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.<
/DIV>
Custom products represented approximately 53% of the Company’s total net sales in fiscal 2004, compared with 49% in fiscal 2003 and 41% in fiscal 2002. In fiscal 2004, approximately 89% 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.® protected short peripheral intravenous catheter from VADUS®, Inc., a privately owned designer and manufacturer of 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 16 patents. Net sales of Secure I.V. were less than 1% of total net sales in fiscal 2004. We are operating this portion of the Company as a separate business segment. The Secure I.V. is currently being manufactured for Span-America by an unaffiliated contract manufacturing company.
Since acquiring the assets of Secure I.V. we have completed the design and development of the product and have scaled up from prototype manufacturing to a semi-automated production. We began market test shipments of Secure I.V. in late fiscal 2004. Based on initial feedback from customers, we are in the process of making several design enhancements to improve the product’s performance. We expect the design changes to result in a slight production delay in early fiscal 2005 and a temporary increase in manufacturing costs. In the second and third quarters of fiscal 2005, we expect to accelerate production based on market acceptance of the product. We continue to be optimistic about the prospects for the safety catheter segment. However, this is a new business unit still in the development phase with little sales an
d production history, and there can be no assurance that this segment will become profitable.
Research and Development
The Company’s expenditures for research and development for the last three fiscal years are set forth in the following table:
| |
|
2004 |
|
2003 |
|
2002 |
|
|
Medical |
|
$ |
311,572 |
|
$ |
255,688 |
|
$ |
294,701 |
|
|
Custom products |
|
|
11,220 |
|
|
|
|
|
|
|
|
Safety catheters |
|
|
363,621 |
|
|
300,733 |
|
|
51,439 |
|
|
Total research and development expense |
|
$ |
686,413 |
|
$ |
556,421 |
|
$ |
346,140 |
|
The company expects research and development costs in fiscal 2005 to be higher than in 2004.
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 competitors in the overlay and positioner markets are Sunrise Medical, Kendall, and Ehob.
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 was developed principally during the 1990’s. Competitors include BG Industries (now owned by Encompass), Gaymar, Hill-Rom, KCI, Invacare, Sunrise Medical, Direct Supply, and Medline. These competitors use combinations of their own sales representatives and manufacturer’s representatives to sell directly to hospitals, distributors, and long-term care facilities nationwide.
Many of the Company's competitors in the health care segment are larger and have greater resources than Span-America. We believe the Company’s competitive advantages in the medical segment include innovative and patented product designs, product quality, manufacturing capabilities, distribution relationships, and customer responsiveness.
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 Sleep Innovations, 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 i
ts 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. We believe Span-America’s competitive advantages in the custom products segment include our distribution relationship with Louisville Bedding Company, innovative product designs, foam fabrication capabilities, low cost manufacturing processes, and customer responsiveness.
Safety Catheters. The Company’s Secure I.V. products will compete in the protected short peripheral intravenous catheter marketplace. Two major companies, Medex (acquired from Johnson and Johnson and recently acquired by Smiths Group plc) and Becton Dickinson and Company, supply about 80% of this market. Both of these companies have established national sales organizations and world-wide distribution networks. Their resources are greater than those of Span-America. Span-America has distribution agreements with distributors in three distinct markets, acute care, alternate care and emergency medical services at this time. The emergency medical services distributor is a national distributor. The other distributors are region
al.
The Company believes that Secure I.V.’s design offers a competitive advantage in that it allows for bloodless intravenous catheter insertions without the need for vein occlusion, which helps protect healthcare workers from exposure to blood-borne pathogens. 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 Louisville Bedding Company to distribute certain of its consumer foam products. Sales to Louisville Bedding during fiscal 2004 made up approximately 47% of the Company's total net sales and approximately 89% of sales in the custom products segment.
See "Distributor Relationships" on page 5 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 United States patents and 5 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 2 to 9 years with additional patents pending. The Company’s PressureGuard patents have remaining lives ranging from 10 to 14 years with additional patents pending. The Company's Span-Aids patents have remaining lives ranging from less than a year to 10 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, which are all held by the Company. The mark “Secure I.V.” is also a registered trademark of the Company. Additional patent applications have been filed.
