SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q



(X)		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934

	OR

(  )		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
      SECURITIES EXCHANGE ACT OF 1934


For Quarter Ended February 26, 1999	Commission File Number:  0-45


SHELDAHL, INC.
(Exact name of registrant as specified in its charter)



            Minnesota	                         41-0758073
(State or other jurisdiction of	    (IRS Employer Identification Number)
incorporation or organization)		




           Northfield, Minnesota	                55057
(Address of principal executive offices)      	(Zip code)



Registrant's telephone number, including area code:  (507) 663-8000		

As of March 25, 1999, 11,152,588 shares of the Registrant's common stock were 
outstanding.

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>


PART I: FINANCIAL INFORMATION

SHELDAHL, INC. AND SUBSIDIARY
	CONSOLIDATED STATEMENTS OF OPERATIONS
	(Unaudited)
                                            	Six Months Ended

                                      	February 26,   	February 27,
(In thousands,                            1999            1998
except for per share data)


Net sales		                              $56,516	        $56,743
Cost of sales	                            50,697	         54,036
                                      			_______	        _______
Gross profit                              	5,819          	2,707
                                      			_______	        _______
Expenses:
Sales and marketing                       	4,751          	4,915
General and administrative                	3,758	          3,942
Research and development                  	1,253          	2,002
Interest	                                   	987	          1,122
Restructuring costs                       	3,100	          4,000
                                       		_______	        _______
Total expenses	                           13,849        	 15,981
                                        	_______	        _______

Loss before income taxes and 
cumulative effect of change in 
method of accounting                    	(8,030)       	(13,274)

Benefit for income taxes	                      -	          4,840
                                      			_______	        _______

Net loss before cumulative effect
of change in  method of accounting 
for start-up costs	                      (8,030)        	(8,434)

Cumulative effect of change in 
method of accounting for 
start-up costs                                	-        	(5,206)
                                      			_______	        _______

Net loss before preferred dividends     	(8,030)	       (13,640)
 
Convertible preferred stock dividends   	(1,072)          	(359)
                                      			_______	       ________

Net loss applicable to common 
shareholders                            	$(9,102)	     $(13,999)
                                       			=======	       =======

Net loss per common share:
	Basic -
	Net loss before change in method 
	of accounting and after 
	convertible preferred stock dividends  	$ (0.84)      	$ (0.97)
	Change in accounting method	                   -      	  (0.57)
                                       			_______       	_______
	Net loss per common share              	$ (0.84)	      $ (1.54)
                                       			=======	       =======

	Diluted -
	Net loss before change in method 
	of accounting and after 
	convertible preferred stock dividends  	$ (0.84)	      $ (0.97)
	Change in accounting method	                   -	        (0.57)
                                       			_______	       _______
	Net loss per common share              	$ (0.84)	      $ (1.54)
                                       			=======	       =======

Number of shares outstanding - Basic	      10,772	         9,084
Number of shares outstanding - Diluted	    10,772         	9,084

The accompanying notes are an integral part of these statements.
<PAGE>


SHELDAHL, INC. AND SUBSIDIARY
	CONSOLIDATED STATEMENTS OF OPERATIONS
	(Unaudited)

                                        	Three Months Ended

                                      	February 26,  	February 27,
 (In thousands,                            1999          1998
except for per share data)


Net sales	                             	  $28,042	      $27,751
Cost of sales                             	24,930	       27,184
                                       			_______	      _______

Gross profit                               	3,112          	567
                                       			_______	      _______

Expenses:
Sales and marketing	                        2,531        	2,515
General and administrative	                 1,831	        2,092
Research and development	                     679        	1,070
Interest                                     	664	          609
Restructuring costs                        	3,100	        4,000
                                        		_______	      _______

Total expenses	                             8,805	       10,286
                                         	_______	      _______

Loss before income taxes                 	(5,693)      	(9,719)

Benefit for income taxes                       	-        	3,465
                                       			_______	      _______

Net loss before preferred dividends      	(5,693)      	(6,254)

Convertible preferred stock dividends	      (418)        	(172)
                                       			_______	      _______

Net loss applicable to common 
shareholders	                            $(6,111)     	$(6,426)
                                       			=======	      =======

Net loss per common share:
	Basic
	Net loss per common share              	$ (0.55)     	$ (0.70)
                                       			=======	      =======

	Diluted
	Net loss per common share	              $ (0.55)	     $ (0.70)
                                       			=======	      =======

Number of shares outstanding - Basic      	11,037	        9,131
Number of shares outstanding - Diluted	    11,037	        9,131

The accompanying notes are an integral part of these statements.
<PAGE>


SHELDAHL, INC. AND SUBSIDIARY
	CONSOLIDATED BALANCE SHEETS

                            	ASSETS
 (In thousands)                        	February 26,	    August 28,
                                          	1999	            1998
                                      		(unaudited)
Current assets:
Cash	                                   	$   1,327      	$   1,005
Accounts receivable, net	                   19,100	         15,727
Inventories	                                17,224         	15,488
Other current assets                        	1,257	            627
                                         		_______	        _______
Total current assets	                       38,908         	32,847
                                          	_______	        _______

Construction in process	                     5,985         	26,682
Land and buildings	                         28,555	         28,255
Machinery and equipment                   	133,715	        113,642
Less: accumulated depreciation           	(71,664)	       (66,322)
                                         		_______	        _______
Net plant and equipment                    	96,591	        102,257
                                          	_______	        _______

Other assets                                	1,109	          1,202
                                         		_______	        _______

                                       			$136,608       	$136,306
                                        			=======        	=======

               	LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Current maturities of long-term debt     	$  3,884      	$   4,296
Accounts payable                            	8,845          	7,766
Accrued compensation                        	1,126          	1,554
Other accruals	                              5,228          	4,518
Restructuring reserves                      	5,166	          5,494
                                         		_______	        _______
Total current liabilities                  	24,249         	23,628

Long-term debt                             	31,839         	27,829

Restructuring reserves                      	1,638	          2,131
Other long-term accruals	                    3,920          	3,961
                                         		_______        	_______
		Total liabilities                        	61,646         	57,549
                                        			_______	        _______

