The weighted  average grant date fair value per share of options  granted during
the years ended December 31, 2001, 2000, and 1999 were $15.29, $5.97, and $5.47,
respectively.

(13) Fair Values of Financial Instruments

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

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

<Table>
<Caption>
                                                                          2001                              2000
                                                            ---------------------------------   ------------------------------
                                                              Carrying       Estimated fair       Carrying       Estimated
                                                                value             value            value         fair value
                                                            --------------   ----------------   -------------  ---------------
      <S>                                                   <C>              <C>                <C>            <C>
      Financial assets:
         Cash...................................   (a)      $        821     $        821       $        404   $        404
         Restricted cash........................   (a)             8,838            8,838              7,201          7,201
         Notes Receivable, net..................   (a)            54,325           54,325             32,981         32,981
         Residual interest in securitizations, net (b)           102,755          102,755             74,317         74,317

      Financial liabilities:
         Due to Parent and Affiliate............   (c)            11,653           11,653                419            419
         Borrowings under bank line of credit...   (c)            74,318           74,318             48,441         48,441
         Mortgage payable.......................   (d)            11,616           11,616             11,696         11,696
         Note payable to Parent.................   (d)            13,298           13,298             17,731         17,731
         Foreign exchange contract..............                     711              711                 --             --
</Table>



                                       F-28
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

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


(b)  The fair  value  of the  overcollaterization  component  is  determined  to
     approximate the carrying value after the allowance for doubtful accounts on
     Notes  Receivable  securitized and before  deferred gross profit.  The fair
     value of the  interest  rate  differential  component is  determined  using
     estimated   discounted   future  cash  flows   taking  into   consideration
     anticipated prepayment and default rates as follows:

<Table>
<Caption>
                                                                              2001              2000
                                                                         ---------------   ---------------
                          <S>                                             <C>              <C>
                           Discount rate...............................        13.5%            13.5%
                          Weighted annual prepayment speed and
                               expected default rate...................        10.5%             9.0%

</Table>

(c)  The carrying value of the due to Parent  approximates fair value due to the
     variable  interest rates charged on the  borrowings.  The carrying value of
     the due to Affiliate approximates fair value due to its short-term nature.

(d)  The  carrying  value  reported  approximates  the fair  value  because  the
     interest rates charged on these obligations approximates the market rate of
     interest for similar types of borrowings.

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

(14) Related Party Transactions

     WorldMark

         (i) Management Contract

The Company  manages the resort  properties  transferred to WorldMark  under the
terms of a  management  agreement  which is  subject to annual  approval  by the
owners.  Under the terms of the  management  agreement,  the Company  receives a
management fee equal to the lesser of 15% of WorldMark's  budgeted  expenditures
or the full net profit of WorldMark and is reimbursed for certain  expenses.  In
addition,  the Company is responsible for paying annual dues on Vacation Credits
which it owns prior to their sale to  customers  and  reimburses  WorldMark  for
delinquent dues on canceled  memberships in order to reacquire  Vacation Credits
securing defaulted Notes Receivable. The managed operations of WorldMark are not
consolidated in the  accompanying  financial  statements as the Company does not
exercise voting control over WorldMark and the terms of the management agreement
do not  result  in the  Company  having  a  controlling  financial  interest  in
WorldMark.

WorldMark  has  programs  whereby an Owner can use his or her  Vacation  Credits
toward  other  vacation  options such as package  tours and  cruises.  Trendwest
purchases the vacation packages on behalf of


                                       F-29
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

WorldMark and is subsequently reimbursed.  WorldMark provides the owner with the
package in exchange for the owner's  Vacation  Credits plus cash,  if necessary.
The Vacation  Credits are deposited into a pool of credits.  The pool of credits
is available to the Company for a fee of $0.07 per credit or for one-time use to
owners for a fee of $0.08 per credit paid to WorldMark. Trendwest utilizes these
Vacation Credits in certain  marketing  programs.  The Company also pays various
salaries and other costs on behalf of WorldMark and is subsequently  reimbursed.
The Company  does not  recognize  any  revenues  related to these  reimbursement
transactions with WorldMark. A summary of these transactions for the years ended
December 31 follows:


<Table>
<Caption>
                                                                                  2001             2000             1999
                                                                              -------------    -------------    -------------
           <S>                                                                <C>              <C>              <C>
           Management fee income recognized by Trendwest..............        $      3,170     $      3,877     $      2,972
           Dues expense incurred by Trendwest.........................               1,735            1,008            1,376
           Delinquent dues expense incurred by Trendwest..............               1,497              940              727
           Salaries and benefits reimbursed by WorldMark.............. (a)           1,848            6,208           10,417
           Travel packages reimbursed by WorldMark....................               1,130              430              --
           One-time use credits purchased by Trendwest................               2,464            1,282              --
           Other expenses reimbursed by WorldMark..................... (b)           2,560              933              763
</Table>

(a)  WorldMark began funding its own payroll and taxes during 2001.

(b)  Other  reimbursed  expenses  increased during 2001 due to leasing of office
     space from the  Company  and  payment  of dues  statement  preparation  and
     related costs.


