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Sheldahl Completes $7.2 Million Private Placement

1 March 1999

Sheldahl Completes $7.2 Million Private Placement

  Workforce Reductions Announced; Will Result in Annual Cost Savings of $2.4
                                   Million

    NORTHFIELD, Minn., March 1 -- Sheldahl, Inc. ,
today announced that it had completed a private placement of $7.2 million in
preferred stock. The new Series E preferred shares are convertible at $6.25
per common share at the option of shareholders, most of whom are current
stockholders and/or members of Sheldahl's Board.
    Edward L. Lundstrom, Sheldahl's President and Chief Executive Officer,
said, "The new equity placement enhances our financial stability, provides
additional liquidity, and ensures that we are in compliance with an existing
bank covenant. Further," he added, "the investment displays the confidence the
investor group has in Sheldahl's strategic plan and in the Company's ability
to achieve its goals."

    Business efficiencies support workforce reduction
    Sheldahl also announced that it had reduced its salaried workforce, mainly
related to its core businesses, by 12 percent, or approximately 40 employees.
This move will result in annual cost savings of $2.4 million, and will begin
to take effect in the Company's third quarter. Half of the reduction was
accomplished through an early retirement program made available to long-term
employees. The Company will take a $3.1 million charge in its second quarter
related to the action.
    Commenting on the reduction, Lundstrom stated, "As a result of last year's
restructuring, we have been able to significantly reduce costs and enhance our
competitiveness. This has enabled us to provide the same responsive service to
our customers with fewer employees."

    Sheldahl sees flat first half, growth in second half
    Lundstrom noted that, as expected, the Company's second quarter sales will
be comparable to those of the previous two quarters, but concluded, "We expect
sales growth in the range of 10 to 12 percent in the second half."
    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 datacommunications markets. The Company, which is
headquartered in Northfield, Minn., has operations in Northfield; Longmont,
Colo.; Detroit, Mich.; South Dakota; Toronto, Ontario, Canada; and Chihuahua,
Chih., Mexico. Its sales offices are located in Hong Kong, China; Singapore;
and Mainz, Germany. 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
    Statements contained here, other than historical data, may be
forward-looking and subject to risks and uncertainties including, but not
limited to, those set forth in the Company's annual report, 10K, 10Q, and
other SEC filings.