Stockholders' Equity:
	Convertible preferred stock                   	40             	41
	Common stock	                               2,788	          2,415
	Additional paid-in capital	               106,381         	99,751
	Subscribed preferred stock               	(1,695)              	-
	Accumulated deficit                     	(32,552)	       (23,450)
                                        		 _______        	_______

		Total shareholders' equity               	74,962         	78,757
                                        			_______	        _______

                                         	$136,608       	$136,306
                                          	=======	        =======

The accompanying notes are an integral part of these statements.
<PAGE>


SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

                                            		Six Months Ended

(In thousands)	                          February 26,	     February 27,
                                           	1999             	1998
Operating activities:
Net loss		                                $ (9,102)       	$(13,998)	
	Adjustments to reconcile net loss
   to net cash used in operating activities:
Depreciation and amortization	                8,066           	7,103
Preferred stock dividends	                    1,072             	359
Deferred income taxes	                            -         	(4,840)
Accounting method change	                         -	           5,206
Restructuring costs charged to operations	    3,100           	4,000
Restructuring payments made	                (3,427)               	-
Net change in other operating activities:
Accounts receivable                        	(3,373)           	(998)
Inventories                                	(1,736)         	(1,488)
Prepaid expenses and other current assets    	(630)           	(276)
Other assets                                    	93              	54
Accounts payable and accrued liabilities	     1,700	           2,406
Other non-current liabilities            	     (41)	            (82)
                                           	_______         	_______
	Net cash used in operating activities	     (4,278)         	(2,554)
                                         			_______	         _______

Investing activities:
Capital expenditures, net                  	(3,642)        	(14,120)
                                          		_______	         _______

Financing activities:
Net borrowings under revolving credit 
  facilities                                 	5,980          	10,486
Proceeds from other long-term debt	               -	           2,334
Repayments of long-term debt               	(2,449)	           (475)
Costs and redemption of Series B 
  preferred stock	                            (837)           	(300)
Net proceeds of Series E preferred stock     	5,392               	-
Stock options exercised                        	156             	163
                                          		_______	         _______
		Net cash provided by financing 
		  activities                               	8,242          	12,208
                                         			_______	         _______

Net increase (decrease) in cash 
equivalents                                    	322	         (4,466)

Cash and cash equivalents at 
beginning of period                          	1,005	           5,567
                                         			_______	         _______

Cash and cash equivalents at 
end of period	                              $ 1,327         	$ 1,101
                                         			=======	         ======= 

Supplemental cash flow information:
Interest paid	                              $ 1,662         	$ 1,853
                                          		=======	         =======
Income taxes paid	                          $    69	         $     7
                                          		=======	         =======

	The accompanying notes are an integral part of these statements.
<PAGE>


SHELDAHL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

These condensed and unaudited consolidated financial statements have been 
prepared by the Company pursuant to the rules and regulations of the 
Securities and Exchange Commission.  In the opinion of management, these 
condensed unaudited consolidated financial statements reflect all adjustments, 
of a normal and recurring nature, necessary for a fair statement of the 
interim periods, on a basis consistent with the annual audited financial 
statements.  Certain information, accounting policies and footnote disclosures 
normally included in financial statements prepared in accordance with 
generally accepted accounting principles have been condensed or omitted 
pursuant to such rules and regulations.  Although these disclosures should be 
considered adequate, the Company strongly suggests that these condensed 
unaudited financial statements be read in conjunction with the financial 
statements and summary of significant accounting policies and notes thereto 
included in the Company's latest annual report on Form 10-K.

1)	Inventories, which are valued at the lower of first-in first-out cost or 
market, consists of (in thousands):

                  	February 26, 1999    	August 28, 1998

Raw materials          	$  5,717            	$ 4,964
Work-in-process	           5,207              	4,742
Finished goods	            6,300	              5,782
                        	_______	            _______
                        	$17,224	            $15,488
                        	=======	            =======

2)  Equity Transactions.

During February 1999, the Company issued 7,210 shares of Series E 
convertible preferred stock.  As of February 26, 1999, the Company had 
received cash of $5,515,000 relating to the issuance of the stock and 
received the remaining $1,695,000 by March 5, 1999.  By March 8, 1999, the 
Company had issued additional 1,350 shares of Series E convertible 
preferred stock and received the related proceeds of $1,350,000.  The 
investors were also issued warrants to purchase a total of 85,600 shares of 
Common Stock of the Company at $7.8125 per share.  The warrants are 
exercisable for a period of five years.  During the three months ended 
February 26, 1999, 231,336 shares of common stock were issued upon the 
conversion of 1,097 shares of Series B convertible preferred stock.  

As of March 31, 1999, the Company's equity structure is summarized as 
follows:

A) 11,152,588 common shares outstanding.

B) $32,917,000 in stated value of Series D 5% convertible preferred stock, 
with a fixed conversion price of $6.15 per share and dividends payable 
in cash or in common stock annually on each July 1.  Accrued but unpaid 
dividends are also due upon the conversion of such preferred shares.

C) $8,560,000 in stated value of Series E 5% convertible preferred stock 
with a fixed conversion price of $6.25 per share and dividends payable 
in cash or in common stock annually on each March 1. Accrued but unpaid 
dividends are also due upon the conversion of such preferred shares.

D) $167,000 in stated value of Series B 5% convertible preferred stock with 
a floating conversion price estimated to be $6.30 per share as of March 
17, 1999 and dividends payable in cash or in common stock at conversion.

	On February 26, 1999, the Company had accrued approximately $990,000 in 
total dividends on these groups of preferred stock.

3)  Restructuring Costs.

	In February 1999, the Company recorded a charge of $3.1 million to reserve 
for the separation costs incurred in reducing its salaried work force.  The 
restructuring costs provide for approximately $1.7 million for severance 
and early retirement salary costs and approximately $1.4 million for 
medical, dental and other benefits being provided to the affected 
individuals.  Approximately 53 people are affected by this action.  These 
new restructuring costs are in addition to the $8.5 million of similar 
costs charged to operations in fiscal 1998 ($4.0 million in the second 
quarter ended February 27, 1998 and $4.5 million in the third quarter ended 
May 29, 1998).

