Washington, DC, Feb. 11, 1999 — SPACEHAB, Inc. (Nasdaq: SPAB) today announced financial results for its fiscal 1999 second quarter and first six months, which ended December 31, 1998.

The company recorded revenue of $23.6 million for the second quarter and $51.9 million for the first six months of fiscal 1999. Revenue for the comparable three and six month periods that ended December 31, 1997, was $17.8 million and $20.3 million respectively.

Of the $23.6 million second quarter fiscal 1999 revenue, $11.9 million was attributed to the ongoing NASA contract with Johnson Engineering (JE); $9.4 million was recognized under the Research and Logistics Module Services (REALMS) contract and related commercial customers; and $2.3 million was contributed by Astrotech. In contrast, for the quarter ending December 31, 1997, of total revenue of $17.8 million, $13.6 million was recognized for the fifth Mir mission upon the return of the module; $1.7 million was recognized under the REALMS contract and related commercial customers; and $2.5 million was generated by Astrotech.

SPACEHAB’s net loss for the quarter was $1.9 million or $0.17 per diluted share compared with net income of $5.7 million or $0.43 per diluted share for the same period last year. For the first six months of fiscal 1999, the net loss was $1.4 million or $0.13 per diluted share compared with net income of $73 thousand, or $0.01 per diluted share for the six months of fiscal 1998.

"The second quarter results were below our expectations," said Dr. Shelley A. Harrison, SPACEHAB’s Chairman and Chief Executive Officer. "The delay in the International Space Station (ISS) deployment is having an impact on our results. While our first mission to the ISS is still scheduled for May 1999, our second resupply mission has been postponed until after the launch of the Russian Service Module that is now scheduled for September 1999. The revenue for this mission was nearly $2 million below our expectations for the quarter ended December 31, 1998.

"Uncertainties regarding the ISS launch schedule also have had an impact on our research missions. The debut of our Research Double Module has been slipped to December 2000. A new research mission opportunity that was supported by a $15 million Congressional appropriation added to NASA’s fiscal 1999 budget is now awaiting a mid-2000 flight opportunity.

"In addition, JE's fee award score from NASA was lower than expected for the period April through September 1998. This score required a $0.7 million reduction in fee for the second quarter. The fee reduction addresses performance at JE prior to its acquisition by SPACEHAB. Corrective action," Dr. Harrison added, "has been taken to address the issues and JE has appealed the fee score to NASA. Fees for the subsequent performance periods are being accrued at historical provisional rates.

"We remain confident that once the Russian Service Module is attached to the ISS, the shuttle flight manifest will stabilize. We anticipate that the schedule should then trend toward approximately one research mission per year and approximately three to four mixed logistics resupply missions (module and Integrated Cargo Carrier) per year through the next four years of assembly and planned 15 years of utilization. Our assets, already proven for research and resupply, will provide the flexibility and efficiency required to service the global human space effort. JE has the extremely important role on behalf of NASA of building the ‘first’ ISS in the form of mockups of all Space Station elements (U.S. and international) for terrestrial subassembly, fit check, and astronaut spacewalk assembly training in the Neutral Buoyancy Lab at Johnson Space Center in Houston. SPACEHAB is now on the ISS critical support path. The primary U.S. commercial players in human space are Boeing, Lockheed Martin, United Space Alliance (a joint venture of Boeing and Lockheed Martin), and SPACEHAB; the first three are increasingly teaming with us with NASA support."

SPACEHAB, with its Johnson Engineering and Astrotech subsidiaries, is the world's leading provider of commercial payload processing services for manned and unmanned payloads. SPACEHAB is the first company to commercially develop, own and operate habitable modules that provide laboratory facilities and logistics resupply aboard NASA’s Space Shuttles. The Company also supports NASA astronaut training at Johnson Space Center, Houston. Our 12th mission, STS-95, flew Senator John Glenn back into space in October 1998. The next SPACEHAB flight, STS-96, is scheduled for May 20, 1999, aboard the Space Shuttle Discovery, and it will be the first resupply mission to the ISS.