<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
   
                                    FORM 10-K/A
    
[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                                            OR

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

                         COMMISSION FILE NUMBER: 1-13042

                                       RIDE, INC.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          WASHINGTON                                     91-1571027
--------------------------------            ------------------------------------
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)                                      

    8160 304TH AVENUE SOUTHEAST
        PRESTON, WASHINGTON                                     98050
----------------------------------------                ------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)
             

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (425) 222-6015

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

     TITLE OF EACH CLASS               NAME OF EACH EXCHANGE ON WHICH REGISTERED
        COMMON STOCK                            NASDAQ NATIONAL MARKET

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

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __ 

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein, and
will not be contained, to the best of 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. [ ]

    As of March 9, 1998, the aggregate market value of the registrant's common
stock held by nonaffiliates of the registrant was $25,984,077 based on the
closing sale price of the registrant's Common Stock on the Nasdaq Stock Market.

    As of March 9, 1998, the number of shares of the registrant's Common Stock
outstanding was 12,136,035.

                      DOCUMENTS INCORPORATED BY REFERENCE:

(1) PORTIONS OF THE REGISTRANT'S DEFINITIVE 1998 PROXY STATEMENT TO BE FILED
    WITH THE SECURITIES AND EXCHANGE COMMISSION ARE INCORPORATED BY REFERENCE
    INTO PART III HEREOF.

<PAGE>   2

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

OVERVIEW

The Company is a leading designer, manufacturer and marketer of snowboards and
related products through its subsidiaries: Ride Snowboard Company ("Ride
Snowboards"), Ride Manufacturing, Inc. ("Ride Manufacturing"), Ride Canada, Inc.
("Ride Canada"), SMP Clothing, Inc. ("SMP"), Smiley Hats, Inc. ("Smiley") and
Carve, Inc. ("US2"). The Company was founded in September 1992 and acquired
C.A.S. Sports International, Inc. and C.A.S. Sports Agency, Inc. (collectively,
"CAS") in August 1994, Ride Manufacturing in September 1995 and SMP in October
1995. The Company also acquired 5150 Snowboards, Inc. ("5150") in September 1995
and later merged 5150 with and into Ride Snowboards. In October 1996, the
Company transferred substantially all of the Canada-based operating assets and
liabilities of CAS (other than fixed assets) into Ride Canada, a newly formed
corporation, and all of the US-based operating assets and liabilities of CAS
into Ride Snowboards, and sold the CAS entities. In June 1997, the Company
acquired substantially all of the assets and liabilities of Device Mfg Corp. and
transferred those assets and liabilities to Ride Snowboards. In July 1997, the
Company's newly formed Smiley subsidiary acquired substantially all of the
assets of Galena Creek Trading Corp. In December 1997, the Company acquired US2
Sports Group Inc. through a merger of that company with and into Carve, Inc., a
newly formed corporation. The results of operations of these acquired
subsidiaries are included in the Company's financial statements from their
respective dates of acquisition through their applicable dates of disposition.

Ride Snowboards sells premium to mid-range snowboards and related products
primarily through specialty snowboard and ski shops and to regional sporting
goods stores under the "Ride," "5150," "Device" and "Liquid" brand names. Ride
Manufacturing is a manufacturer of premium snowboards which are produced
principally for Ride Snowboards. Ride Manufacturing also produces a limited
number of snowboards for other companies on an OEM basis. SMP designs,
manufactures and markets young men's snowboard, surf, wakeboard, motocross and
street apparel which is sold through specialty shops under the "SMP" brand name.
Ride Canada acts as the Company's Canadian distributor for its "Ride," "5150",
"Liquid," "Smiley" and "SMP" branded products. Smiley designs, manufactures and
markets winter head and neck wear sold primarily through ski shops under the
"Smiley" and "Court Jester" brand names. Smiley also produces hats for other
winter products companies on an OEM basis. US2 designs, manufactures and markets
wakeboards and related products under the "FullTilt" and "Sub Rosa" brand names
primarily through specialty retailers, regional sporting goods stores and marine
sports stores. Until its disposition in October 1996, CAS marketed entry-level
snowboards and related products under various brand names, including "Marvel,"
"Slim," "Burnt," and "PL" and on a private label basis, primarily to regional
sporting goods stores and large-format sporting goods retailers. In addition,
CAS sold snowboards and related products on an OEM basis to other snowboard
companies and bought excess snowboard and sporting goods inventories from
manufacturers and sold such products to retailers throughout the world. The OEM
and excess inventory portions of the CAS business were sold in October 1996
while the branded and private label portions of the business were retained by
the Company and are being operated as the Company's Special Products Group
("SPG").

Because snowboarding traditionally is a winter sport and the Company's sales are
concentrated in the northern hemisphere, sales of the Company's products
predominantly occur in the third and fourth quarters. Since much of the
Company's operating expense is fixed in nature and is budgeted based on higher
third and fourth quarter net sales, a decline in net sales relative to internal
expectations would have a significant adverse effect on results of operations.
Because relatively lower net sales are realized in the first and second quarters
of each year, the Company expects to incur operating losses in the first two
quarters of the year for the foreseeable future. The Company expects the
addition of wakeboarding products to its product line-up through its acquisition
of US2 will help to supplement sales in the first and second quarters of the
year in future periods. In addition to seasonal fluctuations, the Company's
operating results fluctuate from quarter to quarter as a result of the timing of
order shipments, new product introductions, new retailer openings, consumer
buying patterns, weather conditions, discretionary spending habits, general
economic conditions in the United States and abroad and other factors.
Furthermore, the Company's gross margins fluctuate with product mix, the timing
of product price adjustments and the mix of international and domestic sales.
See "Business - Risk Factors - Seasonality; Fluctuations in Quarterly Operating
Results."


<PAGE>   3

The Company accumulates a backlog of orders beginning in February as a result of
preseason orders placed in connection with winter sports trade shows. The
backlog decreases beginning in late spring as product begins to be shipped and
is usually insignificant by the end of the year. Backlog in the snowboarding
industry is subject to delay or cancellation.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

Net sales decreased 52% to $36.5 million in 1997 from $75.7 million in 1996.
Device, Smiley and US2 contributed a total of $2.5 million to net sales in 1997,
subsequent to their respective acquisition dates. The CAS excess inventory and
OEM businesses contributed $15.4 million to sales in 1996 through their October
11, 1996 disposition date. The remaining net decrease was due primarily to soft
market conditions throughout the industry due to an oversupply of snowboard
products.

<TABLE>
<CAPTION>
SALES BY PRODUCT GROUP           1996               1997
                        ------------------- -------------------
  (dollars in 000's)
<S>                     <C>       <C>        <C>       <C>
Snowboards              $39,926        53%   $12,520        34%
Bindings                 12,241        16%     8,287        23%
Boots                     4,458         6%     3,714        10%
Skate, wake and other     3,464         5%       971         3%
                        -------   -------    -------   -------
Total hard goods         60,089        80%    25,492        70%
                        -------   -------    -------   -------

Apparel                  13,597        18%     8,387        23%
Accessories               2,042         2%     2,596         7%
                        -------   -------    -------   -------
Total soft goods         15,639        20%    10,983        30%
                        -------   -------    -------   -------
Total                   $75,728       100%   $36,475       100%
                        =======   =======    =======   =======
</TABLE>

Net sales of hard goods (snowboards, bindings, boots, wakeboards and
skateboards) represented 70% of total sales in 1997 while soft goods (apparel
and accessories) made up 30%. In 1996, hard goods comprised 80% of total sales
and soft goods 20%. The increase in percentage of soft goods sales to total
sales is attributable to additional sales added by the Smiley acquisition and to
relatively smaller declines in sales of soft goods as compared to hard goods due
to relatively less severe oversupply conditions. In the hard goods categories,
snowboards declined to 34% of sales in 1997 from 53% in 1996 due to the
disposition of the CAS entities. Snowboard bindings increased to 23% of sales in
1997 from 16% in 1996 due to the relative strength of the Company's "Preston"
brand strap-in series of bindings and the step-in binding sales added from the
acquisition of Device. Boots increased to 10% of sales in 1997 compared to 6% in
the prior year due to the 1997 introduction of boots under the Ride label as
well as the step-in boot sales added as a result of the acquisition of Device.
Skate, wake and other hard goods declined to 3% of sales in 1997 from 5% in 1996
primarily due to the disposition of the CAS excess inventory business which was
involved in numerous non-snowboard close-out categories. Apparel increased to
23% of sales in 1997 from 18% in 1996 due to smaller net declines than seen in
the hard goods categories. Accessories increased to 7% of net sales in 1997 due
primarily to the addition of Smiley in July 1997.

In 1997, net sales in North America made up 68% of total sales with
international sales making up the remaining 32%. In 1996, North American sales
comprised 54% and international sales 46%. The decrease in international sales
in 1997 is attributable to the relatively more severe excess inventory
conditions in the Japanese market.

Gross profit decreased to $9.8 million in 1997 from $14.1 million in 1996 while
gross margins increased to 27% in 1997 from 19% in 1996. The dollar decrease was
due to the large drop in sales volume in 1997. The increase in gross margins was
due to the $6.5 million inventory write down taken by the Company in 1996
related to canceled commitments from the Company's principal Japanese
distributor. Absent the 1996 inventory write down, gross margins would also have
been 27% in 1996. Gross margins in 1997 were positively impacted by the sale of
the CAS businesses, which generally had lower gross margins than other
divisions, the addition of the relatively high gross margin Smiley business, and
cost savings associated with moving the Company's binding operations offshore.


<PAGE>   4

Offsetting these improvements was the sale of lower margin 1996 close out
products and the under-utilization of the Company's manufacturing facility as a
result of the decline in snowboard sales volumes. The Company expects to begin
moving the "FullTilt" wakeboard production to its Corona facility in April 1998.
The Company anticipates that this production shift will consume production time
and capacity in the fall and early winter months when the factory would
otherwise be operating below capacity due to the seasonality of snowboard
production.

Selling, general and administrative expenses decreased 11% to $18.3 million in
1997 from $20.5 million in 1996. This decrease was due primarily to staff
reductions, lower executive salaries, lower variable expenses associated with
the lower sales volumes (primarily commissions and bad debt accruals) and the
disposition of the CAS businesses, offset partly by increased occupancy and
legal expenses as well as the expenses of Device, Smiley and US2 acquired in
1997. The primary components of selling, general and administrative expenses
were salaries, wages, commissions and other compensation ($7.5 million in 1997
and $8.6 million in 1996), advertising, promotion and team ($3.7 million in 1997
and $4.3 million in 1996) and occupancy, depreciation and amortization expense
($2.1 million in 1997 and $1.9 million in 1996).

