Sheldahl Reports Six Month Results

Northfield, MN, March 28, 2000 – Sheldahl, Inc. (Nasdaq: SHEL) today reported results for the six months and second quarter ended February 25, 2000. For the first half of fiscal 2000, sales increased by more than 18% to $66.8 million from $56.5 million, on the strength of the Core Business. Net losses (excluding restructuring charges in 1999) decreased significantly to $4.0 million versus $6.0 million for the first six months of fiscal 1999. These results equate to an equivalent per share loss of $0.35 for the first half of fiscal 2000 compared with a loss of $0.56 for the comparable period of fiscal 1999.

SECOND QUARTER

For the second quarter of fiscal 2000, Sheldahl reported sales of $32.0 million, an increase of 14.2% compared to $28.0 million for the comparable period in fiscal 1999, marking an all time record for the second quarter. Excluding 1999 special charges, pretax losses decreased by $1.0 million when comparing second quarter results year to year, principally due to reduced spending and improved operating efficiencies across the entire company. Excluding 1999 special charges, net losses for the quarter ended February 25, 2000 were $2.1 million, or $0.18 per share, versus $3.0 million, or $0.27 per share, for the quarter ended February 26, 1999 and $1.9 million, or $0.16 per share, for the first quarter of fiscal 2000.

Edward L. Lundstrom, President and Chief Executive Officer, commented on the quarter, stating, "The strength of our Core Business sales achievement in what is normally a weak quarter helped drive bottom line improvements. These efforts were supported by strong cost and cash controls that enabled Sheldahl to satisfy all of our bank covenants. We are pleased with this achievement."

CORE BUSINESS STRONG

"The Company’s Core Business continues to gain momentum, producing excellent results for the second quarter of fiscal 2000 with sales improving 12% to $30.8 million from $27.6 million in the second quarter of fiscal 1999. For the six months ended February 25, 2000, sales from the Core Business totaled $64.4 million versus $55.9 million for the first six months of fiscal 1999. What is even more significant is the backlog we have going into the remainder of the year," Lundstrom said. "While at this time we have no news to report regarding strategic alternatives, we continue to focus our resources on serving our customers and delivering quality products and innovative solutions to which our customers are responding well."

MICRO PRODUCTS BUSINESS REMAINS FLAT

"Micro Products losses continue to adversely effect our ability to improve corporate profitability. Significant Micro Products orders did not materialize this quarter because of the delivery and performance issues we experienced last summer. This coupled with continued slow market development for two-metal tape resulted in Micro Products sales being relatively flat with the first quarter. Backlog going into the second half of the year is at a level comparable with the previous two quarters," said Lundstrom.

Sheldahl is a leading producer of high-density substrates, high-quality flexible printed circuitry, and flexible laminates primarily for sale to the automotive electronics and data communications markets. The Company, which is headquartered in Northfield, Minnesota, has operations in Northfield; Longmont, Colorado; South Dakota; Toronto, Ontario, Canada; and Chihuahua, Chih., Mexico. Its sales offices are located in Detroit, Michigan; Hong Kong, China; Singapore; and Mainz, Germany. As of March 1, 2000, Sheldahl employed approximately 850 people. Sheldahl’s common stock trades on the Nasdaq National Market tier of the Nasdaq Stock Market under the symbol: SHEL. In its’ fiscal year ended August 27, 1999, Sheldahl reported revenues of $122.1 million. Sheldahl news and information can be found on the World Wide Web at http://www.sheldahl.com.

The discussion above contains statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements by their nature involve substantial risks and uncertainties as described by Sheldahl’s periodic filings. Actual results may differ materially depending on a variety of factors, including but not limited to the following: the achievement of Sheldahl’s projected operating results, the ability of Sheldahl to successfully obtain waivers from its lenders for any defaults on its debt covenants, the achievement of efficient volume production and related sales revenue results at Longmont, the ability of Sheldahl to identify and successfully pursue other business opportunities, Sheldahl not entering into an agreement with respect to a transaction or any such transaction not being consummated and Sheldahl successfully defending and ultimately prevailing on the action brought by Sheldahl shareholders. Additional information with respect to the risks and uncertainties faced by Sheldahl may be found in, and the prior discussion is qualified in its entirety by, the Risk Factors contained in the Company’s filings with the Securities and Exchange Commission, including Sheldahl’s Annual Report, Form 10-K for the fiscal year ended August 27, 1999, Form 10-Q for the quarter ended November 26, 1999 and other SEC filings.

Sheldahl does not undertake any obligation to update any such factors or to publicly announce developments or events relating to the matters described herein.

SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited

	Six Months Ended
(in thousands, except for per share data)	February 25, 2000	February 26, 1999
Net sales	$66,842	$56,516
Cost of sales	57,993	50,697
Gross profit	8,849	5,819
Expenses:
Sales and marketing General and administrative Research and development Restructuring Interest	3,951 4,506 1,582 - 1,806	4,751 3,758 1,253 3,100 987
Total expenses	11,845	13,849
Net loss before preferred dividends	(2,996)	(8,030)
Convertible preferred stock dividends	(1,028)	(1,072)
Net loss applicable to common shareholders	$ (4,024)	$ (9,102)
Net loss per common share: Basic and diluted	$ (0.35)	$ (0.84)
Number of weighted shares outstanding: Basic and diluted	11,638	10,772


SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited

	Three Months Ended
(in thousands, except for per share data)	February 25, 2000	February 26, 1999	November 26, 1999
Net sales	$32,030	$28,042	$34,811
Cost of sales	27,937	24,930	30,054
Gross profit	4,093	3,112	4,757
Expenses:
Sales and marketing General and administrative Research and development Interest Restructuring costs	1,861 2,274 662 890 -	2,531 1,831 679 664 3,100	2,091 2,231 921 916 -
Total expenses	5,687	8,805	6,159
Net loss before preferred dividends	(1,594)	(5,693)	(1,402)
Convertible preferred stock dividends	(520)	(418)	(508)
Net loss applicable to common shareholders	$(2,114)	$ (6,111)	$ (1,910)
Net loss per common share: Basic and diluted	$ (0.18)	$ (0.55)	$ (0.16)
Number of weighted shares outstanding: Basic and diluted	11,663	11,037	11,613

SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

ASSETS
(unaudited)

(In thousands)	February 25, 2000	August 27, 1999
Current assets:
Cash and cash equivalents Accounts receivable, net Inventories Other current assets	$ 1,201 21,459 20,987 911	$ 1,043 19,908 18,746 593
Total current assets	44,558	40,290
Construction in progress Land and buildings Machinery and equipment Less: accumulated depreciation Net plant and equipment	1,091 28,567 130,288 (84,095) 75,851	3,399 28,560 127,377 (76,491) 82,845
Other assets	851	795
	$121,260	$123,930
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
Current liabilities:
Current maturities of long-term debt Accounts payable Accrued salaries Other accrued liabilities Restructuring reserves	$ 3,468 10,388 1,272 5,106 1,368	$ 4,142 10,493 1,323 4,682 2,713
Total current liabilities	21,602	23,353
Long-term debt	30,745	29,284
Restructuring reserves	2,303	2,484
Other long-term accruals	3,341	3,477
Shareholders’ investment: Convertible preferred stock Common stock Additional paid-in capital Retained earnings	42 2,924 111,345 (51,042)	40 2,903 109,407 (47,018)
Total shareholders’ investment	63,269	65,332
	$121,260	$123,930

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