<PAGE>

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                          SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

                                      FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                       FOR THE FISCAL YEAR ENDED JUNE 27, 1997

                                          OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   
EXCHANGE ACT  OF 1934   For the transition period from            to 
                                                       -----------  ----------

                              Commission File No.0-12744   

                                 SUNRISE MEDICAL INC.
                (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                    DELAWARE                             95-3836867
          (STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER
         INCORPORATION OR ORGANIZATION)              IDENTIFICATION NO.)

                            2382 FARADAY AVENUE, SUITE 200
                                  CARLSBAD, CA 92008
                       (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
         REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (760) 930-1500

--------------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
     TITLE OF CLASS                NAME OF EACH EXCHANGE ON WHICH REGISTERED
--------------------------------------------------------------------------------
Common Stock, par value $1.00                New York Stock Exchange
Common Stock Purchase Rights                 New York Stock Exchange
--------------------------------------------------------------------------------

Securities registered pursuant to Section 12(g) of the Act:  None

     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/

     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  / /

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant:  $255,950,000 as of August 29, 1997.

     On August 29,  1997, the registrant had 19,304,624 outstanding shares of $1
par value common stock.

                         DOCUMENTS INCORPORATED BY REFERENCE
        DOCUMENTS                                     FORM 10-K REFERENCES
        ---------                                     --------------------
Portions of the company's Definitive Proxy       Part III, Items 10-13 (Page 50)
Statement for its Annual Meeting of
Stockholders to be held on November 13, 1997


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<PAGE>

                                 SUNRISE MEDICAL INC.

                                      FORM 10-K

                       FOR THE FISCAL YEAR ENDED JUNE 27, 1997

                                        INDEX
                                                                           PAGE
                                                                            ----

                                        PART I

Item 1.   Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
Item 2.   Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 3.   Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 4.   Submission of Matters to a Vote of Security Holders . . . . . . . 13
  --      Executive Officers of the Company . . . . . . . . . . . . . . . . 14



                                       PART II

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . 16
Item 6.   Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 17
Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations . . . . . . . . . . . . . . . . . . . . . . 18
Item 8.   Financial Statements and Supplementary Data . . . . . . . . . . . 29
Item 9.   Disagreements on Accounting and Financial Disclosure. . . . . . . 29



                                       PART III

Item 10.  Directors and Executive Officers of the Registrant. . . . . . . . 51
Item 11.  Executive Compensation. . . . . . . . . . . . . . . . . . . . . . 51
Item 12.  Security Ownership of Certain Beneficial Owners and Management. . 51
Item 13.  Certain Relationships and Related Transactions. . . . . . . . . . 51



                                       PART IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K . 52
  --      Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54


                                          1
<PAGE>

                                        PART I

ITEM 1.  BUSINESS

    Sunrise Medical Inc. ("Sunrise" or the "company") is a worldwide leader in
the design and manufacture of medical products used in two attractive growth
markets -- home healthcare and extended care.  Sunrise maintains number one or
number two global market share positions for many of its products.  The
company's core product lines include custom manual and power wheelchairs and
related seating systems; ambulatory, bathing and lifting products; home
respiratory devices; healthcare beds and furniture; and therapeutic mattresses
and other patient support surfaces.  Headquartered in Carlsbad, California, the
company is publicly traded on the New York Stock Exchange under the ticker
symbol "SMD".

    The company manufactures its products in the United States, Mexico, the 
United Kingdom, Germany, France and Spain and distributes them through 
company-owned sales and distribution organizations in those countries as well 
as most of the rest of Europe, Canada and Australia.  It also distributes 
through independent importers/distributors in more than 80 other countries.  
International sales accounted for 44% of total company revenues in the fiscal 
year ended June 27, 1997, up from 27% in fiscal 1992.

    Sunrise was founded in 1983 to take advantage of the shift in patients from
hospitals to alternate site settings.  The company believes that a number of
factors will contribute to continued worldwide growth in the homecare and
extended care markets, including:  (i) the aging of the population; (ii) greater
utilization of lower-cost, alternate-site treatment; (iii) patient preference
for home healthcare; (iv) advances in technology facilitating improved
outpatient care; (v) greater emphasis on integrating the disabled into the
community; and (vi) the increasing popularity of wheelchair sports and
recreational activities among the disabled.

    The company's long-term strategic objective, which it calls its "strategic
intent," is to achieve global market leadership positions in homecare and
extended care products.  Sunrise is already one of the largest firms in its
industry internationally and is a leader in most of its U.S. product markets as
measured by industry sales.  The company seeks to achieve global market
leadership through five growth strategies:

-   MARKET FOCUS.  Offer a full range of products and services to target 
    customer groups -- home care providers and extended care institutions
    thereby leveraging the company's strong salesforces and distribution
    networks.  Provide an exceptional level of customer service, including 
    fast delivery, convenient financing, user friendly electronic commerce, 
    and educational support programs.

-   PRODUCT SUPERIORITY.  Maintain leadership in product innovation by 
    applying the latest technologies to solve patient problems associated 
    with disabilities, respiratory ailements, and alternate site care.

-   COST LEADERSHIP.  Enhance the company's Pursuit of Excellence program, 
    with its emphasis on continuous improvement in manufacturing methods, 
    product cost, quality metrics, and asset management disciplines.


                                          2
<PAGE>

    Improve margins through centralized purchasing, plant consolidations, 
    administrative streamlining, and shifting production to lower labor cost 
    countries such as Mexico and Spain.

-   GLOBAL EXPANSION.  Extend domestic market leadership internationally
    through an aggressive export sales function.  Lead the industry in global 
    consolidation, establishing company-owned sales/distribution organizations 
    in major countries around the world. Leverage competitive advantages in 
    product technology, manufacturing capacity, distribution coverage, and 
    management systems to capitalize on worldwide market growth trends.

-   STRATEGIC ACQUISITIONS.  Enhance core businesses by acquiring proprietary
    technologies and product lines that yield immediate synergy or help enter
    fast growing market niches.

RE-ENGINEERING PROGRAM

    In recent years government budgetary pressures and the rise of managed care
organizations have dramatically changed the U.S. healthcare marketplace, causing
homecare products to be viewed more generically and putting downward pressure on
prices.  Further, home medical equipment providers have been consolidating into
a number of national chains and buying groups, who have used their new
purchasing power to intensify this pressure.

    In the early 1990's, Sunrise operated with a decentralized structure, built
around product-specific salesforces and management teams.  As the new industry
reality emerged, the company implemented a  progression of consolidation 
steps,announced publicly as follows:

    JANUARY 1995:  Formation of SunMed Service ("SMS") to unify order entry,
customer service, and physical distribution of standard products in the U.S.
homecare market through a network of eight distribution centers.  SMS was
launched in February 1996.

    JANUARY 1996:  Integration of six U.S. homecare salesforces into three;
merger of SMS into Guardian division; merger of Jay and Quickie divisions; and
headcount reductions of 6% across all Sunrise divisions.

    JUNE 1996:  Consolidation of four U.S. institutional product divisions into
the Continuing Care Group; consolidation of four French subsidiaries; merger of
two German subsidiaries; and establishment of a Mexican maquiladora factory in
Tijuana to manufacture personal care products.  

    JANUARY 1997:  Merger of five U.S. homecare divisions into the Home 
Healthcare Group, with a single salesforce, launched July 1, 1997; 
consolidation of four U.K. manufacturing divisions into one plant, with the 
last move to be completed by October 1997; and conversion to a common 
enterprise resource planning hardware/software platform in North America and 
in Europe.

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<PAGE>

    This re-engineering program has spanned three fiscal years and is expected
to be completed by the end of calendar 1998.  Most of the remaining financial
impact will be in fiscal 1998, when pre-tax expenses estimated at $13 million
will be incurred, primarily costs of conversion to common computer software
packages in North America and in Europe.  Other re-engineering costs include the
relocation of production activities and personnel and the disposition of
facilities and equipment.

HOME HEALTHCARE GROUP

    The  Home Healthcare Group ("HHG") was consolidated into a single business
in fiscal 1997.   Headquartered in Longmont, Colorado, HHG focuses on  the
outpatient equipment needs of the elderly and the disabled. Headquarters
functions include sales, marketing, finance, information systems, customer
service, distribution, human resources and SunMed Finance, the company's dealer
installment financing division.  Product development and manufacturing
activities are assigned to three product divisions, each with a global market
perspective:  Mobility Products (wheelchairs, including custom, power, pediatric
and standard wheelchairs, and seating and positioning systems); Personal Care
Products (standardized medical products designed to assist in walking, bathing,
toileting, patient lifting and patient mobility); and Respiratory Products
(aerosol, oxygen and sleep therapy products).  The products of the three
divisions are sold through a single nationwide salesforce that calls on a
network of home medical equipment ("HME") providers, rehabilitation technology
suppliers, and drug wholesalers.  Included within HHG are the company's
distribution organizations in Canada and Australia, and its export sales
activities throughout the Americas and the Pacific Rim.  Sales of the Home
Healthcare Group were $282 million, up 7%, and accounted for 43% of the
company's total sales in 1997.

MOBILITY PRODUCTS DIVISION

    The Mobility Products Division's primary product lines are QUICKIE custom
wheelchairs and JAY seating systems.   The QUICKIE range includes manual
ultralight rigid and folding chairs, standard lightweight chairs, pediatric
positioning chairs, power chairs, and wheelchairs designed for racing,
basketball, tennis, and other disabled sports.  U.S. wheelchair plants are
located in Fresno, California and Avon Lake, Ohio.  QUICKIE brand products are
also manufactured by the company's U.K. subsidiary for European customers.  JAY
wheelchair cushions and modular positioning provide flexible, cost-effective
solutions to the seating and postural problems of wheelchair users with special
needs.  The cushions and pads are filled with JAY FLOW, a patented fluid
material designed and manufactured at the company's facility in Longmont,
Colorado.  JAY products are designed to fit all major brands of wheelchairs.

    Sunrise expanded its product offering in the pediatric wheelchair market
with its acquisition of Kid-Kart, Inc. in December 1996.  Kid-Kart designs,
manufactures and markets strollers, push wheelchairs, positioning systems, and
other adaptive medical


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<PAGE>


equipment for the pediatric rehabilitation market, including units designed to
be transportable by bus.

PERSONAL CARE PRODUCTS DIVISION

    The Personal Care Products Division features the professional line of 
GUARDIAN brand patient aids, marketed through HME providers, and a line of 
consumer-packaged personal care products under the CAREMATE brand name, which 
is distributed through drug stores, home centers, department stores and 
specialty retailers.  During 1997 production of certain products was shifted 
from the division's main plant in Simi Valley, California, to a leased 
facility in Tijuana, Mexico. Additional production will be shifted upon 
completion of a larger factory now under construction.

RESPIRATORY PRODUCTS DIVISION

    The Respiratory Products Division manufactures at plants in Somerset,
Pennsylvania and Ft. Pierce, Florida.  Product categories include a broad range
of aerosol, oxygen and sleep therapy home respiratory products under the
DEVILBISS brand name.  Aerosol devices convert liquid medicine into airborne
particles to treat breathing disorders such as asthma and cystic fibrosis.
Oxygen concentrators are electrical devices that enrich normal room air up to
93% purity for patients suffering from chronic obstructive lung diseases such as
emphysema and bronchitis.   Portable liquid and gas oxygen systems allow oxygen
users to leave their homes and resume normal activities for up to eight hours at
a time.  The PULSEDOSE proprietary demand oxygen delivery devices, using a given
supply of liquid or gaseous oxygen, can triple the range of a patient.  Sunrise
also manufactures the DEVILBISS HORIZON line of sleep products, which alleviate
adult obstructive sleep apnea by supplying continuous positive airway pressure
("CPAP") while patients are sleeping.  DEVILBISS products are distributed
globally, with European manufacturing support provided in the U.K. by Sunrise
Europe.

CONTINUING CARE GROUP

    The Continuing Care Group ("CCG"), with headquarters in Stevens Point,
Wisconsin,  manufactures products that foster ease of care for recovering
patients and long term residents in nursing homes, subacute facilities,
hospitals and assisted living centers. Product lines include healthcare beds,
nursing home furniture, patient support surfaces, patient lifters and
specialized institutional bathing systems. CCG's products are sold through two
salesforces, one focused on extended care and the other on hospitals.  In
addition, homecare beds and therapeutic mattresses are sold through the HHG
salesforce to homecare dealers.  Foreign sales of institutional products are
made through Sunrise's international export sales and distribution network. CCG
sales were $93 million in 1997, down 11%, and represented 14% of total company
sales.


                                          5
<PAGE>


    The JOERNS product line consists of healthcare beds, patient room 
furniture, overbed tables, dining room and commons area furnishings.  BIO 
CLINIC support surfaces cover a range of cost-effective products  for the 
prevention and treatment of pressure sores--dermal wounds which can afflict 
immobilized patients.  This broad product line includes: portable low air 
loss mattress systems; specialty mattresses; foam overlays; and foam 
operating room positioners.  BIO CLINIC disposable products are sold through 
medical/surgical distributors, who supply them to their hospital and nursing 
home customers. HOYER patient lifters and slings are used in institutional 
and home settings to lift and transfer disabled patients between bed, 
bathtub, wheelchair and automobile.  PARKER  bathing systems are specialized 
bathtubs that recline or elevate with lifters designed specifically for a 
nursing home.

    In fiscal year 1997, Sunrise formed CCG by consolidating into a single
business what were formerly the Joerns, Bio Clinic, Hoyer and Parker U.S.
divisions. This group integrates the domestic manufacturing, marketing and
distribution of all Sunrise products aimed at nursing homes and hospitals.  The
Bio Clinic manufacturing facility in Ontario, California was closed and the move
to Stevens Point completed in June 1997.  In addition, CCG manufactures patient
lifters in Oshkosh, Wisconsin and foam products in Baldwyn, Mississippi.