   
Also included in operating expenses in 1997 is an $8.6 million loss on
impairment of goodwill. FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets To Be Disposed Of, requires the
Company to periodically review the events and circumstances affecting its
operations for indications that the Company's long-lived assets might be
impaired. During the fourth quarter of 1997, the Company determined that
reorders for its primary products would not meet previously anticipated levels
and the Company realized pricing pressure on its lower-end products, thus
suggesting that the Company's current production capacity and infrastructure
were underutilized. Based on this evaluation, the Company determined that the
$13.9 million of goodwill associated with its acquisitions of CAS, SMP and Ride
Manufacturing was impaired and wrote it down by $8.6 million. The Company's
estimates of the discounted cash flows expected to be generated from these
entities indicate that the remaining carrying amounts are expected to be
recovered. However, it is possible that the current industry oversupply of
snowboard products may be a sign of a permanent shift in demand and there can be
no assurance that the carrying value of the goodwill associated with these
acquisitions will be fully recoverable. Operating expenses in 1996 included $2.5
million in restructuring charges associated with the moving the Company's
snowboard binding operations offshore and the withdrawal of snowboard production
from two outside snowboard manufacturers. The primary components of the
restructuring charges are write-offs of abandoned equipment, tooling and
leasehold improvements, accrual of future lease costs and vendor cancellation
fees.
    

Interest income decreased to $195,000 in 1997 from $333,000 in 1996. The
decrease was due to lower invested cash balances on hand in 1997 as a result of
operating losses incurred in 1996 and 1997. Interest expense increased to
$426,000 in 1997 from $268,000 in 1996. This increase was due principally to
higher seasonal utilization of the Company's line of credit for working capital
purposes. Also included in the 1996 results is a gain of $482,000 on the
disposition of the CAS excess inventory and OEM businesses.

At December 31, 1997, the Company was in a tax loss carryforward position.
Accordingly, the Company's tax benefit is limited to the amount of income taxes
recoverable from prior years, or approximately $0.6 million, resulting in an
effective tax rate of 3.4%. The effective tax rate in 1996 was 34.3% which
reflects full recoverability of tax losses through carryback of such losses
against taxes paid in 1994 and 1995.

As a result of the foregoing, the Company's net loss increased to $16.7 million
in 1997 from $5.5 million in 1996.


<PAGE>   5

YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1996

Net sales increased 1% to $75.7 million in 1996 from $74.9 million in 1995. Ride
Manufacturing, 5150 and SMP contributed a total of $7.6 million to net sales in
1995, subsequent to their respective acquisition dates, and $16.1 million in
1996. The remaining difference is due to the inclusion of the CAS excess
inventory and OEM businesses for the full year in 1995 as opposed to 1996 when
they were included only through their October 11, 1996 disposition date.

<TABLE>
<CAPTION>
SALES BY PRODUCT GROUP           1995               1996
                         -------------------  -------------------
    (dollars in 000's)
<S>                      <C>       <C>        <C>       <C>
Snowboards               $50,304        67%   $39,926        53%
Bindings                   5,334         7%    12,241        16%
Boots                      5,056         7%     4,458         6%
Skate and other            6,437         9%     3,464         5%
                         -------   -------    -------   -------
Total hard goods          67,131        90%    60,089        80%
                         -------   -------    -------   -------

Apparel                    6,699         9%    13,597        18%
Accessories                1,020         1%     2,042         2%
                         -------   -------    -------   -------
Total soft goods           7,719        10%    15,639        20%
                         -------   -------    -------   -------
                                                        
Total                    $74,850       100%   $75,728       100%
                         =======   =======    =======   =======
</TABLE>


Net sales of hard goods represented 80% of total sales in 1996 while soft goods
made up 20%. In 1995, hard goods comprised 90% of total sales and soft goods
10%. As a percentage of sales, snowboards decreased to 53% in 1996 from 67% in
1995. The decline was due to a substantial decrease in OEM snowboard business in
1996, both at Ride Manufacturing where factory production was utilized almost
exclusively for internal production as well as brokered OEM snowboards sold by
CAS. In addition, sales decreased in the retained CAS branded and private label
businesses due to increased competition at the lower price points where these
products were targeted. The increase in snowboard binding sales in 1996 is due
primarily to the market success of the Company's "Preston" brand aluminum
bindings. The decrease in other hard goods was due to the sale of the CAS excess
inventory business which was involved in numerous non-snowboard close-out
categories. The increase in apparel sales is attributable primarily to the
inclusion of SMP for the entire year in 1996 as opposed to 1995 when SMP was
included only from its October 20, 1995 acquisition date.

In 1996, net sales in North America made up 54% of total sales with
international sales making up the remaining 46%. In 1995, North American sales
comprised 67% and international sales 33% of total sales. The increase in
international sales in 1996 was attributable primarily to the addition of SMP
for the entire year in 1996 as a majority of that company's sales were to
international markets.

Gross profit decreased to $14.1 million in 1996 from $19.9 million in 1995 while
gross margins dropped to 19% in 1996 from 27% in 1995. These decreases were due
to a $6.5 million inventory write down taken by the Company in December 1996.
This write down was necessitated by excess inventories resulting primarily from
canceled commitments from the Company's principal Japanese distributor. Without
the inventory write down, gross margins would have been 27% in 1996. The
addition of Ride Manufacturing in September 1995 allowed the Company to
internally manufacture 45% of its branded snowboards in 1996 compared to only
10% in 1995. Cost savings from this change had a positive impact on gross
margins. In addition, the inclusion of a full year of higher-margin SMP sales in
1996 also served to increase gross margins. Offsetting these gains was an
aggressive fourth quarter 1996 discounting program offered by the Company in an
attempt to reduce the amount of excess inventory on hand.

Selling, general and administrative expenses increased 88% to $20.5 million in
1996 from $10.9 million in 1995. The increase was due to the inclusion of the
operations for Ride Manufacturing and SMP for the entire year in 1996 as well as
the increased scope of the Company's operations in 1996. In addition, the
Company incurred $1.0 million in management transition expenses in 1996
associated with the 1996 changes in top management. The primary 


<PAGE>   6

components of selling, general and administrative expenses were salaries, wages,
commissions and other compensation ($8.6 million in 1996 and $5.5 million in
1995), advertising, promotion and team ($4.3 million in 1996 and $1.9 million in
1995) and occupancy, depreciation and amortization expense ($1.9 million in 1996
and $735,000 in 1995).

Operating expenses in 1996 also included $2.5 million in restructuring charges
associated with the moving the Company's snowboard binding operations offshore
and the withdrawal of snowboard production from two outside snowboard
manufacturers. The primary components of the restructuring charges are
write-offs of abandoned equipment, tooling and leasehold improvements, accrual
of future lease costs and vendor cancellation fees.

Interest income decreased to $333,000 in 1996 from $406,000 in 1995. The
decrease was due to higher cash balances on hand in 1995 from the Company's
secondary stock offering in August 1995 and the proceeds from exercise of common
stock warrants. Interest expense increased to $268,000 in 1996 from $18,000 in
1995. This increase was due to principally to seasonal utilization of the
Company's line of credit for working capital purposes. Also included in the 1996
results is a gain of $482,000 on the disposition of the CAS excess inventory and
OEM businesses.

   
The provision for income taxes represents a 36.5% effective tax rate for 1995
compared with a 34.3% effective rate for 1996. The decrease is due primarily to
expense for state income tax purposes lowering the overall tax benefit of the
1996 loss.
    

As a result of the foregoing factors, including the non-recurring restructuring
charges, inventory write down and management transition expenses, the Company
incurred a net loss of $5.5 million in 1996 compared to net income of $6.0
million in 1995.

LIQUIDITY AND CAPITAL RESOURCES

   
The Company requires capital for the development of its technology and products,
procurement of raw materials and finished goods manufactured by others, and
capital equipment. The Company financed its 1997 operations from seasonal
borrowings under its lines of credit and through a $3.0 million private
placement of convertible preferred stock in December 1997. The Company financed
its 1996 operations through cash and securities remaining from its 1995
secondary stock offering and from seasonal borrowings under its lines of credit.
Net cash used in operating activities totaled $3.8 million in 1997 compared with
$10.8 million in 1996. The decrease in cash used in operations was attributable
primarily to decreases in accounts receivable and inventory balances, net of
amounts received in acquisitions and income tax refunds received. Net inventory
balances increased approximately 10% at December 31, 1997 compared to December
31, 1996, primarily due to inventories received in the Device, Smiley and US2
acquisitions. Due to the seasonal nature of its business, the Company's need for
cash has been greater in its third and fourth quarters, when working capital has
been invested in accounts receivable and inventories.
    

   
Net cash used in investing activities totaled $3.0 million in 1997 compared to
$1.2 million in 1996. The 1997 amount included approximately $2.0 million
expended in the Company's acquisitions of Device, Smiley and US2 and $753,000 in
capital expenditures. Net cash used in investing activities in 1996 included
$5.4 million in capital expenditures, offset by liquidation of securities and
investments of $3.8 million and $884,000 in net cash received from the sale of
the CAS businesses. Principal capital expenditures in 1997 included
manufacturing equipment, new business software and snowboard molds and tooling.
The Company expects to invest similar amounts in capital expenditures during
1998. The Company intends to finance 1998 capital expenditures through
internally generated funds, through leasing or from borrowings under its line of
credit.
    

Net cash provided by financing activities totaled $5.0 million in 1997 compared
with $0.9 million in 1996. Financing sources in 1997 included $2.8 million in
net proceeds received on a private placement of convertible preferred stock,
$300,000 in exercises of stock options and $2.0 million in net advances on the
Company's line of credit. Financing sources in 1996 included $1.1 million in
exercises of stock options and $750,000 in long term debt proceeds associated
with the Company's tenant improvements, offset by $1.0 million in repayments of
acquisition notes payable.