As of February 26, 1999, the Company had total remaining restructuring 
reserves of $6.8 million.  Of this amount, approximately $6.3 million 
related to severance, wages and benefits and approximately $500,000 related 
to the remaining equipment disposal, facility closedown and other costs.

In total, for all restructuring costs recorded at February 26, 1999, the 
Company expects to make cash outlays of $2.8 million during the last six 
months of fiscal 1999 and $2.6 million for all of fiscal 2000.  The 
remaining $1.4 million of restructuring costs are expected to be paid out 
over the ten years beginning in fiscal 2001.

During the six months ended February 26, 1999, the Company paid $3.4 
million of restructuring expenses relating to reserves charged to 
operations in fiscal 1998.  Also, the Company wrote off $494,000 of fixed 
assets relating to the Aberdeen, South Dakota facility and charged this 
amount to previously established reserves.

4)  Earnings Per Share

The basic loss per share amount is determined based on the weighted average 
of common shares outstanding.  Diluted loss per share is determined based 
on the same figure, since the Company's potentially dilutive items, 
convertible preferred stock, stock options and warrants, are anti-dilutive 
in the periods presented.
<PAGE>


SHELDAHL, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED OPERATING RESULTS AND FINANCIAL CONDITION

Six Months Ended February 26, 1999, and February 27, 1998 

Sales

The Company's net sales declined $226,000, or 0.4%, from $56.7 million for the 
six months ended February 27, 1998 to $56.5 million for the six months ended 
February 26, 1999.  The automotive market sales for the six months ended 
February 26, 1999 declined 3.5% to $38.7 million.  This decline represents 
weaker than anticipated orders during the mid-December 1998 to mid-January 
1999 period plus continued price pressure with the industry.

Sales to the datacom market increased 39.2% to $9.2 million for the six months 
ended February 26, 1999.  Sales of the Company's new Novaflexr VHD product 
accounted for approximately $2 million of the increase.  Additionally, sales 
for the Company's ViaThinr substrates for IC packages also increased $167,000 
during this period.  Sales to the aerospace defense market consisting 
principally of various laminate materials declined $1.1 million or 24% 
reflecting the typical order pattern of this market.

The chart below details the Company's sales by market during the period (in 
thousands):

                 	Six Months Ended	  Six Months Ended
	Market              	Feb 26, 1999 	 Feb 27, 1998	  Gross Change  	% Change

Automotive             	$ 38,702      	$ 40,092	      $ (1,390)	    (3.5%)
Datacom                   	9,225         	6,628          	2,597     	39.2%
Industrial                	3,683	         3,718           	(35)     	(.9%)
Consumer	                  1,402	         1,673	          (271)   	(16.1%)
Aerospace/Defense	         3,504         	4,632	        (1,128)   	(24.3%)
                        	_______	       _______	        _______	   _______
Total	                  $ 56,516      	$ 56,743       	$  (227)       	.4%
                        	=======	       =======	        =======	   =======


Gross Profit

Gross profit increased to 10.3% of sales, or $5.8 million, for the six months 
ended February 26, 1999.  As reflected in the table below, Micro Products 
grossed a $6.7 million loss.  The combined Materials and Interconnect business 
units' gross profit increased $3.1 million to $12.5 million, or 22.4%, of 
sales.  The improved performance is due to savings realized in production 
labor as well as more effective cost management of factory costs.

	Six Months Fiscal 1999	Six Months Fiscal 1998

        	Interconnect	 Micro   	 Total	 Interconnect  	Micro	    Total
	         & Material 	Products	 Company	 & Materials 	Products 	Company
(In millions)

Sales      	$55,881   	$ 635   	$56,516   	$56,275    	$  468  	$56,743
Cost of 
   sales    	43,361	   7,336	    50,697	    46,864	     7,172	   54,036
Gross 
   profit   	12,520	 (6,701)     	5,819	     9,411	   (6,704)    	2,707

% of sales	   22.4%	     N/A	     10.3%	     16.7%	       N/A	     4.8%

Sales and marketing expense decreased $164,000, or 3.3%, from $4.9 million for 
the six months ended February 27, 1998, to $4.8 million for the six months 
ended February 26, 1999.  Decreases in travel, advertising and other expenses 
accounted for the decline in expenses.

General and administrative expenses decreased $184,000, or 4.7%, from $3.9 
million for the six months ended February 27, 1998, to $3.8 million for the 
six months ended February 26, 1999.  Increases in staff salaries and 
depreciation expense related to the new computer based systems were more than 
offset by a decrease in expenditures for consulting, communications and 
software.

Research and development expenses decreased $749,000, or 37.4%, from $2.0 
million for the six months ended February 27, 1998, to $1.3 million for the 
six months ended February 26, 1999.  This decline relates to the transition of 
resources out of research and development to direct support production in the 
Company's Longmont facility.  A decline in salaries, research materials and 
supplies plus travel account for the major portion of the reduction.

Interest costs and activities for the noted periods are detailed below (in 
thousands):

                        Six Months Ended	       Six Months Ended
                       	February 26, 1999	      February 27, 1998  	Change

Gross interest expense	       $ 1,719	               $ 1,922       $ (203)
Capitalized interest	           (732)	                 (800)           	68
                             	_______	               _______	      _______
Net interest                	 $   987               	$ 1,122	      $ (135)
                             	=======	               =======	      =======

During the current six months, lower borrowings accounted for the decrease in 
gross interest costs.  At February 27, 1998, total borrowings were $54.0 
million, while at February 26, 1999 total borrowings were reduced to $35.7 
million.  Higher interest rates charged by the Company's lenders prevented 
greater cost savings.

In February 1999, the Company recorded a charge of $3.1 million to reserve for 
the separation costs incurred in reducing its salaried work force.  The 
Company continues to realize benefits from streamlining its business 
processes.  The restructuring costs provide for approximately $1.7 million for 
severance costs and approximately $1.4 million for medical, dental and other 
benefits being provided to the affected individuals.  Approximately 53 people 
are affected by this action. These new restructuring costs are in addition to 
the $8.5 million of similar costs charged to operations in fiscal 1998 ($4.0 
million in the second quarter ended February 27, 1998 and $4.3 million in the 
third quarter ended May 29, 1998). 

