Spacehab’s Johnson Engineering Sells Filter Machining Operations – Sale Further Sharpens Focus on Core Business

SPACEHAB, Inc., a
leading provider of commercial space services, today announced that its
Johnson Engineering (JE) subsidiary has sold its filter housing machining
operations and technology to Clear Lake Industries Holdings LLC (CLI), a
company recently formed by W.T. (Tom) Short, retired SPACEHAB Senior Vice
President for JE.

“Organized to provide JE with rapid access to specialized machining
capabilities, the operating unit has used its excess capacity to develop and
market filter housings for the petrochemical and biotechnology industries,”
said SPACEHAB President and Chief Operating Officer Michael E. Kearney.
“This
transaction with CLI and the sale of our sounding rocket assets last month
support our objectives of focusing on our core businesses, profitable
operations, and improvement of our cash position.”

CLI began operations on July 1.
Approximately 30 JE employees have
transferred to CLI, which has subleased office and shop space from JE at the
original site of machining operations.
JE and CLI are prepared to collaborate
as the need arises.

Johnson Engineering brought in more than $50 million of new business in
SPACEHAB’s third quarter 2001, including a one-year extension of its contract
with NASA’s Johnson Space Center (JSC) to provide astronaut training and other
flight crew systems development services (worth $42 million from May 1, 2001,
to April 30, 2002) and a contract to continue providing space station
configuration management services to JSC (worth $10 million over the next two
years).
JE believes it is well positioned to win a multi-year renewal of its
crew training contract for the period starting May 1, 2002.
JE’s semiannual
NASA contract performance scores have risen steadily over the past three
years; the unit is now ranked “excellent.”
NASA most recently recognized JE
for its outstanding work on space vehicle mockup integration and upgrading.

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
configuration management at NASA’s Johnson Space Center in Houston.
SPACEHAB’s Astrotech subsidiary provides commercial satellite processing
services at facilities in California and Florida.
SPACEHAB’s newest strategic
growth initiative, Space Media, Inc.(TM), brings space into homes and
classrooms worldwide with television and Internet broadcasting from the
International Space Station, 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.