     (ii) Financial Information (Unaudited)

A summary of financial  information  for WorldMark as of and for the years ended
December 31, 2001 and 2000 is as follows:

<Table>
<Caption>
                                                                                          2001               2000
                                                                                     ----------------   ----------------
          <S>                                                                        <C>                <C>
          Cash and investment securities........................................     $     20,058       $     16,772
          Member dues receivable................................................           33,065             24,378
          Other assets..........................................................            6,402              5,302
                                                                                     ----------------   ----------------
                   Total assets.................................................           59,525             46,452
                                                                                     ----------------   ----------------

          Deferred revenue......................................................           35,911             27,432
          Other liabilities.....................................................            4,677              2,992
                                                                                     ----------------   ----------------
                   Total liabilities............................................           40,588             30,424
                                                                                     ----------------   ----------------
                   Net assets...................................................     $     18,937       $     16,028
                                                                                     ================   ================

          Annual member assessments.............................................     $     48,041       $     36,560
                                                                                     ================   ================
          Condominiums owned, at Developers' unamortized historical cost........     $    416,957       $    301,436
                                                                                     ================   ================

</Table>


                                       F-30
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

WorldMark  maintains a reserve for replacement costs of depreciable assets. Such
reserves at December 31, 2001 and 2000, were $18,937 and $16,028, respectively.

WorldMark South Pacific

The Company manages the resort properties transferred to WorldMark South Pacific
through its subsidiary  Trendwest  South Pacific under the terms of a management
agreement  that is subject to renewal every five years  starting in 2005.  Under
the terms of the  management  agreement,  the Company  receives a management fee
equal to 15% of WorldMark South Pacific's expenditures (excluding the management
fee). In addition, the Company is responsible for paying annual dues on Vacation
Credits that it owns prior to their sale to customers and  reimburses  WorldMark
South Pacific for delinquent dues on canceled  memberships in order to reacquire
Vacation Credits securing defaulted Notes Receivable.  The managed operations of
WorldMark  South  Pacific are not  consolidated  in the  accompanying  financial
statements as the Company does not exercise  voting control over WorldMark South
Pacific and the terms of the  management  agreement do not result in the Company
having a controlling financial interest in WorldMark South Pacific. A summary of
these transactions for the years ended December 31 follows:

<Table>
<Caption>
                                                                                 2001             2000
                                                                            -------------    --------------
             <S>                                                            <C>              <C>

             Management fee income recognized by Trendwest............       $       185     $       47
             Dues expense incurred by Trendwest.......................               243            279
</Table>


WorldMark South Pacific maintains a reserve for replacement costs of depreciable
assets.  Such  reserves  at  December  31,  2001  and  2000  were  $191 and $49,
respectively.

Parent

The Company has an open revolving  credit line with its Parent to meet operating
needs and invest excess funds.  The credit line is $10 million and is payable on
demand.  It bears interest at the prime rate plus 1% per annum (5.75% and 10.50%
at December 31, 2001 and 2000, respectively).  Outstanding borrowings under this
credit   agreement  were  $7,129  and  $419  at  December  31,  2001  and  2000,
respectively.  The Company  periodically lends excess funds to the Parent at the
prime  rate  minus  2%  (2.75%  and  7.50%  at  December   31,  2001  and  2000,
respectively).  There  were no  outstanding  lendings  under this  agreement  at
December 31, 2001 and 2000.

The  Company  also  reimburses  the Parent its share of  insurance  expenses.  A
summary of these transactions follows for the years ended December 31:

<Table>
<Caption>
                                                                    2001               2000               1999
                                                               ----------------   ----------------   ----------------
                   <S>                                         <C>                <C>                 <C>
                   Interest expense incurred by Trendwest.     $        284       $         44       $         31
                   Interest income recognized by Trendwest               --                114                129
                   Insurance expense incurred by Trendwest            7,424              5,224              3,927

</Table>

                                       F-31
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

Affiliate

On September 28, 2001,  the Company  entered into an agreement with Eagle Crest,
Inc.  (Eagle  Crest)  and  Running  Y Resort,  Inc.  (Running  Y)  (collectively
Affiliate),  wholly-owned  subsidiaries  of Parent,  to acquire $12,138 of Notes
Receivable at Affiliate's historical cost of face value plus accrued interest in
exchange  for a cash  payment  of  $8,625  and a  $3,513  promissory  note.  The
promissory note is non-interest bearing,  payable in equal monthly installments,
and is due in full on the earlier of  September  28, 2002 or the closing date of
the Company's next  securitization  transaction  following the acquisition date.
Under  the  agreement,  any  remaining  principal  balance  on Notes  Receivable
acquired from Affiliate which default reduce the outstanding  amount owed by the
Company under the promissory note.

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

At December 31, 2001, the total amount due to Affiliate was $4,524.

