<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                  FORM 10-K/A

                                 ANNUAL REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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

                                    K2 INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                  DELAWARE                                      95-2077125
          (State of Incorporation)                 (I.R.S. Employer Identification No.)

          4900 SOUTH EASTERN AVENUE                                90040
           LOS ANGELES, CALIFORNIA                              (Zip Code)
  (Address of principal executive offices)
</TABLE>

       Registrant's telephone number, including area code (323) 724-2800

          Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                                                          NAME OF EACH EXCHANGE ON
             TITLE OF EACH CLASS                              WHICH REGISTERED
             -------------------                          ------------------------
<S>                                            <C>
          Common Stock, par value $1                      New York Stock Exchange
                                                              Pacific Exchange
   Series A Preferred Stock Purchase Rights               New York Stock Exchange
                                                              Pacific Exchange
</TABLE>

          Securities registered pursuant to Section 12(g) of the Act:

                                      None

    Indicate by an "X" whether the registrant 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, and has been subject to such filing requirements for
the past 90 days.  Yes /X/  No / /

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

    The aggregate market value of the voting stock of the registrants held by
nonaffiliates was approximately $130,135,325 as of March 7, 2000.

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 7, 2000.

             Common Stock, par value $1            17,949,700 Shares

Documents Incorporated by Reference

    Portions of the proxy statement for the Annual Meeting of Shareholders
    to be held April 28, 2000 are incorporated by reference in Part III.

--------------------------------------------------------------------------------
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<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                    K2 INC.

                       STATEMENTS OF CONSOLIDATED INCOME

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31
                                                              ------------------------------------------
                                                                  1999           1998           1997
                                                              ------------   ------------   ------------
                                                               (IN THOUSANDS, EXCEPT PER SHARE FIGURES)
<S>                                                           <C>            <C>            <C>
Net sales...................................................    $635,105       $574,510       $559,030
Cost of products sold.......................................     462,033        418,950        391,860
                                                                --------       --------       --------
  Gross profit..............................................     173,072        155,560        167,170
Selling expenses............................................      95,774         87,389         79,832
General and administrative expenses.........................      40,341         39,030         38,303
Research and development expenses...........................      12,113         12,391         11,979
                                                                --------       --------       --------
  Operating income..........................................      24,844         16,750         37,056
Interest expense............................................      12,741         12,163         10,560
Other income, net...........................................        (413)          (236)          (619)
                                                                --------       --------       --------
  Income from continuing operations before provision for
    income taxes............................................      12,516          4,823         27,115
Provision for income taxes..................................       4,005            955          7,815
                                                                --------       --------       --------
  Income from continuing operations.........................       8,511          3,868         19,300
Discontinued operations, net of taxes.......................       1,332            975          2,600
                                                                --------       --------       --------
Net Income..................................................    $  9,843       $  4,843       $ 21,900
                                                                ========       ========       ========
Basic earnings per share:
  Continuing operations.....................................    $   0.50       $   0.23       $   1.17
  Discontinued operations...................................        0.08           0.06           0.15
                                                                --------       --------       --------
  Net income................................................    $   0.58       $   0.29       $   1.32
                                                                ========       ========       ========
Diluted earnings per share:
  Continuing operations.....................................    $   0.50       $   0.23       $   1.15
  Discontinued operations...................................        0.08           0.06           0.16
                                                                --------       --------       --------
  Net income................................................    $   0.58       $   0.29       $   1.31
                                                                ========       ========       ========
Basic shares outstanding....................................      16,880         16,554         16,541
Diluted shares outstanding..................................      16,883         16,637         16,713
</TABLE>

                 See notes to consolidated financial statements

                                       20
<PAGE>
                                    K2 INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   DECEMBER 31
                                                              ---------------------
                                                                1999        1998
                                                              ---------   ---------
                                                              (IN THOUSANDS, EXCEPT
                                                                NUMBER OF SHARES)
<S>                                                           <C>         <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents.................................  $  9,421    $  3,394
  Accounts receivable, net..................................   149,151     126,011
  Inventories, net..........................................   172,154     188,348
  Deferred taxes and income taxes receivable................    10,030      12,780
  Prepaid expenses and other current assets.................     5,053       5,037
                                                              --------    --------
    Total current assets....................................   345,809     335,570

PROPERTY, PLANT AND EQUIPMENT
  Land and land improvements................................     1,637         992
  Buildings and leasehold improvements......................    32,219      29,814
  Machinery and equipment...................................   124,421     111,872
  Construction in progress..................................     4,176       8,393
                                                              --------    --------
                                                               162,453     151,071
  Less allowance for depreciation and amortization..........    89,858      84,480
                                                              --------    --------
                                                                72,595      66,591

OTHER ASSETS
  Intangibles, principally goodwill, net....................    38,928      19,564
  Net assets of discontinued operations.....................    24,706      27,511
  Other.....................................................     5,840       3,759
                                                              --------    --------
    Total Assets............................................  $487,878    $452,995
                                                              ========    ========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Bank loans................................................  $ 57,359    $ 64,350
  Accounts payable..........................................    44,231      20,807
  Accrued payroll and related...............................    19,781      15,982
  Other accruals............................................    32,808      21,555
  Current portion of long-term debt.........................     4,444       4,444
                                                              --------    --------
    Total current liabilities...............................   158,623     127,138
Long-term Debt..............................................   107,280     110,724
Deferred Taxes..............................................     3,455      13,014

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Preferred Stock, $1 par value, authorized
    12,500,000 shares, none issued
  Common Stock, $1 par value, authorized 40,000,000 shares,
    issued shares--18,672,646 in 1999 and 17,190,652 in
    1998....................................................    18,673      17,191
  Additional paid-in capital................................   143,326     132,488
  Retained earnings.........................................    75,248      67,227
  Employee Stock Ownership Plan and stock option loans......    (1,975)     (1,981)
  Treasury shares at cost, 733,110 in 1999 and 623,759 in
    1998....................................................    (8,992)     (8,106)
  Accumulated other comprehensive loss......................    (7,760)     (4,700)
                                                              --------    --------
    Total Shareholders' Equity..............................   218,520     202,119
                                                              --------    --------
    Total Liabilities and Shareholders' Equity..............  $487,878    $452,995
                                                              ========    ========
</TABLE>

                 See notes to consolidated financial statements

                                       21
<PAGE>
                                    K2 INC.

                STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                        FOR THE THREE YEARS ENDED DECEMBER 31, 1999
                                  ---------------------------------------------------------------------------------------
                                                                     EMPLOYEE STOCK               ACCUMULATED
                                             ADDITIONAL                OWNERSHIP      TREASURY       OTHER
                                   COMMON     PAID-IN     RETAINED   PLAN AND STOCK   SHARES,    COMPREHENSIVE
                                   STOCK      CAPITAL     EARNINGS    OPTION LOANS    AT COST        LOSS         TOTAL
                                  --------   ----------   --------   --------------   --------   -------------   --------
                                                          (IN THOUSANDS EXCEPT PER SHARE FIGURES)
<S>                               <C>        <C>          <C>        <C>              <C>        <C>             <C>
BALANCE AT
  DECEMBER 31, 1996.............  $17,132     $131,627    $55,047       $(7,087)      $(6,719)      $(1,012)     $188,988
  Net income for the year
    1997........................                           21,900                                                  21,900
  Translation adjustments.......                                                                     (3,905)       (3,905)
                                                                                                                 --------
  Comprehensive income..........                                                                                   17,995

  Exercise of stock options.....       28          459                                                                487
  Cash dividends, $.44 per
    share.......................                           (7,279)                                                 (7,279)
  Repurchase of shares and stock
    option loan repayments......                                          1,070        (1,387)                       (317)
  Employee Stock Ownership Plan,
    amortization, loan and
    partial loan repayment......                                          3,011                                     3,011
                                  -------     --------    -------       -------       -------       -------      --------
BALANCE AT
  DECEMBER 31, 1997.............   17,160      132,086     69,668        (3,006)       (8,106)       (4,917)      202,885

