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<p align="center"><font size="3"><strong>UNITED STATES</br>
SECURITIES AND EXCHANGE COMMISSION</br>
Washington, D.C. 20549</strong></font></p>

<p align="center"><font size="4"><strong>FORM 10-K</strong></font></p>
<p align="center"><font size="3"><strong>
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
</strong></font></p>
<p align="center"><font size="3" color="FF0000"><strong>
                     FOR THE FISCAL YEAR ENDED JULY 2, 1999
</strong></font></p>

<p align="center"><font size="3"><strong> OR </strong></font></p>

<p align="center"><font size="3"><strong>
[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
</strong></font></p>
<p align="center"><font size="3"><strong>
 For the transition period from ________to _________
</strong></font></p>
<p align="center"><font size="3"><strong>
                           Commission File No. 0-12744
</strong></font></p>
<p align="center"><font size="5" color="#0000FF"><strong>
                             <u>SUNRISE MEDICAL INC.</u>
</strong></font></br>
<font size="2">
          (Exact name of registrant as specified in its charter)
</font></p>

<P> 
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<font size="3"><strong>
<CENTER><u>Delaware</u></CENTER>
</font></strong>
</TD>
<TD>
<font size="3"><strong>
<CENTER><u>95-3836867</u></CENTER>
</font></strong>
</TD>
</TR>
<TR>
<TD>
<font size="2">
<CENTER>  (State or Other Jurisdiction of Incorporation or Organization) </CENTER>
</font>
</TD>
<TD>
<font size="2">
<CENTER>(IRS Employer Identification Number)</CENTER>
</font>
</TD>
</TR>
</TABLE>
<BR>



<p align="center"><font size="3"><strong>
                       2382 Faraday Avenue, Suite 200<br>
                          <u> Carlsbad, CA 92008
</strong></font></u></br>

<font size="2">
              (Address of principal executive offices)
</font></p>

<p align="center"><font size="3"><strong><u>
   Registrant's telephone number, including area code:  (760) 930-1500
</strong></font></u></p>

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<p align="center"><font size="3"><strong>
Securities registered pursuant to Section 12(b) of the Act:
</strong></font></p>


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<TD>
<font size="2"><strong>
<CENTER><u>TITLE OF CLASS</u></CENTER>
</font></strong>
</TD>
<TD>
<font size="2"><strong>
<CENTER><u>NAME OF EACH EXCHANGE ON WHICH REGISTERED</U></CENTER>
</font></strong>
</TD>
</TR>
<TR>
<TD>
<font size="3">
<CENTER>Common Stock, par value $1.00</CENTER>
</font>
</TD>
<TD>
<font size="3">
<CENTER>New York Stock Exchange</CENTER>
</font>
</TD>
</TR>
<TR>
<TD>
<font size="3">
<CENTER>Common Stock Purchase Rights</CENTER>
</font>
</TD>
<TD>
<font size="3">
<CENTER>New York Stock Exchange</CENTER>
</font>
</TD>
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<p align="center"><font size="3"><strong>
Securities registered pursuant to Section 12(g) of the Act: None
</strong></font></p>


<p>   
     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. [X] </p>

<p>   
     Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 91 days. YES [X] NO [  ] </p>

<p>   
The aggregate market value of the voting stock held by non-affiliates of the
registrant was  $101,100,000 as of October 1, 1999.

<p>   
As of October 1, 1999, the registrant had 22,233,933 outstanding shares of $1
par value common stock.

<p align="center"><font size="3"><strong>
                      DOCUMENTS INCORPORATED BY REFERENCE
</strong></font></p>


<P> 
<TABLE COLS=2 WIDTH="100%" >
<TR>
<TD>
<font size="3"><strong>
<CENTER><u>Documents</u></CENTER>
</font></strong>
</TD>
<TD>
<font size="3"><strong>
<CENTER><u>Form 10-K References</u></CENTER>
</font></strong>
</TD>
</TR>
<TR>
<TD>
<font size="2">
<CENTER>
Portions of our Definitive Proxy
Statement for our upcoming Annual Meeting of
Stockholders
</CENTER>

</font>
</TD>
<TD>
<font size="2">
<CENTER>Part III, Items 10-13 (Page 57)</CENTER>
</font>
</TD>
</TR>
</TABLE>
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<p align="center"><strong> SUNRISE MEDICAL INC.<br>
                                    FORM 10-K<br>
                     FOR THE FISCAL YEAR ENDED JULY 2, 1999<br></p>
</strong></p>
<p align="center"><strong>
                                      INDEX
</strong></p>
<p align="center"><strong><A HREF="#parti">
                                     PART I</A>
</strong></p>
<p><A HREF="#item1">
Item 1.   Business</A><br>

<p><A HREF="#item2">
Item 2.   Properties</A><br>

<p><A HREF="#item3">
Item 3.   Legal Proceedings</A><br>

<p><A HREF="#item4">
Item 4.   Submission of Matters to a Vote of Security Holders</A><br>
            
  --      Executive Officers of the Company<br>

<p align="center"><strong><A HREF="#partii">
                                     PART II</A>
</strong></p>

<p><A HREF="#item5">
Item 5.   Market for Registrant's Common Stock and Related Stockholder Matters</A><br>

<p><A HREF="#item6">
Item 6.   Selected Financial Data</A><br>

<p><A HREF="#item7">
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations</A><br>

<p><A HREF="#item7a">
Item 7A.      Quantitative and Qualitative Disclosure About Market Risks</A><br>


<p><A HREF="#item8">
Item 8.   Financial Statements and Supplementary Data</A><br>

<p><A HREF="#item9">
Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure</A><br>

<p align="center"><strong><A HREF="#partiii">
                                     PART III</A>
</strong></p>

<p><A HREF="#item10">
Item 10.  Directors and Executive  Officers of the  Registrant</A><br>

<p><A HREF="#item11">
Item 11.  Executive  Compensation</A><br>

<p><A HREF="#item12">
Item 12.  Security Ownership of Certain Beneficial Owners and Management</A><br>

<p><A HREF="#item13">
Item 13.  Certain  Relationships and Related  Transactions</A><br>

<p align="center"><strong><A HREF="#partiv">
                                     PART IV</A>
</strong></p>

<p><A HREF="#item14">
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K</A><br>



<p align="left"><strong>
<A HREF="#sign">
Signatures</A>
</strong></p>

<p align="center"><A NAME="parti"><strong> PART I</A> </strong></p>

<p><A NAME="item1"><strong> ITEM 1.   BUSINESS </A></strong></p>
<P>General</P>
</B><P>Sunrise Medical Inc. is a worldwide leader in the design, manufacture and
marketing of medical products used by the disabled and the elderly.  We maintain
number one or number two global market share positions for many of our core
products including:</P>

<UL>

<UL>
<LI>custom manual and power wheelchairs and related seating systems;</LI>
<LI>home respiratory devices such as compressor nebulizers and oxygen
concentrators;</LI>
<LI>personal care products such as walkers, crutches and bath safety products;
</LI>
<LI>nursing home beds and specialized bathing systems; and</LI>
<LI>speech devices for the disabled.</LI></UL>
</UL>

<P>We manufacture our products in the United States, Mexico, the United Kingdom,
Germany, France and Spain and distribute them through company-owned sales
organizations in 19 countries and through independent importer-distributors in
about 80 other countries.  Our customers include more than 20,000 home medical
equipment providers and distributors around the world who provide our products
to millions of end-users each year.  In addition, we sell directly to extended
care and assisted living facilities and to users of speech devices.</P>
<P>We believe that a number of factors will contribute to the continued
worldwide growth in the markets for our products, including:</P>

<UL>

<UL>
<LI>advances in technology that permit the care of higher acuity patients in the
institutional or home environment and also facilitate independent living by
people with disabilities;</LI>
<LI>greater societal emphasis on integrating the disabled into the mainstream of
community, workplace and schools;</LI>
<LI>the increasing popularity of wheelchair sports and recreational activities
among the disabled;</LI>
<LI>the aging of the population;</LI>
<LI>the economic pressures in all developed countries to shift patients from
hospitals to lower-cost institutional and homecare settings; and</LI>
<LI>patient preference for home healthcare.</LI></UL>
</UL>

<P>Headquartered in Carlsbad, California, Sunrise was incorporated in 1983 and
is publicly traded on the New York Stock Exchange under the ticker symbol
"SMD."</P>

<B><P><A NAME="_Toc394223846">Products </P>

</B><P>Our corporate mission is to improve people's lives by creating
innovative, high quality products.  The following is a summary of our revenues
by principal product line for the last three fiscal years.</P>

<pre>
                                          % of Total Revenue
                                    -----------------------------
                                      1999      1998      1997
                                    --------- --------- ---------
Wheelchairs....................           43%       42%       40%
Home respiratory products......           18%       19%       19%
Personal care products.........           21%       21%       24%
Beds and bathing systems.......           15%       16%       15%
Speech devices.................            3%        2%        2%

</pre>


<B><I><P>Wheelchairs.</B></I>  Our broad range of wheelchair products
include:</P>

<UL>

<UL>
<U><LI>Custom ultralight wheelchairs</U>.  Our ultralight custom manual models
are the wheelchairs of choice for active users.  These include, among others,
the <I>Quickie 2</I>, manufactured in the U.S. and U.K. and the <I>Sopur
Easy</I> made in Germany.</LI>
<U><LI>Sports wheelchairs.</U>  Our <I>Quickie, Shadow</I> and <I>Sopur</I>
brands of custom wheelchairs are designed for specific sports such as tennis,
basketball, road racing and quad rugby.</LI>
<U><LI>Lightweight standard wheelchairs.</U>  Our lightweight manual wheelchairs
such as the <I>Breezy 500</I> and <I>Sopur Classic</I> are primarily for
geriatric users.</LI>
<U><LI>Standard wheelchairs.</U>  Our standard wheelchairs are used primarily
for the value conscious customer and the short-term rental market.  These
include the recently introduced <I>Breezy 100</I> for the U.S. market and the
<I>Breezy 300</I> manufactured in Spain.  The <I>Breezy 100</I> was voted a
"Best New Product of the Year" by one of our larger customers.</LI>
<U><LI>Pediatric wheelchairs.</U>  Our pediatric wheelchairs such as the
<I>Zippie, Youngster</I> and <I>Kid-Kart</I> are specially designed for children
with disabilities, adjusting to accommodate a child's growth and changing
needs.</LI>
<U><LI>Power wheelchairs.</U>  Our custom power wheelchairs, including the
<I>Quickie P210</I>, <I>Quickie F55</I>, <I>Breezy P300</I> and the <I>Sopur
P140</I>, provide mobility for more severely disabled end-users.</LI>
<U><LI>Scooters.</U>  Our three and four wheeled battery-powered scooters under
the <I>Sterling</I> brand provide easy and convenient mobility primarily for
geriatric end-users with only moderate disabilities.</LI></UL>
</UL>

<P>Our custom wheelchairs are manufactured to individual end-user specifications
as to dimensions, features and color.  For instance, the <I>Quickie 2</I> offers
one-inch increments of seat depth, seat width and back height, in a choice of 15
colors and an array of options and accessories which give the end-user an almost
unlimited number of variations from which to choose.  Power wheelchair options
include microprocessor technology to enable quadriplegic users to maneuver their
wheelchairs through the movement of fingers, head or chin or by sipping and
puffing through a plastic straw.  Some wheelchairs have controllers that
interface with household appliances and personal computers, permitting the
disabled user to be self-reliant.  We manufacture a custom wheelchair upon
receipt of an order for a specific end-user and then deliver the finished
product within three days to three weeks.</P>
<P>Our <I>Jay </I>brand of specialty wheelchair cushions and positioning systems
prevent pressure sores and provide postural support and improved comfort.
<I>Jay</I> products utilize our patented <I>Jay Flow</I> viscous fluid to
provide pressure relief.  The <I>Jay</I> modular seating systems fit on all
major brands of wheelchairs and include a variety of customized positioning
devices for postural support.</P>
<B><I><P>Home Respiratory Products</B></I>.  We manufacture and sell a broad
range of home respiratory products under the <I>DeVilbiss </I>brand.  Our
product categories include:</P>

<UL>

<UL>
<U><LI>Aerosol products.</U>  These products include our <I>Pulmo-Aide</I>
compressor nebulizer that converts liquid medicine into airborne particles to
treat asthma and other breathing disorders.</LI>
<U><LI>Oxygen concentrators.</U>  Our oxygen concentrator products enrich normal
room air to a 90% oxygen level for patients suffering from chronic obstructive
lung diseases such as emphysema and bronchitis.</LI>
<U><LI>Ambulatory oxygen products.</U>  Our <I>PulseDose</I> oxygen conserving
devices triple the use time over standard ambulatory oxygen products, allowing
oxygen users to leave their homes for longer periods of time.</LI>
<U><LI>Sleep therapy products.</U>  We also manufacture a line of sleep therapy
products that alleviate adult obstructive sleep apnea by supplying continuous
positive airway pressure ("CPAP").</LI></UL>
</UL>

<B><I><P>Personal Care Products</B></I>.  Personal care products include our
<I>Guardian</I> and <I>Coopers</I> brands of ambulatory products, such as
walkers, crutches and canes.  This product line also includes aids for daily
living, such as bedside commodes and bath safety products.  In addition, we
manufacture and market patient lifters and hoists for the nursing home and
homecare setting under our <I>Hoyer</I> and <I>Oxford</I> brands, and home
stairlifts under the <I>Minivator</I> brand.  Our <I>Eggcrate</I> brand foam
mattress overlays are used for the prevention of pressure sores.</P>
<B><I><P>Speech Devices.</B></I>  With our <I>DynaVox </I>products, we are the
global leader in augmentative communication devices and related computer
software for people affected by speech disabilities.  Our devices combine
dynamic touch-screen technology, predictive natural language software and a
life-like voice synthesizer to speak for those with speech disorders due to
conditions including cerebral palsy, autism, multiple sclerosis and stroke.  At
the core of <I>DynaVox's</I> technology is advanced proprietary natural language
software that incorporates linguistic and grammatical intelligence to speed
sentence formation.</P>
<B><I><P>Beds and Bathing Systems</B></I>.  We manufacture a full line of
nursing home beds and furniture under the <I>Joerns</I> brand in the U.S. and
the <I>Corona</I> brand in Europe.  The <I>Joerns</I> product line consists of
healthcare beds, patient room furniture, overbed tables, dining room and common
area furnishings.  Our <I>Parker</I> brand of bathing systems are specialized
bathtubs with features such as adjustable height bathtubs for easier patient
bathing by caregivers and side-door entry for safe transfer from
wheelchairs.</P>
<B><P></A>Re-engineering Program</P>
</B><P>In 1995, Sunrise was composed of 30 free-standing operating units, each
with its own president and management team, manufacturing or distribution
facilities, salesforce, computer system and accounting function.  We were able
to compete successfully under this structure because the insurance system in
place would pay for whatever products and features clinicians specified, placing
greater weight on innovation than price.  However, by the mid-1990s, homecare
products increasingly were viewed generically, due to government budgetary
pressures and the rise of managed care.  Also, with the consolidation of home
medical equipment providers into national chains and buying groups, volume
contract prices declined sharply, reducing our gross margin.  As a result, we
began a three-year business re-engineering program in early 1996 designed to
reduce our cost structure and enhance our market responsiveness.  The re-
engineering program eliminated redundancies and inefficiencies in our operations
by significantly restructuring fundamental components of our business,
including:</P>

<UL>

<UL>
<U><LI>Business units</U>.  We reorganized 30 independent business units into
two integrated businesses in the U.S. and four within Sunrise Europe, supported
by a network of country sales organizations.</LI>
<U><LI>Manufacturing facilities</U>.  We consolidated 23 factories into 12
factories in six countries and also moved an operation from Simi Valley,
California to a new facility in Tijuana, Mexico.</LI>
<U><LI>Information systems</U>.  We redesigned our management information
systems, integrating 30 different data centers into six and standardizing on a
single hardware/software platform for North America and one for Europe.</LI>
<U><LI>Sales organizations</U>.  We consolidated 12 U.S. salesforces into two in
order to improve our calling frequency and better align our selling efforts
against the different markets our products serve.</LI></UL>
</UL>

<P>The re-engineering program, completed during the first half of fiscal 1999,
succeeded in reducing our marketing, selling and administrative expenses from
25.6% of sales in fiscal year 1996 to 22.3% in fiscal year 1999.</P>
<B><P>Operating Segments</P>
</B><P>Our operating segments are organized by distribution channels<B>.  </B>We
have three reportable segments: U.S. Rehabilitation Products, European
Rehabilitation Products and Institutional Products.</P>
<P>Information as to revenues, operating income (loss), total assets, capital
expenditures and depreciation and amortization by segment is included in Note 14
of the "Notes to Consolidated Financial Statements."</P>
<B><P>U.S. Rehabilitation Products</P>
</B><P>The U.S. rehabilitation products segment includes wheelchairs and seating
systems, ambulatory and bath safety aids, home respiratory devices and speech
devices focused on the needs of the disabled and elderly in the United
States.</P>
<P>The Home Healthcare Group, headquartered in Longmont, Colorado, includes
sales, marketing, finance, information systems, customer service, distribution
and human resources.<B>  </B>Also included are SunMed Finance, our dealer
installment financing division and Sunrise Consulting, our Medicare
reimbursement consulting business.  Product development and manufacturing
activities in the U.S. are organized by principal product line:</P>

<UL>

<UL>
<U><LI>Mobility Products</U>:  custom, power, pediatric and standard
wheelchairs; and seating and positioning systems;</LI>
<U><LI>Personal Care Products</U>:  standardized medical products designed to
assist in walking, bathing, toileting, patient lifting and transport and wound
prevention; and</LI>
<U><LI>Respiratory Products</U>:  aerosol, oxygen and sleep therapy
products.</LI></UL>
</UL>