In February 1998, a restructuring charge of $4.0 million was recorded related 
to the culmination of the Company's business process design initiative that 
began two years ago.  Due to significant productivity benefits resulting from 
the initiative, the Company reduced the size of its salaried workforce.  The 
resulting workforce reduction involved layoffs, early retirement offerings, 
reassignments and reclassifications of positions.  The restructuring costs 
provided for approximately $2.5 million for severance and early retirement 
salary costs, approximately $1.3 million for medical, dental and other 
benefits being provided to the affected individuals, and approximately $0.2 
million for outplacement and other costs.
 
As of February 26, 1999, the Company's restructuring reserve was $6.8 million. 
In total, for all restructuring costs recorded at February 26, 1999, the 
Company expects to make cash outlays of $2.8 million during the last six 
months of fiscal 1999 and $2.6 million for all of fiscal 2000.  The remaining 
$1.4 million of restructuring costs are expected to be paid out over the ten 
years beginning in fiscal 2001.  During the six months ended February 26, 
1999, the Company paid $3.4 million of restructuring expenses relating to 
reserves charged to operations in fiscal 1998.

Income taxes were applied at 34% in the six months ended February 27, 1998.  
No income taxes were applied in the current period as the Company provides 
allowances for all of its net deferred tax assets.  Dividends on preferred 
stock were $1.1 million for the six months ended February 26, 1999, up 
$713,000 from the $359,000 figure for the six months ended February 27, 1998. 
The $32.9 million Series D preferred stock issued in July of 1998 accounted 
for this increase.  As a result, net loss to common shareholders for the six 
months ended February 26, 1999 was $9.1 million, or $0.84 per share.  This 
compares with a loss per share before changes of method of accounting of $0.97 
for the six months ended February 27, 1998.
<PAGE>


SHELDAHL, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED OPERATING RESULTS AND FINANCIAL CONDITION

Three Months Ended February 26, 1999 and February 27, 1998

Sales

The Company's net sales increased $291,000, or 1.1%, from $27.8 million for 
the three months ended February 27, 1998 to $28.0 million for the three months 
ended February 26, 1999.  The automotive market sales for the three months 
ended February 26, 1999 decreased 6% to $18.6 million. This decline represents 
weaker than anticipated orders during the mid-December 1998 to mid-January 
1999 period plus continued price pressure within the industry.

Sales to the datacom market increased $2.2 million, or 73%, for the three 
months ended February 26, 1999 to $5.3 million. Sales of the Company's new 
Novaflexr VHD product accounted for $1.5 million of the increase.  Sales to 
all other markets reflect a decrease of 16%, or $780,000.

The table below details the Company's sales by market for the period (in 
thousands):

          		Three Months Ended	 Three Months Ended
	Market    	February 26, 1999	  February 27, 1998  	Gross Change  	% Change

Automotive    	  $ 18,621	          $ 19,795        	$ (1,174)     	(5.9%)
Datacom	            5,303             	3,058	            2,245	      73.4%
Industrial	         1,559             	1,678            	(119)	     (7.1%)
Consumer             	646             	1,090	            (444)    	(40.7%)
Aerospace/Defense	  1,913             	2,130            	(217)    	(10.2%)
                 	_______	           _______	          _______	    _______
Total	           $ 28,042          	$ 27,751       	  $    291	       1.1%
                 	=======	           =======          	=======	    =======


Gross Profit

Gross profit increased to 11.1% of sales, or $3.1 million for the three months 
ended February 26, 1999.  As reflected in the table below, the Micro Products 
business gross loss decreased by 10%, or $359,000, to $3.0 million.  Less 
depreciation and salaried expenses are the primary cause of this improvement. 
The combined Materials and Interconnect business units' gross profit increased 
to $6.1 million, or 22.3% of sales.  The improved performance is due to 
savings realized in production labor as well as more effective cost management 
of factory costs.

         	Three Months Fiscal 1999	          Three Months Fiscal 1998

      	Interconnect	  Micro    	 Total	  Interconnect	   Micro     	Total
       	& Material  	Products	  Company	  & Materials  	Products  	Company
(In millions)

Sales    	$27,551    	$  491   	$28,042    	$27,507     	$  244   	$27,751
Cost of 
   sales  	21,411	     3,519	    24,930	     23,553	      3,631	    27,184
Gross 
   profit  	6,140   	(3,028)     	3,112	      3,954	    (3,387)       	567

% of sales 	22.3%	       N/A	     11.1%      	14.4%        	N/A        	2%

Sales and marketing expenses remained level at $2.5 million for the three 
months ended February 26, 1999 compared to the same period one year ago.  
Increases in outsourced computer design expenses were offset by declines in 
salaries and travel.

General and administrative expenses decreased $261,000, or 12%, from $2.1 
million for the three months ended February 27, 1998, to $1.8 million for the 
three months ended February 26, 1999.  Increases in depreciation were offset 
by declines in salaries, consulting expense and office expense.

Research and development expenses decreased $391,000, or 36%, from $1.1 
million for the three months ended February 27, 1998, to $679,000 for the 
three months ended February 26, 1999. This decline relates to the transition 
of resources out of research and development to direct support production in 
the Company's Longmont facility.  A decline in salaries, research materials 
and supplies, and travel account for a major portion of the reduction.

Interest costs and activities for the noted period are detailed below (in 
thousands):

                    	Three Months Ended	   Three Months Ended
                     	February 26, 1999    	February 27, 1998	   Change

Gross interest expense	    $   921              	$ 1,062        	$ (141)
Capitalized interest        	(257)                	(453)            	196
                          	_______	              _______	        _______
Net interest              	$   664	              $   609        	$    55
                          	=======	              =======	        =======

During the current quarter, lower borrowings accounted for the decrease in 
gross interest costs. At February 27, 1998, total borrowings were $54.0 
million, while at February 26, 1999, total borrowings were $35.7 million.  
Higher interest rates charged by the Company's primary lenders prevented 
greater cost reduction in interest expense.  Fewer projects in process account 
for the decline in capitalized interest.