  Net income for the year
    1998........................                            4,843                                                   4,843
  Translation adjustments.......                                                                        217           217
                                                                                                                 --------
  Comprehensive income..........                                                                                    5,060
  Exercise of stock options.....       31          402                                                                433
  Cash dividends, $.44 per
    share.......................                           (7,284)                                                 (7,284)
  Stock option loan(s)..........                                            (96)                                      (96)
  Employee Stock Ownership Plan,
    amortization, loan and
    partial loan repayment......                                          1,121                                     1,121
                                  -------     --------    -------       -------       -------       -------      --------
BALANCE AT
  DECEMBER 31, 1998.............   17,191      132,488     67,227        (1,981)       (8,106)       (4,700)      202,119

  Net income for the year
    1999........................                            9,843                                                   9,843
  Translation adjustments.......                                                                     (3,060)       (3,060)
                                                                                                                 --------
  Comprehensive income..........                                                                                    6,783
  Issuance of shares from
    acquisition of Ride, Inc....    1,482       10,838                                                             12,320
  Repurchase of shares..........                                                         (886)                       (886)
  Cash dividends, $.11 per
    share.......................                           (1,822)                                                 (1,822)
  Stock option loan(s)..........                                             (4)                                       (4)
  Employee Stock Ownership Plan,
    amortization, loan and
    partial loan repayment......                                             10                                        10
                                  -------     --------    -------       -------       -------       -------      --------
BALANCE AT
  DECEMBER 31, 1999.............  $18,673     $143,326    $75,248       $(1,975)      $(8,992)      $(7,760)     $218,520
                                  =======     ========    =======       =======       =======       =======      ========
</TABLE>

                 See notes to consolidated financial statements

                                       22
<PAGE>
                                    K2 INC.

                     STATEMENTS OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31
                                                              -------------------------------
                                                                1999        1998       1997
                                                              ---------   --------   --------
                                                                        (THOUSANDS)
<S>                                                           <C>         <C>        <C>
OPERATING ACTIVITIES
  Income from continuing operations.........................  $   8,511   $  3,868   $ 19,300
  Gain on sale of investments...............................                           (3,500)
  Adjustments to reconcile income from continuing operations
    to net cash provided by (used in) operating activities:
    Depreciation of property, plant and equipment...........     11,685     11,183     10,313
    Amortization of intangibles.............................      2,041      1,556      1,261
    Deferred taxes and income taxes receivable..............     (6,522)    (4,515)    (1,476)
    Changes in operating assets and liabilities:
      Accounts receivable...................................    (10,653)   (13,521)   (27,638)
      Inventories...........................................     25,830     (5,353)   (31,813)
      Prepaid expenses and other current assets.............        283      1,438     (1,139)
      Accounts payable......................................     14,389    (16,500)     4,325
      Payrolls and other accruals...........................      1,867       (828)     4,733
                                                              ---------   --------   --------
  Net cash provided by (used in) continuing operations......     47,431    (22,672)   (25,634)

INVESTING ACTIVITIES
  Property, plant and equipment expenditures................    (16,204)   (17,257)   (19,425)
  Disposals of property, plant and equipment................      4,013      1,527        298
  Purchases of businesses, net of cash acquired.............     (2,629)                 (834)
  Proceeds on sale of investments...........................                            9,908
  Other items, net..........................................         99       (729)    (5,654)
                                                              ---------   --------   --------
  Net cash used in investing activities.....................    (14,721)   (16,459)   (15,707)

FINANCING ACTIVITIES
  Borrowings under long-term debt...........................    125,035     62,500     51,892
  Payments of long-term debt................................   (128,479)   (40,444)   (52,755)
  Net increase (decrease) in short-term bank loans..........    (22,749)    15,383     41,658
  Net proceeds from accounts receivable facility............                            3,275
  Exercise of stock options.................................                   433        487
  Dividends paid............................................     (1,822)    (7,284)    (7,279)
  Net repayments by ESOP....................................                 1,107      3,000
                                                              ---------   --------   --------
  Net cash (used in) provided by financing activities.......    (28,015)    31,695     40,278
                                                              ---------   --------   --------
Net increase (decrease) in cash and cash equivalents from
  continuing operations.....................................      4,695     (7,436)    (1,063)

DISCONTINUED OPERATIONS
  Income from discontinued operations.......................      1,332        975      2,600
  Adjustments to reconcile income from discontinued
    operations to net cash used in discontinued operations:
    Depreciation and amortization...........................      2,939      2,844      2,652
    Capital expenditures....................................     (2,565)    (3,442)    (4,303)
    Other items, net........................................       (374)     4,747     (4,734)
                                                              ---------   --------   --------
Cash provided by (used in) discontinued operations..........      1,332      5,124     (3,785)
                                                              ---------   --------   --------
Net increase (decrease) in cash and cash equivalents........      6,027     (2,312)    (4,848)
Cash and cash equivalents at beginning of year..............      3,394      5,706     10,554
                                                              ---------   --------   --------
Cash and cash equivalents at end of year....................  $   9,421   $  3,394   $  5,706
                                                              =========   ========   ========
</TABLE>

                 See notes to consolidated financial statements

                                       23
<PAGE>
                                    K2 INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 1999

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

    K2 is a leading designer, manufacturer and marketer of brand name sporting
goods, which represent $474.3 million, or 74.7%, of K2's 1999 consolidated net
sales, and other recreational products, which represent $41.0 million in 1999
net sales. K2 is also a manufacturer and supplier of selected industrial
products, which had sales of $119.8 million in 1999.

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of K2 and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

FISCAL PERIODS

    K2 maintains its books using a 52/53 week year ending on the last Sunday of
December. For purposes of the consolidated financial statements, the year end is
stated as of December 31. The years ended December 31, 1999, 1998 and 1997
consisted of 52 weeks.

REVENUE RECOGNITION

    K2 recognizes revenue from product sales upon shipment to its customers.

USE OF ESTIMATES

    The preparation of financial statements in conformity with Generally
Accepted Accounting Principles ("GAAP") requires management to make estimates
and assumptions affecting the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual amounts could differ from those estimates.

FOREIGN CURRENCY TRANSLATION

    The functional currency for most foreign operations is the local currency.
The financial statements of foreign subsidiaries have been translated into
United States dollars. Asset and liability accounts have been translated using
the exchange rate in effect at the balance sheet date. Revenue and expense
accounts have been translated using the average exchange rate for the year. The
gains and losses associated with the translation of the financial statements
resulting from the changes in exchange rates from year to year have been
reported in the other comprehensive income or loss account in shareholders'
equity. Transaction gains or losses, other than intercompany debt deemed to be
of a long-term nature, are included in net income in the period in which they
occur.

CASH EQUIVALENTS

    Short-term investments (including any debt securities) that are part of K2's
cash management portfolio are classified as cash equivalents and are carried at
amortized cost. These investments are highly liquid, are of limited credit risk
and have original maturities of three months or less when purchased. The
carrying amount of cash equivalents approximates market.

                                       24
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTS RECEIVABLE AND ALLOWANCES

    Accounts receivable are the result of K2's worldwide sales activities.
Although K2's credit risk is spread across a large number of customers within a
wide geographic area, periodic concentrations within a specific industry occur
due to the seasonality of its businesses. At December 31, 1999 and 1998, K2's
receivables from sporting goods retailers who sell skis, skates, snowboards and
bikes amounted to 71% and 66%, respectively of total receivables. K2 generally
does not require collateral and performs periodic credit evaluations to manage
its credit risk. Accounts receivable are net of allowances for doubtful accounts
of $6,572,000 and $5,798,000 at December 31, 1999 and 1998, respectively.

INVENTORIES

    Inventories are stated at the lower of cost or market. Cost is determined on
the LIFO method with respect to approximately 14% and 23% of total inventories
at December 31, 1999 and 1998, respectively. Cost was determined on the FIFO
method for all other inventories.

