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FOR IMMEDIATE RELEASE

SPACEHAB REPORTS FINANCIAL RESULTS FOR FISCAL YEAR 2001

October 15, 2001, Washington, D.C. - SPACEHAB, Inc. (NASDAQ/NMS: SPAB), a leading provider of commercial space services, today announced financial results for its 2001 fiscal year and fourth quarter, which ended June 30, 2001.

For fiscal 2001, SPACEHAB revenue of $105.3 million remained essentially unchanged from last year's revenue of $105.7 million. Fiscal year end earnings before interest, taxes, depreciation and amortization (EBITDA) totaled approximately $0.8 million. Net loss for fiscal 2001 was $12.8 million or $1.12 per basic and diluted share compared to a net loss of $3.8 million or $0.34 per diluted share for the previous year. Approximately 25 percent of the annual net loss was from a non-cash non-recurring charge ($3.3 million), and approximately 45 percent of the annual loss from operations resulted from operations that have been curtailed or discontinued.

For the fourth quarter of fiscal 2001, revenue increased 4.2 percent to $29.9 million from $28.7 million the year before. Net loss for the fourth quarter was $5.6 million compared to income of $22,000 for the fourth quarter of fiscal 2000. Fourth quarter EBITDA were $2.4 million, an indication of improvement in operating performance. Basic and diluted loss per share for the fiscal 2001 fourth quarter was $0.49 compared to earnings of $0.00 per share for the same quarter in fiscal 2000.

SPACEHAB recorded approximately $13.9 million of non-cash charges involving depreciation, amortization, required reserves and a one-time charge to establish a full valuation allowance on deferred tax assets.

Excluding losses attributable to business operations that have been curtailed or disposed of since January 1, 2001 and the one-time deferred tax asset write-down, SPACEHAB would have recorded a $7.8 million loss from operations for fiscal 2001, compared to the $13.7 million operating loss reported.

"At the beginning of the third quarter of fiscal 2001, management responded to continued delays in its human space and satellite markets by implementing a multi-faceted plan to improve SPACEHAB's financial health. We reorganized our operations to focus on core business, arranged for sales of non-core assets, and initiated a cost-reduction campaign to strengthen our cash position and establish profitable operations," said SPACEHAB Chairman and Chief Executive Officer Dr. Shelley A. Harrison. "Since the close of fiscal 2001, we've signed a long-term representation agreement with Astrium for our Integrated Cargo Carrier program, completed a $20 million financing for Astrotech's Florida facility expansion, had Space Media take on a venture capital partner with a $750,000 investment, and retired a balance of more than $3 million owed to CIT/Equipment Financing, thereby improving our overall liquidity. Our fiscal 2001 operating loss included a $900,000 loss from the Johnson Engineering filter housing operations and a $200,000 loss from the Astrotech Oriole sounding rocket project - both sold subsequent to year-end for a total of $2.1 million. We also recorded a $4.8 million startup loss for Space Media."

"Certain elements of our financial and liquidity plan were not complete in time for the filing of SPACEHAB's audited financial statements: definitization of equitable adjustment with NASA on STS-107 delays from October 2001 through next year's scheduled launch, rescheduling of our debt with Alenia, restructuring of the terms of our line of credit with Bank of America, and final negotiations for several new NASA missions," said Dr. Harrison. "Consequently, SPACEHAB's external auditors, Ernst & Young LLP, have issued an opinion on our 2001 consolidated financial statements that raises questions with regard to SPACEHAB's ability to continue as a going concern. While this opinion is disappointing, we remain committed to completing the final elements of our business and financial plans, which will provide sufficient liquidity through 2002 and beyond."

Several factors affected SPACEHAB's financial performance for fiscal 2001. While the partners in the International Space Station (ISS) executed an ambitious series of assembly missions over the past year, the station is not yet available for full-fledged habitation, research operations and commercial utilization. Launch dates for SPACEHAB ISS resupply missions booked in fiscal 1999-2000 slipped to fiscal 2001-2002. SPACEHAB's gross margins decreased from fiscal 2000 to 2001 in part because of changes in the nature and mix of SPACEHAB's Space Shuttle missions (limited research and resupply missions, only one flight of a double module). NASA postponed the launch of Shuttle mission STS-107, which will mark the first flight of SPACEHAB's Research Double Module (flight contract value $65 million, asset value $101 million). STS-107 originally was scheduled to launch in May 2000 and is currently scheduled for launch in May 2002. SPACEHAB has completed negotiations with NASA for a $26.7 million equitable adjustment payment to compensate for costs incurred through September 2001 because of this delay. Further adjustments are expected to cover the period from October 2001 through launch.

