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                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D. C.  20549

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997       COMMISSION FILE NUMBER 0-9387
                          -----------------                              ------

                                      Empi, Inc.
                (Exact name of registrant as specified in its charter)

               MINNESOTA                                    41-1310335
     (State or other jurisdiction of                     (I.R.S. employer
     incorporation or organization)                     identification no.)

           599 CARDIGAN ROAD
          ST. PAUL, MINNESOTA                                  55126
(Address of principal executive offices)                     (Zip code)

         Registrant's telephone number, including area code  (612)  415-9000
                                                             ---------------

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

         Securities registered pursuant to Section 12 (b) OF THE ACT:  NONE
                                                                       ----

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

                              NO PAR VALUE COMMON STOCK
                              -------------------------
                                   (Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of 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 held by non-affiliates of the
registrant on March 3, 1998, was approximately $ 129,760,391.

The number of shares outstanding of the registrant's class of common stock as of
March 3, 1998, was 7,746,889 shares of no par value common stock.

                        DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held April 29, 1998 are incorporated by reference into Part III.

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                                       PART I

ITEM 1.     BUSINESS

GENERAL

Empi, Inc. ("Empi" or the "Company") is one of the largest medical device
companies in rehabilitative medicine in the United States.  The Company is a
leading supplier of electrotherapy, iontophoretic drug delivery, orthotic and
incontinence treatment products to the orthopedic rehabilitation and
incontinence treatment markets.  Empi develops, markets and manufactures
products, supported by clinical research, that continuously improve the quality
of life for patients with functional disabilities, and are used in both the
clinic and home setting.

Empi was organized as a Minnesota corporation in October 1977.  The Company's
corporate headquarters are located at 599 Cardigan Road, St. Paul, Minnesota
55126, (612) 415-9000.

ORTHOPEDIC REHABILITATION MARKET

Currently, the Company manufacturers and markets the following orthopedic
rehabilitation products: TENS (Transcutaneous Electrical Nerve Stimulation)
devices for the treatment of chronic and acute pain; NMES (neuromuscular
electrical stimulation) devices for restoring muscle tone and mobility;
iontophoretic drug delivery systems to non-invasively deliver local anesthesia
and anti-inflammatory medications through the skin; and dynamic splinting
orthoses for restoring joint range of motion.  In addition, the Company
distributes functional active resistance orthoses for treatment of knee
dysfunction, patient-administered cervical traction devices to manage chronic
cervical pain and a complete line of accessories for its products.

To complement its orthopedic rehabilitation products offered, the Company
entered into a strategic alliance in August of 1995 with Tennessee-based Rehab
Med+Equip, Inc. Under which the Company markets a catalog of rehabilitation
products that meet the growing needs of its customers.  The catalog includes
over 200 products, such as ice packs, whirlpool baths, lumbar and cervical rolls
and supports, as well as orthotics and bracing products.

INCONTINENCE TREATMENT MARKET

In 1992, the Company began marketing a proprietary pelvic floor stimulation
(PFS) system to physical therapists, family care physicians, gynecologists,
urogynecologists and urologists for the treatment of female urinary
incontinence.  In 1993, the Company diversified its incontinence product line by
acquiring Physical Health Devices, Inc. (PHD), an electromyography (EMG)
biofeedback company.  Electromyography is used in incontinence treatment as a
volitional method to reeducate the pelvic floor muscles.  The Company's
incontinence treatment product line further expanded in 1997 with the
introduction of a device that combines both PFS and EMG, and in 1998 with a
simplified, low cost PFS device for home use.

INTERNATIONAL MARKET

The Company sells its products internationally through independent dealers.
With the acquisition of the Nortech division of Medtronic, inc. In November
1992, the Company gained new international marketing opportunities through
independent dealer relationships in Canada, Europe, Australia and New Zealand,
allowing for expanded distribution of its new products in both the orthopedic
rehabilitation and incontinence treatment markets.  In 1994, the Company began
to focus on establishing master distributors for each business segment in key
international markets.  In April 1995, the Company closed its Canadian office
and now markets its products through a master distributor located in Quebec,
Canada.  One of the major objectives for the international market for 1998
involves introducing the Company's orthotic products in Japan and the
Scandinavian countries.

PRODUCTS

  ELECTROTHERAPY

  TENS DEVICES:  Physicians and physical therapists have treated their
  patients' chronic and acute pain with electrical stimulation, often referred
  to as "transcutaneous electrical nerve stimulation" or "TENS," for over 20
  years.  Although TENS may not be effective for every patient or every
  condition, medical professionals have accepted TENS as an effective treatment
  for chronic or acute pain resulting from a variety of medical conditions.

                                          2
<PAGE>

  TENS devices are most frequently used to treat persistent orthopedic
  conditions such as low back pain, joint stiffness and muscle spasm.
  Physicians have also prescribed TENS for pain resulting from a variety of
  other conditions including abdominal surgery, post-operative pain, arthritis,
  tendonitis, phantom limb pain and childbirth.  TENS devices generally reduce
  pain while the device is being used, as well as for a period of time
  following usage, but do not cure the cause of the pain.

  TENS devices consist of a small, portable, battery-powered electrical pulse
  generator which is connected via wires to electrodes placed at or near the
  site of the patient's pain.  The devices are small enough to fit into a shirt
  pocket and weigh approximately 5 ounces, allowing patients to alleviate pain
  conveniently at home or elsewhere.  The electrodes are attached to the skin
  with an interface layer of conductive gel.  The stimulator produces low
  voltage pulses of electricity that can be delivered continuously or
  intermittently in different wave forms throughout the treatment session.
  Empi's premier TENS products are market leaders due to their pre-programmed
  features and high intensity capability.  Epix VT-TM-, launched in 1997,
  provides additional benefits through its outcomes measurement capabilities to
  physicians and payors who desire objective documentation to validate the
  effect of TENS for any given patient.  The Company's other TENS devices
  include:  Epix XL-Registered Trademark-, Eclipse+-Registered Trademark- and
  Dynex-Registered Trademark- IV.

  Two theories have been advanced to explain the manner in which TENS
  alleviates pain.  The "gate control theory" postulates that the electrical
  impulses from TENS devices block or interfere with the neurological
  transmission of pain signals from the site of the injury to the brain.  A
  second theory suggests that the electrical impulses prompt the release of
  endogenous endorphins, the body's natural pain suppressing agents.  Neither
  theory has conclusive support in the scientific literature.  Under either
  theory, TENS relieves pain without the costs and risks associated with
  surgery or the undesirable side effects and physiological problems of
  prolonged drug use which can include addiction, stupor, depression,
  disorientation, nausea and ulcers.

  NMES DEVICES:  Medical professionals also use electrical stimulation to
  activate and exercise muscles for rehabilitative purposes.  "Neuromuscular
  electrical stimulation" or "NMES" has proven effective in producing
  controlled, involuntary muscle contractions which can maintain the strength
  and mobility of a limb or prevent deterioration of muscle tissues in patients
  who are unable to perform voluntary muscle contraction.  Physicians have
  prescribed neuromuscular stimulation in a variety of circumstances intended
  to improve muscle tone, increase joint mobility and accelerate recovery from
  traumatic injury.  Common conditions for which NMES therapy may be prescribed
  include common knee injuries, swelling, spasticity and improper gait.  The
  Company's current NMES devices are Focus-Registered Trademark- and Respond
  Select-Registered Trademark-.

  ACCESSORIES:  The Company meets the needs of its customers by supplying
  accessories such as electrodes, cables, conductive gel, skin care products,
  batteries and other accessories, which are either manufactured by Empi or
  purchased from other vendors for resale.  The Company has exclusive rights to
  distribute several unique models of electrodes.

  Empi believes that the U.S. market for TENS, NMES and accessories exceeds
  $100 million.  The Company expects the market to grow, in unit volume, by
  less than 5% per annum but anticipates experiencing continued pricing
  pressures which may result in flat or declining revenues.

  IONTOPHORETIC DRUG DELIVERY

  IONTOPHORESIS:  Iontophoresis is a process using electric current to assist
  drug transfer through the skin.  Iontophoretic applications include the
  delivery of local anesthesia and anti-inflammatory medication for joint and
  tissue treatment.  For many applications, use of iontophoresis can be
  advantageous when compared to a syringe because it allows medications to be
  dispersed without invading the joint space.  It can also avoid many of the
  systemic and other side effects frequently associated with oral medications
  or injections.

  The Company has developed both a proprietary iontophoresis device and
  patented buffered electrode capable of delivering small molecular drugs that
  can be ionized, such as drugs for arthritis, bursitis, tendonitis and related
  conditions.  The system is controlled by a microprocessor and uses continuous
  low voltage electrical current that delivers charged drug particles through
  the skin's surface. The Company received FDA 510(K) clearance in July 1990
  for its Dupel-Registered Trademark- iontophoresis device and in November 1991
  for its buffered electrode.  The Company introduced its iontophoresis system,
  for human use, to the marketplace in the first quarter of 1992.

                                          3
<PAGE>

  The company estimates that the current market for human iontophoresis systems
  is approximately $35 million domestically, and that the market defined in
  sales dollars is growing at a rate of 5 to 10% per annum.

  Empi is continually investigating alternate uses of its technologies in new
  medical markets.  During 1996, the Company developed and test marketed the
  Relion-TM- iontophoresis drug delivery system for use in the equine
  veterinary marketplace.  Relion offers veterinarians a useful local drug
  delivery system for a variety of drugs used in the treatment of horses.  In
  February of 1997, the Company launched Relion in the U.S. and international
  marketplaces through regional veterinary distributors.

  ORTHOTICS

  ORTHOTICS:  The Advance Dynamic ROM-Registered Trademark- orthoses product
  line is used to correct joint range of motion limitations at the wrist,
  elbow, knee or ankle.  The Company's Advance Dynamic ROM orthosis is based on
  the principle that particular connective tissue will remodel over time in
  response to the type and amount of physical stress it receives.  The Advance
  Dynamic ROM orthosis addresses the permanent or plastic component of
  connective tissue deformation to achieve long-term range of motion
  improvement.  It does this by gently delivering low-load stress at the
  joint's end-range over a prolonged period of time.  The Company's Advance
  Dynamic ROM orthosis product line, introduced in the first quarter of 1995,
  consists of models for forearm supination, elbow, wrist, knee and ankle
  joints as well as below the knee amputee devices.  Range of motion
  limitations, generally referred to as contractures, often result following
  long periods of restricted motion or when scar adhesions form following
  trauma.  The dynamic orthoses line fits very well with the Company's focus on
  cost effective treatments used outside the clinic setting.  The Company
  estimates that the current ROM orthotics market is approximately $40 million
  in the U.S. and that the potential sales growth rate over the next few years
  will range between 10 and 15% per year.

