UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended...............March 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission file number 0-27206
SPACEHAB, Incorporated
300 D Street, SW
Suite 814
Washington, D.C. 20024
(202) 488-3500
Incorporated in the State of Washington I.R.S. Employer
Identification
No. 91-1273737
The number of shares of Common Stock outstanding as of the close of business on
April 30, 1999:
Class Number of Shares Outstanding
Common Stock 11,205,310
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ -----
<PAGE>
SPACEHAB, INCORPORATED AND SUBSIDIARIES
MARCH 31, 1999 QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART 1 FINANCIAL INFORMATION Page
----
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1999
and June 30, 1998 3
Condensed Consolidated Statements of Operations for the Three
and Nine Months ended March 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows for the
Nine Months ended March 31, 1999 and 1998 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
2
<PAGE>
PART 1: FINANCIAL INFORMATION
Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In thousands, except share data) March 31, June 30,
1999 1998
(unaudited) (audited)
-------------------- -------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 32,726 $ 2,327
Receivables, net 13,553 5,979
Prepaid expenses and other current assets 2,060 550
-------------------- -------------------
Total current assets 48,339 98,856
Property, plant and equipment, net of
Accumulated depreciation and amortization
Of $47,745 and $43,338 124,642 112,588
Goodwill, net of accumulated amortization of $1,090 and $230 26,262 3,224
Other assets, net 6,689 5,936
-------------------- -------------------
Total assets $ 205,932 $ 220,604
==================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable, current portion $ 2,824 $ 2,824
Loan payable under credit agreement, current portion 333 500
Accounts payable and accrued expenses 11,299 6,204
Accrued subcontracting services 7,145 13,177
Deferred revenue 7,880 13,491
-------------------- -------------------
Total current liabilities 29,481 36,196
Accrued contract costs 928 -
Notes payable to shareholder 7,860 11,895
Loan payable under credit agreement, net of current portion 667 1,000
Loan payable, net of current portion 7,059 9,177
Convertible notes payable 63,250 63,250
Deferred income taxes 2,094 2,678
-------------------- -------------------
Total liabilities 111,339 124,196
Stockholders' equity:
Common stock, no par value, authorized
30,000,000 shares, issued and outstanding
11,204,762 and 11,168,161 shares, respectively 81,403 81,239
Additional paid-in capital 16 16
Retained earnings 13,174 15,153
-------------------- -------------------
Total stockholders' equity 94,593 96,408
-------------------- -------------------
Total liabilities and stockholders' equity $ 205,932 $ 220,604
==================== ===================
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
3
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SPACEHAB, INCORPORATED AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Nine Months
(In thousands, except share data) Ended March 31, Ended March 31,
-------------------------------- ---------------------------------
1999 1998 1999 1998
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue $ 26,693 $ 18,997 $ 78,600 $ 39,290
Costs of revenue:
Integration and operations 17,539 7,132 50,776 17,079
Depreciation 1,309 1,232 3,827 3,678
Insurance and other direct costs 658 697 3,439 1,464
Indirect costs 2,450 386 6,617 950
-------------- --------------- --------------- ---------------
Total costs of revenue 21,956 9,447 64,659 23,171
Gross profit 4,737 9,550 13,941 16,119
Operating expenses:
Marketing, general and administrative 3,691 3,018 10,781 7,794
Research and development 708 1,318 2,678 3,070
-------------- --------------- -------------- ---------------
Total operating expenses 4,399 4,336 13,459 10,864
-------------- --------------- --------------- ---------------
Income from operations 338 5,214 482 5,255
Interest expense, net of capitalized amounts 1,252 1,253 3,910 2,632
Interest and other income (422) (930) (1,859) (2,341)
Other expense 46 - 596 -
-------------- --------------- --------------- ---------------
Income (loss) before income taxes (538) 4,891 (2,165) 4,964
Income tax expense (benefit) 3 - (186) -
-------------- --------------- --------------- ---------------
Net income (loss) $ (541) $ 4,891 $ (1,979) $ 4,964
============== =============== =============== ===============
Basic earnings per share:
Net income (loss) per share- basic $ (0.05) $ 0.44 $ (0.18) $ 0.45
============== =============== =============== ===============
Shares used in computing net income (loss)
per share- basic 11,189,242 11,156,274 11,178,004 11,152,312
============== =============== =============== ===============
Diluted earnings per share:
Net income (loss) per share - diluted $ (0.05) $ 0.37 $ (0.18) $ 0.44
============== =============== =============== ===============
Shares used in computing net income (loss)
per share - assuming dilution 11,189,242 16,062,335 11,178,004 11,407,595
============== =============== =============== ===============
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
4
<PAGE>
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(In thousands) Nine Months Ended March 31,
1999 1998
--------------------- ---------------------
Cash flows provided by (used for) operating activities:
<S> <C> <C>
Net income (loss) $ (1,979) $ 4,964
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 5,661 4,456
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 792 (7,796)
Increase in prepaid and other
Current assets (1,204) (1,567)
Increase in deferred mission costs - (479)
Increase in other assets (204) (1,775)
Increase (decrease) in deferred revenue (4,044) 16,274
Increase (decrease) in accounts payable
and accrued expenses (2,374) 2,248
Decrease in advanced billings (1,567) (470)
Increase (decrease) in accrued consulting
and subcontracting services (6,032) 1,736
--------------------- ---------------------
Net cash provided by (used for) operating activities (10,951) 17,591
--------------------- ---------------------
Cash flows used for investing activities:
Payments for flight assets under construction (12,893) (13,360)
Payments for building under construction (1,020) (3,205)
Investment in joint venture (800) -
Purchase of property and equipment and other assets (2,104) (505)
Purchase of Johnson Engineering, net of cash acquired (25,344) -
--------------------- ---------------------
Net cash used for investing activities (42,161) (17,070)
--------------------- ---------------------
Cash flows provided by (used for) financing activities:
Payment of note payable to Insurers (500) (500)
Payment of debt placement fees - (4,043)
Proceeds from issuance of convertible notes payable - 63,250
Payment of note payable to shareholder (4,035) -
Proceeds from note payable - 14,119
Payment of loan payable (2,118) (1,412)
Proceeds from issuance of common stock 164 140
--------------------- ---------------------
Net cash provided by (used for) financing activities (6,489) 71,554
--------------------- ---------------------
Net increase (decrease) in cash
and cash equivalents (59,601) 72,075
Cash and cash equivalents at beginning of period 92,327 12,887
--------------------- ---------------------
Cash and cash equivalents at end of period $ 32,726 $ 84,962
===================== =====================
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
5
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SPACEHAB, INCORPORATED AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
1. Basis of Presentation:
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, consisting of only normal
recurring accruals, necessary for a fair presentation of the consolidated
financial position of SPACEHAB, Incorporated and subsidiaries ("SPACEHAB" or the
"Company") as of March 31, 1999, and the results of their operations for the
three and nine month periods ended March 31, 1999 and 1998 and their cash flows
for the nine months ended March 31, 1999 and 1998. However, the consolidated
financial statements are unaudited, and do not include all related footnote
disclosures. Certain items in cost of revenues, S,G&A and R&D for the three and
nine months ending March 31, 1998 have been reclassified to conform with the
1999 consolidated financial statement presentation (see accompanying table).