Restructuring in the satellite communications industry has temporarily slowed payload processing activities for SPACEHAB's Astrotech subsidiary, but revenue under existing contracts is expected to rise in fiscal 2002.

SPACEHAB continued to incur startup costs for its majority-owned subsidiary, Space Media, Inc. (SMI), throughout fiscal 2001. In January 2001, SPACEHAB reorganized the subsidiary to focus on near-term market prospects, enabling a downsizing of operations to manage startup costs and return on investment. Space Media is now concentrating on the operation of its STARS Academy global education program (www.starsacademy.com) and online retailing through The Space Store (www.thespacestore.com). In September 2001, SMI received a $750,000 equity investment from escottVentures II, LLC, of Melbourne, Florida. SMI intends to use this venture capital investment to help build worldwide enrollment in STARS Academy and sales for The Space Store.

For the fiscal year ended June 30, 2001, revenue included $45 million recognized from Space Flight Services contracts in support of Space Shuttle missions, including SPACEHAB's Research and Logistics Mission Support (REALMS) contract with NASA and contracts with commercial customers to fly experiments and other payloads; $53.5 million from SPACEHAB's Johnson Engineering (JE) unit, primarily under contracts with NASA's Johnson Space Center; $6.2 million contributed by SPACEHAB's Astrotech subsidiary for satellite processing; and $0.5 million for Space Media. In comparison, for the fiscal year ended June 30, 2000, revenue of $39.6 million was recognized from Space Shuttle missions, $58.2 million from JE (formerly Engineering Services), $7.6 million from Astrotech, and $0.3 million from miscellaneous sources (Space Media did not report revenues for FY 2000).

"SPACEHAB is pressing hard to regain profitability on our existing business backlog while pursuing core areas of new business growth," said SPACEHAB President and Chief Operating Officer Michael E. Kearney. "We are dedicated to providing first-rate, affordable, user-friendly end-to-end services. We aim to continue expanding our customer base, extending our global reach, building new strategic partnerships and strengthening existing alliances, while maintaining our reputation for quality and innovation."

Founded in 1984, with more than $100 million in annual revenue, SPACEHAB, Inc., is a leading provider of commercial space services. SPACEHAB develops, owns, and operates habitat and laboratory modules and cargo carriers aboard NASA's Space Shuttles. It also supports astronaut training and space station configuration management at NASA's Johnson Space Center in Houston and builds space-flight trainers and mockups. SPACEHAB's Astrotech subsidiary provides commercial satellite processing services at facilities in Florida and California. SPACEHAB's newest strategic growth initiative, SPACEHAB Huntsville, will provide customer-focused end-to-end services to the space research community at NASA's Marshall Space Flight Center in Huntsville, Alabama. SPACEHAB's Space Media, Inc.™, unit brings space into homes and classrooms worldwide with interactive education programs through STARS Academy (www.starsacademy.com), and space merchandise from The Space Store (www.thespacestore.com).

This release may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Such risks and uncertainties include, but are not limited to, whether SPACEHAB will fully realize the economic benefits under its NASA and other customer contracts, the timing and mix of Space Shuttle missions, the successful development and commercialization of new space assets, technological difficulties, product demand, timing of new contracts, launches and business, market acceptance risks, the effect of economic conditions, uncertainty in government funding, the impact of competition, and other risks detailed in the SPACEHAB's Securities and Exchange Commission filings.

FOR MORE INFORMATION:

Note: An audiotape of SPACEHAB's conference call with investors will be available after 2 p.m. EDT Tuesday October16, 2001, at: http://www.videonewswire.com/event.asp?id=1428.

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SPACEHAB, INCORPORATED AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

⁽¹⁾ The Company recorded a non-cash non-recurring charge to establish a full valuation allowance on its deferred tax asset as of June 30, 2001.