Applied Signal Technology, Inc. announces first quarter results.

SUNNYVALE, Calif.--(BUSINESS WIRE)--Feb. 16, 1996--Applied Signal Technology, Inc. (NASDAQ:APSG) announced its operating results for the first quarter ended Feb. 2, 1996.

Revenues for the first quarter of fiscal 1996 were $15,798,000 which represents a 14% increase over first quarter fiscal 1995 revenues of $13,821,000. Net income declined 85% to $150,000 or $0.02 per share for the quarter ended Feb. 2, 1996 from $1,020,000 or $0.13 per share for the same period of fiscal 1995.

Brian Offi, the Company's Chief Financial Officer explained, "Revenues for the first quarter of fiscal 1996 were up 14% when compared to the same period of fiscal 1995 primarily due to an increase in contract activity experienced in the Company's three engineering divisions (Strategic, Military and Commercial Divisions). This increase represents continued demand for the Company's products and services.

"Net income for the first quarter decreased from $1,020,000 or $0.13 per share to $150,000 or $0.02 per share. This decrease in net income is primarily due to unfavorable adjustments of estimated costs-to-complete on production jobs during this first quarter." Offi went on to say that variations in quarter to quarter results are a normal part of the Company's business and that the operating results of any given period may not be indicative of results for any future period.

Order levels for the first quarter of fiscal 1996 were up 394% from $3,588,000 in fiscal 1995 to $14,129,000. The increase in orders reflects a preponderance of new contracts awarded during the first quarter of fiscal 1996 as compared to the same period of fiscal 1995.

Gary Yancey, the Company's president and CEO commented on the first quarter operating results. "Although the first quarter net income decreased on a year-to-year basis, we are encouraged that the revenue and order levels have increased. The production programs which eroded margins during the first quarter are nearing completion and we believe we have adequately comprehended the costs necessary to complete these jobs."

Except for historical information contained herein, the matters discussed in this news release contain forward looking statements that involve risks and uncertainties including 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 filed for the fiscal year ended Oct. 31, 1995.

Applied Signal Technology designs, develops, manufactures and markets advanced digital signal processing equipment to collect and process a wide range of telecommunications signals for commercial and government applications. -0-

                Applied Signal Technology, Inc.
                Condensed Statements of Income
      For the Periods Ending Feb. 2, 1996 and Jan. 27, 1995
                        (Unaudited)

                                          Three Months Ended
                                        Feb. 2,        Jan. 27,
                                         1996            1995

            (In thousands except per share data)

Revenues from contracts                $ 15,798        $ 13,821
Operating expenses:
  Contract costs                         10,815           8,459
  Research and development                1,912           1,813
  General and administrative              2,840           1,983
    Total operating expenses             15,567          12,255
Operating income                            231           1,566
Interest income/(expense), net               19             134
Income before provision for taxes
 on income                                  250           1,700
Provision for taxes on income               100             680
Net income                                $ 150         $ 1,020
Earnings per share                        $0.02           $0.13
Average common shares outstanding         7,782           7,651

                     APPLIED SIGNAL TECHNOLOGY
                     CONDENSED BALANCE SHEETS

                          (Unaudited)
                            ASSETS

                                       February 2,       October 31,
                                          1996              1995

Current assets:
 Cash                                  $       ---       $       369
 Accounts receivable                        26,738            29,564
 Refundable income taxes                       107               107
 Inventory                                   5,524             3,474
 Prepaids and other current assets           1,927             1,990
   Total current assets                     34,296            35,504

Property and equipment, at cost             26,744            24,747
Accumulated depreciation and
 amortization                              (14,369)          (13,492)
Net property and equipment                  12,375            11,255

Long-term investments                        2,122             2,095

Other assets                                   117               176

Total assets                           $    48,910       $    49,030

                LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable, accrued payroll
  and benefits                         $     6,230       $     7,612
 Other accrued liabilities                   1,496             1,547
 Income taxes payable                        1,421             2,077
 Bank line of credit                         1,300               ---
   Total current liabilities                10,447            11,236

Deferred income taxes                          847               847

Shareholders' equity                        37,616            36,947

Total liabilities and shareholders'
 equity                                $    48,910       $    49,030

CONTACT: Applied Signal Technology, Inc.

Brian M. Offi or Mary Rogge, 408/749-1888