  Empi has entered into an agreement with Inverse Technology Corporation to
  market Protonics-TM-, a functional active resistance orthosis, to physicians
  and physical therapists.  The innovative technology of Protonics-TM-
  addresses neuromuscular disorders in patients with knee dysfunction problems
  by helping to strengthen muscles, ligaments and tendons surrounding the knee
  joint through resistive exercise.  The addition of Protonics-TM- is part of
  the Company's strategy to become a leader in the growing therapeutic bracing
  market. The Company launched Protonics-TM- nationally in the fourth quarter
  of 1996.

  The Company also has a national distribution agreement with Glacier Cross,
  Inc. to market Pronex-Registered Trademark-, a cervical traction device used
  to relieve chronic neck pain by relaxing muscle tension and spasms by
  mechanical separation of the cervical vertebrae.  The Company sells Pronex to
  patients through physical therapists.

  INCONTINENCE TREATMENT

  FEMALE URINARY INCONTINENCE PRODUCTS:  In 1987, the Company began a research
  project related to the application of its electro-therapeutic technology to
  the treatment of female urinary incontinence.  In July 1991, the Company
  received FDA 510 (k) clearance for its first female pelvic floor
  rehabilitation system, Innova-Registered Trademark- PFS.  Urinary
  incontinence is the involuntary loss of urine so severe as to have social,
  psychological or hygienic consequences.   According to the 1996 Agency for
  Health Care Policy and Research (AHCPR) guidelines, "the U.S. spends $16
  billion a year to care for people with urinary incontinence, up from $10
  billion in 1990."  At least 50% of the 1.5 million men and women in nursing
  homes suffer from incontinence.  This condition is often a principal reason
  that families of the elderly commit them to full-time care.  Current
  treatments for female urinary incontinence range from surgical procedures,
  with a three to four day hospital stay and a cost of $6,000 to $25,000, to
  behavioral or pharmacologic therapy.  Products designed to manage the problem
  of urinary incontinence include appliances such as implantable stimulation
  devices catheters, collection devices and urethral plugs as well as
  disposable products such as adult diapers or briefs, padded undergarments and
  bed pads designed to keep urine away from the patient's skin.  PFS cures as
  well as controls stress, urge and mixed incontinence.  Stress incontinence,
  the most common form, is the inability of the sphincter to hold back urine
  when there is a sudden increased pressure on the bladder.  Leakage of urine
  commonly occurs with activities such as coughing, sneezing, lifting and
  exercising.  Urge incontinence occurs when the bladder is irritated and
  contracts spontaneously causing a sudden need to urinate.  Mixed incontinence
  is a combination of both stress and urge incontinence.  Traditionally, urge
  incontinence has been treated with pharmacological therapy.  Many patients
  are intolerant of the medication's side effects.  Stress incontinence is
  poorly treated by pharmacological treatment and therefore, in most cases, has
  resulted in surgical intervention.

                                          4
<PAGE>

  Empi's urinary incontinence treatment devices, Innova PFS, InnoSense-TM- and
  Minnova-TM-, are composed of an externally worn, microprocessor-based
  neuromuscular stimulator that activates a proprietary multi-channel vaginal
  or rectal electrode.  The devices automatically deliver timed dosages of
  stimulation for the treatment of stress, urge and mixed incontinence during
  twenty-minute treatment sessions.  The treatment sessions are generally
  performed twice a day in the convenience and privacy of the home.  In
  addition to PFS, InnoSense features EMG biofeedback capabilities for use in
  volitional reeducation of the pelvic floor muscles.  The regular use of PFS
  can improve or cure stress, urge or mixed incontinence; published studies
  indicate a cure/improvement rate of 60-90%.  The cost of treatment with PFS
  is approximately one thousand dollars or less, including physician fees.

  The Company believes electro-therapeutic pelvic muscle stimulation will
  eventually be selected as one of the first choice treatments before more
  invasive treatments due to its noninvasive nature, lower cost, lower risk and
  lack of side effects.  The recent AHCPR guidelines, for the treatment of
  adult urinary incontinence, gives PFS a "B" strength of evidence
  recommendation for stress, urge and mixed incontinence.  This is the same
  rating currently enjoyed  by available surgical alternatives.  While there
  are other pelvic muscle stimulation devices available, Innova PFS has been
  proven to be safe and effective based on controlled clinical studies
  published in peer-reviewed journals.  The Company has designed an
  intravaginal electrode which it believes has several significant advantages
  over other electrodes, including the patented ComfortPulse-Registered
  Trademark- technology which makes the electrode more comfortable and
  effective during treatment.

  It is estimated that more than 13 million women in the United States suffer
  from urinary incontinence.  The company believes that, for various reasons,
  electro-therapeutic treatment will not be appropriate for a portion of these
  women.  The Company's initial target market includes women aged 35-65 who,
  when properly diagnosed, would benefit from electrical stimulation therapy.
  The Company estimates that at least 6 million women exist in this target
  market.  Future growth in incontinence product sales is dependent in part on
  broad Medicare reimbursement.  To date, Medicare coverage has been denied and
  establishment of a favorable national policy coverage decision remains
  doubtful in the foreseeable future despite the cost effectiveness of this
  therapy. The Company is also investigating the use of PFS for the treatment
  of post-prostatectomy incontinence, fecal incontinence and interstitial
  cystitis.  Studies using Innova to treat these conditions are under review.


MANUFACTURING

Empi manufactures its electrotherapy and Advance ROM orthotic devices, as well
as some components and related accessories, at its Clear Lake, South Dakota
facility.  Manufacturing activities at the Clear Lake facility include
electronic and mechanical assembly, electrode fabrication and assembly, and
fabric sewing processes.

The Company's products are comprised of a variety of components including die
cast metal parts, injection-molded plastic parts, printed circuit boards,
electronic components, batteries and battery chargers, leadwires, electrodes and
other components.  Parts for these components are purchased from outside
suppliers and are, in some instances, manufactured on a custom basis.

Many of the component parts and raw materials the Company uses in its
manufacturing and assembly operations are available from more than one supplier.
However, several component parts and accessory products are currently purchased
through a single supply source.  If these components were no longer available,
the Company is able to develop alternative sources for these components,
avoiding any material adverse effect upon the Company's operations.

CUSTOMERS, MARKETING AND SALES

The Company's primary customers are patients, physical therapists and physical
therapy clinics, as well as U.S. distributors and dealers and international
dealers.  These customers represented 60%, 33%, 4%, and 3%, respectively, of
Empi's net sales for fiscal 1997. As of year end 1997, Empi had over 100 field
sales representatives, selling rehabilitation products domestically on a direct
basis to physicians, physical therapists and their patients.  The Company
currently serves nearly 80% of the 17,000 physical therapy clinics and hospital
physical therapy departments nationwide.  The Company also provides its
customers a network for direct billing to insurance claims offices, Medicare
carriers, HMOs and other managed health care programs.


Empi has invested in both telemarketing and direct mail programs to contact
patients who use its TENS and NMES devices to help them meet their needs in
reordering accessory products.  The Company utilizes direct sales programs

                                          5

<PAGE>

to contact home health care dealers who purchase the Company's products for
resale to hospitals, clinicians and patients.

Given the consolidation of provider networks and larger payor groups, which have
continued to gain leverage in coverage and reimbursement decisions, the Company
established a national accounts group in 1994 to address coverage and
reimbursement issues and to gain preferred supplier agreements with these
providers.

Empi believes that the combination of its direct sales force, and patient care,
clinic customer, third party billing and national account services gives the
Company a distinct competitive advantage in today's marketplace.

The Company sells its products internationally through independent dealers.  At
the end of 1997, Empi had 21 international distributors covering 16 countries,
worldwide. The Company introduced the orthotic product line in Germany, Holland
and Belgium in mid-1997, and plans to introduce these products to the
Scandinavian countries in 1998.

No individual customer accounted for 10 percent or more of total revenue for
1997, 1996 or 1995, respectively.

COMPETITION

ELECTROTHERAPY

The Company's two strongest competitors in the electrotherapy market, who
recently announced their intent to merge, are Rehabilicare, Inc. and Staodyn,
Inc.  The principal competitive factors in the electrotherapy marketplace are
access to contracts due to managed care constraints, price, product quality and
service.  Empi believes its competitive advantage in the electrotherapy
marketplace results from higher quality products and a strong distribution
network.

IONTOPHORETIC DRUG DELIVERY

The Company feels its primary competitors in the iontophoretic market are IOMED,
Inc., Dynatronics, Corp. and Henley Healthcare, Inc.

ORTHOTICS

The Company's major competitors in the orthotic market are Dynasplint Systems,
Inc., the LMB division of DeRoyal Industries, Inc. and Ultraflex Systems, Inc.
In the cervical traction market, the Company faces two main competitors:
Saunders Group, Inc. and Lossing Orthopedic, Inc.

INCONTINENCE TREATMENT

Several companies are developing new treatment products designed to cure or
control incontinence problems, including injectable biomaterials, improved drug
therapy, other electro-therapeutic devices and muscle contraction biofeedback
devices.  Each of these treatment approaches is aimed at eliminating or reducing
a patient's reliance on incontinence appliances or disposable diapers.  Both
InCare Medical Products, Inc. and Utah Medical Products, Inc. have pelvic floor
stimulation devices on the market.  Currently, none of these competitive devices
have published placebo-controlled clinical studies to support the effectiveness
of their product claims.

PRODUCTS AND TECHNOLOGIES UNDER DEVELOPMENT

Empi's current research and development efforts are principally directed towards
the development of next generation products and technologies related to the
Company's orthotics, electrotherapy and iontophoretic drug delivery businesses,
enhancement of existing products, and manufacturing process developments to
improve product performance and costs.  In 1997 research and development focused
on developing next-generation incontinence systems, a new TENS device with data
collection capabilities, new models for the Advance ROM and other new
therapeutic braces.

