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For Immediate Release

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

Margaret E. Grayson
Chief Financial Officer

Vienna, Virginia (September 16, 1998) – SPACEHAB, Inc., (Nasdaq: SPAB) today announced financial results for its 1998 fourth quarter and fiscal year, which ended June 30, 1998.

For the fourth quarter of fiscal 1998, revenue increased 34 percent to $24.8 million from $18.5 million the year before. Net income for the fourth quarter increased 38 percent to $4.6 million from $3.4 million for the comparable period in fiscal 1997. On a per-share basis, basic earnings for the fourth quarter increased to $0.42 in fiscal 1998 from $0.30 in fiscal 1997. Diluted earnings for the fourth quarter were $0.35 in 1998 and $0.28 in 1997.

For fiscal 1998, the company’s revenue increased 13 percent to $64.1 million from $56.6 million. Net income for fiscal 1998 decreased 31 percent to $9.6 million from $13.8 million in fiscal 1997. There are primarily two reasons for the difference in net income. First, SPACEHAB made significant expenditures during the year for the development of capital assets and addition of personnel. Second, a $4.2 million reduction in long-term debt, pursuant to a refinancing of SPACEHAB’s existing credit agreement in the first quarter of fiscal 1997, gave rise to an extraordinary net gain of $3.3 million, or $0.29 per share, included in net income for fiscal 1997. Net earnings per share in fiscal 1998 were $0.86 (basic) and $0.84 (diluted). In fiscal 1997, basic and diluted net earnings per share were $1.24 ($0.95 excluding the extraordinary gain).

At June 30, 1998, SPACEHAB’s balance sheet listed $92.3 million in cash and marketable securities. Long-term debt of $85.3 million was approximately 46 percent of total capitalization. Shareholders’ equity stood at $96.4 million.

"Our business plan for fiscal 1998 called for substantial investment to make available the assets, people, and processes we needed to support our growth in conjunction with the advent of the International Space Station (ISS) and stepped up telecommunications satellite launches," said Dr. Shelley A. Harrison, SPACEHAB's Chairman and Chief Executive Officer.

"The nearly $88 million in new financing arrangements we completed over the past twelve months are being used to develop and build assets that are vital to the future of human space flight and the satellite telecommunications industry," Dr. Harrison said. "Our Research Double Module, for example, will enable continuing microgravity research aboard the Space Shuttles during the ISS assembly period. This module is scheduled to make its first flight aboard the Space Shuttle in September 2000.

"Construction of SPACEHAB's Integrated Cargo Carrier system has also begun. This highly flexible system can be used as a stand-alone carrier or combined with SPACEHAB single and double modules to increase the Space Shuttle’s capability to carry unpressurized cargo to the ISS.

"We are pleased with our performance in fiscal 1998, and we are as enthusiastic as ever about the future of commercial space activities. We began the year as the preeminent private-sector supplier of products and services for human spaceflight operations as well as telecommunications satellite payload processing. We started fiscal 1999 strongly on July 1 by extending our human spaceflight leadership with the acquisition of Johnson Engineering."

Johnson Engineering Corporation performs critical services for NASA, including managing the Agency’s Neutral Buoyancy Laboratory, the underwater facility in Houston where astronauts train for space walks and assembly of the ISS. With over 450 employees and $43 million of revenue in calendar 1997, Johnson Engineering expands SPACEHAB’s capability to support NASA and other government and commercial customers.

"We also announced on July 1 an agreement with NOVESPACE, S.A., under which SPACEHAB plans to market flights aboard NOVESPACE’s Airbus-300 Zero-Gravity aircraft to U.S. users for scientific and technological experiments," Dr. Harrison continued. "The arrangement with NOVESPACE complements other SPACEHAB relationships, including an agreement announced June 23 with Guigné Technologies Ltd. to market space aboard the revolutionary SpaceDRUMSTM microgravity processing facility, a June 18 agreement with Daimler-Benz Aerospace AG to market sounding-rocket flight opportunities, and SPACEHAB’s May 7 acquisition of the rights to the free-flying Wake Shield Facility."

With such a comprehensive portfolio of ground-based, suborbital and space-based microgravity research facilities, SPACEHAB has effectively established a "Microgravity Staircase," which offers government, commercial and academic customers research opportunities aboard a variety of platforms. Each step in the staircase offers a different duration of microgravity exposure, providing researchers steadily increasing periods of microgravity as their experiments progress in complexity and level of funding. Whether a given experiment requires a 30-second parabolic aircraft ride, a 12-minute trip aboard a suborbital rocket, or an extended stay on an orbiting platform, SPACEHAB will be able to provide experiment processing and testing through all phases of microgravity research, from small, university-class payloads to dedicated government-sponsored science missions.

"Looking ahead to the near-term, NASA will use our Single and Double Modules with integration and operations support for Space Shuttle missions currently scheduled for October 1998 and May 1999," Dr. Harrison said. "These missions are expected to be the first of a series of missions supporting both the continuing demand for microgravity research during and after the ISS assembly phase and the logistics resupply needs of the ISS during its construction and operational phases. As ISS assembly progresses, SPACEHAB’s modules for pressurized logistics and science and our new Integrated Cargo Carrier for unpressurized logistics position us to extend our experience to the ISS."

SPACEHAB, Inc., 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. The next SPACEHAB flight is scheduled for October 29, aboard the Space Shuttle Discovery when Senator John Glenn makes his return voyage to space.