SPAN-AMERICA REPORTS HIGHER SALES AND INCOME
Declares Quarterly Dividend

GREENVILLE, S.C. (July 24, 2002) -- Span-America Medical Systems, Inc. (Nasdaq:SPAN) today reported higher sales and earnings for the third quarter ended June 29, 2002.  Net sales rose 14% to $8.3million, and net income increased 8% to $359,000, or 14 cents a diluted share, compared with net income of $334,000, or 13 cents a diluted share, in the third quarter of last year. 

The Company also declared a regular quarterly cash dividend of $0.03 per share payable on September 3, 2002, to shareholders of record on August 15, 2002.

Third Quarter Results

"Our third quarter sales growth benefited from solid gains in our medical and custom products businesses," stated Jim Ferguson, president and chief executive officer of Span-America Medical Systems, Inc.  "Strong demand for medical mattress products contributed to a 13% growth in medical sales to $5.1 million compared with the third quarter of last year.  The 14% increase in custom product sales to $3.2 million was largely due to the continued success of our marketing and distribution agreement for consumer bedding products with Louisville Bedding Company.

"Most of the medical sales growth was due to higher demand for our proprietary medical mattresses, which jumped 40% during the quarter.  We experienced solid sales increases from all our mattress products, with our alternating pressure mattresses and the newly released PressureGuard Easy Air™ low-air-loss mattress showing the largest gains.  We are pleased with the excellent growth we have seen from the two newest products in our mattress line up."

Third quarter medical sales also benefited from an 82% increase in seating products as a result of a special order from a new customer.  Sales of mattress overlays declined 17%, as replacement mattresses took market share at the expense of mattress overlays.  Sales of Span-Aids patient positioners declined 4% during the quarter.

 Industrial product sales, excluding a one-time order shipped in the third quarter of last year, rose 17% to $651,000 compared with the same quarter last year.  Including the one-time order, industrial sales declined by 17% compared with last year.  Sales of consumer foam products (also part of the custom products business) increased 26% to $2.6 million, primarily due to higher volume of Geo-Systems™ mattress overlays.

Gross margin for the third quarter increased 13% to $2.5 million, or 30.3% of sales, compared with $2.2 million, or 30.6% of sales, in the same quarter last year.  The gross margin level increased because of higher sales volume, but the gross margin percentage decreased slightly as a result of higher labor and overhead costs.

Operating income rose 11% during the quarter to $388,000 compared with $351,000 in the comparable period last year.  The increase was due mainly to higher sales volume during the quarter.  Selling and marketing expenses were up 10% during the quarter due to higher commission and samples expense.  Administrative expenses rose 21% primarily due to unrealized losses on the cash value of variable equity life insurance policies and higher bad debt expense. 

Non-operating income declined 1% to $162,000 for the quarter.  The change consisted of a 43% decline in interest income due to lower interest rates compared with the prior year and a 15% increase in royalty income from a shielded hypodermic syringe that the Company licenses to Becton and Dickinson Company.

Year-to-Date Results

Net sales for the first nine months of fiscal 2002 increased 9% to $22.8 million compared with $21.0 million for the same period in fiscal 2001.  Medical sales increased 10% to $14.2 million due to higher volumes of mattress and seating products, and custom products sales rose 6% to $8.6 million entirely on growth of Geo-Systems mattress overlays sold through Louisville Bedding Company.

Net income year-to-date rose 41% to $1.2 million, or 45 cents a diluted share, compared with $837,000, or 33 cents a diluted share, for the year-to-date in fiscal 2001.  The earnings growth for the first nine months was due mostly to the higher sales volume and, to a lesser extent, a reduction inlower amortization expense related to the adoption of SFAS No. 142new accounting rules for goodwill amortization, and higher royalty income.

"We are pleased with Span-America's performance through the third quarter of fiscal 2002," continued Mr. Ferguson.  "We expect fourth quarter sales volume to show solid gains in both our medical and custom product segments.  We believe margins will be somewhat lower in the fourth quarter compared with the first three quarters of this year due to an expected change in product mix.  We remain optimistic about a solid finish for fiscal 2002."

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®, Isch-Dish®, and Selan® 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.  Span-America Medical Systems, Inc. is not responsible for changes made to this document by wire services or Internet services.