Management believes that the reclassifications of costs provides better matching
of the specific activities to the costs incurred in conjunction with such
activities.
The consolidated results of operations for the three and nine months ended March
31, 1999 and 1998 are not necessarily indicative of the results that may be
expected for the full year. The Company's results of operations have fluctuated
significantly from quarter to quarter (see note 4). The interim unaudited
condensed consolidated financial statements should be read in conjunction with
the Company's audited consolidated financial statements appearing in the
Company's Form 10-K for the year ended June 30, 1998.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Six Months Ended
(In thousands) March 31, 1998 March 31, 1998 December 31, 1998
Reclassified Reclassified Reclassified
As Statement of As Statement of As Statement of
Reported Operations Reported Operations Reported Operations
- ------------------------------------------ ----------- -------------- ----------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenue $18,997 $ 18,997 $39,290 $39,290 $51,907 $ 51,907
Costs of revenue:
Integration & Operations 7,563 7,132 18,380 17,079 33,237 33,237
Depreciation 979 1,232 3,936 3,678 2,517 2,517
Insurance & other direct costs 520 697 915 1,464 6,142 2,781
Indirect costs 0 386 0 950 0 4,167
----------- -------------- ----------- -------------- ------------ ---------------
Total costs of revenue 9,062 9,447 22,221 23,171 41,896 42,702
Gross profit 9,935 9,550 17,069 16,119 10,011 9,205
Operating expenses:
Marketing, general & administrative 3,980 3,018 10,021 7,794 8,857 7,090
Research and development 741 1,318 1,793 3,070 1,010 1,971
----------- -------------- ----------- -------------- ------------ ---------------
Total operating expenses 4,721 4,336 11,814 10,864 9,867 9,061
Income (loss) from operations $ 5,214 $ 5,214 $ 5,255 $ 5,255 $ 144 $ 144
----------- -------------- ----------- -------------- ------------ ---------------
</TABLE>
2. Earnings per Share:
The following are reconciliations of the numerators and denominators of the
basic and diluted earnings per share computations for the three and nine-month
periods ended March 31, 1999 and 1998, respectively:
6
<PAGE>
<TABLE>
<CAPTION>
(In thousands except Three months ended March 31, 1999 Three months ended March 31, 1998
share data) Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income available to
common stockholders $(541) 11,189,242 $(0.05) $4,891 11,156,274 $0.44
Effect of dilutive
securities:
Convertible notes payable - - - $ 991 4,642,202 -
Options and warrants - - - - 263,859 -
----------------------------------------------------------------------------------
Diluted EPS:
Income available to
common stockholders $(541) 11,189,242 $(0.05) $5,882 16,062,335 $0.37
<CAPTION>
Nine months ended March 31, 1999 Nine months ended March 31, 1998
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income available to
common stockholders $ (1,979) 11,178,004 $(0.18) $4,964 11,151,312 $0.45
Effect of dilutive
securities:
Convertible notes payable - - - - - -
Options and warrants - - - - 256,283 -
----------------------------------------------------------------------------------
Diluted EPS:
Income available to
common stockholders : $(1,979) 11,178,004 $(0.18) $4,964 11,407,595 $0.44
</TABLE>
Convertible notes payable outstanding as of March 31, 1999, convertible into
4,642,202 shares of common stock at $13.625 per share and due October 2007, were
not included in the computation of diluted EPS for the three and nine months
ended March 31, 1999 or the nine months ended March 31, 1998 as the inclusion of
the converted notes would be anti-dilutive for these periods.
Options and warrants to purchase 1,468,508 shares of common stock for the three
month period ended March 31, 1999, at prices ranging from $8.875 to $24.00 per
share, were outstanding as of March 31, 1999 but were not included in the
computation of diluted EPS because the options' exercise prices were greater
than the average market price of the common shares during the three months ended
March 31, 1999. These options expire between June 24, 1999 and August 3, 2007.
Options and warrants to purchase 1,352,943 shares of common stock for the nine
months ended March 31, 1999, at prices ranging from $9.875 to $24.00 per share,
were outstanding but were not included in the computation of diluted EPS because
the options' exercise prices were greater than the average market price of the
common shares during the nine months ended March 31, 1999. These options expire
between June 24, 1999 and August 3, 2007.
Options and warrants to purchase 1,818,597 and 1,811,021 shares of common stock,
respectively, at prices ranging from $11.00 to $14.00 per share, were
outstanding for the three and nine month periods ended March 31, 1998 but were
not included in the computation of diluted EPS because the options' and
warrants' exercise prices were greater than the average market price of the
common shares during the three and nine month periods ended March 31, 1998.