In conjunction with the above transactions,  Affiliate entered into an agreement
with the Company and  WorldMark to transfer all of its  developed  unsold resort
properties  to WorldMark in exchange  for the right to sell  WorldMark  Vacation
Credits  equal to the credit  value of the  properties.  The  Company  agreed to
purchase Notes Receivable resulting from the subsequent sale of Vacation Credits
by Affiliate at face value.  Affiliate  will refund to the Company any remaining
principal  balance on Notes  Receivable  purchased  from Affiliate that default.
Additionally, the Company receives a fee from Affiliate for each Vacation Credit
sale  made by  Affiliate  and must pay a  commission  fee to  Affiliate  for any
Upgrades of Vacation  Credit sales  originated by Affiliate.  Through 1999,  the
Company  acquired  certain  Notes  Receivable  from  Affiliate  under a  similar
agreement which expired in 1999.

The  following is a summary of the  transactions  with  Affiliate  for the years
ended December 31:

<Table>
<Caption>
                                                                    2001               2000               1999
                                                               ----------------   ----------------   ----------------
                   <S>                                         <C>                <C>                 <C>
                   Notes Receivable purchased from
                     Affiliate............................     $     17,785       $         --       $        650
                   Transaction fees received from Affiliate             222                 --                 --
                   Upgrade commissions paid to Affiliate..              186                 --                 --
</Table>

(15) MountainStar Development

The  Company  is  developing  a resort  in  central  Washington  state  known as
MountainStar.  Prior to June 2000, the Parent owned the land and the Company was
acting as the developer. In June of 2000, the


                                       F-32
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

Company  acquired the  MountainStar  development  from its Parent.  The purchase
price was  $47,600,  consisting  of $25,000 in cash,  a $17,731  unsecured  note
payable to Parent and the  settlement  by the  Company of a $4,869  intercompany
receivable  from  Parent.  The  excess  of  the  purchase  price  over  Parent's
historical cost was treated as a non-cash  reduction to retained earnings due to
the  accounting  requirement  to use  historical  cost on such a transfer from a
controlling  shareholder.  The Company recorded the asset at Parent's historical
cost of  $44,300;  the excess  $3,300 of the  purchase  price  over this  amount
reduced retained  earnings.  The cash payment was funded  primarily  through the
Company's existing credit facilities.

The property is located approximately 80 miles east of Seattle,  Washington. The
Company plans to develop the property as two separate projects: the MountainStar
Master Planned Resort (MPR) and the City of Cle Elum Urban Growth Area (UGA).

Plans  for the  6,300-acre  MPR  include  at least  two golf  courses,  numerous
recreational   amenities  and  3,785  dwelling   units   including  two  lodges,
condominiums, cabins and vacation homes. The MPR land use plan has been approved
by  Kittitas  County and all  appeals  have been  settled.  The  Company is also
working on several  strategies to provide adequate water to develop the proposed
projects. There can be no assurance that these strategies will be successful. If
the Company is unable to achieve its  objectives  with regards to water  rights,
the actual  development  of the MPR could be materially  different than outlined
above.

The  1,100-acre  UGA is planned as a mixed-use  development  including a primary
home  community with single family homes,  condominiums,  an office park, a golf
course,  and apartment  units.  The City of Cle Elum is scheduled to release the
Final Environmental Impact Statement in Spring 2002. The City of Cle Elum is the
lead agency for land use decisions in the UGA. If the Company is not  successful
in obtaining the desired  entitlements for the UGA, the final development of the
property could be materially different than outlined above.

The Company does not  anticipate  generating  revenue from either project during
2002.

(16) Commitments and Contingencies

Purchase Commitments

The Company  routinely enters into cancelable  purchase  agreements with various
parties to acquire and build  resort  properties.  At  December  31,  2001,  the
Company has outstanding  purchase  commitments of $136,305 related to properties
under development. Anticipated future payments under the purchase agreements are
as follows for the years ending December 31:


                           2002                              $   66,190
                           2003                                  70,115
                                                             ------------
                           Total                             $  136,305
                                                             ============


                                       F-33
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)


Surety and Performance Bonds

The  Company  utilizes  surety  and  performance   bonds  in  developing  resort
properties.  As of  December  31,  2001,  there  were  $4,625  in  surety  bonds
outstanding.

Litigation

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

Lease Commitments

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

                               2002..........................  $ 8,210
                               2003..........................    7,247
                               2004..........................    6,771
                               2005..........................    5,034
                               2006..........................    2,628
                               Thereafter....................      617

Rental  expense  amounted  to $8,526,  $5,925,  and  $4,225 for the years  ended
December 31, 2001, 2000, and 1999, respectively.

(17) Segment Reporting

The Company has two reportable segments;  sales and financing. The sales segment
markets and sells Vacation Credits and Fractional Interests. The finance segment
is  primarily   responsible  for  servicing  and  collecting   Notes  Receivable
originated in  conjunction  with the financing of sales of Vacation  Credits and
Fractional  Interest sales.  The finance segment does not include the activities
of the Company's finance  subsidiaries.  Management evaluates the business based
on sales and  marketing  activities  as these  are the  primary  drivers  of the
business.

