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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 27, 2003                   
|OR
|o  |  | 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 |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

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

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

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 |  | 

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
o

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. o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2):
YES x   NO
o

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 March 28, 2003, the last trading day of the registrants most recently
completed second fiscal quarter, was $16,816,766.

The number of shares of the registrants common stock, no par value,
outstanding as of December 4, 2003 was 2,571,218.

Documents Incorporated By Reference

Portions of the 2003 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 12, 2004 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 one of the
Companys leading products. 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
and through distributors 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. In addition, the Company
acquired the assets of the Secure I.V.® line of peripheral intravenous
catheters in July 2002 and is currently in the process of bringing these
products to market. The Secure I.V. products are expected to be sold directly
and through distributors to health care facilities in the United States and
Canada.

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 2003 were approximately $2.2 million or 5% of total net sales. The
majority of the Companys export sales occurred in Canada. See Note 18 in the
Notes to Financial Statements on page 28 of the Companys 2003 Annual Report
attached as Exhibit 13.1.

The Company maintains a website at http://www.spanamerica.com. The
Companys reports and other filings made with the Securities and Exchange
Commissions are available free of charge on the Companys website, which
includes a link to the Companys filings in the SECs EDGAR filing database.

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|Span-America Medical Systems, Inc. 2003 10-K |  |  | 1 | 





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Industry Segment Data

The industry segment data included in Note 18 to the Companys audited
financial statements for the year ended September 27, 2003, presented on pages
28 and 29 of the 2003 Annual Report, is incorporated herein by reference.

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 51% of total net sales in 2003, 59% of total net sales in
2002, and 60% of total net sales in 2001.

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 10% of the Companys total
net sales in fiscal 2003. 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.

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

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|Span-America Medical Systems, Inc. 2003 10-K |  |  | 2 | 





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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.

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 510(k) 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

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|Span-America Medical Systems, Inc. 2003 10-K |  |  | 3 | 





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alternating pressure or a basic lateral rotation modality by flipping a
toggle switch on the control panel. The APM2 represents the Companys single
largest product in terms of revenues.

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 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 2003, 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 10% of the Companys net sales in fiscal 2003. 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.

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|Span-America Medical Systems, Inc. 2003 10-K |  |  | 4 | 





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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.

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 included among seating
products covered for reimbursement 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
that is especially 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 4% of the Companys net sales in
fiscal 2003.

Distributor Relationship.During fiscal 2003, approximately 15% of the
Companys medical products were sold to Cardinal Healthcare, Inc. (Cardinal)
which distributes these products to hospitals nationwide. Span-America has
maintained a distribution relationship with Cardinal (formerly Allegiance
Healthcare Corporation and Baxter Healthcare Corporation) for 24 years. In
September 1996, Baxter spun off its healthcare distribution and cost management
business to create Allegiance. In 1998, Allegiance was acquired by Cardinal
and has continued to function as a separate unit of Cardinal. The Companys
distribution agreement with Cardinal 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. The consumer products are
marketed to retailers through Louisville Bedding Company (LBC), a leading
manufacturer and distributor of bedding products in North America. LBC is the
exclusive distributor of the Companys products pursuant to a distribution
agreement between the companies, which expires in December 2006. The agreement
can be renewed for successive terms based on mutual agreement by both
companies.

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|Span-America Medical Systems, Inc. 2003 10-K |  |  | 5 | 





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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
southeastern United States. Its customers represent a wide variety of markets,
including the photographic film, durable goods, electronics, automotive, and
sports equipment industries.

Custom products represented approximately 49% of the Companys total net
sales in fiscal 2003, compared with 41% in fiscal 2002 and 40% in fiscal 2001.
In fiscal 2003, approximately 82% of the Companys total custom products sales
were distributed through Louisville Bedding Company.

Safety Catheters

On July 15, 2002, the Company acquired assets related to the Secure I.V.®
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 I.V.
catheter. The Secure I.V. has FDA 510(k) approval and is protected by 11
patents. The Company is currently preparing to manufacture and market the new
product line. We currently anticipate that sales of Secure I.V. will begin in
fiscal 2004. We will 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.

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|Span-America Medical Systems, Inc. 2003 10-K |  |  | 6 | 





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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 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 I.V. products will compete in the
protected, short peripheral catheter marketplace. Two major companies, Medex
(acquired from Johnson and 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 I.V. at the present time.