The Company operates in a highly seasonal business, generating the majority of
its sales in the third and fourth calendar quarters. The Company's cash receipts
from its North American customers are received predominantly in the months of
December, January and February while its international customers generally pay
by cash in advance or letter of credit. In order to finance operations and
manufacture and purchase products during the remainder of the year, the 


<PAGE>   7

Company has historically utilized a revolving line of credit. The Company has a
$15 million revolving line of credit arrangement with a bank to finance import
letters of credit and working capital needs. The line provides for direct
advances and letters of credit of up to $5.5 million through January 31, 1998,
$2.0 million from February 1 to March 31, 1998 and $8.0 million from April 1 to
June 30, 1998. Advances on the line bear interest at 1% over the bank's prime
rate. At December 31, 1997, the Company had approximately $740,000 in
outstanding import letters of credit and direct advances of $2.0 million drawn
against this line. The line of credit has certain operating covenants, including
financial ratios, working capital restrictions and restrictions on payment of
dividends on the Company's Common Stock. The line of credit expires on June 30,
1998 at which time the Company anticipates renewing or replacing its line of
credit. In the event that the Company is unable to renew its line of credit, the
Company will seek other sources of working capital financing including, but not
limited to, other bank lines of credit, asset-based borrowing, long-term debt or
additional equity. There can be no assurance that such alternative sources will
be available on favorable terms or at all. The Company's inability to
successfully renew or replace its line of credit would have a material adverse
impact on the Company's financial condition and may require the Company to
reduce its expenditures, curtail certain operations, or dispose of operating
assets to enable it to continue its operations. See "Item 1. Business - Risk
Factors - Liquidity; Dependence on Line of Credit."

In December 1997, the Company issued 3,000 shares of Series B 5% Cumulative
Convertible Preferred Stock for $3,000,000 ("Series B Preferred"). In connection
with this transaction, the Company also issued warrants to purchase 283,720
shares of common stock for an exercise price of approximately $2.68 per share
("the Warrants"). Dividends on the Series B Preferred accrue quarterly, are
payable in cash or stock and must be paid before dividends can be declared and
paid on the Company's Common Stock. Portions of the Series B Preferred may be
converted into the Company's Common Stock, at the option of the holders,
beginning in March 1998. All the Series B Preferred automatically converts to
common stock in December 2000. Subject to certain adjustments, the Series B
Preferred converts to Common Stock at the lesser of $2.68 per share or 90% of
the market price (as defined) of the Company's Common Stock at the time of
conversion. The Company has reserved approximately 2,245,000 shares of Common
Stock for issuance upon conversion of the Series B Preferred and exercise of the
warrants. The 10% discount from market price of the conversion of preferred
stock is accounted for as a preferred stock dividend. The dividend is required
to be included in earnings per share computations over the period from the date
of issuance through the date the security is first convertible. The Company has
therefore included a $30,000 preferred stock dividend in its net loss per share
calculations for the year ended December 31, 1997 and will include an additional
$270,000 preferred stock dividend in its net income (loss) per share for the
quarter ending March 31, 1998 and the year ending December 31, 1998.

Although the Company cannot accurately anticipate the effects of inflation, the
Company does not believe inflation has had or is likely to have a material
effect on its results of operations or liquidity.

Except for distributions paid to shareholders when the Company was an S
Corporation, the Company has never paid dividends on its common stock. The
Company's present policy is to retain any earnings to finance the Company's
business. Any future dividends will be dependent upon the Company's financial
condition, results of operations, current and anticipated cash requirements,
acquisition plans and plans for expansion, and any other factors which the
Company's Board of Directors deems relevant. The Company's bank loan agreement
restricts the payment of dividends. The Company has no present intention of
paying dividends on its common stock in the foreseeable future.

The Company has developed a plan to assess and address Year 2000 compliance
issues. The Company is currently implementing new Year 2000 compliant financial
systems to replace its older financial systems as part of the normal course of
business. The implementation of the new systems should be completed during 1998.
The Company does not expect this project to have a significant effect on
operations and does not expect to spend any significant amounts on internal Year
2000 issues. However, there can be no guarantee that the systems of other
companies on which the Company relies will be converted on a timely basis and
would not have an adverse effect on the Company's systems.

MARKET RISK

The Company's Ride Canada subsidiary operates and maintains its accounting
records using the Canadian dollar as its functional currency. In accordance with
generally accepted accounting principles, upon consolidation the assets,
liabilities, revenues and expenses of this subsidiary are translated into US
dollars at the appropriate exchange rate 


<PAGE>   8

prevailing during the period and are therefore subject to fluctuations in the
exchange rates between the Canadian dollar and the US dollar.

During 1997, the Company purchased certain finished snowboards and raw materials
from foreign suppliers with payments denominated in foreign currencies,
primarily the German mark. In order to protect against changes in the exchange
rate between the mark and the US dollar, the Company routinely enters into
forward foreign exchange contracts with financial institutions to fix the cost
of these purchases. Although the Company believes that these contracts decrease
the Company's overall exposure to gains and losses from currency fluctuations,
such exposure cannot be entirely eliminated. In addition, during the contractual
periods, the Company is exposed to certain losses in the event of nonperformance
by the counterparties to the forward contracts. At December 31, 1997, the
Company did not have any open forward contracts.

<PAGE>   9

                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Ride, Inc.

We have audited the accompanying consolidated balance sheets of Ride, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1997. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Ride, Inc. and
subsidiaries at December 31, 1997 and 1996, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.


                                       ERNST & YOUNG LLP


Seattle, Washington
March 3, 1998

                                       1

<PAGE>   10

                                   RIDE, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                            -------------------
                                                              1996       1997
                                                            --------   --------
<S>                                                         <C>        <C>     
ASSETS
Current assets:
   Cash and cash equivalents                                $  3,232   $  1,332
   Accounts receivable, less allowance for doubtful
    accounts of $655 in 1996 and $925 in 1997                 14,193     12,588
   Inventories  (Note 7)                                       5,986      6,564
   Prepaid expenses and other current assets                     450        728
   Income taxes receivable                                     2,836      1,569
   Deferred tax assets  (Note 10)                              1,423        385
                                                            --------   --------
Total current assets                                          28,120     23,166
Plant and equipment, net (Note 8)                              5,757      5,670
Notes receivable, net of discount of $116 in 1996 (Note 5)     1,884      1,600
  
Goodwill, net of accumulated amortization of $514 in 1996     
     and $842 in 1997 (Note 3)                                14,292      9,358
Other assets                                                     602      1,201
                                                            --------   --------
Total assets                                                $ 50,655   $ 40,995
                                                            ========   ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                         $  4,631   $  3,719
   Accrued expenses and other current liabilities              2,161      1,555
   Accrued restructuring charges (Note 6)                        387         --
   Short-term borrowings (Note 9)                                 --      1,995
   Notes payable (Note 9)                                         --        689
                                                            --------   --------

Total current liabilities                                      7,179      7,958
Other long-term liabilities                                      832      1,582
Deferred income taxes (Note 10)                                  335        385
Commitments and contingencies (Note 14)

Shareholders' equity:
    Convertible preferred stock, no par value, 10,000
     shares authorized
         Series A: 100 shares issued and outstanding 
           Aggregate liquidation preference of $500
           (Note 11)                                             500        500
         Series B: 3 shares issued and outstanding
           Aggregate liquidation preference of $3,000
           (Note 11)                                              --      2,841
     Common stock, no par value, 20,000 shares
       authorized 10,760 and 12,092 issued and 
       outstanding, respectively                              39,583     42,393
     Cumulative translation adjustment                            --       (125)
     Retained earnings (deficit)                               2,226    (14,539)
                                                            --------   --------
        Total shareholders' equity                            42,309     31,070
                                                            --------   --------
Total liabilities and shareholders' equity                  $ 50,655   $ 40,995
                                                            ========   ========
</TABLE>


                             See accompanying notes.


                                       2
<PAGE>   11


                                   RIDE, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)



<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31,
                                               --------------------------------
                                                 1995        1996        1997
                                               --------    --------    --------
<S>                                            <C>         <C>         <C>     
Net sales                                      $ 74,850    $ 75,728    $ 36,475
Cost of goods sold (Note 6)                      54,988      61,641      26,656
                                               --------    --------    --------
Gross profit                                     19,862      14,087       9,819

Selling, general and administrative expenses     10,868      20,487      18,278
Loss on impairment of goodwill (Note 3)              --          --       8,600
Restructuring charges (Note 6)                       --       2,500          --
                                               --------    --------    --------
Operating expenses                               10,868      22,987      26,878
                                               --------    --------    --------
Operating income (loss)                           8,994      (8,900)    (17,059)

Interest expense                                    (18)       (268)       (426)
Interest income                                     406         333         195
Gain on sale of subsidiary (Note 5)                  --         482          --
                                               --------    --------    --------
Income (loss) before income taxes                 9,382      (8,353)    (17,290)
Income tax expense (benefit)  (Note 10)           3,427      (2,863)       (595)
                                               --------    --------    --------

Net income (loss)                              $  5,955    $ (5,490)   $(16,695)
                                               ========    ========    ========
Net income (loss) per share: (Note 17)
    Basic                                      $   0.67    $  (0.52)   $  (1.51)
                                               ========    ========    ========
    Diluted                                    $   0.59    $  (0.52)   $  (1.51)
                                               ========    ========    ========

Share used in the computation of net income
(loss) per share:
   Basic                                          8,872      10,614      11,128
                                               ========    ========    ========
   Diluted                                       10,132      10,614      11,128
                                               ========    ========    ========
</TABLE>


                                   See accompanying notes.


