Applied Signal Technology, Inc.
Announces Fiscal Second Quarter Operating Results

—Second Quarter Revenues Increase 18% to $53.5 million—
—Second Quarter Earnings per Share Increase 94% to $0.31—

Sunnyvale, CA. June 2, 2009 - Applied Signal Technology, Inc. (NASDAQ - APSG) announced operating results for the second quarter and first six months of fiscal 2009, ended May 1, 2009. The Company reported revenues for the second quarter increased 18% to $53,500,000 compared to the year-ago period’s revenues of $45,284,000. Earnings per share during the second quarter increased by 94% to $0.31 versus the year-ago level of $0.16 per share.

William Van Vleet, President and Chief Executive Officer of Applied Signal Technology, Inc., commented, “We are continuing to see benefits from improvements in operations initiated last year, resulting in sustained improvements in profitability. Revenues are also increasing as a result of strong product sales with the launch of our new Model 680 Raider product and strong demand for our core broadband communications equipment.”

The Company’s operating income for the second quarter of fiscal 2009 increased by 128% to $6,455,000 as compared to $2,835,000 in the second quarter of fiscal year 2008. Similar to the first fiscal quarter, this improvement was driven by several factors, including increased profit from product sales, a reduction in stock-based compensation expense, and an increase in royalty revenue associated with the licensing of intellectual property into commercial satellite communications markets. The Company also noted that during the second quarter of fiscal 2008, earnings were reduced by approximately $0.06 per share due to recording inventory write-downs and accounts receivable reserves.

Revenues for the first six months of fiscal year 2009 were $98,884,000 representing a 12% increase when compared to revenues of $88,009,000 for the first six months of fiscal year 2008. Operating income for the first six months of fiscal 2009 increased by 132% to $12,103,000 as compared to $5,215,000 for the first six months of fiscal year 2008. Net income for the first six months of fiscal year 2009 was $7,589,000 or $0.58 per diluted share compared to the year-ago level of $3,503,000 or $0.28 per diluted share.

New orders received during the second quarter of fiscal year 2009 were $56,454,000 representing a 17% increase when compared to new orders of $48,150,000 received during the second quarter of fiscal year 2008. New orders for the first six months of fiscal year 2009 were $89,575,000 representing a 19% increase when compared to new orders of $75,039,000 for the same period of fiscal year 2008.

Mr. Van Vleet concluded, “We will continue to focus our energy on capturing organic growth opportunities in the rapidly developing intelligence, surveillance and reconnaissance (ISR) and cyber-security markets. We will also utilize the strategic advantages provided to us by our strong capital position to find new, complementary growth opportunities.”

Attached to this news release are condensed, consolidated statements of income, balance sheets and statements of cash flows for the second quarter and first six months of fiscal year 2009 ended May 1, 2009.

Conference Call
The Company will host a conference call on June 2, 2009 to discuss second quarter fiscal 2009 results. If you wish to participate in the conference call, please dial 1-877-407-8031 for domestic callers or 1-201-689-8031 for international callers on June 2, 2009 at 5:00 p.m. eastern time/2:00 p.m. pacific time. There is no pass code required. This call may be listened to simultaneously at the Web site www.InvestorCalendar.com. A rebroadcast of the call will be available upon its completion and will remain available for a limited time.

Applied Signal Technology, Inc. provides advanced intelligence, surveillance and reconnaissance (ISR) products, systems and services to enhance global security. For further information about Applied Signal Technology visit our website at www.appsig.com.

Except for historical information contained herein, matters discussed in this news release may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Statements as to future organic and new complimentary growth opportunities and the order opportunities available to us in the rapidly developing intelligence, surveillance and reconnaissance (ISR) and cyber-security markets are forward-looking statements. The risks and uncertainties associated with these statements include our ability to capture organic growth opportunities, our ability to utilize the strategic advantages of our strong capital position, whether orders will be issued by procurers, including the U. S. Government; the timing of any orders placed by procurers; whether we will be successful in obtaining contracts for these orders if they are forthcoming; whether any contracts obtained by us will be performed well and be profitable and whether any such contracts might be terminated prior to completion; whether we will be able to hire qualified staff as needed; and other risks detailed from time to time in our SEC reports including our latest Form 10-K filed for the fiscal year ended October 31, 2008. The Company assumes no obligation to update the information provided in this news release.

Applied Signal Technology, Inc.
Condensed Consolidated Statements of Income
(in thousands except per share data)

Applied Signal Technology, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

Applied Signal Technology, Inc.
Consolidated Statements of Cash Flows
Increase (decrease) in Cash
(in thousands)