SUNRISE MEDICAL EUROPE

    Sunrise manufactures products in four European countries (United Kingdom,
Germany, Spain and France) and also owns distribution companies in the
Netherlands, Norway, Sweden, Italy and Switzerland that distribute the company's
products into these and surrounding countries. Sales in Europe have grown
significantly in each of the last four years, reflecting expansion of the
company's core businesses as well as a number of acquisitions.  European sales
were $268 million, up 5%, and accounted for 41% of total company sales in 1997.

    In the United Kingdom, Sunrise manufactures and markets five major product
lines: wheelchairs, personal care products, patient lifters, respiratory
products and bathing systems.  The wheelchair product line includes QUICKIE
custom manual wheelchairs, POWERTEC power wheelchairs, STERLING electric
scooters and MINIVATOR home stairlifts. COOPERS canes, walkers, bath safety
products and aids for daily living are sold through homecare dealers and retail
drugstores. DEVILBISS oxygen concentrators are rented through the U.K. national
health service and exported throughout Europe.  The OXFORD line of Sunrise
lifting systems for patient transfers covers a broad range of applications in
both institutional and home care use.  PARKER specialized bathing systems are
sold in the U.K., France and the U.S.  In recent years exports have increased
steadily to more than 40 countries, including, most importantly, the company's
European distribution network.

    In Germany, Sunrise manufactures and markets the SOPUR line of custom
lightweight manual, power, pediatric and performance wheelchairs.  Other Sunrise
homecare products such as JAY seating systems, DEVILBISS oxygen concentrators
and


                                          6
<PAGE>


Spanish manufactured standard wheelchairs are also distributed by this
organization to homecare dealers throughout Germany and Austria.

    The company's Spanish subsidiary, located in Bilbao, manufactures URIBARRI
standard wheelchairs and patient aids, providing Sunrise with a low-cost
European manufacturing base.  URIBARRI wheelchairs and patient aids are sold
throughout Spain and exported to many countries, including Sunrise divisions in
Europe and Australia.

    In France, Sunrise manufactures nursing home beds and furniture in Tours
under the CORONA and TEKTONA SANTE brands.  CORONA products are marketed to
French nursing homes and hospitals through a direct salesforce, while homecare
products are sold through a nationwide network of home medical equipment
dealers.  Sunrise France also distributes QUICKIE and SOPUR brand wheelchairs,
the DEVILBISS line of respiratory products, and PARKER bathing systems.

    In fiscal 1997 Sunrise announced a series of consolidations of its European
operations within each major country in order to eliminate administrative
redundancies, capitalize on economies of scale, and enhance cost efficiencies.
In France, four separate operating locations were consolidated in Tours under a
single management structure.  In Germany, the distribution and manufacturing
activities were integrated into the SOPUR business in Malsch.  In the U.K.,
Sunrise purchased an existing 370,000 square-foot manufacturing facility in
Wollaston (Birmingham area) England, refurbished it, and began relocating four
factories to the new site (wheelchairs, patient lifters, personal care products
and respiratory products). These factory moves, involving approximately 1,150
jobs, are expected to be completed in October 1997. The conversion of European
computer systems onto a common hardware/software platform is expected to be
completed by the end of fiscal 1998.

SALES AND DISTRIBUTION

    Home Healthcare Group products are sold through a nationwide salesforce
that calls on a network of 12,000 HME providers, rehabilitation technology
suppliers and drug wholesalers.  Special attention is being directed to larger
regional and national accounts, including the deployment of incentive programs
that benefit customers who purchase from multiple Sunrise divisions.  HHG offers
consolidated customer service, order entry, distribution and credit functions
for standard products sold to the domestic HME market.  Order processing centers
are maintained in California and Pennsylvania, and eight regional distribution
centers are located throughout the United States.  Large national accounts and
independent homecare providers are able to purchase standard products across all
Sunrise divisions by placing a single order; products are shipped the next day
from one of the regional distribution centers.  However, customized products,
such as most QUICKIE wheelchairs and many JAY cushion products, continue to be
ordered directly and shipped from those factories.


                                          7
<PAGE>


    Continuing Care Group sells its products directly to healthcare institutions
through its own nationwide salesforce. In the case of capital equipment such as
beds and bathing systems, company account representatives demonstrate and sell
products directly to nursing homes and other continuing care institutions where
clinicians such as directors of nursing play a key role in product evaluations
and ultimate decision making.  In the case of hospital disposable products, such
as EGGCRATE mattress overlays, a second CCG sales force calls on hospital
influencers such as enterostomal therapy (E.T.) specialists to stimulate demand,
but products are sold and distributed through medical/surgical distributors.
Contracts with  hospital groups and group purchasing organizations also play an
important role in purchasing decisions.

    Sunrise products are marketed in Europe through distribution channels that
resemble U.S. patterns.  Home medical equipment products are distributed through
independent medical equipment dealers in most countries, although, under
Scandinavia's state-controlled healthcare systems, the local technical aid
centers perform a similar function.  The company has its own salesforces calling
on these distribution channels in all major countries of Western Europe.
Institutional products are sold direct to nursing homes and hospitals through
the company's own salesforces in the U.K., France and several other countries.


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<PAGE>

    Two separate export sales teams represent all Sunrise product lines in
their respective global regions. They are responsible for developing import
distributor relationships in all countries where Sunrise products are sold.  One
team, part of HHG, covers the Americas and Pacific Rim, while the second team,
part of Sunrise Medical Europe, covers Europe, the Middle East, Africa, and
Central Asia.

COMPETITION

    Sunrise encounters significant domestic and foreign competition from a 
number of well-established manufacturers in each of its product lines. 
Sunrise's primary competitors in the U.S. are Invacare Corporation, Nellcor 
Puritan Bennett, Graham-Field and Hillenbrand Industries.  Invacare competes 
with Sunrise in almost every product line and market.  On September 8, 1997, 
Graham-Field, annouced an agreement to acquire Fugua Enterprises, another 
major competitor. In the European homecare market, Meyra Ortopedia (Germany) 
and Scandinavian Mobility are the most important competitors.

    Sunrise competes primarily on the basis of its product features and 
performance, the range of products offered, the quality of its customer 
service and delivery, the competitiveness of  its prices, the technical 
expertise of its salesforces, and the strength of its distribution operations 
and independent dealer network. In certain countries and product markets, 
including the United States, the company faces competition from other 
manufacturers that have larger market shares, more extensive financial 
resources or other competitive advantages. 

MANUFACTURING

    The company operates 17 manufacturing plants in the U.S., Mexico, and
Western Europe.  Manufacturing processes include metal fabrication,
welding/brazing, injection molding, circuit board assembly, powder coating,
final assembly, life testing and quality assurance. Certain components used in
the company's products, such as small motors and electronic controls, are
manufactured by third parties.  Although the company purchases most of its raw
materials, components and supplies from a number of different vendors, it does
procure a few components and materials on a single-source basis.  If one of
these single-source vendors failed to deliver components as planned, the company
would be temporarily unable to ship certain of its products.  During the past
few years, prices paid by the company for certain raw materials, such as
aluminum, foam and wood, have fluctuated widely. When prices have increased, the
company has not always been able to pass along the full effect of such increases
to its customers. In addition, its manufacturing margins have recently been hurt
by the strengthening of the British pound, since a major portion of Sunrise 
Europe sales come from products manufactured in the U.K. and sold on the 
Continent.

    The company has utilized a variety of operational tools such as
"just-in-time" manufacturing, demand flow technology, value engineering, total
quality management, target costing, and its Associate suggestion system to
reduce product costs, increase quality, shorten delivery cycles and improve
asset turnover. These complementary techniques are all part of the company's
Pursuit of Excellence program.  All Sunrise factories have earned ISO 9001
certification, the international standard for quality assurance in design and
manufacturing.


                                          9
<PAGE>

RESEARCH AND DEVELOPMENT

    Sunrise conducts research and development at each of its manufacturing
divisions.  For the year ended June 27, 1997, the company spent $16.5 million on
research and development, or 2.5% of sales, compared to $15.5 million, or 2.3%
of sales, in the prior year.  Each operating unit establishes annual objectives
for introducing new products, and the company tracks progress against those
objectives on a regular basis.  The company introduced more than 100 new
products in each of the last two fiscal years.

PATENTS AND TRADEMARKS

    Sunrise currently holds patents associated with certain existing products 
and has filed applications for additional patents covering certain of its 
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 its current or future 
market position. The company relies primarily on product quality and 
features, strong marketing and distribution networks, competitive prices, and 
responsive customer service to protect and improve its competitive positions.

    This annual report discusses many of the brands and trademarks owned and 
used by Sunrise and its subsidiaries.  For ease of reading, these brands have 
been indicated in capital letters, and trademark and registration 
designations have been omitted.

WARRANTY

    The company's products are generally sold with limited warranties for
periods of up to five years.  Customers may also purchase extended warranties on
certain products.  Some components of the company's wheelchair products have a
lifetime warranty. The expected warranty expense associated with each product
sold is booked at the time of sale, and the adequacy of those warranty reserves
is reviewed regularly.

GOVERNMENT FUNDING AND REGULATION

    The healthcare industry is affected by extensive government funding and
regulation at the federal and state levels.

    MEDICARE AND MEDICAID. Medicare is a federally funded health insurance
program administered by private insurance companies providing health insurance
coverage for persons 65 or older and certain 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 certain financially and medically needy persons regardless of age.  These
programs provide reimbursement to homecare providers for rentals and sales of
medical


                                          10
<PAGE>

equipment and related supplies.  Medicare generally pays 80% of the allowable
rate of reimbursement for home medical equipment items, while Medicaid generally
pays 100%. 

    The company estimates that approximately 21% of its 1997 sales were 
ultimately funded by these U.S. government programs. While the company itself 
is not a provider under Medicare or Medicaid, its products are sold to 
homecare dealers, nursing homes and hospitals that are providers under these 
programs and do depend upon Medicare and Medicaid reimbursement for a portion 
of their revenue. Changes in Medicare/Medicaid regulations can adversely 
impact the company's revenues and collections indirectly by reducing the 
reimbursement rate received by HME 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 the company's products sold through 
this channel.

    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. The company has made
special efforts in recent years to allocate more of its new product engineering
dollars to lower cost, more generic products favored by managed care and
Medicare/Medicaid programs.

    The recently passed Balanced Budget Act of 1997 will reduce reimbursement 
for oxygen concentrator rentals by 30% over two years, beginning January 1, 
1998.  Domestic sales of oxygen concentrators accounted for approximately 4% 
of the company's sales in 1997, and a lesser percentage of gross profit.  
Other features of the new law, such as the creation of a separate 
reimbursement category for portable oxygen products and the addition of a 
patient upgrade capability using personal funds, are expected to have a 
favorable impact on the sale of certain homecare products. 

    FDA REGULATION.  Medical products manufactured by the company in the U.S.
are subject to regulation by the U.S. Food and Drug Administration ("FDA"). Most
such medical devices must be the subject of device listings filed with the FDA,
and medical device manufacturers must be registered. Certain products require
clearance by the FDA prior to marketing and distribution in the United States.
Delays in receiving such approval can adversely affect the company's ability to
introduce new products on a timely basis and impact the company's results of
operations and financial condition.  During the last two years, such delays have
slowed new product introductions and, in a number of cases, have led to their
initial marketing overseas in advance of the United States. 

EMPLOYEES (ASSOCIATES)

    The company employed 4,254 full-time Associates worldwide as of June 27,
1997.  Approximately 400 Associates at two factories in the United States are
covered by collective bargaining agreements that expire in June 1998 and 2002. 
In Europe, 236 Associates in the


                                          11
<PAGE>

United Kingdom and 142 in Germany are covered by national union arrangements.
The company has not experienced a strike, work stoppage or labor disturbance
during its 14-year history. The company believes that its labor relations are
good.  Sunrise refers to its employees as Associates.

BACKLOG

    Sunrise's backlog of firm orders at June 27, 1997 was approximately $39
million, compared to $44 million at June 28, 1996.  Approximately $16 million in
1997 and $20 million in 1996 represented orders for patient room beds and
furnishings, the one portion of Sunrise's business for which backlog is believed
to be a meaningful predictive factor because of the long order lead times in
this market.  Generally, Sunrise manufactures the balance of its products to its
forecast of near-term demand, shipping immediately from stock, or else produces
customized products based on actual orders received and ships within a short
period thereafter. As a result, Sunrise does not have a substantial backlog for
these products. Management does not believe that its overall backlog at any
particular time is a very meaningful indicator of future sales levels.

WORKING CAPITAL REQUIREMENTS

    The company does not maintain inventory of its products for a significant
period of time (see "Backlog"). Most of the company's 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.
The company  maintains a larger stock of those component parts which require
longer lead times to obtain from suppliers to minimize the risk of extending
time periods to fulfill product orders. Most of the company's sales are made on
standard terms requiring  payment by the customer within 30 days of delivery.
Some sales are made on extended terms on a selective basis. Certain customers
elect to finance their purchases with installment note contracts offered by the
company's captive finance subsidiary.  The company occasionally accepts products
for replacement upon customer request. However, returns for credit or refund
have not been a material aspect of the company's business.

FOREIGN OPERATIONS

    Sunrise has foreign subsidiaries with manufacturing and distribution
operations in the United Kingdom, France, Germany, Spain and Mexico. In
addition, company-owned sales/distribution companies are located in Canada,
Australia, the Netherlands, Norway, Sweden, Switzerland and Italy. All of
Sunrise's manufacturing and distribution facilities are located in industrially
developed areas where qualified labor and material supply have been readily
available at economic rates.

