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 December 1, 1995  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 December 21, 1995, 8,846,246 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


                                                 Three Months Ended
                                              December 1,    December 2,
(in thousands, except for per share data)        1995          1994

Net sales                                       $26,097        $21,088
Cost of sales                                    20,410         16,688
                                                 ______         ______
Gross profit                                      5,687          4,400
                                                 ______         ______
Expenses:
     Sales and marketing                          2,221          2,275
     General and administrative                   1,170            864
     Research and development                       690            531
     Interest                                       383             19
                                                 ______         ______
          Total expenses                          4,464          3,689
                                                 ______         ______
Income before provision for income taxes          1,223            711

Provision for income taxes                        (365)          (192)
                                                 ______         ______
Net income                                        $ 858          $ 519
                                                 ======         ======
Net income per share                              $0.12          $0.08
                                                 ======         ======
Weighted average common shares and
   common share equivalents outstanding           7,257          6,838
                                                 ======         ======



                          SHELDAHL, INC.
                   CONSOLIDATED BALANCE SHEETS
                            Unaudited

                              ASSETS
(In thousands)                            December 1,   September 1,
                                            1995           1995
Current assets:
     Cash and cash equivalents                  $17,299        $ 1,045
     Accounts receivable, net                    17,920         17,637
     Inventories                                 11,843         12,509
     Prepaid expenses and other current assets    1,302            732
     Deferred tax assets                            650            849
                                                 ______         ______
          Total current assets                   49,014         32,772
                                                 ______         ______
     Construction in process                     37,867         32,654
     Plant and equipment, at cost                69,606         68,672
     Less: accumulated depreciation            (42,707)       (41,471)
                                                 ______         ______
          Net plant and equipment                64,766         59,855
                                                 ______         ______

     Other assets                                 1,499          1,559
                                                 ______         ______
                                               $115,279        $94,186
                                                 ======         ======
             LIABILITIES AND SHAREHOLDERS' INVESTMENT

Current liabilities:
     Current maturities of long-term debt       $ 5,429        $ 4,179
     Accounts payable                            10,331          9,113
     Accrued compensation                         1,354          1,262
     Other accruals                               2,162          1,886
                                                 ______         ______
          Total current liabilities              19,276         16,440

     Long-term debt                              21,972         33,864

     Other non-current liabilities                2,760          2,683

     Deferred taxes                                 372            247
                                                 ______         ______
     Shareholders' investment:
          Common Stock                            2,212          1,708
          Additional paid-in capital             50,896         22,311
          Retained earnings                      17,791         16,933
                                                 ______         ______
          Total shareholders' investment         70,899         40,952
                                                 ______         ______
                                               $115,279        $94,186
                                                 ======         ======

                 SHELDAHL, INC. AND SUBSIDIARY
             CONSOLIDATED STATEMENTS OF CASH FLOWS
                           Unaudited
                                
                                
                                                    Three Months Ended
(in thousands)                                December 1,     December 2,
                                                 1995             1994
Operating activities:
Net income                                       $   858         $   519
   Adjustments to reconcile net income
      to net cash provided by operating activities:
       Depreciation and amortization               1,456           1,037
       Deferred income tax provision                 324             161

   Net change in other operating activities:
       Accounts receivable                         (283)             112
       Inventories                                   666         (1,360)
       Prepaid expenses and other current assets   (570)           (120)
       Other assets                                   60           (464)
       Accounts payable and accrued liabilities    1,586             568
       Income taxes payable                            -             (3)
       Other non-current liabilities                  77            (21)
                                                  ______          ______
Net cash provided by operating activities          4,174             429
                                                  ______          ______
Investing activities:
   Capital expenditures, net                     (6,367)         (6,031)
   Net cash flows used in discontinued operation       -            (49)
                                                  ______          ______
Net cash used in investing activities            (6,367)         (6,080)
                                                  ______          ______
Financing activities:
   Borrowings (repayments) under revolving credit
      facilities, net                           (10,534)           4,169
   Repayments of long-term debt                    (108)            (65)
   Issuance of common stock                       29,089             198
                                                  ______          ______
Net cash provided by financing activities         18,447           4,302
                                                  ______          ______
Increase (decrease) in cash                       16,254         (1,349)
                                                  ______          ______
Cash at beginning of period                        1,045           2,008
                                                  ______          ______
Cash at end of period                            $17,299         $   659
                                                  ======          ======
Supplemental cash flow information:
   Income taxes paid                             $    31         $    34
                                                  ======          ======
   Interest paid                                 $   735         $   224
                                                  ======          ======
<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
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 last-in first-out cost
   or market, consists of (in thousands):

