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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

|                               |                                                                  
|------------------------------ | -----------------------------------------------------------------
|[X]                            | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  
|                               | EXCHANGE ACT OF 1934 for the fiscal year ended September 28, 2002
|                               | OR                                                               
|[   ]                          | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE         
|                               | SECURITIES EXCHANGE ACT OF 1934 for the transition period        
|                               | from ______to ______                                             
|Commission File Number 0-11392

SPAN-AMERICA MEDICAL SYSTEMS, INC.

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|South Carolina                                                 |  | 57-0525804                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

70 Commerce CenterGreenville, South Carolina 29615
(Address of principal executive offices)

Registrants telephone number, including area code: (864) 288-8877

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class |  | Name of exchange on which registered
|------------------- |  | ------------------------------------

---

|None |  | None
|---- |  | ----

Securities registered pursuant to Section 12(g) of the Act:

|Title of each class       
|--------------------------
|Common Stock, no par value

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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant computed by reference to the last price at which the stock was
sold on December 16, 2002 was $16,524,846.

The number of shares of the registrants common stock, no par value,
outstanding as of December 16, 2002 was 2,538,870.

Documents Incorporated By Reference

Portions of the 2002 Annual Report to Shareholders are incorporated by
reference into Parts I and II, and portions of the Companys Definitive Proxy
Statement for the annual shareholders meeting to be held February 14, 2003 are
incorporated by reference into Part III.



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PART I

Item 1. Business

Background

Span-America Medical Systems, Inc. (the Company or Span-America) was
incorporated under the laws of the state of South Carolina on September 21,
1970. The Company manufactures and distributes a variety of polyurethane foam
products for the medical and custom products markets.

Span-America commenced operations in 1975 as a manufacturer of
polyurethane foam patient positioners. During the next several years, the
Company expanded its product lines to produce lapidus (flat foam) and
convoluted foam mattress overlays for the wound care market. Wound care
products aid in the treatment or prevention of pressure ulcers, commonly known
as bed sores or decubitus ulcers. In the late 1970s the Company also began
producing foam products for industrial applications, primarily to utilize
excess manufacturing capacity. In 1985, the Company introduced its patented
Geo-Matt® mattress overlay in the health care market, which became the
Companys leading product. At the same time, the Company began selling its
mattress overlay products to retailers throughout the United States.

The Company entered the replacement mattress segment of the pressure ulcer
care market in 1992 through the acquisition of Healthflex, Inc. The Company is
currently marketing the PressureGuard line of replacement mattresses directly
to hospitals, long-term care facilities, and home health care dealers.

The Companys long-term strategy is to become a leading health care
manufacturer specializing in wound management products used in the prevention
and treatment of pressure ulcers. Most of the Companys medical products are
currently directed toward wound care applications, and the Company is actively
seeking to develop or acquire new products which are in this market segment.
The Company also seeks to further develop and manufacture consumer and
industrial applications of its medical products.

The Companys products are distributed primarily in the United States and
to a lesser degree in several foreign countries. Total export sales during
fiscal 2002 were approximately $1.1 million or 3% of total net sales. The
majority of the Companys export sales occurred in Canada.

Industry Segment Data

The industry segment data included in Note 17 to the Companys audited
financial statements for the year ended September 28, 2002, presented on pages
22 and 23 of the 2002 Annual Report, is incorporated herein by reference.

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Medical

Span-Americas principal medical products consist of support surfaces
(polyurethane foam mattress overlays, non-powered therapeutic replacement
mattresses, and powered therapeutic replacement mattresses), patient
positioners, and seating products. These products are marketed to all health
care settings, including acute care hospitals, long term care facilities, and
home health care providers, primarily in North America. Sales of medical
products represented 59% of total net sales in 2002, 60% of total net sales in
2001, and 58% of total net sales in 2000.

Mattress Overlays.Span-America produces a variety of foam mattress
overlays, including convoluted and lapidus foam pads and its patented Geo-Matt®
overlay. Mattress overlays comprised approximately 13% of the Companys total
net sales in fiscal 2002. These products are designed to provide patients with
greater comfort and to assist in treating patients who have or are susceptible
to pressure ulcers. Span-Americas overlay products are mattress pads rather
than complete mattresses and are marketed as less expensive alternatives to air
and water mattresses. The mattress overlays are designed for single patient
use.

The Geo-Matt® mattress overlay represents the Companys single largest
product in terms of revenues. Geo-Matt was designed in conjunction with
clinical studies performed by the Institute for Rehabilitation and Research at
the Baylor College of Medicine. The products patented design includes over
800 individual cells which are cut to exacting tolerances on
computer-controlled equipment to create a clinically effective mattress
surface.

The Companys mattress overlays disperse body heat, increase air
circulation beneath the patient, and reduce moisture build-up in order to
prevent the development or promote the healing of pressure ulcers. Their
convoluted or geometrically contoured construction also reduces shear forces
and more evenly distributes the patients body weight, thereby reducing the
pressure that causes ulcers.

Replacement Mattresses. Span-Americas non-powered therapeutic
replacement mattresses (as distinguished from overlays) are of two types.
Geo-Mattress® products are single-density or multi-layered foam mattresses
topped with the same patented Geo-Matt surface used in the Companys overlays.
These mattresses are sold as alternatives to standard innerspring and all-foam
mattresses found facility-wide in acute and long term care settings.