                                       3
<PAGE>   12

                                   RIDE, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                             PREFERRED STOCK                                        CUMULATIVE
                                             ---------------                                                  
                                    SERIES A              SERIES B           COMMON STOCK        TRANSLATION  RETAINED
                                    --------              --------           ------------                             
                               SHARES       AMOUNT     SHARES    AMOUNT    SHARES       AMOUNT    ADJUSTMENT   EARNINGS      TOTAL
                             ---------     --------  --------- --------- ----------   ---------  -----------  ----------  ----------
<S>                          <C>           <C>       <C>       <C>       <C>          <C>        <C>          <C>         <C>    
Balances at January 1, 1995      100        $500       --          --         7,710     $9,193       --          $1,831     $11,524

  Net income for the year                                                                                         5,955       5,955
  Preferred stock dividends                                                                                         (35)        (35)
  Secondary public
    offering of common                                                        
     stock, net of
      offering costs                                                          1,465     23,311                               23,311
  Exercise of common stock                                                    
    warrants                                                                  1,239      4,515                                4,515
  Common stock issued in
    SMP acquisition                                                              28        593                                  593
  Stock option exercises
    and related tax                                                              
     benefits                                                                    72        571                                  571
  Issuance of common
    stock under stock                                                             
     purchase plan                                                                4         61                                   61
                               -----      -------   ------     --------  ----------   ---------  --------    ----------    ---------
Balances at December 31, 1995    100         500       --          --        10,518     38,244       --           7,751      46,495

  Net loss for the year                                                                                          (5,490)     (5,490)
  Preferred stock dividends                                                                                         (35)        (35)
  Stock option exercises
    and related tax                                                             
     benefits                                                                   231      1,258                                1,258
  Issuance of common
    stock under stock                                                            
     purchase plan                                                               11         81                                   81
                               -----      -------   ------     --------  ----------   ---------  --------    ----------    ---------
Balances at December 31, 1996    100         500       --          --        10,760     39,583       --           2,226      42,309

  Net loss for the year                                                                                         (16,695)    (16,695)
  Preferred stock dividends                                         30                                              (70)        (40)
  Stock option exercises
    and related tax                                                              
     benefits                                                                    98        307                                  307
  Issuance of common
    stock under stock                                                            
     purchase plan                                                               24         53                                   53
  Issuance of preferred
    stock, net of offering                             
     costs                                             3          2,811                                                       2,811
  Common stock issued in                                                      
    acquisitions                                                              1,210      2,450                                2,450
  Foreign currency                                                                                  
    translation loss                                                                                (125)                      (125)
                               -----      ------    ----       --------  ----------   --------   -------     ----------    -------- 
Balances at December 31, 1997    100        $500       3         $2,841      12,092    $42,393     $(125)     $ (14,539)    $31,070
                               =====      ======    ====       ========  ==========   ========   =======     ==========    ======== 
</TABLE>


                             See accompanying notes.

                                        4

<PAGE>   13


                                    RIDE INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                     YEAR ENDED DECEMBER 31,
                                                --------------------------------
                                                  1995        1996        1997
                                                --------    --------    --------
<S>                                            <C>            <C>           <C>
OPERATING ACTIVITIES
Reconciliation of net income to net cash
  provided by (used in) operations:
Net income (loss)                               $  5,955    $ (5,490)   $(16,695)
Depreciation                                         196       1,288       1,560
Amortization                                         190         421         453
Deferred income tax (benefit) expense                (27)       (876)      1,088
Loss on impairment                                    --          --       8,600
Non-cash restructuring charges                        --       2,397          --
Gain on sale of subsidiary                            --        (482)         --
Amortization of discount on notes receivable          --         (34)       (116)
Changes in operating assets and liabilities:
  (Increase) decrease in accounts receivables     (8,076)       (637)      2,689
  (Increase) decrease in inventories              (1,316)     (1,577)        308
  (Increase) decrease in prepaid expenses           (590)        294        (227)
  (Increase) decrease in income taxes                
    receivable                                       (15)     (2,894)      1,267
  Increase (decrease) in accounts payable          3,649      (3,065)     (1,652)
  Decrease in accrued expenses and other            
    current liabilities                             (698)       (102)     (1,247)
                                                --------    --------    --------
Net cash used in operating activities               (732)    (10,757)     (3,972)

INVESTING ACTIVITIES
Purchases of plant and equipment                  (1,910)     (5,364)       (753)
Acquisitions, net of cash acquired               (13,039)         --      (1,979)
Sales of (purchases) of securities                
  available-for-sale                              (3,840)      3,840          --
Proceeds from sale of subsidiary, net of              --         884          --
  costs
Increase in other assets                            (157)       (532)       (223)
                                                --------    --------    --------
Net cash used in investing activities            (18,946)     (1,172)     (2,955)

FINANCING ACTIVITIES
Net advances on line of credit                        --          --       1,995
Proceeds from sale of preferred stock                 --          --       2,811
Proceeds from exercise of common stock               
  options                                            267       1,087         307
Proceeds from sale of common stock                23,372          --          --
Proceeds from exercise of common stock             
  warrants                                         4,515          --          --
Proceeds from Employee Stock Purchase Plan            --          81          53
Proceeds from long-term borrowings                    --         750          --
Repayments of notes payable and long-term             
  borrowings                                          --        (993)        (99)
Dividends paid                                       (35)        (35)        (40)
                                                --------    --------    --------
Net cash provided by financing activities         28,119         890       5,027
                                                --------    --------    --------
Net increase (decrease) in cash and cash           
  equivalents                                      8,441     (11,039)     (1,900)
Cash at beginning of period                        5,830      14,271       3,232
                                                --------    --------    --------
Cash at end of period                           $ 14,271    $  3,232    $  1,332
                                                ========    ========    ========

SUPPLEMENTAL DISCLOSURE
Cash paid for interest                          $      8    $    275    $    414
Cash paid for income taxes                      $  3,505    $    910    $     68
NONCASH INVESTING AND FINANCING ACTIVITIES
Common stock and notes payable issued in       
  acquisitions                                  $  1,531    $     --    $  2,450
Tax benefit of stock option exercises           $    304    $    171    $     --

</TABLE>

                             See accompanying notes.

                                       5

<PAGE>   14

                                   RIDE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997


1.    SIGNIFICANT ACCOUNTING POLICIES

Description of Business

The consolidated financial statements include the accounts of Ride, Inc. ("Ride"
or the "Company") and its subsidiaries: Ride Snowboard Company ("Ride
Snowboards"), Ride Manufacturing, Inc. ("Ride Manufacturing"), Ride Canada, Inc.
("Ride Canada"), SMP Clothing, Inc. ("SMP"), Smiley Hats, Inc. ("Smiley") and
Carve, Inc. ("US2"). The Company was founded in September 1992 and acquired
C.A.S. Sports International, Inc. and C.A.S. Sports Agency, Inc. (collectively,
"CAS") in August 1994, Ride Manufacturing in September 1995 and SMP in October
1995. The Company also acquired 5150 Snowboards, Inc. ("5150") in September 1995
and later merged 5150 with and into Ride Snowboards. In October 1996, the
Company transferred substantially all of the Canada-based operating assets and
liabilities of CAS (other than fixed assets) into Ride Canada, a newly formed
corporation, and all of the US-based operating assets and liabilities of CAS
into Ride Snowboards, and sold the CAS entities. In June 1997, the Company
acquired substantially all of the assets and liabilities of Device Mfg Corp. and
transferred those assets and liabilities to Ride Snowboards. In July 1997, the
Company's newly formed Smiley subsidiary acquired substantially all of the
assets of Galena Creek Trading Corp. In December 1997, the Company acquired US2
Sports Group Inc. through a merger of that company with and into Carve, Inc., a
newly formed corporation. The results of operations of these acquired
subsidiaries are included in the Company's financial statements from their
respective dates of acquisition through their applicable dates of disposition.
See Notes 4 and 5.

Ride Snowboards sells premium to mid-range snowboards and related products
primarily through specialty snowboard and ski shops. Ride Manufacturing is a
manufacturer of premium snowboards which are produced principally for Ride
Snowboards. Ride Manufacturing also produces a limited number of snowboards for
other snowboard companies on an OEM basis. SMP designs and manufactures
snowboard, surf, skate, motocross and street apparel which is sold primarily
through specialty shops. Ride Canada acts as the Company's Canadian distributor
for the Company's branded products. Smiley designs and manufactures premium head
and neck wear for the winter sports industry and is sold through specialty
shops. US2 designs, manufactures and distributes wakeboards, wakeboard bindings
and accessories under the "FullTilt" and "Sub Rosa" brand names through marine
and specialty retailers. Until its disposition in October 1996, CAS marketed
entry-level snowboards and related products under various brand names and on a
private label basis primarily to regional sporting goods stores and large-format
sporting goods retailers. In addition, CAS sold snowboards and related products
on an OEM basis to other snowboard companies and bought excess snowboard and
sporting goods inventories from manufacturers and sold such products to
retailers throughout the world. The OEM and excess inventory portions of the CAS
business were sold in October 1996 (see Note 5) while the branded and private
label portions of the business were retained by the Company.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. Intercompany transactions have been eliminated in
consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.



                                       6
<PAGE>   15

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Foreign Currency

The local currency is considered the functional currency of the Company's
Canadian operations. The financial statements of the Company's Canadian
subsidiary are translated into U.S. dollars using the exchange rate at the
balance sheet date for assets and liabilities and the average exchange rate for
the period for revenues and expenses. Resulting translation adjustments are
recorded as a separate component of shareholders' equity.

The Company enters into foreign currency forward contracts, generally with terms
of 270 days or less, as a hedge against some of its foreign currency
commitments. Offsetting gains and losses on these contracts are recognized
concurrently with the exchange gains and losses stemming from the associated
commitments. During the contractual periods, the Company is exposed to certain
losses in the event of nonperformance by the counterparties to the forward
contracts. At December 31, 1997, the Company did not have any open forward
contracts.

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Inventories

Inventories are carried at the lower of cost or market using the first-in,
first-out method.

Plant and Equipment

Plant and equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally
five to ten years. Leasehold improvements are amortized over the lesser of the
estimated useful life of the asset or the term of the related lease. Snowboard
and snowboard binding molds are amortized to cost of goods sold over one to
three years based on the number of related snowboards and bindings sold.

Goodwill

Goodwill is being amortized over 15 to 40 years using the straight-line method.
The Company periodically reviews the carrying value of goodwill to determine if
the facts and circumstances suggest that the value may be impaired. See Note 3.

Revenue Recognition

The Company recognizes revenue from the sale of its products when the products
are shipped to customers.

Research and  Development Costs

Research and development costs are charged to expense as incurred and totaled
approximately $217,000 in 1995, $417,000 in 1996 and $338,000 in 1997.



                                       7
<PAGE>   16

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Advertising Costs

The Company expenses the production costs of advertising the first time the
advertising takes place. Advertising expense totaled $528,000 in 1995, $847,000
in 1996 and $1,090,000 in 1997.

Warranty Costs

The Company generally offers a one-year warranty on its products from the time
of retail sale. Anticipated net costs associated with warranties are charged to
expense at the time of the sale of its products. The Company is reimbursed for a
portion of the cost of defective products by the manufacturers.

Income Taxes

The Company accounts for income taxes under the liability method. Deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured using the tax
rates and laws that will be in effect when the differences are expected to
reverse. Valuation allowances are established when necessary to reduce deferred
tax assets to the amounts expected to be realized.

Net Income (Loss) Per Share

In 1997, the Financial Accounting Standards Board (FASB) issued Statement No.
128, Earnings Per Share. Statement 128 replaced the calculation of the primary
and fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the Statement 128
requirements.