ITEM 2.  PROPERTIES

    Sunrise's  corporate headquarters office is located in Carlsbad,
California, and comprises approximately 21,000 square feet of leased space that
Sunrise occupies under a lease expiring in


                                          12
<PAGE>

2004. Sunrise conducts its U.S. operations from 12 leased facilities (totaling
approximately 962,000 square feet) under leases with expiration dates ranging
from 1997 through 2008, and also operates factories using four company-owned
facilities totaling approximately 411,000 square feet.

    For its international operations, Sunrise leases 35 facilities in Europe,
Canada and Australia (totaling approximately 321,000 square feet) under leases
with expiration dates extending through 2017, together with 10 company-owned
facilities in Europe with approximately 835,000 square feet.  The number of
facilities will decline as consolidations of operations in the U.K., France and
Germany are completed.

    Sunrise's facilities are used primarily for manufacturing, distribution and
administration. Sunrise has options to renew a number of its leases, as well as
purchase options on certain leased facilities. Management believes that its
facilities are adequate for  Sunrise's current needs.

ITEM 3.  LEGAL PROCEEDINGS

    The company is a party to various legal proceedings arising in the ordinary
course of business.  Management does not believe that the outcome of any of
these actions will have a material adverse effect upon the financial position or
results of operations of the company.

    The Securities and Exchange Commission ("SEC") has entered a formal order
of private investigation into the circumstances underlying the restatement of
the company's 1995 and 1994 financial statements.  The company is cooperating
fully with the SEC in its investigation.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    No matters were submitted to a vote of the company's stockholders during the
fourth quarter of fiscal 1997.


                                          13
<PAGE>

                          EXECUTIVE OFFICERS OF THE COMPANY

Pursuant to General Instruction G(3) of Form 10-K, the following information is
included as an unnumbered Item in Part I of this Report.

The following is a list of names and ages of the executive officers (within the
meaning of Item 401 of Regulation S-K) of the company, indicating all positions
and offices with the company held by each such person and each such person's
principal occupation or employment during the past five years.  Executive
officers serve at the discretion of the Board of Directors.  No person other
than those listed below has been chosen to become an executive officer of the
company.

NAME                    AGE POSITION
----                    --- --------
Richard H. Chandler     54  Chairman of the board, chief executive officer
                            and president

Steven A. Jaye          41  Senior vice president, general counsel and
                            secretary

Dennis J. McCarthy      56  President - Continuing Care Group

Thomas H. O'Donnell     54  President - Home Healthcare Group

Barrie Payne            60  President - Sunrise Medical Europe

John M. Radak           36  Vice president and controller 

Ted N. Tarbet           44  Senior vice president and chief financial
                            officer


Richard H. Chandler has served as chairman of the Board of Directors and chief
executive officer of the company since its inception in January 1983 through the
present.  In January 1996 he also became president, a position he previously
held from January 1983 until July 1993.  From 1982 to 1983, he was president of
Richard H. Chandler Company, a management consulting firm, during which period
he planned the formation of the company.  From 1979 to 1982, he was president
and chief executive officer of Abbey Medical, Inc.  Mr. Chandler participated in
the leveraged buy-out of Abbey Medical from Sara Lee Corporation in June 1979
and arranged for its 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 its Abbey Rents/Abbey Medical division.

Steven A. Jaye was elected senior vice president, general counsel and secretary
of the company in August 1996 after joining the company 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.

Dennis J. McCarthy was elected president of the Continuing Care Group in  June
1997 after serving as president of Joerns Healthcare Inc. (a Sunrise subsidiary)
since September 1990.  From 1986 to 1989, Mr. McCarthy was president of the
Document Management Products Company


                                          14
<PAGE>

(DMPC), a subsidiary of Bell & Howell Company that manufactures and markets
office products and systems, where he also served as a corporate vice president.
From 1981 to 1986, he was president of the Computer Output Microfilm Division of
Bell & Howell.

Thomas H. O'Donnell was elected president of the Home Healthcare Group in June
1997.  He served as executive vice president--operations of the company from
January 1987 until August 1988, when he was elected president of  Quickie
Designs Inc. (a Sunrise subsidiary).  In January 1996 he was named senior vice
president--North America.  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.

Barrie Payne was elected president of Sunrise Medical Europe in June 1997.  He
was named senior vice president--Europe in January 1996, after serving as
managing director of Sunrise Medical Ltd. (a Sunrise subsidiary) since June
1983.  Previously, Mr. Payne was president of A-BEC Mobility Inc., a distributor
of electric wheelchairs and other power mobility products that was founded by
him in 1972 and was purchased by Sunrise Medical in 1983.

John M. 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.

Ted N. 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 of the company 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.


                                          15
<PAGE>

                                       PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

The company's 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:

                      Fiscal Year 1997            Fiscal Year 1996
               -----------------------------------------------------------------
                    High            Low         High           Low
--------------------------------------------------------------------------------

First Quarter       18 1/8         15 1/8      29            25 1/8

Second Quarter      15 7/8         13 5/8      26 7/8        15 1/8

Third Quarter       16 1/2         12 5/8      19 1/4        13 3/4

Fourth Quarter      15             10 1/8      20 3/4        13 7/8

Year                18 1/8         10 1/8      29            13 3/4

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

The number of holders of record of Sunrise common stock as of August 29, 1997
was 576. The company estimates it has approximately 10,600 beneficial holders of
its common stock.  The closing price of the common stock on August 29, 1997 was
14 13/16.

The company has not paid cash dividends to holders of its common stock and has
no plans to do so in the foreseeable future. The company presently intends to
retain all earnings to fund its operations and future growth. 


                                          16

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA
(In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                      Years Ended
                                             -------------------------------------------------------------
                                              June 27,     June 28,    June 30,      July 1,     July 2,
CONSOLIDATED RESULTS OF OPERATIONS DATA:          1997         1996        1995         1994        1993
                                                  ----         ----        ----         ----        ----

     <S>                                       <C>         <C>          <C>          <C>         <C>
     Net sales                                $656,742     $667,130    $601,927     $466,942    $319,196
     Gross profit                              213,681      220,625     205,651      166,947     115,317
     Marketing, selling and administrative
        expenses                               144,695      159,109     134,511      102,776      67,269
     Research and development expenses          16,506       15,544      13,937       11,029       7,388
     Corporate expenses                         12,109        9,998       7,360        5,444       4,439
     Amortization of intangibles                 8,273        8,686       6,823        5,435       2,374
     Unusual items                                --         65,152        --           --          --  
     Corporate operating income (loss)          32,098      (37,864)     43,020       42,263      33,847
     Interest expense                           14,774       16,687      10,358        6,078       4,252
     Income (loss) before taxes                 21,027      (52,460)     33,863       36,168      29,696
     Net income (loss)                         $10,569     $(40,867)    $19,471      $21,809     $18,090
                                                ------      -------      ------       ------      ------
                                                ------      -------      ------       ------      ------

     Net income (loss) per share(1)            $  0.55    $(   2.17)    $  1.03      $  1.19     $  1.21
                                                ------      -------      ------       ------      ------
                                                ------      -------      ------       ------      ------

     Weighted Average Shares Outstanding(1)     19,196       18,810      18,819       18,317      14,950
                                                ------      -------      ------       ------      ------
                                                ------      -------      ------       ------      ------

CONSOLIDATED BALANCE SHEET DATA:

     Working capital                         $ 102,231     $104,991    $119,594     $101,479   $  92,049
     Total assets                              610,549      620,416     604,743      471,667     284,031
     Long-term debt(2)                         188,061      207,446     182,029      118,697      32,475
     Stockholders' Equity(3)                  $279,420     $260,554    $299,493     $259,539    $194,723
                                               -------      -------     -------      -------     -------
                                               -------      -------     -------      -------     -------
</TABLE>

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

(1) Net income (loss) per share and weighted average number of shares
    outstanding for fully diluted computations are not materially different
    from primary computations.
(2) Excludes current installments of long-term debt.
(3) The company did not declare cash dividends for the fiscal years 1993
    through 1997.


                                          17
<PAGE>

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

RESULTS OF OPERATIONS

Sunrise closed its fiscal year ended June 27, 1997 with worldwide revenues of 
$656.7 million, a decrease of 2% from 1996 .  Net sales grew 4% in 1997 after 
adjusting for the effects of foreign currency translation, divestitures and 
acquisitions.  Net income increased to $10.6 million from a loss of $40.9 
million in fiscal 1996, and gained 86% over $5.7 million last year when 
unusual items are excluded.  Earnings per share rose 83% to $0.55 from $0.30 in
1996 excluding the unusual items, and from a loss of $2.17 per share as 
reported last year.

During fiscal 1997, the company consolidated a number of its operating units,
factory sites and salesforces and strategically re-aligned its divisions into
three market-oriented operating groups:  the Home Healthcare Group (HHG), the
Continuing Care Group (CCG) and Sunrise Medical Europe.  The consolidations are
expected to be completed in calendar 1998, with further streamlining of
operating units, data centers, factory sites and salesforces.  Management
estimates that approximately $13 million in non-recurring costs will be incurred
during fiscal 1998 to complete these activities, principally to implement
related computer system conversions. Other re-engineering costs include the 
relocation costs of production activities and personnel and the disposition 
of facilities and equipment.

NET SALES ANALYSIS

Sales decreased 1.6% in 1997 to $657 million from sales of $667 in 1996,
following an increase of   11% over sales of $602 million recorded in 1995.  The
sale of the company's Comfort Clinic division,  in October 1996, marking the
company's exit from the consumer products market, reduced sales by 5% in fiscal
1997.  The acquisition of Kid-Kart, Inc. in December 1996 added to sales by 1%
in 1997, while the acquisition of three European-based businesses between April
and October 1995 added 11% to the company's sales in 1996. Acquisitions
accounted for 8 percent of the increase in sales in 1995.  Sunrise used
acquisitions during these periods to enhance existing businesses and expand
internationally.  International sales accounted for 44% of worldwide net sales,
compared with 42% in 1996 and 33% in 1995.

Fluctuations of foreign currency rates decreased overall net sales by 1% in
1997, while increasing net sales by less than 1% in 1996 and by 3% in 1995.  The
impact of foreign currency fluctuations on net sales is not necessarily
indicative of the impact on net earnings due to the offsetting foreign currency
impact on costs and expenses and the company's hedging activities. (See Note 1
to the consolidated financial statements for the company's accounting policies
for foreign currency instruments.)

The 4% internal sales growth from 1996 to 1997 was primarily the result of
continued volume increases.  Average selling prices in a number of major product
lines declined in 1997, primarily due to healthcare cost containment pressures.

Healthcare cost reduction continues to be pursued in the United States and 
Europe, putting downward pressure on the Company's price. Management believes 
that it is correctly responding through its strategic re-alignment around

                                          18
<PAGE>

markets, reducing its cost structure by consolidating business units, 
factories and sales forces.  As was evidenced in fiscal 1997, management 
believes that future sales growth will be driven predominantly by unit volume 
growth, price competitiveness, new product introductions, contract sales to 
increasingly larger customers and buying groups, and by international 
expansion.

Following is a summary of sales by business group as a percentage of total net
sales: 

ANALYSIS OF PRODUCT LINE SALES CONTRIBUTION
($ in millions)
                                  1997             1996               1995
                               ------------     -------------    --------------

Home Healthcare Group        $282      43%    $265      40%     $258      43%

Continuing Care Group          93      14%     103      15%      112      19%

Sunrise Medical Europe        268      41%     255      38%      165      27%

Comfort Clinic(1)              14       2%      44       7%       67      11%

  Total                      $657     100%    $667     100%     $602     100%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

(1)Divested in October 1996

Net sales of the Home Healthcare Group (HHG) reached record levels in each of
the last three years, growing 7% to $282 million in 1997, after an increase of
2% to $265 million in 1996 from sales of $258 million in 1995.  Sales of
respiratory products led the increase in 1997, followed by custom wheelchairs
and personal care products.  Sales from the introduction of the SOLAIRIS line of
oxygen concentrators and the PULSE DOSE EX2000, an oxygen conservation device
that can triple the effective range of portable gas cylinders, were largely
responsible for the boost in respiratory sales.  Growth in custom wheelchair
sales was attributed primarily to strong sales of  standard lightweight manual
wheelchairs.  Personal care products grew by 4%, reflecting a rebound from a
slight decline experienced in 1996.  Unit volume growth was evidenced in
substantially all product lines, while average selling prices decreased
primarily as a result of the increase in discounts to large national accounts.

Continuing Care Group (CCG) sales declined 11% in 1997 to $93 million.  This 
followed a decline of 7% in 1996 to $103 million, compared to growth of 12% 
in 1995.  The sale of the company's air therapy rental business in January 
1996, following an extended period of declining rental rates, negatively 
impacted sales by 6% in fiscal 1997 and 4% in fiscal 1996.   Although 1997 
unit volume increased in sales of beds, patient lifters and slings, these 
were more than offset by depressed unit sales of patient room furniture, 
bathing systems and foam overlays.  Generally, in 1997, average selling 
prices declined as a result of growth in large national contracts, while the 
decrease in unit sales of patient furniture was attributed to the shift in 
new construction funding from nursing homes to assisted living centers.  Unit 
volume sales of bathing systems declined in 1997 due to the discontinuation 
of several products.  The 1997 decline of

                                          19

<PAGE>

foam overlays is primarily attributed to the loss of a major national private 
label contract at low margins.  