In 1997, the Company introduced the Geo-Mattress Max, Plus, and Pro
models, foam therapeutic replacement mattresses. In early 1999, the Company
extended the product line with the release of the Geo-Mattress with Wings®.
This product, which features raised perimeter bolsters for added patient
safety, has been a significant contributor to overall Geo-Mattress sales. A
second line extension, the Geo-Mattress Atlas, was added in December 2000 to
address the needs of obese patients. With a carrying capacity up to 600
pounds, the Geo-Mattress Atlas is specifically designed for the unique pressure
management challenges faced within this growing specialty area of patient care.
In addition to the Max, Plus, Pro, Wings, and Atlas products, which are
intended for in-facility use, the Company also offers the Geo-Mattress HC for
in-home use.

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The Companys more complex non-powered replacement mattresses consist of
products from the PressureGuard® Series. The PressureGuard design was acquired
through the acquisition of Healthflex, Inc. in February 1992. The original
design combines a polyurethane foam shell and static air cylinders to form a
replacement mattress that incorporates the comfort and pressure relieving
features of both mattress overlays and more sophisticated dynamic mattresses.
This original design, which the company later used as the basis for powered
versions (see below) was further refined through a complete technical upgrade
of all PressureGuard components in November 1997. In conjunction with this
upgrade, some models were renamed to better reflect their functions.

In addition to the non-powered, static PressureGuard Renew® (formerly
PressureGuard II), the Company also offers the PressureGuard CFT®. This model
incorporates patented design principles of constant force technology. First
introduced as the CustomCare mattress in June of 1995, the PressureGuard CFT is
unique in that it is a dynamic support surface that rivals very expensive
powered surfaces in effectiveness, yet it requires no power source of any kind.

The Companys powered therapeutic replacement mattresses consist of the
remaining models in the PressureGuard Series. In November 1993, the Company
received FDA 510K marketing approval for its PressureGuard IV mattress system.
Building on the comfort and support of the original PressureGuard design,
PressureGuard IV was designed as a sophisticated, powered system for providing
pressure reduction and patient comfort, with the added ability to turn the
patient. The system was designed to automatically sense the patients weight
and position, and to continually adjust the pressures appropriately while
slowly and quietly repositioning the patient at angles up to 30 degrees in
cycles of up to two hours. The upgraded version, renamed the PressureGuard Turn
Select®, incorporates all of these capabilities, as well as several additional
features. Of particular note is a pendant-operated, microprocessor-controlled
motion system which is built into the mattress rather than being hung on the
bed frame as a separate unit.

Introduced at the same time as the Turn Select in November 1997, the
PressureGuard Site Select® includes many of the features of the Turn Select,
including the built-in microprocessor-controlled motion system. However,
instead of turning the patient, the Site Select is designed to give the
caregiver the ability to selectively adjust the pressure at particular body
sites based on patient need. Like the Turn Select, it is completely
programmable through a hand-held pendant.

Another powered system in the PressureGuard line is the PressureGuard
APM®, a simpler but very effective alternating pressure mattress. Originally
introduced as the DynaGuard®, in November 1994, the APM is targeted primarily
at the long term care and home care markets. In March 2000, the Company added a
more feature-laden version of this mattress called the PressureGuard APM2. The
APM2 gives the caregiver the flexibility to offer either alternating pressure
or a basic lateral rotation modality by flipping a toggle switch on the control
panel.

Early in fiscal 2002, the company introduced the PressureGuard Easy Air®,
its first offering in the category of low air loss therapy. The Easy Air
incorporates several patent-pending design innovations which the company
believes allow it to overcome several common

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performance compromises inherent in other competitive low air loss products.
Additionally, the Easy Air has been independently documented to outperform all
leading competitors in controlling excess skin moisture, a key performance
advantage in the competitive support surfaces marketplace.

All of the powered products in the PressureGuard Series are sold primarily
through home health care equipment dealers for daily rental in home care, long
term care and, less commonly, in acute care settings. Beginning with the
governments 1998 implementation of the Prospective Payment System of
reimbursement, however, long term care facilities increasingly are electing to
purchase these products outright through the Companys distributors rather than
continuing to rent them. During fiscal 2002, replacement mattresses and related
products made up approximately 29% of total net sales.

Patient Positioners.Span-Americas specialty line of patient positioners
is sold primarily under the trademark Span-Aids®. Span-Aids accounted for
approximately 12% of the Companys net sales in fiscal 2002. This is the
Companys original product line and consists of over 300 different foam items
which aid in relieving the basic patient positioning problems of elevation,
immobilization, muscle contracture, foot drop, and foot or leg rotation.
Span-Aids patient positioners hold the patients body in orthopedically correct
positions, provide greater patient comfort and tend to promote healing for
long-term comatose patients or those with a flaccid or immobilized condition.
The positioners also aid in the prevention of pressure ulcers by promoting more
effective dispersion of pressure, heat and moisture. Span-Aids are intended
for single-patient use throughout the patients entire treatment program.
Among the Span-Aids products presently marketed are abduction pillows, body
aligners, head supports, limb elevators and various foot and wrist positioners.

Span-Americas patient positioners are sold primarily to hospitals and
long-term care facilities by several national medical products distributors.
The Company believes that Span-Aids are one of the most effective patient
positioning devices available in the health care market, as compared to
pillows, rolled towels and other similar materials traditionally used by
nursing personnel to position immobilized patients. Span-Aids are constructed
of open-cell polyurethane foam which allows air to circulate next to the
patients skin, thereby reducing heat and moisture build-up.

Most Span-Aids body positioners are pressure packaged to reduce the amount
of storage space required by hospitals and other facilities that utilize them.
This patented packaging method reduces the package size by as much as 75% while
protecting the positioners from dust and contamination during transportation
and storage.

