<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
------------------ --------------------
Commission file number 33-88216
------------------------------------------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
SUNRISE MEDICAL INC. PROFIT SHARING/SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Sunrise Medical Inc.
2382 Faraday Avenue, Suite 200
Carlsbad, California 92008
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Page
----
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . . . . 1
Financial Statements:
Statements of Net Assets Available for Benefits at
June 30, 1997 and 1996. . . . . . . . . . . . . . . . . . . . . . . 2
Statement of Changes in Net Assets Available for Benefits for
the year ended June 30, 1997. . . . . . . . . . . . . . . . . . . . 3
Statement of Changes in Net Assets Available for Benefits for
the year ended June 30, 1996. . . . . . . . . . . . . . . . . . . . 4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 5
Supplemental Schedules:
Schedule I - Item 27a - Schedule of Assets Held for Investment
Purposes at June 30, 1997 . . . . . . . . . . . . . . . . . . . . . 10
Schedule II -Item 27d - Schedule of Reportable Transactions
for the year ended June 30, 1997. . . . . . . . . . . . . . . . . . 11
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees of Sunrise Medical Inc. Profit Sharing/Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Sunrise Medical Inc. Profit Sharing/Savings Plan (the Plan) as of
June 30, 1997 and 1996, and the related statements of changes in net assets
available for benefits for each of the years in the two-year period ended
June 30, 1997. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Sunrise
Medical Inc. Profit Sharing/Savings Plan as of June 30, 1997 and 1996, and the
changes in net assets available for benefits for each of the years in the
two-year period ended June 30, 1997 in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in
the statements of changes in net assets available for benefits is presented for
the purposes of additional analysis rather than to present the changes in net
assets available for benefits for each fund. The supplemental schedules and
Fund Information have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
/s/ KPMG Peat Marwick LLP
Los Angeles, California
November 7, 1997
1
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Statements of Net Assets Available for Benefits
June 30, 1997 and 1996
ASSETS 1997 1996
-------------- --------------
Investments, at fair value (note 3) $ 46,173,715 39,894,548
Receivables:
Employer's contribution 2,401,219 2,031,758
Participants' contributions 284,756 299,834
-------------- --------------
Net assets available for benefits $ 48,859,690 42,226,140
-------------- --------------
-------------- --------------
See accompanying notes to financial statements.
2
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended June 30, 1997
<TABLE>
<CAPTION>
American
Express IDS IDS New IDS
Trust Income Mutual Dimenstions Stock
Fund II Fund Fund Fund
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net gain (loss) on sale of investments and
unrealized appreciation (depreciation), net $ 848,330 538,533 2,255,631 516,778
Interest and dividends - 717,359 455,126 220,863
--------------- --------------- ------------- -------------
Net investment income (loss) 848,330 1,255,892 2,710,757 737,641
Contributions:
Employer's 1,060,454 484,526 724,917 318,808
Participants' 917,590 643,913 1,147,515 478,188
--------------- --------------- ------------- -------------
Total additions 2,826,374 2,384,331 4,583,189 1,534,637
Deductions from net assets attributed to:
Vested benefits paid to participants 2,137,874 790,485 1,223,344 448,564
--------------- --------------- ------------- -------------
Net increase (decrease) before interfund transfers 688,500 1,593,846 3,349,845 1,086,073
Interfund transfers 98,307 (60,095) (106,366) 106,532
--------------- --------------- ------------- -------------
Net increase (decrease) 786,807 1,533,751 3,243,479 1,192,605
Net assets available for benefits:
Beginning of year 14,253,126 6,275,409 10,499,875 2,763,854
--------------- --------------- ------------- -------------
End of year $ 15,039,933 7,809,160 13,743,354 3,956,459
--------------- --------------- ------------- -------------
--------------- --------------- ------------- -------------
<CAPTION>
Sunrise Medical,
IDS Inc. Pooled
Selective Common Stock Loans to
Fund Fund Pariticipants Total
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net gain (loss) on sale of investments and
unrealized appreciation (depreciation), net 2,182 (1,000,092) - 3,161,362
Interest and dividends 143,535 16,605 99,577 1,653,065
--------------- --------------- ------------- -------------
Net investment income (loss) 145,717 (983,487) 99,577 4,814,427
Contributions:
Employer's 142,626 452,310 - 3,183,641
Participants' 189,460 598,841 - 3,975,507
--------------- --------------- ------------- -------------
Total additions 477,803 67,664 99,577 11,973,575
Deductions from net assets attributed to:
Vested benefits paid to participants 226,006 367,021 136,731 5,340,025
--------------- --------------- ------------- -------------