<P>In the United States, products are sold through a salesforce of 122 sales
Associates who call on a network of approximately 12,500 homecare providers,
rehabilitation technology suppliers and drug wholesalers.  This dedicated
salesforce stimulates demand by calling on referral sources such as discharge
planners, nurses, physical, occupational and respiratory therapists and other
health professionals.  In addition, an acute care sales force of 23 independent
sales representatives sell Home Healthcare Group's hospital products to medical-
surgical distributors and hospital group purchasing organizations.  Effective
July 1999, the Home Healthcare Group has modified its salesforce's incentive
structure to encourage sales of higher margin products while still offering
customers the complete product line they want from one supplier.  The territory
structure was also realigned so that all salespeople carry the full line of
Sunrise products, a change aimed at increasing call frequency due to the smaller
average size of each full line territory.</P>
<P>Included within the Home Healthcare Group are our distribution organizations
in Canada and Australia and our global export sales department.  The global
export sales team is responsible for developing relationships with independent
importers to sell the full line of Sunrise products in countries where we do not
have our own distribution organization.</P>
<P>The Home Healthcare Group offers consolidated customer service, order entry,
distribution and credit functions for all Sunrise products sold domestically.
The Home Healthcare Group's orders are received via phone, fax or electronically
into our customer service group.  Standard products are shipped the same day or
next day from one of five regional distribution centers, allowing 24 to 48 hour
delivery to most customers.  Customized products, such as most <I>Quickie</I>
wheelchairs and <I>Jay</I> seating products, are manufactured to order and
shipped directly from those factories within three days to three weeks.</P>
<P>Through our DynaVox Systems division located in Pittsburgh, Pennsylvania, we
design, manufacture and market hardware and software products for people with
speech and cognitive disabilities.  The <I>DynaVox</I> product line is the
global leader in augmentative communication devices.  Our speech devices combine
powerful microprocessors with proprietary software that uses predictive natural
language logic, touch-screen technology and a life-like voice synthesizer to aid
those with speech disorders.  Typical users are unable to speak as a result of
conditions such as cerebral palsy, autism, multiple sclerosis or stroke.  Most
users today are children, but there is a larger potential market with the
elderly, particularly if Medicare begins to fund this product, which we are
working to achieve.  Proprietary <I>DynaVox DSS</I> software is sold separately
for use with Windows or Macintosh based personal computers.  This allows parents
and teachers to customize programs and download them to the user's speech
device.</P>
<P>DynaVox products are sold through our U.S. salesforce of 32 speech product
specialists and through Sunrise distribution organizations or independent
importer-distributors in other developed countries.  Purchasers and payors
include school districts, non-profit organizations, state medical insurance
programs and government agencies.  Many users of our wheelchairs and other
products have disabilities which also require the need for assistive technology
devices.  For example, persons afflicted with cerebral palsy or multiple
sclerosis often require both mobility products and speech devices.</P>
<B><P>European Rehabilitation Products</P>
</B><P>The European rehabilitation products segment consists of three
manufacturing divisions which produce wheelchairs and seating systems, scooters,
home stairlifts and daily living aids and six distribution divisions that
distribute these products as well as respiratory products in Europe, the Middle
East, Africa and Central Asia.</P>
<P>Our European divisions' manufacturing, selling and distribution processes are
similar to those of the U.S. based Home Healthcare Group.  In Europe, we
manufacture our rehabilitation products in the U.K., Germany and Spain and
distribute them through company-owned sales and distribution organizations in
France, the Netherlands, Norway, Sweden, Italy and Switzerland.  Sunrise Medical
Ltd., operating in the U.K., manufactures and markets wheelchairs, scooters,
personal care products, patient lifters and respiratory products.  Sunrise
Germany manufactures and markets the <I>Sopur </I>line of custom lightweight
manual, power, pediatric and performance wheelchairs.  This organization also
distributes respiratory products and standard wheelchairs to homecare dealers
throughout Germany and Austria.  Our Spanish subsidiary manufactures standard
wheelchairs, power wheelchairs and patient aids.  We have a salesforce of 151
sales Associates in Europe selling our products to local home medical equipment
providers.</P>
<B><P>Institutional Products </P>
</B><P>The institutional products segment is comprised of three manufacturing
divisions and globally produces and sells healthcare beds and furniture,
therapeutic matresses and other patient support surfaces and bathing systems for
patients and long-term residents in institutional settings such as nursing
homes, sub-acute facilities and assisted living centers.</P>
<P>The Continuing Care Group manages this segment, with its headquarters in
Stevens Point, Wisconsin.  Products are manufactured in the U.S., the U.K. and
France and are sold through our own salesforce of 75 Associates calling directly
on institutional settings and assisted living facilities in those three
countries.  Clinicians such as directors of nursing play a key role in product
evaluations and ultimate decision making.</P>
<P>The Continuing Care Group also markets the Sunrise OneSource program, which
bundles design services and sells a full line of self-manufactured and
outsourced products primarily to assisted living facilities.  OneSource sales of
$4.5 million in 1999 have tripled versus the prior year.  In addition, this
segment manufactures homecare beds and therapeutic mattresses that are sold
through the Home Healthcare Group's salesforce to U.S. homecare equipment
providers and, in Europe, through our sales organization in France.</P>
<B><P>Sales and Marketing</P>
</B><P>Sunrise products are primarily marketed through a number of programs
including print advertising, product brochures and videos and electronic
commerce featuring a comprehensive product catalog and on-line customer service
inquiries.</P>
<P>The Home Healthcare Group sells through a nationwide salesforce to
independent homecare providers and dealers who typically display these products
in a retail setting and sell or rent them to patients.  The salesforce calls on
these dealers and also stimulates a pull-through demand by explaining product
benefits to clinical influencers such as physical, occupational and respiratory
therapists.  Special attention has been directed to larger regional and national
accounts, including the use of incentive programs that benefit customers who
purchase from multiple Sunrise divisions.</P>
<P>DynaVox products are sold to end-users through a direct salesforce and
through Sunrise distribution organizations or independent importer-distributors
in other developed countries.  DynaVox also has a flexible product rental
program.</P>
<P>In Europe, products are marketed and sold through independent medical
equipment dealers in most countries, although under Scandinavia's state-
controlled healthcare systems, the government's local technical aid centers
perform a similar function.</P>
<P>The Continuing Care Group sells institutional products through our own
salesforces in the U.S. and Europe. Our account representatives demonstrate and
sell products directly to continuing care institutions where clinicians such as
directors of nursing play a key role in product evaluations and ultimate
decision making.  This Group offers OneSource products to assisted living
facilities through computer based marketing material.  Certain products
manufactured by the Continuing Care Group that are sold primarily through
dealers or distributors are handled by the Home Healthcare Group salesforce.</P>
<B><P>Customers</P>
</B><P>Rehabilitation products are principally sold to independent medical
equipment dealers, rehabilitation technology suppliers, drug wholesalers,
medical-surgical distributors and hospital purchasing organizations.
Institutional products are sold mainly to nursing homes, sub-acute facilities
and assisted living centers.  No single customer or buying group accounted for
more than 10% of Sunrise's revenues in 1999.</P>
<B><P>Manufacturing</P>
</B><P>Sunrise operates 15 manufacturing plants in the U.S. (9), Mexico (1), the
U.K. (2), France (1), Germany (1) and Spain (1).  See "Operating Segments."
Manufacturing processes include metal and wood fabrication, welding/brazing,
injection molding, circuit board assembly, powder coating, final assembly, life
testing and quality assurance.  Purchased components used in our products
include small motors, electronic controls, batteries, wheels and tires.
Although we purchase most of our raw materials, components and supplies from a
number of different vendors, we do procure a few components and materials on a
single-source basis.  If one of these single-source vendors failed to deliver
components as planned, we would be temporarily unable to ship some of our
products.  Historically, the prices we have paid for certain raw materials, such
as aluminum, foam and wood, have fluctuated widely.  When prices have increased,
we have not always been able to pass along the full effect of these increases to
our customers.  See "Management Discussion and Analysis of Financial Condition
and Results of Operations -- Factors that May Affect Future Operating
Results."</P>
<P>Sunrise's mass customization manufacturing capabilities enable it to produce
customized wheelchairs and related seating and positioning products that are
tailored to each end-user's needs.  Our 15 modern manufacturing facilities use
robotic and computer-controlled machinery.  We have an additional competitive
advantage with factories located both in North America and Europe that can serve
local customers and export internationally.</P>
<P>We have utilized a variety of techniques, such as just-in-time manufacturing,
demand flow technology, value engineering, total quality management, target
costing and our Associate suggestion system to reduce product costs, increase
quality, shorten delivery cycles and improve asset turnover.  These
complementary techniques are all part of our Pursuit of Excellence program, in
which production Associates are regularly trained.  All of our factories have
earned or are in the process of earning ISO 9001 certification, the
international standard for quality assurance in design and manufacturing.</P>
<B><P>Research and Development</P>
</B><P>We conduct research and development at each of our manufacturing
divisions.  For the year ended July 2, 1999, we spent $21.1 million on research
and development, or 3.2% of sales, compared to $17.9 million, or 2.7% of sales,
in the prior year.  Each operating unit establishes annual objectives for
introducing new products and we track progress against those objectives on a
regular basis.  We introduced approximately 50 new products in 1999.  Our
increase in research and development expenditures supports our strategy of
increasing sales growth and profit margins through development of innovative,
higher technology products.  Our most significant introductions in 1999
include:</P>

<UL>

<UL>
<U><LI>two power wheelchairs in the U.S.</U>:  the <I>Quickie G-424</I>, which
has a unique six wheel independent suspension providing a "floating" ride, and
the <I>Quickie S-525</I>, with modular seating choices, electronics and motor
packages allowing the prescriber to provide appropriate power to the
consumer;</LI>
<U><LI>two power wheelchairs in Europe</U>:  the <I>Quickie F55</I> power
wheelchair, introduced in the U.K. and the <I>Breezy P300</I> introduced in
Spain, the power version of the aluminum/composite <I>Breezy 300</I> standard
wheelchair introduced in 1998; and</LI>
<U><LI>two respiratory devices</U>:  the <I>DeVilbiss Versatile PulseDose
EX3000</I> which is the only oxygen conserver that is interchangeable between
liquid oxygen portable and reservoir containers and gas portable units, and the
<I>AutoAdjust LT "Smart" CPAP</I>, allowing the patient to customize the
algorithm settings.</LI></UL>
</UL>

<B><P>Patents and Trademarks</P>
</B><P>We currently hold patents associated with some existing products and have
filed applications for additional patents covering some of our newer products.
Although some of these patents can provide a meaningful competitive advantage in
a particular product market, overall, management does not consider the ownership
of patents essential to our current or future market position.</P>
<B><P>Warranty</P>
</B><P>Our products are generally sold with limited warranties for periods of up
to five years.  Customers may also purchase extended warranties on some
products.  Some components of our wheelchair products have a lifetime warranty.
The expected warranty expense associated with each product sold is recorded at
the time of sale and the adequacy of those warranty reserves is reviewed
regularly and adjusted accordingly.</P>
<B><P>Foreign Operations</P>
</B><P>We have foreign subsidiaries with manufacturing and distribution
operations in the U.K., France, Germany, Spain and Mexico.  In addition,
company-owned sales/distribution companies are located in Canada, Australia, the
Netherlands, Norway, Sweden, Switzerland and Italy.  We also have salespeople
who cover neighboring countries, such as Belgium, Luxembourg, Austria, Denmark
and Portugal.  All of our manufacturing and distribution facilities are located
in industrially developed areas where qualified labor and material supply have
been readily available.  See "Management Discussion and Analysis of Financial
Condition and Results of Operations -- Factors that May Affect Future Operating
Results."  Financial information relating to our operations by geographic area
is included in Note 14 of the "Notes to Consolidated Financial Statements".</P>
<B><P>Competition</P>
</B><P>The medical supply industry is characterized by intense competition.  We
encounter significant domestic and foreign competition from a number of
established manufacturers in each of our product lines. In some countries and
product markets, including the U.S., we face competition from other
manufacturers that have substantially greater financial and other resources,
larger market shares or other competitive advantages.  Price reductions by our
competitors could result in similar price reductions by us.</P>
<P>The worldwide markets for rehabilitation and institutional products are
dominated by two global manufacturers, Sunrise and Invacare Corporation.  Other
primary competitors in the U.S. include Respironics, Graham-Field and
Mallinckrodt in rehabilitation products and Hillenbrand Industries in
institutional products.  In the European market, Meyra/Ortopedia and Invacare
are the most important competitors in rehabilitation products and Hillenbrand
Industries in institutional products.</P>
<P>We compete primarily on the basis of:</P>

<UL>

<UL>
<LI>product features, performance and quality;</LI>
<LI>the breadth of our full line product offering;</LI>
<LI>competitive prices and financing terms;</LI>
<LI>customer service and delivery;</LI>
<LI>salesforces support; and</LI>
<LI>the strength of our independent dealer network.</LI></UL>
</UL>

<B><P>Government Funding and Regulation</P>
</B><P>Extensive government funding and regulation at the federal and state
levels affect the healthcare industry.</P>
<B><I><P>Medicare and Medicaid.</B></I>  Medicare is a federally funded health
insurance program administered by private insurance companies providing health
insurance coverage for persons 65 or older and other persons with disabilities.
Medicaid is a federally and state-funded health insurance program administered
by state governments that provides reimbursement for healthcare related expenses
for persons with certain financial and medical need regardless of age.  These
programs provide reimbursement to homecare providers for rentals and sales of
medical equipment and related supplies.  Medicare generally pays 80% of the
allowable rate of reimbursement for home medical equipment items under our Part
B programs, while Medicaid generally pays 100%.</P>
<P>The U.S. health and homecare industry is continually adapting to changes in
Medicare reimbursement.  The Balanced Budget Act of 1997 made significant
reductions in spending for the Medicare and Medicaid programs, including those
affecting our customers.  For example, the Balanced Budget Act reduced
reimbursement for oxygen concentrator rentals by 30% over the past two years
(25% in January 1998 and another 5% in January 1999) and imposed reductions in
the level of the annual increase for hospitals, suppliers and distributors of
home medical equipment.  Additionally, the Balanced Budget Act required the
government to conduct competitive bidding demonstration projects involving,
among other things, oxygen equipment.  In addition, the Balanced Budget Act
granted the Health Care Financing Administration the authority to lower Medicare
reimbursement by up to 15% per year on any item that does not meet a pricing
standard of inherent reasonableness, although minimal use has been made of this
authority to date.  Further, the Balanced Budget Act imposed a prospective
payment system for Medicare skilled nursing facilities, which has eliminated
cost-based reimbursement in favor of a per diem payment based upon the projected
level of resources needed to care for residents.  In many cases, the payment
rates have been reduced sharply from prior levels, causing severe financial
difficulties for our nursing home customers.  These changes at the provider
level have had an adverse impact on Sunrise, particularly in the case of nursing
home construction and purchases in fiscal year 1999.</P>
<P>Although Sunrise itself is not a provider under Medicare for rehabilitation
and institutional products, these products are sold to home medical equipment
dealers, nursing homes and hospitals that are providers and thus depend upon
Medicare and Medicaid reimbursement for a portion of their revenue. Overall, we
estimate that 21% of our 1999 sales were directly or indirectly funded by
government sources in the U.S.  Our DynaVox subsidiary is a provider under many
state Medicaid programs and also sells our products directly to school districts
and other governmental units. Changes in regulations can adversely impact our
revenues and collections directly by reducing payments to our DynaVox subsidiary
and indirectly by reducing the reimbursement rate received by home medical
equipment providers, thus making it less profitable for them to sell or rent
products to the end-user.  This, in turn, can put downward pressure on prices
charged for our products sold through this channel.  We also depend on
government funding available in Europe.</P>
<P>In addition, many governmental agencies, including agencies which directly or
indirectly provide funding for the purchase of products sold by us, may not
timely be year 2000 compliant which may adversely affect our revenues and cash
flow.  See "Management Discussion and Analysis of Financial Condition and
Results of Operations -- Year 2000 Readiness."</P>
<P>Management believes that intensified healthcare cost containment efforts
through managed care continue to favor lower cost alternatives such as home
healthcare and nursing home care, as has been the case historically.
Increasingly, government funded programs are relying on managed care programs to
provide healthcare insurance to their beneficiaries.  We have made special
efforts in recent years to allocate more of our new product engineering dollars
to lower cost, more generic products favored by managed care and
Medicare/Medicaid programs.</P>
<P>In the U.S., both the Home Healthcare Group, as a manufacturer of items
reimbursable by Medicare, Medicaid and other government programs, and our
DynaVox subsidiary, as a direct provider of items reimbursable by these and
other programs, are subject to a variety of complex and extensive state and
federal statutes and regulations governing healthcare fraud and abuse. The
federal anti-kickback statute prohibits some business practices and
relationships involving the provision of health care items and services
reimbursable under Medicare, Medicaid and other federal health programs.  These
prohibited practices include the payment or receipt of remuneration for the
referral, or arranging for the referral, of patients whose care will be paid for
by Medicare, Medicaid, or other governmental programs.  Sanctions for violating
the anti-kickback statute include criminal penalties and civil sanctions,
including civil monetary penalties and possible exclusion from government
programs such as Medicare and Medicaid.  Any exclusion could be direct in the
case of our DynaVox subsidiary or indirect as a result of the rejection of
government reimbursements to suppliers and distributors of our rehabilitation
and institutional products.  In addition, many states have adopted their own
anti-kickback provisions.</P>
<P>Both state and federal provisions govern the submission of false claims by
direct providers, including our DynaVox subsidiary, of items and services
reimbursable by government programs.  Violations of these provisions can result
in criminal penalties and civil sanctions, including civil money penalties and
possible exclusion.  The government has also taken the position in some cases
that indirect providers, such as manufacturers of drugs and devices, can be
liable under these false claims provisions, for instance, as part of a
fraudulent course of conduct.  There is increasing investigative and enforcement
activity against direct and indirect providers of items and services
reimbursable by Medicare, Medicaid and other government programs, potentially
subject to state and federal anti-kickback and false claims provisions.  This
activity is being undertaken by the Department of Health and Human Services, by
the Office of Inspector General, by state Medicaid Fraud Control Units, by
government subcontractors including Medicare carriers and fiscal intermediaries
and by other entities.  In addition, healthcare providers increasingly have been
the targets of qui tam or "whistleblower" lawsuits, alleging the submission of
false claims.  We believe that we are not currently the subject of any
investigation or inquiry.</P>
<B><I><P>FDA Regulation.</B></I>  The U.S. Food and Drug Administration and
corresponding foreign agencies regulate medical products manufactured by us.
Most of these devices are subject to device listings filed with the FDA and
medical device factories must be registered with the FDA.  The FDA regulates the
introduction, manufacture, advertising, labeling, packaging, marketing,
distribution and recordkeeping for these products.  In manufacturing and
marketing our products, we must comply with FDA regulations, including various
FDA recordkeeping requirements and inspections by the FDA.  The testing for and
preparation of required applications can be expensive and subsequent FDA review
can be lengthy and uncertain.  Moreover, clearance or approval, if granted, can
include significant limitations on the indicated uses for which a product may be
marketed.  Failure to comply with applicable FDA regulations can result in
fines, civil penalties, suspensions or revocation of clearances or approvals,
recalls or product seizures, operating restrictions or criminal penalties.
Delays in receipt of, or failure to receive, clearances or approvals for our
products for which clearances or approvals have not yet been obtained would
adversely affect the marketing of those products in the U.S. and could adversely
affect the results of future operations.</P>
<P>We must obtain FDA or foreign regulatory approval or clearance for marketing
our new devices prior to their release.  There are two primary means by which
the FDA permits a medical device to be marketed.  We may seek clearance for the
device by filing a 510(k) premarket notification with the FDA.  To obtain that
clearance, the 510(k) premarket notification must establish that the device is
"substantially equivalent" to a device that has been legally marketed or was
marketed before May 28, 1976.  We may not place the device into commercial
distribution in the U.S. until the FDA issues a substantial equivalence
determination notice.  This notice may be issued within 90 days of submission,
but usually takes longer.  The FDA, however, may determine that the proposed
device is not substantially equivalent, or require further information, such as
additional test data or clinical data, or require us to modify our product
labeling, before it will make a finding of substantial equivalence.  In
addition, the FDA may inspect our manufacturing facility before issuing a notice
of substantial equivalence and may delay or decline to issue that notice until
the facility is found to be in compliance with Good Manufacturing Practice
requirements.  The process of obtaining FDA clearance of a 510(k) premarket
notification, including testing, preparation and subsequent FDA review, can take
a number of years and require the expenditure of substantial resources.</P>
<P>The FDA also has the authority to issue performance standards for devices
manufactured by us.  In the event that any performance standards are issued, our
products would be required to conform, which could result in significant
additional expenditures for us.  The impact of FDA regulation on us has
increased in recent years as we have increased our manufacturing operations.  We
cannot assure you that changes to current regulations or additional regulations
imposed by the FDA will not have an adverse impact on our business and financial
condition in the future.</P>
<B><I><P>Additional Government Regulation.</B></I>  In addition, we sell some of
our products directly to the U.S. government, particularly the Department of
Veteran's Affairs and General Services Administration.  Sales to the U.S.
government are subject to pricing and other regulatory requirements.  Our
failure to meet these requirements may disqualify us from selling to the U.S.
government in the future and subject us to fines.</P>
<P>Further, our operations are subject to review and inspection by local, state,
federal and foreign governmental entities.  In addition, we are subject to a
variety of other federal and state regulations, including, but not limited to,
those administered by the United States Department of Labor and the United
States Occupational Safety and Health Administration.  Moreover, with respect to
both existing and proposed foreign and domestic operations, changes in current
or future laws or regulations or future judicial intervention may have a
material adverse effect on us.  We are unable to predict the effect that any
future foreign or domestic legislation or regulation may have on our existing or
future business.</P>
<B><P>Employees</P>
</B><P>We refer to our employees as Associates.  We employed approximately 4,600
full-time Associates worldwide as of July 2, 1999.  Approximately 430
Associates at two factories in the U.S. are covered by collective bargaining
agreements that expire in 2002.  In Europe, approximately 230 Associates in the
U.K. and 150 in Germany are covered by national union arrangements.  We have not
experienced a strike or work stoppage during our 16-year history.  We believe
that our labor relations are good.</P>
<B><P>Cost of shipping</P>
</B><P>Shipping is a significant expense in the operation of our business.  We
ship our products to customers generally by United Parcel Service in the U.S.
and other delivery services worldwide and typically bear some or all of the
costs of shipment.  Accordingly, any significant increase in shipping rates
could have an adverse effect on our operating results.  Similarly, strikes or
other service interruptions by these shippers could adversely affect our ability
to deliver products on a timely basis, which could have an adverse effect on our
relationships with our customers.</P>
<B><P>Backlog</P>
</B><P>Our backlog of firm orders at July 2, 1999 was approximately $34
million compared to $43 million at July 3, 1998.  Approximately $15
million in 1999 and $13 million in 1998 represented orders for patient room beds
and furnishings, the one portion of our business for which backlog is believed
to be a meaningful predictive factor because of the long order lead times in
this market.  Generally, we manufacture the balance of our products to our
forecast of near-term demand, shipping immediately from stock, or else produce
customized products based on actual orders received and ship within a short
period thereafter.  As a result, we do not have a substantial backlog for these
products.  Management does not believe that our overall backlog at any
particular time is a meaningful indicator of future sales levels.</P>
<B><P>Customer Payment Terms</P>
</B><P>We do not maintain inventory of our products for a significant period of
time.  See "Backlog."  Many of our products are manufactured in connection with
specific orders, which are shipped in less than 30 days and in many cases less
than 72 hours, from receipt of the order.  Patient room bed and furnishing
products also are manufactured in connection with specific orders, but may take
from one to three months until products are ready to ship.  We maintain a larger
stock of those component parts that require longer lead times to obtain from
suppliers to minimize the risk of extending time periods to fulfill product
orders.  Most of our sales are made on standard terms requiring payment by the
customer within 30-60 days of delivery.  Some sales are made on extended terms
on a selective basis.  Some customers elect to finance their purchases with
installment note contracts offered by our captive finance subsidiary, SunMed
Finance.  We occasionally accept products for replacement upon customer request.
However, returns for credit or refund have not been a material aspect of our
business.</P>