Stock Based Compensation

The Company has elected to apply the disclosure-only provisions of FASB
Statement No. 123, "Accounting for Stock-Based Compensation." Accordingly, the
Company accounts for stock-based compensation using the intrinsic method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations. Compensation cost for stock
options is measured at the excess, if any, of the fair value of the Company's
common stock at the date of the grant over the stock option price.

Reclassifications

Certain reclassifications have been made to prior year balances to conform with
current year presentation.



                                       8
<PAGE>   17

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2.    LIQUIDITY

The Company operates in a highly seasonal business, generating the majority of
its sales in the third and fourth quarters. The Company's cash receipts from its
North American customers are received predominantly in December, January and
February while its international customers generally pay by cash in advance or
letter of credit. In order to maintain the scope of the Company's operations and
manufacture and purchase product during the remainder of the year, the Company
has historically utilized a revolving line of credit with a bank to finance
import letters of credit and working capital needs. The Company currently has a
revolving line of credit which provides for import letters of credit and direct
cash advances of up to $5.5 million prior to January 31, 1998, $2.0 million from
February 1, 1998 to March 31, 1998 and $8.0 million through June 30, 1998.

The Company has incurred losses of $16.6 million and $5.5 million for the years
ended December 31, 1997 and 1996, respectively. The Company has financed its
operations to date through the issuance of equity and bank lines of credit. The
Company's existing line of credit expires on June 30, 1998. The Company
anticipates renewing or replacing its line of credit. In the event that the
Company is unable to renew its line of credit, the Company will seek other
sources of working capital financing including, but not limited to, other bank
lines of credit, asset-based borrowing, long-term debt or additional equity.
There can be no assurance that such alternative sources will be available on
favorable terms or at all. The Company's inability to successfully renew or
replace its line of credit would have a material adverse impact on the Company's
financial condition and may require the Company to reduce its expenditures,
curtail certain operations, or dispose of operating assets to enable it to
continue its operations at least through December 1998.

   
3.    LOSS ON IMPAIRMENT

In accordance with FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets To Be Disposed Of, the Company
periodically reviews the events and circumstances affecting its operations for
indicatons that the Company's long-lived assets might be impaired. During the
fourth quarter of 1997, the Company determined that reorders for its primary
products would not meet previously anticipated levels and the Company realized
pricing pressure on its lower-end products, thus suggesting that the Company's
current production capacity and infrastructure were underutilized. Based on
this evaluation, the Company determined that the $13.9 million of goodwill
associated with its acquisitions of CAS, SMP and Ride Manufacturing was
impaired and wrote it down by $8.6 million. The Company's estimates of the
discounted cash flows expected to be generated from these entities indicate
that the remaining carrying amounts are expected to be recovered. However, it is
possible that the current industry oversupply of snowboard products may be a
sign of a permanent demand shift and there can be no assurance that the
carrying value of the goodwill related to these acquisitions will be 
recoverable.
    

4.    ACQUISITIONS

Ride Manufacturing and 5150

On September 1, 1995, the Company acquired all of the capital stock of Ride
Manufacturing, a snowboard manufacturer, and 5150, a marketer of snowboards, for
$11.9 million in cash. The acquisition has been accounted for as a purchase with
the excess of the purchase price over the fair value of the assets acquired
allocated primarily to goodwill.

SMP

On October 20, 1995, SMP, a newly-formed, wholly owned subsidiary of the Company
acquired certain assets (primarily inventories, fixed assets, trademarks and
other intangibles) of Sex Money Power Clothing, Inc., a manufacturer of
snowboard, surf, skate and street apparel. The aggregate purchase price of $2.46
million was comprised of $937,500 in cash, $937,500 in short-term notes payable,
and 28,409 newly-issued shares of Common Stock valued at $593,000. The
transaction has been accounted for as a purchase with the excess of the purchase
price over the fair value of the assets acquired allocated primarily to
goodwill.


                                       9
<PAGE>   18

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Device

On June 12, 1997, the Company purchased substantially all of the assets (except
cash and accounts receivable) and liabilities of Device, a manufacturer of
step-in snowboard bindings and boots based in Boulder, Colorado. The purchase
price was comprised of approximately $1.0 million in assumed liabilities and
285,265 newly-issued shares of Common Stock valued at $790,000. The transaction
has been accounted for as a purchase with the excess of the purchase price over
the fair value of the assets acquired allocated primarily to goodwill.

Smiley Hats

On July 22, 1997, the Company purchased substantially all of the assets of
Galena Creek Trading Company, Inc. (d.b.a. Smiley Hats), a manufacturer of
winter hats based in Sparks, Nevada. The purchase price was comprised of
approximately $550,000 in cash and 320,000 shares of Common Stock valued at
$750,000. Galena Creek Trading Company was majority owned and controlled by the
Company's Chief Executive Officer. The transaction has been accounted for as a
purchase with the excess of the purchase price over the fair value of the assets
acquired allocated primarily to goodwill.

US2

On December 19, 1997, Carve, Inc., a newly-formed, wholly owned subsidiary of
the Company acquired the stock of US2 Sports Group, Inc., a manufacturer of
wakeboards and wakeboard bindings. The purchase price was comprised of 605,263
newly-issued shares of Common Stock valued at $910,000 plus the assumption of
net liabilities of $652,000. The transaction has been accounted for as a
purchase with the excess of the purchase price over the fair value of the assets
acquired allocated primarily to goodwill.

Summarized unaudited pro forma results of operations, assuming the Device,
Smiley Hats and US2 acquisitions took place on January 1 of each year, are as
follows:

<TABLE>
<CAPTION>
                                                        December 31,
                                               ------------------------------
                                                 1995       1996        1997
                                               -------    -------    --------
                                                       (in thousands)
<S>                                            <C>        <C>         <C>    
      Net sales                                $84,345    $80,569     $40,595
      Net income (loss)                          6,716    (6,185)    (18,743)
      Net income (loss) per share - diluted      $0.66    $(0.53)     $(1.56)
</TABLE>

5.    DISPOSITION

On October 11, 1996, the Company sold the stock of CAS to two former Company
executives and a number of CAS employees. The $3.0 million sales price was
comprised of $1,000,000 in cash and short-term notes and $2.0 million in
long-term notes. The Company recognized a pre-tax gain of $482,000 in connection
with this sale.

The long-term notes are secured by the stock of the sold corporations and bear
interest at prime. No interest or payments are due until March 1998 at which
time payments of $100,000 plus interest will be due quarterly through September
2002. The $400,000 current portion of the note due in 1998 is included in
Accounts Receivable.



                                       10
<PAGE>   19

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6.   RESTRUCTURING AND INVENTORY WRITE-DOWN

On December 12, 1996 the Company's Board of Directors approved a plan to
writedown excess inventories and restructure the Company's manufacturing
operations. Due to canceled commitments from the Company's principal Japanese
distributor and an oversupply of snowboards from other manufacturers, the
Company recognized a $6.5 million write-down of its inventories. This amount has
been included in cost of sales for the year ended December 31, 1996. In
addition, the Company recognized a $2.5 million restructuring charge in
connection with moving the Company's binding production offshore and the
withdrawal of snowboard production from two outside snowboard manufacturers used
in 1996. The primary components of this charge were write-offs of abandoned
equipment, tooling and leasehold improvements, cancellation fees paid to U.S.
vendors and future lease costs. The Company anticipates future cash outlays will
not exceed the $228,000 included in other long-term liabilities for future
minimum lease payments and will be funded through normal operating cash flows.

 7.   INVENTORIES

Inventories consisted of the following:

<TABLE>
<CAPTION>
                                         December 31,    
                                     ------------------  
                                       1996       1997   
                                     -------    -------  
                                         (in thousands)  
<S>                                  <C>        <C>      
        Finished goods               $ 9,415    $ 6,186  
        Work in process                   96        228  
        Raw materials and supplies     2,391      2,189  
        Obsolescence reserve          (5,916)    (2,039) 
                                     -------    -------  
                                     $ 5,986    $ 6,564  
                                     =======    =======  
</TABLE>

8.    PLANT AND EQUIPMENT

Plant and equipment consisted of the following:

<TABLE>
<CAPTION>
                                             December 31,
                                         -------------------
                                           1996       1997
                                         -------    -------
                                           (in thousands)
<S>                                      <C>        <C>    
      Office equipment                   $ 1,364    $ 1,609
      Production equipment and tooling     2,674      3,147
      Leasehold improvements               2,126      2,211
      Vehicles and other                     588        753
      Construction in process                 --        205
                                         -------    -------
                                           6,752      7,925
      Accumulated depreciation              (995)    (2,255)
                                         -------    -------
                                         $ 5,757    $ 5,670
                                         =======    =======
</TABLE>

9.    LINE OF CREDIT AND LONG-TERM DEBT

Ride has a revolving credit line arrangement with a bank to finance its import
letters of credit and working capital needs. The maximum amount of direct cash
advances available fluctuates based on the seasonality of the Company's cash
flows and cannot exceed $2.0 million prior to March 31, 1998 or $8.0 million
through June 30, 1998. Advances on the line bear interest at the bank's prime
rate. At December 31, 1997, the Company had outstanding advances of $1,995,000
and $740,000 in outstanding import letters of credit drawn against this line.
The line of credit expires on June 30, 1998 and has certain operating covenants,
including financial ratios, working capital restrictions and restrictions on
payment of dividends on the Company's Common Stock. The Company was in
compliance with all such covenants at December 31, 1997. The line is
collateralized by substantially all the assets of the Company.



                                       11
<PAGE>   20

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the Company's December 1997 acquisition of US2, the Company
assumed US2's revolving credit line, a term loan and $307,000 of current notes
payable. The balance on the line at December 31, 1997 was $296,000, bore
interest at the bank's prime plus two percent or 10.5% at year end and was
included in notes payable. This revolving line of credit expired on January 13,
1998 and was paid off at that time. The $452,000 balance outstanding on the term
loan at December 31, 1997, less $86,000 current portion, is included in other
long-term liabilities and bears interest at the bank's prime plus 1.25%, or
9.75% at year end. The outstanding balance is due in monthly principle and
interest payments of $10,596 through May 2002. The remaining $307,000 of notes 
payable were retired subsequent to year end.

During 1996, the Company's landlord loaned the Company $750,000 to fund a
portion of the expansion and improvement of the Company's Preston, Washington
office and warehouse facilities. The loan has an effective interest rate of
approximately 3% and is due in monthly payments of principal and interest of
$9,100 through December 2003.

