LOS ANGELES–Dec. 16, 2002–K2 Inc. (NYSE:KTO) and Rawlings Sporting Goods Company, Inc. (Nasdaq:RAWL) jointly announced the signing of a definitive merger agreement in which Rawlings would become a wholly-owned subsidiary of K2 in a stock-for-stock merger. Based on the average closing price of K2 shares for the 15-trading days ending December 13, 2002, the value of the transaction is $84 million, plus assumed liabilities. The transaction, which is subject to shareholder approval by both companies, regulatory review and other customary conditions, is expected to be completed in the spring of 2003. K2 indicated that it expects the transaction to be accretive to its earnings in the first 12 months following completion of the merger and beyond.

“Rawlings provides a premier platform for our entry into the $1.3 billion team sports equipment business and is America’s leading baseball brand in a $440 million segment,” said Richard Heckmann, K2′s chairman and chief executive officer. “We believe a merged K2 and Rawlings will be able to take advantage of obvious synergies with combined distribution, manufacturing, marketing and administration across all of our products that will result in improved growth dynamics for both companies. The newly combined company will be the leader in baseball, fishing equipment, personal flotation devices, in-line skates and skis in the U.S. market, and No. 2 in snowboards. Furthermore, Rawlings has a strong management team that we welcome to the expanding K2 family.”

Heckmann added: “As we look to resources for future development, our combined companies’ strong balance sheet presents attractive financing options. In addition, K2′s recently announced $25 million convertible debenture transaction and our senior credit facility will allow us to invest in the growth of all of our brands.”

“This merger gives Rawlings and its shareholders multiple platforms for future growth and success,” said Stephen O’Hara, Rawlings’ chairman and chief executive officer. “K2 will be a powerful collection of brands, highly demanded by consumers, fostering a greater partnership with retailers, and having significantly increased manufacturing synergies.”

The merger is structured as a tax-free exchange of stock. Under terms of the agreement, each share of Rawlings common stock will be converted into 0.950 of a share of K2 common stock, subject to a collar mechanism. If the average closing price of K2 common stock for the 15-trading days ending two trading days prior to the closing date (the “Average Closing Price”) exceeds $10.53 per share, the exchange ratio will be adjusted downward to an exchange ratio that will result in Rawlings stockholders receiving a number of shares of K2 common stock (based on the Average Closing Price of K2 common stock) having a value of $10 per share. If the Average Closing Price of K2 common stock is less than $9.47 per share, the exchange ratio will be adjusted upward to an exchange ratio that will result in Rawlings stockholders receiving a number of shares of K2 common stock (based on the Average Closing Price of K2 common stock) having a value of $9 per share.

The merger agreement provides that, in the event that the average closing price of K2 common stock over any 15 consecutive trading day period ending two calendar days prior to the closing date is less than $8 per share, then K2 can elect to terminate the merger agreement.

At September 30, 2002, K2 had approximately 18.1 million shares of common stock outstanding, and Rawlings had approximately 8.1 million shares outstanding.

Rawlings, a 120-year-old icon in sports equipment, reported sales of $173.7 million for its fiscal year ended August 31, 2002, and earnings of $3.3 million, or $0.41 per share. Nearly a century ago, Rawlings introduced a then-revolutionary baseball glove, and today more than half of Major League players use a Rawlings’ glove. Rawlings is the official baseball of Major League Baseball, Minor Leaggue Baseball and the NCAA College World Series. The company also manufactures, markets and supplies bats, uniforms, basketballs and other sporting equipment for professional, collegiate and recreational use throughout the U.S. as well as in many countries around the world.

K2 Inc. is a leading designer, manufacturer and marketer of brand-name sporting goods, recreational and industrial products. The company’s sporting goods and recreational products include well-known names such as K2 and Olin alpine skis; K2, Ride and Morrow snowboards, boots and bindings; K2 inline skates; Stearns sports equipment; Shakespeare fishing tackle; K2 bikes; and Dana Design backpacks. K2′s other recreational products include Planet Earth apparel, Adio skateboard shoes and Hilton corporate casuals. K2′s industrial products include Shakespeare extruded monofilaments, marine antennas and composite light poles.

K2 intends to file a registration statement, including a K2 prospectus, and other relevant documents concerning the merger with the U.S. Securities and Exchange Commission. The registration statement will also include the joint proxy statement of K2 and Rawlings soliciting the votes of their shareholders with respect to the transaction.