APPLIED SIGNAL TECHNOLOGY, INC. ANNOUNCES THE APPOINTMENT OF ROBERT RICHARDSON TO THE BOARD OF DIRECTORS AND DECLARES DIVIDEND FOR SHAREHOLDERS

Sunnyvale, CA. Thursday, March 4, 2003 – Applied Signal Technology, Inc. (NASDAQ - APSG) announced that Mr. Robert Richardson has been appointed to the Company’s Board of Directors. Mr. Richardson was Chairman and Chief Executive Officer of Unitrode Corporation, a publicly traded semiconductor company, which he successfully sold to Texas Instruments, Inc. in 2000. From June 1992 to November 1997, Mr. Richardson was President of SVG Lithography (formerly Perkin-Elmer) in Connecticut, and the Vice President, New Business Development and Corporate Marketing for Silicon Valley Group. Mr. Richardson currently serves as a director of Genus, Inc. a manufacturer of critical deposition processing products for the global semiconductor industry and the data storage industry.

The Company also announced that it has declared a $0.25 per share dividend payable to shareholders over the next twelve months. The dividend is payable quarterly at the rate of $0.0625 per share. The first quarterly dividend will be payable on May 16, 2003 to shareholders of record on May 2, 2003. Thereafter, the remaining dividends will be payable on August 15, 2003, November 14, 2003 and February 14, 2004 to shareholders of record at August 1, 2003, October 31, 2003, and January 30, 2004, respectively.

Regarding the recent events, Mr. Gary Yancey, President and Chief Executive Officer, commented, “We are very pleased to have Bob Richardson join the Board of Directors. His management and commercial experience add a new dimension to our Board that we believe is helpful to the Company’s continued growth and development. Bob can offer valuable advice and insight from a CEO’s perspective that should help us as we continue to diversify into new government markets. Although, Applied Signal Technology is not planning to pursue commercial marketplaces, Bob’s business development viewpoint from a commercial perspective will be very valuable.”

Mr. Yancey went on to say, “It is the Board’s belief that the payment of dividends is an appropriate way to provide direct shareholder value. The Company’s strong and growing cash balances afford us the opportunity to provide this series of payments to our shareholders and still maintain a strong balance sheet with more than adequate cash reserves.”

Applied Signal Technology, Inc., designs, develops, manufactures and markets advanced digital signal processing equipment to collect and process a wide range of telecommunications signals for signal reconnaissance applications. For additional Company-related information, visit the Company’s 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. Statements as to beliefs concerning potential contract options, the Company’s ability to successfully complete the initial contract to position it to win future phases, whether or not the U.S. Government decides to procure subsequent phases, potential synergistic effects from working with other companies, and beliefs concerning contractual opportunities for further orders are forward-looking statements. These risks and uncertainties include whether these potential orders will be issued by the U. S. Government; whether the Company will be successful in obtaining contracts for these orders if they are forthcoming and when such orders may be forthcoming and awarded; whether the Company can successfully complete the initial contract and any options, if awarded; and other risks detailed from time to time in the Company’s SEC reports including its latest Form 10-K filed for the fiscal year ended October 31, 2002.