The Company believes that Secure I.V.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
I.V. In addition, the competitors are able to supply a wider variety of other
medical devices to their customers. Because of design differences and
economies of scale, competing devices are less costly to make.

Major Customers

The Company has a business relationship with Cardinal to distribute
certain of its medical foam products. In fiscal 2003 sales to Cardinal
amounted to approximately 8% of the Companys total net sales and approximately
15% of the Companys sales in the medical segment. Span-America also has a
relationship with Louisville Bedding Company to distribute certain of its
consumer foam products. Sales to Louisville Bedding during fiscal 2003 made up
approximately 40% of the Companys total net sales and approximately 82% of
sales in the custom products segment.

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|Span-America Medical Systems, Inc. 2003 10-K |  |  | 7 | 





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See Distributor Relationship on page 5 and Competition on pages 6 and
7 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.

Patents and Trademarks

The Company holds 41 federally registered trademarks and 16 foreign
trademark registrations, including Span-America, Span-Aids, Geo-Matt,
Geo-Mattress, PressureGuard,and Isch Dishin the medical and consumer
segments.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 53 United States patents and 6 foreign patents
relating to various components of its patient positioners, mattress overlays,
and replacement mattresses for the medical segment. 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 medical foam 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 3 to 10 years with
additional patents pending. The Companys PressureGuard patents have remaining
lives ranging from 11 to 15 years with additional patents pending. The
Companys Span-Aids patents have remaining lives ranging from 0 to 11 years.

As previously noted, in July 2002, the Company acquired assets related to
the Secure I.V.® catheter product line of VADUS®, Inc., a privately owned
designer and manufacturer of peripheral intravenous catheters. The Secure I.V.
has FDA 510(k) approval and is protected by 11 U. S. patents and five foreign
patents. Additional patent applications have been filed. Secure
I.V. is a federally registered trademark. The Company holds two
foreign trademark registrations related to Secure I.V.

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.

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As of September 27, 2003, Span-America had unshipped orders of
approximately $1.7 million which represents a 46% increase compared to a
backlog of $1.1 million, at fiscal year end 2002. All orders in the current
backlog are expected to be filled in the 2004 fiscal year.

Employees

On September 27, 2003, the Company had 264 full-time employees, including
5 officers and two part-time employees. Of these employees, 19 were executive
or management personnel, 21 were administrative and clerical personnel, 19 were
sales personnel, and 202 were manufacturing employees. The Company is not a
party to any collective bargaining agreement and has never experienced an
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.

In August 2003 the Company received certification as an ISO 9002 and ISO
13488 supplier for our PressureGuard mattress products from our Greenville,
South Carolina plant. These standards are prepared by the American Society for
Quality Control Standards Committee to correspond to the International Standard
ISO 9002:1994. ISO (the International Organization for Standardization) is a
worldwide federation of national standards bodies dealing with quality-system
requirements that can be used by a supplier to demonstrate its capability and
for the assessment of the capability of a supplier by external parties.
Compliance with ISO standard 13488 is required by Health Canada for all Class
II medical devices sold there. The certification is subject to reassessment at
six month intervals.

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.

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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 leased facility in Norwalk, California. The
lease expires on December 31, 2006 and provides for a rental rate of $18,657
per month, increasing annually to $20,198 per month.

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

Item 3. Legal Proceedings

As previously reported in the Companys Form 10-Q for the quarter ended
June 28, 2003, on July 17, 2003, shareholder Jerry Zucker filed suit against
the Company in the Court of Common Pleas in Charleston, South Carolina
challenging certain aspects of the Companys Shareholder Rights Plan. In his
suit, Mr. Zucker sought, among other relief, a court declaration that certain
provisions of the Shareholder Rights Plan are unenforceable and an injunction
precluding the Company from interpreting the Shareholder Rights Plan to
restrict certain actions that Mr. Zucker might take in the future. Both a
committee of independent directors and the full board of directors had
previously concluded that the Shareholder Rights Plan is designed to help
ensure that the Companys shareholders receive fair treatment in the event of
an unsolicited attempt to gain control of the Company and to discourage certain
coercive takeover tactics. The plan, however, is not designed to deter a proxy
contest or a fair offer for the whole Company.