10.   INCOME TAXES

Deferred tax assets and (liabilities) consisted of the following:

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                          ------------------
                                                            1996       1997
                                                          -------    -------
                                                           (IN THOUSANDS)
<S>                                                       <C>        <C>    
      Deferred tax assets:
         Net operating loss carryforwards                 $   102    $ 2,931
         Goodwill writedown                                    --      2,924
         Inventory reserves                                   914        641
         Allowance for bad debts                              213        220
         Warranty reserves                                    119         82
         Restructuring reserves                               122         68
         Other accruals                                        55        165
                                                          -------    -------
      Total deferred tax assets                             1,525      7,031
      Less: Valuation allowance for deferred tax assets        --     (6,646)
                                                          -------    -------
                                                            1,525        385
      Deferred tax liabilities:
         Depreciation and amortization                       (437)      (385)
                                                          -------    -------
      Total deferred tax liabilities                         (437)      (385)
                                                          -------    -------
          Net deferred tax assets                         $ 1,088    $    --
                                                          =======    =======
      Balance sheet classification:
        Current assets                                    $ 1,423    $   385
        Noncurrent liabilities                               (335)      (385)
                                                          -------    -------
                                                          $ 1,088    $    --
                                                          =======    =======
</TABLE>

At December 31, 1997, the Company had net operating loss carryforwards for
income tax purposes of $8.5 million, which are available to offset future
federal taxable income, if any. The federal operating loss carryforwards begin
to expire in 2007 through 2017. Recognition of approximately $3.2 million of
the Company's federal operating loss carryforwards may be limited pursuant to
Section 382 of the Internal Revenue Code.  The December 31, 1997, a valuation
allowance of $6,646,000 was established for the deferred tax assets in excess
of deferred tax liabilities.



                                       12
<PAGE>   21

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of the provision (benefit) for income taxes are as
follows:

<TABLE>
<CAPTION>
                                       YEAR ENDED DECEMBER 31,
                                  -----------------------------
                                   1995        1996      1997
                                  -------    -------    -------
                                         (IN THOUSANDS)
<S>                               <C>        <C>        <C>     
      Current:
        Federal                   $ 3,147    $(1,713)   $(1,760)
        State                         164        106         --
        Canada                        143       (380)        77
                                  -------    -------    -------
                                    3,454     (1,987)    (1,683)
                                  -------    -------    -------
      Deferred:
        Federal                       (48)      (928)       996
        State                          21         52        301
        Canada                         --         --       (209)
                                  -------    -------    -------
                                      (27)      (876)     1,088
                                  -------    -------    -------
      Total provision (benefit)   $ 3,427    $(2,863)   $  (595)
                                  =======    =======    =======
</TABLE>

The Company's effective income tax rate varied from the U.S. federal statutory
tax rate as follows:

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                                     ---------------------------
                                                     1995        1996       1997
                                                     ----        ----       ----
<S>                                                  <C>        <C>        <C>    
     U.S. federal statutory tax rate                 34.0%      (34.0%)    (34.0%)

     Change in tax rate resulting from:
        State income taxes, net of federal benefit    1.3         1.2       (1.7)
        Foreign taxes                                 0.8         0.5       (0.2)
        Nondeductible goodwill amortization           0.3         0.3        0.1
        Benefit of foreign sales corporation           --        (1.1)        --
        Valuation allowance                            --          --       32.1
        Other                                         0.1        (1.2)       0.3
                                                     ====       =====      =====
      Effective tax rate                             36.5%      (34.3%)     (3.4%)
                                                     ====       =====      =====
</TABLE>

11.   SHAREHOLDERS' EQUITY

Preferred Stock

Series A

On December 31, 1993, the Company issued 100,000 shares of Series A 7%
cumulative convertible nonvoting preferred stock for $500,000 ("Series A
Preferred"). Dividends on the Series A Preferred accrue quarterly and must be
paid before dividends can be declared and paid on the Company's Common Stock. In
the event of liquidation, the holders of the Series A Preferred will be entitled
to $5.00 per share plus unpaid dividends before any payments are made to the
holders of Common Stock. The Series A Preferred is convertible at the holder's
option into 200,000 shares of Common Stock. The Series A Preferred may be
redeemed by the Company at $5.00 per share beginning January 1, 1999 and ending
December 31, 2004. The Company has reserved 200,000 shares of Common Stock for
issuance upon the conversion of the Series A Preferred.


                                       13
<PAGE>   22

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Series B

On December 19, 1997, the Company issued 3,000 shares of Series B 5% Cumulative
Convertible Preferred Stock for $3,000,000 ("Series B Preferred"). In connection
with this transaction, the Company also issued warrants to purchase 283,720
shares of common stock for an exercise price of approximately $2.68 per share
("the Warrants"). Dividends on the Series B Preferred accrue quarterly, are
payable in cash or stock and must be paid before dividends can be declared and
paid on the Company's Common Stock. Portions of the Series B Preferred may be
converted into the Company's Common Stock, at the option of the holders,
beginning in March 1998. All the Series B Preferred automatically converts to
common stock in December 2000. Subject to certain adjustments, the Series B
Preferred converts to Common Stock at the lesser of $2.68 per share or 90% of
the market price (as defined) of the Company's Common Stock at the time of
conversion. The Company has reserved approximately 2,245,000 shares of Common
Stock for issuance upon conversion of the Series B Preferred and exercise of the
warrants.

The 10% discount from market price of the conversion of preferred stock is
accounted for as a preferred stock dividend. The dividend is required to be
included in earnings per share computations over the period from the date of
issuance through the date the security is first convertible. The Company has
therefore included a $30,000 preferred stock dividend in its net loss per share
calculations for the year ended December 31, 1997 and will include an additional
$270,000 preferred stock dividend in its net income (loss) per share for the
quarter ending March 31, 1998 and the year ending December 31, 1998.

Stock Purchase Plan

In May 1995, the Company adopted an Employee Stock Purchase Plan which allows
eligible employees to buy the Company's Common Stock at a 15% discount from
market price utilizing payroll deductions. A total of 100,000 shares have been
reserved for issuance under this Plan. During 1995, 1996 and 1997, 3,971, 11,123
and 23,600 shares of Common Stock were purchased by employees under this Plan,
respectively. As of December 31, 1997, 61,306 shares were available for future
sale under the Plan.

12.   STOCK-BASED COMPENSATION

The Company adopted two stock option plans in 1994 that provide for the grant of
incentive and nonqualified stock options to the Company's employees, officers,
and directors. At December 31, 1997, the Company had 2,103,513 shares of Common
Stock reserved for issuance pursuant to these plans. Options generally vest over
a four-year period commencing one year from the date of grant.

Pro forma information regarding net income (loss) per share is required by FASB
Statement 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The value
for these options was estimated at the date of grant using a Black-Scholes
option-pricing model with the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                1995         1996         1997
                                                ----         ----         ----
<S>                                              <C>          <C>          <C>
Expected dividend yield                          0%            0%           0%
Expected stock price volatility               37.6%         48.5%        61.3%
Risk-free interest rate                        6.9%          6.1%         6.1%
Expected life of options in years              4.5           3.1          3.1
</TABLE>



                                       14
<PAGE>   23

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For purposes of pro forma disclosures, the estimated weighted average value of
the options granted of $3.05, $4.91 and $2.65 per share during 1995, 1996 and
1997, respectively, is amortized to expense over the options' vesting period.
During the phase in period of Statement 123, which has been applied only for
options granted after 1994, the effects of applying the Statement for providing
pro forma disclosure are not indicative of future amounts until the new rules
are applied to all outstanding nonvested awards. The Company's pro forma
information is as follows (in thousands except per share amounts):

<TABLE>
<CAPTION>
                                                     December 31,
                                           ------------------------------------
                                              1995         1996          1997
                                           ----------  ----------   -----------
<S>                                        <C>         <C>          <C>        
Net income (loss) - as reported            $    5,955  $   (5,490)  $  (16,695)
Net income (loss) - pro forma              $    5,459  $   (6,731)  $  (17,586)

Diluted earnings per share - as reported   $     0.59  $    (0.52)  $    (1.51)
Diluted earnings per share - pro forma     $     0.54  $    (0.64)  $    (1.59)
</TABLE>

A summary of options granted and outstanding are as follows (in thousands except
per share amounts):

<TABLE>
<CAPTION>
                                                                      WEIGHTED AVERAGE
                                                       NUMBER OF        EXERCISE PRICE
                                                        OPTIONS            PER SHARE
                                                        -------            ---------
<S>                                                  <C>              <C>  
Balance at January 1, 1995                                  974            $ 3.65
  Granted                                                 1,067            $ 8.54
  Exercised                                                 (72)           $ 4.01
  Forfeited/Canceled                                       (114)           $ 5.70
                                                     ----------

Balance at December 31, 1995  (exercisable 237)           1,855            $ 6.32
  Granted                                                   278            $13.43
  Exercised                                                (231)           $ 4.80
  Forfeited/Canceled                                       (222)           $ 9.94
                                                     ----------

Balance at December 31, 1996  (exercisable 801)           1,680            $ 7.21
  Granted                                                   492            $ 5.74
  Exercised                                                 (98)           $ 3.17
  Forfeited/Canceled                                       (566)           $10.19
                                                     ----------
 
Balance at December 31, 1997 (exercisable 904)            1,508            $ 5.29
                                                     ==========
</TABLE>

Included in the 1997 option grants are approximately 400,000 employee options
repriced to $6.50 per share.

The following table summarizes information concerning currently outstanding and
exercisable options:

<TABLE>
<CAPTION>
                              OPTIONS OUTSTANDING                 OPTIONS EXERCISABLE
                              -------------------                 -------------------
                                   WEIGHTED
                                   AVERAGE          WEIGHTED                     WEIGHTED
         RANGE OF      NUMBER      REMAINING        AVERAGE        NUMBER        AVERAGE
        EXERCISE     OUTSTANDING   CONTRACTUAL      EXERCISE     EXERCISABLE     EXERCISE
         PRICES     (IN THOUSANDS)   LIFE            PRICE      (IN THOUSANDS)    PRICE
------------------ ------------- ------------- -------------- ------------- --------------
<S>                <C>           <C>           <C>            <C>           <C>  
       $2.94-$4.40          444      6.6 years        $ 3.20           390         $ 3.20
       $4.40-$6.60        1,034      7.7 years        $ 5.92           494         $ 5.65
      $6.60-$16.75           30      7.9 years        $14.63            20         $16.75
                   ------------                                ----------- 
                          1,508      7.4 years        $ 5.29           904         $ 4.84
                   ============                                =========== 
</TABLE>

At December 31, 1997 options to purchase 595,356 shares were available for
future grant.



