SPACEHAB, Incorporated
, a leading provider of commercial space services with over $100
million in annual revenue, today announced financial results for the Company’s
second quarter of fiscal year 2003, ended December 31, 2002.

Second Quarter Results

SPACEHAB reported an increase in revenues to $28.1 million for the second
quarter of 2003 compared to $27.7 million for second quarter of 2002. Gross
profit decreased $2.0 million to $5.3 million, or 19% of revenue, for second
quarter 2003. Margins in the current quarter were lower due to changes in the
mix of business under contract.

The Company reported net income of $1.2 million, or $0.09 per diluted
share for this quarter, which is a 79% increase from net income of $700,000,
or $0.05 per diluted share for the same period a year ago. SPACEHAB’s net
income for the second quarter of fiscal 2003 represented an improvement of
nearly $1.3 million, or $0.10 per diluted share, from a loss of ($94,000), or
($0.01) per diluted share, as reported in its first quarter fiscal 2003
results. The Company noted that its recording of a $503,000 tax benefit in
the second quarter, representing a refund of taxes paid in prior years, also
contributed to the Company’s growth in net income for the quarter.

Operating expenses declined $2.5 million to $2.7 million for the second
quarter of fiscal 2003, a result of continuing company-wide cost reduction
efforts and elimination of non-core operating expenses. Second quarter fiscal
year 2003 EBITDA (earnings before interest, taxes, depreciation, and
amortization) was $5.4 million compared to $5.8 million for the second quarter
of 2002. Noncash charges totaled $2.9 million for the second quarter of
fiscal 2003 versus $3.7 million for the second quarter of fiscal 2002.

Six Month Results

Revenues increased 10% to $54.9 million for the six months ended December
31, 2002, compared to $50.0 million for the six months ended December 31,
2001. Gross profit remained unchanged at 19% of revenue for the six months
ended December 31, 2002, compared to the same period a year ago.

Net income was $1.1 million, or $0.08 per diluted share, for the six
months ended December 31, 2002, compared to a net loss of ($2.2) million, or
($0.19) per diluted share, for the same period a year ago.

Operating expenses for the six months ended December 31, 2002 declined
$4.0 million to $6.2 million, compared to the six months ended December 31,
2001. Previous fiscal year operating expenses included $2.6 million in non-
recurring costs. EBITDA for the six months ended December 31, 2002 was $10.2
million, compared to $6.5 million for the six months ended December 31, 2001,
an increase of 57%. EBITDA variances are an outcome of improved results from
operations and lower noncash charges.

“Our management team is dedicated to growing our operations, providing
quality service, and financial recovery — all of which are on track and
improving as reflected in today’s financial report,” said Dr. Shelley A.
Harrison, Chairman and Chief Executive Officer of SPACEHAB. “With a large
backlog of over $173 million, outstanding customer support provided by our
business units, and a commitment to our stakeholders, we are delivering on our
pledge of strengthening our business,” said Dr. Harrison.

Balance Sheet

During the second quarter of fiscal year 2003, SPACEHAB repaid $0.9
million of debt obligations, and has repaid $3.5 million of debt for the
fiscal year to date. SPACEHAB’s total remaining term debt obligations,
excluding convertible subordinated notes payable, were $21.9 million at
December 31, 2002, including a facility mortgage of $18.1 million secured and
funded by contract payments. Cash and cash equivalents totaled $1.8 million
as of December 31, 2002.

“SPACEHAB continues to improve its financial position, managing operating
margins and costs while reducing debt obligations,” said Julia A. Pulzone,
Senior Vice President, Finance and Chief Financial Officer of SPACEHAB. “We
are pleased that our ongoing efforts are demonstrating steady financial
improvement and strengthening our balance sheet.”

STS-107 Space Shuttle Mission

Through the second quarter of fiscal 2003, SPACEHAB’s Space Flight
Services business unit completed preparations for the STS-107 Space Shuttle
mission which launched on January 16, 2003. SPACEHAB managed the integration
of approximately 8,300 pounds of research payloads for NASA, other space
agencies, and commercial customers worldwide. Approximately 7,500 pounds of
these payloads were contained within the SPACEHAB Research Double Module
(RDM).

On February 1, 2003, the RDM was lost in the tragic STS-107 accident.
SPACEHAB is working under NASA’s leadership to support the investigation as we
continue our operations in support of NASA’s Space Flight Program. The RDM
has a net book value of $67.2 million at December 31, 2002. The loss of the
RDM is partially covered by NASA and commercial insurance sources. The
Company’s commercial insurance on the module was $17.7 million. The Company
has not yet begun negotiating the value of the NASA coverage. Other options
for recovering the value of the RDM are also being evaluated.

At this time the Company is not planning to replace the RDM. SPACEHAB’s
Space Flight Services business unit has two additional modules and other
flight assets available to support the Company’s current NASA contracts.
These same assets can be used to support future NASA contracts.

Update of Ongoing Operations

SPACEHAB’s Space Flight Services business unit is continuing its
operations, finalizing preparations for the STS-114 mission. SPACEHAB is
providing a cargo carrier, known as the External Stowage Platform 2, or ESP2,
that will be deployed and permanently mounted to the orbiting International
Space Station (ISS). The Company continues to support two additional ISS
resupply missions, STS-116 and STS-118, with its existing modules.

