Applied Signal Technology, Inc.
Receives SPAWAR Contract to Supply an Interferometric Synthetic Aperture Sonar System

Sunnyvale, CA, October 4, 2007 – The Space and Naval Warfare Center, Charleston (SPAWARSYSCEN Charleston) has awarded Applied Signal Technology, Inc. (NASDAQ: APSG), a provider of integrated synthetic aperture sonar and navigation suites and mission and target analysis workstations, a $5 million indefinite delivery/indefinite quantity (IDIQ) contract to provide up to five interferometric synthetic aperture sonar (InSAS) systems. Under the terms of the IDIQ contract, the Navy has ordered one system.

The contract requires Applied Signal Technology (AST) to provide a real-time, low power InSAS system that provides high resolution imagery and bathymetry, and which fits existing medium to large autonomous underwater vehicles (AUV).

Synthetic Aperture Sonar (SAS) is emerging as an ideal sensor for AUV-based wide area seafloor surveillance, sea-mine localization, geological surveys for cable and pipeline installation, and other applications. AST successfully fielded its PROSAS™ Real-Time SAS Processor on a commercial mission-ready AUV in 2004. By using vehicle motion to create a long synthetic array, PROSAS has the potential to increase image resolution by an order-of-magnitude or more compared to traditional sidescan sonars. The SAS technology is also well suited for interferometric processing, providing co-located, high resolution bathymetry and imaging from the same sensor.

Mr. Gary Yancey, President and Chief Executive Officer of Applied Signal Technology, stated, “This award is a very important achievement and is the result of a lot of government and corporate investment to refine our SAS offering. We have been investing to compliment U.S. Government investments in order to be able to provide a field operational SAS system. We believe this will be one of a few operational bathymetric SAS systems in service.”

Mr. Yancey concluded his remarks, “I believe this demonstrates our company’s credibility as a production SAS system provider. There are requirements for such systems beyond commercial survey systems. This same technology supports undersea warfare and we believe it offers us an opportunity for growth in that marketplace.”

Applied Signal Technology, Inc. provides advanced digital signal processing products, systems and services in support of intelligence, surveillance, and reconnaissance for global security. For further information about Applied Signal Technology visit our website at www.appsig.com.