Sales in Europe grew by 5% in 1997 to $268 million following increases of 55% 
in 1996 and 51% in 1995.  The large increases in the two preceding years 
reflected both internal growth and the impact of a series of acquisitions. 
Foreign currency exchange rate movements had an unfavorable impact on 
European sales of 4% in 1997 and a favorable impact of 1% and 13% in 1996 and 
1995, respectively. Excluding the impact of acquisitions and foreign currency 
exchange movements, sales grew by 6% in fiscal 1997 after growth of 19% in 
1996.  In 1997 sales growth within Europe was strongest in Germany, Spain, 
and the company's country distribution organizations.  Sales growth in the 
United Kingdom was modest and was partially offset by a slight decline in 
sales in France.  Overall, during 1997, European unit sales volumes 
increased, while average selling prices were lower than prior years in 
several markets due to increasing discounts to dealers.  Product sales growth 
was led by custom wheelchairs, which remained the largest European product 
line and demonstrated modest volume  increases.   Personal care products and 
beds also contributed to the total growth in sales in 1997, while respiratory 
sales declined, primarily due to the termination of a distribution agreement 
Sunrise had with another manufacturer. 

EXPENSE AND PROFIT ANALYSIS

In 1997 gross margin (gross profit as a percentage of net sales) decreased by
0.6% to 32.5%.  Gross margin in a number of domestic product lines was adversely
affected by market pricing pressures indirectly driven by the growth of managed
healthcare and consolidation of the company's customer base.  In Europe, gross
margins were adversely affected by the disruptive impact of consolidations as
well as the growth of buying groups.  Gross margin declined by 1.1% in 1996 due
primarily to a significant decline in the profitability of the company's support
surfaces business.  For the company's other product lines, the gross margin was
36.2% in 1996, as competitive pricing conditions and cost increases in certain
raw materials were largely offset by selective price increases, changes in
product mix and improvements in factory productivity.

Marketing, selling and administrative expenses decreased 1.8% as a percentage 
of net sales in 1997, after an increase of 1.5% in 1996.  This decrease 
reflects the results of a company-wide profit improvement program instituted 
early in the 1996 calendar year.  As a result, these expenses declined 
despite the costs associated with the February 1996 launch of SunMed Services 
("SMS"), the company's integrated order entry, customer service and delivery 
function for standard products sold to the U.S. homecare market. SMS operated 
in all of fiscal 1997.  Marketing, selling and administrative expenses for 
1997 include one-time costs of $1.4 million for the company's sponsorship of 
the 1996 Atlanta Paralympic Games. Without these costs, fiscal 1997 
marketing, selling and administrative expenses decreased 9.9% to 21.8% of net 
sales as compared to 23.8% in fiscal 1996. 

Research and development (R&D) expense increased 6% to $16.5 million in 1997
following an increase of 12% in 1996.  The growth of R&D spending has generally
been consistent with sales growth and continues to reflect the company's focus
on applying new technologies to address unmet user needs and technological
enhancements to existing products.   Management believes


                                          20
<PAGE>

that investing significant resources in R&D will result in future revenue growth
and market share gains.

The following is a summary of expenses and profits as a percentage of net sales:

<TABLE>
<CAPTION>
                                                                                   % Increase
                                                                                   (Decrease)
                                                                              --------------------
($ in millions)                         1997        1996         1995        1997/96       1996/95
--------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>          <C>           <C>          <C>
Net sales                             $656.7       $667.1      $601.9         ( 2)%         11%
--------------------------------------------------------------------------------------------------
Gross profit                           213.7        220.6       205.7         ( 3)%          7%
    % of net sales                      32.5%        33.1%       34.2%
Marketing, selling and
   administrative expenses             144.7        159.1       134.5         ( 9)%         18%
    % of net sales                      22.0%        23.8%       22.3%
Research and development                16.5         15.5        13.9            6%         12%
    % of net sales                       2.5%         2.3%        2.3%
Corporate expenses                      12.1         10.0         7.4           21%         36%
    % of net sales                       1.8%         1.5%        1.2%
Amortization of goodwill
   and other intangibles                 8.3          8.7         6.8         ( 5)%         27%
    % of net sales                       1.3%         1.3%        1.1%
Unusual items                             --         65.2          --            *           *
    % of net sales                                    9.8%
--------------------------------------------------------------------------------------------------
Corporate operating income (loss)       32.1       (37.9)        43.0            *           *
    % of net sales                       4.9%      ( 5.7)%        7.1%
Interest expense                        14.8         16.7        10.4        ( 11)%         61%
    % of net sales                       2.2%         2.5%        1.7%
Interest income and other, net           3.7          2.1         1.2           77%         74%
    % of net sales                       0.6%         0.3%        0.2%
--------------------------------------------------------------------------------------------------
Income (loss) before income taxes       21.0       (52.5)        33.9            *           *
    % of net sales                       3.2%      ( 7.9)%        5.6%
Income taxes (benefit)                  10.5       (11.6)        14.4            *           *
    % of income (loss) before taxes     49.7%      (22.1)%       42.5%
--------------------------------------------------------------------------------------------------
Net income (loss)                      $10.6      $(40.9)       $19.5            *           *
    % of net sales                       1.6%      ( 6.1)%        3.2%
--------------------------------------------------------------------------------------------------

    * Percentage not meaningful
</TABLE>


In January 1997 the company announced the consolidation of its four U.S. 
homecare divisions into the Home Healthcare Group based in Longmont, 
Colorado, and also initiated a series of consolidations in its European 
operations.  These actions are designed to improve manufacturing

                                          21

<PAGE>

and marketing efficiencies while reducing operating costs.  Pre-tax charges of
$4.7 million were incurred in 1997 in connection with these consolidations. 
Management estimates that approximately $13 million in non-recurring costs will
be incurred during 1998 to complete these activities, principally to implement
related information system conversions. 

The company's support surfaces business returned to profitability in 1997,
following losses of $15 million at the division profit contribution level in
1996 and $4 million in 1995.  (Profit contribution is an internal measurement
used by the company to measure operating unit performance; it does not include
any allocations of unusual items, corporate office expense, goodwill
amortization, interest, or income taxes.)  During 1996, significant expense
increases were incurred in this business, including higher marketing costs and
increased bad debt expenses, while revenues were under increased competitive
pressures.  In December 1995 management initiated a number of actions designed
to return this business to profitability, including staffing and overhead
reductions to align operations with a significantly lower level of sales.  As
part of this plan, Bio Clinic's air therapy rental business was sold in January
1996.

In June 1996, Bio Clinic was merged with the Joerns division to form a single
institutional products organization, the Continuing Care Group (CCG),
integrating the domestic manufacturing and marketing of all Sunrise products
aimed at nursing homes and hospitals.  In August 1996, following a strategic
review of its businesses, the company decided to sell its Comfort Clinic
division in order to concentrate on its core healthcare products business.  The
sale of this division for $14 million was completed in October 1996.

In addition to these actions related to the support surfaces business, 
management conducted in December 1995 an intensive review of the company's 
other businesses and initiated Operation Rebound, a company-wide profit 
improvement plan.  This plan involved four major elements: the consolidation 
of the company's domestic salesforces from twelve to six; the integration of 
a number of the company's smaller divisions operating within the same country 
or market; the establishment of profit improvement programs at all divisions; 
and the sale of the air therapy rental business referred to above.  In June 
1996 the company reached an agreement to settle stockholder litigation filed 
in November and December 1995 following the announcement of the investigation 
of accounting practices in its support surfaces business and subsequent 
restatement of the company's 1995 and 1994 financial statements.  The company 
also announced plans to consolidate certain European operations.

As a result of these actions, the Sunrise recorded pre-tax charges from unusual
items of $65.2 million in 1996.  These charges included: $18.6 million for costs
of the internal investigation, restatement, and reissuance of historical
financial statements and the settlement of related litigation, including
attorneys' fees; $27.6 million for the write-down of assets at Bio Clinic and
Comfort Clinic to reflect revised estimates of net asset realizations, including
goodwill; and $19.0 million related to the company's reorganization and cost
reduction program (including severance costs of $3.2 million).  Of the total
charges of $65.2 million, approximately $36.2 million required cash payments and
$29.0 million represented non-cash charges. During 1997, these reserves were
adjusted downward by $4.6 million because of lower than expected costs to
relocate operations and to write down assets to be sold.


                                          22
<PAGE>

Corporate operating income improved to 4.9% of sales in 1997, compared to 4.1%
(excluding unusual item charges) in 1996, due to the decrease in marketing,
selling and administrative expenses and  the improvement in the support surfaces
business.  The 1996 decline from 7.1% in the prior year reflected lower gross
margins in support surfaces, respiratory and patient aids product lines, as well
as higher selling and administrative costs.

Interest expense decreased by 11% in 1997 to $14.8 million following an increase
of 61% to $16.7 million in 1996.  The 1997 reduction resulted from lower average
borrowings during 1997, as well as lower average interest rates.  The increase
in 1996 was primarily due to higher average borrowings required to finance
acquisitions completed during 1995 and 1996 and to fund capital expenditures. 
In addition, higher interest rates caused by market conditions and by less
favorable terms in the company's credit agreement contributed to the increase in
interest expense in 1996.  Interest income increased 15% in 1997 to $3.3 million
after an increase of 78% in 1996, reflecting the growth in installment
receivables.  Management believes that the wide range of installment financing
plans offered by its SunMed Finance subsidiary is an important contributor to
its market position in the U.S. home healthcare market. 

In 1997 the company's effective tax rate was 49.7% compared to a tax benefit at
an effective rate of 22.1% in 1996 and an effective tax rate of 42.5% in 1995. 
The effective tax rates differ from the U.S. corporate tax rate of 35% primarily
because of non-deductible goodwill amortization.

Net income in 1997 was $10.6 million or 1.6% of net sales.   As a result of the
unusual item charges, the company incurred a net loss of $40.9 million in 1996. 
Excluding the unusual items, net income was $5.7 million or 0.9% of net sales. 
In 1995 net income was $19.5 million or  3.2% of net sales.

The company attempts 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.  The company believes that inflationary material cost
increases may continue and that the markets in which it sells its products will
remain price-sensitive, thereby limiting its ability to offset higher costs with
pricing actions.

FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY

CASH FLOW

Cash flows provided by operations increased 78% to $38 million in 1997 from $22
million in 1996.  Cash flows provided by operations were $19 million in 1995. 

Cash generation (defined as net income plus non-cash charges) has historically
been an important source of funding for capital spending, working capital and
acquisitions.  Cash generation was $45 million (430% of net income) in 1997. 
This compares to $3 million  in 1996 (reflecting the impact of unusual items)
and $46 million (236% of net income) in 1995. 


                                          23
<PAGE>

As noted above, the unusual item charges in 1996 included $36.2 million
requiring the payment of cash, of which $18.8 million was paid in 1996 and $9.9
million in 1997.  Management estimates that the remaining liability of $7.5
million will require payments of $6.5 million in 1998 and $1 million
thereafter.

CAPITAL EXPENDITURES

Capital spending in 1997 was $29.3 million, or 164% of depreciation expense, 
compared to $19.0 million, approximately equal to depreciation expense, in 
1996. In 1995 capital expenditures were $23.1 million, or 137% of 
depreciation expense.  Significant investments made in 1997 include the $10 
million purchase and remodeling of a 370,000 square foot factory site to 
house the company's consolidated U.K. operations, improvements in 
telecommunications and data processing systems, upgrades and enhancements in 
machinery and equipment and new product tooling.  The company expects capital 
expenditures in 1998 to be less than in 1997.

ACQUISITIONS

On December 27, 1996 the company 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 $.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,
1995 would not differ materially from amounts reported. 

In July 1995 the company purchased Coopers Healthcare Plc, a United Kingdom
manufacturer of patient aids.  This was followed in October by the acquisition
of Parker Bath Group, a U.K. manufacturer and distributor of bathing systems and
patient lifters.

During 1995, Sunrise acquired certain assets and liabilities of Jay Medical
Ltd., a Boulder, Colorado-based manufacturer of wheelchair cushions and seating
systems. The company also acquired Cozy Craft, a domestic line of seating
inserts for which it was already the primary distributor.  In Europe in 1995,
Sunrise acquired Corona, a French manufacturer of healthcare beds and also
purchased two distribution companies in Italy and Switzerland, former
importers/distributors for the company. 

CAPITAL STRUCTURE AND LEVERAGE

The company's capital structure consists of two primary components: 
stockholders' equity and long-term debt.  Stockholders' equity was $279.4
million at the end of 1997, an increase of $18.9 million from the prior
year-end.  In addition to net income of $10.6 million, common stock of $6.5
million was issued in 1997 for the acquisition of Kid-Kart and $0.4 million was
issued upon exercise of stock options, and foreign currency translation
increased stockholders' equity by $1.4 million. 


                                          24
<PAGE>

ANALYSIS OF LONG-TERM DEBT

                                                       1997     1996    1995

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

         Fixed-rate debt as a percentage of
             total debt at year-end                     69 %   66 %      72 %

         Foreign denominated debt as a
             percentage of total debt at year-end       58%     56%      41%

         Weighted average annual interest rate         7.4%     7.8%    6.6%

         Interest coverage (before unusual items)      2.2 x    1.6 x   4.2 x

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

Long-term debt (excluding current installments) decreased by $19 million to $188
million at June 27, 1997, aided by divestiture proceeds, tax refunds, and
diligent asset management.  The ratio of debt to total capitalization was
reduced to 40% at year end, which equates the company's target ceiling, 
compared to 44% at the end of fiscal 1996. 

Sunrise attempts to minimize interest expense while also managing its exposure
to variable interest rates by employing interest rate exchange agreements, or
swaps, to convert its bank borrowings from floating rate into the equivalent of
fixed rate debt.  However, as a policy Sunrise does not use interest rate swaps
or any other derivatives that have a level of complexity or risk which, in the
judgment of Sunrise's management, is higher than the exposure to be hedged.  The
company does not hold or issue such instruments for trading purposes.  

Sunrise has used foreign-denominated borrowings from its multi-currency credit
facility 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 $112 million in 1997 compared to $119 million and $76
million in 1996 and 1995, respectively.

The company's multi-currency credit facility provides for maximum borrowings of
$250 million, declining to $235 million in January 1999 and $215 million in
January 2000.  The company must comply with certain covenants, such as the
maintenance of leverage ratio and interest coverage, minimum levels of tangible
net worth, and certain restrictions on acquisitions.  As of June 27, 1997 the
company had approximately $79 million of funds available from the credit
facility.