	In February 1999, the Company recorded a charge of $3.1 million to reserve for 
the separation costs incurred in reducing its salaried work force.  The 
Company continues to realize benefits from streamlining its business 
processes.  The restructuring costs provide for approximately $1.7 million for 
severance and early retirement salary costs, approximately $1.4 million for 
medical, dental and other benefits being provided to the affected individuals. 
Approximately 53 people are affected by this action. These new restructuring 
costs are in addition to the $8.5 million of similar costs charged to 
operations in fiscal 1998 ($4.0 million in the second quarter ended February 
27, 1998 and $4.3 million in the third quarter ended May 29, 1998).

As of February 26, 1999, the Company had remaining restructuring reserves of 
$6.8 million.  In total, for all restructuring costs recorded at February 26, 
1999, the Company expects to make cash outlays of $2.8 million during the last 
six months of fiscal 1999 and $2.6 million for all of fiscal 2000.  The 
remaining $1.4 million of restructuring costs are expected to be paid out over 
the ten years beginning in fiscal 2001.

In February 1998, a restructuring charge of $4.0 million was recorded related 
to the culmination of the Company's business process design initiative that 
began two years ago.  Due to significant productivity benefits resulting from 
the initiative, the Company reduced the size of its salaried workforce.  The 
resulting workforce reduction involved layoffs, early retirement offerings, 
reassignments and reclassifications of positions.  The restructuring costs 
provide for approximately $2.5 million for severance and early retirement 
salary costs, approximately $1.3 million for medical, dental and other 
benefits being provided to the affected individuals, and approximately $0.2 
million for outplacement and other costs.

No taxes were applied in the three months ended February 26, 1999 as 
allowances against all of the Company's net deferred tax assets have been 
recorded.  Last year, income taxes were applied at 34% reflecting a tax 
benefit of $3.5 million.  Convertible preferred stock dividends increased to 
$418,000 for the three months ended February 26, 1999.  This increase is due 
to the Series D preferred stock issued in July of 1998.  As a result, net loss 
to common shareholders for the three months ended February 26, 1999, was $6.1 
million, or $0.55 per share. This compares to a net loss of $6.4 million, or 
$0.36 per share, for the three months ended February 27, 1998.


Financial Condition and Cash Flow

Since the end of fiscal 1998, the Company's financial condition has 
strengthened.  The Company's Interconnect and Materials businesses have 
registered improved operating results while the Micro Products business has 
managed costs and is vigorously pursuing volume orders.  In February of 1999, 
the liquidity of the Company was enhanced with the $8.56 million preferred 
stock equity placement.  As a result, the Company's lenders have removed the 
requirement that the Company raise additional equity funds as part of its 
Credit and Security Agreement.  As of March 26, 1999, the Company had $10.1 
million outstanding on its revolving credit note and had an additional $8.6 
million available to borrow.  The Company expects, with anticipated growth in 
revenue during the third and fourth quarters of fiscal 1999, to generate 
sufficient cash flow from operations to fund restructuring payments ($2.8 
million), term debt obligations ($2.0 million) and modest capital spending 
($1.5 million to $2.0 million per quarter).  These are all within the 
borrowing limits of the existing Credit and Security Agreement with its 
lenders.

For the first six months of fiscal 1999, operations consumed cash of $4.3 
million.  Net of $3.4 million of restructuring payments, operations generated 
a negative cash flow of $0.9 million, an improvement of $1.7 million over the 
six months ended February 27, 1998.   This improvement was due to increased 
gross profits offset by increased inventories and accounts receivables.  The 
increase in receivables is attributable to increased sales during the last 
four weeks of the current period.  Inventories increased to support a higher 
level of customer orders in the coming quarter.


Equity Transactions

During February 1999, the Company issued 7,210 share of Series E convertible 
preferred stock.  As of February 26, 1999, the Company had received cash of 
$5,515,000 relating to the issuance of the stock and the Company received the 
remaining $1,695,000 by March 5, 1999.  By March 8, 1999, the Company had 
issued additional 1,350 shares of Series E convertible preferred stock and 
received the related proceeds of $1,350,000.  The investors were also issued 
warrants to purchase a total of 85,600 shares of Common Stock of the Company 
at $7.8125 per share.  The warrants are exercisable for a period of five 
years.  Additionally, during the quarter ended February 26, 1999, 231,336 
shares of common stock were issued upon the conversion of 1,097 shares of 
Series B convertible preferred stock.  

As of March 31, 1999, the Company's equity structure is summarized as follows:

A. 11,152,588 common shares outstanding.

B. $32,917,000 in stated value of Series D 5% convertible preferred stock, 
with a fixed conversion price of $6.15 per share and dividends payable in 
cash or in common stock annually on each July 1.  Accrued but unpaid 
dividends are also due upon the conversion of such preferred shares.

C. $8,560,000 in stated value of Series E 5% convertible preferred stock with 
a fixed conversion price of $6.25 per share and dividends payable in cash 
or in common stock annually on each March 1. Accrued but unpaid dividends 
are also due upon the conversion of such preferred shares.

D. $167,000 in stated value of Series B 5% convertible preferred stock with a 
floating conversion price estimated to be $6.30 per share as of March 17, 
1999 and dividends payable in cash or in common stock at conversion.

On February 26, 1999, the Company had accrued approximately $990,000 in 
total dividends on these groups of preferred stock.


Year 2000 Update

The Year 2000 issue is the result of computer programs being written using two 
digits rather than four to define the applicable year. The Company's computer 
equipment, software, devices and products with imbedded technology that are 
time-sensitive may recognize a date using "00" as the year 1900 rather than 
the year 2000. This could result in a system failure or miscalculations 
causing disruptions of operations, including, among other things, a shut down 
in the Company's manufacturing operations, a temporary inability to process 
transactions, send invoices or engage in similar normal business activities.

State of Readiness.  The Company has undertaken various initiatives to 
evaluate the Year 2000 readiness of the products sold by the Company 
("Products"), the information technology systems used in the Company's 
operations ("IT Systems"), its non-IT systems, such as power to its 
facilities, HVAC systems, building security, voicemail and other systems, as 
well as the readiness of its customers and suppliers.  The Company has 
identified eleven Year 2000 target areas that cover the entire scope of the 
Company's business and has internally established teams committed to 
completing an 8-step Compliance Validation Process ("CVP") for each target 
area.  Each team is expected to fully complete this process on or before 
September 1, 1999.  The table below identifies the Company's target areas as 
well as the 8-step CVP with its expected timeline.  Sheldahl's Y2K teams are 
either complete or near complete with Phase 1 of this process and progressing 
with Phase 2 remediation activities.