These options and warrants expire between June 21, 1998 and October 21, 2004.
7
<PAGE>
3. Acquisition of Johnson Engineering:
On July 1, 1998, the Company acquired all of the outstanding shares of capital
stock of Johnson Engineering Corporation ("Johnson Engineering"). Johnson
Engineering performs several critical services for NASA including flight crew
support services, operations, training and fabrication of mockups at NASA's
Neutral Buoyancy Laboratory and at NASA's Mockup and Integration Laboratory,
where astronauts train for both Space Shuttle and International Space Station
missions. Johnson Engineering also designs and fabricates flight hardware, such
as flight crew equipment and crew quarters habitability outfitting as well as
providing stowage integration services. Johnson Engineering is also responsible
for configuration management of the International Space Station (ISS).
The Company paid approximately $25.3 million, including transaction costs, to
acquire all of the capital stock of Johnson Engineering. The business
combination is being accounted for using the purchase method under Accounting
Principles Board Opinion No. 16, Business Combinations, (APB Opinion 16). The
purchase price has been allocated to the assets and liabilities acquired based
on preliminary estimates of fair value as of the date of acquisition. Based on
the allocation of the net assets acquired, goodwill of approximately $24 million
was recorded. Such goodwill is being amortized on a straight-line basis over 25
years. The purchase price has been allocated as follows (in thousands):
Cash $
2
Prepaid and other current assets 306
Accounts receivable, net 8,366
Inventory 5
Property, plant and equipment, net 446
Other assets 622
Goodwill 23,962
Current liabilities (7,470)
Accrued contract costs (928)
--------
Total purchase price $ 25,311
========
APB Opinion 16 requires, for purchase business computations, the presentation of
pro forma combined results of operations for the current year and the preceding
year as if the combination had occurred at the beginning of the periods
presented. The following unaudited pro forma consolidated results of operations
are not necessarily indicative of actual or future results of operations.
<TABLE>
<CAPTION>
(in thousands except per share data) Three Months Nine Months
Ended March 31, Ended March 31,
1999 1998 1999 1998
----------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue $ 26,693 $ 30,811 $ 78,600 $ 76,278
Gross profit 4,737 10,823 13,941 17,729
Net income (loss) $ (541) $ 4,881 $ (1,979) $ 4,940
=========== ========== ========== =========
Net income (loss) per share - diluted $ (0.05) $ 0.37 $ (0.18) $ 0.43
=========== ========== ========== =========
</TABLE>
4. Revenue Recognition:
Under the Mir contract, revenue was recognized upon completion of each module
flight, and total contract revenue was allocated to each flight based on the
amount of services the Company provided on the flight relative to total
8
<PAGE>
services provided for all flights under contract. Obligations associated with a
specific mission, e.g., integration services, were also recognized upon
completion of the mission. For the REALMS (Research and Logistics Mission
Support) contract and for new contract awards for which the capability to
successfully complete the contract can be reasonably assured and the costs at
completion can be reliably estimated at contract inception, revenue is
recognized under the percentage-of-completion method. This
percentage-of-completion method allows the Company to report revenue based on
costs incurred on a per mission basis over the period of that mission. The
percentage of completion method results in the recognition of revenue over the
period of contract performance, thereby decreasing significant quarter by
quarter fluctuations in reported revenue. Revenue provided by the Astrotech
payload processing facilities is recognized ratably over the occupancy period of
the satellites at the Astrotech facilities. Revenue provided by Johnson
Engineering is primarily based on cost-plus award fee contracts, whereby revenue
is recognized to the extent of costs incurred plus estimates of award fee
revenues using the percentage-of-completion method. Award fees, which provide
earnings based on the Company's contract performance as determined by NASA
evaluations, are recorded when the amounts can be reasonably estimated, or are
awarded. Changes in estimated costs to complete and estimated amounts recognized
as award fees are recognized in the period they become known.
5. Statements of Cash Flows - Supplemental Information:
(a) Cash paid for interest costs was $4.0 million and $1.5 million for the nine
months ended March 31, 1999 and 1998, respectively. The Company capitalized
interest of approximately $1.8 million and $1.4 million during the nine months
ended March 31, 1999 and 1998, respectively.
(b) The Company paid $0.4 million and $1.3 million for income taxes during the
nine months ended March 31, 1999 and 1998, respectively.
6. Credit Facilities:
On June 16, 1997, the Company entered into a $10.0 million line of credit
agreement with a financial institution. Outstanding balances on the line of
credit accrue interest at either the lender's prime rate or a LIBOR-based rate,
and are collateralized by certain assets of the Company. The term of the
agreement is through October 1999. As of March 31, 1999, the Company had not
drawn against the line of credit.
On July 14, 1997, the Company's wholly owned subsidiary, Astrotech, entered into
a five-year credit facility with a financial institution for loans of up to
$15.0 million. This loan is collateralized by the assets of Astrotech and
certain other assets of the Company, and is guaranteed by the Company. Interest
accrues at LIBOR plus three percent. As of March 31, 1999, the Company had drawn
$14.1 million against this loan. As of March 31, 1999 and 1998, the outstanding
balance on this loan was $9.9 million and $12.7 million, respectively.
In October 1997, the Company completed a private placement offering for $63.3
million of aggregate principal of its 8% Convertible Subordinated Notes due
2007. Interest is payable semi-annually. The notes are convertible into the
common stock of the Company at a rate of $13.625 per share. This offering
provided the Company with net proceeds of approximately $59.9 million to be used
for capital expenditures associated with the development and construction of
space related assets, the purchase of Johnson Engineering and for other general
corporate purposes.