Net increase (decrease) before interfund transfers 251,797 (299,357) (37,154) 6,633,550
Interfund transfers (41,552) (194,987) 198,161 -
--------------- --------------- ------------- -------------
Net increase (decrease) 210,245 (494,344) 161,007 6,633,550
Net assets available for benefits:
Beginning of year 1,811,793 5,585,654 1,036,429 42,226,140
--------------- --------------- ------------- -------------
End of year 2,022,038 5,091,310 1,197,436 48,859,690
--------------- --------------- ------------- -------------
--------------- --------------- ------------- -------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended June 30, 1996
<TABLE>
<CAPTION>
American
Express IDS IDS New IDS
Trust Income Mutual Dimenstions Stock
Fund II Fund Fund Fund
--------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net gain (loss) on sale of investments and
unrealized appreciation (depreciation), net $ 803,083 495,935 1,750,173 266,533
Interest and dividends - 211,848 374,905 98,845
--------------- ------------- -------------- -------------
Net investment income (loss) 803,083 707,783 2,125,078 365,378
Contributions:
Employer's 953,895 448,523 601,320 242,638
Participants' 1,134,668 742,184 1,252,715 550,017
--------------- ------------- -------------- -------------
Total additions 2,891,646 1,898,490 3,979,113 1,158,033
Deductions from net assets attributed to:
Vested benefits paid to participants 1,855,584 530,881 1,155,149 158,971
--------------- ------------- -------------- -------------
Net increase (decrease) before interfund transfers 1,036,062 1,367,609 2,823,964 999,062
Interfund transfers (879,747) (101,455) 160,882 83,406
--------------- ------------- -------------- -------------
Net increase (decrease) 156,315 1,266,154 2,984,846 1,082,468
Net assets available for benefits:
Beginning of year 14,096,811 5,009,255 7,515,029 1,681,386
--------------- ------------- -------------- -------------
End of year $ 14,253,126 6,275,409 10,499,875 2,763,854
--------------- ------------- -------------- -------------
--------------- ------------- -------------- -------------
<CAPTION>
Sunrise Medical,
IDS Inc. Pooled
Selective Common Stock Loans to
Fund Fund Pariticipants Total
--------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net gain (loss) on sale of investments and
unrealized appreciation (depreciation), net (39,493) (2,434,804) - 841,427
Interest and dividends 104,290 19,071 75,621 884,580
--------------- ---------------- ------------- --------------
Net investment income (loss) 64,797 (2,415,733) 75,621 1,726,007
Contributions:
Employer's 155,796 484,416 - 2,886,588
Participants' 281,351 866,769 - 4,827,704
--------------- ---------------- ------------- --------------
Total additions 501,944 (1,064,548) 75,621 9,440,299
Deductions from net assets attributed to:
Vested benefits paid to participants 94,575 986,677 35,120 4,216,957
--------------- ---------------- ------------- --------------
Net increase (decrease) before interfund transfers 407,369 (1,451,225) 40,501 5,223,342
Interfund transfers 139,178 369,198 228,538 -
--------------- ---------------- ------------- --------------
Net increase (decrease) 546,547 (1,082,027) 269,039 5,223,342
Net assets available for benefits:
Beginning of year 1,265,246 6,667,681 767,390 37,002,798
--------------- ---------------- ------------- --------------
End of year 1,811,793 5,585,654 1,036,429 42,226,140
--------------- ---------------- ------------- --------------
--------------- ---------------- ------------- --------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Notes to Financial Statements
June 30, 1997 and 1996
(1) DESCRIPTION OF PLAN
The following description of the Sunrise Medical Inc. Profit
Sharing/Savings Plan (the Plan) is provided for general information
purposes only. The Plan is sponsored by Sunrise Medical Inc. and certain
of its subsidiaries (the Company), and the Plan's trustee and recordkeeper
is American Express Trust Company (American Express), formerly IDS Bank &
Trust (IDS). Participants should refer to the Plan for a more complete
description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan which went into effect July 1, 1984
and is generally available to all U.S. employees who have completed 60 days
of service with the Company. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
The following types of contributions are allowable under the Plan:
- Salary Deferral Contributions -- Participants may contribute up to 14%
of their pre-tax earnings, as defined in the Plan, subject to
limitation. A participant's total tax-deferred contribution cannot
exceed $9,500 in calendar years 1997 or 1996.
- Matching Employer Contributions -- The Company contributes matching
amounts each Plan year. Salary deferral contributions were matched
100% up to a maximum of $400 per participant for the Plan years ended
June 30, 1997 and 1996.
- Discretionary Employer Contributions -- The Company may make an
additional profit sharing contribution to those eligible participants
who have completed one year of service and are actively employed as of
the last day of the Plan year. This contribution is limited to a
maximum of 6% of the participant's eligible earnings and is allocated
in proportion to each participant's earnings.