LONG-LIVED ASSETS

    Long-lived assets, include, among others, goodwill, intangible assets, and
property, plant and equipment and are reviewed periodically to determine if the
carrying values are not impaired. K2 considers the future undiscounted cash
flows of the acquired companies in assessing the recoverability of these assets.
If indicators of impairment are present, or if long-lived assets are expected to
be disposed of, impairment losses are recorded. Any impairment is charged to
expense in the period in which the impairment is incurred.

PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment are recorded at cost. Depreciation is provided
on the straight-line method based upon the estimated useful lives of the assets.
In the fourth quarter of 1999, K2 wrote down certain equipment in connection
with the restructuring of its ski and snowboard operations no longer in use. In
the third quarter of 1998, K2 wrote down certain equipment related to its bike
product line no longer in use.

INTANGIBLES

    Goodwill arising from acquisitions is amortized on a straight-line basis
over a period ranging from 15 to 40 years. Other intangibles are amortized on a
straight-line basis over 3 to 15 years. Accumulated amortization of intangibles
as of December 31, 1999 and 1998, amounted to $8,867,000 and $7,259,000,
respectively.

STOCK-BASED COMPENSATION AND OTHER EQUITY INSTRUMENTS

    K2 and its subsidiaries account for employee and directors' stock option
grants using the intrinsic method. Generally, the exercise price of K2's
employee stock options equals or exceeds the market price of the underlying
stock on the date of grant and no compensation expense is recognized. If the
option price is less than the fair value, K2 records compensation expense over
the vesting period of the option. Options

                                       25
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
granted to non-employees are accounted for using the fair value method. K2
disclosed the pro forma effects of using the fair value method for all option
plans in the accompanying financial statements.

ADVERTISING COSTS

    Advertising costs are expensed as incurred. Advertising costs for the years
ended December 31, 1999, 1998 and 1997 amounted to $23,680,000, $21,903,000 and
$20,548,000, respectively.

RESEARCH AND DEVELOPMENT

    Research and development costs are charged to expense as incurred.

OTHER INCOME

    Other income includes interest income, royalties and other miscellaneous
income

INCOME TAXES

    Income taxes are recorded using the liability method.

EARNINGS PER SHARE

    Basic earnings per share ("EPS") are determined by dividing net income by
the weighted average number of shares outstanding during the period. Diluted EPS
reflects the potential dilutive effects of stock options, using the treasury
stock method. The dilutive effects of stock options included in the dilutive EPS
calculation at December 31, 1999, 1998 and 1997 were 3,000, 83,000 and 171,000,
respectively. During 1999, 1998 and 1997, the computation of diluted EPS did not
include the options to purchase 1,064,000, 542,000 and 4,500 shares of common
stock, respectively, because their inclusion would have been antidilutive.

NEWLY ISSUED ACCOUNTING STANDARDS

    Effective in 2001 accounting for gains or losses resulting from changes in
the value of derivatives would be changed depending on the use of the derivative
and whether they qualify for hedge accounting. The adoption of this new
requirement is not expected to have a material impact on the financial position
or results of operations of K2.

RECLASSIFICATIONS

    Certain prior year amounts have been reclassified to conform with the
current year presentation.

NOTE 2--CHARGES AGAINST EARNINGS

    In the fourth quarter of 1999, a pre-tax charge of $10.5 million was charged
to cost of products sold to cover restructuring costs of $6.5 million and
downsizing costs of $4.0 million. K2's strategic initiative was adopted in 1999
to reduce the cost structure of its ski and snowboard operations by taking
advantage of lower cost manufacturing and sourcing opportunities. In accordance
with the initiative, K2's Seattle manufacturing facility has been downsized and
approximately half of its ski and all of its snowboard

                                       26
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 2--CHARGES AGAINST EARNINGS (CONTINUED)
manufacturing have been moved to either K2's China or California production
facilities or to third party sourcing operations worldwide. The restructuring
charge reflects expenses associated with the write-off of related equipment and
inventory, the reduction of approximately 200 production personnel and the
utilization of approximately 200 temporary workers. The downsizing costs were
incurred in 1999 as a result of reducing the size of the Seattle manufacturing
facility. Approximately $5.3 million of the total amount is cash related.

    The following table summarizes the activity in 1999:

<TABLE>
<CAPTION>
                                                                SEVERANCE
                                       EQUIPMENT   INVENTORY   AND RELATED   SUBTOTAL   DOWNSIZING    TOTAL
                                       ---------   ---------   -----------   --------   ----------   --------
                                                                    (THOUSANDS)
<S>                                    <C>         <C>         <C>           <C>        <C>          <C>
1999 Charges.........................   $3,355      $2,229         $923       $6,507      $3,993     $10,500

UTILIZED:
  Cash...............................                  500          130          630       3,852       4,482
  Non-cash...........................    3,355       1,132                     4,487         141       4,628
                                        ------      ------         ----       ------      ------     -------
                                         3,355       1,632          130        5,117       3,993       9,110
Balance December 31, 1999............   $   --      $  597         $793       $1,390      $   --     $ 1,390
                                        ======      ======         ====       ======      ======     =======
</TABLE>

    In the third quarter of 1998, a pre-tax charge of $14.5 million was included
in earnings from continuing operations. Of this amount, $10.5 million was
charged to cost of products sold to write down certain categories of bike and
skate inventories as a result of a sudden change in the market demand for those
products. The balance of the charge was recorded in general and administrative
expenses for costs associated with the change in the bike business and
implementing planned cost reduction programs at the winter sports operations.
The charges primarily related to non-cash items. At December 31, 1999, in
addition to the reserves in the table above, approximately $13.5 million of the
1998 charges had been utilized with approximately $2.1 million of reserves
remaining primarily against inventory and accounts receivable. These reserves
are expected to be utilized in the year 2000, with no significant cash outflow,
as the related inventory is disposed of and the accounts receivable balances are
written off. In 1997, a pre-tax restructuring charge of $2.4 million was
recorded in connection with the announcement of K2's plan to consolidate its
mountain bike and outdoor equipment operations into its existing facility on
Vashon Island, Washington, and to move its production of outdoor products to
outside sources. The restructuring was completed during 1998.

NOTE 3--DISCONTINUED OPERATIONS

    On September 10, 1998, K2 adopted a plan to dispose of its Simplex building
products division as part of K2's strategic focus on the core sporting goods and
other recreational businesses. Accordingly, Simplex is shown in the accompanying
consolidated financial statements as a discontinued operation.

    Income from discontinued operations are net of taxes of $718,000, $525,000
and $1,400,000 for the years ended December 31, 1999, 1998 and 1997,
respectively. Net assets of discontinued operations were segregated in the
accompanying consolidated balance sheets and consisted primarily of accounts
receivable, inventories and fixed assets, offset by accounts payable, accrued
payroll and related items and other accruals. Net sales of $72,985,000,
$86,616,000 and $87,903,000 for the years ended December 31, 1999,

                                       27
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 3--DISCONTINUED OPERATIONS (CONTINUED)
1998 and 1997, respectively, were excluded from consolidated net sales in the
accompanying consolidated statements of income.

NOTE 4--ACQUISITIONS

    On October 7, 1999 K2 completed the acquisition of Ride, Inc. ("Ride"), a
designer and manufacturer of snowboard equipment, apparel and accessories, in an
all-stock merger transaction. Under the terms of the merger, each share of Ride
common and preferred stock was converted into 1/10 share of common stock of K2.
Based on the number of preferred and common shares outstanding of Ride as of the
acquisition date, approximately 1,482,000 shares of K2's common stock were
issued to the Ride shareholders and the purchase price was valued at
$12.3 million. This transaction was accounted for using the purchase method of
accounting; accordingly, the purchased assets and liabilities have been recorded
at their estimated fair values at the date of the acquisition. The preliminary
purchase price allocation resulted in an excess of cost over net assets acquired
of approximately $15.3 million, to be amortized on a straight-line basis over
20 years. The results of operations of Ride have been included in the
consolidated financial statements since the date of acquisition.