Year 2000 Target Areas
_______________
1. Business Computer Systems
2. Technical Infrastructure
3. End-User Computing
4. Manufacturing Equipment
5. Test Lab
6. Telecommunications
7. Research and Development
8. Logistics
9. Facilities
10. Customers
11. Suppliers/Key Service Providers

Compliance Validation Process:
Phase 1 - Expected Completion April 30, 1999
_______________
1. Team Formation
2. Inventory Assessment
3. Compliance Assessment
4. Risk Assessment

Phase 2 - Expected Completion September 1, 1999
_______________
1. Resolution/Remediation
2. Validation
3. Contingency Plan
4. Sign-Off Acceptance

With respect to the Company's relationships with third parties, the Company 
relies both domestically and internationally upon various vendors, 
governmental agencies, utility companies, telecommunications service 
companies, delivery service companies and other service providers. Although 
these service providers are outside the Company's control, the Company has 
mailed letters to those with whom it believes its relationships are material 
and has verbally communicated with some of its strategic customers to 
determine the extent to which interfaces with such entities are vulnerable to 
Year 2000 issues and whether products and services purchased from or by such 
entities are Year 2000 ready.  In February 1999 the Company initiated a 
Business Partner Assessment Program focused on evaluating customers and 
suppliers Year 2000 readiness to identify third parties that imposed 
significant risk on Sheldahl.  The Company intends to complete follow-up 
activities, including but not limited to site surveys, phone surveys, mailings 
and remediation assistance, with identified third parties as part of the Phase 
2 validation.  

Costs to Address Year 2000 Issues.  To date, the Company has not incurred any 
material expenditures in connection with identifying or evaluating Year 2000 
compliance issues.  The Company has incurred the majority of its costs from 
the recent installation of a business computer system consisting primarily of 
the Enterprise Requirements Planning (ERP) System as well as the opportunity 
cost of time spent by employees of the Company evaluating Year 2000 compliance 
matters generally.  Because the Company did not accelerate the installation of 
the ERP System, it does not consider the costs related thereto to be charges 
for Year 2000 compliance.  Presently, the Company estimates for the cost of 
Year 2000 upgrades and enhancements to its IT Systems and non-IT Systems to be 
less than $100,000. The Company anticipates that these costs will be contained 
within the Company's fiscal 1999 budget.  At this time, the Company does not 
possess information necessary to estimate the potential financial impact of 
Year 2000 compliance issues relating to its vendors, customers and other third 
parties.  Such impact, including the effect of a Year 2000 business 
disruption, could have a material adverse impact on the Company's financial 
condition and results of operations. 

Risks of Year 2000 Issues.  Because the Company is still in the discovery and 
evaluation phase of assessing its overall Year 2000 exposure, it cannot at 
this time state with certainty that the Year 2000 issues will not have a 
material adverse impact on its financial condition, results of operations and 
liquidity.  Although the Company considers them unlikely, the Company believes 
that the following several situations, not in any particular order, make up 
the Company's "most reasonably likely worst case Year 2000 scenarios":  

1.  Disruption of a Significant Customer's Ability to Accept Products or 
Pay Invoices. 

The Company's significant customers are large, well-informed customers, 
mostly in the automotive field, who are disclosing information to their 
vendors that indicates they are well along the path toward Year 2000 
compliance.  These customers have demonstrated their awareness of the 
Year 2000 issue by issuing requirements of their suppliers and 
indicating the stages of identification and remediation which they 
consider adequate for progressive calendar quarters leading up to the 
century mark.  The Company's significant customers, moreover, are 
substantial companies that the Company believes would be able to make 
adjustments in their processes as required to cause timely payment of 
invoices.  Because of lengthy lead times in the industry, disruption of 
orders from the Company is not likely a problem.  Any deliveries 
occurring in the first half of 2000 will be those resulting from orders 
placed in 1999, while any disruptions of the order process early in 2000 
will concern deliveries made many months later, with adequate 
opportunity for correction (or manual handling) of the order process 
before the timing becomes critical.

2.  Disruption of Supply Materials.  

Recently, the Company began a process of surveying its vendors for 
public disclosures in regards to their Year 2000 readiness and is now in 
the process of assessing and cataloging these disclosures. The Company 
expects to work with vendors that provide inadequate disclosures or show 
a need for remediation assistance.  Where ultimate survey results show 
that the need arises, the Company will arrange for back-up vendors 
before the changeover date.

3.  Disruption of the Company's IT Systems.  

The Company is proceeding with a scheduled upgrade of its current 
hardware and software IT systems to state-of-the-art systems and such 
process has required Year 2000 compliance in the various invitations for 
proposals.  Year 2000 testing is occurring as upgrades proceed and, in 
addition, will occur after all upgrades are complete, sometime during 
fiscal 1999.  For this reason, the Company considers that disruption of 
its IT Systems is unlikely. 

4.  Disruption of the Company's Non-IT Systems.  

The Company is completing a comprehensive assessment of all non-IT 
systems, including among other things its manufacturing systems and 
operations, with respect to both embedded processors and obvious 
computer control.  For some systems, upgrades are already completed or 
scheduled, and the remaining non-compliant systems remediation needs are 
being planned.  Considering the nature of the equipment and systems 
involved, the Company expects to complete any remediation efforts on a 
reasonably short schedule, and in any case before arrival of the Year 
2000.  The Company also believes that, after such assessment and 
remediation, if any disruptions do occur, such will be dealt with 
promptly and will be no more severe with respect to correction or impact 
than would be an unexpected breakdown of well-maintained equipment.