In December 1998, the Company amended its agreement with Alenia Spazio S.p.A., a
shareholder, relative to subordinated notes payable with an outstanding
principal balance of $11.9 million due in August 2001. In exchange for payment
of $4.0 million of principal on or before December 31,1998, Alenia agreed to
waive the interest payment due for the quarter ended December 31, 1998 and to
reduce the annual interest rate on the subordinated notes from 12% to 10% on the
outstanding balance as of January 1, 1999. The interest expense benefit, $0.4
million for the payment waived, is being amortized over the remaining term of
the loan which is due August 2001. Beginning January 1, 1999, the same interest
rate will be applied to the senior debt (the Insurers' note) that has an
outstanding balance of $1.0 million as of December 31, 1998.
9
<PAGE>
For the period ended March 31, 1999, the Company was in breach of certain loan
covenants of the term loan and line of credit facility. The covenants had been
negotiated prior to the acquisition of Johnson Engineering. While the Company
had not drawn against the line of credit, covenant waivers were requested and
received, for the quarter ended March 31, 1999, from both lending institutions.
The Company is in the process or renegotiating the loan covenants.
7. Shareholder Rights Plan:
On March 26, 1999 the Board of Directors adopted a Stockholder Rights
Plan designed to deter coercive takeover tactics and to prevent a potential
acquirer from gaining control of the Company without offering a fair price to
all of the Company's stockholders. Each Right under the Plan entitles the holder
to buy one one-thousandth of a share of a new series of junior participating
preferred stock for $35. If any person or group becomes the beneficial owner of
15% or more of SPACEHAB's common stock (with certain limited exceptions), then
each Right (not owned by the 15% stockholder) will then entitle its holder to
purchase, at the Right's then current exercise price, common shares having a
market value of twice the exercise price. In addition, if after any person has
become a 15% stockholder, and SPACEHAB is involved in a merger or other business
combination transaction with another person, each Right will entitle its holder
(other than the 15% stockholder) to purchase, at the Right's then current
exercise price, common shares of the acquiring company having a value of twice
the Right's then current exercise price. The rights were granted to each
shareholder of record on April 9, 1999. SPACEHAB generally will be entitled to
redeem the Rights at a redemption price of $.01 per Right until a person or
group acquires a 15% position. The Rights will expire on April 9, 2009.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
This document may contain "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including (without limitation) the "General" and
"Liquidity and Capital Resources" sections of this Item 2. Such statements are
subject to certain risks and uncertainties, including those discussed herein,
which could cause actual results to differ materially from those projected in
such statements.
SPACEHAB was incorporated in 1984 to commercially develop space habitat
modules to operate in the cargo bay of the Space Shuttles. SPACEHAB currently
provides space within and on the modules for both NASA and commercial customers.
Astrotech was established in 1984 to provide payload processing facilities to
serve the satellite manufacturing and launch services industry. Astrotech
currently provides launch site preparation of flight-ready satellites to major
U.S. space launch companies and satellite manufacturers. Johnson Engineering was
incorporated in the state of Colorado in 1973 and is primarily engaged in
providing engineering services and products to the federal government.
The Company currently operates under two significant contracts with NASA:
the REALMS Contract, a $92.6 million contract for two research missions aboard
the Space Shuttle and two logistics missions to resupply the International Space
Station; and, the Flight Crew Systems Development Contract (the "FCSD Contract")
currently a $324.9 million multitask cost-plus-award and incentive-fee contract,
that commenced in May 1993 and will conclude in April 2001. The value of the
NASA portion of the REALMS contract is $67.5 million for four firm missions and
the commercial value is currently $25.1 million. The Company has the potential
to increase the total REALMS Contract value by an additional $12.2 million
through module usage sales to commercial customers for microgravity space
research such as the European Space Agency (ESA), the National Space Development
Agency of Japan (NASDA) and the Canadian Space Agency (CSA). The first mission
under the REALMS Contract, STS-95 which carried Senator John Glenn back into
space, was completed in October 1998. The three remaining flights are currently
scheduled for launch in May 1999, December 1999 and December 2000. Under the
FCSD Contract,
10
<PAGE>
Johnson Engineering provides a variety of critical crew training, support and
manufacturing functions on a cost plus award fee and incentive fee basis.
Revenue
SPACEHAB generates revenue by: (i) providing lockers and/or volume within
and on the SPACEHAB Modules; (ii) integration and operations support services
provided to scientists and researchers responsible for the experiments; and/or
(iii) from NASA or International Agencies to carry logistics supplies for Module
missions aboard the Shuttle system. Under the Mir Contract, the Company
recognized revenue only at the completion of each Space Shuttle mission
utilizing Company assets. Accordingly, the Company's quarterly revenue and
profits had fluctuated dramatically based on NASA's launch schedule and will
continue to do so under any contract for which revenue is recognized only upon
completion of a mission. For the REALMS contract and for future contract awards
for which the capability to successfully complete the contract can be
demonstrated at contract inception, revenue recognition under the
percentage-of-completion method is being reported based on costs incurred on a
per mission basis over the period of the mission. The percentage-of-completion
method results in the recognition of revenue over the period of contract
performance, thereby significantly decreasing the quarter-by-quarter
fluctuations in reported revenue.
Astrotech revenue is derived from various multi-year fixed price
contracts with satellite and launch vehicle manufacturers. The services and
facilities Astrotech provides to its customers support the final assembly,
checkout and countdown functions associated with preparing a satellite for
launch. This preparation includes: the final assembly and checkout of the
satellite, installation of the solid rocket motors, loading of the liquid
propellant, encapsulation of the satellite in the launch vehicle, transportation
to the launch pad and command and control of the satellite during pre-launch
countdown. Revenue provided by the Astrotech payload processing facilities is
recognized ratably over the occupancy period of the satellites in the Astrotech
facilities. In addition, Astrotech expects to generate additional revenue from
an exclusive multi-year agreement to process all Sea Launch program payloads at
the Boeing facility in Long Beach, California. The first Sea Launch payload was
processed by Astrotech and successfully launched during March 1999.