Seating Products.The final category of medical products made by
Span-America consists of seating cushions and related seating products. The
Companys offerings in this category can be subdivided into three main groups:



| |  |  | wound healing aids,                                               
| | - |  | ------------------------------------------------------------------
|
| |  |  | patient positioning and general pressure management products, and 
|
| |  |  | pressure management products without patient positioning elements.

4



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Seating products made specifically as an aid to wound healing include the
Isch-Dish® and Sacral Dish® pressure relief cushions. Seating products made
for patient positioning and general pressure management include the Isch-Dish
Thin, the Geo-Matt® Contour cushion, the Equalizer, and the EZ-Dish. The
Equalizer contoured positioning cushion has a multi-component design that
includes a viscoelastic foam top, proprietary soft polymer inserts, and a
contoured base. Like the Isch-Dish, The Equalizer is recognized for
reimbursement among seating products covered by the Medicare system. This
makes it an attractive option for durable medical equipment suppliers and rehab
seating specialists. The EZ-Dish pressure relief cushion, which uses some of
the features of the original Isch-Dish design, offers a simpler, more
affordable solution to the seating problems of nursing home patients.

Seating products designed to address pressure management without
additional positioning benefits include the Gel-T® cushion and the Geo-Matt and
Geo-Matt PRT® wheelchair cushions. The Gel-T is a gel/foam combination cushion
popular with elderly patients. The Geo-Matt and Geo-Matt PRT cushions
incorporate the Companys proprietary Geo-Matt anti-shearing surface. Seating
products accounted for approximately 6% of the Companys net sales in fiscal
2002.

Distributor Relationship.During fiscal 2002, approximately 19% of the
Companys medical products were sold to Allegiance Healthcare Corporation
(Allegiance) which distributes these products to hospitals nationwide.
Span-America has maintained a distribution relationship with Allegiance
(formerly Baxter) for 23 years. In September 1996, Baxter spun off its
healthcare distribution and cost management business to create Allegiance. In
1998, Allegiance was acquired by Cardinal Healthcare, Inc. and has continued to
function as a separate unit of Cardinal. The Companys distribution agreement
with Allegiance has been unaffected by these ownership changes.

Custom Products

Span-Americas custom products segment includes two major product lines:
consumer products and industrial products. The Companys consumer product line
consists primarily of convoluted and geo-cut mattress overlays and specially
designed pillows for the consumer bedding market.

Span-Americas industrial product line consists primarily of foam
packaging and cushioning materials. The Company also produces foam products
that are used for flotation, sound insulation and gasketing purposes. The
majority of these products are made to order according to customer
specifications. To date, most of the Companys industrial sales have been in
the specialty packaging segment of the custom products market. The Company
currently has one full-time sales representative and several manufacturers
representatives selling its foam fabrication capabilities primarily in the
Southeast. Its customers represent a wide variety of markets, including the
photographic film, durable goods, electronics, automotive, and sports equipment
industries.

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Custom products represented approximately 41% of the Companys total net
sales in fiscal 2002, compared with 40% in fiscal 2001 and 42% in fiscal 2000.
In fiscal 2002, approximately 77% of the Companys total custom products sales
were distributed through Louisville Bedding Corporation, an international
manufacturer and marketer of bedding products.

Safety Catheters

On July 15, 2002, the Company acquired assets related to the Secure IV®
product line from VADUS®, Inc., a privately owned designer and manufacturer of
peripheral intravenous catheters. The assets consist primarily of patents and
equipment related to the design, production and sale of the Secure IV catheter.
The Secure IV has FDA 510(k) approval and is protected by 11 patents. We plan
to begin manufacturing and marketing Secure IV in fiscal 2003, and we expect to
operate this portion of our business as a separate segment.

Competition

Medical. In the medical market segment, the Company faces significant
competition for sales of its foam mattress overlays. The competition for
convoluted mattress overlays is primarily based on price and delivery. For
other foam mattress overlay products (such as the Geo-Matt overlay), the
competition is based mainly on product performance and quality. However, to a
lesser extent, the competition for Geo-Matt type overlays is also based on
price and delivery. Competition with respect to the Companys Span-Aid
products is primarily based on price. However, a secondary source of
competition for patient positioners results from alternative methods such as
the use of pillows and other devices to position patients.

The Company believes that it is among the top three nationwide suppliers
of foam mattress overlays and patient positioners to the U.S. health care
market. The Companys primary competitor in the overlay and positioner markets
is Sunrise Medical.

The competition in the therapeutic replacement mattress market is based on
product performance, price and durability. Potential customers typically
select a product based on these criteria after conducting a formal clinical
evaluation of sample mattresses for periods of one to six months. A secondary
source of competition results from alternative products such as mattress
overlays, which are significantly less expensive than replacement mattresses.

The market for therapeutic replacement mattresses has developed
principally during the 1990s. Competitors include BG Industries, Invacare,
Sunrise Medical, KCI and Hill-Rom. The other competitors use combinations of
their own sales representatives and manufacturers representatives to sell
directly to hospitals, distributors, and long-term care facilities nationwide.

Most of the Companys competitors in the health care segment are larger
and have greater resources than Span-America.

Custom Products.In the custom products segment, Span-America has
encountered significant competition for its mattress pad and pillow products.
The competition is principally

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based on price, which is largely determined by foam density and thickness.
However, competition also exists due to variations in product design and
packaging. There are presently a number of companies with the manufacturing
capability to produce similar bedding products. The Companys primary
competitors in this market are Foamex, Leggett and Platt, and ER Carpenter, all
of which are larger and have greater resources than Span-America. The Company
also has a number of competitors in the market for its industrial products,
including Tuscarora and UFP Technology. These competitors are larger and have
greater resources than Span-America. The competition for industrial foam
products is largely based on price. In some instances, however, design and
delivery capabilities are also important.