<A NAME="item2"></A>
<B><P>ITEM 2.	PROPERTIES</P>
</B><P>Our corporate headquarters is located in Carlsbad, California and
comprises approximately 21,000 square feet of leased space that we occupy under
a lease expiring in 2004.  We lease 15 facilities in North America, including a
facility in Tijuana, Mexico that supports the U.S. operations.  These facilities
total approximately 682,000 square feet under leases with expiration dates
ranging from 1999 through 2008.  We also own and operate five factories in the
U.S. totaling approximately 764,000 square feet.</P>
<P>For our international operations, we lease 25 facilities in Europe, Canada
and Australia totaling approximately 254,000 square feet under leases with
expiration dates through 2017.  We own nine facilities in Europe with
approximately 670,000 square feet.</P>
<P>Our facilities are used primarily for manufacturing, distribution and
administration.  We have options to renew a number of the leases.  We believe
that our facilities are adequate for our current needs.</P>



<A NAME="item3"></A>
<B><P>ITEM 3.	LEGAL PROCEEDINGS</P>
</B><P>We are a party to various legal proceedings arising in the ordinary
course of business.  We do not believe that the outcome of any of these actions
will have a material adverse effect upon our financial position or results of
operations.</P>
<P>In October 1995, we announced that our board of directors had formed a
special committee of outside directors to investigate possible accounting
irregularities at our Bio Clinic Corporation subsidiary.  Upon completion of our
board's internal investigation, we voluntarily restated our financial statements
for fiscal years 1994 and 1995.  Shortly after discovering the irregularities,
we replaced the management team at Bio Clinic and subsequently sold most of the
business in 1996.  We promptly reported this incident to the Securities and
Exchange Commission, which entered a formal order of private investigation.  We
cooperated fully with the Commission in their investigation, which was completed
with entry of a consent decree on February 25, 1999.  The Commission cited the
five responsible individuals formerly at Bio Clinic for securities law
violations.  However, the Commission did not charge Sunrise or any of our
current management with any violations of the antifraud provisions of the
Securities Act, nor did it require Sunrise to pay any monetary penalty.</P>



<A NAME="item4"></A>
<B><P>ITEM 4.</B>	<B>SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</P>
</B><P>No matters were submitted to a vote of our stockholders during the fourth
quarter of fiscal 1999.</P>

<B><P>EXECUTIVE OFFICERS OF THE COMPANY</P>
</B><P>Pursuant to General Instructions G(3) of Form 10-K, the following
information is included as an unnumbered Item in Part I of this Report.</P>
<P>The following table sets forth our executive officers, who serve at the
discretion of the Board of Directors.  No person other than those listed below
has been chosen to be an executive officer.</P>

<pre>
        Name          Age                       Position
-------------------- ---- ----------------------------------------------------
Murray H. Hutchison   60  Chairman of the Board, Chief Executive Officer and
                          President (effective October 4, 1999)

Richard H. Chandler   56  Chairman of the Board, Chief Executive Officer and
                          President (resigned October 4, 1999)

Ben Anderson-Ray      44  Senior Vice President Operations and Group President
                          Continuing Care Group

Steven A. Jaye        43  Senior Vice President, General Counsel and Secretary

Thomas H. O'Donnell   56  Senior Vice President Operations and Group President
                          - Home Healthcare Group

Barrie Payne          62  Senior Vice  President Operations, Group President
                          and Managing Director - Sunrise Medical Ltd.

John M. Radak         39  Vice President and Controller

Ted N. Tarbet         46  Senior Vice President and Chief Financial Officer

</pre>

<I><P>Management Profiles </P>
</I><B><P>Murray H. Hutchison.</B>  On October 4, 1999, Richard H. Chandler
resigned as the chairman of the board, chief executive officer and president of
the company.  On that date, the Board of Directors appointed Mr. Hutchison to
serve as interim chairman of the board of directors, chief executive officer and
president and announced the retention of the executive recruiting firm of
Spencer Stuart to lead a search for a permanent replacement for Mr. Chandler.
Mr. Hutchison has served as a director of Sunrise since 1983.  From 1976 through
1996, Mr. Hutchison was chairman of the board of International Technology
Corporation, a NYSE-listed environmental management company and its chief
executive officer from 1976 to 1994.  Mr. Hutchison is currently a private
investor and serves on the board of directors of Epic Solutions, Huntington
Hotel Corporation, Olsen Company and Senior Resource Group, all privately held
companies and Cadiz Land Company and Foodmaker, Inc., both publicly traded
companies.</P>
<B><P>Richard H. Chandler.</B>  Mr. Chandler, who founded the company in 1983
and served as its chief executive officer since that time, resigned from his
positions as chairman of the board of directors, president and chief executive
officer, as well as his seat on the board, effective October 4, 1999.  Mr.
Chandler is now an employee consultant under an agreement providing for three
years of services and a covenant not to compete with or solicit employees from
the company.  From 1982 to 1983, he was president of Richard H. Chandler
Company, a management-consulting firm, during which period he planned the
formation of Sunrise.  From 1979 to 1982, he was president and chief executive
officer of Abbey Medical, Inc., the nation's largest chain of home medical
equipment stores at the time.  Mr. Chandler participated in the leveraged buy-
out of Abbey Medical from Sara Lee Corporation in June 1979 and arranged for
Abbey's sale to American Hospital Supply Corporation in April 1981.  From 1974
to 1979, he held senior management positions with Sara Lee Corporation, ending
as a group vice president and including two years when he was president of the
Abbey Medical/Abbey Rents division.</P>
<B><P>Ben Anderson-Ray.</B>  Mr. Anderson-Ray was elected group president in
July 1998 of the newly defined Sunrise Medical Continuing Care Group, which
manufactures <I>Joerns</I> and <I>Corona</I> beds and furniture and <I>Parker
Bath</I> bathing equipment for nursing homes and other healthcare institutions.
From November 1996 to this new election, Mr. Anderson-Ray was president of the
Mobility Products Division. From 1994 to 1996 he served as vice president of
marketing and business development for the Rubbermaid Home Products Division.
Prior to this, he was general manager of cooking, cleaning and beverage product
for Black & Decker Corporation.  From 1984 to 1993 Mr. Anderson-Ray held
positions at General Electric including manager of Asia-Pacific marketing and
sales, manager of international automotive products and product manager of
lighting products.</P>
<B><P>Steven A. Jaye</B>.  Mr. Jaye was elected senior vice president, general
counsel and secretary in August 1996, after joining Sunrise as vice president
and general counsel in August 1995. From 1991 through 1995, Mr. Jaye served as
the vice president - legal affairs for Magma Power Company, a publicly traded
international power producer.  From 1984 through 1991, he served as a business
attorney with the law firm of Latham & Watkins.  Prior to receiving his
legal degree, Mr. Jaye served as a design, production and quality assurance
engineer for a subsidiary of Hughes Aircraft Company.  In addition to his legal
duties, Mr. Jaye is responsible for the worldwide purchasing, quality, risk
management and real estate operations for Sunrise.</P>
<B><P>Thomas H. O'Donnell</B>.  Mr. O'Donnell was elected president of the Home
Healthcare Group in July 1997.  He served as executive vice president -
operations of Sunrise from January 1987 until August 1988, when he was elected
president of Quickie Designs Inc. (then a Sunrise subsidiary).  In January 1996
he was named senior vice president - North America.  Prior to joining Sunrise in
1986, Mr. O'Donnell was president and chief operating officer of General
Computer Company, a manufacturer and distributor of personal computer
peripherals.  From 1984 to 1985, he was chief executive officer of Connecting
Point of America, Inc., a chain of computer retail stores.  From 1967 to 1984,
he was with IBM Corporation in a variety of management positions, most recently
as vice president - product management for the Entry Systems Division.</P>
<B><P>Barrie Payne.</B>  Mr. Payne was elected senior vice president of Sunrise
in January 1996 and has been managing director of Sunrise Medical Ltd. (U.K.)
since June 1983.  In addition to his responsibilities at Sunrise Medical Ltd.
(U.K.), Mr. Payne oversees Sunrise's distribution divisions in Scandinavia and
the Netherlands.  From January 1996 through June 1997, Mr. Payne also served as
senior vice president - Europe.  Mr. Payne joined Sunrise following our purchase
of A-BEC Mobility Inc., a company founded by Mr. Payne in 1972, where he served
as president.  A-BEC Mobility Inc. distributed electric wheelchairs and other
power mobility products.</P>
<B><P>John M. Radak.</B>  Mr. Radak was elected vice president and controller in
January 1995. From 1992 to 1995, Mr. Radak was vice president, finance for the
respiratory care subsidiary of Bird Medical Technologies Inc., a medical device
manufacturer.  Prior to joining Bird, he held various financial management
positions with Calcomp Inc., a Lockheed/Martin subsidiary that manufactures
printers and plotters for computer graphics applications. Mr. Radak is a
certified public accountant.</P>
<B><P>Ted N. Tarbet.</B>  Mr. Tarbet was elected senior vice president and chief
financial officer in August 1993. Mr. Tarbet joined Sunrise in 1986 as corporate
controller.  In 1988 he was made a vice president and in 1989 he was elected to
the position of vice president, chief financial officer and secretary.  From
1981 to 1986, Mr. Tarbet served as controller and then as vice president and
chief financial officer of Anadex Inc., a manufacturer of personal computer
products.  Mr. Tarbet is a certified public accountant.</P>


<p align="center"><A NAME="partii"><strong> PART II</A> </strong></p>
<A NAME="item5"></A>
<B><P>ITEM 5.	MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS</P></B>

</B><P>Our common stock, $1 par value, trades on the New York Stock Exchange
under the symbol "SMD."  The highest and lowest daily closing price for each
quarterly period during the last two fiscal years was as follows:</P>

<pre>

                            Fiscal Year 1999     Fiscal Year 1998
                          -------------------  -------------------
                            High       Low       High       Low
                          --------- ---------  --------- ---------
First Quarter.....        14 7/16   6 9/16     16 1/2    14 1/16
Second Quarter....        13 1/2    8 5/16     16 9/16   14 3/4
Third Quarter.....        12 3/8    6 1/8      16 3/8    13 9/16
Fourth Quarter....        9 1/4     5 15/16    16 3/16   14 1/8
Year..............        14 7/16   5 15/16    16 9/16   13 9/16

</pre>

<P>The number of holders of record of Sunrise common stock as of October 1, 1999
was 606.</P>
<P>We have not paid cash dividends to holders of our common stock and have no
plans to do so in the foreseeable future.  Provisions of our credit facility and
senior notes restrict the payment of dividends.</P>

<A NAME="item6"></A>
<B><P>ITEM 6.       SELECTED FINANCIAL DATA</B>

<P>(In thousands, except per share amounts)

<pre>
                                                 Years Ended
                              -------------------------------------------------
                               July 2,   July 3,  June 27,  June 28,  June 30,
                                1999     1998(3)    1997      1996      1995
                              --------- --------- --------- --------- ---------
Consolidated results of
operations data (1):
 Net sales .................. $660,248  $657,169  $670,545  $675,417  $609,086
 Gross profit................  199,494   205,538   222,739   225,788   210,154
 Marketing, selling and
   administrative expenses...  147,027   155,998   162,504   172,847   145,148
 Research and development
   expenses..................   21,075    17,919    17,483    16,265    14,587
 Amortization of goodwill
   and other intangibles.....    8,589     8,440     8,273     8,686     6,823
 Re-engineering expenses and
   merger costs..............      --     29,016       --     65,152       --
 Operating income (loss).....   22,803    (5,835)   34,479   (37,162)   43,596
 Interest expense............   16,486    15,222    14,774    16,687    10,366
 Income (loss) before taxes..    8,269   (11,802)   23,477   (51,749)   34,584
 Net income (loss)...........   $4,498  ($12,010)  $12,114  ($40,378)  $19,956
                              ========= ========= ========= ========= =========

 Basic net income (loss)
   per share.................    $0.20    ($0.55)    $0.56    ($1.89)    $0.93
                              ========= ========= ========= ========= =========

 Weighted average shares
   outstanding...............   22,195    22,001    21,656    21,391    21,400
                              ========= ========= ========= ========= =========
 Diluted net income (loss)
   per share.................    $0.20    ($0.55)    $0.55    ($1.89)    $0.93
                              ========= ========= ========= ========= =========
 Weighted average number
   of shares assuming
   dilution..................   22,253    22,001    21,933    21,391    21,556
                              ========= ========= ========= ========= =========

Consolidated balance sheet
   data (1):
 Working capital............. $120,087  $107,579  $103,087  $107,193  $121,381
 Total assets................  607,190   616,305   615,731   624,578   607,320
 Long-term debt, including
   current installments......  205,838   191,782   193,812   213,517   184,403
 Stockholders' equity (2).... $266,998  $272,660  $283,692  $263,281  $301,731

</pre>

<SUP><FONT SIZE=3><P>(1)</SUP> All financial data has been restated to reflect
the 1998 acquisition of Sentient Systems, Inc., accounted for as pooling of
interests. </P>

<SUP><P>(2)</SUP> We did not declare cash dividends for the years 1995 through
1999.</P>
<SUP><P>(3)</SUP> Fiscal year 1998 contained 53 weeks.




<A NAME="item7"></A>
<B><P>ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS</P>

<P>RESULTS OF OPERATIONS</P>
</B><P>For the fiscal year ended July 2, 1999, consolidated net revenues
increased $3 million, or 0.5%, from 1998.  The effects of foreign currency
translation, divestitures and acquisitions were negligible.  This compares to a
sales decrease of 2% in 1998 from the 1997 level.  Fiscal year 1998 was a 53-
week year while fiscal years 1997 and 1999 each contained 52 weeks.  Net income
increased to $4.5 million in 1999 compared to a net loss of $12 million in 1998
after non-recurring expenses.  Earnings per share were $0.20 compared to a loss
per share of $0.55 in 1998.  Earnings per share were $0.55 in 1997.</P>
<P>In the fourth quarter of 1998, we completed our multi-year, company-wide re-
engineering program and also concluded our merger with Sentient Systems, Inc.,
now named DynaVox Systems (DynaVox).  Approximately $29 million in re-
engineering expenses and merger costs were incurred during 1998 to complete
these activities.  Excluding re-engineering expenses and merger costs, we earned
$5.4 million or $0.24 per share in 1998.  All financial data has been restated
to reflect the 1998 acquisition of Sentient Systems, Inc., which was accounted
for as a pooling of interests.</P>
<B><P>Net Sales Analysis</P>
</B><P>Net sales were $660 million in 1999 compared to $657 million in 1998 and
$671 million in 1997.  While unit volumes increased for many rehabilitation
products in 1999, decreased volumes in the nursing home sector, continuing price
competition and product mix resulted in marginal revenue growth over 1998.</P>
<P>Fluctuations of foreign currency rates did not have a significant impact on
1999 revenues but decreased overall net sales by 3% in 1998 and 1% in 1997.  The
impact of foreign currency fluctuations on net sales is not necessarily
indicative of the impact on operating results due to the offsetting foreign
currency impact on costs and expenses and our hedging activities.  (See Note 1
to the consolidated financial statements for our accounting policies for foreign
currency instruments.)</P>
<P>Internal sales growth of 2% in 1998 was primarily the result of continued
unit sales increases partially offset by generally declining prices due to
pricing pressures and to a change in the product mix to lower-priced products.
The merger with DynaVox in April 1998 contributed $15 million or 2% of net sales
in 1998 and 2% in 1997.  International sales accounted for 43% of consolidated
net sales in 1999 compared with 42% in 1998 and 44% in 1997.</P>
<P>Healthcare cost reduction continues to be pursued in the United States and
Europe, causing downward pressure on our prices.  We believe that we are
appropriately reducing our cost structure through a strategic re-alignment and
by consolidating business units, factories and salesforces.</P>
<B><P>Analysis of Product Line Sales Contribution</P>
</B><P>The following table shows net sales by operating segment as a percentage
of total net sales:</P>

<pre>

($ in millions)

                                          1999          1998          1997
                                     ------------- ------------- -------------
U.S. rehabilitation products........ $363.6    55% $359.8    55% $342.9    51%

