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SPACEHAB ANNOUNCES FINANCIAL RESULTS FOR FISCAL YEAR 1999

Washington, DC, September 8, 1999 — SPACEHAB, Inc. (Nasdaq: SPAB) today announced financial results for its 1999 fourth quarter and fiscal year (FY), which ended June 30, 1999.

For the fourth quarter of fiscal 1999, revenue increased 17 percent to $29.1 million from $24.8 million the year before. Net loss for the fourth quarter was $(0.6) million versus earnings of $4.6 million for the comparable period in FY 1998. On a per-share basis, basic and diluted loss per share for the FY 1999 fourth quarter was $(0.05) compared to diluted earnings per share of $0.35 in 1998.

For fiscal 1999, the company's revenue increased 68 percent to $107.7 million from $64.1 million. SPACEHAB's net loss for the year was $(2.6) million or $(0.23) per basic and diluted share compared to net income of $9.6 million or $0.84 per diluted share from the previous year.

For the year ended June 30, 1999, revenue of $39.1 million was recognized from the Research and Logistics Mission Support (REALMS) contract and related commercial customers in support of Space Shuttle research and International Space Station (ISS) resupply missions, $58.4 million was from our Johnson Engineering (JE) subsidiary primarily under its contract with NASA's Johnson Space Center, $9.8 million was contributed by our Astrotech subsidiary for its satellite processing business and $0.4 million was from miscellaneous revenue. Conversely, for the year ended June 30, 1998, revenue of $53.3 million was recognized from the Mir and REALMS contracts and related commercial customers and $10.8 million from Astrotech.

The decrease in module revenue from the year ended June 30, 1998, is attributable to delays in the ISS assembly. "The Space Shuttle program is experiencing a temporary slowdown in launches," said David A. Rossi, SPACEHAB's President and Chief Operating Officer. "The Shuttle only flew three times during our fiscal 1999 versus an average of seven missions per year for the last eight years, and of those three missions SPACEHAB's modules were the primary payloads on two." NASA's current plans show eight missions per year beginning calendar 2000. SPACEHAB is currently under contract for two more missions, STS-101 in January 2000 and STS-107 in December 2000, and NASA has options to exercise six more missions under the REALMS contract.

Astrotech's revenue declined from the year ended June 30, 1998, due to delays in planned satellite launches caused by launch vehicle failures during the fourth quarter of fiscal 1999. These satellite launches have subsequently resumed in SPACEHAB's fiscal first quarter 2000.

Also affecting earnings was the continued investment by Astrotech in the research and development (R&D) of a new sub-orbital rocket called the Oriole. R&D expenses related to this program were $0.5 million and $1.0 million for the quarter and year ended June 30, 1999, respectively. The Oriole is intended to be the next-generation sub-orbital rocket for NASA's research activities at Wallops Island, VA and double as a low-cost target vehicle for training and testing for the Department of Defense's Theatre High Altitude Air Defense program. Both of these programs will be awarded through competitive procurements during our FY 2000 and beyond.

During FY 1999, SPACEHAB's Astrotech subsidiary processed two-dozen satellites that were launched aboard Atlas, Delta and Athena rockets from Florida and California. Astrotech also processed the first test payload for Boeing's Sea Launch. Astrotech has a 15-year exclusive contract to process payloads for Sea Launch in Long Beach, California.

At the beginning of the fiscal year, SPACEHAB acquired Johnson Engineering (JE), a Houston-based firm with 25 years of experience supporting NASA with training operations and facility engineering. JE helped SPACEHAB diversify its business base and brought in additional revenues of $58.4 million in fiscal 1999. JE's annual revenue increased 36 percent from $42.8 million in the calendar prior to the acquisition.

"SPACEHAB achieved many milestones this fiscal year in spite of overall earnings decline," said Dr. Shelley A. Harrison, SPACEHAB's Chairman and Chief Executive Officer. "We supported John Glenn's triumphant return to space through the use of SPACEHAB's Research Module where approximately 70 percent of the company's revenue on this mission was derived from customers other than NASA." "Fiscal 1999 ushered in a new space program era with the birth of the International Space Station (ISS). SPACEHAB participated in the first supply mission to the ISS in May of this year, carrying vital equipment, tools and supplies within SPACEHAB's Logistics Double Module and on the Company's new flat-bed carrier, the Integrated Cargo Carrier."

In August 1999, Munich-based DaimlerChrysler Aerospace AG (Dasa) committed to purchase a $12 million equity stake in SPACEHAB. Dasa's investment is for 1.33 million shares of preferred stock which is convertible on a one-for-one basis into common stock. This will increase Dasa's investment interest in SPACEHAB to approximately 11.5 percent. Mr. Josef Kind, President of Dasa's Space Infrastructure Division, joined SPACEHAB's Board of Directors, representing the preferred shares. He replaced Dr. Pollvogt of Dasa who has served as a director of the Company since August 1993.

"SPACEHAB is confident about the continuing assembly of the ISS and our role in resupply logistics, research, and ongoing collaboration efforts with NASA and international contributors to this monumental endeavor," remarked Dr. Harrison. " We look forward to remaining an industry leader in space research and commercialization efforts while working diligently to increase shareholder value."

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 the Johnson Space Center.

This press 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, business and launches, 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

Note: Certain items in costs of revenue and operating expenses for the three and twelve months ended June 30, 1998, have been reclassified to conform with the 1999 consolidated financial statement presentation.

FOR MORE INFORMATION:
Kimberly Campbell
Manager of Marketing
SPACEHAB, Inc.
(281) 853-1031
campbell@spacehab.com

Mark A. Kissman
SVP Finance and CFO
SPACEHAB, Inc.
(202) 488-3500
kissman@spacehab.com