Sheldahl Proceeds On a Non-Exclusive Basis to Sell Technical Materials Business

    NORTHFIELD, Minn.--Aug. 1, 2001--Sheldahl, Inc. today announced it has amended a letter agreement, dated May 23, 2001, with affiliates of Morgenthaler Group for the sale of a portion of its technical materials business.
    The amendment eliminates a thirty-day exclusive negotiating period with the group, extending Sheldahl's ability to actively pursue all sale opportunities. In addition, Sheldahl said that affiliates of Ampersand Ventures, who were included in the original agreement, have withdrawn from negotiations.
    "Several parties, including the Morgenthaler Group, have expressed interest in buying our technical materials business," said Donald Friedman, President and Chief Executive Officer of Sheldahl. "With the amended agreement, we can continue to pursue all proposals to maximize the price that Sheldahl receives."
    Sheldahl announced in May it was in the process of negotiating a sale of its technical materials business to Morgenthaler Partners and Ampersand Ventures, investors in the company. The company engaged William Blair & Company, LLC of Chicago to conduct the targeted sale process.
    The sale would include Sheldahl's vacuum deposited materials, unidirectional tape and specialty laminates, including Copper/PET and Copper/PEN, used in the electronics industries. The company said it would retain the portion of its materials operations consisting of the display products group that manufactures Accentia(TM), a key component in the plastic display and touch panel markets, and Comclad, a line of high frequency, low loss materials for wireless markets and its adhesiveless and Lithium battery products.
    "We are encouraged by the interest we have received for the purchase of this business," said Friedman. "In addition, we continue to be pleased with the overall progress we are making as a company to return the business to profitability."

    About Sheldahl

    Sheldahl, Inc. 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; Endicott, NY; South Dakota; Toronto, Ontario, Canada; and Chihuahua, Chih., Mexico. Sheldahl's Common Stock trades on the Nasdaq National Market tier of the Nasdaq Stock Market under the Symbol: SHEL. 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. 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 December 29, 2000, 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.