In November 2003, Mr. Zucker and the Company reached a settlement
agreement whereby Mr. Zucker agreed to dismiss his lawsuit without prejudice in
exchange for the Companys agreement to delete certain language in the
definition of Person contained in the Shareholder Rights Plan. The Company
believes removal of the language clarifies the scope of the definition of
Person but will not significantly change the protections afforded the Company
and its shareholders by the Shareholder Rights Plan.

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.

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 2003 fiscal year.

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 10 | 





---



##### 



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 9 of the
Companys 2003 Annual Report is incorporated herein by reference. In addition,
the information under Stock Information on the inside back cover of the
Companys 2003 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
|           |  |                    |       |                          |  |              
|01/12/01   |  |                    | 8,000 |                          |  |               | 5.000 |  |  |  | 40,000 | 
|01/29/02   |  |                    | 8,000 |                          |  |               | 5.950 |  |  |  | 47,600 | 
|04/03/03   |  |                    | 8,000 |                          |  |               | 8.000 |  |  |  | 64,000 | 

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
8 of the Companys 2003 Annual Report is incorporated herein by reference.

Item 7. Managements Discussion and Financial Analysis

Managements Discussion and Financial Analysis on pages 10 through 15 of
the Companys 2003 Annual Report are incorporated herein by reference.

Item 7a. Qualitative and Quantitative Disclosures About Market Risk

The information contained in the section titled Market Risk on page 14
of the Companys 2003 Annual Report is incorporated herein by reference.

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 11 | 





---



##### 



Item 7b. Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Item 7c. Contractual Obligations

The following table summarizes the Companys significant contractual
obligations and commercial commitments at September 27, 2003 and the future
periods in which such obligations are expected to be settled in cash. For
additional information regarding these obligations see the referenced footnotes
to the Companys audited financial statements for the year ended September 27,
2003, presented on pages 24 and 30 of the 2003 Annual Report.

|                                |  |       |       |      |  |           |       |           |  |       |       |  |  |   |     |        |  |   |     | 
|------------------------------- |  | ----- | ----- | ---- |  | --------- | ----- | --------- |  | ----- | ----- |  |  | - | --- | ------ |  | - | --- | 
|                                |  |       |       |      |  | Less      |       |           |  |       |       |  |  |   |     | More  
|Contractual Obligations         |  |       |       |      |  | than 1    |       |           |  |       |       |  |  |   |     | than 5
|(in thousands of dollars)       |  | Total |       | year |  | 1-3 years |       | 3-5 years |  | years
|                                |  |       |       |      |  |           |       |           |  |      
|Operating leases  Note 19      |  | $     | 762   |      |  | $         | 231   |           |  | $     | 470   |  |  | $ | 61  |        |  |   |     | 
|Purchase obligations  Note 20  |  |       | 2,650 |      |  |           | 2,150 |           |  |       | 500   |  |  |   |     |        |  |   |     | 
|Deferred compensation  Note 11 |  |       | 1,042 |      |  |           | 114   |           |  |       | 227   |  |  |   | 227 |        |  | $ | 474 | 
|                                |  |       |       |      |  |           |       |           |  |       |       |  |  |   |     |        |  |   |     | 
|Total contractual obligations   |  | $     | 4,454 |      |  | $         | 2,495 |           |  | $     | 1,197 |  |  | $ | 288 |        |  | $ | 474 | 
|                                |  |       |       |      |  |           |       |           |  |       |       |  |  |   |     |        |  |   |     | 

Item 8. Financial Statements and Supplementary Data

The financial statements of the Company included on pages 16 through 30 of
the Companys 2003 Annual Report are incorporated herein by reference.

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

None

Item 9A. 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 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

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 12 | 





---



##### 



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 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 2003 fiscal year under the headings
Election of Directors, Business Experience of Nominees and Directors,
Executive Officers, and Compensation of Directors and Executive Officers.

Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

The following table summarizes information regarding the Companys equity
compensation plans as of September 27, 2003:

|                                                           |  |                   |         |                   |  |                     |      |                     |  |                     |         |    
|---------------------------------------------------------- |  | ----------------- | ------- | ----------------- |  | ------------------- | ---- | ------------------- |  | ------------------- | ------- | ---
|                                                           |  |                   |         |                   |  |                     |      |                     |  | 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     |  |                   | 295,250 |                   |  | $                   | 5.26 |                     |  |                     | 184,942 |    
|                                                          
|Equity compensation
plans not approved
by security holders |  |                   | 0       |                   |  |                     | 0    |                     |  |                     | 0       | (1)
|                                                          
|Total                                                      |  |                   | 295,250 |                   |  | $                   | 5.26 |                     |  |                     | 184,942 |    
|                                                          