European rehabilitation products....  219.0    33%  217.8    33%  230.0    34%
                                     ------- ----- ------- ----- ------- -----
  Subtotal rehabilitation products.. $582.6    88% $577.6    88% $572.9    85%

Institutional products..............   77.6    12%   79.6    12%   83.8    13%

Comfort Clinic (1)..................     --      --    --      --  13.8     2%
                                     ------- ----- ------- ----- ------- -----
   Total                             $660.2   100% $657.2   100% $670.5   100%
                                     ======= ===== ======= ===== ======= =====

</pre>
<p><SUP>(1)</SUP> Divested in October 1996


<B><P>Rehabilitation Products</P>
</B><P>Rehabilitation Product sales increased $5 million in 1999 to $583 million
from $578 million in 1998, primarily due to growth in speech devices and
European sales.</P>
<P>U.S. rehabilitation products net sales of $364 million increased 1% in 1999
from $360 million in 1998.  This compares to growth of 5% in 1998 and 6% in
1997.  Overall, speech devices and mobility product sales increased in both 1999
and 1998.  Sales growth in each year was negatively impacted by declining
prices.  Pediatric and positioning products, seating products and custom
wheelchairs led the growth in 1999.  In 1998, mobility products growth was
primarily due to strong sales in custom and standard lightweight manual
wheelchairs.  Personal care product sales declined slightly from the prior year,
however standard wheelchairs, bath safety and ambulatory products sales advanced
over the prior year.  In 1999, oxygen and sleep therapy product sales exceeded
the prior year but respiratory sales declined overall due to soft sales of
liquid and gas products.  Respiratory sales advanced modestly in 1998,
negatively impacted by the Balanced Budget Act of 1997, which reduced
reimbursement for oxygen concentrator rentals beginning January 1, 1998, causing
respiratory dealers to delay purchases of equipment for their rental fleets.
Speech device sales increased 3.7% from 1998 and 11% from 1997 primarily driven
by the introduction of new products and expanded international sales.</P>
<P>Rehabilitation product sales in Europe were $219 million in 1999, up slightly
from $218 million in 1998 primarily due to the introduction of the <I>Breezy
300</I> manual and <I>Breezy P300</I> power chairs.  Sales in Europe decreased
by 5% in 1998 compared to 1997.  In 1998, overall European unit sales volumes
were up on relatively flat prices, partially offset by a shift in product mix to
lower-priced products.  Sales were also negatively impacted by disruptions
related to the consolidation of four factories in the U.K. and unfavorable
foreign currency exchange rates.  The impact on European sales of these
unfavorable rates was 6% in 1998 and 4% in 1997.  The impact of foreign currency
translation was negligible in 1999.  Excluding the impact of acquisitions and
foreign currency exchange movements, sales grew by 1% in 1998 after growth of 5%
in 1997.  In 1998, sales growth within Europe was strongest in Western Europe
and our distribution organizations.</P>
<B><P>Institutional Products</P>
</B><P>Institutional product sales decreased 2% in 1999 to $78 million compared
to declines of 5% in 1998 to $80 million and 7% in 1997 to $84 million.  Sales
of bathing products in 1999 increased 14% from the prior year, but were more
than offset by a decline in revenues from beds and patient room furnishings.
These declines were due to lower average selling prices resulting from adverse
changes in Medicare reimbursement impacting our customer base.  In 1999 and 1998
unit volume increased in sales of beds, patient room furniture and bathing
systems, but the increases were partially offset by a decline in unit sales of
accessories.  Generally, average selling prices declined as a result of a change
in mix to lower priced products, while the decrease in unit sales of accessories
was attributed to customers purchasing fewer of them with their new bed
orders.</P>
<B><P>Expense and Profit Analysis</P>
</B><P>The following is a summary of expenses and profits as a percentage of net
sales:</P>

<pre>
($ in millions)

                                                                % Increase
                                                                 (decrease)
                                                              ---------------
                                                               1999/   1998/
                                     1999     1998     1997     98      97
                                   -------- -------- -------- ------- -------
Net sales.........................  $660.2   $657.2   $670.5       1%     -2%

Gross profit......................   199.5    205.5    222.7      -3%     -8%
  % of net sales..................    30.2%    31.3%    33.2%
Marketing, selling and
  administrative expenses.........   147.0    156.0    162.5      -6%     -4%
  % of net sales..................    22.3%    23.7%    24.2%
Research and development expenses.    21.1     17.9     17.5      18%      2%
  % of net sales..................     3.2%     2.7%     2.6%
Amortization of goodwill
  and other intangibles...........     8.6      8.4      8.3       2%      1%
  % of net sales..................     1.3%     1.3%     1.2%
Re-engineering expenses and
  merger costs....................      --     29.0       --     *       *
  % of net sales..................      --      4.4%      --      --      --
                                   -------- -------- --------
Operating income (loss)...........    22.8     -5.8     34.5     *       *
  % of net sales..................     3.5%    -0.9%     5.1%
Interest expense..................    16.5     15.2     14.8       8%      3%
  % of net sales..................     2.5%     2.3%     2.2%
Interest income and other, net....     2.0      9.3      3.8     -79%    145%
  % of net sales..................     0.3%     1.4%     0.6%
                                   -------- -------- --------
Income (loss) before income taxes.     8.3    -11.8     23.5     *       *
  % of net sales..................     1.3%    -1.8%     3.5%
Income tax expense................     3.8      0.2     11.4     *       *
  % of income (loss) before taxes.    45.6%     1.8%    48.4%
                                   -------- -------- --------
Net income (loss).................    $4.5   ($12.0)   $12.1     *       *
  % of net sales..................     0.7%    -1.8%     1.8%
                                   ======== ======== ========
*    Percentage not meaningful
</pre>


<P>Gross profit as a percentage of net sales decreased 1.1 percentage points in
1999 and 1.9 percentage points in 1998.  The current year's gross margin was
adversely affected by price declines, product mix shifts and higher distribution
costs to expedite backlog shipments.  In 1998, gross margin in a number of
domestic product lines was adversely affected by market pricing pressures and
product mix shift, and European gross margins were adversely affected by
unfavorable foreign exchange rates, the disruptive impact of factory
consolidations and the growth of buying groups.  We have taken steps to counter
this trend, including reductions in force and selected price increases.</P>
<P>Marketing, selling and administrative expenses declined 6% and, as a
percentage of net sales, 1.4 percentage points in 1999 following a decrease of
0.5 percentage points in 1998.  The decrease reflected our commitment to keep
tight control of operating expenses as well as the benefits from implementation
of our re-engineering program.  Included in expenses for 1999 was approximately
$2.0 million of severance expense which resulted from the fourth quarter profit
improvement plan.  Marketing, selling and administrative expenses for 1998
included costs estimated to be approximately $2.3 million for positions
duplicated temporarily during the consolidation of divisions.</P>
<P>Research and development expenses increased 18% to $21.1 million in 1999,
compared to an increase of 2% in 1998.  The growth in research and development
spending has been ahead of sales growth and continues to reflect our investment
in applying new technologies to address unmet user needs and develop higher
margin products.</P>
<P>We completed our three-year re-engineering program in 1998.  Approximately
$27 million in non-recurring costs were incurred during that year primarily
associated with implementation of common software and hardware systems and with
facilities consolidations and relocations.  In addition, we merged with DynaVox
in the fourth quarter of 1998.  Approximately $2 million of merger related
expenses were incurred.  Pre-tax charges of $4.7 million were incurred in 1997
in connection with the re-engineering principally to implement related
information system conversions.</P>
<P>Operating income of $23 million in 1999, or 3.5% of net sales, was consistent
with 1998 both in dollars and as a percent to net sales, excluding 1998 re-
engineering expenses and merger costs.  Operating income decreased to 3.5% in
1998 from 5.1% in 1997 primarily due to the decline in the gross margin to 31.3%
from 33.2% in 1997.</P>
<P>Operating income from U.S. rehabilitation products was $15 million in 1999
compared to $18 million in 1998, and $19 million in 1997. The 1999 decrease
reflected the impact of lower gross margins as a result of pricing pressure,
product mix shifts and higher distribution costs to expedite backlog shipments
in homecare products.  The decrease was partially offset by the favorable impact
of higher sales of speech devices and lower operating expenses.  Operating
income was also affected by severance expense related to the fourth quarter
profit improvement plan.</P>
<P>European rehabilitation products operating income of $13 million in 1999 was
$8 million higher than in 1998 mainly due to improved gross margins and lower
operating expenses.  Operating income decreased to $5 million in 1998 from $16
million in 1997 due to the adverse effect on gross margins of unfavorable
foreign exchange rates and the disruptive impact of factory consolidations in
the U.K.</P>
<P>Institutional products had an operating loss of $4 million in 1999 compared
to operating income of $0.6 million in 1998 and an operating loss of $1 million
in 1997.  The decrease in 1999 was due to adverse changes in Medicare
reimbursement affecting our customers and causing their order rates and average
selling prices to decline.  Financial performance in this segment is expected to
improve once our customers adjust to the lower reimbursement levels.</P>
<P>Interest expense increased by 8% in 1999 to $16.5 million and 3% in 1998 to
$15.2 million.  The increase each year was due to higher average borrowings and
interest rates.  Higher interest rates were caused by less favorable terms in
our credit agreement and higher interest rates for the new senior notes, which
fixed interest rates for seven to 10 years.</P>
<P>Interest income increased 17% in 1999 to $4.3 million after an increase of
8.5% in 1998 primarily due to the growth in installment receivables in 1999.</P>
<P>Included in Other income (expense), net in 1999 is a $2.2 million charge
related to termination costs of interest rate swap agreements.  In 1998, we
reported other income of $5.6 million primarily as a result of a favorable
settlement of a patent infringement lawsuit of $4.4 million and approximately
$0.5 million from the sale of property in the U.K.</P>
<P>In 1999, our income tax expense was $3.8 million compared to $0.2 million in
1998 and $11.4 million in 1997.  The effective tax rates of 45.6%, 1.8% and
48.4% in 1999, 1998 and 1997, respectively, differ from the expected statutory
rate primarily due to the effect of non-deductible goodwill amortization.  In
addition to the goodwill impact, the effective tax rate of 1.8% in 1998 on a
loss before income taxes of $11.8 million was also driven by tax expense
recorded on pre-tax income in certain foreign jurisdictions with high tax
rates.</P>
<P>Net income in 1999 was $4.5 million, or 0.7% of net sales compared to a net
loss of $12 million in 1998.  The current year earnings were impacted by
severance expense of $2.7 million as a result of the fourth quarter profit
improvement plan and $2.2 million in interest rate swap termination costs.
Excluding the after-tax impact of re-engineering expenses and costs associated
with the DynaVox merger in 1998, net income was $5.4 million in 1998 or 0.8% of
net sales.  In 1997, net income was $12.1 million or 1.8% of net sales.</P>
<P>Earnings per share in 1999 were $0.20 compared to a loss per share of $0.55
in 1998.  Earnings per share were $0.36 in 1999 before $6.0 million of unusual
charges primarily related to severance and swap termination costs.  Excluding
re-engineering expenses and merger costs, we earned $0.24 per share in 1998.
Earnings per share were $0.55 in 1997.  The decrease in 1998 was primarily due
to lower gross profit.</P>
<B><P>Impact of Inflation</P>
</B><P>We attempt to minimize or offset the impact of inflationary pressures on
labor and raw material costs through increased sales volume, improved
productivity, active cost control measures, and, to a lesser extent, increases
in product pricing.  We believe inflationary material cost increases may
continue and the markets in which we sell our products will remain price-
sensitive, thereby limiting our ability to offset higher costs with pricing
actions.</P>
<B><P>FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY</P>
<P>Cash Flow</P>
</B><P>Cash and cash equivalents were approximately $1.5 million at July 2, 1999
and $0.9 million at July 3, 1998.  Net cash provided by operating activities was
$2.9 million compared to $4.8 million in the prior year.  Cash generation
(defined as net income plus non-cash charges) increased to $29.5 million in 1999
from $9.9 million in 1998, due to the increase in net income.  This was offset
by receivables growth, reflecting increased customer use of financing programs,
together with a decrease in accrued compensation and other current liabilities.
Working capital increased $13 million to $120 million in 1999.</P>
<P>Capital spending in 1999 was $15.8 million, primarily invested for
enhancements in machinery and equipment and new product tooling, leasehold
improvements at the new facility in Mexico and a plant expansion in Germany.
There were no material capital expenditure commitments outstanding as of July 2,
1999.  We generally expect capital expenditures to aggregate between 100-150% of
depreciation expense.</P>
<P>We increased long-term borrowings by $16.3 million to finance operational
activities and capital expenditures.  Historically our principal source of
liquidity has been cash flow from operations supplemented with borrowings under
the existing revolving credit facility.  At October 1, 1999, we had outstanding
borrowings of $48 million under our $70 million unsecured revolving bank credit
facility.  As we discuss in more detail below under "Analysis of Long-Term
Debt," the amount of the revolving credit facility will be reduced from $70
million to $25 million in July 2000 in quarterly increments of $15 million per
quarter commencing in January 2000.  In January 2001, borrowings outstanding
under the revolving credit facility, together with the company's $40 million
secured bank term loan, will be due and payable in full.  We are considering a
variety of alternatives to generate the cash to fund the credit line reductions,
such as the divestiture of certain assets, including the sale and leaseback of
company-owned manufacturing facilities, and the issuance of securities.  We
believe that we will be able to maintain adequate liquidity position through the
above measures together with cash generation, management of working capital and
capital expenditure levels, and available borrowings under our credit facility.
We plan to explore a number of options to refinance our bank debt on or prior to
its January 2001 due date, which may include one the options described above or
new bank financing.</P>
<B><P>Acquisitions</P>
</B><P>On April 13, 1998, we exchanged approximately 2.7 million shares of
common stock valued at approximately $40 million for all of the outstanding
common stock of Sentient Systems Technology, Inc., now named DynaVox Systems, a
manufacturer of augmentative communication devices and software for persons
affected by speech disabilities.  The transaction was accounted for as a pooling
of interests.</P>
<P>On November 20, 1997, we completed the acquisition of Mechanical Application
Designs, Inc. (MADI), a manufacturer of tilt/recline seating systems, for
approximately 100,000 shares valued at $1.6 million and cash of $0.4 million.
The transaction was accounted for as a purchase.  Pro forma results of
operations giving effect to the acquisition as though it had occurred on June
28, 1997 would not differ materially from amounts reported.</P>
<B><P>Capital Structure and Leverage</P>
</B><P>Our capital structure consists of two primary components: stockholders'
equity and long-term debt.  Stockholders' equity was $267 million at the end of
1999, a decrease of $5.7 million from the prior year-end.  The decrease is
primarily from the impact on accumulated other comprehensive income of foreign
currency translation adjustments related to converting foreign denominated debt
on our multi-currency line of credit to U.S. dollar denominated debt.</P>
<B><P>Analysis of Long-Term Debt</P></B>

<pre>
Analysis of Long-Term Debt
                                               1999      1998      1997
                                             --------- --------- ---------
Fixed-rate debt as a percentage of
  total debt at year-end....................       52%       93%       69%

Foreign denominated debt as a
  percentage of total debt at year-end......        5%       36%       58%

Weighted average annual interest rate.......      8.0%(1)   7.8%      7.4%

Interest coverage(2)........................      1.7x      2.5x      3.1x
</pre>

<SUP><P>(1)</SUP> As a result of the recent amendments to our bank
agreement discussed below, the weighted annual average interest rate increased to
11% based upon the interest rates prevailing on October 1, 1999.


<SUP><P>(2)</SUP> Earnings before income taxes, net interest
expense and re-engineering expenses and merger costs divided by net interest expense.