SPACEHAB’s Johnson Engineering subsidiary continues to support NASA with
its facility operations and maintenance effort at the Neutral Buoyancy
Laboratory and Space Vehicle Mockup Facility as well as configuration
management support to the ISS Program. SPACEHAB subsidiary, Astrotech Space
Operations, provided payload processing services for the EUTELSAT W-5
satellite in the second quarter of fiscal 2003. Astrotech also supported
processing for two missions at its Vandenberg Air Force Base facilities, the
tandem ICESat/CHIPSat mission for NASA and the U.S. Air Force Coriolis
spacecraft for Spectrum Astro.

Financial and Operational Outlook

“We believe long-term shareholder value must be built on consistent
profitability through sound operational and financial management. SPACEHAB
has been continuously focused on these objectives, building upon its strong
foundation through provision of high value services,” concluded Dr. Harrison.

About SPACEHAB

With more than $100 million in annual revenue, SPACEHAB, Incorporated 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. Its Johnson Engineering subsidiary provides orbiter crew
compartment integration, ISS stowage and configuration management, supports
astronaut training, and builds space-flight mockup trainers at NASA’s Johnson
Space Center in Houston. SPACEHAB’s Astrotech subsidiary provides commercial
satellite processing services at facilities in California and Florida.
Additionally, through The Space Store, Space Media provides space merchandise
to the public and space enthusiasts worldwide (http://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 impact of the recent Columbia
tragedy on the Company’s existing and future business operations, the amount
of insurance coverage the Company expects to receive for its RDM, which was
lost as part of the Columbia tragedy, 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, contact:

    Kimberly Campbell                      Julia A. Pulzone
    Director of Marketing                  Chief Financial Officer
    SPACEHAB, Inc. -- Headquarters Office  SPACEHAB, Inc. -- Washington Office
    Phone 713-558-5049                     Phone 202-488-3500
    Fax 713-558-5960                       Toll free 888-647-9543
    campbell@spacehab.com                  pulzone@hqspacehab.com


    Website: http://www.spacehab.com

Conference call: A Webcast of SPACEHAB’s earnings conference call with
investors will be available after 2 p.m. EDT Friday, February 7, 2003, at:
http://www.firstcallevents.com/service/ajwz373144662gf12.html .

                   SPACEHAB, INCORPORATED AND SUBSIDIARIES
          Unaudited Condensed Consolidated Statements of Operations



                                       Three Months          Six Months
    (in thousands, except           Ended December 31,    Ended December 31,
     share data)
                                    2002        2001        2002        2001
   Revenue                        $28,050     $27,727     $54,862     $50,019
   Costs of revenue                22,758      20,471      44,393      40,337
   Gross profit                     5,292       7,256      10,469       9,682

   Operating expenses:
      Selling, general and
       administrative               2,667       5,121       6,083      10,057
      Research and development         73         125          85         143
         Total operating expenses   2,740       5,246       6,168      10,200
         Income (loss) from
          operations                2,552       2,010       4,301        (518)
   Interest expense, net of
    capitalized amounts            (1,839)     (1,308)     (3,699)     (2,743)
   Interest and other income, net     (41)        (17)        (30)      1,124
         Income (loss) before
          income taxes                672         685         572      (2,137)
   Income tax benefit (expense)       503         (27)        509         (55)
         Net income (loss)         $1,175        $658      $1,081     $(2,192)
   Basic Income (loss) per share:
   Net Income (loss) per share --
    basic                           $0.10       $0.06       $0.09      $(0.19)
   Shares used in computing net
    income (loss) per share
    -- basic                   12,234,266  11,833,602  12,194,775  11,740,655
   Diluted income (loss) per
    share:
   Net income (loss) per
    share -- diluted                $0.09       $0.05       $0.08      $(0.19)
   Shares used in computing
    net income (loss)          13,606,199  13,166,936  13,558,802  11,740,655



                Selected Financial Data by Segment (Unaudited)

    (In Thousands)                      Three Months         Six Months
                                      Ended December 31,  Ended December 31,

                                       2002       2001     2002       2001
    Revenue
         Space Flight Services        $14,072    $15,416  $26,439    $25,018
         Johnson Engineering            9,879      9,952   21,153     20,127
         Astrotech Space Operations     3,804      1,988    6,650      4,235
         Space Media, Inc.                212        239      336        363
         All Other                         83        132      284        276
    Total Revenue                     $28,050    $27,727  $54,862    $50,019

    Earnings (loss) before tax
         Space Flight Services        $(1,090)    $1,251  $(2,095)   $(2,286)
         Johnson Engineering              863        834    1,562      1,236
         Astrotech Space Operations     1,189        (59)   1,507      1,578
         Space Media, Inc.               (109)      (450)    (192)    (1,046)
         All Other                       (181)      (891)    (210)    (1,619)
    Earnings (loss) before tax           $672       $685     $572    $(2,137)



                   SPACEHAB, INCORPORATED AND SUBSIDIARIES
                    Condensed Consolidated Balance Sheets

                                                        December    September
    (In thousands)                                         31,          30,
                                                          2002         2002
                                                     (unaudited)   (unaudited)
                         ASSETS

    Cash and cash equivalents                            $1,792         $574
    Accounts receivable, net                             14,364       14,610
    Prepaid expenses and other current assets               721          908
         Total current assets                            16,877       16,092
    Property, plant, and equipment, net of
      accumulated depreciation and
      amortization                                      170,875      172,793

    All other assets, net                                27,846       28,437
         Total assets                                  $215,598     $217,322

          LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities                                  35,662       37,297

    Long-term liabilities                                91,173       92,484

    Minority interest in consolidated subsidiary            750          750

    Stockholders' equity                                 88,013       86,791
         Total liabilities and
          stockholders' equity                         $215,598      $217,322