Applied Signal Technology, Inc. Announces Plan to Transer Emerging Markets Into Wholly-Owned Subsidiaries.

Business Editors

SUNNYVALE, Calif.--(BUSINESS WIRE)--March 10, 2000

Applied Signal Technology, Inc. (Nasdaq:APSG) announced plans to transfer its cyberspace security and wireless network management technologies into two wholly-owned subsidiaries.

Brian Offi will be responsible for pursuing the cyberspace security marketplace. Stan Huber will be responsible for pursuing the wireless network management marketplace. Both Offi and Huber are long time employees of Applied Signal Technology and will serve as presidents of the operating companies.

The company also announced that the board of directors has appointed James Doyle to the position of chief financial officer of Applied Signal Technology, Inc. replacing Offi.

Gary Yancey, president and CEO of Applied Signal Technology, commented, "As I have stated in the past, I definitely believe both of these new marketplaces offer opportunity for substantial growth in the near future. We felt that the optimum approach to addressing these new markets was with independent operating companies such that they will receive adequate visibility and attention by Applied Signal Technology's board of directors. We will make use of our vast years of experience related to telecommunications processing and our digital signal processing prowess by licensing technology to the appropriate subsidiaries. By utilizing commercial accounting methods within the two subsidiaries, we can more easily communicate with the commercial marketplaces they are addressing.

"Mr. Brian Offi and Mr. Stan Huber have had corporate officer responsibilities within Applied Signal Technology for a number of years and were my direct reports. I have the utmost confidence in these two individuals and feel they will manage these two ventures to notable successes.

"We have recently announced our entry into the cyberspace security with the planned release of our model 2600 Intrusion Detection System at the end of CYQ2. In the wireless network management marketplace, we currently have the model 2010 network quality monitoring product for satellite based wireless communications. We have an installed base of 11 of these units at groundstations around the world as part of a $3.4 million contract.

"We feel that wireless network management and in particular, the quality monitoring aspect of network management is going to become more important as wireless networks provide part of the backbone for the global information network. It is quite likely that E-commerce will demand wireless as well as wireline access in the near future and this places greater demand upon the integrity of the data. This, in turn, places greater demand upon network management and data transfer quality assessment. This is exactly what our model 2010 Quality Measurement System supports automatically. By forming this wireless network management subsidiary, we can more adequately direct our investments into all aspects of network management that are relevant to Applied Signal technology's technological expertise."

Yancey went on to say, "As the subsidiaries grow and evolve more of their own competitive strengths, they will establish themselves in these new marketplaces and will still be afforded the opportunity to license technology from the parent company, Applied Signal Technology.

"By segregating these enterprises as wholly-owned subsidiaries, the Applied Signal Technology, Inc. board of directors will have much better visibility, focus and accountability into establishing these new market areas and making strategic decisions for our shareholders. In addition, this provides us maximum flexibility to return value to shareholders as these subsidiaries become successful enterprises."

Applied Signal Technology designs, develops, manufactures and markets advanced, digital signal processing equipment to collect and process a wide range of telecommunications signals for signal reconnaissance and industrial telecommunication applications. For additional company-related information, visit the company's website at http://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 including customer concentration, competition, dependence upon personnel, volatility of operating results, use of estimates in program costs-to-complete and other risks detailed from time to time in the company's SEC reports including its latest Form 10-K for the fiscal year ended Oct. 31, 1999.