- Post-tax Participant Contributions -- Post-tax contributions of up to
10% of a participant's earnings may be contributed to the Plan.
- Rollover Contributions -- Amounts distributed to participants from
other qualified employee benefit plans may be rolled into the Plan.
All contributions are allocated to the Plan's investment funds at the
direction of the participants.
The total annual addition to a participant's account may not exceed the
lesser of $30,000 or 25% of the participant's taxable net earnings.
5
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Notes to Financial Statements, Continued
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions
and an allocation of (a) the Company's contribution (matching employer and
discretionary employer) and (b) fund earnings. Allocations are based on
participant earnings or account balances, as defined in the Plan document.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
VESTING
Participants are immediately vested in their contributions, matching
employer contributions, rollover contributions and related earnings
thereon.
Full vesting in the discretionary employer contributions occurs at the
earliest of the following dates:
- Completion of five vesting years of service;
- Participant's death;
- Participant becomes disabled as defined under the Plan;
- Participant's normal retirement date; or
- Upon termination or partial termination of the Plan.
Participants become partially vested in the discretionary employer
contributions at 25% increments per year starting with the second year of
service.
INVESTMENT OPTIONS
Participants may allocate their contributions to any combination of the
following investment choices managed by American Express:
NAME OF MUTUAL FUND TYPE OF INVESTMENTS
--------------------------------------- ------------------------------------
American Express Trust Income Fund II A collective investment fund that
seeks a steady rate of return by
investing in Guaranteed Investment
Contracts (GICs) and money market
instruments.
IDS Mutual Fund A growth and income fund that
invests in bonds, common stocks and
notes.
6
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Notes to Financial Statements, Continued
NAME OF MUTUAL FUND TYPE OF INVESTMENTS
--------------------------------------- ------------------------------------
IDS New Dimensions Fund An aggressive growth fund that
invests primarily in common stocks
of companies with excellent
technology, marketing, or
management.
IDS Stock Fund The fund seeks current income and
growth of capital through
investments in common stocks of
companies.
IDS Selective Fund The fund seeks to provide current
income with the preservation of
capital and invests in the four
highest grades of corporate bonds,
government securities, and money
market securities.
Sunrise Medical Inc. Pooled Common The fund aims for long-term capital
Stock Fund appreciation with 90% to 95% of the
fund invested in the stock of
Sunrise Medical Inc.
LOANS TO PARTICIPANTS
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum equal to the lesser of $50,000 or 50% of their vested account
balance. Loan transactions are treated as a transfer to (from) the
investment fund from (to) the Loans to Participants fund. Loan terms range
from 1 month to 5 years or up to 20 years for the purchase of a primary
residence. The loans are secured by the balance in the participant's
account and bear interest at a rate equal to prime interest rate plus two
percentage points. Interest rates range from approximately 9.5% to 11% at
June 30, 1997. Principal and interest are paid ratably through monthly
payroll deductions.
PAYMENT OF BENEFITS
Benefits to participants or beneficiaries generally are payable as a lump
sum equal to the value of their vested account upon retirement, disability,
death or termination of the participant or termination of the Plan.
Additionally, participants may withdraw their salary deferral contributions
during financial hardships, as defined in the Plan.
ADMINISTRATIVE EXPENSES
Plan administrative expenses are funded first by participant fees and
then by forfeitures. Plan administrative expenses were $96,021 and $43,383
in 1997 and 1996, respectively. Forfeitures totaled $68,574 and $83,203 for
the years ended June 30, 1997 and 1996, respectively.
7
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Notes to Financial Statements, Continued
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared using the accrual method
of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Fair value is determined
by American Express based on quoted market prices for the underlying assets
within each fund and based on contract value for benefit responsive
guaranteed investment contracts from insurance companies. Company stock is
valued using quoted market prices. Loans to participants are valued at
cost which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
USE OF ESTIMATES
The plan sponsor and administrator have made a number of estimates and
assumptions relating to the reporting of net assets available for benefits
and changes in net assets available for benefits to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(3) INVESTMENTS
The Plan's investments consist primarily of collective investment funds and
common stock. The Plan's investments in collective investment funds are
held by the American Express Income Fund II, IDS Mutual Fund, IDS New
Dimensions Fund, IDS Stock Fund, IDS Selective Fund, and American Express
Trust Money Market Fund I, which are IDS-administered trust funds.