In fiscal 1997, 1996 and 1995, the Company's research and development expenses
(including clinical studies) were $3,984,000, $3,476,000 and $3,424,000
respectively.  The Company anticipates research and development to grow
incrementally as a percent of sales in future years as the Company refocuses its
research and development emphasis

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on its new product lines.  Expenditures on clinical research and outcomes
studies are expected to grow based on increased regulatory and provider
requirements.

BACKLOG

As of February 28, 1998, Empi did not have a material backlog situation and does
not expect to experience a material backlog situation in the foreseeable future.

PATENTS AND TRADEMARKS

The Company currently owns numerous U.S. patents issued between 1982 and 1997.
These patents cover various aspects and features of Empi's electrotherapy
devices and associated electrodes, incontinence devices and associated
electrodes, and range of motion orthotic devices.  A number of patents and
trademarks were obtained as a result of the Nortech and PHD acquisitions that
cover various aspects of electrodes, stimulators and surface sEMG equipment.  In
addition, numerous patent applications have been filed on various aspects of
electrotherapy and incontinence devices, range of motion orthoses, incontinence
and iontophoresis electrodes.  The initial life of each patent issued to the
Company is either 14 or 17 years from the date of issue.

Although the Company generally seeks patent protection when possible, it does
not consider patent protection to be a significant, competitive advantage in the
marketplace for electro-therapeutic devices; however, patent protection may be
of significance with various aspects of the Company's incontinence electrode
technology and its orthosis technology.  The Company has also registered, and
filed applications to register, various trademarks with the U.S. Patent and
Trademark Office and appropriate offices in foreign countries.

GOVERNMENT REGULATIONS AND REIMBURSEMENT

GOVERNMENT REGULATIONS

Medical device development, testing, manufacturing, labeling and marketing are
regulated under the Federal Food, Drug and Cosmetic Act (the "ACT"), as amended,
and additional regulations promulgated thereunder.  These statutes and
regulations require that manufacturers adhere to certain standards designed to
assure product safety and effectiveness.

The FDA's "Quality System" regulation establishes standards for the Company's
manufacturing processes, requires maintenance of certain records and provides
for unscheduled inspections of the Company facilities.  Certain requirements of
state, local and foreign governments must also be complied with in the
manufacture and marketing of the Company's products.  The Company believes its
operations meet the  requirements of these regulations.

New medical devices require regulatory approval prior to market introduction. In
the United States, new medical devices are subject to either the 510(k)
Pre-Market Notification regulation or the Pre-Market Approval (PMA) regulation
depending on the device's nature and intended use.  International registration
and approval requirements vary and are country dependent.  Most regulatory
approvals require submission of extensive documentation, engineering,
pre-clinical testing and manufacturing information to demonstrate compliance
with the pertinent regulations.  In some cases, product electronics, appearance
or labeling must be modified in order to comply with the foreign regulations.
In addition, some products may require extensive clinical testing to obtain
regulatory approval.  The Company anticipates the FDA may require submission of
additional clinical testing concerning iontophoretic drug delivery.  In this
regard, the Company is preparing the necessary clinical trial data to support
the ongoing sale of its iontophoresis product, Dupel.

The Company contracts with an outside certification authority to review the
conformance of its quality assurance system to two recognized international
quality system standards, ISO-9001 and EN 46001.  Continued certification is
essential for compliance with the Medical Device Directive in the European
Union.  The Company received this certification in 1996.

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<PAGE>

REIMBURSEMENT

The Company receives a significant portion of its revenues from third party
payors, such as Medicare, workers compensation, private insurance companies and
HMOs, who pay on behalf of the patients who rent and/or purchase the Company's
products.  The Company maintains a large support staff that verifies third party
payor coverage and obtains physicians' prescriptions prior to claim submission.
When appropriate, the Company's staff obtains authorizations from third party
payors and letters of medical necessity from the prescribing physicians.  Delays
in obtaining appropriate documentation and the time required for claims
processing by the third party payors significantly impact Empi's outstanding
receivables.  The Company electronically bills claims to a multitude of third
party payors including Medicare.

Empi's dependence on third party payors exposes the Company to the risk of
government regulations and unilateral payor decisions, limiting the amount of
payor reimbursement and/or coverage for the Company's products.  The Company
anticipates a continuing dependence on third party payors with respect to new
products, such as its pelvic floor stimulation devices.  The process to
establish reimbursement for new technology in the current medical marketplace is
costly, time consuming and unpredictable.

EMPLOYEES

As of January 31, 1998, the Company had 527 employees.  Of these, 168 were
engaged in production and production support, 25 in research and development,
121 in sales and marketing, 156 in sales operations, and 57 in various
administrative capacities.

None of the Company's employees are represented by a labor union, and the
Company believes that it has an amicable and positive working relationship with
its employees.

FORWARD-LOOKING STATEMENTS

The Company wishes to caution investors that certain statements made in this
Form 10-K, which are summarized below, are forward-looking statements that
involve risk and uncertainties, and actual results may be materially different.
Factors that could cause actual results to differ include, but are not limited
to those identified:


- Success in achieving sales growth and improving profitability depends on the
  Company's ability to continue to offer new proprietary products acceptable to
  the marketplace, diversification of its product lines, and efficiencies in
  the Company's distribution, manufacturing and medical billing systems.
- Increased sales within the incontinence market depends in part on securing
  Medicare reimbursement and general acceptance in the marketplace that the
  Company's products provide preferable solutions to high-cost surgery for
  certain incontinence products.
- Growth within the TENS, NMES and accessories market, and the orthotics and
  iontophoresis markets, as well as the Company's participation in such growth,
  depends on general market and competitive conditions.


ITEM 2.   PROPERTIES

On June 14, 1996, the Company and Cardigan Investments Limited Partnership
entered into an office/light manufacturing lease for a 93,666 square foot
building located at 599 Cardigan Road, St. Paul, Minnesota that now serves as
the Company's corporate headquarters.  The lease that commenced on October 11,
1996 is for ten years with two options to renew for five years each.  After
assuming occupancy of the Cardigan Road location, the Company vacated the other
two office buildings in Fridley and Arden Hills, Minnesota.

The Company owns two properties in Clear Lake, South Dakota consisting of a
24,000 square foot manufacturing facility on four acres of property and a 10,000
square foot warehouse on 1.3 acres.

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<PAGE>

ITEM 3.   LEGAL PROCEEDINGS

There are no material legal proceedings to which the Company is a party or of
which any of its property is the subject other than ordinary, routine litigation
incidental to the Company's business.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

There were no matters submitted to a vote of shareholders during the fourth
quarter ended December 31, 1997.


                                          9
<PAGE>

EXECUTIVE OFFICERS OF THE COMPANY

Each executive officer is elected to office by the Board of Directors and holds
the office until his or her successor is elected and qualified.  There are no
family relationships among any of the Company's directors or officers.

The following table sets forth information with regard to the executive officers
of the Company as of March 3, 1998:


                                   PRINCIPAL OCCUPATION, BUSINESS
NAME AND AGE OF OFFICER            EXPERIENCE PAST FIVE YEARS
-----------------------            --------------------------

Joseph E. Laptewicz (49)           President and Chief Executive officer since
                                   October 1994.  Acting Chief Financial Officer
                                   from March 1997 to July 1997.  Prior to
                                   joining the Company, Mr. Laptewicz was
                                   President and Chief Executive Officer of
                                   Schneider (USA), Inc., a manufacturer of
                                   products for interventional medicine and a
                                   division of Pfizer, Inc., from April 1992 to
                                   September 1994 and Executive Vice President
                                   from July 1991 to March 1992.


Robert W. Clapp (48)               Vice President of Manufacturing of the
                                   Company since March 1993.  Mr. Clapp served
                                   in the capacity of Vice President of
                                   Manufacturing at Dacomed Corp., a medical
                                   products manufacturer and distributor, from
                                   February 1987 to March 1993.


Shawn F. Featherston (44)          Vice President of Sales Operations since July
                                   1996.  Mr. Featherston served as Vice
                                   President of Human Resources of the Company
                                   from January 1996 to June 1996 and Director
                                   of Human Resources from January 1993 to
                                   December 1995.  Prior to joining the Company,
                                   he served as Human Resources Consulting
                                   Manager for Mcgladry and Pullen from January
                                   1989 to December 1992.

Deborah L. Jensen (41)             Vice President of Regulatory Affairs, Quality
                                   Assurance and Clinical Research since April
                                   1997.  Ms. Jensen was Director of Regulatory
                                   Affairs for the Company from October 1995 to
                                   April 1997.  Ms. Jensen served in the
                                   capacity of Regulatory Affairs Manager for
                                   Scimed, a division of Boston Scientific,
                                   Inc., from May 1993 to October 1995.

Patrick D. Spangler (42)           Vice President, Chief Financial Officer and
                                   Assistant Secretary since July 1997.  Prior
                                   to joining the Company, Mr. Spangler served
                                   in various capacities at Medtronic, Inc. from
                                   March 1986 to June 1997, most recently as
                                   Director of Treasury Operations.


Gary D. Sullivan (48)              Executive Vice President of Sales and
                                   Marketing since May 1997.  Vice President of
                                   Marketing from February 1995 to May 1997.
                                   Prior to joining the Company, Mr. Sullivan
                                   was Director of Sales and Marketing at
                                   Schneider (USA) Inc. from October 1993 to
                                   February 1995.  From November 1991 to October
                                   1993, he served as Director of Marketing for
                                   Cordis Corp., a manufacturer of medical
                                   devices.

H. Philip Vierling (42)            Vice President of Sales since February 1998.
                                   Vice President of Marketing from May 1997 to
                                   February 1998.  Mr. Vierling was Director of
                                   Business Development for the Company from
                                   January 1995 to May 1997; Director of
                                   Marketing from May 1993 to January 1995; and
                                   Regional Sales Manager from February 1986 to
                                   May 1993.

                                          10
<PAGE>

                                      PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
          SHAREHOLDER MATTERS


The Company's common stock trades on the Nasdaq Stock Market's National Market
under the symbol EMPI.  High and low sale prices for each quarter of fiscal
years ended December 31, 1997 and 1996 are presented below.