    The following summarized unaudited pro forma results of operations of K2
assume the acquisition of Ride had occurred as of the beginning of the
respective periods. This pro forma information does not purport to be indicative
of what would have occurred had the acquisition been made as of those dates, or
of results which may occur in the future:

PRO FORMA INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                           FOR THE YEAR ENDED
                                                              DECEMBER 31,
                                                       --------------------------
                                                          1999            1998
                                                       ----------      ----------
                                                         (DOLLARS IN THOUSANDS,
                                                       EXCEPT PER SHARE AMOUNTS)
<S>                                                    <C>             <C>
Net sales............................................   $653,582        $616,288
Loss from continuing operations......................    (11,440)         (5,008)
Loss per common share................................       (.63)           (.28)
</TABLE>

    On March 26, 1999, K2 acquired certain assets relating to the Morrow
snowboard business, including the Morrow trademark, from Morrow
Snowboards, Inc. The net cash purchase price was approximately $3.0 million. The
purchase price allocation resulted in an excess of cost over net assets acquired
of approximately $1.7 million, to be amortized on a straight-line basis over
15 years. The results of operations related to the acquisition have been
included in the consolidated financial statements since the date of acquisition.
The acquisition did not have a material pro forma impact on operations.

    On August 19, 1998, K2 purchased the remaining 65% of shares of K2 Japan
Corporation not previously owned by K2. K2 Japan Corporation is a distributor of
K2 branded products located in Japan. The transaction was accounted for using
the purchase method of accounting and the results of operations from this
business have been included in the consolidated statements of income from the
date of acquisition. The purchase price of the acquisition was not material. The
fair value of the liabilities of K2

                                       28
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 4--ACQUISITIONS (CONTINUED)
Japan Corporation at the acquisition date approximated the fair value of the
assets acquired including $2.7 million of goodwill to be amortized over
25 years.

NOTE 5--INVENTORIES

    Inventories consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                            1999       1998
                                                          --------   --------
                                                              (THOUSANDS)
<S>                                                       <C>        <C>
Finished goods..........................................  $129,429   $146,233
Work in process.........................................    10,573      8,078
Raw materials...........................................    34,228     37,911
                                                          --------   --------
  Total at lower of FIFO cost or market (approximates
    current cost).......................................   174,230    192,222
Less LIFO valuation reserve.............................     2,076      3,874
                                                          --------   --------
                                                          $172,154   $188,348
                                                          ========   ========
</TABLE>

NOTE 6--BORROWINGS AND OTHER FINANCIAL INSTRUMENTS

    At December 31, 1999, K2 had $84.6 million under foreign and domestic
short-term lines of credit with $56.8 million outstanding and no borrowings
available under K2's debt covenant restrictions. The foreign subsidiaries' lines
of credit generally have no termination date but are reviewed annually for
renewal and are denominated in the subsidiaries' local currencies. At
December 31, 1999, interest rates on short-term lines of credit ranged from 2.1%
to 11.2%. The weighted average interest rates on short-term lines of credit as
of December 31, 1999 and 1998 were 6.5% and 4.4%, respectively.

                                       29
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 6--BORROWINGS AND OTHER FINANCIAL INSTRUMENTS (CONTINUED)
    The principal components of long-term debt at December 31 were:

<TABLE>
<CAPTION>
                                                            1999       1998
                                                          --------   --------
                                                              (THOUSANDS)
<S>                                                       <C>        <C>
Notes payable due in seven equal annual principal
  installments through 2009 with annual interest payable
  at 8.41%..............................................  $ 50,000
Notes payable due in six equal annual principal
  installments through 2004 with semi-annual interest
  payable at 8.39%......................................    22,224   $ 26,668
$75 million five-year unsecured bank revolving credit
  line due September 30, 2004, interest payments due at
  LIBOR plus 1.00% to 2.00% and a commitment fee of
  0.225% to 0.50% on the unused portion of the line
  through September 30, 2004............................    39,500
$100 million bank revolving credit line replaced by the
  $75 million credit line described above...............               88,500
                                                          --------   --------
                                                           111,724    115,168
Less-amounts due within one year........................     4,444      4,444
                                                          --------   --------
                                                          $107,280   $110,724
                                                          ========   ========
</TABLE>

    The principal amount of long-term debt maturing in each of the five years
following 1999 is:

<TABLE>
<CAPTION>
                                                              (THOUSANDS)
<S>                                                           <C>
2000........................................................    $  4,444
2001........................................................       4,444
2002........................................................       4,444
2003........................................................      11,587
2004........................................................      51,091
Thereafter..................................................      35,714
                                                                --------
                                                                $111,724
                                                                ========
</TABLE>

    Interest paid on short- and long-term debt for the years ended December 31,
1999, 1998 and 1997 was $12.7 million, $12.2 million and $10.6 million,
respectively.

    Under an accounts receivable arrangement, K2 can sell with limited recourse,
undivided participation interests in designated pools of accounts receivable for
a period of up to five years, in an amount not to exceed $50 million. Under this
arrangement, $50 million of accounts receivables as of December 31, 1999 and
1998, were sold.

    The $75 million credit line and the accounts receivable arrangement, among
other things, restrict amounts available for payment of cash dividends and stock
repurchases by K2. As of December 31, 1999, $9.3 million of retained earnings
were free of such restrictions. The interest rate on the $75 million credit line
at December 31, 1999 was 8.5%.

    K2 had $21.0 million of letters of credit outstanding as of December 31,
1999.

                                       30
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 6--BORROWINGS AND OTHER FINANCIAL INSTRUMENTS (CONTINUED)
    The carrying amounts for the short-term lines of credit and the long-term
bank revolving credit line approximate their fair value since floating interest
rates are charged, which approximate market rates. The fair value of the
$50.0 million 8.41% notes payable, based on quoted market price, is
$46.6 million as compared to a carrying amount of $50.0 million. The fair value
of the $22.2 million 8.39% notes payable, based on quoted market price, is
$21.0 million as compared to a carrying amount of $22.2 million.

    K2, including its foreign subsidiaries, enters forward exchange contracts to
hedge certain firm and anticipated sales and purchase commitments which are
denominated in U.S. or foreign currencies. The purpose of the foreign currency
hedging activities is to reduce K2's risk of fluctuating exchange rates. At
December 31, 1999, K2 had foreign exchange contracts with maturities of within
one year to exchange various foreign currencies to dollars in the aggregate
amount of $33.6 million, and with a fair market value of approximately
$33.2 million based on current market rates. The fair value of these contracts,
represented a net unrealized gain of approximately $438,000 as of December 31,
1999 and will be recognized in earnings when the underlying transaction occurs.
Counterparties on foreign exchange contracts expose K2 to credit losses in the
event of non-performance, but K2 does not anticipate non-performance.

NOTE 7--INCOME TAXES

    Pretax income from continuing operations for the years ended December 31 was
taxed under the following jurisdictions:

<TABLE>
<CAPTION>
                                                     1999       1998       1997
                                                   --------   --------   --------
                                                            (THOUSANDS)
<S>                                                <C>        <C>        <C>
Domestic.........................................  $ 6,365    $(2,543)   $22,003
Foreign..........................................    6,151      7,366      5,112
                                                   -------    -------    -------
                                                   $12,516    $ 4,823    $27,115
                                                   =======    =======    =======
</TABLE>

    Components of the income tax provision applicable to continuing operations
for the three years ended December 31 are:

<TABLE>
<CAPTION>
                                  1999                  1998                  1997
                           -------------------   -------------------   -------------------
                           CURRENT    DEFERRED   CURRENT    DEFERRED   CURRENT    DEFERRED
                           --------   --------   --------   --------   --------   --------
                                                     (THOUSANDS)
<S>                        <C>        <C>        <C>        <C>        <C>        <C>
Federal..................  $ 9,147    $(7,317)    $1,525    $(2,825)    $8,140    $(1,695)
State....................      705        (25)       575         70         60        470
Foreign..................    2,050       (555)     2,115       (505)       405        435
                           -------    -------     ------    -------     ------    -------
                           $11,902    $(7,897)    $4,215    $(3,260)    $8,605    $  (790)
                           =======    =======     ======    =======     ======    =======
</TABLE>