<P>Long-term debt, including current installments, of $206 million at July 2,
1999 increased approximately $14 million from $192 million at July 3, 1998.  The
ratio of debt to total capitalization increased to 42% at year-end, compared to
41% at the end of 1998.</P>
<P>We attempt to minimize interest expense while also managing exposure to
variable interest rates by employing interest rate exchange agreements, or
swaps, periodically to convert our bank borrowings from floating rate into the
equivalent of fixed rate debt.  However, as a policy we have not used interest
rate swaps or any other derivatives that had a level of complexity or risk that,
in our judgment, was higher than the hedged exposure.  We do not hold or issue
such instruments for trading purposes.  As of July 2, 1999, we did not have any
interest rate swap agreements.</P>
<P>We have used foreign-denominated borrowings from our multi-currency credit
facility periodically to hedge against foreign currency balance sheet exposures
that would otherwise result from changes in currency values.  Total foreign-
denominated debt at year-end was $10 million in 1999, $68 million in 1998, and
$112 million in 1997.</P>
<P ALIGN="JUSTIFY">In 1998, we completed a private placement of $100 million of
senior notes, $50 million maturing after seven years and bearing interest at
7.09% with the remaining $50 million maturing after 10 years at an interest rate
of 7.25%.  The proceeds of this debt issuance were used to reduce the
outstanding debt on our unsecured multi-currency credit facility.</P>
<P>Our multi-currency bank credit facility provides for maximum borrowings of
$110 million.  As of July 2, 1999, we had $94 million outstanding on the credit
facility.  The agreement was amended in April 1999 and further amended on
September 30, 1999 relating to pricing and certain collateral matters.  The
credit facility required us to comply with certain covenants such as maintenance
of leverage ratio, tangible net worth, and interest coverage, and places certain
restrictions on acquisitions and payment of dividends.  As of July 2, 1999, we
were in violation of one of the financial covenants.  We have amended the
agreement, which permanently waived the covenant violation.</P>
<P>The amended credit agreement reduced the maximum borrowings from $120 million
to  $110 million and divided the facility into a $70 million unsecured revolving
credit facility and a $40 million secured term loan.  The term loan is secured
by all domestic accounts receivable and is due and payable in a single
installment in January 2001.  As of October 1, 1999, we had $88 million of
borrowings outstanding under the credit facility, consisting of the $40 million
term loan and $48 million of revolving credit facility borrowings.</P>
<P>Borrowings under the $70 million credit facility, as amended, are subject to
certain revised financial covenants.  The agreement places certain restrictions
on acquisitions and payment of dividends and provides for a reduction in maximum
borrowings on the revolving credit facility to $25 million in July 2000 in
increments of $15 million per quarter beginning in January 2000.  Additional
reductions in maximum borrowings could occur if we generate excess cash flow, as
defined, or if we fail to maintain a minimum ratio of debt to EBITDA as of June
30, 2000.  The remaining $25 million is due and payable in January 2001.</P>
<B><P>Foreign Currency Risk Management</P>
</B><P>Operating on a global basis requires a posture of active currency risk
management.  To finance imports and exports, we utilize a variety of foreign
currencies that are constantly shifting in relative value.  We engage in hedging
activities to reduce potential transaction losses on net cash flows and balances
denominated in these currencies.  These amounts can arise from cross-border
trade flows or intercompany financing transactions.  Our financial statements
are also affected by foreign currency translation fluctuations.  These distort
the comparative results of foreign operations when they are translated into U.S.
dollars using dissimilar rates.</P>
<P>In contrast to transaction gains or losses, translation adjustments are not
the result of a cash exchange of currencies and, therefore, do not give rise to
a direct economic gain or loss.  In these cases the costs to execute hedges
would exceed any consistently realizable tangible benefits.  Consequently, we do
not commit economic resources to hedge against the potential effect of foreign
currency translation fluctuations.  We believe that the best long-term
protection of stockholder value is to do business in a broad number of
currencies.</P>
<B>
<P>Dividend Policy</P>
</B><P>While provisions of our amended credit facility and senior notes restrict
the payment of dividends, our present policy is to use available cash flow for
reinvestment in our core businesses, for future acquisitions and for debt
reduction rather than to pay a cash dividend.  This policy reflects an appraisal
by management and the Board of Directors of the attractiveness of our investment
opportunities and their confidence in our ability to increase economic value for
our stockholders through cash retention and reinvestment.  This policy is
reviewed periodically as industry conditions change.</P>
<B><P>Year 2000 Compliance</P>
</B><P>Many currently installed computer systems and software products in use
around the world today are coded to accept only two digit entries in the date
code field.  These date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates.  Any failure to make
this distinction could result in system failures or miscalculations causing
disruptions of operations including, among other things, a temporary inability
to process transactions, send invoices or engage in similar normal business
activities.  As a result, many companies' software and computer systems may need
to be upgraded or replaced in order to comply with these year 2000
requirements.</P>
<P>We have created a corporate oversight task force to address year 2000 issues.
We have established milestones and detailed plans that are actively being
implemented so that our research programs, products and internal computer,
financial, manufacturing, research and other infrastructure systems are year
2000 compliant on a timely basis.  A team of corporate and divisional staff,
including our internal auditors, has performed and is performing independent
reviews and evaluations of equipment and systems to verify compliance.
Additionally, we are reviewing our customer and supplier relationships to assess
and address year 2000 issues.</P>
<P>During 1998, all our information processing operations in the U.S. were
consolidated into two year 2000 compliant system platforms from 10 original
legacy systems.  In Europe, the conversion of all our major manufacturing and
distribution operations to a common year 2000 compliant system was completed in
July of 1999.</P>
<P>We have undertaken internal reviews to evaluate all products manufactured and
sold for year 2000 compliance.  Most of our products are not affected due to the
mechanical nature and the absence of date-dependent functions.  Those products
with date functions have been analyzed and tested by our engineering and quality
assurance staff and it has been determined that all our products manufactured in
the last five years are year 2000 compliant.  While we have taken numerous steps
to ensure that all products are year 2000 compliant and to make information on
the year 2000 readiness of our products available to our customers, there is no
way to fully guarantee that we will be completely successful in either case.</P>
<P>Also, we have requested assurances from our major suppliers that they are
addressing this issue and that products procured by us will function properly in
the year 2000.  Some critical suppliers have been unwilling to provide these
assurances and do not expect to provide these assurances prior to the year 2000.
This is particularly the case outside of the United States where we have
significant operations.  This could result in manufacturing delays and backlogs.
If necessary, and where feasible, substitute vendors will be identified.  In
addition, many governmental agencies, including agencies which directly or
indirectly provide funding for the purchase of products sold by us, and other
third parties such as telephone, electricity and other utility companies may not
be year 2000 compliant.  As a result, it is difficult for us to assess the
likelihood, or the impact on our business, of such entities' failure to be year
2000 compliant.</P>
<P>The costs we incurred to date in connection with our year 2000 compliance
program have not had a material impact on our financial condition or results of
operations except as included in the computer conversion re-engineering expenses
in fiscal 1998 as indicated.  Based on the information currently available, we
estimate that the total cost of completing our year 2000 compliance program will
not be material.  This estimate is based on information available at this time.
New developments that occur could affect our estimate of the amount of time and
costs necessary to become year 2000 compliant.  We currently expect that the
year 2000 issue will not pose significant operational problems.  However, delays
in our remediation efforts, or a failure to timely identify all year 2000
dependencies in the systems, equipment or processes of Sunrise, our vendors,
customers, financial institutions or other third parties could have material
adverse consequences, including delays in the manufacture, delivery or sale of
products.  We are in the process of developing contingency plans along with our
remediation efforts for continuing operations in the event these problems arise,
but we may not be fully successful in this regard.</P>
<P>The information about our year 2000 status is believed to be accurate, but is
presented for information purposes only, and is not a contractual commitment or
modification of any contract that may exist between us and any third party.</P>
<B><P>Recent Accounting Developments</P>
</B><P>In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments and hedging activities. SFAS 133 requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
The Statement, as amended, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000.  Earlier application of the Statement is
permitted. Adoption of SFAS 133 is not expected to have a material effect on our
financial position or results of operations.</P>
<B><P>Factors That May Affect Future Operating Results</P>
</B><P>We have made forward-looking statements in this report, including the
estimated benefits to be realized from the consolidation of various Sunrise
divisions worldwide.  These statements are only predictions.  Actual events or
results may differ materially as a result of risks and uncertainties facing us
including:</P>
<I><P>Government Funding.</I>  The worldwide healthcare industry is subject to
complex and extensive government regulation and relies heavily upon funding at
the federal and state levels.  In the U.S., we are a direct Medicaid provider
only through our DynaVox subsidiary.  We are not a direct provider under
Medicare or Medicaid for our rehabilitation or institutional products.  However,
these products are sold to home medical equipment providers and distributors,
nursing homes and hospitals that are providers under these programs and thus
depend upon Medicare and/or Medicaid reimbursement for a portion of their
revenues.  We also depend on government funding available in Europe.  Changes in
U.S. or European funding practices could adversely impact our revenues and
collections and put downward pressure on prices charged for products sold by us.
See "Business -- Government Funding and Regulation."</P>
<P>We sell some products directly to the U.S. government, particularly the
Department of Veteran's Affairs and General Services Administration.  Sales to
the U.S. government are subject to pricing and other regulatory requirements.
Failure to meet these requirements may disqualify Sunrise from selling to the
U.S. government in the future and subject us to fines.</P>
<I><P>Governmental Regulation.</I>  We and our customers and suppliers are
subject to extensive federal and state regulation in the U.S., as well as
regulation by foreign governments.  We cannot predict the extent to which future
legislative and regulatory developments concerning our business practices and
products for the healthcare industry may affect us.  Thus, any failure to comply
with these laws, rules and regulations or any changes in the regulatory
framework could have a material adverse effect on our business, financial
condition, or results of operations.  See "Business -- Governmental Funding and
Regulation."</P>
<I><P>Competition.</I>  The medical device industry is characterized by intense
competition.  We encounter significant domestic and foreign competition from a
number of established manufacturers in each of our product lines.  Many of our
competitors have larger market shares and substantially greater financial and
other resources than we do and may succeed at utilizing these resources to
obtain a temporary or permanent competitive advantage over us.  See "Business --
Competition."</P>
<I><P>Products.</I>  Our competitors may succeed in developing or marketing
products which are more effective or efficient than those that we may market.
These developments may render our products obsolete or noncompetitive.  Our
future results will depend, in part, on our ability to enhance existing products
and to introduce new products on a timely and cost-effective basis that meet
evolving customer requirements.  Delays in introduction or a disappointing
market acceptance could have an adverse effect on our business.</P>
<I><P>Pricing Pressures.</I>  The growth in national chains and buying groups
among home medical equipment providers has caused manufacturers, including us,
to reduce their effective prices by offering increased volume discounts.  The
increasing penetration of managed care into the home medical equipment industry
is exacerbating this trend.  If we are unable to achieve sufficient
manufacturing, supply chain and technological efficiencies to offset any future
price reductions, our profit margins will be adversely affected.</P>
<I><P>Materials and Components.  </I>We purchase most of our raw materials,
components and supplies from a number of different vendors on a non-exclusive
basis.  There can be no assurance that our vendors will not enter into exclusive
arrangements with our competitors, or cease selling materials or products to us
at commercially reasonable prices or at all.  We procure a few components and
materials on a single-source basis.  If one of these single-source vendors
failed to deliver components as planned, we would be temporarily unable to ship
some of our products.  Historically, prices paid by us for some raw materials,
such as aluminum, foam and wood, have fluctuated widely.  When prices have
increased, we have not always been able to pass along the full effect of these
increases to our customers.</P>
<I><P>Re-Engineering Program.</I>  We have completed our three-year corporate
re-engineering program that has consolidated our domestic and European divisions
and our U.S. salesforces.  In 1998, we invested approximately $27 million in
this program, including the costs of new and upgraded management information
systems necessary to support the newly consolidated operations.  These
investments are expected to result in future cost reductions and operating
efficiencies but no assurances can be given that such will be the case.</P>
<I><P>International Operations.   </I>A significant portion of our sales in
recent years has been derived from our international operations.  For the fiscal
year ended July 2, 1999, international sales accounted for 43% of our total
revenue.  Our operations depend upon the economies of the markets in which we
operate and therefore are subject to fluctuations in these economies and their
corresponding currencies.  Furthermore, any changes in foreign government
reimbursement policies or regulations could have a material adverse effect on
our business.</P>
<P>A number of our agreements are with non-U.S. entities that are governed by
the laws of, and are subject to dispute resolution in the courts of the country
or region in which the operation is located.  We cannot accurately predict
whether such forum will provide us with an effective and efficient means of
resolving disputes that may arise in the future.  Even if we are able to obtain
a satisfactory decision through arbitration or a court proceeding, we could have
difficulty enforcing any award or judgment on a timely basis.</P>
<I><P>Product Liability; Claims Exposure.</I>  Our products expose us to
potential liabilities for end-user injuries or death caused by our products.
Although we design and manufacture our products with a high degree of care and
concern for safety, our products may fail to operate properly resulting in
injury or death.  We believe that our current liability insurance is adequate
given our claims history, the cost of coverage and industry practice.  However,
there is a risk that our insurance coverage may not be adequate to satisfy the
product liability awards that may arise.</P>
<I><P>Risks Associated with our Workforce.  </I>Of our approximately 4,600 full-
time employees, approximately 430 employees at two factories in the U.S. are
unionized with collective bargaining agreements that expire in 2002.  In Europe,
approximately 380 employees are covered by national union arrangements.
Although we have never had a strike or work stoppage in our 16 year history, and
although we believe that our relations with our employees are good, we cannot
assure you that we will be able to negotiate a satisfactory renewal of these
collective bargaining agreements or that our employee relations will remain
stable.  Additionally, we have an extensive sales and distribution network upon
which we greatly depend.  A loss of a large number of our salesforce could have
a material adverse effect on our business.</P>
<I><P>Future Acquisitions.</I>   We intend in the future to pursue acquisitions
of companies that would help us achieve our strategic goals, although we have no
present commitments with respect to any acquisitions.  Future acquisitions by us
could result in potentially dilutive issuances of equity securities, the
incurrence of debt and contingent liabilities and an increase in amortization
expenses related to goodwill and other intangible assets, which could have a
material adverse effect upon our business, financial condition and results of
operations.  Acquisitions involve numerous risks, including difficulties in the
assimilation of the operations, technologies, services and products of the
acquired companies and the diversion of management's attention from other
business concerns.  In the event that any acquisition were to occur, there can
be no assurance that our business, financial condition and results of operations
would not be materially adversely affected.</P>
<I><P>Year 2000 Readiness.</I>  Failure by us or our suppliers or payors to be
year 2000 compliant may have an adverse effect on our operations.  We have
created a corporate oversight task force to address year 2000 issues.  We have
established milestones and detailed plans which are actively being implemented
so that our research programs, products and internal computer, financial,
manufacturing and other infrastructure systems are year 2000 compliant on a
timely basis.  A team of corporate and divisional staff, including our internal
auditors, has performed and is performing independent reviews and evaluations of
equipment and systems to verify compliance.  We have undertaken internal reviews
to assess year 2000 issues related to our products.  While we believe that all
our products are year 2000 compliant, there is no way for us to fully guarantee
that we will be completely successful in this regard.</P>
<P>We have requested assurances from our major suppliers that they are
addressing this issue and that products procured by us will be year 2000
compliant.  Some critical suppliers have been unwilling to provide these
assurances.  This is particularly the case outside of the U.S. where we have
significant operations.  Year 2000 failures on the part of our suppliers could
result in manufacturing delays, increased costs or lost revenues.  This could
result in manufacturing delays and backlogs.  In addition, many agencies,
including government agencies which directly or indirectly provide funding for
the purchase of products sold by us, and other third parties such as telephone,
electricity and other utility companies may not be year 2000 compliant which may
adversely affect our revenues and cash flow.  It is difficult for us to assess
the likelihood, or the impact on our business, of these entities' failure to be
year 2000 compliant.  See "Year 2000 Compliance."</P>
<P>We disclaim any obligation to update any of the above factors that may effect
future operating results, to announce publicly the result of any revisions to
any of the forward-looking statements contained in this report, or to make
corrections to reflect future events or developments.</P>




<A NAME="item7a"></A>
<B><P>ITEM 7A. 	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK</P>

</B><P>Our primary financial market risks include fluctuations in interest rates
and currency exchange rates.  Although the majority of our transactions are in
U.S. dollars, some transactions are based in various foreign currencies.  We
purchase short-term, forward exchange contracts to hedge the impact of foreign
currency fluctuations on certain underlying assets, liabilities and commitments
for operating costs denominated in foreign currencies.  The purpose of entering
into these contracts is to protect against economic losses associated with
foreign exchange transactions.  Gains and losses on the hedges offset a majority
of the increases or decreases in our local currency operating costs in the
corresponding periods.  The contracts have maturity dates that do not normally
exceed 12 months.  The unrealized gains and losses on these contracts are
deferred and recognized in the results of operations in the period in which the
hedged transaction impacts earnings.  We do not purchase short-term forward
exchange contracts for trading purposes.  There were no foreign currency forward
contracts outstanding as of July 2, 1999.</P>
<P>At July 2, 1999 a hypothetical 10% adverse movement in short-term interest
rates on our variable rate debt would have resulted in a reduction of $0.5
million in annual pre-tax income.</P>



<A NAME="item8"></A>
<B><P> ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA</P></B>

<P>The following are included herein:</P>

<P>Report of Management</P>

<P>Independent Auditors' Report</P>

<P>Consolidated balance sheets as of July 2, 1999 and July 3, 1998</P>

<P>Consolidated statements of operations for the years ended
July 2, 1999, July 3, 1998 and June 27, 1997</P>

<P>Consolidated statements of stockholders' equity for the years ended
July 2, 1999, July 3, 1998 and June 27, 1997</P>

<P>Consolidated statements of cash flows for the years ended
July 2, 1999, July 3, 1998 and June 27, 1997</P>

<P>Notes to consolidated financial statements</P>



<P> </P>



<A NAME="item9"></A>
<B><P>ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE</P>
</B>

<P>	None.</P>

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>


<A NAME="manreport"></A>
<B><P ALIGN="CENTER">REPORT OF MANAGEMENT</P>
</B><P>The management of Sunrise Medical Inc. is responsible for the
preparation, integrity and accuracy of the accompanying financial statements and
related information.  The consolidated financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis and include amounts based on our best estimates and informed
judgments, as required.</P>
<P>Management maintains a comprehensive system of internal controls supported by
formal policies and procedures, management training programs, a written code of
business conduct, periodic internal audits and management reviews.  Although no
cost-effective system will preclude all errors and irregularities, we believe
Sunrise Medical has in place a system of internal controls which provides
reasonable assurance that assets are safeguarded against material loss from
unauthorized use or disposition, transactions are recorded in accordance with
our policies, and the financial information presented to our stockholders is
reliable.</P>
<P>The Audit Committee of the Board of Directors is comprised solely of outside
directors.  The Audit Committee meets periodically with the independent
auditors, our internal auditors and financial management to ensure that each is
carrying out their responsibilities.  Both the independent auditors and the
internal auditors have free and direct access to the Audit Committee.</P>
<P>Our independent auditors are recommended by the Audit Committee and selected
by the Board of Directors.  The consolidated financial statements have been
audited by KPMG LLP, who have expressed their opinion elsewhere herein with
respect to the fairness of the statements.  Their audits included a review of
the system of internal control and tests of transactions to the extent they
considered necessary to render their opinion.</P>

<P> </P>
<P>Ted N. Tarbet</P>
<P>Senior vice president and chief financial officer</P>

<P> </P>
<P>John M. Radak</P>
<P>Vice president and controller</P>

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="opinion"></A>
<B><P ALIGN="CENTER">INDEPENDENT AUDITORS' REPORT</P></B>

<P> </P>
<P>To the Board of Directors and Stockholders</P>
<P>of Sunrise Medical Inc.:</P>
<P>We have audited the accompanying consolidated balance sheets of Sunrise
Medical Inc. and Subsidiaries as of July 2, 1999 and July 3, 1998, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended July 2, 1999.  In
connection with our audits of the consolidated financial statements, we have
also audited the financial statement schedule as listed in Item 14.a (2).  These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.</P>
<P>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.</P>
<P>In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sunrise
Medical Inc. and Subsidiaries as of July 2, 1999 and July 3, 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended July 2, 1999 in conformity with generally accepted
accounting principles.  Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.</P>
<DIR>
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<DIR>
<DIR>
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<P>/s/ KPMG LLP</P>
</DIR>
</DIR>
</DIR>
</DIR>
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</DIR>

<P>San Diego, California<br>
August 13, 1999, except as to Note 7<br>
which is as of September 30, 1999.