FOREIGN CURRENCY RISK MANAGEMENT

Operating on a global basis requires a posture of active currency risk
management. To finance imports and exports, the company utilizes a variety of
foreign currencies that are constantly shifting in relative value. The company
engages 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. The company's
financial statements are also affected by foreign currency translation
fluctuations. These distort the


                                          25
<PAGE>

comparative results of foreign operations when they are translated into U.S.
dollars using dissimilar rates.

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, Sunrise does
not commit economic resources to hedge against the potential effect of foreign
currency translation fluctuations. It believes that the best long-term
protection of stockholder value is to do business in a broad number of
currencies.

DIVIDEND POLICY

The company's present policy is to use available cash flow for reinvestment in
its 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, which includes the company's largest stockholder, of the
attractiveness of the company's investment opportunities and their confidence in
its ability to continue increasing economic value for its stockholders through
cash retention and reinvestment. This policy is reviewed periodically as
industry conditions change.

LITIGATION

The company is a party to various legal proceedings arising in the ordinary
course of business.  Management does not believe that the outcome of any of
these actions will have a material adverse effect upon the financial position or
results of operations of the company.

The Securities and Exchange Commission ("SEC") has entered a formal order of 
private investigation into the circumstances underlying the restatement of 
the company's 1995 and 1994 financial statements.  The company is cooperating 
fully with the SEC in its investigation.

NEW ACCOUNTING STANDARDS

In 1997 the Financial Accounting Standards Board issued the following
statements:  

- Statement No. 128, "Earnings per Share" ("SFAS 128"). The effects of 
  SFAS 128 is discussed in Note 1 to the consolidated financial statements. 
  The company will adopt SFAS 128 in the second quarter of fiscal 1998.

- Statement No. 129, "Disclosure of Information about Capital Structure" ("SFAS
  129"), which requires disclosures about capital structure that had been
  included in a number of previously issued statements and opinions.  The
  company will comply with the disclosure requirements in 1998. No significant
  revisions of prior disclosure are expected.

- Statement No. 130, "Reporting Comprehensive Income" ("SFAS 130"), establishes
  standards for reporting and display of comprehensive income and its
  components.  The company will adopt SFAS 130 in fiscal 1999.

- Statement No. 131, "Disclosures about Segments of an Enterprise and Related
  Information" ("SFAS 131"), establishes standards for the way public business
  enterprises are to report information about operating segments in annual
  financial statements and requires those enterprises to report selected
  information about operating segments in interim financial reports issued to
  shareholders.  It also establishes standards for related disclosure about
  products and


                                          26
<PAGE>

  services, geographic areas and major customers.   The company will adopt SFAS
  131 in fiscal 1999. 

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

The company has made forward-looking statements in this Form 10-K, including the
estimated benefits to be realized from the consolidation of various Sunrise
divisions worldwide, the timing of completion of these activities and the level
of future capital expenditures.  These statements are only predictions.  Actual
events or results may differ materially as a result of risks and uncertainties
facing the company including: 

COMPETITION - The company encounters significant competition domestically from a
number of well-established manufacturers in each of its product lines, and from
foreign sources for some products.  In certain countries and product markets,
including the United States, the company may face competition from other
manufacturers that have larger market shares or other competitive advantages. 

PRICING PRESSURES - The growth in national chains and buying groups among home
medical equipment providers has caused manufacturers to reduce their effective
prices by offering volume discounts.  The increasing penetration of managed care
into home medical equipment industry is exacerbating this trend.  If the company
is unable to achieve sufficient manufacturing and technological efficiencies to
offset any future price reductions, its profit margins will be adversely
affected. 

RE-ENGINEERING PROGRAM - The company is in the later stages of a three-year
corporate re-engineering program that has consolidated its domestic healthcare
business into two operating groups and its European operations in France,
Germany and the U.K. into country organizations.  In fiscal 1998, Sunrise will
invest approximately $13 million in two re-engineering programs, 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.  There is no assurance,
however,  that the information system conversion will be completed on schedule
and on budget, or that the anticipated re-engineering savings and efficiencies
will in fact be achieved.  Short term results could also be affected negatively
by the disruptions associated with this re-engineering program. 

RAW MATERIAL COSTS - In the past few years, prices paid by the company for 
certain raw materials, such as aluminum, foam and wood, have fluctuated.  
When prices have increased, the company has not always passed along the full 
effect of such increases to its customers in order to maintain or enhance the 
company's market position.

NEW PRODUCTS - The company's future results will depend in part on its 
ability to enhance its 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 the company's business.

                                          27
<PAGE>

MEDICARE/MEDICAID FUNDING - The U.S. healthcare industry is heavily reliant 
upon extensive government regulation and funding at the federal and state 
levels. Although the company is not a provider under Medicare or Medicaid, 
its products are sold to home medical equipment ("HME") providers, nursing 
homes and hospitals which are providers under these programs and do depend 
upon Medicare and/or Medicaid reimbursement for a portion of their revenue. 
Changes in Medicare/Medicaid regulations could adversely impact the company's 
revenues and collections indirectly by reducing the reimbursement rate 
received by HME providers and thus make 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 the company's products sold through this channel.  (See 
"Business-Government Funding and Regulation".)

GOVERNMENT REGULATION - Medical equipment manufactured or sold by the company 
in the U.S. is subject to regulation by the U.S. Food and Drug Administration 
("FDA"). All such medical devices must be the subject of device listings 
filed with the FDA, and medical device manufacturers must be registered. 
Certain products require clearance by the FDA prior to marketing and 
distribution in the United States. Delays in receiving such approval could 
adversely affect the company's ability to introduce new products on a timely 
basis and impact the company's results of operations and financial condition. 
 During the last two years, such delays have slowed new product introductions 
and, in a number of cases, have led to their initial marketing overseas in 
advance of the United States. In addition, the company and its products are 
subject to similar regulation in other countries.

INTERNATIONAL OPERATIONS - An increasing portion of the company's sales in
recent years has been derived from its international operations.  The company's
international financial results could be significantly affected by such factors
as:  government budgetary pressures and payment policies for healthcare
products, difficulties in staffing and managing foreign operations, and other
risks associated with international activities.

The company disclaims any obligation to update any of the factors that may
affect future operating results or to announce publicly the result of any
revisions to any of the forward-looking statements contained in this Form 10-K,
or to make corrections to reflect future events or developments.


                                          28
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following are included herein:
                                                                            PAGE
                                                                            ----

    Report of Management                                                    29

    Independent Auditors' Report                                            30

    Consolidated balance sheets as of June 27, 1997 and June 28, 1996       31

    Consolidated statements of operations for the years ended               32
    June 27, 1997, June 28, 1996 and June 30, 1995         

    Consolidated statements of cash flows for the years ended               33
    June 27, 1997, June 28, 1996 and June 30,  1995 

    Consolidated statements of stockholders' equity for the years           34
    ended June 27, 1997, June 28, 1996 and June 30, 1995 

    Notes to consolidated financial statements                              35

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

    None.


                                          29
<PAGE>

                                 REPORT OF MANAGEMENT

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.

Management maintains a comprehensive system of internal controls supported by
formal policies and procedures, 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.

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 its responsibilities. Both the independent auditors and the internal
auditors  have free and direct access to the Audit Committee. 

The company's independent auditors are recommended by the Audit Committee and
selected by the Board of Directors. The consolidated financial statements have
been audited by KPMG Peat Marwick 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.



Richard H. Chandler
CHAIRMAN AND CHIEF EXECUTIVE OFFICER



Ted N. Tarbet
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER



John M. Radak
VICE PRESIDENT AND CONTROLLER


                                          30
<PAGE>

                             INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
of Sunrise Medical Inc.:

We have audited the accompanying consolidated balance sheets of Sunrise Medical
Inc. and Subsidiaries as of June 27, 1997 and June 28, 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the years in the three-year period ended June 27, 1997.  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.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sunrise Medical Inc.
and Subsidiaries as of June 27, 1997 and June 28, 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 27, 1997 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.




KPMG Peat Marwick LLP

Los Angeles, California
August 13, 1997


                                          31
<PAGE>

                        SUNRISE MEDICAL INC. AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                                    (in thousands)

<TABLE>
<CAPTION>
                                                                       June 27,     June 28,
                                                                           1997         1996
                                                                       --------     --------
<S>                                                                   <C>          <C>
ASSETS
Current assets:
  Cash and cash equivalents                                          $    2,823   $    1,785
  Trade receivables, net of allowance for doubtful accounts 
     of $5,075 and $11,523, respectively                                114,223      123,924
  Installment receivables, net                                           13,351       10,312
  Income tax refunds receivable                                           3,794       12,535
  Inventories                                                            88,757       80,937
  Deferred income taxes                                                  11,343       17,802
  Other current assets                                                    3,703        5,016
                                                                      ---------    ---------
      Total current assets                                              237,994      252,311

Property and equipment, net                                              90,852       82,246
Goodwill and other intangible assets, less accumulated
  amortization of $39,440 and $31,167, respectively                     274,410      278,857
Other assets, net                                                         7,293        7,002
                                                                      ---------    ---------

Total assets                                                         $  610,549   $  620,416
                                                                      ---------    ---------
                                                                      ---------    ---------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current installments of long-term debt                             $    4,942   $    5,748
  Trade accounts payable                                                 47,486       42,861
  Accrued compensation and other expenses                                81,216       88,331
  Income taxes payable                                                    2,119       10,380
                                                                      ---------    ---------
     Total current liabilities                                          135,763      147,320

Long-term debt, less current installments                               188,061      207,446
Deferred income taxes                                                     7,305        5,096
Stockholders' equity:
  Preferred stock, $1 par. Authorized 5,000 shares; none issued              --           --
  Common stock, $1 par. Authorized 40,000 shares; 19,304 and
   18,847 shares, respectively, issued and outstanding                   19,304       18,847
  Additional paid-in capital                                            202,379      195,906
  Retained earnings                                                      55,978       45,409
  Cumulative foreign currency translation adjustment                      1,759          392
                                                                      ---------    ---------
     Total stockholders' equity                                         279,420      260,554
                                                                      ---------    ---------

Total liabilities and stockholders' equity                           $  610,549   $  620,416
                                                                      ---------    ---------
                                                                      ---------    ---------
</TABLE>



            (See accompanying notes to consolidated financial statements)


                                          32
<PAGE>

                        SUNRISE MEDICAL INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                       (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                         Years Ended
                                                             -----------------------------------
                                                             June 27,     June 28,    June 30,
                                                                 1997         1996        1995
                                                             --------     --------    --------
<S>                                                           <C>         <C>          <C>
Net sales                                                    $656,742     $667,130    $601,927
Cost of sales                                                 443,061      446,505     396,276
                                                              -------      -------     -------
Gross profit                                                  213,681      220,625     205,651

Marketing, selling and administrative expenses                144,695      159,109     134,511
Research and development expenses                              16,506       15,544      13,937
Corporate expenses                                             12,109        9,998       7,360
Amortization of goodwill and other intangibles                  8,273        8,686       6,823
Unusual items                                                      --       65,152          --
                                                              -------      -------     -------

Corporate operating income (loss)                              32,098     ( 37,864)     43,020
                                                              -------      -------     -------

Other (expense) income:
   Interest expense                                          ( 14,774)    ( 16,687)   ( 10,358)
   Interest income                                              3,303        2,878       1,617
   Other income and expense, net                                  400     (    787)   (    416)
                                                              -------      -------     -------
                                                             ( 11,071)    ( 14,596)   (  9,157)
                                                              -------      -------     -------

Income (loss) before income taxes                              21,027     ( 52,460)     33,863
Income tax expense (benefit)                                   10,458     ( 11,593)     14,392
                                                              -------      -------     -------

Net income (loss)                                            $ 10,569    $( 40,867)   $ 19,471
                                                              -------      -------     -------
                                                              -------      -------     -------

Net income (loss) per share                                  $   0.55    $(   2.17)   $   1.03
                                                              -------      -------     -------
                                                              -------      -------     -------

Weighted average number of shares outstanding                  19,196       18,810      18,819
                                                              -------      -------     -------
                                                              -------      -------     -------
</TABLE>


            (See accompanying notes to consolidated financial statements)

                                          33
<PAGE>

                        SUNRISE MEDICAL INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (in thousands)

<TABLE>
<CAPTION>
                                                                         Years Ended
                                                             -----------------------------------
                                                             June 27,     June 28,    June 30,
                                                                 1997         1996        1995
                                                                 ----         ----        ----
<S>                                                        <C>         <C>           <C>
Cash flows from operating activities:
  Net income (loss)                                        $   10,569  $(   40,867)  $  19,471
  Depreciation and amortization                                17,882       19,090      16,854
  Amortization of goodwill and other intangibles                8,273        8,686       6,823
  Deferred income taxes                                         8,731   (   13,140)      2,866
  Unusual items--non-cash charges                                 --        28,978         -- 
  Changes in assets and liabilities, net of effect
     of acquisitions:
         Receivables, net                                       1,180        4,808    (  4,334)
         Installment receivables                               (3,468)       2,476    (  7,687)
         Inventories                                           (8,490)       2,983   (  10,616)
         Prepaid expenses and other assets                      5,476        2,967   (   4,951)
         Income taxes                                             480   (    3,257)  (   1,585)
         Accounts payable and other liabilities                (2,435)       8,793       1,950
                                                            ---------    ---------    --------

Net cash provided by operating activities                      38,198       21,517      18,791
                                                              -------      -------     -------
Cash flows from investing activities:
  Purchase of property and equipment                       (   29,250)  (   19,041)  (  23,144)
  Proceeds from sale of businesses                             14,000        6,004         -- 
  Net cash invested in acquisition of businesses           (      856)  (   23,072)  (  52,254)
                                                            ---------    ---------    --------