---

|(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.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 13 | 





---



##### 



For additional information on the Companys stock option plans, see Note
12 to the Companys audited financial statements for the year ended September
27, 2003, presented on pages 25 and 26 of the 2003 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 2003 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. Principal Accountant Fees and Services

Additional information required under Item 14 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 2003 fiscal year under the heading
Principal Accountant Fees and Services,

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   |  | Restated Articles of Incorporation: Incorporated by reference to Exhibit
3(a) to the Companys Registration Statement on Form S-18, Commission File
No. 0-11392.                                                                       
|      |  |                                                                                                                                                                                                                                        
|3.1.1 |  | Articles of Amendment filed with the South Carolina Secretary of State
on February 6, 1989: Incorporated by reference to Exhibit 3.1.1 to the
Companys Annual Report on Form 10-K for the fiscal year ended September
28, 1991.       
|      |  |                                                                                                                                                                                                                                        
|3.1.2 |  | Articles of Amendment filed with the South Carolina Secretary of State
on March 5, 1992: Incorporated by reference to Exhibit 4.4 to the
Companys Registration Statement on Form S-2 dated May 11, 1992,
Commission File No. 33-47670.

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 14 | 





---



##### 



|      |  |                                                                                                                                                                                                                                                                                   
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1.3 |  | Articles of Amendment filed with the South Carolina Secretary of State
on April 22, 1993: Incorporated by reference to Exhibit 4.1 to the
Companys Quarterly Report on Form 10-Q for the quarter ended April 3,
1993.                                                            
|      |  |                                                                                                                                                                                                                                                                                   
|3.2   |  | Amended and Restated By-Laws dated February 4, 1997: Incorporated by
reference to Exhibit 3.0 to the Companys Quarterly Report on Form 10-Q
for the quarter ended March 29, 1997.                                                                                                
|      |  |                                                                                                                                                                                                                                                                                   
|3.2.1 |  | Amendment to the Companys by-laws dated March 13, 2003: Incorporated by
reference to Exhibit 3.2 to the Companys report on Form 8-K dated March
13, 2003, Commission File No. 000-11392.                                                                                        
|      |  |                                                                                                                                                                                                                                                                                   
|3.2.2 |  | Amendment to the Companys by-laws dated November 7, 2003.                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                   
|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.    
|      |  |                                                                                                                                                                                                                                                                                   
|4.3   |  | Amended and Restated Shareholder Rights Agreement dated March 24, 2003,
between Span-America Medical Systems, Inc. and American Stock
Transfer &
Trust Company as Rights Agent: Incorporated by reference to Exhibit 4.1 to
the Companys report on Form 8-K dated March 24, 2003.
|      |  |                                                                                                                                                                                                                                                                                   
|4.3.1 |  | Amendment No. 1 to the Amended and Restated Shareholder Rights Agreement
dated, November 19, 2003: Incorporated by reference to Exhibit 4.1 to the
Companys report on Form 8-K dated December 2, 2003.                                                                           
|      |  |                                                                                                                                                                                                                                                                                   
|4.4   |  | Agreement among Span-America Medical Systems, Inc., Jerry Zucker, and
Robert B. Johnston, dated December 17, 2003, regarding nomination of Mr.
Johnston to the Span-America Board of Directors.                                                                                   
|      |  |                                                                                                                                                                                                                                                                                   
|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  |  | 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.                                                                                               

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 15 | 





---



##### 



|       |  |                                                                                                                                                                                                                                                                                         
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2.1 |  | 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   |  | 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.                                                                             
|       |  |                                                                                                                                                                                                                                                                                         
|10.3.1 |  | Amendment No. 1 to the 1991 Stock Option Plan: Incorporated by reference
to Exhibit 10.4.2 to the 1998 10-K.                                                                                                                                                                            
|       |  |                                                                                                                                                                                                                                                                                         
|10.4   |  | 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.                                                                                                                                        
|       |  |                                                                                                                                                                                                                                                                                         
|10.5   |  | 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.                                  
|       |  |                                                                                                                                                                                                                                                                                         
|10.6   |  | 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.                                                                             
|       |  |                                                                                                                                                                                                                                                                                         
|10.6.1 |  | Amendment No. 1 to the 1997 Stock Option Plan: Incorporated by reference
to Exhibit 10.14.2 to the 1998 10-K.                                                                                                                                                                           
|       |  |                                                                                                                                                                                                                                                                                         
|10.7   |  | 1997 Long Term Incentive Stock Option Plan: Incorporated by reference to
Exhibit 10.15 to the 1997 10-K.                                                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                         
|10.8   |  | 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. 000-11392.
|       |  |                                                                                                                                                                                                                                                                                         
|10.8.1 |  | 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.                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                         
|10.9   |  | 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.                                                                                                                                                           

