SPACEHAB ANNOUNCES SECOND QUARTER RESULTS

Washington, D.C., February 2, 2000 – SPACEHAB, Inc. (Nasdaq: SPAB) achieved revenue of $26.0 million for the second quarter and $52.0 million for the six months ended December 31, 1999 versus $23.6 million and $51.9 million for the comparable periods last year. SPACEHAB’s net loss for the second quarter was $1.3 million or $0.11 per basic and diluted share compared to net loss of $1.9 million or $0.17 per diluted share from the same quarter last year. The six months results were a loss of $3.2 million or $0.29 per basic and diluted share compared to a loss of $1.4 million or $0.13 per basic and diluted share for the same period a year ago.

"We’ve seen progress on the International Space Station (ISS) and Space Shuttle programs, but delays in the construction of the ISS continue to affect our earnings," said Dr. Shelley A. Harrison, SPACEHAB’s Chairman and Chief Executive Officer. "Along with commercial satellite launch delays affecting Astrotech and extra costs incurred at Johnson Engineering, this situation caused a loss for the quarter."

Revenues by business segment for the current quarter were $10.8 million for SPACEHAB modules, $1.3 million for Astrotech and $13.9 million for Johnson Engineering. This compares to $9.4 million, $2.2 million and $12.0 million respectively for the same period a year ago.

Revenues by business segment for the six-month period were $16.4 million for SPACEHAB modules, $4.1 million for Astrotech and $31.5 million for Johnson Engineering. These results compare to $20.8 million, $4.8 million and $26.3 million respectively for the same six-month period a year ago.

Earnings or loss before interest and tax for the second quarter for these same segments were $0.3 million loss for the module business, $1.1 million loss for Astrotech and $0.5 million loss for Johnson Engineering versus $1.3 million loss, $0.1 million loss and $0.8 million loss respectively for the second quarter fiscal 1999.

Earnings or loss before interest and tax for the six months ended December 31,1999, for these same segments were $3.9 million loss for the module business, $1.0 million loss for Astrotech and $0.0 million income (break-even) for Johnson Engineering versus $0.7 million loss, $0.0 million income (break-even) and $0.9 million loss respectively for the same six-month period a year ago.

SPACEHAB’s revenue for module services was in line with expectations. The launch of SPACEHAB’s next ISS resupply mission, STS-101, is scheduled to occur after the launch of the Russian Service Module and is thus likely to slip to this summer. However, this slip could result in additional business for SPACEHAB. NASA has issued a change order to our existing Research and Logistics Module Services (REALMS) contract to prepare for another SPACEHAB module mission to the ISS in April, before the Russian Service Module is launched. This mission could bring in more than $20 million in revenue over the next three quarters if NASA exercises an option on the REALMS contract for this new mission.

Four commercial satellites were processed at Astrotech during the quarter. Two ICO Global Communications satellite launches planned for this quarter were delayed pending ICO’s reorganization.

Johnson Engineering continued to provide crew training for the Hubble Space Telescope servicing mission, launched in December, and upcoming ISS assembly flights. Technical problems with a training version of a robotic arm being built by JE led to $900,000 in additional expenses during the quarter. The company expects the arm will be completed and delivered to NASA by the end of March.

"Although the ISS assembly schedule is not yet stable," noted Dr. Harrison, "the good news is that the Shuttle fleet is back in service and that SPACEHAB is anticipating a new resupply mission this year. We look forward to taking on additional missions once ISS construction is back on track later this year. Moreover, we are making substantial strategic progress on developing more international revenue and global alliances."

Demonstrating its continuing leadership in space commerce, SPACEHAB announced a major new initiative in December: a commercial habitat module, Enterprise™, which will be attached to the ISS and outfitted with a television and Internet broadcasting studio. Also in December, SPACEHAB received a $4.2 million contract award from NASA for the launch of an Integrated Cargo Carrier (ICC) and two SPACEHAB Oceaneering Space Systems (SHOSS) boxes on ISS assembly flight 7A.1, currently scheduled for February 2001. This transaction marks SPACEHAB’s fourth ICC sale.

SPACEHAB is the first company to commercially develop, own and operate habitable modules that provide laboratory facilities and cargo resupply aboard NASA’s Space Shuttle fleet. With its Johnson Engineering and Astrotech units, SPACEHAB is the world’s leading provider of commercial payload processing services for manned and unmanned payloads. The company also supports NASA astronaut training at Johnson Space Center in Houston.

NOTE: Certain items in costs of revenue and operating expenses for the three and six months ended December 31, 1998 have been reclassified to confirm with the fiscal year 2000 consolidated financial statement preparation.

Mark Kissman
Chief Financial Officer
SPACEHAB, Inc.
(202) 488-3500 x236
kissman@hqspacehab.com

Linda Billings
Director of Communications
SPACEHAB, Inc.
(202) 488-3500 x201
billings@hqspacehab.com