The Company recorded revenue of $26.7 million for the third quarter and $78.6 million for the first nine months of fiscal 1999. Revenues for the comparable three- and nine-month periods that ended March 31, 1998, were $19.0 million and $39.3 million, respectively.

Of the $26.7 million third quarter fiscal 1999 revenue: $9.0 million was recognized under the Research and Logistics Mission Support (REALMS) contract that supports NASA re-supply missions to the International Space Station (ISS) and Shuttle-based research; $15.5 million was contributed by our subsidiary Johnson Engineering (JE), primarily under its contract with NASA's Johnson Space Center; and $2.2 million was contributed by our Astrotech subsidiary for telecommunication satellite processing services. For the same quarter last year, total revenue was $19.0 million. Of that: $2.8 million was recognized under the REALMS contract; $13.6 million was generated under our previous NASA contract to re-supply the Russian space station Mir; and $2.6 million was generated by Astrotech.

SPACEHAB's net loss for the quarter was $0.5 million or $0.05 per diluted share compared to net income of $4.9 million or $0.37 per diluted share for the same period last year. For the first nine months of fiscal 1999, the net loss was $2.0 million or $0.18 per diluted share compared to net income of $5.0 million, or $0.44 per diluted share for the first nine months of fiscal 1998.

"Although the first two elements of the ISS were launched and assembled in orbit late last year, delays in delivery and launch of the Russian Service Module continue to have an impact on our results," said Dr. Shelley A. Harrison, SPACEHAB¹s Chairman and Chief Executive Officer. "While our first cargo-delivery mission to the ISS is still slated for May 20th, our second re-supply mission has been postponed until after the launch of the Russian Service Module, currently scheduled for late 1999.

"Also affecting earnings was a $0.5 million investment in research and development of new sounding rocket technology. Astrotech is developing the Oriole suborbital rocket in anticipation of providing NASA a next-generation sounding rocket for its research activities at Wallops Island, VA. The Oriole also could be used as a low-cost target for testing and training under the DoD's Theater Missile Defense program," Harrison said.

"We remain confident that once the Russian Service Module is attached to the ISS later this year, the shuttle flight manifest will stabilize. Our assets, already proven for research and re-supply, should provide the flexibility and efficiency required to service the global human space effort."

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 re-supply aboard NASA's Space Shuttles. The Company also supports NASA astronaut training at Johnson Space Center, Houston. SPACEHAB's 13th mission, STS-96, is scheduled for May 20, 1999, aboard the Space Shuttle Discovery and will be the first cargo delivery mission to the ISS.

SPACEHAB, INCORPORATED AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations

Note: Net cash provided by (used for) operating activities

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