Safety Catheters. The Companys Secure IV products will compete in the
protected, short peripheral catheter marketplace. Two major companies, Johnson
& Johnson and Becton, Dickinson and Company, supply about 80% of this market.
Both of these companies have established national sales forces and world-wide
distribution networks. Their resources are greater than those of Span-America.
Span-America has no established distribution base or sales force for Secure IV
at the present time.

The Company believes that Secure IVs design offers a competitive
advantage in that it allows for bloodless starts without the need for vein
occlusion, which helps protect healthcare workers from exposure to blood and
other body fluids. However, potential customers may choose the Companys
competitors over the Company because the competitors offer a wider range of
custom variations for their safety catheters than the Company does for Secure
IV. In addition, the competitors are able to supply a wider variety of other
medical devices to their customers.

Major Customers

The Company has a business relationship with Allegiance to distribute
certain of its medical foam products. In fiscal 2002 sales to Allegiance
amounted to approximately 11% of the Companys total net sales and
approximately 19% of the Companys sales in the medical segment. Span-America
also has a relationship with Louisville Bedding Corporation to distribute
certain of its consumer foam products. Sales to Louisville Bedding Corporation
during fiscal 2002 made up approximately 32% of the Companys total net sales
and approximately 77% of sales in the custom products segment.

See Distributor Relationship on page 5 and Competition on page 6 for
more information on major customers.

Seasonal Trends

Some seasonality can be identified in certain of the Companys medical and
consumer foam products. However, the fluctuations have minimal effect on the
Companys operations because of offsetting trends among these product lines.
Span-America has not experienced significant seasonal fluctuations in its
industrial product line.

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Patents and Trademarks

The Company holds 39 federally registered trademarks and 16 foreign
trademark registrations, including SPAN-AMERICA, SPAN-AIDS, GEO-MATT,
SPAN-CARE, PRESSUREGUARD, and ISCH DISH. Other federal registration
applications are presently pending. The Company believes that these trademarks
are readily identifiable in their respective markets and add value to the
Companys product lines.

The Company also holds 59 United States patents and 7 foreign patents
relating to various components of its patient positioners, mattress overlays,
and replacement mattresses. Additional patent applications have been filed.
Management believes that these patents are important to the Company. However,
while the Company has a number of products covered by patents, there are
competitive alternatives available which are not covered by these patents.
Therefore, the Company does not rely solely on its patents to maintain its
competitive position in the marketplace.

Span-Americas principal patents include the patents on its Geo-Matt,
Geo-Mattress, PressureGuard, and Span-Aids products. The Companys Geo-Matt
and Geo-Mattress patents have remaining lives ranging from 5 to 9 years with
additional patents pending. The Companys PressureGuard patents have remaining
lives ranging from 12 to 16 years with additional patents pending. The
Companys Span-Aids patents have remaining lives ranging from 0 to 12 years.

As previously noted, in July 2002, the Company acquired assets related to
the Secure IV® catheter product line of VADUS®, Inc., a privately owned
designer and manufacturer of peripheral intravenous catheters. The Secure IV
has FDA 510(k) approval and is protected by 10 U. S. patents and one foreign
patent. Additional patent applications have been filed.

Raw Materials and Backlog

Polyurethane foam and nylon/vinyl mattress covers and tubes account for
approximately 80% of Span-Americas raw materials. In addition, the Company
uses corrugated shipping cartons, polyethylene plastic packaging material and
hook-and-loop fasteners. The Company believes that its basic raw materials are
in adequate supply and are available from many suppliers at competitive prices.

As of September 28, 2002, Span-America had unshipped orders of
approximately $1.1 million which represents a 21% increase compared to a
backlog of $948,000, at fiscal year end 2001. All orders in the current
backlog will be filled in the 2003 fiscal year.

Employees

On September 28, 2002, the Company had 234 full-time employees, including
5 officers. Of these employees, 17 were executive or management personnel, 19
were administrative and clerical personnel, 19 were sales personnel, and 174
were manufacturing employees. The Company is not a party to any collective
bargaining agreement and has never experienced an

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interruption or curtailment of operations due to labor controversy. Management
believes that its relations with its employees are good.

Supervision and Regulation

The Federal Food, Drug and Cosmetic Act, and regulations issued or
proposed thereunder, provide for regulation by the Food and Drug Administration
(the FDA) of the marketing, manufacture, labeling, packaging and distribution
of medical devices, including the Companys products. These regulations
require, among other things, that medical device manufacturers register with
the FDA, list devices manufactured by them, and file various types of reports.
In addition, the Companys manufacturing facilities are subject to periodic
inspections by regulatory authorities and must comply with good manufacturing
practices as required by the FDA and state regulatory authorities. The
Company believes that it is in substantial compliance with applicable
regulations and does not anticipate having to make any material expenditures as
a result of FDA or other regulatory requirements.

Environmental Matters

The Companys manufacturing operations are subject to various government
regulations pertaining to the discharge of materials into the environment.
Span-America believes that it is in substantial compliance with applicable
regulations. The Company does not anticipate that continued compliance will
have a material effect on the Companys capital expenditures, earnings or
competitive position.

Item 2. Properties

The Companys principal office and manufacturing facility is owned by the
Company and located in Greenville, South Carolina. This facility contains
approximately 125,000 square feet and is located on a 13-acre site.