<TABLE>
<CAPTION>


                                   1997                          1996
                            HIGH           LOW            HIGH          LOW

<S>                      <C>            <C>            <C>            <C>
First. . . . . . . . . . $ 20 5/8       $ 16 3/4       $ 25 7/8       $ 16 1/4

Second . . . . . . . . . $ 18 1/2       $ 15 1/2       $ 20 1/4       $ 12 1/2

Third. . . . . . . . . . $ 24           $ 19 3/4       $ 15 1/2       $ 11 1/4

Fourth . . . . . . . . . $ 25 3/8       $ 15           $ 21 3/4       $ 14
</TABLE>

The Company had 531 common shareholders of record at March 3, 1998.  The Company
has never paid a cash dividend and does not anticipate the payment of cash
dividends in the foreseeable future since earnings are expected to be retained
to finance the Company's growth.

                                          11
<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA

                           SELECTED SIX-YEAR FINANCIAL DATA
                                      EMPI, INC.

 
<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                   YEAR ENDED DECEMBER 31
                                                    1997         1996         1995         1994           1993            1992
------------------------------------------------------------------------------------------------------------------------------

<S>                                           <C>           <C>          <C>          <C>           <C>            <C>
OPERATIONS STATEMENT DATA
Net sales. . . . . . . . . . . . . . . . . .  $   73,468    $  70,630    $  67,342    $  61,304     $   66,377     $    33,355
Gross profit . . . . . . . . . . . . . . . .      54,395       52,171       49,654       45,574         49,523          25,143
Operating income . . . . . . . . . . . . . .      16,105       14,420       12,335        6,197         15,325           6,309
Net income . . . . . . . . . . . . . . . . .      10,516        9,357        8,002        3,356          9,334           4,049

Diluted earnings per share . . . . . . . . .  $     1.27    $    1.08    $    0.90    $    0.39     $     1.08     $      0.48
Diluted weighted averages shares
    outstanding  . . . . . . . . . . . . . .       8,258        8,660        8,899        8,611          8,660           8,438

Basic earnings per share . . . . . . . . . .  $     1.30    $    1.11    $    0.93    $    0.39     $     1.12     $      0.51
Weighted average shares
    outstanding. . . . . . . . . . . . . . .       8,077        8,448        8,588        8,536          8,334           7,957

BALANCE SHEET DATA
Cash and security investments  . . . . . . .  $   24,500    $  20,064    $  21,039    $  12,062      $   6,981      $    6,858
Working capital  . . . . . . . . . . . . . .      50,357       43,186       44,512       35,445         30,684          22,076
Total assets . . . . . . . . . . . . . . . .      63,893       60,355       60,737       52,708         50,185          34,551
Long-term debt . . . . . . . . . . . . . . .          66          333        1,468        1,800          1,603           2,016
Shareholder's equity . . . . . . . . . . . .      58,689       53,657       53,079       45,000         41,355          27,265
</TABLE>

 

                         QUARTERLY FINANCIAL DATA (UNAUDITED)
                                      EMPI, INC.
<TABLE>
<CAPTION>


YEAR ENDED (IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)        FIRST         SECOND      THIRD         FOURTH
--------------------------------------------------------------------------------

<S>                            <C>           <C>        <C>            <C>
 DECEMBER 31, 1997
 Net sales. . . . . . . . . .  $ 18,025      $ 18,444   $ 18,409       $ 18,590
 Operating income . . . . . .     3,685         3,840      4,159          4,421
 Net income . . . . . . . . .     2,407         2,513      2,684          2,912
 Diluted earnings per share .      0.29          0.30       0.33           0.35

 DECEMBER 31, 1996
 Net sales. . . . . . . . . .  $ 16,892      $ 16,937   $ 17,758      $ 19,043
 Operating income . . . . . .     3,123         3,292      3,640         4,365
 Net income . . . . . . . . .     2,237         2,173      2,392         2,555
 Diluted earnings per share .      0.25          0.25       0.28          0.30
</TABLE>


ALL SHARE AND PER SHARE DATA HAVE BEEN RESTATED TO REFLECT A 2-FOR-1 STOCK
SPLIT, EFFECTIVE JUNE 1993, AND THE ADOPTION OF SFAS NO. 128.

                                          12
<PAGE>

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

The following table sets forth, for the periods indicated, certain items
reflected in the financial statements as a percent of sales:

PERCENT OF SALES

<TABLE>
<CAPTION>
                                          YEAR ENDED DECEMBER 31
                                         1997      1996      1995
--------------------------------------------------------------------
<S>                                     <C>       <C>       <C>

Net sales. . . . . . . . . . . . . .    100.0%    100.0%    100.0%
Cost of sales. . . . . . . . . . . .     26.0      26.1      26.3
                                       --------------------------
Gross profit . . . . . . . . . . . .     74.0      73.9      73.7
Selling, general and administrative.     46.7      48.6      50.3
Research and development . . . . . .      5.4       4.9       5.1
                                       --------------------------
Operating income . . . . . . . . . .     21.9      20.4      18.3
Other income, net. . . . . . . . . .      1.4       1.2       1.2
                                       --------------------------
Income before taxes. . . . . . . . .     23.3      21.6      19.5
Income tax expense . . . . . . . . .      9.0       8.3       7.6
                                       --------------------------
Net income . . . . . . . . . . . . .     14.3      13.3      11.9
                                       --------------------------
                                       --------------------------
</TABLE>

RESULTS OF OPERATIONS

SALES

The Company's net sales for 1997 grew by 4 percent over the prior year from
$70.6 to $73.5 million.  Electrotherapy sales accounted for 65 percent of total
sales or $47.9 million, a reduction of 1 percent from $48.5 million in 1996 due
primarily to continued pricing pressures.  Iontophoretic drug delivery product
sales increased by 13 percent over the prior year, with increased volumes offset
by slight decreases in prices.  Orthotic product sales grew by 26 percent over
1996 levels as the Company realized synergies resulting from the marketing of
Protonics-TM- and Advance Dynamic ROM-Registered Trademark- orthoses to both
physical therapists and orthopedic surgeons. Lack of consistent reimbursement
continued to adversely impact growth of the Company's incontinence product line
as 1997 incontinence treatment product sales decreased 13 percent from a
relatively small sales base in 1996.  Dupel-Registered Trademark-, Protonics-TM-
and Advance Dynamic ROM accounted for most of the dollar gains in 1997 sales.

As of year end 1997, the Company had over 100 field sales representatives
selling products domestically on a retail basis.  International sales, as a
percentage of total sales, were 3 percent in 1997 compared with 5 percent in
1996.  The majority of international sales are generated through distribution
agreements with retailers located in Germany, Canada and Spain.

The Company's 1996 sales increased by 5 percent to $70.6 million from $67.3
million in 1995.  Sales of the Company's electrotherapy products and related
accessories increased 5 percent in 1996.  The iontophoretic drug delivery
product line sales increased 23 percent in 1996 compared with the year-earlier
period.  Sales in 1996 of the orthotic product line increased 7 percent as
compared to 1995. The product line with the strongest relative sales growth was
the incontinence product line with a 26 percent growth.

Based on prior trends and faced with anticipated ongoing market pricing 
pressures and offsetting price and volume concessions within preferred supplier
agreements, the Company would anticipate that future electrotherapy sales will
remain flat at best.  Looking forward, iontophoresis and orthotic product sales
are expected to increase with most of the growth in Protonics-TM- and the
Advance Dynamic ROM product line.

GROSS PROFIT

Due to continued manufacturing and distribution efficiencies such as new surface
mount technology, offset by a shift in the product mix towards orthotic
products, gross profit as a percentage of sales remained relatively flat at

                                          13
<PAGE>

74.0 percent in 1997, compared with 73.9 percent in 1996. Lower-margin wholesale
sales were 7 percent of total sales for 1997, compared with 9 percent for the
year-earlier period.

Gross profit for 1996 was 73.9 percent of sales, compared with 73.7 percent for
1995.  Manufacturing efficiencies were partially offset by reduced margins on
iontophoretic drug delivery products given pricing pressures.

Looking forward, the Company expects a slight decrease in the gross profit
percentage due to a continued increase in orthotic products in the product mix
and increases in prices from suppliers.  Through continued emphasis on
manufacturing and distribution efficiencies, the Company is working to minimize
the effects of these increases.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $34.3 million, or 46.7 percent
of sales, for 1997 versus $34.3 million, or 48.6 percent of sales, in 1996.
Continued efficiencies realized from the consolidation of two corporate
locations in 1996, offset by slight increases in incentive compensation, kept
selling, general and administrative dollars constant in 1997.

Selling, general and administrative expenses, stated as a percentage of sales
for 1996 and 1995, were 48.6 percent and 50.3 percent, respectively.  Selling,
general and administrative expenses for 1996 totaled $34.3 million, compared
with $33.9 million in 1995.  This improvement resulted from the Company's
continued expense control programs, including the consolidation of two corporate
locations and reductions in incentive compensation and administrative expenses.

The Company plans to increase marketing expenditures related to the new products
launched in late 1997 and early 1998.  Increased efficiencies in selling,
general and administrative expenses are intended to substantially offset these
expenditures.

RESEARCH AND DEVELOPMENT

Research and development expenses increased slightly to $4.0 million in 1997
from $3.5 million in 1996, or 5.4 percent of 1997 sales as compared with 4.9
percent of 1996 sales.  The Company's 1997 research and development efforts were
focused on designing new incontinence treatment products - InnoSense-TM- and
Minnova-TM-, developing next-generation electrotherapy devices - Epix VT, and
expansion of the orthotic product line as well as continued development of
next-generation orthotic devices.

Research and development expenses were $3.5 million and $3.4 million for 1996
and 1995, respectively.  Stated as a percentage of sales, research and
development expenses for 1996 were 4.9 percent, compared with 5.1 percent for
1995.  The Company's research and development expenses in 1996 were spread
relatively evenly among the electrotherapy, orthotic and iontophoretic drug
delivery product groups with slightly higher expenditures for incontinence
treatment products.

The Company anticipates research and development to grow incrementally as a
percent of sales in future years as the Company refocuses its research and
development emphasis on its new product lines.  Expenditures on clinical
research and outcomes studies are expected to grow based on increased regulatory
and provider requirements.

OTHER INCOME AND EXPENSES

Other income, comprised primarily of interest and dividend income, totaled $1.0
million in both 1997 and 1996. Interest expense for 1997 was $2,000 versus
$69,000 in 1996. Additional non-recurring expenses of $54,000 were recorded in
1997 related to the Company's relocation to a new corporate facility in late
1996.

