SPAN-AMERICA REPORTS HIGHER SALES AND NET INCOME
FOR FOURTH QUARTER OF FISCAL 2002

GREENVILLE, S.C. (October 30, 2002) Span-America Medical Systems, Inc. (Nasdaq:SPAN) today reported higher sales and net income for the fourth quarter and fiscal year ended September 28, 2002.  Fourth quarter sales advanced 33% to $10.7 million and net income rose 14% to $482,000, or $0.18 per diluted share, compared with the fourth quarter of fiscal 2001. 

"Span-America's sales and earnings showed solid progress in fiscal 2002 as a result of continued growth in our core medical and custom products businesses," stated Jim Ferguson, president and chief executive officer of Span-America Medical Systems, Inc.  "Growth in our medical business was led by our two newest mattress products, while consumer sales increased due to the excellent sales and marketing efforts of our strategic partner, Louisville Bedding Company." 

Fourth Quarter Results

Net sales for the fourth quarter of fiscal 2002 rose to $10.7 million compared with $8.1 million in the fourth quarter of fiscal 2001.  The 33% growth in sales was driven by custom products that rose 47% to $5.2 million and medical products that increased 22% to $5.5 million. 

"Custom product sales benefited from a July-August promotion with Wal-Mart for our Geo-Systems^TM mattress overlays by Louisville Bedding," continued Mr. Ferguson.  "We also recorded a 25% increase in industrial product sales, our first quarter-over-quarter increase in two years.  We are optimistic about further sales growth for industrial products as the economy improves."

Medical sales growth benefited from increased demand for PressureGuard Easy Air low-air-loss mattresses and PressureGuard APM2 alternating pressure mattresses.  Growth in medical mattress sales was partially offset by lower sales of overlays, patient positioners and seating products.

"We are especially pleased with the demand for our PressureGuard Easy Air low-air-loss mattress, which was introduced last October, and our PressureGuard APM2 alternating pressure mattress.  The new Easy Air has been well received in the market, and APM2 sales have far surpassed our expectations," noted Mr. Ferguson.

Span-America's gross profit increased 11% in the fourth quarter of 2002 on the strength of higher sales.  Gross margin declined to 26.8% in the latest quarter from 32.1% in the fourth quarter of 2001 due to a change in product mix, primarily higher sales of consumer mattress overlays.

Operating profit rose 16% to $544,000 compared with $471,000 in the fourth quarter of 2001 as a result of higher sales and reduced administrative costs.  General and administrative costs declined 18% from the prior fourth quarter and benefited from funds received from the settlement of a patent infringement lawsuit and lower amortization expense compared with the prior year due to the implementation of new accounting rules regarding amortization of goodwill.  The Company also incurred design and development costs of approximately $59,000 ($0.01 per share after-tax) for the Secure IV® product line acquired in July 2002.

Non-operating income was down 13% to $160,000 from $183,000 due to lower interest income and royalty income.  Net income for the quarter rose 14% to $482,000, or $0.18 per diluted share, compared with $424,000, or $0.17 per diluted share, in the fourth quarter of 2001.

Year-End Results

Net sales for fiscal 2002, which ended in September, rose 15% to $33.5 million compared with $29.1 million in fiscal 2001. Earnings for fiscal 2002 increased 32% to $1.66 million, or $0.64 per diluted share, compared with $1.26 million, or $0.50 per diluted share in fiscal 2001.  Sales growth for the year was about evenly divided between the medical and custom products business units.

Medical sales rose $2.3 million (13%) to $19.7 million for the year.  The medical sales growth was led by Span-America's lines of therapeutic mattresses and seating products, which had sales increases for the year of 39% and 30%, respectively.  This growth more than offset declines in medical overlay and positioner sales, which were down in fiscal 2002 by 15% and 4%, respectively.

In the custom products segment, fiscal 2002 sales increased by 2.1 million (18%) to $13.8 million compared with $11.7 million last year.  All of the custom products sales growth came from the consumer product line, which grew by 29% to $11.0 million.  Consumer product sales were up due to higher demand for the Geo-Systems line of mattress overlays sold through Louisville Bedding Company.  Industrial sales, which are also part of the custom products business, declined in fiscal 2002 by 11% to $2.8 million because of the loss of two large customers in late fiscal 2001.

Net income for fiscal 2002 was up 32% to $1.66 million, or $0.64 per diluted share, compared with $1.26 million, or $0.50 per diluted share, in fiscal 2001.  The increase was due to higher sales volume, lower amortization expense as a result of the new accounting rules for goodwill, and proceeds received from the settlement of a patent infringement lawsuit in September 2002.

Fiscal 2003 Outlook

"We anticipate continued sales growth for our core medical and custom products businesses in fiscal 2003.  Earnings for 2003 are expected to increase from our core businesses, but overall profitability is expected to be somewhat lower due to the anticipated costs for the development and marketing of the new Secure IV product line.  We plan to bring Secure IV to market in fiscal 2003, and we believe it will be a positive contributor to earnings in fiscal 2004.  Overall, we expect 2003 to be a year of growth and progress for Span-America," 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®, 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 inability to achieve sales and cost targets for the Secure IV product line, (e) the impact of competitive products and pricing, (f) government reimbursement changes in the medical market, (g) FDA regulation of medical device manufacturing, (h) raw material cost increases; and (i) 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.