Greenville, South Carolina (January 20, 1998) -- Span-America Medical Systems, Inc. (Nasdaq/NM:SPAN) today reported higher sales and net income for the first quarter of fiscal 1998 ended December 27, 1997. The Company also announced a regular cash dividend of $.025 per share payable on March 4, 1998, to shareholders of record as of February 16, 1998.

Net sales for the first quarter increased 7% to $8.3 million compared with $7.7 million in the first quarter last year. Sales growth was strong in the consumer, industrial, and contract packaging business units. Sales of medical products were down in the first quarter due to lower sales of static replacement mattresses. Earnings for the quarter rose 18% to $412,000 compared with $350,000 in the first quarter last year. Basic earnings per share were $0.13, up 23% from $0.11 in the first quarter of fiscal 1997. Diluted earnings per share were $0.13 for the current quarter compared with $0.11 in the first quarter last year.

"Span-America's higher sales volume fueled our earnings increase for the first quarter of fiscal 1998," stated Jim Ferguson, president and chief executive officer of Span-America Medical Systems, Inc. "Consumer sales increased 17% primarily because of seasonal promotions of foam mattress pads and pillows. Contract packaging sales rose 30% as a result of new contracts received in 1997. Industrial sales were up 22% due to higher sales to existing customers and the addition of several new customers since last year. We anticipate further sales growth in our industrial business unit as we begin shipping products on a new Fuji Photofilm project in the second half of fiscal 1998.

"Our medical sales were down 10% in the first quarter mainly due to lower sales of static replacement mattresses. The weakness came mostly from the acute care market segment, while sales to the long-term care segment were strong. Sales of our new Geo-Mattress product line did very well, but they did not fully offset sales declines in other product lines. We expect to begin shipping our newest dynamic mattresses, the PressureGuard® Turn Select and SiteSelect, during our second fiscal quarter after we receive FDA marketing approval.

"We are encouraged by our profit growth during the quarter, resulting from the higher sales volume and lower selling and administrative expenses as a percent of sales. Our operating profit margin improved in spite of slightly higher manufacturing costs, which have been affected by higher labor costs in the South Carolina market. Overall, we are pleased with the Company's solid sales and earnings performance in the first quarter of fiscal 1998, since the first quarter has historically been one of our weaker quarters," concluded Mr. Ferguson.

Span-America Medical Systems, Inc. manufactures and markets products to the health care industry for the prevention and treatment of pressure ulcers. The Company also is a manufacturer and marketer of foam and contract packaging products for the consumer and industrial markets. Span-America's stock is traded on The Nasdaq Stock Market's National Market under the symbol SPAN

With the exception of historical factual information, the statements made in this press release constitute forward-looking statements, contain the words "believes," "anticipates," "expects," and words of similar import based upon current expectations and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve certain assumptions, risks and uncertainties that could cause actual results to differ materially from those included in or contemplated by the statements. The Company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the issuance of this press release.