Interest income was $1.0 million in 1996, compared with $798,000 in 1995.
Interest expense was $69,000 in 1996 and $114,000 in 1995. The primary
contributor to interest expense in 1996 and 1995 was an interest-bearing note
issued to partially finance the Company's 1992 acquisition of Nortech, a
division of Medtronic, Inc.  In the third quarter of 1996, the Company repaid
the remaining debt and retired the note.  In the first quarter of 1996, the
Company recorded a one-time gain in excess of $200,000 from the settlement of a
trade dress infringement lawsuit, and in the fourth quarter of 1996 recorded
$378,000 in non-recurring expenses relating to the Company's relocation.

                                          14
<PAGE>

NET INCOME

Net income in 1997 improved to $10.5 million, an increase of $1.2 million, or 12
percent. Higher sales, combined with relatively flat spending and no significant
one-time charges, were the main reasons for the increase in net income for 1997.
As a result of higher net income and the Company's stock buyback program, 1997
diluted earnings per share increased from $1.08 to $1.27, reflecting an 18
percent increase over 1996.  Diluted earnings per share in 1997 increased by
approximately $.04 per share as a result of the stock buyback program.

Net income in 1996 was $9.4 million, compared with $8.0 million in 1995. The
improvement resulted from higher sales levels, combined with strong expense
controls.   Diluted earnings per share in 1996 increased to $1.08 from $.90 in
1995, an increase of 20 percent.


LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents and short-term investments were $24.5 million as of
December 31, 1997, an increase of approximately $4.4 million from the year ended
December 31, 1996.  Due to its strong cash position, the Company continued its
stock buyback program which began in 1995.  During 1997, the Board of Directors
authorized an additional $17.5 million to buy back and retire shares.  Some of
the shares repurchased under the program will be used to cover stock issuances
in connection with the Company's stock option and stock purchase plans.  The
Company repurchased and retired 529,300 shares of common stock at a total cost
of $10.5 million in 1997.  During 1996, the Company repurchased and retired
778,000 warrants and shares of common stock at a total cost of $9.9 million.
The Company intends to continue its stock repurchase program in 1998, given
favorable market conditions, the Company's cash position and other factors.  As
of December 31, 1997, the Company's working capital was $50.4 million and its
current ratio was 10.8 to 1.0.  Cash flows generated from operations were $12.3
million in 1997, $13.9 million in 1996 and $11.5 million in 1995.

Accounts receivable at December 31, 1997 increased 10 percent over December 31,
1996.  The Company has continued to refine its collection efforts on receivables
which allowed a reduction in 1997 in its allowance against accounts receivable
by $200,000.  Inventories increased approximately $700,000, or 9 percent, in
1997. The introduction of new products accounted for the majority of the
increase in inventories.  Expenditures for property, plant and equipment were
$1.7 million in 1997, down 57 percent over 1996.  After adjusting for the
one-time expenditures of approximately $2.5 million in leasehold improvements
and other equipment purchases related to the move to the new corporate facility,
capital expenditures in 1997 were flat compared to 1996.  The Company believes
its cash and cash equivalents and short-term investments, together with cash
flow from operations, will be sufficient to meet the Company's currently
projected needs for working capital and capital requirements for the foreseeable
future.

A multifunctional team of internal staff is managing the Company's comprehensive
Year 2000 initiative.  The team's activities are designed to ensure that there
is no adverse effect on the Company's core business operations and that
transactions with customers, suppliers, and financial institutions are fully
supported. While the Company believes there will be minimal to no impact on its
internal systems, there can be no guarantee that the systems of other companies
on which the Company's systems and operations rely will be converted on a timely
basis and will not have a material adverse effect on the Company.  The cost of
the Year 2000 initiatives is not expected to be material to the Company's
results of operation or financial position.

OUTLOOK

The Company's strategic goals are to: (i) expand into related rehabilitation
markets with new and existing technology; and (ii) broaden medical device
offerings by bringing additional products to its existing markets. These
objectives will be pursued through internal development efforts and strategic
alliances, depending upon Company resources and the availability of
opportunities, while reinforcing the Company's leadership position with physical
therapists.

The Company's primary ongoing financial goals are to increase its revenue growth
and enhance profitability by focusing on its mission: to continuously improve
the quality of life for patients with functional disabilities through the
development, manufacturing and marketing of innovative, cost effective,
biomedical products and services.

                                          15
<PAGE>

FORWARD-LOOKING STATEMENTS

Certain statements made in this Management's Discussion and Analysis, which are
summarized here, are forward-looking statements that involve risk and
uncertainties, and actual results may be materially different.  Factors that
could cause actual results to differ include, but are not limited to those
identified:

-    The expectations that in the future electrotherapy sales will remain flat
     at best and iontophoresis and orthotic products sales will increase, depend
     on retaining reimbursement by Medicare carriers, workers' compensation
     programs, managed care and private insurance payors.  Increased sales of
     incontinence products also depend on the Company's ability to obtain
     Medicare reimbursement approval for the Company's pelvic floor stimulation
     products.  In addition, other general market conditions and competitive
     factors within the rehabilitation market, including the introduction of new
     products or technology by competitors, could adversely effect sales.

-    The expectation of a slight decrease in the gross profit percentage depends
     on the actual product mix, prices from suppliers, other market conditions
     and actual manufacturing and distribution efficiencies.

-    The expectation that the Company will increase marketing expenditures
     related to recently launched products depends on market acceptance and the
     necessary support for such products.

-    The Company's intention to continue its stock repurchase program in 1998
     depends on the market conditions and the Company's cash position.

-    The sufficiency of the Company's cash and cash equivalents and short-term
     investments, together with cash flow from operations, depends on general
     market conditions and competitive conditions.

-    The Company's products are regulated under the federal Food, Drug and
     Cosmetic Act, and the Company is required to secure clearance from the U.S.
     Food and Drug Administration (FDA) prior to marketing new products.  Lack
     of clearance or delays in securing clearance could negatively impact sales
     of new products.

-    If the Company is not successful in meeting the needs of patients,
     providers and payors in the orthopedic rehabilitation and incontinence
     treatment markets, its financial goals will likely not be met.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to List of Financial Statements and Financial Statement Schedule,
along with such financial statements, immediately following the signature page
of this Report.


ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL
          DISCLOSURE

None.

                                     PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 regarding the Company's directors included
in the Company's Proxy Statement for the Annual Meeting of Shareholders to be
held April 29, 1998 under the caption "Election of Directors" is incorporated
herein by reference.

The information required by Item 10 regarding the Company's executive officers
is set forth in Part I of this report.

                                          16
<PAGE>

The information required by Item 10 regarding compliance with Section 16(a) of
the Exchange Act included in the Company's Proxy Statement for the Annual
Meeting of Shareholders to be held April 29, 1998 under the caption "Compliance
with Section 16 (a) of the Exchange Act" is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by Item 11 regarding executive compensation included in
the Company's Proxy Statement for the Annual Meeting of Shareholders to be held
April 29, 1998 under the caption "Executive Compensation" is incorporated herein
by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT

The information required by Item 12 regarding voting securities and principal
holders thereof included in the Company's Proxy Statement for the Annual Meeting
of Shareholders to be held April 29, 1998 under the caption "Principal
Shareholders and Management Ownership" is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

                                          17
<PAGE>

                                      PART IV

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

(a)  (1) AND (2)  --  FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.

     See Index to Consolidated Financial Statements and Schedules, which begins
     on Page F-1 immediately following the signature page to this report.

     (3)  --  EXHIBITS.

     (3.1)          Restated Articles of Incorporation, as amended, have been
                    filed as Exhibit 3.1 to the Company's Report on Form 10-K
                    for the fiscal year ended December 31, 1996, and are
                    included herein by reference pursuant to Rule 12b-32.

     (3.2)          Bylaws together with amendment adopted June 12, 1986 have
                    been filed as Exhibit 3.2 to the Company's Report on
                    Form 10-K for the fiscal year ended December 31, 1987, and
                    are included herein by reference pursuant to Rule 12b-32.

     (4.1)          Certificate for shares of Common Stock has been filed as
                    Exhibit 4.1 to the Company's Registration Statement on Form
                    S-2, Registration No. 33-42568, and is incorporated herein
                    by reference pursuant to Rule 12b-32.

     (10.1)         Employment agreement with Donald D. Maurer dated May 1, 1993
                    has been filed as Exhibit 10.3 to the Company's Report on
                    Form 10-K for the fiscal year ended December 31, 1993, and
                    is incorporated herein by reference pursuant to Rule
                    12b-32.*

     (10.2)         Empi, Inc. 1987 Stock Option Plan together with forms of
                    incentive and non-qualified option agreements has been filed
                    as Exhibit 10.7 to the Company's Report on Form 10-K for the
                    fiscal year ended December 31, 1987, and is incorporated
                    herein by reference pursuant to Rule 12b-32.*

     (10.3)         Amendment to Empi, Inc. 1987 Stock Option Plan has been
                    filed as Exhibit 10.8 to the Company's Report on Form 10-K
                    for the fiscal year ended December 31, 1992, and is
                    incorporated herein by reference pursuant to Rule 12b-32.*

     (10.4)         Amendment to Empi, Inc. 1987 Stock Option Plan dated
                    December 22, 1992 has been filed as Exhibit 10.13 to the
                    Company's Report on Form 10-K for the fiscal year ended
                    December 31, 1993, and is incorporated herein by reference
                    pursuant to Rule 12b-32.*

     (10.5)         Amendment to Empi, Inc. 1987 Stock Option Plan dated
                    February 9, 1995 has been filed as Exhibit 10.16 to the
                    Company's Report on Form 10-K for the fiscal year ended
                    December 31, 1994, and is incorporated herein by reference
                    pursuant Rule 12b-32.*

     (10.6)         Employment agreement with Joseph E. Laptewicz dated October
                    1, 1994 has been filed as Exhibit 10  to the Company's
                    Report on Form 10-Q for the quarter ended September 30,
                    1994, and is incorporated herein by reference pursuant to
                    Rule 12b-32.*

     (10.7)         Lease dated June 14, 1996 between the Company and Cardigan
                    Investments, a limited Partnership, covering office/light
                    manufacturing space in St. Paul, Minnesota has been filed as
                    Exhibit 10 to the Company's Report on Form 10-Q for the
                    quarter ended September 30, 1996, and is included herein by
                    reference pursuant to Rule 12b-32.