Johnson Engineering generates revenue primarily from its multi-year cost
plus award and incentive-fee contract with NASA. Johnson Engineering's flight
crew support services include operations, training and fabrication of mockups at
NASA's Neutral Buoyancy Laboratory, and at NASA's Mockup and Integration
Laboratory, where astronauts train for both Space Shuttle and International
Space Station missions. Johnson Engineering also designs and fabricates flight
hardware including flight crew equipment and crew quarters habitability
outfitting and provides stowage integration services. Johnson is also
responsible for configuration management of the ISS. Revenue provided by Johnson
Engineering is recognized to the extent of costs incurred plus award fee using
the percentage of completion method, measured on costs incurred. Award fees,
which provide earnings based on contract performance as determined by periodic
NASA evaluations, are recorded when the amounts can be reasonably estimated or
are awarded.
Costs of Revenue
Costs of revenue for SPACEHAB missions include integration and operations
expenses associated with the performance of three types of efforts: (i)
sustaining engineering in support of all missions under a contract, (ii) mission
specific support and (iii) other costs of revenue including depreciation
expense, related insurance, costs associated with the both the Astrotech and
Spacehab payload processing facilities and Johnson Engineering direct and
indirect costs under the FCSD Contract.
11
<PAGE>
RESULTS OF OPERATIONS
For the three months ended March 31, 1999 as compared to the three months ended
March 31, 1998.
Revenue. Revenue increased by 41% to approximately $26.7 million as
compared to $19.0 million for the three months ended March 31, 1999 and 1998,
respectively. Revenue of $9.0 million was recognized from the REALMS Contract
with NASA and with related commercial customers, $15.5 million from Johnson
Engineering under the FCSD Contract and $2.2 million from Astrotech. In
contrast, for the quarter ended March 31, 1998, revenue of $13.6 million was
recognized for the sixth Mir mission upon the return of the module, $2.8 million
was recognized under the REALMS Contract for both NASA and related commercial
customers and revenue of $2.6 million was generated by Astrotech.
Costs of Revenue. Costs of revenue for the quarter ended March 31, 1999
increased by 132% to $22.0 million, as compared to $9.4 million for the prior
year's quarter. This significant increase was due to the inclusion of Johnson
Engineering's costs of $13.9 million, primarily for costs incurred in support of
the FCSD contract. For the quarter ended March 31, 1999, integration and
operations costs for the REALMS and related commercial customer contracts were
$5.6 million, $1.2 million for Astrotech payload processing and $1.3 million of
depreciation expense. For the three months ended March 1998, the components of
costs of revenue include integration and operations costs under the Mir contract
of $5.7 million, $1.3 million under the REALMS and related commercial customer
contracts, $1.2 million for Astrotech payload processing, and depreciation
expense of $1.2 million.
Operating Expenses. Operating expenses increased approximately 1% to
approximately $4.4 million for the three months ended March 31, 1999 as compared
to approximately $4.3 million for the three months ended March 31, 1998.
Marketing, general and administrative expenses increased 22% to approximately
$3.7 million for the three months ended March 31,1998 as compared to $3.0
million for the quarter ended March 31, 1998. The increase is due to the
inclusion of $0.7 million of Johnson Engineering's expenses. Research and
development costs decreased by approximately 46% to $0.7 million for the quarter
ended March 31, 1999 as compared to $1.3 million for the quarter ended March 31,
1998. R&D costs decreased by $1.2 million during the quarter ended March 31,
1999 due primarily to the reduction of R&D efforts, particularly for the ICC and
SHUCS systems, for use aboard Space Shuttle missions. This decrease was
partially offset by $0.5 million of R&D expenses at Astrotech for the
development of a new product line, sounding rockets.
Interest and Other Expense. Interest expense was approximately $1.3
million for the three months ended March 31, 1999 and the three months ended
March 31, 1998. There was also approximately $0.6 million and $1.4 million of
interest capitalized for the quarters ended March 31, 1999 and 1998,
respectively. Interest was capitalized based on the construction of the
Company's research module with double module hardware and additional facilities
being constructed by Astrotech.
Interest and Other Income. Interest and other income was approximately
$0.4 million and $0.9 million for the three months ended March 31, 1999 and
1998, respectively. Interest is earned on the Company's short-term investments
of the proceeds received from the Company's debt financings completed during
July and October 1997.
Income Taxes. Based on the Company's projected taxable earnings for
fiscal year 1999, the Company did not record significant income tax expense
(benefit) for the quarter ended March 31, 1999.
Net Income (Loss). The net loss for the quarter ended March 31, 1999 was
approximately ($0.5) million or ($.05) per share (basic and diluted EPS) on
11,189,242 shares as compared to net income of $4.9 million or $0.44 per share
(basic EPS) on 11,156,274 shares or $0.37 (diluted EPS) on 16,062,335 shares.
12
<PAGE>
For the nine months ended March 31, 1999 as compared to the nine months ended
March 31, 1998.
Revenue. Revenue increased by 100% to $78.6 million as compared to $39.3
million for the nine months ended March 31, 1999 and 1998, respectively. Revenue
recognized during the nine months ended March 31, 1999 was from: REALMS and
commercial customer contracts of $29.8 million; Astrotech operations of $6.9
million and Johnson Engineering operations of $41.9 million, primarily under the
FCSD contract. Conversely, for the nine months ended March 31, 1998 the
Company's revenue was attributable to the Mir Contract of $27.2 million, REALMS
and commercial customer contracts of $4.6 million and Astrotech operations of
$7.5 million. Johnson Engineering's revenue was reduced during the period ended
December 31, 1998 by $0.7 million as the result of their award score, for the
award period April-September 1998, which was lower than accrued and resulted in
no fee earned for the period. The fee reduction addressed performance at Johnson
Engineering prior to its acquisition by SPACEHAB. Corrective action has been
taken. For the current award period, Johnson Engineering has been recognizing
revenue based on an anticipated award score of 75%, which management believes is
reasonable based on its understanding of the reasons for the previous low score
and the corrective actions taken by the Company in response to the customer's
concerns. There can be no assurance that Johnson Engineering will achieve that
score.