Investments in the Sunrise Medical Inc. Pooled Common Stock Fund primarily
consist of the common stock of Sunrise Medical Inc. The Plan's investment
consist of the following at June 30:
1997 1996
------------ -----------
American Express Trust Income Fund II* $ 14,233,678 13,573,394
IDS Mutual Fund* 7,267,100 5,727,236
IDS New Dimensions Fund* 13,175,109 10,058,644
IDS Stock Fund* 3,682,194 2,555,129
IDS Selective Fund 1,907,071 1,701,102
Sunrise Medical Inc. Pooled Common Stock Fund* 4,474,132 4,866,727
American Express Trust Money Market Fund I 236,742 375,887
Loans to participants 1,197,689 1,036,429
------------ -----------
$ 46,173,715 39,894,548
------------ -----------
------------ -----------
* Represents more than 5% of total plan assets.
8
<PAGE>
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Notes to Financial Statements, Continued
(4) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan, subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their accounts.
(5) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
Included in net assets available for benefits at June 30, 1996 was $21,533
for amounts related to Plan participants and participants who have
terminated their service with the Company and requested a lump sum
distribution of their account balance. This amount is reflected as
benefits payable on the Form 5500 which is filed with the Internal Revenue
Service. There were no such amounts in 1997.
(6) INCOME TAXES
The Internal Revenue Service (IRS) has determined and informed the Company
by a letter dated January 17, 1997, that the Plan is designed in accordance
with applicable sections of the Internal Revenue Code (IRC). The Plan has
been amended since receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that the Plan is designed
and is currently being operated in compliance with the applicable
requirements of the IRC.
9
<PAGE>
SCHEDULE 1
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
June 30, 1997
<TABLE>
<CAPTION>
CURRENT
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE
----------------------- ---------------------------------------- -------------- -------------
<S> <C> <C> <C>
* American Express Mutual Fund $ 12,642,598 14,233,678
Income Fund II 842,933 shares at $16.89 per share
* IDS Mutual Fund Mutual Fund 6,324,366 7,267,100
499,011 shares at $14.56 per share
* IDS New Dimensions Mutual Fund 9,072,512 13,175,109
Fund 559,690 shares at $23.54 per share
* IDS Stock Fund Mutual Fund 2,978,009 3,682,194
143,017 shares at $25.73 per share
* IDS Selective Fund Mutual Fund 1,922,516 1,907,071
210,469 shares at $9.06 per share
* Sunrise Medical Inc. Sunrise Medical Inc. Pooled Common 6,391,058 4,474,132
Stock Fund 296,064 shares at $15.11
per share
* American Express Trust Money Market 236,742 236,742
Money Market Fund I 236,742 shares at $1.00 per share
* Loans to participants Interest rate ranges from 9.5% to 11% 1,197,689 1,197,689
-------------- --------------
Balance at June 30, 1997 $ 40,765,490 46,173,715
-------------- --------------
-------------- --------------
</TABLE>
* Party-in-interest
See accompanying independent auditors' report.
10
<PAGE>
SCHEDULE 2
SUNRISE MEDICAL INC.
PROFIT SHARING/SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
For the year ended June 30, 1997
<TABLE>
<CAPTION>
CURRENT
VALUE OF
COST OF ASSET ON NET
IDENTITY OF PURCHASE SELLING ASSET TRANSACTION GAIN OR
PARTY INVOLVED PRICE (1) PRICE (1) SOLD (1) DATE (1) (LOSS)
- ---------------------- ------------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
American Express $ 2,454,390 2,620,178 2,547,023 2,454,390 73,155
Trust Income
Fund II
IDS New Dimensions 2,811,815 2,811,815
Fund
Sunrise Medical Inc. 2,344,527 2,344,527
Pooled Common
Stock Fund
</TABLE>
(1) Series of transactions
See accompanying independent auditors' report.
11
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
----------------------- ---------------------------------------------
23.1 Consent of KPMG Peat Marwick LLP
<PAGE>
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
December 23, 1997 Sunrise Medical Inc. Profit Sharing/Savings Plan
--------------------------------------------------
(Name of Plan)
/s/ Richard H. Chandler
---------------------------------------------------
Richard H. Chandler
Plan Administration Committee Member
/s/ Ted N. Tarbet
---------------------------------------------------
Ted N. Tarbet
Plan Administration Committee Member
/s/ Roberta C. Baade
---------------------------------------------------
Roberta C. Baade
Plan Administration Committee Member
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Sunrise Medical Inc.:
We consent to the incorporation by reference in the Registration Statement (No.
33-88216) on Form S-8 of Sunrise Medical Inc. of our report dated November 7,
1997, relating to the financial statements and related schedules of the Sunrise
Medical Inc. Profit Sharing/Savings Plan as of June 30, 1997 and June 30, 1996
and for each of the years in the two-year period ended June 30, 1997, which
report appears in the June 30, 1997 annual report on Form 11-K of the Sunrise
Medical Inc. Profit Sharing/Savings Plan.
/s/ KPMG Peat Marwick LLP
Los Angeles, California
December 22, 1997