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


                                      F-34
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

The following tables summarize the segment activity of the Company:

<Table>
<Caption>
                                                                                                         Segment
       Year ended December 31, 2001:                       Sales          Finance         Other           Total
                                                         -----------     -----------    -----------    -------------
       <S>                                               <C>             <C>            <C>            <C>
       External revenue...........................       $  406,137      $    5,282     $   4,607      $   416,026
       Interest revenue - net.....................               --           6,238            --            6,238
       Interest revenue-intersegment..............               --           7,243            --            7,243
       Intersegment revenue.......................               --           1,446            --            1,446
                                                         -----------     -----------    -----------    -------------
                Segment revenue...................       $  406,137      $   20,209     $   4,607      $   430,953

       Segment profit.............................       $   62,927      $   13,154     $   3,019      $    79,100

       Significant non-cash items:

       Provision for doubtful accounts and sales
         returns..................................       $   38,886      $       --     $       --     $     38,886
</Table>

<Table>
<Caption>
                                                                                                           Segment
       Year ended December 31, 2000:                       Sales          Finance         Other             Total
                                                         -----------     -----------    -----------      -------------
       <S>                                               <C>             <C>            <C>            <C>
       External revenue...........................       $  293,130      $    3,943     $   4,763        $  301,836
       Interest revenue - net.....................               --           4,373            --             4,373
       Interest revenue-intersegment..............               --           6,712            --             6,712
       Intersegment revenue.......................               --           1,933            --             1,933
                                                         -----------     -----------    -----------      -------------
                Segment revenue...................       $  293,130      $   16,961     $   4,763        $  314,854
       Segment profit.............................       $   53,026      $   11,036     $   3,004        $   67,066

       Significant non-cash items:

       Provision for doubtful accounts and sales
         returns..................................       $   27,015      $       --     $      --        $   27,015

</Table>

<Table>
<Caption>
                                                                                                           Segment
       Year ended December 31, 1999:                       Sales          Finance         Other             Total
                                                         -----------     -----------    -----------      -------------
       <S>                                               <C>             <C>            <C>            <C>
       External revenue...........................       $  234,315      $    4,463     $   3,710        $   242,488
       Interest revenue - net.....................               --           5,552            --              5,552
       Interest revenue-intersegment..............               --           3,839            --              3,839
       Intersegment revenue.......................               --           1,605            --              1,605
                                                         -----------     -----------    -----------      -------------
                Segment revenue...................       $  234,315      $   15,459     $   3,710        $   253,484

       Segment profit.............................       $   40,035      $   10,890     $   2,054        $    52,979

       Significant non-cash items:
       Provision for doubtful accounts and sales
         returns..................................       $   21,407      $       --     $      --        $    21,407
       Gain on sale of property and equipment.....       $       --      $      869     $      --        $       869

</Table>

                                       F-35
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

                        December 31, 2001, 2000, and 1999

                          (dollar amounts in thousands)

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

<Table>
<Caption>
                                                                             Year ended December 31,
                                                                    2001               2000              1999
                                                                -------------       ------------    ---------------

                                                                -------------       ------------    ---------------
             <S>                                                <C>                 <C>             <C>
             Segment revenue..............................      $   430,953         $   314,854     $   253,484
             Interest expense reported net of capitalized

                 interest.................................              591                 479             442
             Elimination of intersegment revenue .........           (8,689)             (8,645)         (5,444)
             Finance subsidiaries revenue ................           46,313              30,950          25,644

                                                                -------------       ------------    ---------------
                    Consolidated revenue..................      $   469,168         $   337,638     $   274,126
                                                                =============       ============    ===============

             Segment profit...............................      $    79,100         $    67,066     $    52,979
             Corporate overhead not included in segment
                 reporting................................          (29,712)            (18,983)        (15,091)
             Finance subsidiaries profit .................           38,025              22,017          19,243
                                                                -------------       ------------    ---------------
                    Consolidated pre-tax income...........      $    87,413         $    70,100     $    57,131
                                                                =============       ============    ===============
</Table>

The  Company's  revenue from  external  customers  derived from sales within the
United  States  totaled  $376,642,  $287,795,  and  $234,665 for the years ended
December 31, 2001, 2000, and 1999, respectively. Revenue from external customers
derived  from  sales in all  foreign  countries,  primarily  Australia,  totaled
$29,495,  $5,335,  and $0 for the years ended December 31, 2001, 2000, and 1999,
respectively.  Revenue from external  customers is attributed to countries based
on the  location  where the sale was made.  Substantially  all of the  Company's
long-lived  assets  are  located  within the  United  States.  The net assets of
foreign  operations  totaled  $9,964 and $6,140 at  December  31, 2001 and 2000,
respectively.













                                      F-36


<Page>


                                     PART IV

Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The following documents are filed as part of this report:

<Table>
<Caption>
     Exhibit
     Number        Description
     <S>           <C>
     3.1           Amended and Restated Articles of Incorporation of Trendwest Resorts, Inc. (12)
     3.2           Amended and Restated Bylaws of Trendwest Resorts, Inc. (12)
     10.1          Receivables  Purchase Agreement among Trendwest Resorts,  Inc. and TW Holdings II, Inc. and TW Holdings
                   III, Inc. and TRI Funding IV, Inc. dated as of November 1, 2000. (1)
     10.2          Receivables  Purchase  Agreement  among Trendwest  Resorts,  Inc., TW Holdings III, Inc., Sage Systems,
                   Inc. International Securitization Corporation and Bank One, NA dated as of January 7, 2000. (3)
     10.3          Receivables  Sale  Agreement  between  Trendwest  Resorts,  Inc. and TW Holdings III, Inc.  dated as of
                   January 7, 2000. (3)
     10.4          Receivables  Purchase  Agreement  among  Trendwest  Resorts,  Inc.,  TRI Funding II, Inc.,  TRI Funding
                   Company I, LLC, TW Holdings,  Inc., TW Holdings II, Inc.,  and TRI Funding III, Inc. dated as of August
                   1, 1999. (6)
     10.5          Receivable  Sale Agreement  between  Trendwest  Resorts,  Inc. and TW Holdings II dated as of April 15,
                   1999. (7)
     10.6          Receivables  Purchase  Agreement  among  Trendwest  Resorts,  Inc., TRI Funding  Company I, L.L.C.,  TW
                   Holdings Inc. and Trendwest Funding II, Inc., dated as of March 1, 1998. (10)
     10.7          Receivables Purchase Agreement among Trendwest Resorts,  Inc., TW Holdings,  Inc. and Trendwest Funding
                   I, Inc., dated as of March 1, 1996. (12)
    *10.8          Second  Amendment  dated  March 7,  2001 to Credit  Agreement  between  Trendwest  Resorts,  Inc.,  and
                   Trendwest  South Pacific PTY.  Ltd., as the  Borrowers,  the lenders named  therein,  KeyBank  National
                   Association,  as lead arranger and  administrative  agent and as the letter of credit  issuing  lender,
                   Bank One, NA, as syndication agent and Australian lender dated as of August 14, 2000.
    *10.9          First  Amendment  dated January 19, 2001 to Credit  Agreement  between  Trendwest  Resorts,  Inc.,  and
                   Trendwest  South Pacific PTY.  Ltd., as the  Borrowers,  the lenders named  therein,  KeyBank  National
                   Association,  as lead arranger and  administrative  agent and as the letter of credit  issuing  lender,
                   Bank One, NA, as syndication agent and Australian lender dated as of August 14, 2000.
     10.10         Credit  Agreement  between  Trendwest  Resorts,  Inc.,  and Trendwest  South Pacific PTY.  Ltd., as the
                   Borrowers,   the  lenders  named  therein,   KeyBank  National   Association,   as  lead  arranger  and
                   administrative  agent and as the letter of credit issuing  lender,  Bank One, NA, as syndication  agent
                   and Australian lender dated as of August 14, 2000. (2)
     10.11         Servicing  Agreement  among TRI  Funding  IV,  Inc.,  Trendwest  Resorts,  Inc.  and Wells  Fargo  Bank
                   Minnesota, National Association dated as of November 1, 2000. (1)
     10.12         Indenture Among TRI Funding IV, Inc., Trendwest Resorts, Inc. and Wells Fargo Bank Minnesota,  National
                   Association dated as of November 1, 2000. (1)
     10.13         Indenture among  Trendwest  Resorts,  Inc., TRI Funding III, Inc. and Norwest Bank Minnesota,  National
                   Association dated as of August 1, 1999. (6)
     10.14         Trust  Indenture  between  Trendwest  Resorts,  Inc., TW Holdings II, Sages Systems,  Inc., and LaSalle
                   National Bank dated as of April 15, 1999. (7)
     10.15         Series  1998-1  Supplement  dated as of March 1,  1998 to  Indenture  among  Trendwest  Resorts,  Inc.,
                   Trendwest Funding II, Inc. and LaSalle National Bank dated as of March 1, 1998. (10)
     10.16         Indenture among Trendwest  Resorts,  Inc., TRI Funding II, Inc. and LaSalle  National Bank, dated as of
                   March 1, 1998. (10)
     10.17         Indenture  among Trendwest  Resorts,  Inc., TRI Funding  Company I, L.L.C.  and LaSalle  National Bank,
                   dated as of March 1, 1996. (12)
     10.18         Purchase Agreement between TRI Funding III, Inc., and Prudential  Securities  Incorporated dated August
                   18, 1999. (6)
     10.19         Purchase  and Sale  Agreement  between  Trendwest  Resorts,  Inc.,  Trendwest  Funding II, Inc. and TRI
                   Funding II, Inc. (10)
     10.20         Purchase and Sale Agreement among Trendwest  Resorts,  Inc.,  Trendwest Funding I, Inc., TWH Funding I,
                   Inc. and TRI Funding Company I, L.L.C., dated March 1, 1996. (12)
     10.21         Management  Agreement (Fourth Amended) between Trendwest Resorts,  Inc. and WorldMark,  the Club, dated
                   September 30, 1994. (12)
     10.22         Stock Purchase  Agreement among JELD-WEN,  inc.,  Trendwest Resorts,  Inc., and Trendwest  Investments,
                   Inc. dated as of June 12, 2000. (4)
     10.23         Form of Promissory Note relating to Stock Purchase Agreement among JELD-WEN,  inc.,  Trendwest Resorts,
                   Inc., and Trendwest Investments, Inc. dated as of June 12, 2000. (4)
    *10.24         Receivables Purchase Agreement Among Trendwest Resorts,  Inc. and TW Holdings III, Inc. and TRI Funding
                   V, Inc. Dated as of August 1, 2001
    *10.25         Servicing  Agreement  Among TRI  Funding V, Inc.  and  Trendwest  Resorts,  Inc.  and Wells  Fargo Bank
                   Minnesota, National Association Dated as of August 1, 2001