Net cash used for investing activities                     (   16,106)  (   36,109)  (  75,398)
                                                            ---------    ---------    --------

Cash flows from financing activities:
  Borrowings of long-term debt                                124,885      191,759     208,335
  Repayments of long-term debt                               (146,374)    (177,335)  ( 156,220)
  Proceeds from issuance of common stock                          446          273       3,604
                                                              -------      -------    --------
  
Net cash (used for) provided by financing activities        (  21,043)      14,697      55,719
                                                             --------      -------     -------

Effect of exchange rate changes on cash                     (      11)   (      60)         47
                                                             --------     --------    --------

Net increase (decrease) in cash and cash equivalents            1,038           45   (     841)
Cash and cash equivalents at beginning of year                  1,785        1,740       2,581
                                                            ---------    ---------    --------

Cash and cash equivalents at end of year                   $    2,823   $    1,785   $   1,740
                                                            ---------    ---------    --------
                                                            ---------    ---------    --------
</TABLE>


            (See accompanying notes to consolidated financial statements)


                                          34
<PAGE>

                        SUNRISE MEDICAL INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                    (in thousands)

<TABLE>
<CAPTION>

                                                     Common Stock                                  Foreign      Total
                                                 --------------------    Additional               Currency     Stock-
                                                   Number                  Paid-in    Retained   Translation   holders'
                                                 of Shares   Amount       Capital      Earnings  Adjustment     Equity
                                                 --------- ----------    ----------   ---------  -----------  ----------
<S>                                              <C>       <C>           <C>          <C>        <C>          <C>
Balance at July 1, 1994                             17,996  $  17,996    $  175,965   $  66,805  $    (1,227)  $ 259,539
                                                 ---------  ---------    ----------   ---------  -----------  ----------
 Exercise of stock options, including
   associated tax benefits, net                        261        261         3,343           -            -       3,604
 Issuance of stock for acquisitions                    340        340        10,647           -            -      10,987
 Net income                                              -          -             -      19,471            -      19,471
 Foreign currency translation
   adjustment                                            -          -             -           -        5,892       5,892
                                                 ---------  ---------    ----------   ---------  -----------  ----------
Balance at June 30, 1995                            18,597     18,597       189,955      86,276        4,665     299,493
                                                 ---------  ---------    ----------   ---------  -----------  ----------
 Exercise of stock options, including
   associated tax benefits                              27         27           246           -            -         273
 Issuance of stock for acquisition                     223        223         5,705           -            -       5,928
 Net loss                                                -          -             -     (40,867)           -     (40,867)
 Foreign currency translation
   adjustment                                            -          -             -           -       (4,273)     (4,273)
                                                 ---------  ---------    ----------   ---------  -----------  ----------
Balance at June 28, 1996                            18,847     18,847       195,906      45,409          392     260,554
                                                 ---------  ---------    ----------   ---------  -----------  ----------
 Exercise of stock options, including
   associated tax benefits                              41         41           405           -            -         446
 Issuance of stock for acquisition                     416        416         6,068           -            -       6,484
 Net income                                              -          -             -      10,569            -      10,569
 Foreign currency translation
   adjustment                                            -          -             -           -        1,367       1,367
                                                 ---------  ---------    ----------   ---------  -----------  ----------
Balance at June 27, 1997                            19,304  $  19,304    $  202,379   $  55,978  $     1,759   $ 279,420
                                                 ---------  ---------    ----------   ---------  -----------  ----------
                                                 ---------  ---------    ----------   ---------  -----------  ----------
</TABLE>


            (See accompanying notes to consolidated financial statements)


                                          35
<PAGE>

                        SUNRISE MEDICAL INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands, except per share amounts)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY  Sunrise Medical Inc. (the "company") designs, manufactures and
markets medical products used in institutional and homecare settings that
address the recovery, rehabilitation, and respiratory needs of the patient. 
Products include custom, manual and electric wheelchairs, wheelchair seating
systems, ambulatory and bath safety aids, home respiratory devices, patient-room
beds and furnishings, and therapeutic mattresses and support surfaces. The
company's products are designed to meet the special needs of four groups of
people: the elderly, the disabled, the recovering patient, and the respiratory
sufferer.

BASIS OF PRESENTATION  The consolidated financial statements include domestic
and foreign subsidiaries. All material intercompany profits, balances and
transactions have been eliminated.   Accounts denominated in foreign currencies
have been translated using year-end exchange rates for assets and liabilities,
while revenues and expense are translated at exchange rates prevailing during
the year.  Adjustments for foreign currency translation fluctuations are
deferred as a separate element of consolidated stockholders' equity.

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.

FISCAL YEAR END  The company's fiscal year ends on the Friday closest to June
30, resulting in years of either 52 or 53 weeks. The years ended June 27, 1997,
June 28, 1996 and June 30, 1995 each contained 52 weeks.

INVENTORIES  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. 

PROPERTY AND EQUIPMENT  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 five to 42 years for
buildings and improvements and two to 15 years for machinery and equipment.

GOODWILL  The excess of purchase price over the fair value of net assets of
acquired subsidiaries (goodwill) is amortized on a straight-line basis over
periods of 20 to 40 years, depending on the nature and type of business
acquired.


                                          36
<PAGE>

LONG-LIVED ASSETS  Effective with the first quarter of fiscal 1997, the company
adopted Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."  
The statement requires that impairment loss be recorded on long-lived assets
used in operations, such as property and equipment and intangible assets, when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the carrying amount of the assets.
This loss is measured by the difference between carrying amounts and estimated
fair values.  The effect of adoption was not material.

DERIVATIVE FINANCIAL INSTRUMENTS  The company uses derivative financial
instruments to reduce its financial market risks by hedging foreign currency and
interest rate market exposures.  The company does not use derivative financial
instruments for speculative or trading purposes.  Criteria used in designating
an instrument as a hedge include the instrument's  effectiveness in risk
reduction and one-to-one matching of derivative instruments to underlying
transactions.  Gains and losses on currency forward contracts that are
designated and effective as hedges of anticipated transactions are deferred and
recognized in income in the same period that the underlying transactions are
settled and generally offset the losses and gains on the underlying
transactions.  Gains and losses on any instruments not meeting the above
criteria would be recognized in income in the current period. Income or expense
on interest rate swaps is accrued as an adjustment to the yield of the debt that
is hedged.

REVENUE RECOGNITION  The company recognizes revenue from product sales at the
time of shipment and provides an appropriate allowance for estimated returns and
adjustments.

WARRANTY COSTS  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.

RESEARCH AND DEVELOPMENT COSTS  Research and development costs relate to both
present and future products and are expensed in the year incurred.

STOCK-BASED COMPENSATION  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.  The company has 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 the company's stock at the date of grant over the amount an employee must pay
to acquire the stock. 

NET INCOME (LOSS) PER SHARE  Net income (loss) per share is computed using the
weighted average number of shares of outstanding common stock and dilutive
common stock equivalents from the assumed exercise of stock options.  Fully
diluted earnings per share are not materially different from primary amounts. 
Pursuant to Statement of Financial Accounting Standards No.


                                          37
<PAGE>

128, "Earnings per Share," which is effective for periods ending after December
15, 1997, the company's basic net income (loss) per share would have been $0.55
in 1997, $(2.17) in 1996 and $1.06 in 1995; diluted per share data would have
been $0.55, $(2.17) and $1.03, respectively.

CASH FLOW INFORMATION  Cash payments for interest in 1997, 1996 and 1995 were
$14,183, $16,060 and $9,547, respectively.  Cash payments of $10,615, $8,842 and
$13,912 were made for income taxes in 1997, 1996 and 1995, respectively.  The
company received income tax refunds of $9,680  in 1997 and $6,834 in 1996.

2.  FINANCIAL INSTRUMENTS

CASH AND CASH EQUIVALENTS  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.

INSTALLMENT RECEIVABLES  Installment receivables consist of the following:

                                                         June 27,    June 28,
                                                             1997        1996
                                                           ------      ------
         Current portion                                 $ 17,994    $ 14,293
         Less:
             Unearned interest                            ( 2,409)    ( 2,225)
             Allowance for doubtful accounts              ( 2,234)    ( 1,756)
                                                           ------     -------
             Net current portion                           13,351      10,312

         Due after one year (included in other assets)      6,190       5,761
                                                          -------     -------
         Total installment receivables, net              $ 19,541    $ 16,073
                                                          -------     -------
                                                          -------     -------


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.

LONG-TERM DEBT  Based on borrowing rates currently available to the company for
bank loans with similar terms and average maturities, the carrying amount of
long-term debt at June 27, 1997 and June 28, 1996 approximated its fair value.
    
FOREIGN CURRENCY FORWARD EXCHANGE CONTRACTS  The company transacts business in
various foreign currencies, primarily European currencies.  The company uses
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. 
    
SWAP AGREEMENTS   The fair market value of interest rate swap agreements (Note
7) is the amount the company would be required to pay to terminate them, which
is estimated to be $1,622


                                          38
<PAGE>

at June 27, 1997 ($1,211 at June 28, 1996).  Net receipts or payments under all
swap agreements are included in interest expense. The company is exposed to
credit loss in the event of nonperformance by the other party to the interest
rate swap agreements.  However, the company considers the risk of nonperformance
by the other party to be minimal because the party to each swap agreement is a
member of the company's bank group. 
    
3.  BALANCE SHEET ITEMS
    
Inventories consist of the following:

                                                       June 27,    June 28,
                                                           1997        1996
                                                       --------    --------
        Raw material                                    $34,501     $33,980
        Work-in-progress                                 11,570       9,629
        Finished goods                                   42,686      37,328
                                                         ------      ------
        Total inventories                               $88,757     $80,937
                                                         ------      ------
                                                         ------      ------

If all inventories had been valued at FIFO cost, inventories would have been
approximately $90,178 and $82,829 for 1997 and 1996, respectively.

The components of property and equipment are as follows:
    
                                                       June 27,    June 28,
                                                           1997        1996
                                                           ----        ----

        Land                                           $  5,194    $  5,434
        Buildings, machinery and equipment              159,488     140,191
        Leasehold improvements                            9,590      11,772
                                                       --------    --------
                                                        174,272     157,397
        Less accumulated depreciation and 
          amortization                                (  83,420)   ( 75,151)
                                                       --------     -------

        Property and equipment, net                    $ 90,852    $ 82,246
                                                        -------     -------
                                                        -------     -------

4.  ACQUISITIONS

On December 27, 1996 the company 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 $.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,
1995 would not differ materially from amounts reported.
    
In July 1995 the company acquired Coopers Healthcare Plc, a United Kingdom-based
manufacturer of patient aids, for 222,266 shares of common stock (valued at $5.9
million) and cash of $2.5 million.  In October 1995 the company acquired Parker
Bath Group, a U.K.


                                          39
<PAGE>

manufacturer and distributor of bathing systems and patient lifters, for cash
and notes amounting to $30.0 million.
    
In April 1995 the company acquired the outstanding stock of S.E.P.A.C., Corona
S.A., Tecktona Bois S.A. and Tecktona Sante S.A., a group of related French
corporations (collectively, "Corona") for approximately $42.9 million. The total
purchase price of 206 million French francs included 174,918 shares of Sunrise
common stock valued at 31 million French francs with the remainder in cash,
which was funded from the company's bank credit facility.  Corona manufactures
and markets hydraulic and electric beds and other furniture for the homecare,
nursing home and hospital markets in France.
    
In September 1994 the company purchased selected assets and liabilities of 
Jay Medical, Ltd. ("Jay") for approximately $31 million. The total purchase 
price included cash of $19 million also financed through the multi-currency 
credit facility, a subordinated note of $7.5 million and 165,789 shares of 
Sunrise Medical Inc. common stock valued at $4.5 million when issued in 
December 1994. Jay manufactures specialized wheelchair seating and 
positioning products which it markets throughout the world.  Also during 
fiscal 1995 the company acquired a U.S. manufacturer of adaptive seating 
accessories for wheelchairs and two wheelchair distributors, one in Italy and 
one in Switzerland.  These companies were acquired for approximately $3.7 
million, consisting of $2.4 million in cash and $1.3 million in subordinated 
notes.
    
All of these acquisitions were accounted for by the purchase method of
accounting.  The excess of the aggregate purchase price over the fair market
value of net assets acquired of approximately $6 million in 1997, $36 million in
1996, and $69 million in 1995 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.
    
5.  UNUSUAL ITEMS
    
In December 1995 the company completed an intensive review of its operations and
businesses and initiated Operation Rebound, a corporate-wide profit improvement
plan.  This plan involved four major elements: the consolidation of the
company's U.S. salesforces from twelve to six; the integration of a number of
the company's smaller divisions operating within the same country or market;
establishment of profit improvement programs at all divisions; and the sale of
the Bio Clinic division's air therapy rental business because of declining
margins and high administrative costs.  Approximately 250 positions were
eliminated (including 83 positions in the air therapy rental business
transferred as of January 31, 1996 to the buyer of that business), or 6% of the
company total.  The air therapy rental business had net sales of $7.6 million in
1996 through the date of sale; its net sales in 1995 and 1994 were $13.1 million
and $12.8 million, respectively.
    
In June 1996 the company reached a settlement of stockholder litigation
initiated in October and November 1995 following the announcement of an internal
investigation of financial reporting at the Bio Clinic division.  The company
also initiated the merger of the remaining Bio Clinic business into the Joerns
division (thereby eliminating an estimated 60 positions), and commenced


                                          40
<PAGE>

a company-wide reorganization of its operations with the goal of reducing the
company's general and administrative cost structure.  