     (10.8)         Empi, Inc. 1997 Employee Stock Purchase Plan has been filed
                    as Exhibit 10.9 to the Company's Report on Form 10-K for the
                    fiscal year ended December 31, 1996, and is incorporated
                    herein by reference pursuant to Rule 12b-32.*

                                          18
<PAGE>

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

     (10.9)         Empi, Inc. 1997 Stock Option Plan together with forms of
                    incentive and non-qualified option agreements.*

     (10.10)        Separation Agreement with Donald D. Maurer dated May 1,
                    1997.*

     (21)           A list of Subsidiaries of the Company has been filed as
                    Exhibit 21 to the Company's Report on Form 10-K for the
                    fiscal year ended December 31, 1993, and is incorporated
                    herein by reference pursuant to Rule 12b-32.

     (23)           Consent of Independent Auditors.

     (24)           Power of Attorney for Joseph E. Laptewicz Jr., Patrick D.
                    Spangler, Donald D. Maurer, Scott R. Anderson, M. Nazie
                    Eftekhari, Kenneth F. Tempero, and Everett F. Carter.
                    (Included on signature page of this report.)


     (27)           Financial Data Schedule (Filed only in electronic format.)

*    Management contract or compensatory plan.


(b)  REPORTS ON FORM 8-K

     No Reports on Form 8-K were filed during the quarter ended December 31,
     1997.

(c)  EXHIBITS

     The response to this portion of Item 14 (a) (3) is submitted as a separate
     section of this Report.

(d)  FINANCIAL STATEMENT SCHEDULE

     See Index to Consolidated Financial Statements and Financial Statement
     Schedule beginning on Page F-1 immediately following the signature page of
     this Report.

                                          19
<PAGE>

                                      SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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.


                                             EMPI, INC.

March 16, 1998                By             /s/ Joseph E. Laptewicz, Jr.
                                             -----------------------------------
                                              Joseph E. Laptewicz Jr., President
                                              and Chief Executive Officer

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.

                                 (Power of Attorney)

Each person whose signature appears below constitutes and appoints Joseph E.
Laptewicz Jr. and Patrick D. Spangler as his/her true and lawful
attorneys-in-fact and agents, each acting alone, with full power of substitution
and resubstitution, for him/her and in his/her name, place and stead, in any and
all capacities, to sign any or all amendments to this Annual Report on Form 10-K
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he/she
might or could do in person, hereby ratifying and confirming all said
attorneys-in-fact and agents, each acting alone, or his/her substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.


March 16, 1998                /s/ Joseph E. Laptewicz, Jr.
                              -------------------------------------------------
                               Joseph E. Laptewicz Jr., President, Chief
                               Executive Officer and Director (Principal
                               Executive Officer)

March 16, 1998                /s/ Patrick D. Spangler
                              -------------------------------------------------
                               Patrick D. Spangler, Vice President, Chief
                               Financial Officer and Assistant Secretary
                               (Principal Financial and Accounting Officer)

March 16, 1998                /s/ Donald D. Maurer
                              -------------------------------------------------
                               Donald D. Maurer, Chairman Emeritus

March 16, 1998                /s/ Scott R. Anderson
                              -------------------------------------------------
                               Scott R. Anderson, Chairman

March 16, 1998                /s/ M. Nazie Eftekhari
                              -------------------------------------------------
                               M. Nazie Eftekhari, Director

March 16, 1998                /s/ Kenneth F. Tempero
                              -------------------------------------------------
                               Kenneth F. Tempero, Director

March 16, 1998
                              -------------------------------------------------
                               Harold G. Olson, Director

March 16, 1998                /s/ Everett F. Carter
                              -------------------------------------------------
                               Everett F. Carter, Director

                                          20
<PAGE>

                              ANNUAL REPORT ON FORM 10-K



               ITEM 8, ITEM  14 (a)  (1)  AND  (2),  AND  ITEM  14 (d)

                             LIST OF FINANCIAL STATEMENTS
                           AND FINANCIAL STATEMENT SCHEDULE

                          CONSOLIDATED FINANCIAL STATEMENTS
                             FINANCIAL STATEMENT SCHEDULE

                             YEAR ENDED DECEMBER 31, 1997



                                     EMPI, INC.

                                 ST. PAUL, MINNESOTA

                                         F-1
<PAGE>


                          CONSOLIDATED FINANCIAL STATEMENTS

                                      EMPI, INC.

                        YEARS ENDED DECEMBER 31, 1997 AND 1996

                                         F-2
<PAGE>

FORM 10-K -- ITEM  14 (a)  (1)  and  (2)


                                     EMPI, INC.

               INDEX TO LIST OF CONSOLIDATED FINANCIAL STATEMENTS AND
                             FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>


1.   FINANCIAL STATEMENTS                                                  PAGE
                                                                           ----

<S>                                                                        <C>
     Report of Independent Auditors....................................... F-4

     Report of Management................................................. F-5

     Consolidated Balance Sheets -- December 31, 1997 and 1996............ F-6

     Consolidated Statements of Operations -- Years ended December 31,
     1997, 1996 and 1995.................................................. F-7

     Consolidated Statements of Shareholders' Equity --
     Years ended December 31, 1997, 1996 and 1995......................... F-8

     Consolidated Statements of Cash Flows --
     Years ended December 31, 1997, 1996 and 1995......................... F-9

     Notes to Consolidated Financial Statements -- December 31, 1997...... F-10

2.   FINANCIAL STATEMENT SCHEDULE

     Schedule II -- Valuation and Qualifying Accounts..................... F-16
</TABLE>

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

                                         F-3
<PAGE>



                           REPORT OF INDEPENDENT AUDITORS


Board of Directors and Shareholders
Empi, Inc.

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

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

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


/s/ Ernst & Young LLP


Minneapolis, Minnesota
January 23, 1998

                                         F-4
<PAGE>

                                REPORT OF MANAGEMENT


Management is responsible for the accompanying consolidated financial
statements, which are prepared in accordance with generally accepted accounting
principles.  In management's opinion, the consolidated financial statements
present fairly the Company's financial position, results of operations and cash
flows.  In addition, information and representations included in the Company's
Annual Report are consistent with the financial statements.

The Company maintains a system of internal accounting policies, procedures and
controls intended to provide reasonable assurance, given the inherent
limitations of all internal control systems, at appropriate costs, that
transactions are executed in accordance with Company authorization, are properly
recorded and reported in the financial statements, and that assets are
adequately safeguarded.  Corporate financial management continually evaluate the
adequacy and effectiveness of this system of internal accounting policies,
procedures and controls, and actions are taken to correct deficiencies as they
are identified.

The Audit Committee of the Board of Directors is comprised solely of nonemployee
directors and is responsible for overseeing and monitoring the quality of the
Company's accounting and auditing practices.  The Audit Committee meets
regularly and on special occasions, as needed, with corporate financial
management and the independent auditors to review their activities.  The
independent auditors have full and free access to the Audit Committee to discuss
the results of their work, the adequacy of internal financial controls and the
quality of financial reporting.




/s/ Joseph E. Laptewicz, Jr.
Joseph E. Laptewicz, Jr.
President and Chief Executive Officer



/s/ Patrick D. Spangler
Patrick D. Spangler
Vice President, Chief Financial Officer and Assistant Secretary

                                         F-5
<PAGE>

EMPI, INC. CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                            DECEMBER 31
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)                         1997         1996
-------------------------------------------------------------------------------

<S>                                                   <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents                           $     3,020   $    2,849
  Short-term investments                                   21,480       17,215
  Accounts receivable, less allowances
    ($4,881 -- 1997;  $5,062 -- 1996)                      18,046       16,458
  Inventories                                               8,003        7,320
  Deferred income taxes                                     3,874        5,002
  Other                                                     1,072          707
                                                      -----------   ----------
    Total current assets                                   55,495       49,551

Equipment and improvements:
  Equipment                                                12,558       10,995
  Furniture and fixtures                                    1,663        1,630
  Leasehold improvements                                    3,275        3,287
                                                      -----------   ----------
                                                           17,496       15,912

  Less accumulated depreciation and amortization           10,990        8,822
                                                      -----------   ----------
    Net equipment and improvements                          6,506        7,090

Other assets                                                1,892        3,714
                                                      -----------   ----------
Total assets                                          $    63,893   $   60,355
                                                      -----------   ----------
                                                      -----------   ----------



LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                    $     1,990   $    2,455
  Customer advances                                           332          514
  Employee compensation                                     1,655        1,792
  Commissions payable                                         526          596
  Current portion of long-term debt                           269          287
  Income taxes                                               ----          386
  Other                                                       366          335
                                                      -----------   ----------
    Total current liabilities                               5,138        6,365

Long-term debt, less current portion                           66          333

Shareholders' equity:
  Common stock, no par value:
    Authorized shares - 25,000,000
    Issued and outstanding shares -
      8,032,011 in 1997 and 8,219,940 in 1996               9,847       15,331
  Retained earnings                                        48,842       38,326
                                                      -----------   ----------
    Total shareholders' equity                             58,689       53,657
Total liabilities and shareholders' equity            $    63,893   $   60,355
                                                      -----------   ----------
                                                      -----------   ----------
</TABLE>


SEE ACCOMPANYING NOTES.

                                         F-6
<PAGE>

EMPI, INC. CONSOLIDATED STATEMENTS OF OPERATIONS

 
<TABLE>
<CAPTION>

                                                        YEAR ENDED DECEMBER 31
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)           1997           1996           1995
--------------------------------------------------------------------------------------

<S>                                            <C>          <C>            <C>
  Net sales                                    $ 73,468     $   70,630     $   67,342
  Cost of goods sold                             19,073         18,459         17,688
                                               --------------------------------------
    Gross profit                                 54,395         52,171         49,654

  Operating expenses:

    Selling, general and administrative          34,306         34,275         33,895
    Research and development                      3,984          3,476          3,424
                                               --------------------------------------
      Total operating expenses                   38,290         37,751         37,319
                                               --------------------------------------
    Income from operations                       16,105         14,420         12,335
  Other income, net                                 995            795            783
                                               --------------------------------------
    Income before income taxes                   17,100         15,215         13,118
  Income tax expense                              6,584          5,858          5,116
                                               --------------------------------------
    Net income                                 $ 10,516     $    9,357     $    8,002
                                               --------------------------------------
                                               --------------------------------------

  Diluted net income per share                 $   1.27     $     1.08     $     0.90
                                               --------------------------------------
                                               --------------------------------------

  Diluted weighted average shares outstanding     8,258          8,660          8,899
                                               --------------------------------------
                                               --------------------------------------


  Basic net income per share                   $   1.30     $     1.11     $     0.93
                                               --------------------------------------
                                               --------------------------------------

  Weighted average shares outstanding             8,077          8,448          8,588
                                               --------------------------------------
                                               --------------------------------------
</TABLE>


SEE ACCOMPANYING NOTES.