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 16 | 





---



##### 



|      |  |                                                                                                                                                                                                                                                                                    
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10 |  | 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.  
|      |  |                                                                                                                                                                                                                                                                                    
|10.11 |  | Severance Protection Agreement between the Company and James D. Ferguson
dated July 25, 2002: Incorporated by reference to Exhibit 10.20 of the
Companys Annual Report on Form 10-K for the fiscal year ended September
28, 2002 (the 2002 10-K), Commission File No. 000-11392.
|      |  |                                                                                                                                                                                                                                                                                    
|10.12 |  | Severance Protection Agreement between the Company and Robert E. Ackley
dated July 25, 2002: Incorporated by reference to Exhibit 10.21 of the
2002 10-K.                                                                                                                          
|      |  |                                                                                                                                                                                                                                                                                    
|10.13 |  | Severance Protection Agreement between the Company and Richard C.
Coggins dated July 25, 2002: Incorporated by reference to Exhibit 10.22 of
the 2002 10-K.                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                    
|10.14 |  | Severance Protection Agreement between the Company and James R. OReagan
dated July 25, 2002: Incorporated by reference to Exhibit 10.23 of the
2002 10-K.                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                    
|10.15 |  | Severance Protection Agreement between the Company and Clyde A. Shew
dated July 25, 2002: Incorporated by reference to Exhibit 10.24 of the
2002 10-K.                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                    
|13.1  |  | 2003 Annual Report to Shareholders.                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                    
|23.1  |  | Consent of Elliott Davis, LLC                                                                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                    
|31.1  |  | Officer Certifications Pursuant to Section 302                                                                                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                    
|32.1  |  | Officer Certifications Pursuant to Section 906                                                                                                                                                                                                                                     

(b)  Reports on Form 8-K



| |                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Report on Form 8-K filed July 23, 2003 related to the Companys
press release regarding a lawsuit filed against the Company by
Jerry Zucker challenging certain aspects of the Companys
Shareholder Rights Plan.                 
|
| | Report on Form 8-K filed July 24, 2003 related to the Companys
earnings release for the third quarter of fiscal 2003.                                                                                                            
|
| | Report on form 8-K filed October 30, 2003 related to the Companys
earnings release for the year ended September 27,
2003.                                                                                                        
|
| | Report on form 8-K filed December 2, 2003 related to the Companys
press release regarding settlement of a lawsuit filed against
the Company by Jerry Zucker challenging certain aspects of the
Companys Shareholder Rights Plan.

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 17 | 





---



##### 



(c)  Exhibits



| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | The exhibits required by this section of Item 15 are attached
hereto or incorporated by reference.

(d)  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.

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 18 | 





---



##### 



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 22, 2003

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                  |  | Controller                                                        
|                                           |  |                                                                   
|Gwendolyn L. Randolph                      |  |                                                                   
|                                           |  |                                                                   
|/s/ Robert H. Dick                         |  | Director                                                          
|                                           |  |                                                                   
|Robert H. Dick                             |  |                                                                   
|                                           |  |                                                                   
|/s/ Thomas F. Grady, Jr.                   |  | Director                                                          
|                                           |  |                                                                   
|Thomas F. Grady, Jr.                       |  |                                                                   
|                                           |  |                                                                   
|/s/ Guy R. Guarch                          |  | Director                                                          
|                                           |  |                                                                   
|Guy R. Guarch                              |  |                                                                   
|                                           |  |                                                                   
|/s/ Thomas D. Henrion                      |  | Director                                                          
|                                           |  |                                                                   
|Thomas D. Henrion                          |  |                                                                   
|                                           |  |                                                                   
|/s/ Douglas E. Kennemore                   |  | Director                                                          
|                                           |  |                                                                   
|Douglas E. Kennemore, M.D.                 |  |                                                                   
|                                           |  |                                                                   
|/s/ James M. Shoemaker, Jr.                |  | Director                                                          
|                                           |  |                                                                   
|James M. Shoemaker, Jr.                    |  |                                                                   

December 22, 2003

|                                             |  |  |    | 
|-------------------------------------------- |  |  | -- | 
|Span-America Medical Systems, Inc. 2003 10-K |  |  | 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 27, 2003

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 27, 2003 are incorporated by reference in Item 8:

Balance Sheets  September 27, 2003 and September 28, 2002.