The Company holds 37 federally registered trademarks and 17 foreign trademark registrations, including Span-America, Span-Aids, Geo-Matt, Geo-Mattress, PressureGuard, and Isch Dish in the medical and consumer segments. Other federal registration applic
ations 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.
Raw Materials and Backlog
Polyurethane foam and nylon/vinyl mattress covers and tubes account for approximately 80% of Span-America's raw materials. In addition, the Company uses corrugated shipping cartons, polyethylene plastic packaging material and hook-and-loop fasteners. The Company believes that its basic raw materials are in adequate supply and are available from many suppliers at competitive prices.
As of October 2, 2004, Span-America had unshipped orders of approximately $1.0 million, which represents a 37% decrease compared to a backlog of $1.7 million at fiscal year end 2003. Most of the decline occurred in the custom products segment and was due to a new program for consumer bedding products at fiscal year end 2003 that was not repeated at fiscal year end 2004. The Company’s order backlog fluctuates significantly from month to month. Consequently, the 37% decrease in backlog at fiscal year end 2004 is not necessarily indicative of sales trends for the coming fiscal year. All orders in the current backlog are expected to be filled in the 2005 fiscal year.
Employees
On October 2, 2004, the Company had 303 full-time employees, including 6 officers and three part-time employees. Of these employees, 19 were executive or management personnel, 24 were administrative and clerical personnel, 20 were sales personnel, and 240 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.
The Company is certified as an ISO 9001 and ISO 13485 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 9001:2000. 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 13485 is required by Health Canada for all Class II medical devices sold there. The certification is subject to reassessment at six month intervals. The Company has m
aintained its certification as a result of ISO audits during 2004.
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 used by the medical and custom products segments and is located on a 13-acre site. The Company currently leases a 22,000 square foot facility near its existing facility in Greenville. The leased building is used for inventory storage at a cost of $7,700 per month. The lease expires on October 31, 2005 at which time the Company expects to vacate the building and consolidate the storage into its existing facility in Greenville.
In December 2004, the Company signed a letter of intent with a construction company to expand the Greenville, SC plant by approximately 60,000 square feet. The addition will be used for manufacturing and storage purposes and will replace the outside storage currently used by the Company. The facility is expected to be completed in September 2005.
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 Company currently plans to renew the lease upon expiration or lease another comparable building, depending on market conditions at the time.
The California facilities and the soon-to-be expanded South Carolina facilities are considered suitable and adequate for their intended purposes.
Item 3. Legal Proceedings
There are currently no pending or threatened legal claims against the Company. However, from time to time the Company is a party to various legal actions arising in the normal course of business. 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 2004 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 9 of the Company's 2004 Annual Report is incorporated herein by reference. In addition, the information under "Stock Information" on the inside back cover of the Company's 2004 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 of the Board and the Chairman of the Audit Committee, receives 1,000 shares of Company common stock per year in lieu of annual cash compensation. As compensation for additional duties the Chairman of the Board receives an additional 1,000 shares, and the Chairman of the Audit Committee receives an additional 500 shares of Company common stock per year. 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.
|
Issue Date |
|
|
# Shares of Common
Stock Issued |
|
|
Fair Market Value on
Issue Date
($ Per Share) |
|
|
Aggregate
Consideration |
|
| |
|
|
|
|
|
|
|
|
|
|
|
01/29/02 |
|
|
8,000 |
|
|
5.950 |
|
$ |
47,600 |
|
|
04/03/03 |
|
|
8,000 |
|
|
8.000 |
|
$ |
64,000 |
|
|
03/02/04 |
|
|
8,500 |
|
|
13.500 |
|
$ |
114,750 |
|
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.
The information regarding equity compensation plans set forth under Item 12 below is incorporated herein by reference.
Item 6. Selected Financial Data
The information contained in the "Selected Financial Information" on page 8 of the Company's 2004 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 16 of the Company's 2004 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 15 of the Company’s 2004 Annual Report is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Company included on pages 17 through 30 of the Company's 2004 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 our disclosure controls and procedures as of the end of the period covered by this annual report (the “Evaluation Date”), and, based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures were effective at the Evaluation Date. There were no changes in our internal controls over financial reporting during the last quarter of fiscal 2004 that have materially affected or are reasonably likely to materially affect out internal control over financial reporting
Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
Item 9B. Other information
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required under Item 10 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 2004 fiscal year under the headings “Election of Directors,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Election of Directors - Code of Ethics.”