The Company produces foam mattress overlays for the medical and consumer
markets in a 40,000 square foot facility in Norwalk, California. The lease
expires in December 31, 2003 at a rental rate of $19,469 per month, increasing
annually to $20,855 per month.

The South Carolina and California facilities are considered suitable and
adequate for their intended purposes.

Item 3. Legal Proceedings

From time to time the Company is a party to various legal actions arising
in the normal course of business. However, management believes that as a
result of legal defenses and insurance arrangements with parties believed to be
financially capable, there are no proceedings threatened or pending against the
Company that, if determined adversely, would have a material adverse effect on
the business or financial position of the Company.

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Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth
quarter of the Companys 2002 fiscal year.

PART II

Item 5. Market for the Registrants Common Stock and Related Shareholder Matters

The stock price information contained under Quarterly Financial Data
within the table and the information set forth below the table on page 7 of the
Companys 2002 Annual Report is incorporated herein by reference. In addition,
the information under Stock Information on the inside back cover of the
Companys 2002 Annual Report is incorporated herein by reference.

In September 1994, the Board of Directors approved a resolution changing
their annual Directors compensation from cash to stock. Each non-employee
Director, except the Chairman, receives 1,000 shares of Company common stock
per year in lieu of their annual cash compensation. The Chairman of the Board
receives 2,000 shares of Company common stock per year as compensation for
additional duties as Chairman. The following table sets forth information about
unregistered shares of common stock issued in the prior three fiscal years to
the Companys non-employee Directors for their service as Directors.

|           |  |                    |       |                          |  |               |       |  |  |   |        | 
|---------- |  | ------------------ | ----- | ------------------------ |  | ------------- | ----- |  |  | - | ------ | 
|           |  | # Shares of Common |       | Fair Market Value on     |  | Aggregate    
|Issue Date |  | Stock Issued       |       | Issue Date ($ Per Share) |  | Consideration
|           |  |                    |       |                          |  |              
|01/10/00   |  |                    | 8,000 |                          |  | $             | 3.500 |  |  | $ | 28,000 | 
|01/12/01   |  |                    | 8,000 |                          |  |               | 5.000 |  |  |   | 40,000 | 
|01/29/02   |  |                    | 8,000 |                          |  |               | 5.950 |  |  |   | 47,600 | 

The Company did not register the shares issued to non-employee Directors
in reliance on the exemption provided by Section 4(2) of the Securities Act of
1933, as amended, which exempts stock issued outside of a public offering from
registration requirements.

Item 6. Selected Financial Data

The information contained in the Selected Financial Information on page
6 of the Companys 2002 Annual Report is incorporated herein by reference.

Item 7. Managements Discussion and Financial Analysis

Managements Discussion and Financial Analysis on pages 8 through 12 of
the Companys 2002 Annual Report are incorporated herein by reference.

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Item 7a. Qualitative and Quantitative Disclosures About Market Risk

The information contained in the section titled Market Risk on page 11
of the Companys 2002 Annual Report is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

The financial statements of the Company included on pages 13 through 24 of
the Companys 2002 Annual Report are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

PART III

Item 10. Directors and Executive Officers of the Registrant

Item 11. Executive Compensation

Information required under Items 10 and 11 of Part III is incorporated
herein by reference to portions of the definitive Proxy Statement filed or to
be filed with the Securities and Exchange Commission on or prior to 120 days
following the end of the Companys 2002 fiscal year under the headings
Election of Directors, Business Experience of Nominees and Directors,
Executive Officers, and Compensation of Directors and Executive Officers.

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Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table summarizes information regarding the Companys equity
compensation plans as of September 28, 2002:

|                                                           |  |                   |         |                   |  |                     |      |                     |  |                     |         | 
|---------------------------------------------------------- |  | ----------------- | ------- | ----------------- |  | ------------------- | ---- | ------------------- |  | ------------------- | ------- | 
|                                                           |  |                   |         |                   |  |                     |      |                     |  | Number of          
|                                                           |  |                   |         |                   |  |                     |      |                     |  | securities         
|                                                           |  |                   |         |                   |  |                     |      |                     |  | remaining available
|                                                           |  | Number of         |         |                   |  |                     |      | for future issuance
|                                                           |  | securities to be  |         |                   |  |                     |      | under equity       
|                                                           |  | issued upon       |         | Weighted-average  |  | compensation plans 
|                                                           |  | exercise of       |         | exercise price of |  | (excluding         
|                                                           |  | outstanding       |         | outstanding       |  | securities         
|                                                           |  | options, warrants |         | options, warrants |  | reflected in column
|Plan category                                              |  | and rights        |         | and rights        |  | (a))               
|                                                           |  |                   |         |                   |  |                    
|                                                           |  | (a)               |         | (b)               |  | (c)                
|                                                           |  |                   |         |                   |  |                    
|Equity compensation
plans approved by
security holders     |  |                   | 273,000 |                   |  | $                   | 5.01 |                     |  |                     | 219,730 | 
|Equity compensation
plans not approved
by security holders |  |                   | 0       |                   |  |                     | 0    |                     |  |                     | 0(1)    | 
|Total                                                      |  |                   | 273,000 |                   |  | $                   | 5.01 |                     |  |                     | 219,730 | 



---

|(1)  Under the Companys director compensation arrangements, there is no set amount of equity
securities authorized for issuance, but the Company currently expects to issue approximately
8,000 shares annually.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For additional information on the Companys stock option plans, see Note
11 to the Companys audited financial statements for the year ended September
28, 2002, presented on pages 19 through 21 of the 2002 Annual Report.