Costs of Revenue. Costs of revenue for the nine months ended March 31,
1999 increased 179% to $64.7 million, as compared to $23.2 million for nine
months ended March 31, 1998. The primary components of costs of revenue for the
nine months ended March 31, 1999 include integration and operation costs under
the REALMS and commercial customer contracts of $18.7 million, Astrotech
operations of $3.5 million and Johnson Engineering of $38.7 million.
Depreciation expense for the period was $3.8 million. In contrast, the primary
components of costs of revenue for the nine months ended March 31, 1998 included
integration and operations costs under the Mir contract of $13.9 million, REALMS
and commercial customers contracts of $2.4 million, and Astrotech operations of
$3.2 million. Depreciation expense for the period was $3.7 million.
Operating Expenses. Operating expenses increased by approximately 24% to
approximately $13.5 million for the nine months ended March 31, 1999 as compared
to approximately $10.9 million for the nine months ended March 31, 1998.
Marketing, general and administrative expenses increased by 38% to $10.8 million
as compared to $7.8 million primarily as the result of Johnson Engineering's
expenses of $2.0 million, staff added in the administrative and marketing
functions and depreciation for additional assets used in the marketing and
general and administrative functions.
Research and development costs decreased 13% to $2.7 million for the
period ended March 31, 1999 as compared to $3.1 million for the period ended
March 31, 1998. R&D costs decreased by $0.9 million dollars for the period
ending March 31, 1999 due primarily to the completion of the R&D effort of the
SPACHAB SHUCS system. This reduction was partially offset by $0.5 million of R&D
expense incurred at Astrotech for the development of a new product line,
sounding rockets.
Interest and Other Expense. Interest expense was approximately $3.9
million for the nine months ended March 31, 1999 as compared to approximately
$2.6 million for the nine months ended March 31, 1998. There was approximately
$1.8 million and $1.4 million of capitalized interest for the nine months ended
March 31, 1999 and 1998, respectively. Interest for the current fiscal year is
capitalized primarily on the construction of the Company's science module with
adapter hardware and an additional payload processing facility being constructed
by Astrotech. The increase in interest expense between the two periods is due
primarily to the interest accrued on the convertible notes that were issued on
October 21, 1997. Additionally during the nine months ended March 31, 1999, the
Company recognized $0.6 million in other expense related to costs associated
with a debt offering that the Company canceled in July 1998.
Interest and Other Income. Interest and other income was approximately
$1.9 million for the nine months ended March 31, 1999 as compared to $2.3
million for the period ended March 31, 1998. Interest income is due to
short-term interest earned by the Company for the investment of the proceeds
received from the Company's credit facilities completed during July and October
1997.
13
<PAGE>
Income Taxes. Based on the Company's projected taxable earnings for
fiscal year 1999, the Company recorded a $0.2 million income tax benefit for the
nine months ended March 31, 1999.
Net Income (Loss). The net loss for the period ended March 31, 1999 was
approximately ($2.0) million, or ($0.18) per share (basic and diluted EPS), on
11,178,004 shares as compared to net income of $5.0 million, or $0.45 per share
(basic EPS), and $0.44 per share (diluted EPS) for the nine months ended
December 31, 1997, on 11,152,312 shares and 11,407,595 shares, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its capital expenditures, research and
development and working capital requirements with progress payments under its
various contracts, as well as with proceeds received from private debt and
equity offerings and borrowings under credit facilities. During December 1995,
SPACEHAB completed an initial public offering of common stock (the "Offering"),
which provided the Company with net proceeds of approximately $43.5 million. In
June 1997, the Company signed an agreement with a financial institution securing
a $10.0 million revolving line of credit (the "Revolving Line of Credit") that
the Company may use for working capital purposes. As of March 31, 1999, no
amounts were drawn on this line of credit which expires in October 1999. In July
1997, Astrotech obtained a five-year term loan (the "Term Loan Agreement"),
which is guaranteed by SPACEHAB, and provides for draws of up to $15.0 million
for general corporate purposes. As of March 31, 1999, the Company had drawn
$14.1 million on this loan, which had an outstanding balance on that date of
$9.9 million. On October 21, 1997, the Company completed a private placement
offering of convertible subordinated notes (the "Notes Offering"), which
provided the Company with net proceeds of approximately $59.9 million which has
been used, in part, for capital expenditures associated with the development and
construction of space related assets, the purchase of Johnson Engineering, and
for general corporate purposes. In December 1998, the Company amended its
agreement with Alenia Spazio S.p.A. relative to subordinated notes payable with
an outstanding balance of $11.9 million. In exchange for payment of $4.0 million
of principal, Alenia agreed to reduce the annual interest rate from 12% to 10%
on the outstanding balance as of January 1, 1999 and the interest payment due
for the quarter ended December 31, 1998 was waived. An agreement with the senior
debt holders under the Insurers' note requires that the same interest rate be
applied to the senior debt with an outstanding balance of $1.0 million as of
December 31, 1998.
For the period ended March 31, 1999, the Company was in breach of certain loan
covenants of the term loan and line of credit facility. The covenants had been
negotiated prior to the acquisition of Johnson Engineering. While the Company
had not drawn against the line of credit, covenant waivers were requested and
received, for the quarter ended March 31, 1999, from both lending institutions.
The Company is in the process of renegotiating the loan covenants.