Also in June 1996, following a strategic review of its businesses, the company
decided to sell its Comfort Clinic division in order to concentrate on its core
healthcare products business, necessitating a write-down of its investment to
estimated net realizable value which was recorded in the fourth quarter of 1996.
The Comfort Clinic division was sold in October 1996 for cash of $14 million. 
Sales through the date of sale were $13.9 million, while the division's sales in
1996 and 1995 were $44 million and $66 million, respectively.
    
As a result of these actions, the company in 1996 recorded pretax charges from
unusual items of $65.2 million, of which $34.8 million was recorded in the
second quarter and $30.4 million in the fourth quarter.  These charges included:
$18.6 million for costs of the internal investigation and settlement of related
litigation, including attorneys' fees; $27.6 million related to Bio Clinic and
Comfort Clinic, consisting of loss on the sale of businesses of $5.8 million,
goodwill write-downs of $13.8 million and other asset adjustments of $8.0
million to reflect revised estimates of net asset realizations; and $19.0
million related to the company's reorganization and cost reduction program. 
During 1997, these reserves were adjusted downward by $4.6 million because of
lower than expected costs to relocate operations and to write down assets to be
sold.
    
In 1997 the company announced the consolidation of its four U.S. homecare
divisions into the Home Healthcare Group based in Longmont, Colorado, and a
series of consolidations in its European operations.  These actions were
designed to reduce operating costs and improve manufacturing and marketing
efficiencies.  Pre-tax charges of $4.7 million were incurred in 1997 in
connection with these consolidations.
    
The following table summarizes the restructuring activity through June 27, 1997
(in millions):

<TABLE>
<CAPTION>
                                                  Total     Adjust-   Additional     Amounts       Balance
                                                 Unusual     ments:     Charges     Utilized          at
                                                  Item      Increase/  in Fiscal     Through       June 27,
                                                 Charge    (Decrease)     1997      June 1997        1997
                                                 ------    ----------  ---------    ----------     ---------
<S>                                             <C>        <C>        <C>           <C>           <C>
Bio Clinic/Comfort Clinic:
   Litigation and investigation                 $ 18.6     $(   0.4)   $     --      $( 16.0)     $  2.2
   Investment write-down  
      and related items                           27.6       (  3.6)        --        ( 22.6)        1.4
                                                ------     --------    --------      -------      ------
                                                  46.2       (  4.0)        --         (38.6)        3.6
Corporate reorganization:
   Severance                                       3.2      (   0.5)        1.4       (  3.1)        1.0
   Facility closings                               5.4      (   0.2)        1.4       (  2.6)        4.0
   Other                                          10.4          0.1         1.9       (  9.5)        2.9
                                                ------     --------    --------      -------      ------
                                                  19.0      (   0.6)        4.7       ( 15.2)        7.9
                                                ------     --------    --------      -------      ------
   Total                                        $ 65.2     $(   4.6)     $  4.7      $( 53.8)     $ 11.5
                                                ------     --------    --------      -------      ------
                                                ------     --------    --------      -------      ------
</TABLE>


                                          41
<PAGE>

Of the original charges of $65.2 million, approximately $36.2 million require
cash payments and $29.0 million represent non-cash charges.  Cash payments of
$18.8 million were made in 1996 and $9.9 million in 1997.  Management estimates
that the remaining liability of $7.5 million will require payments of  $6.5
million in 1998 and $1 million thereafter.

6.  LEASES

The company leases office and operating facilities, machinery and equipment and
automobiles under operating leases which expire over the next 20 years. Rent
expense for operating leases amounted to $10,443, $9,698 and $8,332 for 1997,
1996 and 1995, respectively.  

Minimum lease payments under operating leases expiring subsequent to June 27,
1997 are:

         Year Ended                               Amount
         ----------                               ------
            1998                                 $10,216
            1999                                   6,443
            2000                                   4,624
            2001                                   3,568
            2002                                   3,018
         Thereafter                               12,438
                                                  ------
         Total minimum lease payments            $40,307
                                                  ------
                                                  ------


                                          42
<PAGE>

7.  LONG-TERM DEBT


<TABLE>
<CAPTION>

Long-term debt consists of the following:
                                                                            June 27,       June 28,
                                                                                1997           1996
                                                                                ----           ----
       <S>                                                                  <C>            <C>
       Borrowings under multi-currency credit agreement                     $170,581       $188,205

       Unsecured subordinated notes maturing from 1998 to 2003,
       payable in installments with interest rates from 7% to 10%
       (7% to 9.26% in 1996)                                                  13,051         18,422

       Unsecured European Coal and Steel Community
       job creation loan due 2002; interest at Libor +1%
       payable semiannually                                                    4,161           --  

       Mortgages payable in monthly installments with interest at
       various rates from 6.65% to 9.1%, maturing from 1998
       through 2004, secured by property                                       3,473          3,922

       Obligations under capital leases with lease periods expiring
       at various dates through 2005; interest at various rates from
       6.25% to 14.8%                                                          1,737          2,645
                                                                           ---------      ---------

       Total long-term debt                                                  193,003        213,194

       Less current installments                                          (    4,942)    (    5,748)
                                                                           ----------     ----------

       Long-term debt, net of current installments                          $188,061       $207,446
                                                                           ----------     ----------
                                                                           ----------     ----------

</TABLE>

As of June 27, 1997, aggregate debt maturities were as follows: 1998--$4,942;
1999--$3,410; 2000--$4,730; 2001--$172,533; 2002--$4,448; and
thereafter--$2,940. 
    
The company's unsecured multi-currency bank credit facility provides for maximum
borrowings of $250 million, decreasing to $235 million in January 1999 and to
$215 million in January 2000.  The maturity date is January 2001 and interest is
at the prime rate.  The company has 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 .15% to .30% per year, depending upon
the company's leverage ratio, is payable on the unused portion of the line.  The
credit facility requires the company to comply with certain covenants such as
maintenance of leverage ratio, tangible net worth, and interest coverage, and
places certain restrictions on acquisitions.  At June 27, 1997, the amount of
funds available from the credit facility was approximately $79 million.

SWAP AGREEMENTS  The company has entered into 11 interest rate swap agreements
with U.S. money center banks in order to minimize the impact of interest rate
fluctuations on the company's


                                          43
<PAGE>

interest expense. Each swap agreement is denominated in the currency of the
related borrowings. Under the terms of each agreement the company receives
compensation when the three-month interbank offered rate of the respective
currency exceeds the swap rate and pays compensation when it falls below the
swap rate.  At June 27, 1997 the three-month interbank offered rates were:
French francs--3.33%; U.S. dollars--5.81%; and German marks--3.08%.
    
The following table summarizes the company's interest rate swap agreements.  The
U.S. dollar equivalent is based on exchange rates in effect at June 27, 1997.

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

                              U.S.
Notional                     Dollar    Swap
Amount      Currency         Amount    Rate    Effective Period
------      --------         ------    ----    ----------------

100,000     French francs   $17,050   7.59%    April 1997 - April 2000
85,000      French francs   $14,493   3.50%    April 1997 - April 1998
85,000      French francs   $14,493   4.15%    April 1998 - April 1999
85,000      French francs   $14,493   5.09%    April 1999 - April 2000
85,000      French francs   $14,493   5.95%    April 2000 - April 2001
40,000      German marks    $23,004   3.28%    February 1997 - February 1998
33,000      German marks    $18,978   4.09%    February 1998 - February 1999
30,000      U.S. dollars    $30,000   5.29%    September 1995 - September 1997
30,000      U.S. dollars    $30,000   5.63%    September 1995 - September 2000
25,000      German marks    $14,378   5.01%    February 1999 - February 2000
25,000      German marks    $14,378   5.97%    February 2000 - February 2001

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

8.  BUSINESS AND CREDIT CONCENTRATIONS

The company manufactures and distributes durable medical equipment and supplies
primarily to the home health care and extended care markets.  A significant
portion of the company's receivables are due from home health care 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 the company's
products sold through this channel of distribution.

The company estimates an allowance for doubtful accounts based on the
creditworthiness of its customers as well as general economic conditions. 


                                          44
<PAGE>

9.  INCOME TAXES

The provision (benefit) for income taxes consists of the following:

                                                     Years Ended
                                    ----------------------------------------
                                    June 27,         June 28,       June 30,
                                      1997             1996           1995
                                      ----             ----           ----
    Current:
         Federal                   $(    205)       $( 5,962)      $ 4,635
         State                           217              23           587
         Foreign                       4,463           7,486         4,681
                                      ------          ------        ------
                                       4,475           1,547         9,903
    Deferred:

         Federal                       5,935         (12,060)        3,327
         State                           533         (   238)          936
         Foreign                     (   485)        (   842)          226
                                      ------          ------        ------
                                       5,983         (13,140)        4,489
                                      ------          ------        ------
    Total                            $10,458        $(11,593)      $14,392
                                      ------          ------        ------
                                      ------          ------        ------


Foreign income taxes are based upon $8,768, $16,126 and $13,489 of foreign
earnings before income taxes during 1997, 1996 and 1995, respectively.  No
deferred federal income taxes have been provided for cumulative foreign earnings
of $65,366 as the company has no plans or intentions to repatriate foreign
earnings or liquidate the related foreign assets.  At June 27, 1997, the company
had foreign tax loss carryforwards of approximately $6,680, consisting of $676
which expires in 1998, $5,119 which expires between 2000 and 2004, and $885
which does not expire.

A reconciliation between the federal statutory tax rate and the effective income
tax rate follows:

<TABLE>
<CAPTION>

                                                                                   Years Ended
                                                                   -----------------------------------------
                                                                    June 27,       June 28,        June 30,
                                                                      1997           1996            1995
                                                                      ----           ----            ----
     <S>                                                            <C>            <C>            <C>
    Statutory federal income tax rate                                35.0%         ( 35.0)%        35.0%
    Amortization of goodwill                                           6.5           10.8            4.2
    State income taxes, net of federal taxes                           2.6             --            2.9
    Taxation of foreign 
    operations                                                         4.3            1.9            0.5
    Other, net                                                         1.3            0.2          ( 0.1)
                                                                    ------         ------         ------
         Effective income tax rate                                   49.7%        (  22.1)%        42.5%
                                                                    ------         ------         ------
                                                                    ------         ------         ------
</TABLE>


                                          45
<PAGE>

Significant components of deferred income tax assets and liabilities are shown
below:

<TABLE>
<CAPTION>
                                                                     June 27,      June 28,
                                                                       1997          1996
                                                                       ----          ----
    <S>                                                              <C>           <C>
    Deferred income tax assets:
         Allowance for doubtful accounts                              $ 3,563      $ 4,663
         Inventory reserves                                             4,295        4,407
         Accrued expenses                                               5,030        8,732
         State and local taxes                                       (  1,545)          --
                                                                      -------      -------
                                                                       11,343       17,802
                                                                       ------      -------

    Deferred income tax liabilities:
         Depreciation and amortization                                  7,305        5,096
                                                                      -------      -------

    Net deferred income taxes                                         $ 4,038      $12,706
                                                                      -------      -------
                                                                      -------      -------
</TABLE>


Management believes that realization of the tax benefit of net deferred tax 
assets is more likely than not.

10.  PROFIT SHARING/SAVINGS PLAN  

The company has a 401(k) profit sharing/savings plan covering most U.S.
employees ("Associates").  Under the profit sharing portion of the plan, the
company will contribute to Associates' accounts a percentage of their salary for
the fiscal year. 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 as the amounts are determined based on earnings targets set by the
Board of Directors.  During 1997, 1996 and 1995, $2,533, $2,518 and $2,373,
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
1997, 1996 and 1995, $745, $790 and $709, respectively, of Associate
contributions were matched by the company.

11.  STOCKHOLDERS' EQUITY    

COMMON STOCK PURCHASE RIGHTS  In April 1990 the company's 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 its 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


                                          46
<PAGE>

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
involving the company, 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.
    
STOCK OPTION PLANS  The 1983 Stock Option Plan as amended ("the 83 Plan")
provided for the grant of 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.

In August 1993 the company adopted the 1993 Stock Option Plan ("the 93 Plan")
providing for the grant of 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.

Under both 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.  Option
exercisability is cumulative.  Unexercised options expire up to ten years and
one day after the date of grant.  As of June 27, 1997 there were 431,904
unissued shares of common stock reserved for future grants under the 93 Plan.
    
Shares subject to option under both plans are summarized as follows:

<TABLE>
<CAPTION>
                                                                              Years Ended
                                         --------------------------------------------------------------------------------------
                                               June 27, 1997                 June 28, 1996                June 30, 1995
                                               -------------                 -------------                -------------
                                                           Weighted                       Weighted                    Weighted
                                                            Average                        Average                     Average
                                                           Exercise                       Exercise                    Exercise
                                          Shares            Price        Shares            Price      Shares            Price
                                          ------            -----        ------            -----      ------            -----
<S>                                     <C>               <C>         <C>               <C>         <C>               <C>
Outstanding at beginning of year        1,365,350         $17.47      1,259,175         $18.56      1,312,175         $15.48
Granted                                   409,500          14.88        327,400          14.59        295,425          25.09
Exercised                               (  41,850)         10.05      (  27,200)          8.36      ( 268,750)         10.14
Canceled                                ( 175,350)         18.74      ( 194,025)         20.99      (  79,675)         20.08
                                         --------         ------       --------          -----       --------         ------
Outstanding at end of year              1,557,650         $16.85      1,365,350         $17.47      1,259,175         $18.56

Exercisable at end of year                817,643         $16.75        688,337         $15.73        536,776         $13.53

Weighted average fair value of
   options granted during the year                        $ 5.82                        $ 6.13                           n/a

</TABLE>


                                          47
<PAGE>

The following table summarizes information about stock options outstanding at
June 27, 1997:

             Options Outstanding                        Options Exercisable
----------------------------------------------------- ----------------------
                                 Weighted
                                 Average     Weighted               Weighted
     Range of                   Remaining    Average                 Average
     Exercise        Number    Contractual  Exercise     Number     Exercise
      Prices       Outstanding    Life         Price   Exercisable   Price
      ------       -----------    -------     -----   -----------    -----
$ 4.56 to $12.00    243,150        5.0      $ 8.22      178,850      $ 7.54
$12.38 to $15.88    696,550        8.0      $14.66      216,153      $13.56
$17.25 to $21.88    336,150        6.1      $19.72      261,526      $19.61
$23.50 to $35.88    281,800        7.1      $26.25      161,114      $26.58
                  ---------       ----      ------      -------      ------
                  1,557,650        6.9      $16.85      817,643      $16.75

The company applies APB 25 and related interpretations in accounting for grants
to employees under its 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 the company's 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:

                                                      1997         1996
                                                    --------      ---------
   Net income (loss)          As reported           $10,569      $(40,867)
                              Pro forma             $ 9,904      $(41,075)
   Earnings (loss) per share  As reported           $  0.55      $(  2.17)
                              Pro forma             $  0.52      $(  2.18)

The fair value of options granted has been estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions for grants
in 1997 and 1996 respectively:  expected volatility of 43% and 46% (based on
daily closing stock prices for the preceding four years); risk-free interest
rates of 6.4% and 6.7%; expected lives of 4.9 years; and no dividend yield.  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.  Because
SFAS 123 is applicable only to options granted subsequent to June 28, 1995, the
pro forma effect will not be fully reflected until 1999.