                                       F-7
<PAGE>

EMPI, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>



                                                      COMMON STOCK           RETAINED
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)            SHARES         AMOUNT        EARNINGS
-------------------------------------------------------------------------------------

<S>                                           <C>             <C>            <C>
Balance January 1, 1995                       8,570,371       $ 24,033       $ 20,967
  Exercise of stock options                      57,025            470              -
  Tax benefits of stock options                       -            105              -
  Employee stock purchase plan                  103,263            722              -
  Purchase and retirement of stock              (62,000)        (1,220)             -
  Net income                                          -              -          8,002
                                             ----------------------------------------

Balance December 31, 1995                     8,668,659         24,110         28,969
  Exercise of stock options                      60,384            411              -
  Tax benefits of stock options                       -            311              -
  Employee stock purchase plan                   18,897            359              -
  Purchase and retirement of stock             (528,000)        (8,160)             -
  Purchase and retirement of warrant rights           -         (1,700)             -
  Net income                                          -              -          9,357
                                             ----------------------------------------

Balance December 31, 1996                     8,219,940         15,331         38,326
  Exercise of stock options                     318,159          3,897              -
  Tax benefits of stock options                       -            720              -
  Employee stock purchase plan                   23,212            354              -
  Purchase and retirement of stock             (529,300)       (10,455)             -
  Net income                                          -            -           10,516
                                             ----------------------------------------

Balance December 31, 1997                     8,032,011       $  9,847       $ 48,842
                                             ----------------------------------------
                                             ----------------------------------------
</TABLE>


SEE ACCOMPANYING NOTES.

                                       F-8

<PAGE>

EMPI, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                              YEAR ENDED DECEMBER 31
(IN THOUSANDS)                                                         1997           1996           1995
-----------------------------------------------------------------------------------------------------------

<S>                                                                <C>            <C>            <C>
OPERATING ACTIVITIES
Net income                                                         $ 10,516       $  9,357       $  8,002
Adjustments to reconcile net income to net cash provided by
operating activities:
    Depreciation and amortization                                     3,648          3,506          3,512
    Provision for deferred income taxes                               1,128           (160)          (566)
    Gain on sale of long-term investments                                 -              -            (70)
    Loss on sale of equipment                                             5            101             56
    Provision for loss on accounts receivable                         2,442          2,216          2,565
    Changes in operating assets and liabilities:

      Accounts receivable                                            (4,030)        (2,828)        (1,586)
      Inventories                                                      (683)           949           (782)
      Accounts payable and accrued expenses                            (854)           731            145
      Income taxes payable                                              334             63            155
      Other                                                            (243)           (50)            25
                                                                   ----------------------------------------
          Net cash provided by operating activities                  12,263         13,885         11,456

INVESTING ACTIVITIES
Maturities of short-term investments                                 21,020         17,624          3,180
Purchase of short-term investments                                  (25,285)       (19,749)       (11,790)
(Additions of) reductions in other assets                               405           (233)          (115)
Purchase of equipment and improvements                               (1,743)        (4,013)        (1,785)
                                                                   ----------------------------------------
          Net cash used in investing activities                      (5,603)        (6,371)       (10,510)

FINANCING ACTIVITIES
Payments on long-term debt                                             (285)        (1,524)          (619)
Purchase and retirement of common stock and warrant rights          (10,455)        (9,860)        (1,220)
Proceeds from exercise of common stock options                        4,251            770          1,190
                                                                   ----------------------------------------
          Net cash used in financing activities                     ( 6,489)       (10,614)          (649)
                                                                   ----------------------------------------

                                                                   ----------------------------------------
Net increase (decrease) in cash and cash equivalents                    171         (3,100)           297
Cash and cash equivalents at beginning of year                        2,849          5,949          5,652
                                                                   ----------------------------------------
Cash and cash equivalents at end of year                           $  3,020       $  2,849       $  5,949
                                                                   ----------------------------------------
                                                                   ----------------------------------------
</TABLE>
 

SEE ACCOMPANYING NOTES.

                                         F-9

<PAGE>

EMPI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

The Company develops, manufactures and distributes non-invasive biomedical
devices and accessories for applications in the orthopedic rehabilitation and
incontinence treatment markets. The primary market for the Company's products is
in the United States.  The Company also does a small percentage of business in
Canada, Europe and the Far East.

BASIS OF PRESENTATION

The consolidated financial statements include the Company and its wholly-owned
subsidiaries. All material intercompany balances and transactions have been
eliminated in consolidation.

USE OF ESTIMATES

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

CASH EQUIVALENTS

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

INVESTMENTS

Short-term investments, consisting of debt securities and marketable equity
securities are classified as available-for-sale.  Available-for-sale securities
are stated at cost, which approximates fair value.

INVENTORIES

Inventories are valued at the lower of cost (first-in, first-out method) or
market.

EQUIPMENT AND IMPROVEMENTS

Equipment and improvements are stated on the basis of cost. Depreciation and
amortization of equipment and improvements are computed on the straight-line
method for book purposes (accelerated methods for income tax purposes) over
estimated useful lives of 25 years for building improvements, seven to eight
years for furniture and fixtures, five years for equipment, and three years for
computers.

OTHER ASSETS

Other assets consist primarily of intangible assets including goodwill,
non-compete agreements, costs paid to wholesale distributors for territorial
distribution rights and patent costs. These assets are being amortized on a
straight-line basis over their estimated useful lives ranging from four to seven
years. Accumulated amortization was $7,201,000 and $5,887,000 at December 31,
1997 and 1996, respectively.


IMPAIRMENT OF LONG-LIVED ASSETS

The Company will record impairment losses on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount.

                                         F-10
<PAGE>

EMPI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

STOCK-BASED COMPENSATION

The Company has adopted the disclosure only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," but
applies Accounting Principles Board Opinion No. 25 (APB 25) and related
interpretations in accounting for its plans.  Under APB 25, when the exercise
price of employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.

EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," requiring
dual presentation of basic earnings per share and diluted earnings per share.
Basic earnings per share is calculated by dividing net income by the weighted
average shares outstanding.  Diluted earnings per share is calculated by
dividing net income by the weighted average diluted shares outstanding, which
includes the dilutive effect of options outstanding.  SFAS No. 128 was adopted
by the Company on December 31, 1997.  All earnings per share amounts for all
periods have been presented, and where appropriate, restated to conform to SFAS
No. 128 requirements.

RECLASSIFICATION

Certain prior year items have been reclassified to conform to current year
presentation.

NOTE 2. INVESTMENTS

Investments consist of the following:

<TABLE>
<CAPTION>

                                            DECEMBER 31
                                          1997       1996
                                        --------------------
                                             (IN THOUSANDS)

    <S>                                 <C>        <C>
    Municipal bonds                     $ 11,874    $  6,813
    U. S. Government bonds                 9,606       5,402
    Preferred stock                            -       5,000
    Cash equivalents                         662       1,319
                                        --------------------
                                        $ 22,142    $ 18,534
                                        --------------------
                                        --------------------
</TABLE>

Interest income included in other income was $1,031,000, $1,039,000, and
$798,000 for the years ended December 31, 1997, 1996 and 1995, respectively.

NOTE 3. INVENTORIES

Inventories consist of the following:


<TABLE>
<CAPTION>
                                             DECEMBER 31
                                           1997       1996
                                         --------------------
                                            (IN THOUSANDS)

     <S>                                 <C>         <C>
     Finished goods                      $ 5,515     $ 5,399
     Work in process                         556         678
     Raw materials                         1,932       1,243
                                         --------------------
                                         $ 8,003     $ 7,320
                                         --------------------
                                         --------------------
</TABLE>

NOTE 4. BORROWINGS

Long-term borrowings consist of:

<TABLE>
<CAPTION>

                                             DECEMBER 31
                                           1997       1996
                                           ------------------
                                           (IN THOUSANDS)

     <S>                                   <C>         <C>
     Notes payable                         $ 335       $ 620
     Less current maturities                 269         287
                                           ------------------
                                            $ 66       $ 333
                                           ------------------
                                           ------------------
</TABLE>

                                         F-11
<PAGE>

EMPI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Notes payable at December 31, 1997 and 1996 consists entirely of debt issued in
conjunction with dealer acquisitions and non-compete agreements.

Annual maturities of long-term debt are: 1998--$269,000 and 1999--$66,000.

Total interest paid for the years ended December 31, 1997, 1996 and 1995 was
$2,000, $79,000 and $121,000, respectively. Interest expense included in other
income (expense) was $2,000, $69,000 and $114,000 for the years ended December
31, 1997, 1996 and 1995, respectively.

NOTE 5. INCOME TAXES

At December 31, 1997, the Company has a net operating loss carryforward of
$861,000 for income tax purposes, resulting from the Company's 1993 acquisition
of Physical Health Devices, Inc., which will expire in the year 2007. The
Company's ability to utilize the net operating loss carryforward will be subject
to Internal Revenue Code Section 382 limitations. For financial reporting
purposes, at December 31, 1996, a valuation allowance of $332,000 had been
recognized to offset the deferred tax asset related to the carryforward.  In the
second quarter of 1997, the Company determined that recognition of the deferred
tax asset was probable and reversed the valuation allowance, reducing the
goodwill related to the acquisition of Physical Health Devices, Inc.