                                       15
<PAGE>   24


                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13.   FOREIGN CURRENCY TRANSACTIONS

The Company enters into foreign currency forward contracts, generally with terms
of 270 days or less, as a hedge against some of its foreign currency
commitments. Derivative financial instruments held by the Company are generally
used to manage well-defined foreign exchange and interest rate risks which occur
in the normal course of business. Forward foreign exchange contracts are used by
the Company to reduce the potential impact of unfavorable fluctuations in
foreign exchange rates. The Company regularly has off balance sheet commitments
to buy and sell foreign currencies relating to foreign exchange contracts to
hedge against future currency fluctuations.

Gains and losses on foreign currency contracts not intended to hedge operating
requirements are reported currently in other income. Gains and losses on foreign
currency contracts intended to meet firm commitments are deferred and recognized
as part of the cost of the underlying transaction being hedged. Counterparties
to the foreign exchange contracts are typically major international financial
institutions. The Company's theoretical risk in these transactions is the cost
of replacing, at current market rates, these contracts in the event of default
by the counterparty. Management believes the risk of incurring such losses as a
result of a default by a counterparty is remote.

During 1996 and 1997, the Company recognized losses on foreign currency
contracts totaling approximately $160,000 and $17,000, respectively. The Company
recognized approximately $646,000 in gains on foreign currency futures and
forward contracts during the year ended December 31, 1995. These amounts are
included in cost of goods sold in the accompanying statements of operations. The
Company had no open foreign currency contracts as of December 31, 1997.

14.   COMMITMENTS AND CONTINGENCIES

Leases

The Company is committed under noncancelable operating leases expiring at
various dates through 2003 for warehouse, manufacturing and office facilities.
The leases generally require that the payments of taxes, insurance and
maintenance are the responsibility of the Company.

At December 31, 1997, the Company's future minimum rental payments and related
sublease rentals receivable with respect to non-cancelable operating leases with
terms in excess of one year were as follows:

<TABLE>
<CAPTION>
                              (In thousands)                      Rents
                                                    Future     Receivable
                                                    Minimum       Under
                                                   Payments     Subleases
                                                  ------------ ------------
<S>                                                 <C>            <C> 
              1998                                  $1,233         $201
              1999                                   1,157          183
              2000                                   1,066          143
              2001                                     937          125
              2002                                     766           64
              Thereafter                               782           --
                                                  ------------ ------------
                                                    $5,941         $716
                                                  ============ ============
</TABLE>

Rent expense, net of sublease income, for the years ended December 31, 1995,
1996 and 1997 was approximately $406,000, $1,042,000 and $1,053,000,
respectively.



                                       16
<PAGE>   25

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Class Action Lawsuit

In March 1997, a shareholder filed a lawsuit against the Company and four of its
current or former officers and directors. The lawsuit alleges violations of
certain federal and state securities laws, and purports to seek unspecified
monetary damages on behalf of a class of shareholders who purchased the
Company's Common Stock during the period of August 10, 1995 through December 30,
1996. The Company intends to defend itself vigorously, however there can be no
assurance that the Company will be successful in its defense against the action.
An award of damages against the Company in excess of applicable insurance, if
any, the expenditure of significant sums in defense thereof or diversion of
management's attention from other business concerns, could each have a material
adverse effect on the Company's financial condition and results of operations.

From time to time, the Company is subject to various other pending and
threatened legal actions that arise in the normal course of business. In the
opinion of management, liabilities arising from these claims will not have a
material effect on the financial position of the Company.

15.   EMPLOYEE BENEFIT PLANS

Beginning January 1996, the Company provided a 401(k) plan covering
substantially all of its U.S. employees. Under this plan, participating
employees may defer up to 15% of their pre-tax earnings, subject to certain
Internal Revenue Service limitations. The Company provides matching
contributions which vest 20% annually over a five year period equal to 25% of
each employee's contribution. The Company's 1996 and 1997 matching contributions
for this plan were approximately $31,000 and $39,000, respectively.

16.   CONCENTRATION OF CREDIT RISK AND GEOGRAPHICAL INFORMATION

The Company sells its products to customers predominantly located throughout
North America, Japan and Europe. The concentrations of credit risk with respect
to trade receivables are considered minimal due to the Company's ongoing credit
evaluations of its customers. Based on the Company's assessment of credit risk,
sales in the United States and Canada are made on open credit, C.O.D., cash in
advance, or by postdated check. International sales are generally made on a cash
in advance or letter of credit basis. In 1995 and 1996, sales to the Company's
principal Japanese distributor accounted for approximately 22% and 17% of net
sales, respectively. In 1996, sales to another of the Company's Japanese
distributors accounted for 12%. No one customer accounted for more than 10% of
revenues in 1997.

Worldwide sales of the Company's products were (in thousands):

<TABLE>
<CAPTION>
                                                 December 31,
                                                 ------------
                                        1995         1996         1997
                                        ----         ----         ----
<S>                                    <C>          <C>          <C>    
      North America                    $50,212      $41,016      $24,907
      Japan                             17,051       28,470        7,989
      Europe and other                   7,587        6,242        3,579
                                     ----------    --------      --------

                                       $74,850      $75,728      $36,475
                                     ==========    ========    =========   
</TABLE>


                                       17
<PAGE>   26

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


17.   EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:

   
<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                             -----------------------
                                                        1995          1996       1997
                                                        ----          ----       ----
                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                   <C>         <C>         <C>      
 Numerator:
     Net income (loss)                                $  5,955    $ (5,490)   $(16,695)
     Preferred stock dividends                             (35)        (35)        (70)
                                                      --------    --------    --------
     Numerator for basic earnings per share -
       income available to common stockholders           5,920      (5,525)    (16,765)
        
     Effect of dilutive securities:
        Preferred stock dividends                           35          --          --
                                                      ========    ========    ========
     Numerator for diluted earnings per share -
       income available to common stockholders
       after assumed conversions                      $  5,955    $ (5,525)   $(16,765)
                                                      ========    ========    ========

 Denominator:
     Denominator for basic earnings per share -
       weighted average shares                           8,872      10,614      11,128

     Effect of dilutive securities: (1)
        Employee stock options                           1,060          --          --
        Convertible preferred stock                        200          --          --
                                                      --------    --------    --------
     Dilutive potential common shares                    1,260          --          --
                                                      --------    --------    --------
     Denominator for diluted earnings per share -
       adjusted weighted average shares and                                            
       assumed conversions                              10,132      10,614      11,128
                                                      ========    ========    ========

     Basic earnings per share                         $   0.67    $  (0.52)   $  (1.51)
                                                      ========    ========    ========
     Diluted earnings per share                       $   0.59    $  (0.52)   $  (1.51)
                                                      ========    ========    ========
</TABLE>
    

(1) The effects of potential common securities are excluded from the diluted
    calculation for 1996 and 1997 as their effects would be antidilutive.



                                       18
<PAGE>   27

                                   RIDE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


18.   QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                FIRST     SECOND     THIRD       FOURTH
                                                -----     ------     -----       ------
                                              (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                          <C>         <C>         <C>        <C>     
1996:
  Net sales                                  $ 12,777    $ 13,501    $ 35,329   $ 14,121
  Gross profit (loss)                           3,387       4,164      11,344     (4,808)(1)
  Net income (loss)                              (982)        411       3,642     (8,561)(2)
  Net income (loss) per share (basic)           (0.09)       0.04        0.34      (0.80)(4)
  Net income (loss) per share (diluted)         (0.09)       0.04        0.32      (0.80)(4)

  Balance sheet data (at end of quarter):
    Accounts receivable, net                    9,404      13,993      28,257     14,193
    Inventories                                 6,153      11,865      16,302      5,986
    Working capital                            23,584      23,411      26,920     20,941

1997:
  Net sales                                  $  5,034    $  2,525    $ 18,215   $ 10,701
  Gross profit (loss)                           1,328         664       5,824      2,002
  Net income (loss)                            (2,182)     (2,254)        661    (12,920)(3)
  Net income (loss) per share (basic)           (0.20)      (0.21)       0.06      (1.12)(4)
  Net income (loss) per share (diluted)         (0.20)      (0.21)       0.06      (1.12)(4)

  Balance sheet data (at end of quarter):
    Accounts receivable, net                    8,311       6,339      17,300     12,588
    Inventories                                 6,289      10,111      11,065      6,564
    Working capital                            18,435      15,644      16,768     15,208
</TABLE>

(1) Includes $6.5 million inventory write-down. See Note 6.

(2) Includes $6.5 million inventory write-down and $2.5 million restructuring
    charge. See Note 6.

(3) Includes $8.6 million loss on impairment of goodwill. See Note 3.

(4) The 1996 and first three quarters of 1997 basic and diluted net income
    (loss) per share have been restated to comply with FASB Statement 128,
    "Earnings per Share," which was adopted in the fourth quarter of 1997.


                                       19
<PAGE>   28

                                         PART IV

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

    (a) Documents filed as part of this report:

         1.  Financial Statements.

<TABLE>
<CAPTION>
                                                                             Form 10-K
                                                                            Page Number

<S>            <C>                                                          <C>
                 A.  Report of Ernst & Young LLP, Independent Auditors. .

                 B.  Consolidated Balance Sheets as of December 31, 1996
               and 1997 . . . . . . . . . . . . . . . . . . . . . . . . .

                 C.  Consolidated Statements of Operations for the years
               ended December 31, 1995, 1996 and 1997. . . . . . . . . .

                 D. Consolidated Statements of Shareholders' Equity for
               the years ended December 31, 1995, 1996 and 1997. . . . .

                 E.  Consolidated Statements of Cash Flows for the years
               ended December 31, 1995, 1996 and 1997. . . . . . . . . .

                 F.  Notes to Consolidated Financial Statements. . . . .
</TABLE>


         2.   Financial Statement Schedules.

<TABLE>
<CAPTION>
                                                                             Form 10-K
                                                                            Page Number
<S>                                                                              <C>
               Schedule II - Valuation and Qualifying Accounts. . . . . .

