Back to GetFilings.com
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 29, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from _________ to
_________.
Commission File Number 0-11392
SPAN-AMERICA MEDICAL SYSTEMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
South Carolina 57-0525804
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
70 Commerce Center
Greenville, South Carolina 29615
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (864) 288-8877
------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
- ------------------- ------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
- -----------------------------------------------------------
Common Stock, no par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant computed by reference to the last price at which the stock was
sold on December 12, 2001 was $11,415,568.
The number of shares of the registrant's common stock, no par value,
outstanding as of December 12, 2001 was 2,517,400.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2001 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 1, 2002 are
incorporated by reference into Part III.
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(R) mattress
overlay in the health care market, which became the Company's leading product.
At the same time, the Company began selling its mattress overlay products to
retailers throughout the United States.
The Company entered the replacement mattress segment of the pressure
ulcer care market in 1992 through the acquisition of Healthflex, Inc. The
Company is currently marketing the PressureGuard line of replacement mattresses
directly to hospitals, long-term care facilities, and home health care dealers.
The Company's long-term strategy is to become a leading health care
manufacturer specializing in wound management products used in the prevention
and treatment of pressure ulcers. Most of the Company's medical products are
currently directed toward wound care applications, and the Company is actively
seeking to develop or acquire new products which are in this market segment. The
Company also seeks to further develop and manufacture consumer and industrial
applications of its medical products.
The Company's products are distributed primarily in the United States
and to a lesser degree in several foreign countries. Total export sales during
fiscal 2001 were approximately $1.3 million or 4% of total net sales. The
majority of the Company's export sales occurred in Canada.
INDUSTRY SEGMENT DATA
The industry segment data included in Note 16 to the Company's audited
financial statements for the year ended September 29, 2001, presented on pages
21 and 22 of the 2001 Annual Report, is incorporated herein by reference.
1
MEDICAL PRODUCTS
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 60% of total net sales in 2001, 58% of total net sales in 2000, and
65% of total net sales in 1999.
Mattress Overlays. Span-America produces a variety of foam mattress
overlays, including convoluted and lapidus foam pads and its patented
Geo-Matt(R) overlay. Mattress overlays comprised approximately 18% of the
Company's total net sales in fiscal 2001. 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 as compared to complete mattresses and are marketed as less expensive
alternatives to generally higher priced air and water mattresses. The mattress
overlays are designed for single patient use.
The Geo-Matt(R) mattress overlay represents the Company's single
largest product in terms of revenues. Geo-Matt was designed in conjunction with
clinical studies performed by the Institute for Rehabilitation and Research at
the Baylor College of Medicine. The product's patented design includes over 800
individual cells which are cut to exacting tolerances on computer-controlled
equipment to create a sophisticated and 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 significantly reduces
shear forces while evenly distributing the patient's body weight, thereby
minimizing 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(R) 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.
Since the 1997 introduction of the Geo-Mattress Max, Plus, and Pro
models, foam therapeutic replacement mattresses have consistently represented
the Company's single largest growth category in medical products sales. In early
1999, the Company extended the product line with the release of the Geo-Mattress
with Wings(R). This product, which features raised perimeter bolsters for added
patient safety, has been a significant contributor to overall Geo-Mattress
sales. A second line extension, the Geo-Mattress Atlas, was added in December
2000 to address the needs of obese patients. With a carrying capacity up to 600
pounds, the Geo-Mattress Atlas is specifically designed for the unique pressure
management challenges faced within this growing specialty area of patient care.
In addition to the Max, Plus, Pro, Wings, and
2
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(R) 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 via 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(R) (formerly
PressureGuard II), the Company also offers the PressureGuard CFT(R). This model
incorporates patented design principles of constant force technology. First
introduced as the CustomCare mattress in June of 1995, the PressureGuard CFT is
unique in that it is a dynamic support surface that rivals very expensive
powered surfaces in effectiveness, yet it requires no power source of any kind.
The Company's powered therapeutic replacement mattresses consist of the
remaining models in the PressureGuard Series. In November 1993, the Company
received FDA 510K marketing approval for its PressureGuard IV mattress system.
Building on the comfort and support of the original PressureGuard design,
PressureGuard IV was designed as a sophisticated, powered system for providing
pressure reduction and patient comfort, with the added ability to turn the
patient. The system was designed to automatically sense the patient's weight and
position, and to continually adjust the pressures appropriately while slowly and
quietly repositioning the patient at angles up to 30 degrees in cycles of up to
two hours. The upgraded version, renamed the PressureGuard Turn Select(R),
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(R) 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(R), a simpler but very effective alternating pressure mattress. Originally
introduced as the DynaGuard(R), 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. By
incorporating a basic lateral rotation feature, the APM2 gives the caregiver the
flexibility to offer either of two distinct treatment modalities literally at
the flip of a switch.
3
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 2001, replacement mattresses and related
products made up approximately 24% of total net sales.
Patient Positioners. Span-America's specialty line of patient
positioners is sold primarily under the trademark Span-Aids(R). Span-Aids
accounted for approximately 14% of the Company's net sales in fiscal 2001. This
is the original product line of the Company 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 extensive 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 which utilize
them. This patented packaging method reduces the package size by as much as 75%
while protecting the positioners from dust and contamination during
transportation and storage.
Seating Products. The final category of medical products made by
Span-America consists of seating cushions and related products that address the
needs of the patient when in the seated position. The Company's offerings can be
subdivided into three main categories. (1) Seating products made specifically as
an aid to wound healing include the Isch-Dish(R) and Sacral Dish(R) pressure
relief cushions. (2) Seating products made for patient positioning and general
pressure management include the Isch-Dish Thin, the Geo-Matt(R) Contour(TM)
cushion, the Equalizer(TM), and the EZ-Dish(TM). The Equalizer contoured
positioning cushion has a multi-component design that includes a viscoelastic
foam top, proprietary soft polymer inserts, and a contoured base. Like the
Isch-Dish, The Equalizer is recognized for reimbursement among seating products
covered by the Medicare system. This makes it an attractive option for durable
medical equipment suppliers and rehab seating specialists. The EZ-Dish pressure
relief cushion, which uses some of the features of the original Isch-Dish
design, offers a simpler, more
4
affordable solution to the seating problems of nursing home patients. (3)
Seating products designed to address pressure management without additional
positioning benefits include the Gel-T(R) cushion and the Geo-Matt and Geo-Matt
PRT(R) wheelchair cushions. The Gel-T is a gel/foam combination cushion popular
with elderly patients. The Geo-Matt and Geo-Matt PRT cushions incorporate the
Company's proprietary Geo-Matt anti-shearing surface. Seating products accounted
for approximately 5% of the Company's net sales in fiscal 2001.
Distributor Relationship. During fiscal 2001, approximately 22% of the
Company's medical products were sold to Allegiance Healthcare Corporation
("Allegiance") which distributes these products to hospitals nationwide.
Span-America has maintained a distribution relationship with Allegiance
(formerly Baxter) for 22 years. In September 1996, Baxter spun off its
healthcare distribution and cost management business to create Allegiance. In
1998, Allegiance was acquired by Cardinal Healthcare, Inc. and has continued to
function as a separate unit of Cardinal. The Company's distribution agreement
with Allegiance has been unaffected by these ownership changes.
CUSTOM PRODUCTS
Span-America's custom products segment includes two major product
lines: consumer products and industrial products. The Company's consumer product
line consists primarily of convoluted mattress overlays and specially designed
pillows for the consumer bedding market. In fiscal 2001, approximately 68% of
the Company's total custom products sales were distributed through Louisville
Bedding Corporation, an international manufacturer and marketer of bedding
products.
In 1990, Span-America introduced its TerryFoam(R) comfort products,
which are designed to be used on all types of outdoor furniture. These products
are manufactured in the Company's Greenville, SC plant. They are being sold and
distributed directly by Span-America to retailers nationwide.
Span-America's industrial product line consists primarily of foam
packaging and cushioning materials. The Company also produces foam products
which are used for flotation, sound insulation and gasketing purposes. The
majority of these products are made to order according to customer
specifications instead of being made to stock. 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 manufacturers representatives selling its foam fabrication
capabilities primarily in the Southeast. Its customers represent a wide variety
of markets, including the photographic film, durable goods, electronics,
automotive, and sports equipment industries.
Custom products represented approximately 40% of the Company's total
net sales in fiscal 2001, compared to 42% in fiscal 2000 and 35% in fiscal 1999.
5
COMPETITION
Medical. In the medical market segment, the Company faces significant
competition for sales of its foam mattress overlays. The competition for
convoluted mattress overlays is primarily based on price and delivery. For other
foam mattress overlay products (such as the Geo-Matt overlay), the competition
is based mainly on product performance and quality. However, to a lesser extent,
the competition for Geo-Matt type overlays is also based on price and delivery.
Competition with respect to the Company's Span-Aid products is primarily based
on price. However, a secondary source of competition for patient positioners
results from alternative methods such as the use of pillows and other devices to
position patients.