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<p align="center"><A NAME="bs"><strong>
                      SUNRISE MEDICAL INC. AND SUBSIDIARIES</A><br>
                           CONSOLIDATED BALANCE SHEETS<br>
                                 (in thousands)
</strong>
<pre>

                                                              July 2,   July 3,
                                                               1999      1998
                                                             --------- ---------
                        ASSETS
Current assets:
  Cash and cash equivalents.................................   $1,485      $931
  Trade receivables, net of allowance for doubtful
    accounts of $4,971 and $8,155, respectively.............  127,374   121,967
  Installment receivables, net..............................   23,068    12,329
  Income tax refunds receivable.............................      523     4,013
  Inventories...............................................   87,941    94,589
  Deferred income taxes.....................................   15,435    19,288
  Other current assets......................................    6,745     3,622
                                                             --------- ---------
      Total current assets..................................  262,571   256,739
Property and equipment, net of accumulated
  depreciation and amortization of $90,511 and $81,753,
  respectively..............................................   83,560    85,804
Goodwill and other intangible assets, net of accumulated
  amortization of $59,280 and $50,691 respectively..........  250,650   266,815
Other assets, net...........................................   10,409     6,947
                                                             --------- ---------
Total assets................................................ $607,190  $616,305
                                                             ========= =========

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current installments of long-term debt....................  $14,890    $3,753
  Trade accounts payable....................................   57,879    59,639
  Accrued compensation and other liabilities................   68,913    82,974
  Accrued income taxes......................................      802     2,794
                                                             --------- ---------
      Total current liabilities.............................  142,484   149,160

Long-term debt, less current installments...................  190,948   188,029
Deferred income taxes.......................................    6,760     6,456

Stockholders' equity:
  Preferred stock, $1 par. Authorized 5,000 shares;
    none issued.............................................      --        --
  Common stock, $1 par. Authorized 40,000 shares; 22,204
    and 22,151 shares, respectively, issued and outstanding.   22,204    22,151
Additional paid-in capital..................................  203,548   203,346
Retained earnings...........................................   51,492    46,994
Accumulative other comprehensive (loss) income .............  (10,246)      169
                                                             --------- ---------
    Total stockholders' equity..............................  266,998   272,660
                                                             --------- ---------
Total liabilities and stockholders' equity.................. $607,190  $616,305
                                                             ========= =========
</pre>

<p align="center"> (See accompanying notes to consolidated financial statements)


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<p align="center"><A NAME="ops"><strong>
                      SUNRISE MEDICAL INC. AND SUBSIDIARIES</A><br>
                      CONSOLIDATED STATEMENTS OF OPERATIONS<br>
                     (in thousands, except per share amount)
</strong>
<pre>

                                                          Years Ended
                                                --------------------------------
                                                 July 2,    July 3,    June 27,
                                                   1999       1998       1997
                                                ---------- ---------- ----------
Net sales......................................  $660,248   $657,169   $670,545
Cost of sales..................................   460,754    451,631    447,806
                                                ---------- ---------- ----------
Gross profit...................................   199,494    205,538    222,739

Marketing, selling and administrative expenses.   147,027    155,998    162,504
Research and development expenses..............    21,075     17,919     17,483
Amortization of goodwill and other intangibles.     8,589      8,440      8,273
Re-engineering expenses and merger costs.......       --      29,016        --
                                                ---------- ---------- ----------
Operating income (loss)........................    22,803     (5,835)    34,479
                                                ---------- ---------- ----------
Other (expense) income:
  Interest expense.............................   (16,486)   (15,222)   (14,774)
  Interest income..............................     4,293      3,659      3,372
  Other income and expense, net................    (2,341)     5,596        400
                                                ---------- ---------- ----------
                                                  (14,534)    (5,967)   (11,002)
                                                ---------- ---------- ----------
Income (loss) before income taxes..............     8,269    (11,802)    23,477
Income tax expense.............................     3,771        208     11,363
                                                ---------- ---------- ----------
Net income (loss)..............................    $4,498   ($12,010)   $12,114
                                                ========== ========== ==========

Basic earnings (loss) per share................     $0.20     ($0.55)     $0.56
                                                ========== ========== ==========

Weighted average number of shares outstanding..    22,195     22,001     21,656
                                                ========== ========== ==========

Diluted earnings (loss) per share..............     $0.20     ($0.55)     $0.55
                                                ========== ========== ==========

Weighted average number of shares
  assuming dilution............................    22,253     22,001     21,933
                                                ========== ========== ==========

</pre>

<p align="center"> (See accompanying notes to consolidated financial statements)



<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<p align="center"><A NAME="equity"><strong>
                      SUNRISE MEDICAL INC. AND SUBSIDIARIES</A><br>
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY<br>
                                 (in thousands)
</strong>
<pre>
<font size="1">

                                                                   Accumu-
                                                                   lative
                              Common Stock                          Other
                            -----------------                      Compre-    Total
                             Number           Additional           hensive   Stock-
                               of              Paid-in  Retained   (loss)   holders'
                             Shares   Amount   Capital  Earnings   Income    Equity
                            -------- -------- --------- --------- --------- ---------
Balance at June 28, 1996...  21,428  $21,428  $194,571   $46,890      $392  $263,281

 Exercise of stock options,
  including associated
  tax benefits.............      41       41       405       --        --        446
 Issuance of stock for
  acquisition..............     416      416     6,068       --        --      6,484
 Comprehensive income:
   Net income..............      --       --       --     12,114       --        --
   Foreign currency
    translation adjustment.      --       --       --        --      1,367       --
 Total comprehensive
  income...................      --       --       --        --        --     13,481
                            -------- -------- --------- --------- --------- ---------
Balance at June 27, 1997...  21,885   21,885   201,044    59,004     1,759   283,692

 Exercise of stock options,
  including associated
  tax benefits, net........     166      166       846       --        --      1,012
 Issuance of stock for
  acquisitions.............     100      100     1,456       --        --      1,556
 Comprehensive income:
   Net loss................      --       --       --    (12,010)      --        --
   Foreign currency
    translation adjustment.      --       --       --        --     (1,590)      --
 Total comprehensive
  loss.....................      --       --       --        --        --    (13,600)
                            -------- -------- --------- --------- --------- ---------
Balance at July 3, 1998....  22,151   22,151   203,346    46,994       169   272,660

 Exercise of stock options,
  including associated
  tax benefits, net........      53       53       202       --        --        255
 Comprehensive income:
   Net income..............      --       --       --      4,498       --        --
   Foreign currency
    translation adjustment.      --       --       --        --    (10,415)      --
 Total comprehensive
  loss.....................      --       --       --        --        --     (5,917)
                            -------- -------- --------- --------- --------- ---------
Balance at July 2, 1999....  22,204  $22,204  $203,548   $51,492  ($10,246) $266,998
                            ======== ======== ========= ========= ========= =========

</font size="1">
</pre>

<p align="center"> (See accompanying notes to consolidated financial statements)


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<p align="center"><A NAME="flows"><strong>
                      SUNRISE MEDICAL INC. AND SUBSIDIARIES</A><br>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
                     (in thousands, except per share amount)
</strong>
<pre>

                                                             Years Ended
                                                    -----------------------------
                                                     July 2,   July 3,  June 27,
                                                      1999      1998      1997
                                                    --------- --------- ---------
Cash flows from operating activities:
  Net income (loss)................................   $4,498  ($12,010)  $12,114
  Depreciation and amortization....................   16,161    15,510    17,987
  Amortization of goodwill and other intangibles...    8,589     8,440     8,273
  Deferred income taxes............................     (708)   (1,492)    6,539
  Other non-cash items.............................      942      (520)       --
  Changes in asset and liabilities, net of
    effect of acquisitions:
     Trade receivables, net........................   (7,255)   (7,145)   (1,112)
     Installment receivables, net..................  (13,545)    1,489    (3,449)
     Inventories...................................    5,332    (5,367)   (9,586)
     Other assets..................................   (2,125)   (6,509)    3,225
     Accrued income taxes..........................    1,695       556       (92)
     Trade accounts payable and other liabilities..  (10,696)   11,820     1,024
                                                    --------- --------- ---------
Net cash provided by operating activities..........    2,888     4,772    34,923
                                                    --------- --------- ---------
Cash flows from investing activities:
  Purchase of property and equipment, net..........  (15,780)  (16,549)  (29,248)
  Proceeds from sale of property...................       --     6,423        --
  Proceeds from sales of business..................       --        --    14,000
  Net cash invested in acquisition of business.....       --      (418)     (856)
                                                    --------- --------- ---------
Net cash used for investing activities.............  (15,780)  (10,544)  (16,104)
                                                    --------- --------- ---------
Cash flows from financing activities:
  Borrowings of long-term debt.....................  159,269   239,283   133,479
  Repayments of long-term debt..................... (142,931) (237,982) (146,986)
  Proceeds from issuance of common stock...........      255     1,012       458
                                                    --------- --------- ---------
Net cash provided by (used for) financing
  activities.......................................   16,593     2,313   (13,049)
                                                    --------- --------- ---------
Effect of exchange rate changes on cash............   (3,147)      167    (3,504)
                                                    --------- --------- ---------
Net increase (decrease) in cash
  and cash equivalents.............................      554    (3,292)    2,266
Cash and cash equivalents at beginning of year.....      931     4,223     1,957
                                                    --------- --------- ---------
Cash and cash equivalents at end of year...........   $1,485      $931    $4,223
                                                    ========= ========= =========

</pre>

<p align="center"> (See accompanying notes to consolidated financial statements)

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>



<A NAME="notes"></A>
<B><P ALIGN="CENTER">SUNRISE MEDICAL INC. AND SUBSIDIARIES<br>
<P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</B><P ALIGN="CENTER">(Dollars in thousands, except per share amounts)</P>

<B><P>1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</P>
</B><P>Sunrise Medical Inc. designs, manufactures and markets medical products
used by the disabled and the elderly.  Products include custom, manual and power
wheelchairs and related seating systems, home respiratory devices, personal care
products, nursing home beds and furnishings, specialized bathing systems and
speech devices.</P>
<B><P>Basis of Consolidation.</B>   The consolidated financial statements
include domestic and foreign subsidiaries.  All significant intercompany
balances and transactions have been eliminated.  The applicable local currency
of each of our foreign subsidiaries is the functional currency.  The translation
from the foreign currencies is performed using year-end exchange rates for
assets and liabilities, and for revenue and expense accounts using a weighted
average exchange rate during the year.  Gains and losses resulting from
translating assets and liabilities from the functional currency to U.S. dollars
are included in "Accumulated other comprehensive income," which is part of
stockholders' equity.  As described more fully in Note 4, on April 13, 1998 we
merged with Sentient Systems, Inc., now named DynaVox Systems (DynaVox).  The
merger was accounted for as a pooling of interests.  Accordingly, our
consolidated financial statements have been restated for all periods prior to
the business combination to include the results of DynaVox.  The preparation of
financial statements in conformity with generally accepted accounting principles
requires management estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes.  Actual results could differ
from management's estimates.</P>
<B><P>Reclassification.  </B>Certain reclassifications have been made to the
prior year amounts to conform to the 1999 presentation.</P>
<B><P>Fiscal Year End.</B>  Our fiscal year ends on the Friday closest to June
30, resulting in years of either 52 or 53 weeks.  The year ended July 2, 1999
was 52 weeks, the year ended July 3, 1998 was 53 weeks, and the year ended June
27, 1997 was 52 weeks.</P>
<B><P>Inventories. </B> Certain inventories are stated at the lower of last-in,
first-out (LIFO) cost or market value.  All other inventories are stated at the
lower of first-in, first-out (FIFO) cost or market value.</P>
<B><P>Property and Equipment.</B>  Property and equipment are stated at cost and
depreciated over estimated useful lives by the straight-line or declining
balance methods.  Assets recorded under capital leases and leasehold
improvements are amortized over the shorter of their useful lives or the related
lease terms by the straight-line method.  The estimated useful lives are three
to 40 years for buildings and improvements and two to 12 years for machinery and
equipment.</P>
<B><P>Goodwill. </B> The excess of purchase price over the fair value of net
assets of acquired businesses (goodwill) is amortized on a straight-line basis
over periods of 20 to 40 years, depending on the nature and type of business
acquired.</P>
<B><P>Long-Lived Assets. </B> We evaluate long-lived assets for impairment and
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.  This loss
is measured by the difference between carrying amounts and estimated fair
values.</P>
<B><P>Financial Instruments with Off-Balance Sheet Risk.</B>  In the ordinary
course of business, we utilize derivative financial instruments to reduce our
exposure to market risks from changes in interest rates and foreign exchange
rates.  We enter into these transactions with major international financial
institutions utilizing over-the-counter as opposed to exchange traded
instruments.  These transactions are entered into only for purposes of market
risk management.</P>
<P>We attempt to minimize interest expense while also managing exposure to
variable interest rates by periodically employing interest rate agreements, or
swaps, to convert bank borrowings from floating rate into the equivalent of
fixed rate debt.  We have used foreign-denominated borrowings from our multi-
currency credit facility to hedge against foreign currency balance sheet
exposures that would otherwise result from changes in currency values.</P>
<P>We enter into foreign exchange forward and option contracts with financial
institutions primarily to protect against currency exchange risks associated
with existing assets and liabilities, and certain firmly committed transactions,
as well as probable but not firmly committed transactions.  In addition, we have
entered into foreign exchange forward contracts to hedge certain intercompany
loan transactions between our European divisions.  Our foreign exchange risk
management policy calls for the company to hedge substantially all material
foreign exchange transaction exposures.  However, we may not hedge certain
foreign exchange transaction exposures that are immaterial either in terms of
their minimal U.S. dollar value or in terms of their historically high
correlation with the U.S. dollar.</P>
<P>Probable but not firmly committed transactions comprise sales of our products
in currencies other than the U.S. dollar.  A majority of these non-U.S. dollar-
based sales are made through our European subsidiaries.  The duration of foreign
exchange hedging instruments, whether for firmly committed transactions or for
probable but not firmly committed transactions, currently does not exceed one
year.</P>
<P>Interest rate and foreign exchange instruments generally qualify as
accounting hedges if their maturity dates are the same as the hedged
transactions and if the hedged transactions meet certain requirements.  Sold
interest rate and foreign exchange instruments do not qualify as accounting
hedges.  Gains and losses on accounting hedges of existing assets or liabilities
are generally recorded currently in income or stockholders' equity against the
losses and gains on the hedged transactions.  Gains and losses related to
qualifying accounting hedges of firmly committed or probable but not firmly
committed transactions are deferred and recognized in income in the same period
as the hedged transactions.  Gains and losses on interest rate and foreign
exchange contracts that do not qualify as accounting hedges are recorded
currently in income.  Gains and losses on accounting hedges realized before the
settlement date of the related hedged transaction are also generally deferred
and recognized in income in the same period as the hedged transactions.</P>
<P>We monitor interest rate and foreign exchange positions based on applicable
and commonly used pricing models.  The correlation between the changes in the
fair value of hedging instruments and the changes in the underlying hedged items
is assessed periodically over the life of the hedged instrument. In the event
that it is determined that a hedge is ineffective, including if and when the
hedged transactions no longer exists, we would recognize in income the change in
market value of the instrument beginning on the date it was no longer an
effective hedge.</P>
<P>Further information regarding our accounting treatment of financial
instruments may be found in Note 8 - "Derivatives."</P>
<B><P>Revenue Recognition.</B>  We recognize revenue from product sales upon
shipment and provide an appropriate allowance for estimated returns and
adjustments.</P>
<B><P>Warranty Costs.</B>  Certain products are covered by warranties against
defects in material and workmanship for periods of up to five years.  Components
of certain products carry a lifetime warranty.  The estimated warranty cost is
recorded at the time of sale and is adjusted periodically to reflect actual
experience.</P>
<B><P>Research and Development Costs.</B>  Research and development costs relate
to both present and future products and are expensed in the year incurred.</P>
<B><P>Stock-Based Compensation.</B>  Statement of Financial Accounting Standards
No. 123 (SFAS 123), "Accounting for Stock-Based Compensation," encourages but
does not require companies to record compensation cost for stock-based employee
compensation plans at fair value.  We have chosen to present required
disclosures and to continue to account for stock-based employee compensation
using the method prescribed in Accounting Principles Board Opinion No. 25 (APB
25), "Accounting for Stock Issued to Employees."  Accordingly, compensation cost
for stock options is measured as the excess, if any, of the quoted market price
of our stock at the date of grant over the amount an employee must pay to
acquire the stock.</P>
<B><P>Net Income (Loss) per Share</B>.  Basic EPS is calculated by dividing net
income (loss) by the weighted-average common shares outstanding during the
period.  Diluted EPS reflects the potential dilution to basic EPS that could
occur upon conversion or exercise of securities, options, or other such items,
to common shares using the treasury stock method based upon the weighted-average
fair value of our common shares during the period.</P>
<B><P>Comprehensive Income (Loss)</B>.  We adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130) in
1999.  SFAS 130 establishes standards for the reporting and display of
comprehensive income and its components.  Components of comprehensive income
(loss) include net income (loss) and foreign currency translation adjustments.
Prior year financial statements have been reclassified to conform to the
requirements of SFAS 130.</P>
<B><P>Cash Flow Information</B>.  Cash payments for interest were $17,356 in
1999, $14,380 in 1998, and $14,200 in 1997.  Cash payments for income taxes were
$6,012 in 1999,  $5,696 in 1998, and $11,740 in 1997.  We received income tax
refunds of  $4,400 in 1999, $6,131 in 1998, and $9,680 in 1997.</P>
<B><P>2.</B>	<B>FINANCIAL INSTRUMENTS</P>
<P>Cash and Cash Equivalents</B>.  Cash and cash equivalents include all cash
balances and highly liquid investments with original maturities of three months
or less.  The carrying amount of cash and cash equivalents approximates their
fair value.</P>
<B><P>Installment Receivables.</B>  Installment receivables consist of the
following:</P>

<pre>

                                                      July 2,   July 3,
                                                       1999      1998
                                                     --------- ---------
  Current portion...................................  $27,832   $16,198
  Less:
     Unearned interest..............................   (3,055)   (2,185)
     Allowance for doubtful accounts................   (1,709)   (1,684)
                                                     --------- ---------
     Net current portion............................   23,068    12,329
  Due after one year (included in other assets).....    8,509     5,716
                                                     --------- ---------
  Total installment receivables, net................  $31,577   $18,045
                                                     ========= =========
</pre>

<P>The carrying amount of installment receivables approximates their fair value.
The majority of these receivables are due in less than one year, and the related
interest rates have not varied significantly over the past two years.</P>
<B><P>Trade Receivables, Income Tax Refunds Receivable, Trade Accounts Payable
and Accrued Expenses.</B>  The carrying amounts of these instruments approximate
their fair values due to their short term nature.</P>
<B><P>Long-Term Debt.</B>  Based on borrowing rates currently available to us
for bank loans with similar terms and average maturities, the carrying amount of
long-term debt at July 2, 1999 and July 3, 1998 approximated its fair value.</P>
<B><P>Foreign Currency Forward Exchange Contracts</B>.  We transact business in
various foreign currencies, primarily European currencies.  We use currency
forward contracts and currency options to protect against reductions in value
and volatility of future cash flows caused by changes in foreign exchange rates.
The maturities of these instruments are generally less than one year.  Deferred
gains or losses attributable to foreign currency instruments are not
material.</P>
<B><P>3.	BALANCE SHEET ITEMS</P>
</B><P>Inventories consist of the following:</P>

<pre>

                                                      July 2,   July 3,
                                                       1999      1998
                                                     --------- ---------
  Raw material......................................  $37,477   $42,634
  Work-in-progress..................................   12,758    12,588
  Finished goods....................................   37,706    39,367
                                                     --------- ---------
  Total inventories.................................  $87,941   $94,589
                                                     ========= =========
</pre>

<P>If all inventories had been valued at FIFO cost, inventories would have been
approximately $89,474 at July 2, 1999 and $95,817 at July 3, 1998.</P>
<P>The components of property and equipment are as follows:</P>

<pre>

                                                      July 2,   July 3,
                                                       1999      1998
                                                     --------- ---------
  Land..............................................   $4,439    $4,611
  Buildings, machinery and equipment................  164,410   158,096
  Leasehold improvements............................    5,222     4,850
                                                     --------- ---------
                                                      174,071   167,557
  Less accumulated depreciation and amortization....  (90,511)  (81,753)
                                                     --------- ---------
  Property and equipment, net.......................  $83,560   $85,804
                                                     ========= =========
</pre>

<B><P>4.	ACQUISITIONS AND MERGERS</P>
</B><P>On April 13, 1998 we issued 2.7 million shares of our common stock for
all outstanding common stock of DynaVox, a manufacturer of speech augmentation
devices.  This merge has been accounted for as a pooling of interests and,
accordingly, the consolidated financial statements for periods prior to the
combination have been restated to include the accounts and results of operations
of DynaVox.</P>
<P>On November 20, 1997 we acquired the assets and liabilities of Mechanical
Design Applications, Inc. for 100,000 shares of common stock valued at $1.6
million and cash of $0.4 million.  The transaction was accounted for as a
purchase.  Pro forma results of operations giving effect to the acquisition as
though it had occurred on June 28, 1997 would not differ materially from amounts
reported.</P>
<P>On December 27, 1996 we acquired Kid-Kart, Inc., a manufacturer of pediatric
positioning strollers and other dependent mobility products, for 416,000 shares
of common stock valued at $6.5 million and cash of $0.5 million.  The
transaction was accounted for as a purchase.  Pro forma results of operations
giving effect to the acquisition as though it had occurred on July 1, 1996 would
not differ materially from amounts reported.</P>
<P>The excess of the aggregate purchase price over the fair market value of net
assets acquired of approximately $2 million in 1998 and $6 million in 1997 was
recognized as goodwill and is being amortized over periods ranging from 20 to 40
years.  The operating results of all acquisitions are included in the
consolidated results of operations from the respective dates of acquisition.</P>
<B><P>5.	RE-ENGINEERING EXPENSES AND MERGER COSTS</P>
</B><P>In 1997 we announced the consolidation of our four U.S. rehabilitation
divisions into the Home Healthcare Group based in Longmont, Colorado, and a
series of consolidations in our European operations.  These actions were
designed to reduce operating costs and improve manufacturing and marketing
efficiencies.  Pre-tax charges of $4.7 million, included in selling, general and
administrative expenses, were incurred in 1997 in connection with these
consolidations.</P>
<P>Approximately $27 million in non-recurring costs were incurred during 1998 to
complete these activities, principally to complete our factory consolidations
and to implement related information system conversions.  In addition, we
completed our merger with DynaVox in April 1998.  Merger related expenses
incurred were approximately $2 million.  Of the total charges of $29 million
incurred in 1998, approximately $23 million required cash payments and $6
million represented non-cash charges.</P>
<B><P>6.	LEASES</P>
</B><P>We lease office and operating facilities, machinery and equipment and
automobiles under operating leases that expire over the next 20 years.  Rent
expense for operating leases was $12,521 in 1999, $11,900 in 1998, and  $10,600
in 1997.</P>
<P>Minimum lease payments under operating leases expiring subsequent to July 2,
1999 are:</P>