                                       31
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 7--INCOME TAXES (CONTINUED)
    The principal elements accounting for the difference between the statutory
federal income tax rate and the effective tax rate for the three years ended
December 31 are:

<TABLE>
<CAPTION>
                                                           1999          1998          1997
                                                         --------      --------      --------
                                                                      (PERCENT)
<S>                                                      <C>           <C>           <C>
Statutory federal income tax rate......................    35.0          35.0          35.0
State income tax effect, net of federal benefit........     3.5           8.7           1.3
Valuation allowance and foreign earnings...............    (5.5)        (20.5)         (6.1)
Other..................................................    (1.0)         (3.4)         (1.4)
                                                          -----         -----         -----
                                                           32.0          19.8          28.8
                                                          =====         =====         =====
</TABLE>

    No provision for United States income taxes has been made on undistributed
earnings of foreign subsidiaries, since these earnings are considered to be
permanently reinvested. At December 31, 1999, foreign subsidiaries had unused
operating loss carryforwards of approximately $6.1 million of which
approximately $260,000 expires in 2001 and the remainder carries forward
indefinitely. Since the use of these operating loss carryforwards is limited to
future taxable earnings of the related foreign subsidiaries, a valuation
allowance has been recognized to offset the deferred tax assets arising from
such carryforwards. The valuation allowance, which is included in the tax effect
of foreign earnings above, was reduced by $0.3 million in 1999 and $1.6 million
in 1998, due to the utilization of the related operating loss carryforwards, and
increased in 1997 by a net $4.1 million due to a previously unusable foreign
loss carryforward which became usable.

    At the acquisition date, Ride had federal net operating loss carryovers. The
ability of K2 to utilize these losses to reduce future tax due is very limited.
For financial reporting purposes, the realization of these carryovers, if any,
will reduce goodwill recorded on the acquisition of Ride.

                                       32
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 7--INCOME TAXES (CONTINUED)
    Deferred tax assets and liabilities are comprised of the following at
December 31:

<TABLE>
<CAPTION>
                                                              1999       1998
                                                            --------   --------
                                                                (THOUSANDS)
<S>                                                         <C>        <C>
Deferred tax liabilities:
Depreciation and amortization of property, plant and
  equipment...............................................  $ 5,618    $ 5,078
Trademark amortization....................................      390        364
Other.....................................................    1,758      7,572
                                                            -------    -------
  Deferred tax liabilities................................    7,766     13,014
Deferred tax assets:
Insurance accruals........................................    2,044      1,426
Tax effect of foreign loss carryforwards..................    3,063      2,999
Tax effect of domestic loss carryforwards.................    3,000          0
Bad debt reserve..........................................    1,167      1,207
Inventory reserve.........................................    1,106      2,038
Other.....................................................   11,112      8,109
                                                            -------    -------
                                                             21,492     15,779
Valuation allowance.......................................    6,063      2,999
                                                            -------    -------
  Current deferred tax assets.............................   15,429     12,780
                                                            -------    -------
Deferred tax (assets) liabilites, net.....................  $(7,663)   $   234
                                                            =======    =======
</TABLE>

    Income taxes paid, net of refunds, in the years ended December 31, 1999,
1998 and 1997 were $9.0 million, $5.3 million and $10.9 million, respectively.

NOTE 8--COMMITMENTS AND CONTINGENCIES

    Future minimum payments under noncancelable operating leases as of
December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                                                              (THOUSANDS)
<S>                                                           <C>
2000........................................................    $ 5,166
2001........................................................      4,239
2002........................................................      2,271
2003........................................................      1,532
2004........................................................        787
Thereafter..................................................        211
                                                                -------
                                                                $14,206
                                                                =======
</TABLE>

    Leases are primarily for rentals of facilities, and about two-thirds of
these contain rights to extend the terms from one to ten years.

                                       33
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 8--COMMITMENTS AND CONTINGENCIES (CONTINUED)
    Net rental expense, including those rents payable under noncancelable leases
and month-to-month tenancies, amounted to $4,797,000, $4,417,000 and $3,684,000
for the years ended December 31, 1999, 1998 and 1997, respectively.

    K2 has not experienced any substantial difficulty in obtaining raw
materials, parts or finished goods inventory for its sporting goods and other
recreational products businesses. Certain components and finished products,
however, are manufactured or assembled abroad and therefore could be subject to
interruption as a result of local unrest, currency exchange fluctuations,
increased tariffs, trade difficulties and other factors. Major portions of K2's
in-line skates are manufactured by a single supplier. K2 believes alternate
sources for these products could be found.

    K2 is subject to various legal actions and proceedings in the normal course
of business. While the ultimate outcome of these matters cannot be predicted
with certainty, management does not believe these matters will have a material
adverse effect on K2's financial statements.

    K2 is one of several named potentially responsible parties ("PRP") in an
Environmental Protection Agency matter involving discharge of hazardous
materials at old waste sites in South Carolina and Michigan. Although
environmental laws technically impose joint and several liability upon each PRP
at each site, the extent of K2's required financial contribution to the cleanup
of these sites is expected to be limited based upon the number and financial
strength of the other named PRPs and the volume and types of waste involved
which might be attributable to K2.

    Environmental and related remediation costs are difficult to quantify for a
number of reasons including the number of parties involved, the difficulty in
determining the extent of the contamination, the length of time remediation may
require, the complexity of environmental regulation and the continuing
advancement of remediation technology. K2's environmental engineers, consultants
and legal counsel has developed estimates based upon cost analyses and other
available information for this particular site. K2 accrues for these costs when
it is probable a liability has been incurred and the amount can be reasonably
estimated. At December 31, 1999 and 1998, K2 had recorded an estimated liability
of approximately $806,000 and $963,000, respectively, with no provision for
expected insurance recovery.

    The ultimate outcome of these matters cannot be predicted with certainty,
however, management does not believe these matters will have a material adverse
effect on K2's financial statements.

NOTE 9--PENSION PLANS AND OTHER BENEFIT PLANS

    K2 sponsors several trusteed noncontributory defined benefit pension plans
covering most of its employees. Benefits are generally based on years of service
and the employee's highest compensation for five consecutive years during the
years of credited service. Contributions are intended to provide for benefits
attributable to service to date and service expected to be provided in the
future. K2 funds these plans in accordance with the Employee Retirement Income
Security Act of 1974.

    K2 also sponsors defined contribution pension plans covering most of its
domestic employees. Contributions by K2 for the defined contribution plans are
determined as a percent of the amounts contributed by the respective employees.
During 1999, 1998 and 1997, K2 expensed contributions of $940,000, $928,000 and
$753,000, respectively, related to these plans.

                                       34
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 9--PENSION PLANS AND OTHER BENEFIT PLANS (CONTINUED)
    The following table sets forth the defined benefit plans' funded status and
amounts recognized in K2's consolidated balance sheets at December 31:

<TABLE>
<CAPTION>
                                                              PENSION PLAN
                                                           -------------------
                                                             1999       1998
                                                           --------   --------
                                                               (THOUSANDS)
<S>                                                        <C>        <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year..................  $ 58,411   $51,896
Service cost.............................................     2,089     1,749
Interest cost............................................     4,041     3,796
Actuarial (gain) loss....................................    (8,294)    3,994
Benefits paid............................................    (3,085)   (3,024)
                                                           --------   -------
Benefit obligation at end of year........................  $ 53,162   $58,411
                                                           ========   =======
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year...........  $ 50,611   $48,432
Actual return on fair value of plan assets...............     9,531     4,884
Employer contributions...................................       319       319
Benefits paid............................................    (3,085)   (3,024)
                                                           --------   -------
Fair value of plan assets at end of year.................    57,376    50,611
                                                           --------   -------
Funded status of the plan................................     4,214    (7,800)
Unrecognized prior service cost..........................     1,146     1,283
Unrecognized net transition asset........................       (65)     (275)
Unrecognized actuarial (gain) loss.......................   (10,705)    2,666
                                                           --------   -------
Accrued benefit cost.....................................  $ (5,410)  $(4,126)
                                                           ========   =======
WEIGHTED AVERAGE ASSUMPTIONS
Discount rate............................................     7.75%     6.75%
Expected return on plan assets...........................     9.00%     9.00%
Rate of compensation increase............................     5.00%     5.00%
</TABLE>

    The actuarial gains included in the benefit obligation for 1999 are the
result of the increase in the discount rate assumption made for the year as well
as a change in demographic data. The actuarial losses included in the benefit
obligation for 1998 are primarily the result of a decrease in the discount rate
assumption made for the year.

