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

Declares Quarterly Dividend

GREENVILLE, S.C. (July 25, 2001) -- Span-America Medical Systems, Inc. (Nasdaq/NM:SPAN) today reported higher sales and earnings for the third quarter ended June 30, 2001.  Net sales rose 7% to $7.3 million, and net income increased 22% to $334,000, or 13 cents a diluted share, compared with net income of $275,000, or 11 cents a share, in the third quarter of last year.

The Company also declared a regular quarterly cash dividend of $0.03 per share payable on August 31, 2001, to shareholders of record on August 15, 2001.

Third Quarter Results

Span-America continues to benefit from higher sales in our medical business unit, improved operating performance and good expense control," stated Jim Ferguson, president and chief executive officer of Span-America Medical Systems, Inc. "Medical sales rose 18% to $4.5 million in the third quarter, primarily due to strong performance in our mattress business which was up 32% over the same quarter last year.  We also posted sales increases in positioners, seating products and overlays as a result of new sales programs focused on our national distributors and strengthened relationships with long-term care providers.

"We plan to introduce new medical products in the fall, including a new powered mattress and two new wheelchair cushions.  We are enthusiastic about expanding our product lines, especially in the mattress market, the fastest growing part of our medical business."

 Sales in our custom products business unit decreased 6% to $2.86 million compared with $3.05 million in the same quarter of fiscal 2000, primarily due to lower sales of industrial foam products.  Sales of industrial products were down 20% to $782,000 in the third quarter, resulting from a decline in volume with several of our larger customers and general weakness related to the slowing economy.  Sales of consumer foam products (also part of the custom products business) were flat during the quarter at $2.08 million. 

"We expect sales of consumer foam products to improve in the fourth quarter as a result of back-to-school promotions with several major retailers through our partner, Louisville Bedding Company," continued Mr. Ferguson.  "We also are investing more in our medical sales, marketing and product development areas to expand our market potential in the future."

Earnings for the third quarter increased 22% to $334,000, or 13 cents a diluted share, compared with earnings of $275,000, or 11 cents a share, in the year-earlier quarter.  The increase in earnings came from the higher sales volume, a favorable product mix, and good control of manufacturing costs. 

Mr. Ferguson commented, "We are pleased with our third quarter sales and earnings performance.  Our medical business is particularly strong, and the custom products business is holding its own in a difficult economic environment.  Based on current order patterns, we expect the Company to continue to perform well through the fourth quarter of fiscal 2001."

Year-to-Date Results

Net sales for the first nine months of fiscal 2001 increased 10% to $21.0 million compared with $19.1 million for the same period in fiscal 2000.  Medical sales increased 13% to $12.9 million, and custom products sales rose 5% to $8.1 million.

Net income year-to-date rose 22% to $836,000, or 33 cents a diluted share, compared with $684,000, or 27 cents a diluted share, for the year-to-date in fiscal 2000.  The earnings growth for the first nine months was due mostly to the higher sales volume and a favorable product mix.

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) FDA 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.