The Company believes that it is among the top three nationwide
suppliers of foam mattress overlays and patient positioners to the U.S. health
care market. The Company's primary competitor in the overlay and positioner
markets is Sunrise Medical.
The competition in the therapeutic replacement mattress market is based
on product performance, price and durability. Potential customers typically
select a product based on these criteria after conducting a formal clinical
evaluation of sample mattresses for periods of one to six months. A secondary
source of competition results from alternative products such as mattress
overlays which are significantly less expensive than replacement mattresses.
The market for therapeutic replacement mattresses has developed
principally during the 1990's. Competitors include 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 as important as the price of the product.
MAJOR CUSTOMERS
The Company has a business relationship with Allegiance to distribute
certain of its medical foam products. In fiscal 2001 sales to Allegiance
amounted to approximately 13% of the Company's total net sales and approximately
22% of the Company's sales in the medical
6
segment. Span-America also has a relationship with Louisville Bedding
Corporation to distribute certain of its consumer foam products. Sales to
Louisville Bedding Corporation during fiscal 2001 made up approximately 26% of
the Company's total net sales and approximately 68% of sales in the custom
products segment.
See "Distributor Relationship" on page 5 and "Competition" on page 6
for more information on major customers.
SEASONAL TRENDS
Some seasonality can be identified in certain of the Company's medical
and consumer foam products. However, the fluctuations have minimal effect on the
Company's operations because of offsetting trends among these product lines.
Span-America has not experienced significant seasonal fluctuations in its
industrial product line.
PATENTS AND TRADEMARKS
The Company holds 38 federally registered trademarks and 16 foreign
trademark registrations, including SPAN-AMERICA, SPAN-AIDS, GEO-MATT, SPAN-CARE,
PRESSUREGUARD, and ISCH DISH. Other federal registration applications are
presently pending. The Company believes that these trademarks are readily
identifiable in their respective markets and add value to the Company's product
lines.
The Company also holds 58 United States patents and 7 foreign patents
relating to various components of its patient positioners, mattress overlays,
and replacement mattresses. Additional patent applications have been filed.
Management believes that these patents are important to the Company. However,
while the Company has a number of products covered by patents, there are
competitive alternatives available which are not covered by these patents.
Therefore, the Company does not rely solely on its patents to maintain its
competitive position in the marketplace.
Span-America's principal patents include the patents on its Geo-Matt,
Geo-Mattress, PressureGuard, and Span-Aids products. The Company's Geo-Matt and
Geo-Mattress patents have remaining lives ranging from 5 to 9 years with
additional patents pending. The Company's PressureGuard patents have remaining
lives ranging from 12 to 16 years with additional patents pending. The Company's
Span-Aids patents have remaining lives ranging from 0 to 12 years.
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.
7
As of September 29, 2001, Span-America had unshipped orders of
approximately $948,000, which represents a 27% decrease compared to a backlog of
$1.3 million at fiscal year end 2000. All orders in the current backlog will be
filled in the 2002 fiscal year.
EMPLOYEES
On September 29, 2001, the Company had 221 full-time employees,
including 5 officers. Of these employees, 17 were executive or management
personnel, 16 were administrative and clerical personnel, 18 were sales
personnel, and 165 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.
ENVIRONMENTAL MATTERS
The Company's manufacturing operations are subject to various
government regulations pertaining to the discharge of materials into the
environment. Span-America believes that it is in substantial compliance with
applicable regulations. The Company does not anticipate that continued
compliance will have a material effect on the Company's capital expenditures,
earnings or competitive position.
Item 2. Properties
The Company's principal office and manufacturing facility is owned by
the Company and located in Greenville, South Carolina. This facility contains
approximately 125,000 square feet and is located on a 13-acre site.
The Company produces foam mattress overlays for the medical and
consumer markets in a 40,000 square foot facility in Norwalk, California. The
lease expires in December 31, 2003 at a rental rate of $19,469 per month,
increasing annually to $20,855 per month.
The South Carolina and California facilities are considered suitable
and adequate for their intended purposes.
8
Item 3. Legal Proceedings
From time to time the Company is a party to various legal actions
arising in the normal course of business. However, management believes that as a
result of legal defenses and insurance arrangements with parties believed to be
financially capable, there are no proceedings threatened or pending against the
Company that, if determined adversely, would have a material adverse effect on
the business or financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of the Company's 2001 fiscal year.
PART II
Item 5. Market for the Registrant's Common Stock and Related Shareholder
Matters
The stock price information contained under "Quarterly Financial Data"
within the table and the information set forth below the table on page 7 of the
Company's 2001 Annual Report is incorporated herein by reference. In addition,
the information under "Stock Information" on the inside back cover of the
Company's 2001 Annual Report is incorporated herein by reference.