Deferred income taxes reflect the net effect of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of the
Company's deferred tax assets and liabilities as of December 31, 1997 and 1996
are as follows:

<TABLE>
<CAPTION>

                                                  1997           1996
                                                -----------------------
                                                     (IN THOUSANDS)

<S>                                             <C>            <C>
Deferred tax assets:
  Allowance for doubtful accounts               $ 2,053        $ 3,716
  Amortization of non-compete agreement             805            592
  Accrued expenses                                  316            234
  Inventory                                         300            257
  Other                                             675            747
                                                ----------------------
Total deferred tax assets                         4,149          5,546
Deferred tax liabilities                           (275)          (165)
                                                ----------------------
Net deferred tax assets                           3,874          5,381
Valuation allowance for deferred tax assets           -           (379)
                                                ----------------------
                                                $ 3,874        $ 5,002
                                                ----------------------
                                                ----------------------
</TABLE>

<TABLE>
<CAPTION>


                                    1997           1996           1995
                                 ---------------------------------------
                                             (IN THOUSANDS)

<S>                              <C>            <C>            <C>
Current:
  Federal                        $ 4,834        $ 5,040        $ 4,811
  State                              622            978            871
Deferred:
  Federal                            999           (118)          (504)
  State                              129            (42)           (62)
                                 --------------------------------------
                                 $ 6,584        $ 5,858        $ 5,116
                                 --------------------------------------
                                 --------------------------------------
</TABLE>

Reconciliation of the statutory federal income tax rate to the Company's
effective tax rate follows:

<TABLE>
<CAPTION>

                                    1997           1996           1995
                                  ------------------------------------
<S>                               <C>             <C>            <C>
Statutory rate                     34.0%          34.0%          34.0%
Increase resulting from:
  State taxes, net of federal
   tax benefit                      4.0            4.0            4.0
  Amortization of goodwill           -             0.5            1.0
  Other                             0.5             -              -
                                  ------------------------------------
Effective rate                     38.5%          38.5%          39.0%
                                  ------------------------------------
                                  ------------------------------------
</TABLE>

                                         F-12
<PAGE>

EMPI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Total income taxes paid during the years ended December 31, 1997, 1996 and 1995
were $4,845,000, $5,876,000 and $5,469,000, respectively.

NOTE 6.  STOCK PLANS

The Company has a qualified and nonqualified stock option plan for officers, key
employees and nonemployee directors.  The options are granted at fair market
value and are exercisable over periods up to 10 years from grant date in various
increments.  Shares reserved in the Company's 1987 and 1997 Stock Option Plans
for issuance upon the exercise of warrants and options were 1,187,281 at
December 31, 1997.

Option activity in the stock option plans is summarized as follows:


 
<TABLE>
<CAPTION>

                                          QUALIFIED    NON-QUALIFIED      WEIGHTED
                                           OPTION         OPTION      AVERAGE EXERCISE
                                           SHARES         SHARES           PRICE
                                        ----------------------------------------------

<S>                                     <C>            <C>            <C>
Balance January 1, 1995                    393,820        304,757        $ 12.52
  Granted                                   77,015         31,568           8.73
  Canceled/expired                         (16,700)        (2,500)         21.21
  Exercised                                (42,025)       (15,000)          9.42
                                        ---------------------------

Balance December 31, 1995                  412,110        318,825          11.97
                                        ---------------------------
  Granted                                   77,104         26,846          21.36
  Canceled/expired                         (96,013)       (30,806)         15.13
  Exercised                                (44,479)       (15,905)          6.82
                                        ---------------------------

Balance December 31, 1996                  348,722        298,960          13.34
                                        ---------------------------
  Granted                                   67,182         46,400          17.85
  Canceled/expired                         (52,655)        (8,106)         17.51
  Exercised                               (184,906)      (133,253)         12.25
                                        ---------------------------

Balance December 31, 1997                  178,343        204,001        $ 14.93
                                        ---------------------------
                                        ---------------------------
</TABLE>
 

As of December 31, 1997 there were 150,450 options outstanding with exercise
prices between $7.50 and $8.75, 135,344 options outstanding with exercise prices
between $9.88 and $17.88, and 96,550 options outstanding with exercise prices
between $19.25 and $28.00.  At December 31, 1997 outstanding options had a
weighted average remaining contractual life of 7 years.  The number of options
exercisable as of December 31, 1997, 1996 and 1995 were 76,055, 213,725 and
158,000, respectively, at weighted average exercise prices of $12.96, $13.30 and
$14.27.

The Company also has an Employee Stock Purchase Plan.  The Plan enables
employees to contribute up to 10 percent of their compensation toward the
purchase of the Company's common stock at 85 percent of market value.  At
December 31, 1997, 276,788 shares are reserved for future employee purchases of
stock under the Plan.

The fair value of stock options used to compute pro forma net income and
earnings per share disclosures, as prescribed by SFAS No. 123, is the estimated
present value at grant date using a Black-Scholes option-pricing model with the
following weighted average assumptions for 1997, 1996 and 1995: dividend yield
of 0%; expected volatility of 61.36%; a risk free interest rate of 5.66% and
an expected holding period of 3.79 years.

The weighted average fair value of options granted during the years ended
December 31, 1997, 1996 and 1995 was $8.86, $10.47 and $4.48, respectively.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable.  In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.  Because
the Company's employee stock options have characteristics significantly
different than those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options.

                                         F-13
<PAGE>

EMPI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

If the Company had elected to recognize compensation cost for the stock option
plan and employee stock purchase plan based on the fair value at the grant dates
for awards under those plans, consistent with the method prescribed by SFAS 123,
net income and earnings per share would have been changed to the pro forma
amounts indicated below:

 
<TABLE>
<CAPTION>

                                                   1997            1996           1995
                                             -----------------------------------------
                                             (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<S>                           <C>            <C>            <C>            <C>
Net income:                   As reported    $   10,516     $    9,357     $     8,002
                              Pro forma           9,933          9,051           7,613

Diluted earnings per share:   As reported    $     1.27     $     1.08     $      0.90
                              Pro forma            1.20           1.05            0.86

Basic earnings per share:     As reported    $     1.30     $     1.08     $      0.93
                              Pro forma            1.23           1.05            0.89
</TABLE>

Note: The pro forma effect on net income for 1997, 1996 and 1995 is not
representative of the pro forma effect on net income in future years because it
does not take into consideration pro forma compensation expense related to
grants made prior to 1995.

NOTE 7. CAPITAL STOCK

The Company purchased and retired 529,300 shares of common stock for $10.5
million and 528,000 shares of common stock for $8.2 million in 1997 and 1996,
respectively.

In 1996, the Company purchased and retired 250,000 warrant rights for $1.7
million which were originally issued in conjunction with the 1992 acquisition of
the Nortech division of Medtronic, Inc.

NOTE 8. EARNINGS PER SHARE

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

 
<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                      1997           1996           1995
-------------------------------------------------------------------------------------------------------------------

<S>                                                                       <C>              <C>           <C>
Net income                                                                $    10,516      $   9,357     $    8,002

Denominator for earnings per share:
   Weighted average shares; denominator for basic earnings per share            8,077          8,448          8,588

   Effect of dilutive securities:
      Employee  and nonemployee stock options                                     181            212            311
                                                                          -----------------------------------------

   Dilutive common shares; denominator for diluted earnings per share           8,258          8,660          8,899
                                                                          -----------------------------------------
                                                                          -----------------------------------------

Basic earnings per share                                                  $      1.30      $    1.11     $     0.93
                                                                          -----------------------------------------
                                                                          -----------------------------------------

Diluted earnings per share                                                $      1.27      $    1.08     $     0.90
                                                                          -----------------------------------------
                                                                          -----------------------------------------
</TABLE>

 
NOTE 9. LEASES

The Company leases office space under noncancelable operating leases. These
leases expire on various dates through 2006.

Future minimum payments under all lease arrangements subsequent to 1997 are:
1998--$567,000, 1999--$564,000, 2000--$564,000, 2001--$564,000, 2002--$564,000,
and thereafter--$2,142,000.

Rent expense for the years ended December 31, 1997, 1996 and 1995 was $576,000,
$660,000 and $526,000, respectively.

                                         F-14

<PAGE>

EMPI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. RETIREMENT PLAN

The Company has a Retirement Profit Sharing and Savings Plan under
Section 401(k) of the Internal Revenue Code. The Plan allows employees to defer
up to 15% of their income on a pre-tax basis through contributions to the Plan.
For every dollar the employee contributes up to 6% of their income, the Company
will contribute $.50. In 1997, 1996 and 1995, the Company's matching
contribution was $444,000, $404,000 and $421,000, respectively.

                                         F-15

<PAGE>

EMPI, INC. SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS


                             YEAR ENDED DECEMBER 31, 1997
                                    (IN THOUSANDS)

 
<TABLE>
<CAPTION>


---------------------------------------------------------------------------------------------------------------------------------
            Col. A                  Col. B                         Col. C                          Col. D             Col. E
---------------------------------------------------------------------------------------------------------------------------------
                                                                 Additions
                                                                 ---------
                                                          (1)                                       (2)
                                                                        Charged to Other
                                 Beginning Of      Charged to Costs        Accounts --          Deductions -    Balance at End 
   Description                      Period           and Expenses           Describe              Describe         of Period
---------------------------------------------------------------------------------------------------------------------------------

<S>                              <C>               <C>                  <C>                     <C>             <C>
 Year ended
   December 31, 1997:
   Allowance for
   doubtful accounts               $  5,062            $  2,442             $    -0-              $  2,623            $ 4,881

      Inventory reserve               2,769                 128                  -0-                   289              2,608
                                   --------            --------             --------              --------            -------

 Total                             $  7,831            $  2,570             $    -0-              $  2,912            $ 7,489
                                   --------            --------             --------              --------            -------
                                   --------            --------             --------              --------            -------

 Year ended
      December 31, 1996:
      Allowance for
      doubtful accounts            $  5,966            $  2,416             $    -0-              $  3,320            $ 5,062

      Inventory reserve               2,757                 766                  -0-                   754              2,769
                                   --------            --------             --------              --------            -------

 Total                             $  8,723            $  3,182             $    -0-              $  4,074            $ 7,831
                                   --------            --------             --------              --------            -------
                                   --------            --------             --------              --------            -------

 Year ended
      December 31, 1995:
      Allowance for
      doubtful accounts            $  7,684            $  2,565             $    -0-              $  4,283            $ 5,966

      Inventory reserve            $  2,490                 875                  -0-                   608              2,757
                                   --------            --------             --------              --------            -------

 Total                             $ 10,174            $  3,440             $    -0-              $  4,891            $ 8,723
                                   --------            --------             --------              --------            -------
                                   --------            --------             --------              --------            -------

</TABLE>
 
(1)  Provisions for write-off of uncollectable receivables and inventory
     adjustments.

(2)  Represents write-offs of doubtful accounts, net of recoveries, and
     write-offs and disposals of inventory.

                                         F-16