                                December 1, 1995    September 1, 1995

   Raw materials                      $ 3,170             $ 4,267
   Work-in-process                      5,847               5,649
   Finished goods                       3,930               3,663
   LIFO reserve                       (1,104)             (1,070)
                                       ______              ______
                                      $11,843             $12,509
                                       ======              ======
2) Debt and Finance

   The Company has a credit agreement with three banks consisting of a
   $15 million revolving note based on and secured by the Company's
   inventories and accounts receivable, and a $20 million term note
   collateralized by equipment.  Interest accrued on the revolving note
   at prime plus 1.5%; on the term note at prime plus 2.0%.  As of
   December 1, 1995, the Company had a zero balance on the revolving
   note.  The term note provides for quarterly payments of $1,250,000
   beginning January 1, 1996 with the remaining balance due December 31,
   1997.  As of December 1, 1995, the outstanding balance on the term
   note was $20,000,000 at 10.75% interest.  In addition, the Company has
   outstanding a $5.5 million note to Northern Life Insurance Company
   collateralized by the Company's land and buildings in Longmont,
   Colorado.  The note bears interest at 8.32% with monthly principal and
   interest payments of $52,000 with the remaining unpaid principal
   balance due September 1, 2002.

3) Consortium for the Development of Multi-Chip Module Laminates (MCM-L)

   On January 10, 1994, the Company entered into a Consortium Agreement
   sponsored by the Advanced Projects Research Agency (ARPA), a United
   States Government Agency.  The purpose of the Consortium is to
   accelerate the development and commercialization of the multi-chip
   module laminate (MCM-L).  As a Consortium member, the Company expects
   to receive approximately $11.2 million in funding over two years from
   ARPA to further test, design and develop the manufacturing processes
   for the Company's NOVACLAD  based products which are to be used in
   constructing multi-chip modules.  During the three months ended
   December 1, 1995, the Company incurred $1,043,000 in manufacturing,
   selling, research and development and administrative costs refunded
   by ARPA.  To date, the Company has received a total of $8,073,000 of
   funding through the Consortium.  As of December 1, 1995, the Company
   has recorded a $1,180,000 receivable from ARPA.

4) Common Stock Offering

   On November 21, 1995, the Company completed the offering of 2,021,500
   shares of common stock, with net proceeds to the Company of
   approximately $29.1 million.
<PAGE>


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

  Three Months Ended December 1, 1995 and December 2, 1994


Net sales increased $5,009,000 or 23.8% from $21,088,000 for the three
months ended December 2, 1994 to $26,097,000 for the three months ended
December 1, 1995.  Sales to the automotive market increased $5,833,000 or
49.2% from $11,851,000 for the three months ended December 2, 1994 to
$17,684,000 for the three months ended December 1, 1995.  The increase is
the result of continued demand for interconnect systems for engine 
control units, power distribution instrumentation, plus flexible materials
for airbags.  This demand resulted from the Company's continued efforts 
to position itself as a leading supplier of flexible circuits and
interconnects to the automotive electronics industry.  Sales to the
datacommunication market decreased $77,000 or 2.2% from $3,485,000 for 
the three months ended December 2, 1994 to $3,408,000 for the three 
months ended December 1, 1995. Aerospace/defense market sales decreased 
$852,000 or 32.9% from $2,590,000 for the three months ended December 2, 
1994 to $1,738,000 for the three months ended December 1, 1995.  The 
decline in the aerospace/defense market sales is principally due to 
the sale of the Company's Hoskins Aviation Lighting Product Line Division early
in the first quarter of fiscal 1996.  Industrial market sales increased 
$859,000 or 53.6% from $1,604,000 for the three months ended December 2, 
1994 to $2,463,000 for the three months ended December 1, 1995.  Consumer 
market sales decreased $754,000 or 48.4% from $1,558,000 for the three months
ended December 2, 1994 to $804,000 for the three months ended December 1,
1995, as sales of flexible interconnect to original equipment camera
manufacturers declined.