<pre>
                Year Ended                            Amount
---------------------------------------------------- ---------
               2000.................................  $11,002
               2001.................................    8,157
               2002.................................    5,212
               2003.................................    4,172
               2004.................................    3,677
               Thereafter...........................    8,500
                                                     ---------
               Total minimum lease payments.........  $40,720
                                                     =========
</pre>


<B><P>7.	LONG-TERM DEBT</P></B>

<pre>
                                                      July 2,   July 3,
                                                       1999      1998
                                                     --------- ---------
   Borrowing under multi-currency credit agreement..  $94,000   $73,970

   Senior notes.....................................  100,000   100,000

   Unsecured subordinated notes maturing from 1999
   to 2000, payable in installments with interest
   rates from 6.5% to 8.0% (7.0% to 9.1% in 1998)...    2,425     9,460

   Secured European Coal and Steel Community
   job creation loan due 2002; interest at
   Libor +1% payable semiannually (6.4% at
   July 2, 1999), secured by property...............    3,941     4,148

   Mortgages payable in monthly installments with
   interest at various rates from 5.5% to 6.0%,
   maturing from 2000 through 2008, secured by
   property.........................................    4,651     3,134

   Obligations under capital leases with lease
   periods expiring at various dates through 2005,
   interest at various rates from 6.25% to 14.8%....      821     1,070
                                                     --------- ---------
   Total long-term debt.............................  205,838   191,782

   Less current installments........................  (14,890)   (3,753)
                                                     --------- ---------
   Long-term debt, net of current installments...... $190,948  $188,029
                                                     ========= =========
</pre>

<P>As of July 2, 1999, aggregate debt maturities were as follows:  2000--
$14,890; 2001--$82,380; 2002 --$4,329; 2003--$391; 2004--$404; and thereafter--
$103,444.</P>
<P>On October 28, 1997, we completed a private placement of $100 million of
unsecured senior notes, $50 million maturing after seven years, bearing interest
at 7.09% and the remaining $50 million maturing after ten years at an interest
rate of 7.25%.  The proceeds of this debt issuance were used to reduce the
outstanding debt on our multi-currency credit facility.</P>
<P>Our multi-currency bank credit facility provides for maximum borrowings of
$110 million.  The agreement was amended in April 1999 and further amended on
September 30, 1999 relating to pricing and certain collateral matters.  The
maturity date is January 2001.  Interest during the year was at the prime rate
plus 2.25% (7.65% at July 2, 1999).  We have the option of using interbank
offered rates as a basis for interest and can fix the interest rate on the
outstanding portion for up to six months.  A commitment fee of 0.50% per year,
was payable on the unused portion of the line.  The credit facility required us
to comply with certain covenants such as maintenance of leverage ratio, tangible
net worth, and interest coverage, and places certain restrictions on
acquisitions and payment of dividends.  As of July 2, 1999, we were in violation
of one of the financial covenants.  We have amended the agreement, which
permanently waived the covenant violation.</P>
<P>The amended credit agreement reduced the maximum borrowings from $120 million
to $110 million and divided the facility into a $70 million unsecured revolving
credit facility and a $40 million secured term loan.  The term loan provides us
the option of using the London Interbank Offered Rate ("LIBOR") plus 4.50% or
the prime rate plus 3.25% for interest.  The term loan is secured by all
domestic accounts receivable.  The term loan is due and payable in a single
installment in January 2001.</P>
<P>Borrowings under the $70 million credit facility, as amended, are subject to
certain revised financial covenants.  The agreement places restrictions on
acquisitions and payment of dividends and provides for a reduction in maximum
borrowings on the revolving credit facility to $25 million in July 2000 in
increments of $15 million per quarter beginning in January 2000.  Additional
reductions in maximum borrowings could occur if we generate excess cash flow, as
defined, or if we fail to maintain a minimum ratio of debt to EBITDA as of June
30, 2000.  The revolving credit agreement permits Sunrise to elect one of two
variable rate interest options at the time an advance is made. The first option
is a rate equal to the prime rate plus 4.00%.  The second option is a rate based
on LIBOR plus 5.25%.  A commitment fee of 1.00% per year is payable on the
unused portion of the line.  The maturity date is January 2001.  At July 2,
1999, the amount of funds available from the credit facility was approximately
$16 million.</P>

<B><P>8.	DERIVATIVES</P>
</B><P>We manufacture our products in the United States and Europe, but
generated approximately 43% of 1999 revenues from sales made outside the U.S.
Sales generated by our distribution subsidiaries generally utilize the
subsidiary's local currency, thereby exposing us to the risk of foreign currency
fluctuations when the subsidiary imports Sunrise manufactured products.  Also,
as a net borrower, we are exposed to the risk of fluctuating interest rates.  We
utilize derivative instruments in an effort to mitigate these risks.  Our policy
is not to speculate in derivative instruments to profit on the foreign currency
exchange or interest rate price fluctuation, nor to enter trades for which there
are no underlying exposures, nor enter into trades to intentionally increase the
underlying exposure.  Instruments used as hedges must be effective at reducing
the risk associated with the exposure being hedged and are designated as a hedge
at the inception of the contract.  Accordingly, changes in market values of
hedge instruments are highly correlated with changes in market values of
underlying hedged items both at the inception of the hedge and over the life of
the hedge contract.</P>
<P>Various foreign currency contracts are used to hedge anticipated transactions
denominated in foreign currencies and to mitigate the impact of changes in
foreign currency exchange rates on our operations.  We use forward contracts to
hedge transactions between our foreign subsidiaries.  The hedge instruments
mature at various dates with resulting gains or losses recognized at the
maturity date, which approximates the transaction date.  The notional values of
forward contracts afforded hedge accounting treatment at July 3, 1998 was 19.1
million pounds or $31.8 million.  We had no forward contracts outstanding at
July 2, 1999.</P>
<P>When we use foreign currency contracts and the hedged currency strengthens
against foreign currencies, the decline in the value of future foreign currency
cash flows is partially offset by the recognition of gains in the value of the
foreign currency contracts designated as hedges of the transactions.
Conversely, when the hedged currency weakens, the increase in the value of
future foreign currency cash flows is reduced by the recognition of any loss in
the value of the forward contracts designated as hedges.  Gains and losses on
these contracts are recognized in income in the same period that the underlying
transactions are settled and generally offset the losses and gains on the
underlying transactions.</P>

<B><P>9.	BUSINESS AND CREDIT CONCENTRATIONS</P>
</B><P>A significant portion of our receivables are due from home healthcare and
medical equipment dealers located throughout the United States, Canada and
Europe.  Many of these product sales to dealers are ultimately funded through
government reimbursement programs such as Medicare and Medicaid.  Any changes in
these programs could affect dealer liquidity and profitability.  This, in turn,
could put pressure on prices charged and credit terms offered for our products
sold through this channel of distribution.  We estimate an allowance for
doubtful accounts based on the creditworthiness of our customers as well as
general economic conditions.</P>

<B><P>10.	INCOME TAXES</P>
</B><P>The provision (benefit) for income taxes consists of the following:</P>

<pre>
                                                      Years Ended
                                             -----------------------------
                                              July 2,   July 3,  June 27,
                                               1999      1998      1997
                                             --------- --------- ---------
  Current:
      Federal...............................     $971   ($1,470)     $700
      State.................................      276       118       217
      Foreign...............................    2,581     3,097     4,463
                                             --------- --------- ---------
                                                3,828     1,745     5,380
                                             --------- --------- ---------
  Deferred:
      Federal...............................     (587)    2,589     5,935
      State.................................     (186)      (74)      533
      Foreign...............................      716    (4,052)     (485)
                                             --------- --------- ---------
                                                  (57)   (1,537)    5,983
                                             --------- --------- ---------
  Total.....................................   $3,771      $208   $11,363
                                             ========= ========= =========
</pre>

<P>Foreign income taxes (benefits) are based upon $8,640, $(8,308) and $8,768 of
foreign earnings (losses) before income taxes during 1999, 1998 and 1997,
respectively.  No U.S. income taxes have been provided for cumulative
unrepatriated foreign earnings of approximately $66 million as we have no plans
or intentions to repatriate foreign earnings or liquidate the related foreign
assets.  At July 2, 1999, we had foreign tax loss carryforwards of approximately
$12,554, consisting of $1,169, which expires in 2000 through 2001, $5,015, which
expires in 2002 through 2006, and $6,370, which does not expire.  A valuation
allowance has been provided for the net operating loss carryforwards that may
expire before utilization.</P>
<P>A reconciliation between the federal statutory tax rate and the effective
income tax rate follows:</P>

<pre>
                                                      Years Ended
                                             -----------------------------
                                              July 2,   July 3,  June 27,
                                               1999      1998      1997
                                             --------- --------- ---------
  Statutory federal income tax rate.........     35.0%    -35.0%     35.0%
  Amortization of goodwill..................     16.3%     15.0%      6.8%
  State income taxes, net of federal taxes..      0.6%      2.1%      2.9%
  Taxation of foreign operations............      1.6%     18.7%      4.6%
  Tax credits................................    -3.2%     -0.7%     -0.8%
  Valuation allowance change.................     4.9%      --        --
  Adjustment to estimated income tax accruals    -6.9%      --        --
  Other, net................................     -2.7%      1.7%     -0.1%
                                             --------- --------- ---------
       Effective income tax rate............     45.6%      1.8%     48.4%
                                             ========= ========= =========
</pre>

<P>Significant components of deferred income tax assets and liabilities are
shown below:</P>

<pre>
                                                        July 2,   July 3,
                                                         1999      1998
                                                       --------- ---------
  Deferred income tax assets:
      Allowance for doubtful accounts.................    ($908)    ($730)
      Inventories.....................................    4,496     4,393
      Accrued expenses................................   11,539    13,111
      Net operating losses............................    4,684     5,638
      State and local taxes...........................      374       116
                                                       --------- ---------
      Total deferred income tax assets................   20,185    22,528
      Less: Valuation allowance.......................     (402)      --
                                                       --------- ---------
      Net deferred income tax assets..................   19,783    22,528

  Deferred income tax liabilities:
      Depreciation and amortization and other.........   11,108     9,696
                                                       --------- ---------
  Net deferred income taxes...........................   $8,675   $12,832
                                                       ========= =========
</pre>

<P>Management believes that realization of the tax benefit of net deferred
income tax assets is more likely than not.</P>

<B><P>11.	PROFIT SHARING/SAVINGS PLAN</P>
</B><P>We have 401(k) profit sharing/savings plan covering most U.S. employees
("Associates").  Under the profit sharing portion of the plan, we will
contribute to Associates' accounts a percentage of their salary for the fiscal
year ranging from 4 to 6 percent.  The percentage amount is based upon
attainment of certain earnings targets by the company as a whole in the case of
corporate office Associates, or by the subsidiary where the Associate works.
The plan is discretionary with the amounts determined by the Board of Directors.
During 1999, 1998 and 1997, $2,839, $2,534 and $2,533, respectively, were
accrued for this plan.  Under the savings feature of the plan, individual
Associates may make contributions to the plan, which are matched by the company
in an amount determined by the Board of Directors.  During 1999, 1998, and 1997,
$622, $655, and $767, respectively, of Associate contributions were matched.</P>
<B><P>12.	STOCKHOLDERS' EQUITY</P>
<P>Common Stock Purchase Rights.  </B>In April 1990 our Board of Directors
declared a dividend of one common share purchase right ("Right") for each
outstanding share of common stock.  Pursuant to the stockholder Rights Agreement
as amended in May 1997, an exercisable Right will, under certain conditions,
entitle the holder to purchase from the company one-half of one share of common
stock at the exercise price of $60.00 per whole share, subject to adjustment,
until May 16, 2007.  The Rights will become exercisable ten days after a person
(an "Acquiring Person") acquires 15% or more of the common stock or ten days
after a person announces a tender offer which would result in such person
acquiring 15% or more of the common stock.  The Rights may be redeemed by the
Board of Directors for $.01 per Right at any time until ten days following the
public announcement that a person has become an Acquiring Person.  Under certain
circumstances after a person becomes an Acquiring Person, or after a merger or
other business combination, an exercisable Right will entitle its holder (other
than the Acquiring Person) to purchase shares of common stock (or shares of an
acquiring company) having a market value of two times the exercise price of one
Right.</P>
<B><P>Stock Option Plans.  </B>The 1983 Stock Option Plan as amended ("the 83
Plan") provided for the grant of options to purchase up to 1,800,000 shares of
common stock to officers, key Associates and outside directors in the form of
incentive stock options or non-qualified stock options.  The 83 Plan expired in
August 1995.</P>
<P>In August 1993 we adopted the 1993 Stock Option Plan ("the 93 Plan")
providing for the grant of options to purchase up to 4,000,000 shares of common
stock to officers, outside directors and key Associates in the form of incentive
stock options or non-qualified stock options.  At the time of adoption, 300,000
unissued shares of common stock were reserved for future grants under the 93
Plan.  The number of unissued shares of common stock reserved for future grants
under the 93 Plan increases annually by a number equal to 1.5% of the number of
shares of common stock issued and outstanding as of the last day of each fiscal
year.  The 93 Plan expires in August 2003.</P>
<P>As a result of the DynaVox merger in April 1998, Sunrise acquired another
stock option plan.  DynaVox originally adopted this stock option plan on March
12, 1993.  The plan originally covered 100,000 shares.  On April 28, 1998, the
plan was amended and restated by the Board of Directors.  As a result the number
of options that were outstanding under the plan and the number of options that
could be granted in the future will now be exercised for shares of Sunrise stock
in the merger ratio of 2.27 to 1.</P>
<P>Under all plans, the option price (exercise price) is equal to the closing
market price on the day prior to the grant date.  Options become exercisable in
four equal annual amounts, beginning one year after the grant date.  Unexercised
options expire up to ten years and one day after the date of grant.  As of July
2, 1999 there were 178,705 unissued common stock options reserved for future
grants under the 93 Plan.</P>
<P>Shares subject to option under both plans are summarized as follows:</P>

<pre>
                                          Years ended
                     -----------------------------------------------------------
                       July 2, 1999        July 3, 1998        June 27, 1997
                     ------------------- ------------------- -------------------
                                Weighted            Weighted            Weighted
                                Average             Average             Average
                                Exercise            Exercise            Exercise
                       Shares    Price     Shares    Price     Shares    Price
                     ---------- -------- ---------- -------- ---------- --------
Outstanding at
 beginning of year.. 1,697,196   $15.60  1,665,545   $15.48  1,465,275   $16.23
 Granted............   668,550     9.81    504,860    13.94    440,145    12.44
 Exercised..........   (52,800)    4.35   (166,373)    4.25    (41,850)   10.05
 Canceled...........  (294,725)   15.99   (306,836)   18.38   (198,025)   18.80
                     ----------          ----------          ----------
Outstanding at end
 of year............ 2,018,221   $13.91  1,697,196   $15.60  1,665,545   $15.48
                     ==========          ==========          ==========

Exercisable at end
 of year............   968,452   $16.35    917,305   $16.13    944,074   $14.38
                     ==========          ==========          ==========

Weighted average
 fair value of
 options granted
 during the year....              $3.98               $6.14               $6.29
                                ========            ========            ========
</pre>

<P>The following table summarizes information about stock options outstanding at
July 2, 1999:</P>

<pre>
                           Options Outstanding         Options Exercisable
                    --------------------------------- ---------------------

                                 Weighted
                                  Average   Weighted              Weighted
                                 Remaining   Average               Average
    Range of          Number    Contractual Exercise    Number    Exercise
   Exercise Prices  Outstanding    Life       Price   Exercisable   Price
------------------- ----------- ----------- --------- ----------- ---------
  $0.70 to  $12.00     797,270         8.0     $9.17     156,020     $6.86
 $12.38 to  $15.88     818,076         7.0     14.43     422,782     14.28
 $17.25 to  $21.88     230,025         3.6     19.61     216,800     19.73
 $23.50 to  $34.50     172,850         5.1     25.76     172,850     25.76
                    -----------                       -----------
                     2,018,221         6.8    $13.91     968,452    $16.35
                    ===========                       ===========
</pre>

<P>We apply APB 25 and related interpretations in accounting for grants to
employees under our stock option plans.  Because the exercise price of the
options equals the market price of the underlying stock on the date of grant, no
compensation cost has been recognized in our financial statements.  Pro forma
disclosures assuming compensation cost had been determined based on the fair
value of stock options at the grant dates consistent with the method of SFAS 123
are as follows:</P>

<pre>
                                                 Years Ended
                                        -----------------------------
                                         July 2,   July 3,  June 27,
                                          1999      1998      1997
                                        --------- --------- ---------
  Net income (loss):
    As reported........................   $4,498  ($12,010)  $12,114
    Pro forma..........................   $3,459  ($13,594)  $11,232

  Earnings (loss) per share:
    As reported........................    $0.20    ($0.55)    $0.55
    Pro forma..........................    $0.16    ($0.62)    $0.51
</pre>

<P>The fair value of options granted has been estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions for grants:
expected volatility of 50% for 1999, and 43% for 1998 and 1997 (based on daily
closing stock prices for the preceding four years); risk-free interest rates of
5.8% for 1999, 5.5% for 1998 and 6.4% for 1997; expected lives of 4.8 years and
no dividend yield for 1999, 1998 and 1997.  For purposes of the pro forma
disclosures, the estimated fair value of the options has been amortized to
expense over the vesting period of the options.  The pro forma disclosures apply
only to those options granted after June 28, 1995.</P>

<B><P>13.	NET INCOME (LOSS) PER SHARE</P>
</B><P>The following is a reconciliation of the denominators of the basic and
diluted EPS computations.</P>

<pre>

                                                 Years Ended
                                       --------------------------------
                                        July 2,    July 3,    June 27,
                                          1999       1998       1997
                                       ---------- ---------- ----------

Weighted average number of shares
   outstanding........................    22,195     22,001     21,656

Effect of dilutive stock options (1)..        58        --         277
                                       ---------- ---------- ----------
Weighted average number of shares
   assuming dilution..................    22,253     22,001     21,933
                                       ========== ========== ==========

</pre>

<SUP><P>(1)</SUP>   1,861,000, 1,033,000 and 854,000 potential
common shares were not used to compute diluted earnings per share in 1999, 1998
and 1997, respectively, as their effect was antidilutive.