Cash Flows from Operating Activities. Cash flows provided by (used for)
operating activities for the nine months ended March 31, 1999 and March 31, 1998
were ($11.0) million and $17.6, million respectively. The major items
contributing to the use of funds for the period ended March 31, 1999 were the
decrease in deferred flight revenue of ($4.0) million dollars and the decrease
in accrued consulting and subcontractor services of ($6.0) million. The decrease
in deferred flight revenue was primarily due to recognition of all deferred
revenue on STS-95 which flew in October 1998 partially offset by increases in
deferred revenue for STS-101 and STS-107. The decrease in accrued consulting and
subcontractor services was due to the payment of subcontractor costs under the
MIR contract and the payment of accrued subcontractor costs for the research
module with adapter hardware. The increase in cash flows provided by operating
activities for the period ended March 31, 1998 were due primarily to the
increase in billings for the option missions under the MIR contract, the REALMS
contract and the NASDA/ESA contracts.
Cash Flows from Investing Activities. For the nine months ended March 31,
1999, cash flows used for investing activities consisted primarily of capital
expenditures related to the acquisition of Johnson Engineering in July 1998 for
$25.3 million. Additional investing included approximately $12.9 million
attributable to the construction of the ICC system and the Company's research
module with adapter hardware. $1.0 million was invested in the expansion of the
Astrotech facilities, $2.1 million for the purchase of additional property and
equipment and $0.8 million in a
14
<PAGE>
joint venture with Guigne Technologies Limited. For the period ended March 31,
1998 the Company's investing activities primarily consisted of the expansion of
the Astrotech facility, $3.2 million, $8.7 million of capital expenditures
relating to building the research module with adapter hardware and $0.5 million
relating to the increase in machinery and equipment.
Cash Flows from Financing Activities. Cash flows provided by (used for)
financing activities were approximately ($6.5) million and $71.6 million for the
nine months ended March 31, 1999 and 1998, respectively. During the period ended
March 31, 1999, the Company made an early payment of $4.0 million of Alenia debt
in exchange for a lower interest rate and a waiver of interest expense due and
payable for the quarter ended December 31, 1998. Additional payments were made
on outstanding debt of $2.6 million. During the nine months ended March 31,
1998, the Company received net proceeds of approximately $14.1 million under the
Term Loan Agreement. In August 1997, the Company also made the first payment of
$0.5 million under the Credit Agreement. In October 1997, the Company received
net proceeds of approximately $59.9 million by completing an offering of $55.0
million of its 8% Convertible Subordinated Notes due 2007 as well as exercise of
the underwriters' over-allotment for an additional $8.3 million.
The Company believes that cash flows from the Notes Offering, the Term Loan
Agreement, the Revolving Line of Credit and other current financing activities
will be sufficient to meet any cash flow requirements from operations and other
funding requirements for capital asset construction and development for at least
the next twelve months.
Recent Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS 131). SFAS 131 establishes new
procedures and requirements for the (i) determination of business segments and
(ii) presentation and disclosure of segment information. The Company is required
to adopt the provisions of SFAS 131 for the year ended June 30, 1999.
Year 2000 Readiness Disclosure Statement
The Year 2000 ("Y2K") issue is the result of computer programs that were written
using two digits rather than four to define the applicable year. Any computer
program that has date-sensitive software may recognize the date using "00" as
the year 1900 rather than the year 2000. This error could result in systems
failures and computational errors causing disruptions of operations, including,
among other things, the temporary inability to process transactions, send
invoices or engage in similar normal business activities.
SPACEHAB has established a Y2K program to address both information-technology
("IT") and non-IT problems that may exist within the SPACEHAB system, including
its vendors and customers, e.g.- NASA and the Space Shuttle. SPACEHAB's Y2K
program is divided into five major phases- Awareness and Risk Assessment,
Inventory and Risk Assessment, Repair, Replacement and Renovation, Verification
and Validation, and Implementation and Monitoring.
Phases
AWARENESS AND RISK ASSESSMENT- This phase is intended to ensure the
establishment of the Y2K program and the awareness of potential risks and
issues. This phase involves communicating the status and progress of the Y2K
program within SPACEHAB and to third parties. It is an on-going activity and
will continue as SPACEHAB proceeds through the other phases.
INVENTORY AND RISK ASSESSMENT- This phase involves taking an inventory of
SPACEHAB hardware, software and infrastructure to identify those systems that
are and are not Y2K compatible. The emphasis is on those items, which are
believed by SPACEHAB to have a significant impact on the business from a
financial, legal or
15
<PAGE>
service perspective. While this process is ongoing, SPACEHAB estimates that this
phase is substantially complete for Company owned hardware and software.
SPACEHAB is in the process of surveying third party vendors to determine their
state of readiness.
REPAIR, REPLACEMENT AND RENOVATION- This phase, also known as "conversion", is
intended to ensure that the appropriate items identified in the preceding phase
are upgraded to meet the Y2K compliance criteria. Material repairs, replacements
and renovations will be substantially complete by the end of the Company's
current fiscal year for systems that are under direct control of SPACEHAB. No
assessment of completion dates are available for which third parties are
responsible until the completion of that portion of the Inventory and Risk
Assessment phase.
VERIFICATION AND VALIDATION- This phase ensures that critical processes, systems
and infrastructure are verified and tested to ensure Y2K issues will not cause
major disruptions in the on-going operations and business of the Company.
Verification and testing of systems under SPACEHAB's direct control are being
performed by SPACEHAB personnel and personnel of Spacehab's major subcontractor,
Boeing. SPACEHAB expects that all testing of these systems will be complete by
the end of the Company's current fiscal year.
IMPLEMENTATION AND MONITORING- Y2K upgrades are and will be installed into
SPACEHAB's operating systems as necessary. Monitoring will be employed to ensure
that unforeseen Y2K critical items are appropriately prioritized for correction.
SPACEHAB's implementation and monitoring activities are ongoing.
State of Readiness
While there is uncertainty inherent in the Y2K problem resulting in large part
from the uncertainty of the readiness of third party vendors, SPACEHAB's
progress towards completing risk assessment within the SPACEHAB systems is
expected to be completed before the end of 1999.
