SPAN-AMERICA REPORTS HIGHER SALES AND NET INCOME FOR FIRST QUARTER OF FISCAL 2001

 Declares Quarterly Dividend

GREENVILLE, S.C. (January 29, 2001) Span-America Medical Systems, Inc. (Nasdaq/NM:SPAN) today reported record sales for the first quarter of fiscal 2001 of $7.1 million and a 117% increase in net income to $327,000, or 13 cents per diluted share, compared with $151,000, or 6 cents per diluted share, in the first fiscal quarter of last year.  The Company also announced a regular cash dividend of $0.03 per share, payable on March 2, 2001, to shareholders of record on February 15, 2001.

"Span-America's first quarter performance reflected excellent sales growth in both of our business units," stated Jim Ferguson, president and chief executive officer of Span-America Medical Systems, Inc.  "We are particularly pleased with our strong sales performance in the October – December quarter since this is traditionally a seasonally slow period in our business.   The higher sales volume for both medical and custom products was the main contributor to our significant earnings improvement."

First Quarter Results

Net sales rose 30% to $7.1 million in the first quarter of fiscal 2001 compared with $5.5 million in the same quarter last year.  Medical sales rose 23% in the first quarter to $4.6 million compared with $3.7 million last year.  Medical mattress sales led the way, increasing 65% over the first quarter of last year.  Sales of patient positioners were up 22% and seating product sales rose 11% compared with the first quarter of last year. The growth in seating product sales was due in part to Span-America's new contract with Beverly Enterprises, which began in June 2000. Sales of medical mattress overlays declined by 4% during the quarter as a result of shifting demand from mattress overlays to therapeutic mattresses. 

Sales of custom products rose 43% to $2.5 million in the first quarter compared with $1.8 million in the year-earlier quarter.  All of the growth came from Span-America's consumer foam products sold through Louisville Bedding Company.  Sales of industrial packaging products were flat during the quarter. 

"We saw excellent growth in sales of pillows and our Geo-Systems™ line of mattress pads," continued Mr. Ferguson.  "The Geo-Systems products are thicker and have a more sophisticated surface design than traditional convoluted pads and have been well received in the bedding market to date."

Operating income for the first quarter increased 209% to $364,000 compared with $117,000 in the first quarter of last year.  Net income rose 117% to $327,000, or 13 cents a diluted share, compared with $151,000, or 6 cents a diluted share, last year.

Span-America's gross profit increased 30% in the first quarter to $2.2 million compared with $1.7 million in the same period last year while the gross margin percentage remained level at 30.5% in both quarters.  "Selling and marketing expenses were up 19% in the quarter as we continue to expand our selling and new product development efforts. We believe both of our key markets offer solid long-term growth opportunities, and we expect to continue to invest in expanding our selling and marketing capabilities," concluded Mr. Ferguson.

About Span-America Medical Systems, Inc.

Span-America manufactures and markets a comprehensive selection of pressure management products for the medical market, including Geo-Matt®, PressureGuard®, Geo-Mattress®, Span+Aids®, and Isch-Dish® products.  The Company also supplies custom foam and packaging products to the consumer and industrial markets. Span-America's stock is traded on The Nasdaq Stock Market's National Market under the symbol SPAN.

The Company has made forward-looking statements in this release, regarding management's expectations for future sales and earnings performance.  Management wishes to caution the reader that these statements are only predictions.  Actual events or results may differ materially as a result of risks and uncertainties facing the Company including: (a) the loss of a major distributor of the Company's medical or custom products, (b) inability to achieve anticipated sales volumes of medical or custom products, (c) changes in relationships with large customers, (d) the impact of competitive products and pricing, (e) government reimbursement changes in the medical market, (f) F.D.A. regulation of medical device manufacturing, (g) raw material cost increases; and (h) other risks referenced in the Company's Securities and Exchange Commission filings.  The Company disclaims any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise