APPLICATIONS

Confirmation of Sustained Growth in Services Activities Full Year EBIT Above Target set in June 2006: Full year 2006 financial highlights: - Consolidated revenues of EUR1,146.5 million, representing a decrease of 2.3 % compared with 2005, with Services revenue increasing by 12.2%, offset by a decrease in Products and Maintenance activities. - Gross margin of EUR284.0 million, or 24.8% of revenues, one point lower than 2005, due to a less favorable mix; however, gross margins for Products and Maintenance are improving. - EBIT before restructuring charges and non-recurring items of EUR19.7 million, which is higher than the objective set in June 2006. - Net income is a loss of EUR17.1 million, reflecting notably provisions for restructuring intended to accelerate the transformation of the Group, the impacts of adjustments to the CRMF (see Glossary) and deferred tax assets and changes in the scope of the business. - Net cash position of EUR225.1 million at 31 December 2006, with operations generating cash of EUR28.5 million in the year. Outlook: the Group's 2007 EBIT objective is in the range EUR20 million to EUR24 million Fourth quarter 2006 financial highlights: - Consolidated revenues of EUR336.4 million declined slightly, by 2.5%, with an increase in Services activities of 10.9%. The Board of Bull (Euronext Paris: BUL.PA) approved the consolidated accounts for the financial year ending 31 December 2006. Revenues for 2006, with Italian activities consolidated for only the first 11 months, were EUR1,146.5 million, representing a decrease of 2.3% as compared to revenues of EUR1,173.1 million in 2005, which included these activities consolidated over 12 months. Gross margin of EUR284.0 million, or 24.8% of revenue, was recorded which compares with EUR302.2 million or 25.8% of revenue for the prior year. EBIT (see Glossary) totaled EUR19.7 million, which is above the objective communicated in June 2006. Net income (Group share) is a loss of EUR17.1 million. It includes notably adjustments to the CRMF provision and deferred tax assets, as well the impact of the sale of Bull's Italian operations. It also reflects the acceleration of the Group's restructuring aimed at positioning Bull more rapidly on a trajectory of profitable growth. It can be compared to a net profit of EUR15.8 million last year. Didier Lamouche, Bull's Chairman and Chief Executive Officer, commented: "The fourth quarter was marked by the sale of our Italian activities to Eunics SpA; this transaction took place under good financial conditions for Bull while preserving the interests of our Italian staff and customers. This initiative has enabled the Group to divest itself of a long-standing loss-making business, and to focus on its priority strategic targets. Bull's management is fully mobilized and focused on addressing the challenges the company faces, driving the transformation of the Group along a path of profitable growth." The removal of the Italian operations from the scope of consolidation was effected as at 30 November 2006. Excluding the consolidated Italian business activities, the Group's revenue was EUR1,096.4 million in 2006 which compares with EUR1,089.1 million in 2005, representing growth of 0.7%. The results for the fourth quarter and full year 2006 published and discussed below, as well as the 2005 figures shown by way of comparison, include Bull's Italian activities until the date of their removal from the scope of consolidation. Financial results for 2006 Comparisons are established with respect to the prior year. Order intake grew by 5.7%. Orders for the Services business experienced strong growth, increasing by 19%. Those related to the Products business activity fell slightly by 4.2%. Consolidated revenue of EUR1,146.5 million, down by 2.3%, includes growth of 12.2% recorded for the Services business and a slight decrease in Products and Maintenance business activities The geographic breakdown of the consolidated revenue for 2006 shows a slight change. As compared to 2005, the share of Western Europe excluding France decreased by three percentage points, as a result of the decline in the Italian business followed by the disposal of these same activities. The share of Eastern Europe and that of South America increased by two percentage points and one percentage point respectively. The Services business, recording revenue of EUR359.7 million, continues to grow significantly, increasing 12.2% in 2006. Telco services and the Services businesses in South America, continue to grow strongly. Revenues from the Products business were EUR539.6 million, representing a decrease of 6.8%, due to a slowing in sales of the UNIX® range of servers on the one hand, and on the other an unfavorable basis for comparison with 2005 which included a significant share of revenues recognized for the Tera10 supercomputer delivered to the French Atomic Energy Authority (the CEA). Bull's Maintenance business recorded revenues of EUR247.3 million, down by 9.7%, linked to the decline in proprietary systems activities. Nevertheless, the actions taken during the year have significantly stemmed the rate of decrease in revenues, from 13.7% during the first quarter to 6.9 % in the fourth quarter. Gross margin at EUR284.0 million, or 24.8% of revenue, fell by one percentage point due to a less favorable mix; however gross margins for Products and Maintenance increased The gross margin on Products activities is improving, rising to 32.6% as compared with 32.4% in 2005, a result