                                       39
<PAGE>

    *10.26         Indenture  Among TRI Funding V, Inc.  And  Trendwest  Resorts,  Inc.  and Wells  Fargo Bank  Minnesota,
                   National Association Dated as of August 1, 2001
    *10.27         Receivables  Purchase Agreement Among Trendwest Resorts,  Inc., TW Holdings III, Inc., Wells Fargo Bank
                   Minnesota,  Jupiter Securitization  Corporation,  Blue Keel Funding, LLC, Fleet Securities,  Inc., Bank
                   One, NA, and Bank One Trust Company Dated as of September 28, 2001
    *10.28         Receivables  Sales  Agreement  Among  Trendwest  Resorts,  Inc. and TW Holdings III,  Inc.  Dated as of
                   September 28, 2001
    *10.29         Receivables Transfer Agreement Among Trendwest Resorts,  Inc., Eagle Crest, Inc., and Running Y Resort,
                   Inc. Dated as of September 28, 2001
    *10.30         Acquisition  Agreement dated as of May 4, 2001 by and among EAGLE CREST,  INC., an Oregon  corporation,
                   RUNNING Y RESORT,  INC.,  an Oregon  corporation  and EAGLE CREST  VACATION  CLUB,  a nonprofit  Oregon
                   corporation and TRENDWEST RESORTS,  INC., an Oregon  corporation and WORLDMARK,  THE CLUB, a California
                   nonprofit mutual benefit corporation.
    *10.31         WORLDMARK MARKETING AGREEMENT dated as of May 4, 2001, by and among TRENDWEST RESORTS,  INC., an Oregon
                   corporation,  EAGLE  CREST,  INC.,  an  Oregon  corporation,  and  RUNNING Y  RESORT,  INC.,  an Oregon
                   corporation
     10.32         Trendwest Resorts, Inc. 1999 Employee Stock Purchase Plan. (8)
     10.33         Trendwest Resorts, Inc. 1997 Employee Stock Option Plan (12)
     10.34         Form of Employment Agreement between William F. Peare and Trendwest Resorts, Inc. (12)
     10.35         Form of Employment Agreement between Jeffery P. Sites and Trendwest Resorts, Inc. (12)
    *10.36         Form of Indemnity Agreement between Registrant and its directors
     11            Statement re  Computation of Per Share  Earnings ( see Note 1 to the financial  statements  included in
                   this Form 10-K)
    *21            List of Subsidiaries of the Registrant
    *23.1          Consent of KPMG LLP
</Table>

*    Filed  herewith.

(1)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 2000, filed March 30, 2001.

(2)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended September 30, 2000, filed on November 13, 2000.

(3)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended March 31, 2000, filed on May 12, 2000.

(4)  Incorporated by reference to the Company's Current Report on Form 8-K filed
     on June 22, 2000.

(5)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1999, filed March 30, 2000.

(6)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended September 30, 1999, filed on November 12, 1999.

(7)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended June 30, 1999, filed on August 10, 1999.

(8)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-8, filed on July 1, 1999.

(9)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended June 30, 1998, filed August 14, 1998.

(10) Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended March 31, 1998, filed May 15, 1998.

(11) Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1997, filed March 31, 1998.

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

   ____________________________________________________________________________

(b) Reports on Form 8-K

FORM 8-K dated  September 26, 2001 on Item 7:  Financial  Statements,  Pro Forma
Financial  Information  and Exhibits,  relating to agreement with RIDGE, a local
citizens  group,  settling  the dispute  over a Master  Planned  Resort in Upper
Kittitas County in Washington State (site of future MountainStar resort).



FORM 8-K dated  December  19,  2001 on Item 9:  Regulation  FD  Disclosure.  The
Company  announced its projected  fourth quarter 2001 financial  results and its
2002 projections.



                                       40
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
Trendwest Resorts, Inc. has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Redmond, State of
Washington, on March 29, 2002.

                                       TRENDWEST RESORTS, INC.

                                       By:   /s/  JEFFERY P. SITES
                                          -------------------------------------
                                            Jeffery P. Sites
                                            Executive Vice President
<Table>
<Caption>

<S>                                                                <C>                                    <C>

          /s/           WILLIAM F. PEARE                           President, Chief Executive Officer     March 29, 2002
---------------------------------------------------------------
                        William F. Peare                                      and Director
                                                                      (Principal Executive Officer)

          /s/           JEFFERY P. SITES                                Executive Vice President,         March 29, 2002
---------------------------------------------------------------
                        Jeffery P. Sites                               Chief Operating Officer and
                                                                                Director

           /s/          TIMOTHY P. O'NEIL                               Vice President, Treasurer         March 29, 2002
---------------------------------------------------------------
                       Timothy P. O'Neil                               and Chief Financial Officer
                                                                      (Principal Financial Officer)
                                                                     (Principal Accounting Officer)

