Span-America Announces Expectations for Fiscal 2014; Sales to Major Customer to Decline by $13.3M; Consumer Sales to be Lower in FY14

Span-America Medical Systems (NASDAQ: SPAN) announced today that itexpects consumer sales to be lower in fiscal 2014 because a major retailcustomer has selected another supplier in a competitive selection process.Span-America's sales to this customer are expected to decrease byapproximately $13.3 million in fiscal 2014 compared with fiscal 2013, whichincludes the previously announced loss of the November seasonal promotion.The sales decline is expected to reduce fiscal 2014 diluted earnings pershare by approximately $0.10 - $0.15 compared with fiscal 2013, afterfactoring in the expected benefits from planned sales growth in other partsof Span-America's business in fiscal 2014. "We are disappointed to lose this account for the coming year, but we expectthat continued growth from our core medical business and higher sales toother retail accounts will partially offset the loss," stated Jim Ferguson,president and chief executive officer of Span-America Medical Systems. "Weexpect to continue supplying consumer bedding products to this customer atnormal levels through January 2014. Starting in February, we expect ourcustomer to begin purchasing these products from the new supplier. However,we also believe we will have opportunities to make new proposals to thissame customer for other retail programs that will take place in 2014. "We have continued to build our consumer bedding sales to other retailersover the past year and have a strong line of consumer bedding products. Weremain optimistic about potential growth opportunities for additional retailaccounts with our marketing and distribution partner, Hollander HomeFashions. We plan to remain active in the consumer bedding market and willbe working hard to replace the lost sales volume, " concluded Mr. Ferguson. The Company expects an orderly wind down of business with the large accountand does not expect any material exit costs associated with the lostbusiness. The Company plans to release its financial results for the fourth quarterand fiscal year 2014 on November 6, 2013. About Span-America Medical Systems, Inc. Span-America manufactures and markets a comprehensive selection of pressuremanagement products for the medical market, including Geo-Matt(R),PressureGuard(R), Geo-Mattress(R), Custom Care(R), Span+Aids(R),Isch-Dish(R), Risk Manager(R) and Selan(R) products. We also supply customfoam and packaging products to the consumer and industrial markets. Throughour wholly-owned subsidiary Span Medical Products Canada Inc., wemanufacture and market the M.C. Healthcare Products brands of Maxxum,Advantage and Rexx bed frames as well as related case goods, tables andseating products for the long-term care market. Span-America's stock istraded on The NASDAQ Global Market under the symbol "SPAN." For moreinformation, visit www.spanamerica.com and www.mchealthcare.com. Forward-Looking Statements We have made forward-looking statements in this release regarding, amongother things, our expectations for future sales and earnings performance. Wewish to caution the reader that these statements are only predictions. Theseforward-looking statements may be generally identified by the use offorward-looking words and phrases such as "will, " "intends," "may,""believes," "anticipates," "should" and "expects," and are based on thecompany's current expectations or beliefs concerning future events thatinvolve risks and uncertainties. Actual events or results may differmaterially as a result of risks and uncertainties facing the company,including: (a) the inability to achieve anticipated growth in sales ofmedical and industrial products in fiscal 2014, (b) the possibility thatsales to the customer described above could decline faster than we currentlyexpect, (c) the possibility of disruptions in our consumer products businessrelated to the transfer of our exclusive distribution agreement fromLouisville Bedding Company to Hollander Home Fashions on May 24, 2013 as aresult of the sale of Louisville Bedding's utility bedding retail businessto Hollander, (d) the possibility of a loss of a key customer or distributorfor our products, (e) the addition of risks caused by the acquisition ofM.C. Healthcare, including those related to business integration,international operations and foreign exchange, (f) the possibility of havingmaterial uncollectible receivables from one or more key customers ordistributors, (g) the potential for volatile pricing conditions in themarket for polyurethane foam, (h) raw material cost increases, (i) thepotential for lost sales due to competition from low-cost foreign imports,(j) changes in relationships with large customers or key suppliers, (k) theimpact of competitive products and pricing, (l) government reimbursementchanges in the medical market, (m) FDA and Health Canada regulation ofmedical device manufacturing and (n) other risks referenced from time totime in our Securities and Exchange Commission filings. We disclaim anyobligation to update publicly any forward-looking statement, whether as aresult of new information, future events or otherwise. We are notresponsible for changes made to this document by wire services or Internetservices.