See Item 5 of Part II for more information on shares of Company common
stock issued to Directors in lieu of their annual cash compensation.

Item 13. Certain Relationships and Related Transactions

Additional information required under Items 12 and 13 of Part III is
incorporated herein by reference to portions of the definitive Proxy Statement
filed or to be filed with the Securities and Exchange Commission on or prior to
120 days following the end of the Companys 2002 fiscal year under the headings
Election of Directors, Business Experience of Nominees and Directors,
Executive Officers, Compensation of Directors and Executive Officers,
Certain Transactions, and Security Ownership of Certain Beneficial Owners
and Management.

Item 14. Controls and Procedures

The Company has evaluated, with the participation of the Chief Executive
Officer and Chief Financial Officer, the effectiveness of the design and
operation of our disclosure controls and procedures within 90 days of the
filing date of this annual report, and, based on this

12



---



##### 



evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that these controls and procedures are effective. There were no
significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.

Disclosure controls and procedures are our controls and other procedures
that are designed to ensure that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commissions rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow for timely decisions regarding required disclosure.

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  (1) and (2) Financial Statements and Financial Statement Schedules

The response to this portion of Item 15 is submitted as a separate
section of this report beginning on page F-1.

(3) Listing of Exhibits

|       |  |                                                                                                                                                                                                                                                                               
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1    |  | Amendment to the Companys by-laws dated April 25, 1995: Incorporated by
reference to Exhibit 3(ii) to the Companys quarterly report on Form 10-Q
for the quarter ended July 1, 1995, Commission File No. 0-11392.                                                           
|4.1    |  | Specimen of Common Stock certificate: Incorporated by reference to
Exhibit 1 to the Form S-8 filed on January 8, 1990, Commission File No.
33-32896.                                                                                                                          
|4.2    |  | The Registrant hereby agrees to furnish to the Securities and Exchange
Commission upon request a copy of any instrument with respect to long-term
debt not being registered in a principal amount less than 10% of the total
assets of the Registrant on a consolidated basis.
|10.1   |  | Patent Assignment and Royalty Agreement between Donald C. Spann and the
Company, with letter amendment thereto: Incorporated by reference to
Exhibit 10(c) to the Form S-18 filed on June 2, 1983, Commission File No.
2-832-74-A.                                            
|10.2.1 |  | 1987 Stock Option Plan: Incorporated by reference to Exhibit 10 to the
Companys Annual Report on Form 10-K for the fiscal year ended October 2,
1987, Commission File No. 0-11392.                                                                                           

13



---



##### 



|       |  |                                                                                                                                                                                                                                                                                               
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2.2 |  | Amendment No. 1 to the 1987 Stock Option Plan: Incorporated by reference
to Exhibit 10.2.2 to the Companys Annual Report on Form 10-K for the
fiscal year ended October 3, 1998 (the 1998 10-K), Commission File No.
0-11392.                                                              
|10.3   |  | Employee Stock Ownership Plan  Summary Plan Description: Incorporated by
reference to Exhibit 10.6 to the Companys Annual Report on Form 10-K for
the fiscal year ended September 28, 1990, Commission File No. 0-11392.                                                                    
|10.4.1 |  | 1991 Stock Option Plan: Incorporated by reference to Exhibit 10.6 to
the Companys Annual Report on Form 10-K for the fiscal year ended
September 28, 1991, (the 1991 10-K), Commission File No. 0-11392.                                                                                   
|10.4.2 |  | Amendment No. 1 to the 1991 Stock Option Plan: Incorporated by reference
to Exhibit 10.4.2 to the 1998 10-K.                                                                                                                                                                                  
|10.5   |  | Retirement Agreement dated February 6, 1991 between the Company and
Donald C. Spann: Incorporated by reference to Exhibit 10.7 to the 1991
10-K.                                                                                                                                              
|10.6   |  | Contract between the Company and Healthflex, Inc. dated February 28,
1992: Incorporated by reference to Exhibit 2.1 to the Current Report on
Form 8-K (the February 28, 1992 Form 8-K) filed by the Company with the
Commission on February 28, 1992.                                       
|10.7   |  | Contract between the Company and BriGam, Inc. dated October 16, 1992
terminating a royalty agreement: Incorporated by reference to Exhibit
10.10 to the Companys Annual Report on Form 10-K for the fiscal
year ended October 3, 1992, Commission File No. 0-11392.                          
|10.8   |  | Voluntary Resignation Agreement dated July 30, 1993 between the Company
and Donald C. Spann: Incorporated by reference to Exhibit 10.1 to the
Companys Quarterly Report on Form 10-Q for the quarter ended July 3,
1993, Commission File No. 0-11392.                                        
|10.9   |  | Employment Agreement dated February 28, 1992 between the Company and John
W. Wilkinson: Incorporated by reference to Exhibit 28A to the February 28,
1992 Form 8-K.                                                                                                                           
|10.10  |  | Consulting Agreement dated August 1, 1994 between the Company and John
W. Wilkinson: Incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended July 2, 1994.                                                                             
|10.11  |  | Agreement for Sale and Purchase of Assets By and Among Span-America
Medical Systems, Inc., Embracing Concepts, Inc. and Edmund K. Maier dated
February 6, 1996: Incorporated by reference to Exhibit 10.1 to the
Companys Quarterly Report on Form 10-Q for the quarter ended March 30,
1996.