A) Based on an ongoing assessment, the Company has determined that the vast
majority of the hardware and software used in its administrative functions are
Y2K compliant. The computers that are not compliant are being replaced and the
replacement will be completed during 1999.
B) Some computer hardware used in the operations function of SPACEHAB will
require upgrading. The computers at SPACEHAB's Payload Process Facility in
Florida used for ground support electrical testing (GSE) are antiquated,
inefficient and are not Y2K compatible. A proposal has been submitted to upgrade
those systems during 1999 and work is progressing on the upgrade.
C) Surveys and/or questionnaires are being sent to those third parties that
might have an impact on SPACEHAB's business to determine their state of
readiness. Those third parties include; NASA, Boeing, Lockheed-Martin and the
various utility service companies serving our locations.
Costs
The costs associated with required modifications to become Y2K compliant are not
expected to be material to SPACEHAB's financial position or results of
operations. The current estimate to become Y2K compliant is minimal,
approximately $0.2 million, for the replacement of all hardware and software.
This estimate excludes system enhancements, modifications and upgrades to
replace the inefficient and antiquated GSE equipment, which costs are estimated
to be $0.8 million. The costs of the Year 2000 program are being expensed as
incurred. Replacement of the GSE equipment will be capitalized. There was no
specific budget in fiscal year 1999 for Y2K costs.
16
<PAGE>
Risks
In a likely worse case scenario, the failure to correct a material Y2K problem
could result in an interruption in, or a failure of, certain normal business
activities or operations, including operations that are essential to the
provision of SPACEHAB's services. Due to the general uncertainty inherent in the
Y2K problem, resulting in major part from the state of readiness of third
parties, SPACEHAB is unable to determine at this time whether the consequences
of Y2K failures will have a material impact on SPACEHAB's results of operations,
liquidity or financial condition. The potential Y2K impacts from third parties
include; the failure of the utility companies and power grids, NASA and the
Space Shuttle in particular and from the customer owned IT systems which are
located at Astrotech's payload processing facilities.
Contingency Plans
After gathering information from SPACEHAB's Y2K readiness program and to prepare
for the possibility that certain information systems or third parties will not
be Y2K compliant, SPACEHAB intends to develop appropriate contingency plans. The
GSE at SPACEHAB's payload processing facility in Florida, while not Y2K
compliant, is still usable. The only functionality of the GSE that is expected
to be impaired is the printing of the correct date on computer generated
reports.
Readers are cautioned that the discussion of SPACEHAB's efforts and expectations
related to Year 2000 are forward looking statements and should be read in
conjunction with SPACEHAB's disclosure under "Management's Discussion and
Analysis of Financial Condition and Results of Operations- Forward Looking
Statements."
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
17
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The separate Index to Exhibits accompanying this filing
is incorporated herein by reference.
(b) Reports on Form 8-K.
None
Exhibit No. Description of Exhibits
----------- -----------------------
11. Statement regarding Computation of Earnings Per Common
Share.
27 Financial Data Schedule
18
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPACEHAB, INCORPORATED
Date: May 13, 1999 /S/Mark A. Kissman
-----------------------------------------
Mark A. Kissman
Vice President, Finance
Chief Financial Officer
/S/David A. Rossi
-----------------------------------------
David A. Rossi
President and Chief Operating Officer
19
Exhibit 11
SPACEHAB, INCORPORATED AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
(in thousands, except share data) Three Months Nine Months
Ended March 31, Ended March 31,
1999 1998 1999 1998
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net Income (loss) and Adjusted Earnings:
Net income (loss) applicable to common
Shareholders used for basic computations $ (541) $ 4,891 $ (1,979) $ 4,964
---------------- --------------- --------------- ---------------
Dilution adjustments:
Savings in convertible note payable interest
Expense, net of tax 759 991 2,311 -
---------------- --------------- --------------- ---------------
Adjusted net income applicable to
Common shareholders assuming dilution $ 218 $ 5,882 $ 332 $ 4,964
================ =============== =============== ===============
Average number of shares of common stock
used for basic computation 11,189,242 11,156,274 11,178,004 11,152,312
---------------- --------------- --------------- ---------------
Diluted adjustments (1):
Weighted Average Shares and Share
Equivalents Outstanding:
Assumed exercise of options and warrants 146,171 263,859 167,566 256,283
Assumed conversion of convertible debt 4,642,202 4,642,202 4,642,202 -
---------------- --------------- --------------- ---------------
Total number of shares assumed to be
Outstanding assuming dilution 15,978,615 16,062,335 15,987,772 11,407,595
---------------- --------------- --------------- ---------------
Earnings (loss) Common Per Share:
Income (loss) per common share: ---------------- --------------- --------------- ---------------
Basic $ (0.05) $ 0.44 $ (0.18) $ 0.45
================ =============== =============== ===============
Diluted (1): $ 0.01 $ 0.37 $ 0.02 $ 0.44
================ =============== =============== ===============
(1) The assumed exercise of options and warrants and the conversion of
convertible debt is anti-dilutive for the three and nine month periods
ended March 31, 1999 but are included in the calculation of dilutive
earnings per share in accordance with Regulation S-K Item 601 (a)(11).
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SPACEHAB, INC. AS OF AND FOR THE NINE
MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 32,726
<SECURITIES> 0
<RECEIVABLES> 13,553
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 48,339
<PP&E> 124,642
<DEPRECIATION> 47,745
<TOTAL-ASSETS> 205,932
<CURRENT-LIABILITIES> 29,481
<BONDS> 0
0
0
<COMMON> 81,403
<OTHER-SE> 16
<TOTAL-LIABILITY-AND-EQUITY> 205,932
<SALES> 78,600
<TOTAL-REVENUES> 78,600
<CGS> 64,659
<TOTAL-COSTS> 64,659
<OTHER-EXPENSES> 13,459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,910
<INCOME-PRETAX> (2,165)
<INCOME-TAX> (186)
<INCOME-CONTINUING> (1,979)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,979)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
