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SPACEHAB, Inc.
1595 Spring Hill Road
Suite 360
Vienna, Virginia 22182
(703) 821-3000

Vienna, VA, February 5, 1998 - SPACEHAB, Inc., (NASDAQ: SPAB) today announced financial results for its fiscal 1998 second quarter and first six months, which ended December 31, 1997. The company recorded revenue of $17.8 million for the second quarter and $20.3 million for the first six months of fiscal 1998. Revenue for the comparable three and six-month periods that ended December 31, 1996 was $23.0 million and $23.1 million respectively.

Of the $17.8 million second quarter 1998 revenues, $13.6 million was recognized for SPACEHAB's fifth mission under the Mir contract, $2.4 million was contributed by its ASTROTECH subsidiary, and $1.7 million was reported under the newly awarded Research and Logistics Module Services (REALMS) contract.

"SPACEHAB's fifth Mir mission began late in our first quarter, and was completed for purposes of revenue recognition when our Module was returned to our Cape Canaveral processing facility on October 12, 1997," said Dr. Shelley A. Harrison, SPACEHAB Chairman and Chief Executive Officer. "Under the Mir resupply contract, revenue is recognized only upon completion of each mission after the Module is returned to SPACEHAB. Fortunately, this will be different for new contract awards. Revenue from the new REALMS contract and from ASTROTECH Space Operations contracts is reported under the percentage-of-completion method. This will smooth the quarterly fluctuations in revenue and earnings going forward."

In December 1997, the company adopted the provisions of Statement of Financial Accounting Standards No. 128 (FAS 128), which established new guidelines for the calculations of earnings per share. Earnings per share for all prior periods presented have been restated to reflect the provisions of FAS 128. Net income in the table that follows this release presents both basic and diluted earnings per share. SPACEHAB's net income for the quarter ended December 31, 1997 was $6.3 million, or $0.56 per share (basic EPS), compared with $11.1 million, or $1.00 per share (basic EPS), for the same period last year. For the first six months of fiscal 1998, net income was $72,637, or $0.01 per share (basic EPS), as compared with $4.0 million, or $0.36 per share, before extraordinary gain and $7.3 million, or $0.66 per share, including extraordinary gain (basic EPS) a year ago.

"Net income in fiscal year 1998 is slightly ahead of analysts' expectations and is consistent with the Company's business plan, which requires investment in research and development for new assets and for people and processes needed to support our planned growth," Dr. Harrison said. "The timing of these investments is paramount, as SPACEHAB designs and builds new assets to complement the multi-billion dollar investment made by the governments of the world for the International Space Station. The expected decrease in net income since last year resulted from these planned investments in research and development. Furthermore, this year's first-half revenue came predominantly from logistics missions, which are less complicated and have lower margins than last year's mix of logistics and research missions."

During the first six months of fiscal 1998, SPACEHAB successfully completed nearly $88 million in new financing arrangements. These proceeds are being used to develop and build assets integral to the future of human space flight and the satellite telecommunications industry.

The SPACEHAB Research Double Module (RDM) will enable the continued growth of microgravity research aboard the Space Shuttle System. The RDM's first use is targeted for STS-107 in May 2000. The preliminary design for SPACEHAB's Integrated Cargo Carrier (ICC) system has been completed, with construction now scheduled to begin. The ICC System will add the capability to carry unpressurized cargo to the International Space Station. It can be used as a stand-alone carrier or combined with SPACEHAB single and double modules to provide flexible and efficient solutions to complex manifest requirements for carrying customer-defined combinations of cargo and scientific experiments.

At the Company's ASTROTECH subsidiary, work is progressing toward completion of a $2 million expansion of its facility in Titusville, Florida. This work will add a new Encapsulation High Bay to enable parallel encapsulation activities in support of Atlas II and the new Delta III launch vehicle payloads. The expansion is sized also to support the new USAF Evolved Expendable Launch Vehicle (EELV) commercial payload activities slated to begin in 2001. ASTROTECH's Vandenberg facility is also undergoing renovation. Approximately $1 million is slated for site improvements and construction of a new technical support building in preparation for the NASA EOS-AM and WIRE missions scheduled for processing in 1998.

"We are very pleased with our performance for the first six months of fiscal 1998 and even more excited about the opportunities that lie ahead," commented Dr. Harrison.

SPACEHAB, Inc., with its ASTROTECH subsidiary, is the world's leading provider of commercial payload processing services for both astronaut-tended and unmanned payloads. SPACEHAB is the first company to commercially develop, own and operate habitable modules that provide space-based laboratory facilities and logistics resupply aboard the U.S. Space Shuttles to support people living and working in space.

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 successful development and commercialization of new commercial space assets, technological difficulties, product demand, timing of new contracts 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.

	Three Months Ended December 31,		Six Months Ended December 31,
	1997	1996	1997	1996
Revenue	$17,755,687	$22,992,176	$20,292,944	$23,105,418
Costs of revenue:
Integration and operations	5,307,476	6,425,204	8,347,336	8,972,459
Depreciation	978,461	2,376,138	1,956,921	4,752,277
Insurance and other	1,633,723	106,250	2,854,596	106,250
Total costs of revenue	7,919,660	8,907,592	13,158,853	13,830,986
Gross profit	9,836,027	14,084,584	7,134,091	9,274,432
Operating expenses:
Marketing, general and administrative	3,243,010	1,622,120	5,880,734	2,982,527
Research and development	759,768	314,564	1,051,577	314,564
Total operating expenses	4,002,778	1,936,684	6,932,311	3,297,091
Income from operations	5,833,249	12,147,900	201,780	5,977,341
Interest expense, net of capitalized amounts	(1,175,542)	(318,035)	(1,378,335)	(678,317)
Interest and other income	1,699,447	459,665	1,409,880	814,574
Other expense	-	-	-	897,649
Income before income taxes	6,357,154	12,289,530	233,325	5,215,949
Income tax expense	78,461	1,230,000	160,688	1,230,000
Income before extraordinary item	6,278,693	11,059,530	72,637	3,985,949
Extraordinary item - gain on early retirement of debt, net of taxes	-	-	-	3,274,029
Net income	$ 6,278,693	$11,059,530	$ 72,637	$ 7,259,978
Basic earnings per share:
Income before extraordinary item	$ 0.56	$ 1.00	$ 0.01	$ 0.36
Extraordinary item	-	-	-	0.30
Net income per share	$ 0.56	$ 1.00	$ 0.01	$ 0.66
Shares used in computing net income per share	11,149,789	11,111,997	11,148,830	11,091,443
Diluted earnings per share:
Income before extraordinary item	$ 0.47	$ 0.99	$ 0.01	$ 0.36
Extraordinary item	-	-	-	0.29
Net income per share	$ 0.47	$ 0.99	$ 0.01	$ 0.65
Shares used in computing net income per share - assuming dilution	15,034,271	11,146,236	11,401,426	11,147,737

Required Disclosure: In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings Per Share ("FAS 128"). FAS 128 simplified the earnings per share ("EPS") computations previously required under Accounting Principles Board Opinion No. 15, Earnings Per Share, and revised the related disclosure requirements. In simplifying the EPS computations, the presentation of primary EPS is replaced with basic EPS, with the principal difference being that common stock equivalents are not considered in computing basic EPS. In addition, FAS 128 requires dual presentation of basic and diluted EPS. FAS 128 is effective for both interim and annual financial statements issued for periods ending after December 15, 1997. SPACEHAB's financial statements and presentation of EPS for the three and six months ended December 31, 1997 and 1996 are presented using the computations required under FAS 128.