                                          48
<PAGE>

12.  GEOGRAPHIC SEGMENT INFORMATION

Selected geographic information is summarized as follows:

<TABLE>
<CAPTION>
                                                             Years Ended
                                              ----------------------------------------
                                              June 27,       June 28,       June 30,
                                                  1997           1996           1995
                                                  ----           ----           ----
<S>                                           <C>            <C>            <C>
   Net sales:
        United States                         $388,351       $412,361       $437,331
        Europe                                 268,391        254,769        164,596
                                               -------        -------        -------
             Total                            $656,742       $667,130       $601,927
                                               -------        -------        -------
                                               -------        -------        -------

   Corporate operating income (loss):
        United States                         $ 10,820      $( 60,214)      $ 24,277
        Europe                                  21,278         22,350         18,743
                                               -------        -------        -------
             Total                              32,098       ( 37,864)        43,020

   Interest expense                           ( 14,774)      ( 16,687)      ( 10,358)
   Interest income                               3,303          2,878          1,617
   Other income and expense, net                   400       (    787)      (    416)
                                               -------        -------        -------
   Income (loss) before income taxes          $ 21,027      $( 52,460)      $ 33,863
                                               -------        -------        -------
                                               -------        -------        -------

   IDENTIFIABLE ASSETS AT END OF YEAR
        United States                         $271,450       $307,511       $336,040
        Europe                                 339,099        312,905        268,703
                                               -------        -------        -------
             Total                            $610,549       $620,416       $604,743
                                               -------        -------        -------
                                               -------        -------        -------
</TABLE>

Amounts reported for United States include immaterial amounts from subsidiaries
in Canada and Australia.  Eliminated from net sales shown above for 1997, 1996
and 1995 were $4,261, $1,270 and $960, respectively, of sales by European
subsidiaries to North American subsidiaries, and $17,496, $18,146 and $13,053 of
sales, respectively, by North American subsidiaries to European subsidiaries.
Sales between geographic locations are based upon manufacturing costs plus a
reasonable profit element.


                                          49
<PAGE>

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(in thousands, except per share data)

<TABLE>
<CAPTION>
                                            First         Second          Third         Fourth         Fiscal
                                          Quarter        Quarter        Quarter        Quarter           Year
                                          -------        -------        -------        -------          -----
<S>                                     <C>             <C>           <C>              <C>          <C>
1997

Net sales                                $165,353       $169,710       $158,419       $163,260       $656,742
Gross profit                               54,454         54,612         50,774         53,841        213,681
Net income                                  3,060          2,452          1,104          3,953         10,569
Earnings per share                       $   0.16       $   0.13       $   0.06       $   0.20       $   0.55

1996

Net sales                                $157,172       $173,710       $169,574       $166,674       $667,130
Gross profit                               54,700         54,157         56,204         55,564        220,625
Net income (loss)                           3,794        (24,092)         2,694        (23,263)      ( 40,867)
Earnings (loss) per share                $   0.20       $(  1.28)      $   0.14       $(  1.23)      $(  2.17)
</TABLE>


                                          50
<PAGE>

                                       PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the directors of the company is included under the caption
"Election of Directors" in the company's Definitive Proxy Statement for its
Annual Meeting of Stockholders to be held on November 13, 1997 and is
incorporated herein by reference.  Information regarding the executive officers
of the company is included under a separate caption in Part I hereof, and is
incorporated herein by reference.  

ITEM 11. EXECUTIVE COMPENSATION

Certain information regarding executive compensation is set forth under the
caption "Compensation of Executive Officers" in the company's Definitive Proxy
Statement for its Annual Meeting of Stockholders to be held on November 13, 1997
and is incorporated herein by reference. 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership is set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in the
company's Definitive Proxy Statement for its Annual Meeting of Stockholders to
be held on November 13, 1997 and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding related transactions is set forth under the caption
"Certain Transactions" in the company's Definitive Proxy Statement for its
Annual Meeting of Stockholders to be held on November 13, 1997 and is
incorporated herein by reference.  


                                          51
<PAGE>

                                       PART IV

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

(a) INDEX TO FINANCIAL STATEMENTS

    (1)  FINANCIAL STATEMENTS:                                             PAGE
                                                                           ----

    Report of Management                                                    29

    Independent Auditors' Report                                            30

    Consolidated Balance Sheets as of June 27, 1997 and June 28, 1996       31

    Consolidated Statements of Operations for the years                     32
    ended June 27, 1997, June 28, 1996 and June 30, 1995

    Consolidated Statements of Cash Flows for the years                     33
    ended June 27, 1997, June 28, 1996 and June 30, 1995

    Consolidated Statements of Stockholders' Equity for the years           34
    ended June 27, 1997, June 28, 1996 and June 30, 1995

    Notes to Consolidated Financial Statements                              35

    (2)  FINANCIAL STATEMENT SCHEDULES:

    Schedule II -- Valuation and Qualifying Accounts for the                52
    years ended June 27, 1997, June 28, 1996 and June 30, 1995

    All other financial statement schedules have been omitted because they are
    not required or are not applicable, or the information is otherwise
    included.

(b) REPORTS ON FORM 8-K

    A report on Form 8-K dated May 16, 1997, was filed in connection with an
    amendment to the company's Stockholders' Rights Agreement.

(c) EXHIBITS

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


                                          52
<PAGE>

                                                                     SCHEDULE II

                        SUNRISE MEDICAL INC. AND SUBSIDIARIES

                          VALUATION AND QUALIFYING ACCOUNTS

          Fiscal Years Ended June 27, 1997, June 28, 1996 and June 30, 1995 
                                    (in thousands)

<TABLE>
<CAPTION>

                                                                          Additions
                                                                 ---------------------------
                                                  Balance at      Charged to    Charged to                    Balance at
                                                    beginning      costs and        other                         end
Description                                        of period       expenses       accounts       Deductions    of period
-----------                                        ---------       --------       --------       ----------    ---------
<S>                                                <C>             <C>          <C>               <C>          <C>
1995                                                                                                                 
----                                                                                                                 
Allowance for doubtful                                                                                               
    receivables                                     $ 4,373        $ 1,871      $   748 (1)    $(1,088)(2)  $  5,904
Reserve for installment                                                                                              
    receivables                                     $    --        $   954      $    --        $   --       $    954
Reserve for inventory                                                                                              
    obsolescence                                    $ 5,451        $ 2,745      $   361 (1)    $(1,083)(3)  $  7,474
                                                                                                                
1996                                                                                                                
----                                                                                                                
Allowance for doubtful                                                                                              
    receivables                                     $ 5,904        $ 9,421      $   167 (1)    $(3,969)(2)  $ 11,523
Reserve for installment                                                                                              
    receivables                                     $   954        $   980      $     1 (1)    $(  179)(2)  $  1,756
Reserve for inventory                                                                                              
    obsolescence                                    $ 7,474        $ 8,683      $ 1,249 (1)    $(3,742)(3)  $ 13,664
                                                                                                                
1997                                                                                                                
----                                                                                                                
Allowance for doubtful                                                                                              
    receivables                                     $11,523        $ 1,954      $(3,302)(1)    $(5,100)(2)  $  5,075
Reserve for installment                                                                                              
    receivables                                     $ 1,756        $ 1,586      $   125 (1)    $(1,233)(2)  $  2,234
Reserve for inventory                                                                                              
    obsolescence                                    $13,664        $ 4,598      $(1,033)(1)    $(3,468)(3)  $ 13,743
</TABLE>

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


                                          53
<PAGE>

                                      SIGNATURES

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

                                       SUNRISE MEDICAL INC.

                                      By: /s/  Ted N. Tarbet
                                          ----------------------------
                                            Senior Vice President and
                                            Chief Financial Officer
Date: September  16, 1997

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 September 16, 1997.

     SIGNATURE                        TITLE

 /s/ Richard H. Chandler     Chairman, President and Chief Executive Officer
---------------------------  (principal executive officer)
     Richard H. Chandler

 /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/ Lloyd E. Cotsen         Director
---------------------------
     Lloyd E. Cotsen            

                             Director
---------------------------
     Murray H. Hutchison                  

 /s/ William L. Pierpoint    Director
---------------------------
     William L. Pierpoint

 /s/ Babette Heimbuch        Director
---------------------------
     Babette Heimbuch


                                          54
<PAGE>

                                  INDEX OF EXHIBITS

Exhibit
Number                               Description
------                               -----------

   3.1   Certificate of Incorporation of the company and amendments thereto.
         (a)

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

   3.3   Bylaws of the company. (a)

   3.4   Amendment to Article II, Section 2, of the company's Bylaws. (c)

   3.5   Amendment to Certificate of Incorporation of the company as to the
         number of authorized shares. (d)

   3.6   Amendment of Bylaws to increase the number of directors to eight. (c)

   3.7   Amendment of Bylaws to increase the number of directors to nine. (f)

   3.8   Amendment of Bylaws to reduce the number of directors to eight. (g)

   3.9   Amended and Restated Bylaws as of April 29, 1997.

   4.1   Shareholders' Rights Agreement dated April 24, 1990. (h)

   4.2   Amended and Restated Shareholders' Rights Agreement dated May 16,
         1997. (q)

  10.6   Amended and Restated Stock Option Plan for Key Associates. (i)(r)

  10.7   1993 Stock Option Plan. (j)(r)

  10.8   Management Incentive Bonus Plan. (a)(r)

  10.9   Special Bonus Plan. (k)(r)

  10.10  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. (l)

  10.11  Asset Purchase Agreement for the Purchase of Certain Assets of Jay
         Medical, Ltd. (m)

  10.12  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. (n)


                                          55
<PAGE>

INDEX OF EXHIBITS--CONTINUED

Number                               Description
------                               -----------

  10.13  Second Amended and Restated Credit Agreement dated as of September 29,
         1995 among Sunrise Medical Inc. and certain subsidiary borrowers and
         guarantors, Bank of America as agent and other lenders. (o)

  10.14  First Amendment to Second Amended and Restated Credit Agreement and
         Waiver dated as of May 2, 1996 among Sunrise Medical Inc. and certain
         subsidiary borrowers and guarantors, Bank of America as agent and
         other lenders. (g)

  10.15  Second Amendment to Second Amended and Restated Credit Agreement and
         Waiver dated as of August 22, 1996 among Sunrise Medical Inc. and
         certain subsidiary borrowers and guarantors, Bank of America as agent
         and other lenders.(p)

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

  11     Computation of Net Income (Loss) Per Share.

  21     List of Subsidiaries.

  23     Consent of Independent Auditors.


  27     Financial Data Schedule.

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

  (a)    Incorporated herein by reference to the company's Registration
         Statement No. 2-86314.
  (b)    Incorporated herein by reference to the company's 1987 Definitive
         Proxy Statement.
  (c)    Incorporated herein by reference to the company's Form 10-Q for the
         quarter ended December 28, 1990.
  (d)    Incorporated herein by reference to the company's Form 10-Q for the
         quarter ended January 1, 1993.
  (e)    Incorporated herein by reference to the company's Form 10-Q for the
         quarter ended December 31, 1993.
  (f)    Incorporated herein by reference to the company's Form 10-K for the
         fiscal year ended July 1, 1994.
  (g)    Incorporated herein by reference to the company's Form 10-Q for the
         quarter ended March 29,  1996.
  (h)    Incorporated herein by reference to the company's Form 10-Q for the
         quarter ended March 30,  1990.
  (i)    Incorporated herein by reference to the company's 1990 Definitive
         Proxy Statement.
  (j)    Incorporated herein by reference to the company's 1993 Definitive
         Proxy Statement.
  (k)    Incorporated herein by reference to the company's Form 10-K for the
         fiscal year ended July  3, 1992.
  (l)    Incorporated herein by reference to the company's Form 8-K dated June
         29, 1993.
  (m)    Incorporated herein by reference to the company's Form 8-K dated
         September 16, 1994.
  (n)    Incorporated herein by reference to the company's Form 8-K dated April
         7, 1995.
  (o)    Incorporated herein by reference to the company's Form 10-K/A for the
         fiscal year ended June   30, 1995.
  (p)    Incorporated herein by reference to the company's Form 10-K for the
         year ended June 28, 1996.
  (q)    Incorporated herein by reference to the company's Form 8-K dated May
         16, 1997.
  (r)    Management contract or compensatory plan required to be filed as an
         exhibit pursuant to Item 14(c).


                                          56