           /s/           JEROL E. ANDRES                                        Director                  March 29, 2002
---------------------------------------------------------------
                        Jerol E. Andres


           /s/          HARRY L. DEMOREST                                       Director                  March 29, 2002
---------------------------------------------------------------
                       Harry L. Demorest


           /s/         MIICHAEL P. HOLLERN                                      Director                  March 29, 2002
---------------------------------------------------------------
                       Michael P. Hollern


          /s/         DOUGLAS P. KINTZINGER                                     Director                  March 29, 2002
---------------------------------------------------------------
                     Douglas P. Kintzinger


           /s/           LINDA M. TUBBS                                         Director                  March 29, 2002
---------------------------------------------------------------
                         Linda M. Tubbs


          /s/           RODERICK C. WENDT                                       Director                  March 29, 2002
---------------------------------------------------------------
                       Roderick C. Wendt


</Table>




                                       41
<PAGE>


                                  EXHIBIT INDEX

<Table>
<Caption>
     Exhibit
     Number        Description
     <S>           <C>
     3.1           Amended and Restated Articles of Incorporation of Trendwest Resorts, Inc. (12)
     3.2           Amended and Restated Bylaws of Trendwest Resorts, Inc. (12)
     10.1          Receivables  Purchase Agreement among Trendwest Resorts,  Inc. and TW Holdings II, Inc. and TW Holdings
                   III, Inc. and TRI Funding IV, Inc. dated as of November 1, 2000. (1)
     10.2          Receivables  Purchase  Agreement  among Trendwest  Resorts,  Inc., TW Holdings III, Inc., Sage Systems,
                   Inc. International Securitization Corporation and Bank One, NA dated as of January 7, 2000. (3)
     10.3          Receivables  Sale  Agreement  between  Trendwest  Resorts,  Inc. and TW Holdings III, Inc.  dated as of
                   January 7, 2000. (3)
     10.4          Receivables  Purchase  Agreement  among  Trendwest  Resorts,  Inc.,  TRI Funding II, Inc.,  TRI Funding
                   Company I, LLC, TW Holdings,  Inc., TW Holdings II, Inc.,  and TRI Funding III, Inc. dated as of August
                   1, 1999. (6)
     10.5          Receivable  Sale Agreement  between  Trendwest  Resorts,  Inc. and TW Holdings II dated as of April 15,
                   1999. (7)
     10.6          Receivables  Purchase  Agreement  among  Trendwest  Resorts,  Inc., TRI Funding  Company I, L.L.C.,  TW
                   Holdings Inc. and Trendwest Funding II, Inc., dated as of March 1, 1998. (10)
     10.7          Receivables Purchase Agreement among Trendwest Resorts,  Inc., TW Holdings,  Inc. and Trendwest Funding
                   I, Inc., dated as of March 1, 1996. (12)
    *10.8          Second  Amendment  dated  March 7,  2001 to Credit  Agreement  between  Trendwest  Resorts,  Inc.,  and
                   Trendwest  South Pacific PTY.  Ltd., as the  Borrowers,  the lenders named  therein,  KeyBank  National
                   Association,  as lead arranger and  administrative  agent and as the letter of credit  issuing  lender,
                   Bank One, NA, as syndication agent and Australian lender dated as of August 14, 2000.
    *10.9          First  Amendment  dated January 19, 2001 to Credit  Agreement  between  Trendwest  Resorts,  Inc.,  and
                   Trendwest  South Pacific PTY.  Ltd., as the  Borrowers,  the lenders named  therein,  KeyBank  National
                   Association,  as lead arranger and  administrative  agent and as the letter of credit  issuing  lender,
                   Bank One, NA, as syndication agent and Australian lender dated as of August 14, 2000.
     10.10         Credit  Agreement  between  Trendwest  Resorts,  Inc.,  and Trendwest  South Pacific PTY.  Ltd., as the
                   Borrowers,   the  lenders  named  therein,   KeyBank  National   Association,   as  lead  arranger  and
                   administrative  agent and as the letter of credit issuing  lender,  Bank One, NA, as syndication  agent
                   and Australian lender dated as of August 14, 2000. (2)
     10.11         Servicing  Agreement  among TRI  Funding  IV,  Inc.,  Trendwest  Resorts,  Inc.  and Wells  Fargo  Bank
                   Minnesota, National Association dated as of November 1, 2000. (1)
     10.12         Indenture Among TRI Funding IV, Inc., Trendwest Resorts, Inc. and Wells Fargo Bank Minnesota,  National
                   Association dated as of November 1, 2000. (1)
     10.13         Indenture among  Trendwest  Resorts,  Inc., TRI Funding III, Inc. and Norwest Bank Minnesota,  National
                   Association dated as of August 1, 1999. (6)
     10.14         Trust  Indenture  between  Trendwest  Resorts,  Inc., TW Holdings II, Sages Systems,  Inc., and LaSalle
                   National Bank dated as of April 15, 1999. (7)
     10.15         Series  1998-1  Supplement  dated as of March 1,  1998 to  Indenture  among  Trendwest  Resorts,  Inc.,
                   Trendwest Funding II, Inc. and LaSalle National Bank dated as of March 1, 1998. (10)
     10.16         Indenture among Trendwest  Resorts,  Inc., TRI Funding II, Inc. and LaSalle  National Bank, dated as of
                   March 1, 1998. (10)
     10.17         Indenture  among Trendwest  Resorts,  Inc., TRI Funding  Company I, L.L.C.  and LaSalle  National Bank,
                   dated as of March 1, 1996. (12)
     10.18         Purchase Agreement between TRI Funding III, Inc., and Prudential  Securities  Incorporated dated August
                   18, 1999. (6)
     10.19         Purchase  and Sale  Agreement  between  Trendwest  Resorts,  Inc.,  Trendwest  Funding II, Inc. and TRI
                   Funding II, Inc. (10)
     10.20         Purchase and Sale Agreement among Trendwest  Resorts,  Inc.,  Trendwest Funding I, Inc., TWH Funding I,
                   Inc. and TRI Funding Company I, L.L.C., dated March 1, 1996. (12)
     10.21         Management  Agreement (Fourth Amended) between Trendwest Resorts,  Inc. and WorldMark,  the Club, dated
                   September 30, 1994. (12)
     10.22         Stock Purchase  Agreement among JELD-WEN,  inc.,  Trendwest Resorts,  Inc., and Trendwest  Investments,
                   Inc. dated as of June 12, 2000. (4)
     10.23         Form of Promissory Note relating to Stock Purchase Agreement among JELD-WEN,  inc.,  Trendwest Resorts,
                   Inc., and Trendwest Investments, Inc. dated as of June 12, 2000. (4)
    *10.24         Receivables Purchase Agreement Among Trendwest Resorts,  Inc. and TW Holdings III, Inc. and TRI Funding
                   V, Inc. Dated as of August 1, 2001
    *10.25         Servicing  Agreement  Among TRI  Funding V, Inc.  and  Trendwest  Resorts,  Inc.  and Wells  Fargo Bank
                   Minnesota, National Association Dated as of August 1, 2001
    *10.26         Indenture  Among TRI Funding V, Inc.  And  Trendwest  Resorts,  Inc.  and Wells  Fargo Bank  Minnesota,
                   National Association Dated as of August 1, 2001