In September 1994, the Board of Directors approved a resolution
changing their annual Director's compensation from cash to stock. The following
table sets forth information about unregistered shares of common stock issued to
the Company's non-employee Directors in lieu of annual cash compensation for
their service as Directors.
# Shares of Common Fair Market Value on Aggregate
Issue Date Stock Issued Issue Date ($ Per Share) Consideration
- ---------- ------------ ------------------------ -------------
02/08/95 7,000 $5.125 $35,875
03/25/96 6,000 6.375 38,250
01/03/97 5,000 4.250 21,250
02/03/97 4,000 5.000 20,000
01/15/98 8,000 6.875 55,000
01/28/99 8,000 5.000 40,000
01/10/00 8,000 3.500 28,000
01/12/01 8,000 5.000 40,000
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.
9
Item 6. Selected Financial Data
The information contained in the "Selected Financial Information" on
page 6 of the Company's 2001 Annual Report is incorporated herein by reference.
Item 7. Management's Discussion and Financial Analysis
Management's Discussion and Financial Analysis on pages 8 through 10 of
the Company's 2001 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
10 of the Company's 2001 Annual Report is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Company included on pages 11 through 24
of the Company's 2001 Annual Report are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Information required under Items 10, 11, 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 2001 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."
10
PART IV
Item 14. 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 14 is submitted as a separate
section of this report beginning on page F-1.
(3) Listing of Exhibits
3.1 Amendment to the Company's by-laws dated April 25, 1995:
Incorporated by reference to Exhibit 3(ii) to the Company's
quarterly report on Form 10-Q for the quarter ended July 1,
1995, Commission File No. 0-11392.
4.1 Specimen of Common Stock certificate: Incorporated by
reference to Exhibit 1 to the Form S-8 filed on January 8,
1990, Commission File No. 33-32896.
4.2 The Registrant hereby agrees to furnish to the Securities and
Exchange Commission upon request a copy of any instrument with
respect to long-term debt not being registered in a principal
amount less than 10% of the total assets of the Registrant on
a consolidated basis.
10.1 Patent Assignment and Royalty Agreement between Donald C.
Spann and the Company, with letter amendment thereto:
Incorporated by reference to Exhibit 10(c) to the Form S-18
filed on June 2, 1983, Commission File No. 2-832-74-A.
10.2.1 1987 Stock Option Plan: Incorporated by reference to Exhibit
10 to the Company's Annual Report on Form 10-K for the fiscal
year ended October 2, 1987, Commission File No. 0-11392.
10.2.2 Amendment No. 1 to the 1987 Stock Option Plan: Incorporated by
reference to Exhibit 10.2.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 3, 1998 (the "1998
10-K"), Commission File No. 0-11392.
10.3 Employee Stock Ownership Plan - Summary Plan Description:
Incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended September
28, 1990, Commission File No. 0-11392.
10.4.1 1991 Stock Option Plan: Incorporated by reference to Exhibit
10.6 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 28, 1991, (the "1991 10-K"),
Commission File No. 0-11392.
10.4.2 Amendment No. 1 to the 1991 Stock Option Plan: Incorporated by
reference to Exhibit 10.4.2 to the 1998 10-K.
11
10.5 Retirement Agreement dated February 6, 1991 between the
Company and Donald C. Spann: Incorporated by reference to
Exhibit 10.7 to the 1991 10-K.
10.6 Contract between the Company and Healthflex, Inc. dated
February 28, 1992: Incorporated by reference to Exhibit 2.1 to
the Current Report on Form 8-K (the "February 28, 1992 Form
8-K") filed by the Company with the Commission on February 28,
1992.
10.7 Contract between the Company and BriGam, Inc. dated October
16, 1992 terminating a royalty agreement: Incorporated by
reference to Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 3, 1992,
Commission File No. 0-11392.
10.8 Voluntary Resignation Agreement dated July 30, 1993 between
the Company and Donald C. Spann: Incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended July 3, 1993, Commission File No.
0-11392.
10.9 Employment Agreement dated February 28, 1992 between the
Company and John W. Wilkinson: Incorporated by reference to
Exhibit 28A to the February 28, 1992 Form 8-K.
10.10 Consulting Agreement dated August 1, 1994 between the Company
and John W. Wilkinson: Incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended July 2, 1994.
10.11 Agreement for Sale and Purchase of Assets By and Among
Span-America Medical Systems, Inc., Embracing Concepts, Inc.
and Edmund K. Maier dated February 6, 1996: Incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 30, 1996.