                                       35
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 9--PENSION PLANS AND OTHER BENEFIT PLANS (CONTINUED)
    Net pension cost consisted of the following for the year ended December 31:

<TABLE>
<CAPTION>
                                                             PENSION PLAN
                                                    ------------------------------
                                                      1999       1998       1997
                                                    --------   --------   --------
                                                             (THOUSANDS)
<S>                                                 <C>        <C>        <C>
NET PERIODIC COST
Service cost......................................  $ 2,089    $ 1,749    $ 1,707
Interest cost.....................................    4,041      3,796      3,698
Expected return on plan assets....................   (4,474)    (4,280)    (3,857)
Amortization of prior service cost................      137        139        110
Amortization of transition asset..................     (210)      (210)      (210)
Amortization of loss..............................       20         13         24
                                                    -------    -------    -------
Net periodic cost.................................  $ 1,603    $ 1,207    $ 1,472
                                                    =======    =======    =======
</TABLE>

                                       36
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 10--QUARTERLY OPERATING DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                      QUARTER
                                                    --------------------------------------------
                                                     FIRST      SECOND     THIRD     FOURTH (A)    YEAR (B)
                                                    --------   --------   --------   -----------   ---------
                                                            (IN MILLIONS, EXCEPT PER SHARE FIGURES)
<S>                                                 <C>        <C>        <C>        <C>           <C>
1999
Net sales from continuing operations..............   $163.0     $158.3     $139.9      $173.9       $635.1
Gross profit......................................     44.3       48.2       43.7        36.9        173.1

Income (loss) from continuing operations..........      3.1        7.1        3.3        (5.0)         8.5
Discontinued operations, net of taxes.............      0.1        0.9        0.0         0.3          1.3
                                                     ------     ------     ------      ------       ------
Net income (loss).................................   $  3.2     $  8.0     $  3.3      $ (4.7)      $  9.8
                                                     ======     ======     ======      ======       ======

Basic earnings (loss) per share
  Continuing operations...........................   $ 0.19     $ 0.43     $ 0.20      $(0.29)      $ 0.50
  Discontinued operations.........................     0.01       0.05       0.00        0.02         0.08
                                                     ------     ------     ------      ------       ------
  Net income (loss)...............................   $ 0.20     $ 0.48     $ 0.20      $(0.27)      $ 0.58
                                                     ======     ======     ======      ======       ======

Diluted earnings (loss) per share
  Continuing operations...........................   $ 0.19     $ 0.43     $ 0.20      $(0.29)      $ 0.50
  Discontinued operations.........................     0.01       0.05       0.00        0.02         0.08
                                                     ------     ------     ------      ------       ------
  Net income (loss)...............................   $ 0.20     $ 0.48     $ 0.20      $(0.27)      $ 0.58
                                                     ======     ======     ======      ======       ======

Cash dividend per share...........................   $ 0.11     $   --     $   --      $   --       $ 0.11

Stock prices:
  High............................................   $11.63     $11.63     $10.56      $ 8.94       $11.63
  Low.............................................   $ 8.56     $ 7.88     $ 8.81      $ 6.94       $ 6.94
</TABLE>

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

(a) Gross profit, income from continuing operations and net income are $47.4,
    $2.1and $2.4, respectively, before restructuring costs totaling $6.5 ($4.4
    net of taxes) and downsizing costs totaling $4.0 ($2.7 net of taxes). See
    Note 2 to Notes to Consolidated Financial Statements.

(b) Gross profit, income from continuing operations and net income are $183.6,
    $15.7 and $17.0, respectively, before restructuring costs totaling $6.5
    ($4.4 net of taxes) and downsizing costs totaling $4.0 ($2.7 net of taxes).
    See Note 2 to Notes to Consolidated Financial Statements.

                                       37
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 10--QUARTERLY OPERATING DATA (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                                                                       QUARTER
                                                     -------------------------------------------
                                                      FIRST      SECOND    THIRD (A)     FOURTH    YEAR (B)
                                                     --------   --------   ----------   --------   ---------
                                                             (IN MILLIONS, EXCEPT PER SHARE FIGURES)
<S>                                                  <C>        <C>        <C>          <C>        <C>
1998
Net sales from continuing operations...............   $151.0     $156.8      $133.9      $132.8     $574.5
Gross profit.......................................     41.5       47.7        29.4        37.0      155.6

Income (loss) from continuing operations...........      2.7        7.4        (7.9)        1.6        3.8
Discontinued operations, net of taxes..............      0.4        0.7        (0.4)        0.3        1.0
                                                      ------     ------      ------      ------     ------
Net income (loss)..................................   $  3.1     $  8.1      $ (8.3)     $  1.9     $  4.8
                                                      ======     ======      ======      ======     ======

Basic earnings (loss) per share
  Continuing operations............................   $ 0.16     $ 0.45      $(0.48)     $ 0.10     $ 0.23
  Discontinued operations..........................     0.03       0.04       (0.03)       0.02       0.06
                                                      ------     ------      ------      ------     ------
  Net income (loss)................................   $ 0.19     $ 0.49      $(0.51)     $ 0.12     $ 0.29
                                                      ======     ======      ======      ======     ======

Diluted earnings (loss) per share
  Continuing operations............................   $ 0.16     $ 0.45      $(0.48)     $ 0.10     $ 0.23
  Discontinued operations..........................     0.03       0.04       (0.03)       0.02       0.06
                                                      ------     ------      ------      ------     ------
  Net income (loss)................................   $ 0.19     $ 0.49      $(0.51)     $ 0.12     $ 0.29
                                                      ======     ======      ======      ======     ======

Cash dividend per share............................   $ 0.11     $ 0.11      $ 0.11      $ 0.11     $ 0.44

Stock prices:
  High.............................................   $23.69     $23.63      $21.13      $17.44     $23.69
  Low..............................................   $17.75     $16.69      $15.00      $ 7.75     $ 7.75
</TABLE>

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

(a) Gross profit, income from continuing operations and net income are $39.9,
    $1.5 and $1.1, respectively, before charges totaling $14.5 ($9.4 net of
    taxes). See Note 2 to Notes to Consolidated Financial Statements.

(b) Gross profit, income from continuing operations and net income are $166.1,
    $13.3 and $14.3, respectively, before charges totaling $14.5 ($9.4 net of
    taxes). See Note 2 to Notes to Consolidated Financial Statements.

NOTE 11--STOCK OPTIONS

    Under K2's 1999 and 1994 Incentive Stock Option Plans ("1999 Plan" and "1994
Plan", respectively), options may be granted to eligible directors and key
employees of K2 and its subsidiaries at not less than 100% of the market value
of the shares on the dates of grant. No further options may be granted under the
1994 Plan.

    The 1999 Plan permits the granting of options for terms not to exceed ten
years from date of grant. The options are exercisable on such terms as may be
established at the dates of grant.

                                       38
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 11--STOCK OPTIONS (CONTINUED)
    K2 is authorized, at the discretion of the Compensation Committee, to
provide loans to key employees in connection with the exercise of stock options
under the 1999 and 1994 Plans. At December 31, 1999 and 1998, there was a total
of $215,000 and $230,000, respectively, of loans to key employees made to enable
the exercise of stock options, and accrued interest outstanding. The loans are
due on various dates through June 2003. The amounts of these loans are shown as
a reduction of shareholders' equity. The loans are collateralized by the
underlying shares of stock issued and bear interest at the applicable rates
published by the IRS.

