Chandler Resigns as Sunrise Medical CEO Bank Credit Agreement Amended.

CARLSBAD, Calif.--(BW HealthWire)--Oct. 5, 1999--

Sunrise Medical Inc. (NYSE:SMD) announced today that Richard H. Chandler, 56, who founded the company in 1983 and has served as its chief executive officer since then, has resigned from his positions as chairman, president and CEO, as well as his seat on the board of directors, in order to pursue new business ventures.

Sunrise has appointed Murray H. Hutchison, 60, a Sunrise director since 1983, as interim chairman, president and CEO. Mr. Hutchison previously served for 18 years as chairman and CEO of IT Group (formerly International Technology Corporation), a NYSE company, and is presently also a director of Jack in the Box Inc. (formerly Foodmaker, Inc.) and Cadiz Inc. Corporate officers and the executives at Sunrise's six principal operating units will report to Mr. Hutchison. The executive recruiting firm of Spencer Stuart has been retained to lead a search for a permanent replacement for Mr. Chandler.

Explaining his decision to leave the company, Chandler stated, "With the successful completion of the bank credit amendment, I have concluded that it is time to turn the leadership of Sunrise Medical over to a chief executive with a different set of skills. In our industry's present environment, Sunrise needs an operationally oriented chief executive who will drive continuous reduction in costs along with improvement in products. As a major shareholder of Sunrise, I would choose others ahead of myself for the CEO job at this point in time. I will now shift my energies to building another company in a market that is still in its formative stage."

Commenting on Chandler's resignation, Hutchison said, "Dick Chandler has made significant contributions to Sunrise Medical as its founder and builder. The board is very mindful of Dick's stature in the industry and the value of his perspective, and has arranged to have him serve as a consultant for the next three years to assure a smooth transition."

Bank Credit Amendment Concluded

The company also announced that its bank group has agreed to an amendment to its bank credit agreement that remedies a financial covenant violation while providing for anticipated working capital needs. The company's $120 million credit line was reduced to $110 million effective September 30, 1999, and it will be further decreased in a series of reductions to $65 million on July 7, 2000. As part of the amendment, $40 million of the outstanding borrowings under the credit agreement have been converted from the revolving credit facility to a term loan which is secured by the company's domestic accounts receivable. Sunrise currently has approximately $91 million in total bank borrowings outstanding. Borrowings under the amended credit line and the term loan are due in full on January 14, 2001. The blended annual interest rate under the amended agreement will increase to an average of 11% at today's prevailing rates, versus 8% in fiscal 1999.

The company is considering a variety of alternatives to generate additional cash to fund credit line reductions, including the divestiture of certain assets, such as the sale and leaseback of company owned manufacturing facilities, and the direct sales of equity. The company plans to file a shelf registration statement to facilitate securities offerings, if appropriate. Deutsche Banc Alex. Brown has been engaged to provide advice and assistance in connection with a number of alternatives in this regard.

Commenting on these events, Hutchison said, "In approving the amended bank credit agreement, the board has decided to pursue a strategy of de-leveraging the company's balance sheet in order to reduce the company's cost of capital over the long term. We believe this strategy will increase the company's future flexibility and enhance long-term shareholder value."

Sunrise Medical designs, manufactures and markets rehabilitation products and assistive technology devices for people with disabilities, and patient care products used in nursing homes, hospitals and homecare settings. Sunrise products are manufactured in the U.S., Mexico and Europe, and are distributed in more than 100 countries around the world. For more information about the company, please visit its website at www.sunrisemedical.com.

The company has made forward-looking statements in this release, including: expectations regarding the possible sale of certain assets such as the sale and leaseback of facilities or the direct sale of equity to institutional investors. These statements are only predictions. Actual events or results may differ materially as a result of risks and uncertainties facing the company including: (i) the impact of competitive products and activities; (ii) increased industry pricing pressures; (iii) product development, commercialization and market acceptance risks; (iv) the rising cost and availability of raw materials; (v) the reduction or elimination of government funding for the company's products; (vi) unfavorable governmental regulatory actions (such as by the FDA in the U.S.); (vii) disruptions caused by the company's consolidations of operations; (viii) year 2000 compliance related risks; (ix) risks related to the company's international operations; (x) its dependence on key personnel; and (xi) other factors referenced in Securities and Exchange Commission filings of the company. The company disclaims any obligation to update any such factors or to announce publicly any revisions to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments, or to forecast financial results in the future.