<B><P>14.	SEGMENT INFORMATION</P>
</B><P>In 1999, we adopted Statement of Financial Accounting Standards No. 131
(SFAS 131) "Disclosure about Segments of an Enterprise and Related Information,"
which establishes annual and interim reporting requirements for our operating
segments and related disclosures about our products, services, geographic areas
and major customers.  Operating segments are determined based on the way
management measures performance and makes decisions about allocating
resources.</P>
<P>Our reportable segments are strategic business units that are structured by
distribution channels.  We have three reportable segments:  U.S. Rehabilitation
Products, European Rehabilitation Products and Institutional Products.  The U.S.
rehabilitation product segment consists of four manufacturing divisions which
produce and sell wheelchairs and seating systems, ambulatory and bath safety
aids, home respiratory devices and speech devices focused on the needs of the
disabled and elderly in the United States.  The European rehabilitation products
segment consists of three manufacturing divisions which produce wheelchairs and
seating systems, scooters, home stairlifts and daily living aids and six
distribution divisions that distribute these products as well as respiratory
products in Europe, the Middle East, Africa and Central Asia.  The institutional
product segment consists of three manufacturing divisions and globally produces
and sells healthcare beds and furniture, therapeutic mattresses and other
patient support surfaces and institutional bathing systems for patients and long
term residents in nursing homes, sub-acute facilities and assisted living
centers<I>.</P>
</I><P>The accounting policies of the segments are the same as those described
in the summary of significant accounting policies.  We evaluate performance
based on operating income.</P>
<P>We account for intersegment sales and transfers as if the sales or transfers
were to third parties, that is, at current market prices.</P>
<P>Summarized financial information concerning our reportable segments is shown
in the following table.  The "Other" column includes corporate related items
and, as it relates to operating income (loss), income and expense items not
allocated to reportable segments.</P>

<pre>
                               U.S.       Europe
                             Rehabili-   Rehabili-  Institu-
                              tation      tation     tional
                             Products    Products   Products    Other     Total
                            ----------- ----------- --------- --------- ---------
<strong>1999</strong>
Revenues...................   $363,577    $219,063   $77,608     $ --   $660,248
Operating income (loss)....     15,015      13,384    (4,314)   (1,282)   22,803
Total assets...............    334,648     179,979    89,418     3,145   607,190
Capital expenditures, net..      6,545       5,776     1,789     1,670    15,780
Depreciation and
  amortization.............    $12,029      $8,820    $3,958      ($57)  $24,750



<strong>1998</strong>
Revenues...................   $359,830    $217,790   $79,549     $ --   $657,169
Operating income (loss)....     17,584       5,196       670      (269)   23,181
Total assets...............    320,482     193,596    96,550     5,677   616,305
Capital expenditures, net..      5,926       5,877     4,949      (203)   16,549
Depreciation and
  amortization.............    $11,184      $8,037    $4,549      $180   $23,950



<strong>1997</strong>
Revenues...................   $342,879    $230,061   $83,821   $13,784  $670,545
Operating income (loss)....     19,383      16,115      (917)     (102)   34,479
Total assets...............    312,036     204,672   100,218    (1,195)  615,731
Capital expenditures, net..      6,902      18,592     1,803     1,951    29,248
Depreciation and
  amortization.............    $12,142      $8,618    $4,920      $580   $26,260

</pre>


<p><u>1998 Reconciliation of operating loss:</u>

<pre>

   Operating income for reportable segments... $23,181
   Unallocated re-engineering expenses........ (29,016)
                                              ---------
   Consolidated operating loss................ ($5,835)
                                              =========

</pre>


<P>The following is a summary of our revenues by principal product line:</P>

<pre>
                                          % of Revenues
                                    -----------------------------
                                      1999      1998      1997
                                    --------- --------- ---------
Wheelchairs....................           43%       42%       40%
Home respiratory products......           18%       19%       19%
Personal care products.........           21%       21%       24%
Beds and bathing systems.......           15%       16%       15%
Speech devices.................            3%        2%        2%

</pre>

<P>Financial information relating to our operations by geographic area is as
follows:</P>

<pre>

                                             Years Ended
                                    -----------------------------
                                     July 2,   July 3,  June 27,
                                      1999      1998      1997
                                    --------- --------- ---------
Revenues: (a)
  United States..................   $376,638  $375,942  $379,090
  United Kingdom.................     80,545    78,963    74,180
  Other foreign countries........    203,065   202,264   217,275
                                    --------- --------- ---------
  Total..........................   $660,248  $657,169  $670,545
                                    ========= ========= =========

Long-lived assets: (b)
  United States..................   $170,078  $177,022  $177,806
  United Kingdom.................     80,855    85,256    93,334
  France.........................     39,445    43,664    46,183
  Other foreign countries........     43,832    46,677    48,620
                                    --------- --------- ---------
  Total..........................   $334,210  $352,619  $365,943
                                    ========= ========= =========

</pre>

<SUP><P>(a)</SUP>   Revenues areas attributed to geographic areas
based on the location of the customer.</P>

<SUP><P>(b)</SUP>   With the exception of goodwill, long-lived assets are
attributed to geographic areas based on the location of the asset.  Goodwill is
reflected in the location of the business to which it relates.



<B><P>Major Customers</P>
</B><P>No single customer accounted for more than 10% of our consolidated
revenues.</P>


<B><P> 15. LITIGATION</P>

</B><P>We are a party to various legal proceedings arising in the ordinary
course of business.  We do not believe that the outcome of any of these actions
will have a material adverse effect upon our financial position or results of
operations.</P>
<P>In October 1995, we announced that our board of directors had formed a
special committee of outside directors to investigate possible accounting
irregularities at our Bio Clinic Corporation subsidiary.  Upon completion of our
board's internal investigation, we voluntarily restated our financial statements
for fiscal years 1994 and 1995.  Shortly after discovering the irregularities,
we replaced the management team at Bio Clinic and subsequently sold most of the
business in 1996.  We promptly reported this incident to the Securities and
Exchange Commission, which entered a formal order of private investigation.  We
cooperated fully with the Commission in their investigation, which was completed
with entry of a consent decree on February 25, 1999.  The Commission cited the
five responsible individuals formerly at Bio Clinic for securities law
violations.  However, the Commission did not charge the company or any of our
current management with any violations of the antifraud provisions of the
Securities Act, nor did it require the company to pay any monetary penalty.</P>


<p><B>16. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)</B>

<P>(In thousands, except per share data)</P>
<pre>

                          First    Second     Third     Fourth      Fiscal
                         Quarter   Quarter   Quarter    Quarter      Year
                        --------- --------- --------- ------------ ---------
         1999
Net sales.............  $164,795  $163,460  $169,715  $162,278     $660,248
Gross profit..........    51,577    50,904    49,748    47,265      199,494
Net income (loss).....     3,557     1,816     1,779    (2,654)       4,498
Basic income (loss)
 per share............     $0.16     $0.08     $0.08    ($0.12)       $0.20
Diluted income
 (loss)per share......     $0.16     $0.08     $0.08    ($0.12)       $0.20


         1998
Net sales.............  $155,032  $169,089  $164,415  $168,633     $657,169
Gross profit..........    50,959    53,127    52,313    49,139      205,538
Re-engineering
 expenses and
 merger costs.........     4,635     7,043     5,307    12,031       29,016
Net income (loss).....       869       928       (98)  (13,709)(1)  (12,010)
Basic income (loss)
 per share............     $0.04     $0.04     $0.00    ($0.62)(1)   ($0.55)
Diluted income
 (loss)per share......     $0.04     $0.04     $0.00    ($0.62)(1)   ($0.55)

</pre>

<SUP><P>(1)</SUP>	Included in our results for the fourth quarter
was an addition to our tax provision of $5.5 million to adjust our year-to-date
effective tax rate to 1.8% from 65.7% at the end of the third quarter.



<A NAME="partiii"></A>
<p align="center"><strong>
                                     PART III
</strong></p>


<A NAME="item10"></A>
<P><B>ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT</P>
</B><P>Information regarding our directors will be included under the caption
"Election of Directors" in our Definitive Proxy Statement for our upcoming
Annual Meeting of Stockholders and is incorporated herein by reference.
Information regarding our executive officers is included under a separate
caption in Part I hereof, and is incorporated herein by reference.</P>

<A NAME="item11"></A>
<B><P>ITEM 11.	EXECUTIVE COMPENSATION</P>
</B><P>Certain information regarding executive compensation will be set forth
under the caption "Compensation of Executive Officers" in our Definitive Proxy
Statement for our upcoming Annual Meeting of Stockholders.</P>


<A NAME="item12"></A>
<B><P>ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</P>
</B><P>Information regarding security ownership will be set forth under the
caption "Security Ownership of Certain Beneficial Owners and Management" in our
Definitive Proxy Statement for our upcoming Annual Meeting of Stockholders and
is incorporated herein by reference.</P>


<A NAME="item13"></A>
<B><P>ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</P>
</B><P>Information regarding related transactions will be set forth under the
caption "Certain Transactions" in our Definitive Proxy Statement for our
upcoming Annual Meeting of Stockholders and is incorporated herein by
reference.</P>

<A NAME="partiv"></A>
<p align="center"><strong>
                                     PART IV</A>
</strong></p>


<A NAME="item14"></A>
<B><P>ITEM 14.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K</P></B>

<OL TYPE="a">

<B><LI>(1)  Financial Statements</LI></OL></B>

<P>These documents are included in Part II, Section 8.</P>
<OL TYPE="a">

<B><LI>(2)  Financial Statement Schedules</LI></OL>

<OL TYPE="a">

<LI>(3)  Exhibits</LI></OL>

</B><P>Reference is made to the Index of Exhibits immediately preceding the
exhibits hereto, which index is incorporated herein by reference.</P>

<P>Schedule II -- Valuation and Qualifying Accounts for the years ended
July 2, 1999, July 3, 1998 and June 27, 1997.</P>

<P>All other financial statement schedules have been omitted because they are
not required or are not applicable, or the information is otherwise
included.</P>
<OL START=2 TYPE="a">

<B><LI>Reports on Form 8-K</LI></OL>

</B><P>There were no reports on Form 8-K filed during the fourth quarter of
fiscal year ended July 2, 1999.</P>


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>

<p align="right">
                                                                    SCHEDULE II
<p align="center"><strong>
                      SUNRISE MEDICAL INC. AND SUBSIDIARIES<br>
                        Valuation and Qualifying Accounts<br>
     Fiscal Years Ended July 2, 1999, July 3, 1998 and June 27, 1997<br>
                                 (In thousands)
</strong>

<pre>

                                           Additions
                                    ---------------------
                           Balance   Charged  Charged                  Balance
                             at     to costs     to                      at
                          beginning    and     other                   end of
       Description        of period expenses  accounts    Deductions   period
------------------------- --------- --------- ----------- ----------- ---------
1997
----
Allowance for doubtful
    receivables..........  $11,523     1,954   (3,302)(1)  (5,100)(2)   $5,075
Allowance for installment
    receivables..........   $1,756     1,586      125 (1)  (1,233)(2)   $2,234
Allowance for inventory
    obsolescence.........  $13,664     4,598   (1,033)(1)  (3,486)(3)  $13,743

1998
----
Allowance for doubtful
    receivables..........   $5,075     5,342      (52)(1)  (2,210)(2)   $8,155
Allowance for installment
    receivables..........   $2,234       898      --       (1,448)(2)   $1,684
Allowance for inventory
    obsolescence.........  $13,743     3,106      514      (2,384)(3)  $14,979

1999
----
Allowance for doubtful
    receivables..........   $8,155        44     (153)(1)  (3,075)(2)   $4,971
Allowance for installment
    receivables..........   $1,684     1,692      --       (1,667)(2)   $1,709
Allowance for inventory
    obsolescence.........  $14,979     1,968      276 (1)  (1,862)(3)  $15,361

 ---------------
</pre>


<SUP><P>(1)</SUP>	Represents foreign currency translation adjustment, amounts recorded on books of acquired
 subsidiaries at dates of acquisition, and Allowances related to businesses sold.</P>
<SUP><P>(2)</SUP>	Includes write-off of uncollectible accounts.</P>
<SUP><P>(3)</SUP>	Disposition of items previously reserved.</P>


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>

<p align="center"><strong>

                                   SIGNATURES</strong></P>

<P>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
our behalf by the undersigned, thereunto duly authorized.</P>

<P>
<TABLE border=0 cellPadding=0 cellSpacing=0 width="100%">
  <TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD></TR>
  <TR vAlign=top>
    <TD> </TD>
    <TD align=left>
SUNRISE MEDICAL INC.
</TD></TR></TABLE>

<P>
<TABLE border=0 cellPadding=0 cellSpacing=0 width="100%">
  <TR>
    <TD width="38%"></TD>
    <TD width="2%"></TD>
    <TD width="60%"></TD></TR>
  <TR vAlign=top>
    <TD> </TD>
    <TD>By: </TD>
    <TD align=left>
/s/ Ted N. Tarbet
</TD></TR></TABLE>


<TABLE border=0 cellPadding=0 cellSpacing=0 width="100%">
  <TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD></TR>
  <TR vAlign=top>
    <TD> </TD>
    <TD align=left>
      <HR align=left SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD> </TD>
    <TD align=left>
Ted N. Tarbet
</TD></TR>
  <TR vAlign=top>
    <TD> </TD>
    <TD align=left><I>
Senior Vice President and Chief Financial Officer
</I></TD></TR>
  <TR vAlign=top>
    <TD> </TD>
    <TD align=left><I>(Principal Financial and Accounting
  Officer)</I></TD></TR></TABLE></P>

<p>Date: October 15, 1999

<p>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 indicated on October 15, 1999.

<pre>
          Signature                             Title
-----------------------------  ----------------------------------------
/s/ Murray H. Hutchison        Chairman, president and chief executive
-------------------------      officer (principal executive officer)
    Murray H. Hutchison


/s/ Ted N. Tarbet              Senior vice president and chief financial
-------------------------      officer (principal financial officer)
    Ted N. Tarbet


/s/ John M. Radak              Vice president and controller
-------------------------      (principal accounting officer)
    John M. Radak


/s/ J. R. Woodhull             Director
-------------------------
    J. R. Woodhull


/s/ Joseph Stemler             Director
-------------------------
    Joseph Stemler


/s/ Lee A. Ault III            Director
-------------------------
    Lee A. Ault III


/s/ Michael N. Hammes          Director
-------------------------
    Michael N. Hammes


/s/ William L. Pierpoint       Director
-------------------------
    William L. Pierpoint
</pre>

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>

<P ALIGN="CENTER"><strong>INDEX OF EXHIBITS</strong></P>

<pre>
Exhibit
Number                            Description
------- ----------------------------------------------------------------
  3.1   Certificate of Incorporation of the company and amendments
        thereto. (a)

  3.2   Amendment to Certificate of Incorporation of we as set forth
        under the caption "Article III - Liability of Director to the
        Corporation." (b)

  3.3   Second Amended and Restated Bylaws of the company.(o)

  3.4   Amendment to Certificate of Incorporation of we as to the number
        of authorized shares. (c)

  4.1   Amended and Restated Shareholders' Rights Agreement dated May 16,
        1997. (j)

  4.2   Amendment to Amended and Restated Shareholders' Rights Agreement. (o)

  10.1  Amended and Restated Stock Option Plan for Key Associates. (d)

  10.2  1993 Stock Option Plan. (e)

  10.3  Special Bonus Plan (f)

  10.4  Agreement for the Purchase of Certain Stock of Homecare
        Holdings, Inc. dated as of June 29, 1993 among Sunrise Medical
        Inc., Homecare Holdings, Inc., and the selling shareholders
        listed therein. (g)

  10.5  Asset Purchase Agreement for the Purchase of Certain Assets of
        Jay Medical, Ltd. (h)

  10.6  Agreement for the Purchase of Shares of S.E.P.A.C., Corona
        S.A., Tecktona Bois S.A., Tecktona Sante S.A., and Sci La
        Planche by Homecare Holdings France S.A. (i)

  10.7  Form of Change in Control Agreements dated June 27, 1997
        between Sunrise Medical Inc. and certain employees.(k)

  10.8  Third Amended and Restated Credit Agreement and Waiver dated as
        of August 28, 1997 among Sunrise Medical, Inc. and certain
        subsidiary borrowers and guarantors, Bank of America as agent
        and other lenders.(l)

  10.9  Note Purchase Agreement dated as of October 1, 1997 for $50
        million 7.09% Series A Senior Notes Due October 28, 2004 and
        for $50 million 7.25% Series B Notes Due October 28, 2007.(l)

  10.10 1998 Management Incentive Bonus Plan. (m)

  10.11 Amended and Restated Sentient/Sunrise Stock Option Plan. (m)

  10.12 Supplemental Executive Retirement Plan. (m)

  10.13 Second Amendment to the Third Amended and Restated Credit
        Agreement and Waiver dated as of August 28, 1997 among Sunrise
        Medical, Inc. and certain subsidiary borrowers and guarantors,
        Bank of America as agent and other lenders. (n)

  10.14 Second Amended and Restated 1993 Stock Option Plan. (p)

  10.15 Third Amendment to the Third Amended and Restated Credit
        Agreement and Waiver dated as of August 28, 1997 among Sunrise
        Medical, Inc. and certain subsidiary borrowers and guarantors,
        Bank of America as agent and other lenders.

  10.16 Fourth Amendment to the Third Amended and Restated Credit
        Agreement and Waiver dated as of August 28, 1997 among Sunrise
        Medical, Inc. and certain subsidiary borrowers and guarantors,
        Bank of America as agent and other lenders.

  10.17 Fifth Amendment to the Third Amended and Restated Credit
        Agreement and Waiver dated as of August 28, 1997 among Sunrise
        Medical, Inc. and certain subsidiary borrowers and guarantors,
        Bank of America as agent and other lenders.

  21    List of Subsidiaries.

  23    Consent of Independent Auditors.

  27    1999 Financial Data Schedule.

</pre>
<p>------------------


<BLOCKQUOTE>
<OL TYPE="a">


<LI> Incorporated herein by reference to our Registration Statement No. 2-86314.
<LI> Incorporated herein by reference to our 1987 Definitive Proxy Statement.
<LI> Incorporated herein by reference to our Form 10-Q for the quarter ended January 1, 1993.
<LI> Incorporated herein by reference to our 1990 Definitive Proxy Statement.
<LI> Incorporated herein by reference to our 1993 Definitive Proxy Statement.
<LI> Incorporated herein by reference to our Form 10-K for the fiscal year ended July 3, 1992.
<LI> Incorporated herein by reference to our Form 8-K dated June 29, 1993.
<LI> Incorporated herein by reference to our Form 8-K dated September 16, 1994.
<LI> Incorporated herein by reference to our Form 8-K dated April 7, 1995.
<LI> Incorporated herein by reference to our Form 8-K dated May 16, 1997.
<LI> Incorporated herein by reference to our Form 10-K for the year ended June 27, 1997.
<LI> Incorporated herein by reference to our Form 10-Q for the quarter ended September 26, 1997.
<LI> Incorporated herein by reference to our Form 10-K for the fiscal year ended July 3, 1998.
<LI> Incorporated herein by reference to our Form 10-Q for the quarter ended October 2, 1998.
<LI> Incorporated herein by reference to our Form 8-K dated February 11, 1999.
<LI> Incorporated herein by reference to our Form 10-Q for the quarter ended April 2, 1999.

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