14



---



##### 



|        |  |                                                                                                                                                                                                                                                                                       
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.12   |  | Resignation Agreement dated September 1, 1996 between the Company and
Charles B. Mitchell: Incorporated by reference to Exhibit 10.12 to the
Companys Annual Report on Form 10-K for the fiscal year ended September
28, 1996 (the 1996 10-K), Commission File No. 0-11392.        
|10.13   |  | License and Distribution Agreement dated October 22, 1996 between the
Company and Pillowtex Corporation: Incorporated by reference to Exhibit
10.13 to the 1996 10-K.                                                                                                                 
|10.14.1 |  | 1997 Stock Option Plan: Incorporated by reference to Exhibit 10.14 to
the Companys Annual Report on Form 10-K for the fiscal year ended
September 27, 1997 (the 1997 10-K), Commission File No. 0-11392.                                                                           
|10.14.2 |  | Amendment No. 1 to the 1997 Stock Option Plan: Incorporated by
reference to Exhibit 10.14.2 to the 1998 10-K.                                                                                                                                                                         
|10.15   |  | 1997 Long Term Incentive Stock Option Plan: Incorporated by reference to
Exhibit 10.15 to the 1997 10-K.                                                                                                                                                                              
|10.16   |  | Distribution Agreement dated March 1, 1999 between the Company and
Louisville Bedding Corporation: Incorporated by reference to Exhibit
10.16 to the Companys Annual Report on Form 10-K for the fiscal year
ended September 30, 2000 (the 2000 10-K), Commission File No. 0-11392.
|10.17   |  | Addendum to Distribution Agreement between Louisville Bedding Company
and Span-America Medical Systems, Inc. dated January 1, 2002: Incorporated by reference to Exhibit 10.17 to the Companys Quarterly
Report on Form 10-Q for the quarter ended March 30, 2002.                   
|        |  |                                                                                                                                                                                                                                                                                       
|10.18   |  | Asset Purchase Agreement By and Among Span-America Medical Systems,
Inc., Vadus, Inc., and Certain Stockholders of Vadus, Inc. dated February
1, 2002, including amendments dated May 20, 2002 and July 9, 2002:                                                                      
|        |  | Incorporated by reference to Exhibit 10.1 to the Companys Quarterly
Report on Form 10-Q for the quarter ended June 29, 2002.                                                                                                                                                         
|10.19   |  | Production, Marketing and Product Development Support Agreement between
Span-America Medical Systems, Inc., and Vadus, Inc. dated February 1,
2002: Incorporated by reference to Exhibit 10.2 to the Companys
Quarterly Report on Form 10-Q for the quarter ended June 29, 2002.     
|10.20   |  | Severance Protection Agreement between the Company and James D. Ferguson
dated July 25, 2002.                                                                                                                                                                                         
|10.21   |  | Severance Protection Agreement between the Company and Robert E. Ackley
dated July 25, 2002.                                                                                                                                                                                          

15



---



##### 



|      |  |                                                                                               
|----- |  | ----------------------------------------------------------------------------------------------
|10.22 |  | Severance Protection Agreement between the Company and Richard C.
Coggins dated July 25, 2002.
|10.23 |  | Severance Protection Agreement between the Company and James R. OReagan
dated July 25, 2002. 
|10.24 |  | Severance Protection Agreement between the Company and Clyde A. Shew
dated July 25, 2002.     
|13.1  |  | 2002 Annual Report to Shareholders.                                                           
|23.1  |  | Consent of Elliott Davis, LLC                                                                 



|(b) |  | Reports on Form 8-K          
|--- |  | -----------------------------
|    |  |                              
|   
|(c) |  | Exhibits                     
|    |  |                              
|   
|(d) |  | Financial Statement Schedules
|    |  |                              

16



---



##### 



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

SPAN-AMERICA MEDICAL SYSTEMS, INC.

|                                                                  |  |                  
|----------------------------------------------------------------- |  | -----------------
|By: /s/ Thomas D. Henrion
Thomas D. Henrion
Chairman of the Board |  | December 20, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the date indicated.

|                                                    |  |                                                                   
|--------------------------------------------------- |  | ------------------------------------------------------------------
|/s/ James D. Ferguson
James D. Ferguson             |  | President, Chief Executive Officer
(Principal Executive Officer)  
|                                                   
|/s/ Richard C. Coggins
Richard C. Coggins           |  | Chief Financial Officer and Director
(Principal Financial Officer)
|                                                   
|/s/ Gwendolyn L. Randolph
Gwendolyn L. Randolph     |  | Controller                                                        
|                                                   
|/s/ B. Kenneth Bolt
B. Kenneth Bolt                 |  | Director                                                          
|                                                   
|/s/ Robert H. Dick
Robert H. Dick                   |  | Director                                                          
|                                                   
|/s/ Thomas F. Grady, Jr.
Thomas F. Grady, Jr.       |  | Director                                                          
|                                                   
|/s/ Thomas D. Henrion
Thomas D. Henrion             |  | Director                                                          
|                                                   
|/s/ Douglas E. Kennemore
Douglas E. Kennemore, M.D. |  | Director                                                          
|                                                   
|/s/ J. Ernest Lathem
J. Ernest Lathem, M.D.         |  | Director                                                          
|                                                   
|/s/ James M. Shoemaker, Jr.
James M. Shoemaker, Jr. |  | Director                                                          

December 20, 2002

17



---



##### 



CERTIFICATIONS

I, James D. Ferguson, the President and Chief Executive Officer of Span-America
Medical Systems, Inc., certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Span-America Medical
Systems, Inc.;                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                  



| | a) |  | Designed such disclosure controls and procedures to ensure
that material information relating to the registrant including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date, and                                                                                                  
|
| | c) |  | Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                       