    Options granted, exercised and forfeited for the 1999 Plan and 1994 Plan
were as follows:

<TABLE>
<CAPTION>
                                                                               EXERCISE PRICE
                                                                       ------------------------------
                                                                                             WEIGHTED
                                                            SHARES       LOW        HIGH     AVERAGE
                                                           ---------   --------   --------   --------
<S>                                                        <C>         <C>        <C>        <C>
Options outstanding at December 31, 1996.................    689,059    $11.11     $26.50     $20.56
  Granted................................................    234,000     23.50      29.88      23.68
  Exercised..............................................    (28,418)    11.11      23.00      17.13
  Forfeited..............................................    (16,850)    16.38      29.88      24.33
                                                           ---------

Options outstanding at December 31, 1997.................    877,791     11.11      29.88      21.43
  Granted................................................    359,500     11.25      21.50      11.38
  Exercised..............................................    (30,572)    11.11      22.88      14.15
  Forfeited..............................................    (84,058)    11.11      29.88      22.41
                                                           ---------

Options outstanding at December 31, 1998.................  1,122,661     11.11      29.88      18.33
  Granted................................................    229,500      7.50      10.63       7.55
  Forfeited..............................................    (63,050)    10.63      29.88      18.42
                                                           ---------

Options outstanding at December 31, 1999.................  1,289,111      7.50      29.88      16.40
                                                           =========
</TABLE>

    At December 31, 1999, 1998 and 1997, stock options to purchase 695,761,
500,711 and 667,332, shares were exercisable at weighted average prices of
$20.21, $20.02 and $21.19, respectively. At December 31, 1999, 2,534,536 shares
of common stock were reserved for issuance under the Plans.

    K2 uses the intrinsic-value method of accounting for stock-based awards
granted to employees. Accordingly, K2 has not recognized compensation expense
for its stock-based awards to employees. Had K2 elected to adopt the fair value
approach, net income and basic and diluted earnings per share would have been
$8,525,000, $.51 and $.50, respectively, for the year ended December 31, 1999,
$3,950,000, $.24

                                       39
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 11--STOCK OPTIONS (CONTINUED)
and $.24, respectively, for the year ended December 31, 1998 and $21,157,000,
$1.28 and $1.27, respectively, for the year ended December 31, 1997. The pro
forma effect was calculated using Black-Scholes option valuation model, and the
following assumptions were utilized.

<TABLE>
<CAPTION>
                                                    1999          1998          1997
                                                  --------      --------      --------
<S>                                               <C>           <C>           <C>
Risk free interest rate.........................      5.5%          5.0%          5.0%
Expected life...................................  5 years       5 years       5 years
Expected volatility.............................     .388          .326          .225
Expected dividend yield.........................       --           3.9%          2.2%
</TABLE>

    The pro forma amounts may not be representative of future disclosures since
the estimated fair value of stock options is amortized to expense over the
vesting period and additional options may be granted in future years. Since
changes in the subjective assumptions used in the Black-Scholes model can
materially affect the fair value estimate, management believes the model does
not provide a reliable measure of the fair value of its options.

    Options are granted at an exercise price equal to the fair market value at
the date of grant. Information regarding stock options outstanding as of
December 31, 1999 is as follows:

<TABLE>
<CAPTION>
                                                      OPTIONS OUTSTANDING
                                               ---------------------------------   OPTIONS EXERCISABLE
                                                                      WEIGHTED     -------------------
                                                          WEIGHTED     AVERAGE                WEIGHTED
                                                          AVERAGE     REMAINING               AVERAGE
                                                          EXERCISE   CONTRACTUAL              EXERCISE
PRICE RANGE                                     SHARES     PRICE        LIFE        SHARES     PRICE
-----------                                    --------   --------   -----------   --------   --------
<S>                                            <C>        <C>        <C>           <C>        <C>
$7.50 to $11.11..............................  286,331     $ 8.27    8.58 years     57,331     $11.11
$11.250 to $17.25............................  494,680      12.89    7.50 years    232,280      14.74
$21.50 to $29.88.............................  508,100      24.41    7.13 years    406,150      24.63
</TABLE>

NOTE 12--SHAREHOLDERS' EQUITY

    PREFERRED STOCK

    Shares are issuable in one or more series, and the Board of Directors has
authority to fix the terms and conditions of each series. No shares were issued
or outstanding during 1999 and 1998.

    EMPLOYEE STOCK OWNERSHIP PLAN

    K2 has an Employee Stock Ownership Plan ("ESOP") which covers substantially
all of its domestic non-union employees with at least one year of service. As of
December 31, 1999, the trust was indebted to K2 in the aggregate amount of
$565,000 in connection with stock purchases made from 1982 through 1984 of which
131,836 shares with an aggregate market value of $1,005,000 as of December 31,
1999 remained unallocated to participants. These loans are repayable over the
next three to five years with interest at prime plus 1/2%, not to exceed 18%,
and the unallocated shares will be released to participants proportionately as
these loans are repaid. Of the total dividends received by the ESOP on its
investment in K2's Common Stock, dividends on allocated and unallocated shares
in the amount of $29,000 and $167,000 in

                                       40
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 12--SHAREHOLDERS' EQUITY (CONTINUED)
1999 and 1998, respectively, were used to service these loans. Allocated shares
as of December 31, 1999 totaled 1,584,816.

    Additionally, the trust was indebted to K2 in the amount of $1,100,000 at
December 31, 1999 and 1998, in connection with distributions made to terminees.

    Shareholders' equity has been reduced by the amounts of the loans and any
payments made by K2 on behalf of the trust. The payments, made by K2 on behalf
of the trust, which at December 31, 1999 totaled $89,000, are being amortized to
expense over the lives of the loans.

    The amount of K2's annual contribution to the ESOP is at the discretion of
K2's Board of Directors. For the two years 1999 and 1998, contributions were
limited to amounts in excess of annual dividends, net of debt service, of the
ESOP necessary to fund obligations arising in each of those years to retired and
terminated employees. These amounts were $200,000 and $100,000, respectively.
ESOP expense, including amortization of the foregoing payments, was $638,000 and
$156,000 in 1999 and 1998, respectively. No expense was recorded and no
contributions were made in 1997.

    PREFERRED STOCK RIGHTS

    Rights are outstanding which entitle the holder of each share of Common
Stock of K2 to buy one one-hundredth of a share of Series A Junior Participating
Cumulative Preferred Stock at an exercise price of $60.00 per one one-hundredth
of a share, subject to adjustment. The rights are not separately tradable or
exercisable until a party either acquires, or makes a tender offer resulting in
ownership of, at least 15% of K2's common shares. If a person becomes the owner
of at least 15% of K2's outstanding common shares (an "Acquiring Person"), each
holder of a right other than such Acquiring Person and its affiliates is
entitled, upon payment of the then-current exercise price per right (the
"Exercise Price"), to receive shares of Common Stock (or Common Stock
equivalents) having a market value of twice the Exercise Price. If K2
subsequently engages in a merger, a business combination or an asset sale with
the Acquiring Person, each holder of a right other than the Acquiring Person and
its affiliates is thereafter entitled, upon payment of the Exercise Price, to
receive stock of the Acquiring Person having a market value of twice the
Exercise Price. At any time after any party becomes an Acquiring Person, the
Board of Directors may exchange the rights (except those held by the Acquiring
Person) at an exchange ratio of one common share per right. Prior to a person
becoming an Acquiring Person, the rights may be redeemed at a redemption price
of one cent per right, subject to adjustment. The rights are subject to
amendment by the Board.