Gross profit increased $1,287,000 or 29.3% from $4,400,000 for the three
months ended December 2, 1994 to $5,687,000 for the three months ended
December 1, 1995.  Gross profit, as a percentage of sales, increased to
21.8% for the three months ended December 1, 1995 from 20.9% for the 
three months ended December 2, 1994.  Increased factory volume and 
continued improvements to manufacturing processes contributed to the 
increase in gross profit.

Expenses increased $775,000 or 21.0% from $3,689,000 for the three months
ended December 2, 1994 to $4,464,000 for the three months ended December
1, 1995.  As a percentage of sales, expenses decreased to 17.1% for the
three months ended December 1, 1995 from 17.5% for the three months ended
December 2, 1994.

Sales and marketing expenses decreased $54,000 or 2.4% from $2,275,000 
for the three months ended December 2, 1994 to $2,221,000 for the three 
months ended December 1, 1995.  Increased consulting and relocation 
expenses were offset by reductions in travel and proposal materials 
and sample costs.

Net general and administrative expenses increased $306,000 or 35.4% from
$864,000 for the three months ended December 2, 1994 to $1,170,000 for 
the three months ended December 1, 1995.  Gross general and 
administrative costs increased $195,000 or 17.8% from $1,097,000 for the 
three months ended December 2, 1994 to $1,292,000 for the three months 
ended December 1, 1995.  The increase was the result of increased legal 
and consulting costs relating to the China and Morton International joint 
ventures.  During the first quarter of fiscal 1995 and 1996, $233,000 
and $122,000, respectively, of ARPA credits were applied to general 
and administrative costs, decreasing gross expenses.  See Note 3 of 
the accompanying financial statements for additional information 
regarding ARPA. 

Research and development expenses increased $159,000 or 29.9% from
$531,000 for the three months ended December 2, 1994 to $690,000 for the
three months ended December 1, 1995.  Costs increased due to the 
resources required to complete full scale production of the Longmont, 
Colorado, production facility.  

Net interest expense increased by $364,000, or 19 times, from $19,000 for
the three months ended December 2, 1994 to $383,000 from the three months
ended December 1, 1995. Gross interest expense increased $682,000 or
301.8% from $226,000 for the three months ended December 2, 1994 to
$908,000 for the three months ended December 1, 1995.  The Company's
borrowings to support capital expenditures increased substantially 
causing the significant increase in interest cost.  Capitalized interest 
increased $318,000 or 153.6% from $207,000 for the three months ended 
December 2, 1994 to $525,000 for the three months ended December 1, 1995.
The increase in capitalized interest is the result of extensive capital
spending including the new production facility in Longmont, Colorado.

As the result of increased sales and improved gross margin performance,
income before provision for income taxes increased $512,000 or 72.0% from
$711,000 for the three months ended December 2, 1994 to $1,223,000 for 
the three months ended December 1, 1995.

For the current quarter, income taxes have been provided at an estimated
effective annual rate of 30%.  As a result, net income for the three
months ended December 2, 1994 was $519,000 or $0.08 per share and 
$858,000 or $0.12 per share for the three months ended December 1, 1995.

Financial Condition

The Company's cash requirements for the three months ended December 1,
1995 were satisfied through positive operating results and and 
borrowings. For the three months ended December 1, 1995, operating cash 
flows were $4.2 million and capital expenditures for the three months 
ended December 1, 1995 totaled $6.4 million.

On November 21, 1995, the Company completed a $29.1 million common stock
offering; $10.5 million of these funds were used to pay down the 
revolving credit note with the remaining $18.6 million invested in high 
grade short term interest bearing securities.  The Company will use these 
funds to finance its continuing capital expansion programs over the next 
several quarters.

As a result, working capital as of December 1, 1995 was $29,738,000, an
increase of $13,406,000 since September 1, 1995.  The Company's current
ratio increased to 2.5 to 1 compared to 2.0 to 1 at September 1, 1995.

In addition, as a result of the common stock offering, the Company 
expects its interest rates to decline  100 to 150 basis points, under the 
terms of its revolving credit agreement.
<PAGE>

PART II - OTHER INFORMATION


Item 6.    Exhibits and Reports on Form 8-K

       A)  Exhibits

           11    Statement regarding computation of earnings per share

           27    Financial data schedule

       B)  Reports on Form 8-K

           No reports on Form 8-K were filed by the Registrant during
           the quarter ended December 1, 1995.
<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:  January 12, 1996                By:  /s/ John V. McManus
<PAGE>