Statements of Income  Years ended September 27, 2003, September 28,
2002, and September 29, 2001

Statements of Shareholders Equity  Years ended September 27, 2003,
September 28, 2002, and September 29, 2001.

Statements of Cash Flows  Years ended September 27, 2003, September 28,
2002, and September 29, 2001.

Notes to Financial Statements  September 27, 2003.

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. A                        |                                    | COL. B       |           | COL. C           |              | COL. D           |                     | COL. E     
|                              |                                    |              | ADDITIONS |                  |              |                  |                    
|                             
|Description                   |                                    | Balance at   |           | (1)              |              | (2)              |                     |             |          |        |        | Balance at
|                              |                                    | Beginning of |           | Charged to Costs |              | Charged to Other |                     | Deductions- |          | End of
|                              |                                    |              | Period    |                  | and Expenses |                  | Accounts - Describe |             | Describe |        | Period
|                             
|Year Ended September 27, 2003 |                                    |              |           |                  |              |                  |                     |             |          |        |        |            |  |   |         |         |     |   |         |        
|Deducted from asset accounts: |                                    |              |           |                  |              |                  |                     |             |          |        |        |            |  |   |         |         |     |   |         |        
|                              | Reserve for uncollectible accounts |              | $         | 211,000          |              |                  | $                   | 86,884      |          |        |        |            |  |   | $       | 122,884 | (a) |   | $       | 175,000 | 
|                              | Reserve for discounts              |              |           | 170,000          |              |                  |                     | 359,767     |          |        |        |            |  |   |         | 364,767 | (b) |   |         | 165,000 | 
|                              |                                    |             
|Totals                        |                                    | $            | 381,000   |                  |              | $                | 446,651             |             |          |        |       |            |  | $ | 487,651 |         |     | $ | 340,000 |        
|                              |                                    |             
|Year Ended September 28, 2002 |                                    |              |           |                  |              |                  |                     |             |          |        |        |            |  |   |         |         |     |   |         |        
|Deducted from asset accounts: |                                    |              |           |                  |              |                  |                     |             |          |        |        |            |  |   |         |         |     |   |         |        
|                              | Reserve for uncollectible accounts |              | $         | 223,000          |              |                  | $                   | 62,293      |          |        |        |            |  |   | $       | 74,293  | (a) |   | $       | 211,000 | 
|                              | Reserve for discounts              |              |           | 143,000          |              |                  |                     | 321,263     |          |        |        |            |  |   |         | 294,263 | (b) |   |         | 170,000 | 
|                              |                                    |             
|Totals                        |                                    | $            | 366,000   |                  |              | $                | 383,556             |             |          |        |       |            |  | $ | 368,556 |         |     | $ | 381,000 |        
|                              |                                    |             
|Year Ended September 29, 2001 |                                    |              |           |                  |              |                  |                     |             |          |        |        |            |  |   |         |         |     |   |         |        
|Deducted from asset accounts: |                                    |              |           |                  |              |                  |                     |             |          |        |        |            |  |   |         |         |     |   |         |        
|                              | Reserve for uncollectible accounts |              | $         | 304,000          |              |                  | $                   | 44,202      |          |        |        |            |  |   | $       | 125,202 | (a) |   | $       | 223,000 | 
|                              | Reserve for discounts              |              |           | 86,000           |              |                  |                     | 222,961     |          |        |        |            |  |   |         | 165,961 | (b) |   |         | 143,000 | 
|                              |                                    |             
|Totals                        |                                    | $            | 390,000   |                  |              | $                | 267,163             |             |          |        |       |            |  | $ | 291,163 |         |     | $ | 366,000 |        
|                              |                                    |             
|Year Ended September 30, 2000 |                                    |              |           |                  |              |                  |                     |             |          |        |        |            |  |   |         |         |     |   |         |        

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

F-3