         Financial statements and schedules not included herein have been
         omitted because of the absence of conditions under which they are
         required or because the required information, where material, is shown
         in the consolidated financial statements or notes thereto.
</TABLE>


         3.  Exhibits.

<TABLE>
<CAPTION>
   Exhibit No.                        Description

<S>              <C>                   
   
       3.1       Restated Articles of Incorporation and Certificate of
                 Designation of Relative Rights and Preferences of the Series A
                 7% Cumulative Nonvoting Preferred Stock (1)
       3.2       Bylaws of the Company (1)
       3.3       Articles of Amendment to Articles of Incorporation (4)
       3.4       Articles of Amendment to Articles of Incorporation (5)
       3.5       Articles of Correction (6)
       3.6       Amendment to Certificate of Designation of Relative Rights and
                 Preferences of the Series A 7% Cumulative Nonvoting Preferred
                 Stock (15)
    
</TABLE>


<PAGE>   29
   
<TABLE>
<S>              <C>                                                    
       3.7       Certificate of Designation of Relative Rights and Preferences
                 of the Series B 5% Cumulative Convertible Nonvoting Preferred
                 Stock (16)
       4.1       Article VI of the Articles of Incorporation regarding
                 Shareholder Rights (See Exhibit 3.1) (1)
       4.2       Article VIII of the Articles of Incorporation regarding Voting
                 Rights (See Exhibit 3.1) (1)
       4.3       Specimen Stock Certificate (2)
</TABLE>
    
<PAGE>   30
   
<TABLE>
<S>              <C> 
      10.28      Form of Ride Snowboard Company 1994 Stock Option Plan(1)
      10.29      Form of Ride Snowboard Company 1994 Directors' Nonqualified
                 Stock Option Plan(1)
      10.34      Standard Form Multiple Occupancy Lease, dated November 29,
                 1994, by and between Ride Snowboard Company and BDC Preston
                 Properties One Limited Partnership(3)
      10.35      Business Loan Agreement, dated June 30, 1997, by and between
                 Ride, Inc. and U.S. Bank of Washington, N.A.(14)
      10.45      Ride Snowboard Company 1995 Employee Stock Purchase Plan(4)
      10.46      Ride Snowboard Company 1995 Foreign Subsidiary Employee Stock
                 Purchase Plan(4)
      10.49      Employment Agreement, dated September 1, 1995, between the
                 Company and Bernard Gervasoni(7)
      10.50      Employment Agreement, dated October 19, 1995, between the
                 Company and David Milo Myers(8)
      10.51      Registration Rights Agreement dated October 19, 1995, between
                 the Company and David Milo Myers, Lawrence Kraus and Michael
                 Wise(8) 
</TABLE>
    
<PAGE>   31
   
<TABLE>
<S>              <C>
      10.57      Employment Agreement, dated January 1, 1996, by and between
                 C.A.S. Sports International, Inc. and Robert F. Marcovitch(9)
      10.58      First Amendment, dated August 4, 1995, to Lease Agreement by
                 and between Ride Snowboard Company and BDC Preston Properties
                 One Limited Partnership(9)
      10.59      Second Amendment, dated November 21, 1995, to Lease Agreement
                 by and between Ride Snowboard Company and BDC Preston
                 Properties One Limited Partnership(9)
      10.60      Third Amendment, dated March 26, 1996, to Lease Agreement by
                 and between Ride Snowboard Company and BDC Preston Properties
                 One Limited Partnership(9)
      10.63      Agreement, dated May 7, 1996, by and between Ride, Inc. and
                 James J. Salter(10)
      10.64      Agreement, dated August 2, 1996, by and between Ride, Inc. and
                 Kenneth J. Finkelstein(10)
      10.65      Agreement, dated August 7, 1996, by and between Ride, Inc. and
                 Robert E. Hall(10)
      10.66      Stock Purchase Agreement, dated October 11, 1996, by and
                 between Ride, Inc. and Gen-X Equipment, Inc.(11)
      10.67      Amendment No. 1 to Resignation Agreement, dated October 11,
                 1996, by and between Ride, Inc. and James J. Salter.(11)
      10.68      Amendment No. 1 to Resignation Agreement, dated October 11,
                 1996, by and between Ride, Inc. and Kenneth J. Finkelstein.(11)
      10.69      Resignation and Release Agreement, dated October 28, 1996, by
                 and between Ride, Inc. and Timothy G. Pogue(12)
      10.72*     Financial Advisory Agreement, dated January 15, 1997, by and
                 between Ride, Inc. and Roger Madison, Jr.(13)
      10.73      Asset Purchase Agreement, dated July 15, 1997, by and between
                 Ride, Inc. and Galena Creek Trading Company, Inc. (dba Smiley
                 Hats)(14)
      10.74      Subscription Agreement, dated December 19, 1997 by and between
                 Ride, Inc. and Advantage Fund II, Ltd.(17)
      10.75      Registration Rights Agreement, dated December 19, 1997 by and
                 between Ride, Inc. and Advantage Fund II, Ltd.(17)
</TABLE>
    

<PAGE>   32

<TABLE>
<S>              <C> 
      10.76      Warrant Agreement, dated December 18, 1997 by and between Ride,
                 Inc. and Rochon Capital Group, Ltd.(17)
      10.77      Placement Agency Agreement, dated December 18, 1997 by and
                 between Ride, Inc. and Rochon Capital Group, Ltd.(17)
      10.78      Common Stock Purchase Warrant issued to Advantage Fund II, Ltd.
                 dated December 19, 1997(17)
      10.79      Common Stock Purchase Warrant issued to Rochon Capital Group,
                 Ltd. dated December 19, 1997(18)
       21.1      Schedule of Subsidiaries of Ride, Inc.
       23.1      Consent of Ernst & Young LLP, Independent Auditors
       27.1      Financial Data Schedule

</TABLE>

-----------------------

<TABLE>
   
<S>     <C>                                                               
(1)     Exhibit is incorporated by reference to an identically numbered exhibit to the Company's
        Registration Statement on Form SB-2, file no. 33-75770-LA.

(2)     Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Amendment No. 1 to Registration Statement on Form SB-2,
        file no. 33-75770-LA.

(3)     Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Annual Report on Form 10-K for the fiscal year ended
        December 31, 1994.

(4)     Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Registration Statement on Form S-1, file no. 33-94814.

(5)    Exhibit is incorporated by reference to an identically numbered exhibit
        to Amendment No. 1 to the Company's Registration Statement on Form S-1,
        file no. 33-94814.
     
</TABLE>


<PAGE>   33

<TABLE>
   
<S>     <C>    
     
(6)     Exhibit is incorporated by reference to an identically numbered exhibit
        to Amendment No. 2 to the Company's Registration Statement on Form S-1,
        file no. 33-94814.

(7)     Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Current Report on Form 8-K, dated September 1, 1995.

(8)     Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Current Report on Form 8-K, dated October 20, 1995.

(9)     Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Annual Report on Form 10-K for the fiscal year ended
        December 31, 1995.

(10)    Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
        ended June 30, 1996.

(11)    Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Current Report on Form 8-K, dated October 11, 1996.

(12)    Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Annual Report on Form 10-K for the fiscal year ended
        December 31, 1996.

(13)    Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
        ended March 31, 1997.

(14)    Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
        ended September 30, 1997.

(15)    Exhibit is incorporated by reference to exhibit 4.6 to the Company's 
        Current Report on Form 8-K, dated January 8, 1998.

(16)    Exhibit is incorporated by reference to exhibit 4.5 to the Company's 
        Current Report on Form 8-K, dated January 8, 1998.

(17)    Exhibit is incorporated by reference to an identically numbered exhibit
        to the Company's Current Report on Form 8-K, dated January 8, 1998.
    
</TABLE>


<PAGE>   34

<TABLE>
<S>     <C>

   
(18)    Exhibit is incorporated by reference to exhibit 4.4 to the Company's Current Report on
        Form 8-K, dated January 8, 1998.

*       Certain portions of this exhibit have been omitted and filed separately
        with the Commission pursuant to an Application for Confidential
        Treatment.
    
</TABLE>

(b)  Reports on Form 8-K

The Company filed a report on Form 8-K, dated December 19, 1997, related to the
private placement of Series B Convertible Preferred Stock.

<PAGE>   35
   
                                   SIGNATURES


   Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this Form 10-K/A to be 
signed on its behalf by the undersigned thereunto duly authorized.



       RIDE, INC.
       -----------------------------------
           (Registrant)

       /s/ ROBERT E. HALL
       -----------------------------------
                 Robert E. Hall
      Chief Executive Officer and President

DATE:  March 24, 1998
    
<PAGE>   36

                                          EXHIBIT INDEX


<TABLE>
<CAPTION>
                                                                    Manual
Exhibit No.  Description                                            Page No.
-----------  -----------                                            --------

<S>         <C>                                                     <C>
21.1        Schedule of Subsidiaries

23.1        Consent of Ernst & Young LLP, Independent Auditors

27.1        Financial Data Schedule
</TABLE>


<PAGE>   37

                                   RIDE, INC.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
              COL. A                 COL. B              COL. C                COL. D       COL. E
              ------                 ------              ------                ------       ------
<S>           <C>                    <C>                 <C>                   <C>          <C>
</TABLE>

<TABLE>
<CAPTION>
                                                          Additions
                                                 -----------------------------
                                                                 Charged to
                                       Balance at  Charged to      Other                     Balance at
                                       Beginning   Costs and      Accounts-    Deductions-   End of
           Description                 of Period    Expenses      Describe     Describe      Period
           -----------                 ---------    --------      --------     ---------     ------
<S>                                    <C>         <C>            <C>           <C>           <C>   
YEAR ENDED DECEMBER 31, 1997
     Reserves and allowances deducted
        from asset accounts
        Allowance for bad debts        $  655      $  361         $109(1)       $  200(2)     $  925
        Inventory reserves             $5,916                     $ 42(1)       $3,919(3)     $2,039

YEAR ENDED DECEMBER 31, 1996
     Reserves and allowances deducted
        from asset accounts
        Allowance for bad debts        $  359      $  495                       $  199(2)     $  655
        Inventory reserves             $  100      $6,500                       $  684(3)     $5,916

YEAR ENDED DECEMBER 31, 1995
     Reserves and allowances deducted
        from asset accounts
        Allowance for bad debts        $  143      $  253         $ 44(1)       $   81(2)    $  359
        Inventory reserves             $   --      $   60         $130(1)       $   90(3)    $  100
</TABLE>


(1) Amounts acquired in purchase acquisitions.

(2) Uncollectible accounts written off, net of recoveries.

(3) Cost of goods sold in excess of net realized value and obsolete inventories
    written off, net of recoveries.