5.  De-Listing of Company as a Vendor to Certain Customers.  

Several of our principal customers, through the intermediary of an 
automotive industry information agency, have required updated reports in 
the form of answers to an extensive multiple-choice survey on our Year 
2000 compliance efforts.  According to these customers, failure to reply 
to the readiness survey would have led to de-listing as a supplier at 
the present time, resulting in possible current inability to bid on 
procurements requiring deliveries two years or more in the future.  
Although we did respond to these reports on a timely basis, the 
substance of our answers to the readiness surveys have placed Sheldahl 
in a "red" or "danger" zone with respect to those customers' 
guidelines.  One of our two largest customers involved in the efforts of 
the independent audit agency had also already presented a survey 
directly to Sheldahl, and as a result had arranged at its own expense 
for an independent audit of our Year 2000 readiness.  The independent 
audit agency had reported, in the third quarter of fiscal 1998, that 
although Sheldahl's level of readiness placed us in the "red" or 
"danger" category, we (i) were proceeding rapidly with its evaluation 
and remediation efforts, (ii) were expected to reach the ultimate 
compliance goals of the survey in adequate time, and (iii) should not be 
considered a risk to the customer's sources of supply. In December 1998, 
Sheldahl was re-audited by a Remediation Assistance Program consultant 
on behalf of this customer.  At the conclusion of this audit the 
consultant recommended that Sheldahl's Year 2000 Readiness be upgraded 
to a "medium level of risk" from the previous high level of risk 
("red zone").  Furthermore, the consultant noted that in reviewing 
Sheldahl's "Y2K plan against the goals of the remediation assistance 
process, the assessor could not find any gaps or areas of recovery that 
were not covered or considered."  We expect but cannot guarantee that 
responses from other customers will be similar.  In addition, we do not 
know whether other customers' expectations will or will not be as 
stringent as those referred to above and whether our current schedule 
will meet or exceed such expectations. 

	Contingency Plans.  While we recognize the need for contingency 
planning, we have not yet developed any specific contingency plans for 
potential Year 2000 disruptions.  The aforementioned 8-step Compliance 
Validation Process, however, does include contingency planning by each team 
and we will review such plans as developed.  We do anticipate developing 
contingency plans for our most critical areas, but details of such plans will 
depend on our final assessment of the problem as well as the evaluation and 
success of our remediation efforts.  Future disclosures will include 
contingency plans as they become available.


Foreign Currency Exposure

During fiscal 1998, the Company's exposure to foreign currency risk declined 
as two large programs were converted to the United States Dollar.  The Company 
maintains a very limited exposure to foreign currency risk with smaller 
programs contracted in British Sterling, German Marks and French Francs.  
These contracts and the exchange rate are reviewed periodically.  

Beginning January 1, 1999, the Euro, the new European currency, will be used 
commercially.  As of February 26, 1999, none of the Company's customers or 
suppliers has suggested pricing any contracts in Euro.  However, in order to 
remain competitive, the Company anticipates pricing certain contracts in Euro 
and has systems in place to support such contracts by converting foreign 
currency transactions to six decimal places.  When warranted by the size of 
foreign currency contracts, the Company will use a variety of hedging 
techniques, including financial derivatives, to prudently reduce, but not 
eliminate, its exposure to foreign currency fluctuations.  No such contracts 
existed as of February 26, 1999.


New Accounting Pronouncements

During June 1997, the Financial Accounting Standards Board released SFAS No. 
131, "Disclosures about Segments of an Enterprise and Related Information," 
effective for fiscal years beginning after December 15, 1997.  SFAS No. 131 
requires disclosure of business and geographic segments in the consolidated 
financial statements of the Company.  The Company will adopt SFAS No. 131 in 
its fiscal 1999 Form 10-K and is currently analyzing the impact it will have 
on the disclosures in its financial statements.

During February 1998, the Financial Accounting Standards Board issued SFAS No. 
132, "Employers' Disclosures about Pensions and Other Postretirement 
Benefits," effective for fiscal years beginning after December 31, 1997.  
SFAS No. 132 revises certain of the disclosure requirements, but does not 
change the measurement or recognition of those plans.  The adoption of SFAS 
No. 132 will result in revised and additional disclosures, but will have no 
effect on the financial position, results of operations, or liquidity of the 
Company. The Company will adopt SFAS No. 132 in fiscal 1999 and is currently 
analyzing the impact it will have on the disclosures in its financial 
statements.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, 
"Accounting for Derivative Instruments and hedging Activities," effective 
for years beginning after June 15, 1999.  SFAS No. 133 establishes accounting 
and reporting standards requiring that every derivative instrument, including 
certain derivative instruments embedded in other contracts, be recorded in the 
balance sheet as either an asset or liability measured at its fair value.  
SFAS No. 133 requires that changes in the derivative's fair value be 
recognized currently in earnings unless specific hedge criteria are met.  
Special accounting for qualifying hedges allow a derivative's gains or losses 
to offset related results on the hedged item in the income statement and 
requires that a company must formally document, designate and assess the 
effectiveness of transactions that receive hedge accounting.  The Company has 
not yet quantified the impacts of adopting SFAS No. 133 and has not yet 
determined the timing or method of adoption. 


Cautionary Statement

The statements included herein which are not historical or current facts are 
"forward-looking statements" made pursuant to the safe harbor provisions of 
the Private Securities Reform Act of 1995.  Factors which could cause actual 
results to differ materially from those anticipated by some of the statements 
made herein include, but are not limited to, the Company's ability to achieve 
full volume production at its Micro Products facility and other factors 
detailed from time to time in the Company's SEC reports, including the report 
on Form 10-K for the year ended August 27, 1998.
<PAGE>


PART II - OTHER INFORMATION


SHELDAHL, INC. AND SUBSIDIARY
FORM 10-Q


Item 2.	Changes in Securities and Use of Proceeds

	On February 17, 1999, the Board of Directors of Sheldahl, Inc., a 
Minnesota corporation (the "Company"), ratified and approved a private 
placement of its newly created Series E Convertible Preferred Stock, 
$1.00 par value per share, and Warrants (the "Warrants") to purchase 
shares of the Company's Common Stock, $0.25 par value per share (the 
"Preferred Stock"), to a group of accredited investors (the 
"Investors").  The Board also authorized granting the Investors 
certain registration rights with regard to the shares of Common Stock 
underlying the Preferred Stock and the Warrants.  The closing of the 
private placement of $7,210,000 occurred on February 26, 1999, with an 
additional $1,350,000 funded on March 8, 1999.  Based on the manner of 
sale and representations of the Investors, all of which were accredited, 
the Company believes that pursuant to Rule 506 of Regulation D, the 
private placement was a transaction not involving any public offering 
within the meaning of section 4(2) of the Securities Act of 1933, as 
amended, and was, therefore, exempt from the registration requirements 
thereof.