10.12 Resignation Agreement dated September 1, 1996 between the
Company and Charles B. Mitchell: Incorporated by reference to
Exhibit 10.12 to the Company's Annual Report on Form 10-K for
the fiscal year ended September 28, 1996 (the "1996 10-K"),
Commission File No. 0-11392.
10.13 License and Distribution Agreement dated October 22, 1996
between the Company and Pillowtex Corporation: Incorporated by
reference to Exhibit 10.13 to the 1996 10-K.
10.14.1 1997 Stock Option Plan: Incorporated by reference to Exhibit
10.14 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 27, 1997 (the "1997 10-K"),
Commission File No. 0-11392.
10.14.2 Amendment No. 1 to the 1997 Stock Option Plan: Incorporated by
reference to Exhibit 10.14.2 to the 1998 10-K.
12
10.15 1997 Long Term Incentive Stock Option Plan: Incorporated by
reference to Exhibit 10.15 to the 1997 10-K.
10.16 Distribution Agreement dated March 1, 1999 between the Company
and Louisville Bedding Corporation: Incorporated by reference
to Exhibit 10.16 to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 2000 (the "2000
10-K"), Commission File No. 0-11392.
13.1 2001 Annual Report to Shareholders.
23.1 Consent of Elliott Davis, LLP
23.2 Report of Independent Auditors, Ernst & Young LLP
23.3 Consent of Ernst & Young LLP
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
fourth quarter of the fiscal year ended September 29, 2001.
(c) Exhibits
The exhibits required by this section of Item 14 are attached
hereto or incorporated by reference.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a
separate section of this report beginning on page F-1.
13
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 December 18, 2001
- ---------------------------------
Thomas D. Henrion
Chairman of the Board
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 President, Chief Executive Officer
- -------------------------------------
James D. Ferguson (Principal Executive Officer)
/s/ Richard C. Coggins Chief Financial Officer and Director
- -------------------------------------
Richard C. Coggins (Principal Financial Officer)
/s/ Gwendolyn L. Randolph Controller
- -------------------------------------
Gwendolyn L. Randolph
/s/ B. Kenneth Bolt Director
- -------------------------------------
B. Kenneth Bolt
/s/ Robert H. Dick Director
- -------------------------------------
Robert H. Dick
/s/ Thomas F. Grady, Jr. Director
- -------------------------------------
Thomas F. Grady, Jr.
/s/ Thomas D. Henrion Director
- -------------------------------------
Thomas D. Henrion
/s/ Douglas E. Kennemore Director
- -------------------------------------
Douglas E. Kennemore, M.D.
/s/ J. Ernest Lathem Director
- -------------------------------------
J. Ernest Lathem, M.D.
/s/ James M. Shoemaker, Jr. Director
- -------------------------------------
James M. Shoemaker, Jr.
December 18, 2001
14
Annual Report on Form 10-K
Items 14 (a) (1) and (2), (c) and (d)
List of Financial Statements and Financial Statement Schedules
Certain Exhibits
Financial Statement Schedules
Year Ended September 29, 2001
Span-America Medical Systems, Inc.
Greenville, South Carolina
F-1
Span-America Medical Systems, Inc.
Form 10-K - Item 14(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 29, 2001 are incorporated by reference in Item 8:
Balance Sheets - September 29, 2001 and September 30, 2000.
Statements of Income - Years ended September 29, 2001, September 30,
2000, and October 2, 1999
Statements of Shareholders' Equity - Years ended September 29, 2001,
September 30, 2000, and October 2, 1999.
Statements of Cash Flows - Years ended September 29, 2001, September
30, 2000, and October 2, 1999.
Notes to Financial Statements - September 29, 2001.
The following financial statement schedule of Span-America Medical Systems, Inc.
is included in Item 14(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 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
Deducted from asset accounts:
Reserve for uncollectible accounts $326,000 $141,516 $163,516 (a) $304,000
Reserve for discounts 88,000 151,588 153,588 (b) 86,000
-------- -------- ---------- -------- --------
Totals $414,000 $293,104 -- $317,104 $390,000
======== ======== ========== ======== ========
Year Ended October 2, 1999
Deducted from asset accounts:
Reserve for uncollectible accounts $262,000 $134,000 $70,000 (a) $326,000
Reserve for discounts 167,000 179,000 258,000 (b) 88,000
-------- -------- ---------- -------- --------
Totals $429,000 $313,000 -- $328,000 $414,000
======== ======== ========== ======== ========
(a) Uncollectible accounts written off.
(b) Discounts claimed by customers.
F-3