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Net loss was $2.2 million ($0.19 per basic and diluted share) for the six months ended December 31, 2001, compared to a net loss of $4.2 million ($0.37 per share) for the same period a year ago.

Though SPACEHAB's majority-owned subsidiary Space Media, Inc. (SMI), now has an equity partner, SPACEHAB is required to record 100 percent of SMI's losses for financial reporting purposes. SMI's losses were $451,000 for second quarter 2002 and $1.1 million for the fiscal year to date. Excluding SMI's losses, SPACEHAB core operations would have reported a net profit of $1.1 million for second quarter 2002 and a net loss of $1.1 million for the fiscal year to date.

SPACEHAB recorded revenues of $27.7 million for second quarter 2002, up 16 percent over revenues of $24.0 million for second quarter 2001. Revenue increased 24 percent from first quarter 2002 to second quarter 2002, and gross profit improved from 11 percent of revenue in the first quarter to 26 percent of revenue in the second quarter, due to the completion of equitable adjustment negotiations with NASA for Space Shuttle mission STS-107. Revenues were $50.0 million for the six months ended December 31, 2001, compared to $50.9 million for the six months ended December 31, 2000.

Second quarter 2002 earnings before interest, taxes, depreciation and amortization (EBITDA) were $5.8 million, compared to $1.9 million for first quarter 2002 and $1.0 million loss for second quarter 2001. SPACEHAB did not record any tax benefit for second quarter 2002. In second quarter 2001, SPACEHAB recorded a $1.1 million tax benefit equal to $0.10 per share.

Second quarter 2002 operating expenses were $5.2 million, down $1.0 million or 15 percent from $6.2 million in second quarter 2001, a result of company-wide cost reduction efforts. Fiscal 2002 operating expenses included $618,000 for the second quarter and $1.2 million for the year to date in non-recurring costs relating to competition for a contract with NASA's Marshall Space Flight Center (MSFC) in Huntsville, Alabama. MSFC is expected to award the contract, estimated to be worth more than $500 million over 10 years, to the successful bidder later this year.

Noncash charges totaled $4.1 million for second quarter 2002 and $7.5 million for the fiscal year to date.

"In accordance with the financial recovery plan we adopted in January 2001, we have cut costs, contained spending, sold non-core assets, restructured and reduced debt, and taken other steps to improve liquidity and return to profitability," said SPACEHAB Senior Vice President for Finance and Chief Financial Officer Julia Pulzone. "We're pleased to deliver a profitable quarter."

During the six months ended December 31, 2001, SPACEHAB strengthened its balance sheet, repaying approximately $9.6 million of debt, including $4.5 million in the second quarter, the majority of which was funded from operations. SPACEHAB has also reduced its accounts payable by $5.8 million since the close of fiscal 2001. Current liabilities have decreased 32 percent to $41.1 million since the beginning of fiscal 2002. In addition, Astrotech's construction loan for its new Spacecraft Processing Facility in Florida was converted to a term loan in December 2001 following completion of construction.

SPACEHAB concluded negotiations with NASA in second quarter 2002 for a contract modification valued at $27.4 million to provide for equitable adjustment payments related to Space Shuttle mission STS-107, covering launch opportunities through mid-July 2002 and bringing SPACEHAB's total equitable adjustment for the mission to $47.3 million. As SPACEHAB continued work on the STS-107 mission through second quarter 2002, second quarter results of operations include as revenue a portion of this $27.4 million contract modification.

SPACEHAB continued pricing negotiations with NASA in the second quarter for two new Logistics Single Module missions now scheduled to launch in 2003. These missions, expected to comprise an estimated $42 million in new business, are anticipated to be under contract in third quarter fiscal 2002.

"NASA's new Administrator Sean O'Keefe is a vocal advocate of competitive sourcing to cut the agency's costs, improve efficiency, and promote innovation," said SPACEHAB President and Chief Operating Officer Michael E. Kearney. "We've established a track record with NASA as an innovative and economic provider of fixed-price commercial space services, and we look forward to a mutually beneficial business relationship with NASA under Mr. O'Keefe's direction."

"We appreciate the perseverance of our employees, customers, and shareholders during our efforts to return to profitability," said SPACEHAB Chairman and Chief Executive Officer Dr. Shelley A. Harrison. "We especially appreciate recent public recognition by the aerospace industry magazine Aviation Week & Space Technology in its Feb. 4, 2002, issue. The editors selected SPACEHAB for their 45th annual Aerospace Laurels, honoring those who made significant contributions to the field of aerospace in 2001. SPACEHAB won its Laurel 'for creativity in keeping the only real commercial business involved in human space flight afloat in a constantly changing market that started with shuttle middeck augmentation modules and now supports ISS logistics.' Thanks again to our supporters."

Founded in 1984, with more than $100 million in annual revenue, SPACEHAB, Inc., is a leading provider of commercial space services. The company 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 California and Florida. SPACEHAB's newest strategic growth initiative, SPACEHAB Huntsville, offers customer-focused end-to-end services to the space research community at NASA's Marshall Space Flight Center in Huntsville, Alabama. SPACEHAB subsidiary Space Media, Inc.™, 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 contains 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 the company 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 Company's Securities and Exchange Commission filings.

FOR MORE INFORMATION:

Note: A Webcast of SPACEHAB's conference call with investors will be available after 2 p.m. EST Thursday February 7, 2002, at: http://www.videonewswire.com/event.asp?id=2635.