Item 11. Executive Compensation
Information required under Item 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 2004 fiscal year under the heading "Compensation of Directors and Executive Officers."
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information under the heading “Security Ownership of Certain Beneficial Owners and Management” set forth in the Company’s 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 2004 fiscal year is incorporated herein by reference.
The following table summarizes information regarding the Company’s equity compensation plans as of October 2, 2004:
|
Plan category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| |
(a) |
(b) |
(c) |
| |
|
|
|
|
Equity compensation plans approved by security holders |
289,500 |
$5.97 |
159,842 |
| |
|
|
|
|
Equity compensation plans not approved by security holders |
0 |
0 |
0(1) |
| |
|
|
|
|
Total |
289,500 |
$5.97 |
159,842 |
|
(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 8,500 shares annually. |
For additional information on the Company’s stock option plans, see Note 11 to the Company's audited financial statements for the year ended October 2, 2004, presented on pages 25 - 27 of the 2004 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
The information required under Item 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 2004 fiscal year under the heading "Certain Relationships and Related Transactions."
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 2004 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. |
| 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: Incorporated by reference to Exhibit 3.2.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2003 (the “2003 10-K”), 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. |
| 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: Incorporated by reference to Exhibit 4.4 to the 2003 10-K. |
| 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. |
| 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. |
| 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. |
| 10.16 |
Severance Protection Agreement between the Company and Wanda J. Totton dated February 11, 2004: Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended April 3, 2004. |
| 10.17 |
Span-America Medical Systems, Inc. 2000 Restricted Stock Plan: Incorporated by reference to Exhibit B to the Company’s Definitive Proxy Statement filed with the Commission on January 11, 2001. |
| 13.1 |
2004 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 furnished on July 28, 2004 related to the Company’s earnings release for the third quarter of fiscal 2004.
(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. |
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. |
|
|
|
| Date: December 29, 2004 |
By: |
/s/ Thomas D. Henrion |
| |
|
| |
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/ 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/ Robert B. Johnston |
|
Director |
|
|
| Robert B. Johnston |
|
|
|
|
| |
|
|
|
|
| /s/ Douglas E. Kennemore |
|
Director |
|
|
| Douglas E. Kennemore, M.D. |
|
|
|
|
| |
|
|
|
|
| /s/ Peter S. Nyberg |
|
Director |
|
|
| Peter S. Nyberg |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
December 29, 2004 |
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 October 2, 2004
Span-America Medical Systems, Inc.
Greenville, South Carolina
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 October 2, 2004 are incorporated by reference in Item 8:
Balance Sheets -October 2, 2004 and September 27, 2003.
Statements of Income - Years ended October 2, 2004, September 27, 2003, and September 28, 2002.
Statements of Shareholders' Equity - Years ended October 2, 2004, September 27, 2003, and September 28, 2002.
Statements of Cash Flows - Years ended October 2, 2004, September 27, 2003, and September 28, 2002.
Notes to Financial Statements - October 2, 2004.
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.
|
Schedule VIII Valuation and Qualifying Accounts |
|
Span-America Medical Systems, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COL. A |
|
COL. B |
|
COL C. |
|
COL. D |
|
|
|
COL. E |
|
|
|
|
|
|
ADDITIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 2, 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted from asset accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for uncollectible accounts |
|
$ |
175,000 |
|
$ |
(6,830 |
) |
|
|
|
$ |
28,170 |
|
|
(a) |
|
$ |
140,000 |
|
|
Reserve for discounts |
|
|
165,000 |
|
|
405,625 |
|
|
|
|
|
387,625 |
|
|
(b) |
|
|
183,000 |
|
|
Totals |
|
$ |
340,000 |
|
$ |
398,795 |
|
|
— |
|
$ |
415,795 |
|
|
|
|
$ |
323,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|