The Company sold an aggregate of 8,560 shares of the Preferred Stock to 
the Investors for an aggregate purchase price of $8,560,000 pursuant to 
the Convertible Preferred stock Purchase Agreement among the Company and 
the Investors (the "Agreement").

The Preferred Stock is entitled to 5% dividends, payable annually, in 
shares of Common Stock or cash, at the option of the Company.  The 
Preferred Stock is convertible into shares of the Company's Common Stock 
at any time.  Each holder of Preferred Stock is entitled to convert 
shares of the Company's Preferred Stock into that number of shares of 
Common Stock that equals $1,000 plus accrued dividends divided by the 
Conversion Price.  The Conversion Price is $6.25 per share.  The 
Conversion Price is subject to adjustment for certain dilution and 
market price events.

The Company may require holders of Preferred Stock to convert to Common 
Stock provided that the Company's Common Stock trades at certain pre-set 
price levels.

The Agreement between the Company and the Investors, and the Certificate 
of Designation for the Preferred Stock, are incorporated herein by 
reference as Exhibits 4.1 and 4.2 to the Company's Current Report on 
Form 8-K filed March 9, 1999.

Warrants

In connection with the issuance of the Preferred Stock, the Company also 
granted to each Investor a Warrant to purchase shares of the Company's 
Common Stock.  The aggregate amount of shares of Common Stock the 
Company is obligated to issue under the Warrants is 85,600 at an 
exercise price of $7.8125 per share.  The Warrants are exercisable for a 
period of five years.  The form of Warrant issued by the Company to the 
Investors is incorporated herein by reference as Exhibit 4.3 to the 
Company's Current Report on Form 8-K filed March 9, 1999.

Registration Rights

The Company granted the Investors certain registration rights.  The 
registration rights cover all shares of Common Stock issuable to the 
Investors (i) upon conversion of shares of the Preferred Stock, (ii) as 
accrued dividends on the Preferred Stock, and (iii) upon exercise of the 
Warrants.  The Company is obligated to file a shelf Registration 
Statement on Form S-3.

The Registration Rights Agreement between the Company and the Investors 
specifying the terms of the registration rights is incorporated herein 
by reference as Exhibit 4.4 to the Company's Current Report on Form 8-K 
filed March 9, 1999.

Use of Proceeds

The proceeds from the private placement were used by the Company to 
improve the Company's liquidity position.  The Company will not receive 
any proceeds from the resale of the shares of Common Stock issuable to 
the Investors upon conversion of the Preferred Stock.  If the Warrants 
issued to the Investors are exercised in full, the Company will receive 
$668,750.  Such amount is intended to be used by the Company for working 
capital purposes.  There can be no assurance, however, that the Warrants 
will be exercised.


Item 4. Submission of Matters to a Vote of Security Holders

	The Annual Meeting of the shareholders of Sheldahl, Inc. was held on 
January 13, 1999.  There were 10,890,792 shares of common stock entitled 
to vote at the meeting and a total of 9,637,084 shares were represented 
at the meeting.

1.  A proposal was made to ratify and approve the issuance of Common 
Stock upon conversion of shares of the Company's Series B Convertible 
Preferred Stock in compliance with the rules of the Nasdaq National 
Market.  Shares were voted as follows:

   For 	       Against        	Abstain     	Broker Non-Vote

5,008,004	     138,952         	26,626        	4,463,502

2.  A proposal was made to ratify and approve an amendment to the 
Company's Amended and Restated Articles of Incorporation to increase 
the Company's authorized shares of Common Stock from 20,000,000 to 
50,000,000.  Shares were voted as follows:

   For	        Against         	Abstain

9,288,134	      316,400	        32,549

3.  Nine directors were elected at the meeting to serve for one year or 
until their successors are elected and qualified.  Shares were voted 
as follows:

                      		   For      	Against

	James E. Donaghy	      9,431,509   	205,574
	John G. Kassakian	     9,490,741   	146,343
	Edward L. Lundstrom	   9,484,864	   152,220
	Gerald E. Magnuson	    9,486,570	   150,514
	Dennis M. Mathisen	    9,493,668	   143,415
	William B. Miller	     9,487,407	   149,677
	Kenneth J. Roering	    9,491,605	   145,479
	Raymond C. Wieser	     9,489,967	   147,117
	Beekman Winthrop	      9,490,457	   146,627

4.  A proposal was made to approve the selection of the Company's 
independent public accountants for the current fiscal year.  Shares 
were voted as follows:

    For	         Against       	Abstain

9,577,655        	24,946	       34,481


Item 6.	Exhibits and Reports on Form 8-K

A) Exhibits

3.1 Amended and Restated Articles of Incorporation of 
Sheldahl, Inc.

10.1 	Second Amendment to the Credit and Security Agreement, 
dated March 4, 1999 between the Company and Norwest Bank 
Minnesota, N.A., Harris Trust and Savings Bank, The First 
National Bank of Chicago, and The CIT Group.

10.2 Third Amendment to the Credit and Security Agreement, 
dated April 5, 1999 between the Company and Norwest Bank 
Minnesota, N.A., Harris Trust and Savings Bank, The First 
National Bank of Chicago, and The CIT Group.

10.3 Consulting Agreement, dated December 31, 1998, between 
the Company and James E. Donaghy.

10.4 Waiver and Amendment with Addendum to the note Purchase 
Agreement between the Registrant and Northern Life 
Insurance Company dated March 31, 1999.

27	Financial Data Schedule

B)	Reports on Form 8-K

Form 8-K filed on January 15, 1999 regarding Item 5, Other 
Events.
<PAGE>

	SIGNATURES


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.


SHELDAHL, INC.
(Registrant)


Dated: April 9, 1999         	By	/s/ Edward L. Lundstrom
                            		President and Chief Executive Officer


Dated: April 9, 1999	         By	/s/ Jill D. Burchill
                            		Vice President
                            		Chief Financial Officer


Dated: April 9, 1999	         By	/s/ John V. McManus
                             	Vice President Finance
<PAGE>