NOTE 13--SEGMENT DATA

    K2 classifies its business into three segments based on similar product
types consisting of sporting goods products, other recreational products and
selected industrial products. The sporting goods segment consists primarily of
sports equipment used to participate in individual sports activities sold
primarily through sporting goods specialty dealers, regional and national
sporting goods chains and the sporting goods department of mass merchants. The
equipment includes in-line skates, skis, snowboards, bikes, fishing tackle and
flotation vests. The other recreational products segment are primarily active
leisure apparel sold principally into the advertising specialty market through
distributors, and leisure footwear and other apparel sold through specialty
sporting goods dealers. The industrial products segment includes monofilament
line sold to the paper industry, string trimmer line sold to a variety of
distributors, retailers

                                       41
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 13--SEGMENT DATA (CONTINUED)
and equipment manufacturers, fiberglass light poles sold to contractors, utility
companies and municipalities and marine and CB radio antennas sold to marine
dealers.

    K2 evaluates performance based on operating profit or loss (before interest,
corporate expenses and income taxes). The accounting policies of the reportable
segments are the same as those described in the summary of significant
accounting policies in Note 1 of Notes to Consolidated Financial Statements.
Intercompany profit or loss is eliminated where applicable.

    The information presented below is as of or for the year ended December 31.

<TABLE>
<CAPTION>
                                          NET SALES TO
                                     UNAFFILIATED CUSTOMERS             INTERSEGMENT SALES            OPERATING PROFIT (LOSS)
                                 ------------------------------   ------------------------------   ------------------------------
                                   1999       1998       1997       1999       1998       1997       1999       1998       1997
                                 --------   --------   --------   --------   --------   --------   --------   --------   --------
                                                                            (MILLIONS)
<S>                              <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Sporting goods.................   $474.3     $404.9     $410.8     $30.4      $18.6      $21.2      $15.0*     $ 5.3*     $26.3*
Other recreational.............     41.0       43.7       34.2       0.2        0.3         --       (1.9)      (1.1)       0.7
Industrial.....................    119.8      125.9      114.0       1.1        1.4        0.9       17.5       18.4       17.5
                                  ------     ------     ------     -----      -----      -----      -----      -----      -----
  Total segment data...........   $635.1     $574.5     $559.0     $31.7      $20.3      $22.1       30.6       22.6       44.5
                                  ======     ======     ======     =====      =====      =====      -----      -----      -----

Corporate expenses, net........                                                                      (5.4)      (5.6)      (6.8)
Interest expense...............                                                                      12.7       12.2       10.6
                                                                                                    -----      -----      -----
Income from continuing
  operations before provision
  for income taxes.............                                                                     $12.5      $ 4.8      $27.1
                                                                                                    =====      =====      =====
</TABLE>

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

*   1999, 1998 and 1997 include charges of $10.5 million, $14.5 million and
    $2.4 million, respectively.

<TABLE>
<CAPTION>
                                                                         DEPRECIATION AND
                                      IDENTIFIABLE ASSETS                  AMORTIZATION                 CAPITAL EXPENDITURES
                                 ------------------------------   ------------------------------   ------------------------------
                                   1999       1998       1997       1999       1998       1997       1999       1998       1997
                                 --------   --------   --------   --------   --------   --------   --------   --------   --------
                                                                            (MILLIONS)
<S>                              <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Sporting goods.................   $346.9     $301.3     $283.6     $ 9.9      $ 9.3      $ 8.1      $13.0      $ 6.9      $14.5
Other recreational.............     32.4       40.4       33.9       0.8        0.8        0.6        0.5        0.6        0.4
Industrial.....................     63.3       66.8       55.7       2.8        2.5        2.8        2.7        9.8        4.5
                                  ------     ------     ------     -----      -----      -----      -----      -----      -----
  Total segment data...........    442.6      408.5      373.2      13.5       12.6       11.5       16.2       17.3       19.4

Corporate......................     20.6       17.0       14.3       0.2        0.1        0.1
                                  ------     ------     ------     -----      -----      -----

  Total continuing
    operations.................    463.2      425.5      387.5      13.7       12.7       11.6       16.2       17.3       19.4
                                  ------     ------     ------     -----      -----      -----      -----      -----      -----
Discontinued operations........     24.7       27.5       31.9       2.9        2.8        2.7        2.6        3.4        4.3
                                  ------     ------     ------     -----      -----      -----      -----      -----      -----
  Total........................   $487.9     $453.0     $419.4     $16.6      $15.5      $14.3      $18.8      $20.7      $23.7
                                  ======     ======     ======     =====      =====      =====      =====      =====      =====
</TABLE>

                                       42
<PAGE>
                                    K2 INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 13--SEGMENT DATA (CONTINUED)

<TABLE>
<CAPTION>
                                                        1999       1998       1997
                                                      --------   --------   --------
                                                                (MILLIONS)
<S>                                                   <C>        <C>        <C>
NET SALES BY LOCATION
  United States.....................................   $408.1     $381.4     $406.7
  Europe............................................    170.1      153.0      125.0
  Asia..............................................     56.9       40.1       27.3
                                                       ------     ------     ------
    Total net sales.................................   $635.1     $574.5     $559.0
                                                       ======     ======     ======

ASSETS
  United States.....................................   $348.0     $320.9     $315.0
  Europe............................................     94.8       97.3       91.1
  Asia..............................................     45.1       34.8       13.3
                                                       ------     ------     ------
    Total assets....................................   $487.9     $453.0     $419.4
                                                       ======     ======     ======

LONG-LIVED ASSETS
  United States.....................................   $ 99.2     $ 75.4     $ 69.3
  Europe............................................      8.3        8.3        7.4
  Asia..............................................      4.0        2.5        2.6
                                                       ------     ------     ------
    Total long-lived assets.........................   $111.5     $ 86.2     $ 79.3
                                                       ======     ======     ======
</TABLE>

                                       43
<PAGE>
                                    K2 INC.

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders:

K2 Inc.

    We have audited the accompanying consolidated balance sheets of K2 Inc. and
subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 K2 Inc. and
subsidiaries at December 31, 1999 and 1998, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States.

                                          ERNST & YOUNG LLP

Los Angeles, California
February 21, 2000

                                       44
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

<TABLE>
<S>                                                    <C>  <C>
                                                       K2 INC.

                                                       By:           /s/ RICHARD M. RODSTEIN
                                                            -----------------------------------------
                                                                       Richard M. Rodstein
                                                              PRESIDENT AND CHIEF EXECUTIVE OFFICER

                                                       Date:              March 24, 2000
                                                       --------------------------------------------
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                    DATE
                      ---------                                    -----                    ----
<C>                                                    <S>                             <C>
               /s/ RICHARD M. RODSTEIN                 Director, President and Chief
     -------------------------------------------         Executive Officer (Principal  March 24, 2000
                 Richard M. Rodstein                     Executive Officer)

                 /s/ JOHN J. RANGEL                    Senior Vice President--Finance
     -------------------------------------------         (Principal Financial and      March 24, 2000
                   John J. Rangel                        Accounting Officer)

                  /s/ B.I. FORESTER
     -------------------------------------------       Director, Chairman of the       March 24, 2000
                    B.I. Forester                        Board

                 /s/ SUSAN E. ENGEL
     -------------------------------------------       Director                        March 24, 2000
                   Susan E. Engel

                /s/ JERRY E. GOLDRESS
     -------------------------------------------       Director                        March 24, 2000
                  Jerry E. Goldress

             /s/ WILFORD D. GODBOLD, JR.
     -------------------------------------------       Director                        March 24, 2000
               Wilford D. Godbold, Jr.

               /s/ RICHARD J. HECKMANN
     -------------------------------------------       Director                        March 24, 2000
                 Richard J. Heckmann
</TABLE>

                                      II-1
<PAGE>

<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                    DATE
                      ---------                                    -----                    ----
<C>                                                    <S>                             <C>
                /s/ STEWART M. KASEN
     -------------------------------------------       Director                        March 24, 2000
                  Stewart M. Kasen

                /s/ JOHN H. OFFERMANS
     -------------------------------------------       Director                        March 24, 2000
                  John H. Offermans

             /s/ ALFRED E. OSBORNE, JR.
     -------------------------------------------       Director                        March 24, 2000
               Alfred E. Osborne, Jr.
</TABLE>

                                      II-2