                                       42
<PAGE>


    *10.27         Receivables  Purchase Agreement Among Trendwest Resorts,  Inc., TW Holdings III, Inc., Wells Fargo Bank
                   Minnesota,  Jupiter Securitization  Corporation,  Blue Keel Funding, LLC, Fleet Securities,  Inc., Bank
                   One, NA, and Bank One Trust Company Dated as of September 28, 2001
    *10.28         Receivables  Sales  Agreement  Among  Trendwest  Resorts,  Inc. and TW Holdings III,  Inc.  Dated as of
                   September 28, 2001
    *10.29         Receivables Transfer Agreement Among Trendwest Resorts,  Inc., Eagle Crest, Inc., and Running Y Resort,
                   Inc. Dated as of September 28, 2001
    *10.30         Acquisition  Agreement dated as of May 4, 2001 by and among EAGLE CREST,  INC., an Oregon  corporation,
                   RUNNING Y RESORT,  INC.,  an Oregon  corporation  and EAGLE CREST  VACATION  CLUB,  a nonprofit  Oregon
                   corporation and TRENDWEST RESORTS,  INC., an Oregon  corporation and WORLDMARK,  THE CLUB, a California
                   nonprofit mutual benefit corporation.
    *10.31         WORLDMARK MARKETING AGREEMENT dated as of May 4, 2001, by and among TRENDWEST RESORTS,  INC., an Oregon
                   corporation,  EAGLE  CREST,  INC.,  an  Oregon  corporation,  and  RUNNING Y  RESORT,  INC.,  an Oregon
                   corporation
     10.32         Trendwest Resorts, Inc. 1999 Employee Stock Purchase Plan. (8)
     10.33         Trendwest Resorts, Inc. 1997 Employee Stock Option Plan (12)
     10.34         Form of Employment Agreement between William F. Peare and Trendwest Resorts, Inc. (12)
     10.35         Form of Employment Agreement between Jeffery P. Sites and Trendwest Resorts, Inc. (12)
    *10.36         Form of Indemnity Agreement between Registrant and its directors
     11            Statement re  Computation of Per Share  Earnings ( see Note 1 to the financial  statements  included in
                   this Form 10-K)
    *21            List of Subsidiaries of the Registrant
    *23.1          Consent of KPMG LLP
</Table>

*    Filed  herewith.

(1)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 2000, filed March 30, 2001.

(2)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended September 30, 2000, filed on November 13, 2000.

(3)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended March 31, 2000, filed on May 12, 2000.

(4)  Incorporated by reference to the Company's Current Report on Form 8-K filed
     on June 22, 2000.

(5)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1999, filed March 30, 2000.

(6)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended September 30, 1999, filed on November 12, 1999.

(7)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended June 30, 1999, filed on August 10, 1999.

(8)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-8, filed on July 1, 1999.

(9)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended June 30, 1998, filed August 14, 1998.

(10) Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the period ended March 31, 1998, filed May 15, 1998.

(11) Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1997, filed March 31, 1998.

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

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