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors:
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weakness
in internal controls; and
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                      



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                                                              
|----------------------- |  | -----------------------------------------------------------------------------
|Date: December 20, 2002 |  | /s/ James D. Ferguson
James D. Ferguson
President and Chief Executive Officer

18



---



##### 



CERTIFICATIONS

I, Richard C. Coggins, the Chief Financial Officer of Span-America Medical
Systems, Inc., certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Span-America Medical
Systems, Inc.;                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                  



| | a) |  | Designed such disclosure controls and procedures to ensure
that material information relating to the registrant including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date, and                                                                                                  
|
| | c) |  | Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                       



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors:
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weakness
in internal controls; and
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                      



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                        |  |                                                                   
|----------------------- |  | ------------------------------------------------------------------
|Date: December 20, 2002 |  | /s/ Richard C. Coggins
Richard C. Coggins,
Chief Financial Officer

19



---



##### 



Annual Report on Form 10-K

Items 15 (a) (1) and (2), (c) and (d)

List of Financial Statements and Financial Statement Schedules

Certain Exhibits

Financial Statement Schedules

Year Ended September 28, 2002

Span-America Medical Systems, Inc.

Greenville, South Carolina

F-1



---



##### 



Span-America Medical Systems, Inc.

Form 10-K  Item 15(a)(1) and (2)

List of Financial Statements and Financial Statement Schedules

The following financial statements of Span-America Medical Systems, Inc.
included in the annual report of the registrant to its shareholders for the
year ended September 28, 2002 are incorporated by reference in Item 8:



| |  |  | Balance Sheets  September 28, 2002 and September 29, 2001.                                                     
| |  |  | ----------------------------------------------------------------------------------------------------------------
|
| |  |  | Statements of Income  Years ended September 28, 2002, September 29,
2001, and September 30, 2000               
|
| |  |  | Statements of Shareholders Equity  Years ended September 28, 2002,
September 29, 2001, and September 30, 2000.
|
| |  |  | Statements of Cash Flows  Years ended September 28, 2002, September 29,
2001, and September 30, 2000.          
|
| |  |  | Notes to Financial Statements  September 28, 2002.                                                             

The following financial statement schedule of Span-America Medical Systems,
Inc. is included in Item 15(d):



| |  |  | Schedule VIII   Valuation and Qualifying Accounts
| |  |  | --------------------------------------------------

All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.

F-2



---



##### 



Schedule VIII Valuation and Qualifying Accounts
Span-America Medical Systems, Inc.

|                              |                                    |        |              |              |                  |                     | COL C.           |          |             |  |   |        |  |        |         |         |            |  | 
|----------------------------- | ---------------------------------- | ------ | ------------ | ------------ | ---------------- | ------------------- | ---------------- | -------- | ----------- |  | - | ------ |  | ------ | ------- | ------- | ---------- |  | 
|COL. A                        |                                    | COL. B |              | ADDITIONS    |                  | COL. D              |                  |          |             |  |   | COL. E
|                              |                                    |        |              |              |                  |                     |                  |          |             |  |   |       
|                              |                                    |        | Balance at   |              | (1)              |                     | (2)              |          |             |  |   |        |  |        |         |         | Balance at
|                              |                                    |        | Beginning of |              | Charged to Costs |                     | Charged to Other |          | Deductions- |  |   |        |  |        | End of 
|Description                   |                                    | Period |              | and Expenses |                  | Accounts - Describe |                  | Describe |             |  |   |        |  | Period
|                              |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |       
|Year Ended September 28, 2002 |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|Deducted from asset accounts: |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|                              | Reserve for uncollectible accounts |        | $            | 223,000      |                  |                     | $                | 62,293   |             |  |   |        |  |        | $       | 74,293  |            |  | 
|                              | Reserve for discounts              |        |              | 143,000      |                  |                     |                  | 321,263  |             |  |   |        |  |        |         | 294,263 |            |  | 
|                              |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|Totals                        |                                    | $      | 366,000      |              |                  | $                   | 383,556          |          |             |  |  |        |  | $      | 368,556 |         |            |  | 
|                              |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|Year Ended September 29, 2001 |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|Deducted from asset accounts: |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|                              | Reserve for uncollectible accounts |        | $            | 304,000      |                  |                     | $                | 44,202   |             |  |   |        |  |        | $       | 125,202 |            |  | 
|                              | Reserve for discounts              |        |              | 86,000       |                  |                     |                  | 222,961  |             |  |   |        |  |        |         | 165,961 |            |  | 
|                              |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|Totals                        |                                    | $      | 390,000      |              |                  | $                   | 267,163          |          |             |  |  |        |  | $      | 291,163 |         |            |  | 
|                              |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|Year Ended September 30, 2000 |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|Deducted from asset accounts: |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|                              | Reserve for uncollectible accounts |        | $            | 326,000      |                  |                     | $                | 141,516  |             |  |   |        |  |        | $       | 163,516 |            |  | 
|                              | Reserve for discounts              |        |              | 88,000       |                  |                     |                  | 151,588  |             |  |   |        |  |        |         | 153,588 |            |  | 
|                              |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 
|Totals                        |                                    | $      | 414,000      |              |                  | $                   | 293,104          |          |             |  |  |        |  | $      | 317,104 |         |            |  | 
|                              |                                    |        |              |              |                  |                     |                  |          |             |  |   |        |  |        |         |         |            |  | 

(a) Uncollectible accounts written off.
(b) Discounts claimed by customers.

F-3