APPLIED SIGNAL TECHNOLOGY, INC.
GRANTED DOUBLE TALK™
“ADAPTIVE CANCELLATION” PATENT

Sunnyvale CA. October 20, 2004 "Applied Signal Technology, Inc. (NASDAQ - APSG) announced that it was granted a U.S. patent for its Double Talk™ “Adaptive Cancellation” technology that allows full duplex satellite links to transmit concurrently in the same segment of transponder bandwidth. When properly deployed, this technology can provide significant bandwidth savings.

In addition, Applied Signal Technology has licensed its Double Talk™ “Adaptive Cancellation” technology to Comtech EF Data Corporation. This enables Comtech EF Data to integrate additional bandwidth savings functionality into its satellite modems. Comtech EF Data currently offers the Double Talk™ technology commercially packaged as Carrier-in-Carrier™. This added dimension results in a significant improvement in satellite transponder utilization to operators and users of satellite communications. When combined with Comtech EF Data’s advanced forward error correction and modulation techniques, Carrier-in-Carrier delivers unprecedented operating savings.

Regarding the patent and the licensing arrangement with Comtech EF Data, Mr. Gary Yancey, President and Chief Executive Officer of the Company, commented, “The Double Talk™ technology was developed by our wholly owned subsidiary, Transcendent Technologies. When we reintegrated this subsidiary into the company in 2001, we decided to continue the investment in this technology. We felt that, although the Company is not pursuing commercial markets, it made sense to continue this investment since the development was essentially finished by our subsidiary and there was a strong business case for the viability of the technology.”

“The main part of our continued investment was to partner with Comtech EF Data Corporation and integrate the technology into their satellite modems. We realized as a defense company, we would be disadvantaged to attempt a commercial market penetration and as a recognized leader in commercial satellite modems, Comtech EF Data would have a high probability of success at inserting the Double Talk™ technology into the commercial marketplace. Therefore, we developed a licensing arrangement with Comtech EF Data so that both companies can benefit from the investment in this technology.”

Mr. Yancey concluded with, “As demand for bandwidth continues to increase, the economics of Carrier-in-Carrier™ transmission become very significant. The two companies feel that there will be a large market for the technology.”

About Applied Signal Technology, Inc.

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 http://www.appsig.com/.

About Comtech EF Data Corporation

Comtech EF Data Corp. manufactures a broad spectrum of Data and RF products for satellite communications, including Satellite Modems, Network Monitor and Control Software, TCP/IP Performance Enhancement Proxy, Converters, Solid State Power Amplifiers, Transceivers and Satellite Terminals. All products meet or exceed the standards published by Intelsat®, Eutelsat, Insat, AsiaSat and other worldwide and regional satellite networks. Please visit http://www.comtechefdata.com for more information.

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. Forward-looking statements discussed in this release include statements as to the Company's continued growth throughout the year and into the foreseeable future; the future spending by the U.S. Government on intelligence gathering; the Company's ability to hire qualified personnel and such personnel's ability to obtain security clearances; the Company's plans for the future, including the steps it may take and the programs it will emphasize; the Company's beliefs concerning marketplace opportunities for its products and services; and beliefs concerning contractual opportunities for orders. The risks and uncertainties associated with these statements include whether orders will be issued by procurers, including the U. S. Government; the timing of any orders placed by procurers; whether the Company will be successful in obtaining contracts for these orders if they are forthcoming; whether any contracts obtained by the Company will be profitable and whether any such contracts might be terminated prior to completion; whether the Company will be able to hire additional qualified staff as needed; the ability to successfully enter new marketplaces; the Company's ability to maintain profitability; 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, 2003. The Company assumes no obligation to update the information provided in this news release.