of the acceleration of Bull's cost reduction program. Gross margin for the maintenance activity increased from 28.1% to 28.3%, as a result of actions implemented by a dedicated team since the first quarter. These actions enabled the Group on the one hand to improve its margins for activities related to the installed base of proprietary servers, and on the other hand to extend its offering with the launch of new value-added services. Finally, the gross margin on Services decreased by 1.3 points, at 10.6% of revenue. This decrease is mainly the result of the low profitability of the Italian business, and of the termination of an integration services contract in France during the second half of the year. Excluding this non-recurring effect, the gross margin for services in France would have increased in line with our objectives. Full year EBIT was EUR19.7 million, exceeding the high end of the objective range set in June 2006 (EUR18 million) This performance is the consequence of a higher gross margin and lower research and development (R&D) and selling, general and administrative (SG&A) expenses than forecast at the time. R&D expenditure represents 4.0% of 2006 revenues compared with 4.4% in the prior year. SG&A costs totaled EUR217.7 million representing 19% of revenues, as compared to 18.1% of revenues in 2005. The increase in this expenditure is the consequence of increased selling expenses entailed in order to ensure the Group's development on the one hand, and an increase in provisions on the other. These provisions were notably related to a risk of bad debt recognized during the first half, and a tax risk related to the professional tax ('Taxe Professionnelle'). Full year net income, a loss of EUR17.1 million, notably includes provisions for restructuring intended to accelerate the Group's transformation, the impacts of adjustments to the CRMF and deferred taxes, as well as changes to the scope of the business The 2006 net income includes a charge of EUR32.9 million for restructuring intended to reduce the Group's cost structure and to improve its future profitability and the positive impact (+EUR27.3 million) of the October 2006 revision of the CRMF accrual, reduced from EUR54 million to EUR26.7 million. This new amount takes into account the net present value of payments due, and more particularly, the anticipation of significantly reduced payments relating to the 2006 and 2007 financial years. Over the year, deferred tax assets were reassessed from EUR51.7 million to EUR28 million, generating a charge of EUR 23.7 million, of which EUR4 million is linked to the disposal of the Italian business. This led to a gross capital loss before the effect of deferred tax adjustment of EUR6.3 million, which was only partly compensated by the capital gain yielded by the sale of one of Bull's properties at Clayes-sous-Bois. The net cash balance totals EUR225.1 million at December 31, 2006, with cash flow generated from operations amounting to EUR28.5 million in the year Cash flow from operations for 2006 was EUR28.5 million; management of receivables was particularly good and the collection of some EUR15 million was accelerated. During the same period, non-recurring items generated a negative cash flow of EUR37.8 million, notably including the cost of acquisitions (EUR18.1 million), restructuring costs (EUR23.9 million) which were not offset by cash received for asset disposals of EUR13.9 million. The gross cash balance (see glossary) at EUR315 million is stable compared to December 2005. It should be noted that in order to optimize cash management and following approval by the Board of Directors, part of the available funds was invested in marketable securities. These assets are classified "financial assets available for sale" since they are not immediately available, and are included in the gross cash balance calculation, amounting to EUR50.3 million at the end of 2006. Revenue for the fourth quarter of 2006 Consolidated revenue declined 2.5%, totaling EUR336.4 million, with a 10.9% increase in Services activities By activity in the fourth quarter, revenues from Product sales were down by 7.8%, while sustained strong performance in Services gave a 10.9% increase in revenue as compared with the same quarter in 2005. The Maintenance business saw a decrease limited to 6.9%, a rate that continues to improve, quarter after quarter. The Group now employs 7,178 staff; 20% of staff has been with the company for less than 2 years This evolution demonstrates the transformation Bull is undergoing. Focus points for 2006: commitments, achievements and results In 2006, Bull's senior management pledged to address certain long-standing problems; these undertakings have been respected. Italy In December 2006 Bull signed an agreement with Eunics SpA by which they took over the Group's loss-making Italian business activities. This agreement ensures continuity for Bull's customers in all product, service, and maintenance sectors. The agreement includes a five-year distribution agreement. Maintenance During 2006 Bull succeeded in stemming the accelerating decline in its profitable Maintenance business. The appointment of a dedicated divisional Director and the implementation of a strong action plan early in the year were quickly followed by positive results. For the fourth quarter, the decline in revenue for the maintenance activity was only half what it had been during the first quarter, and the gross margin for the Maintenance activity slightly increased in 2006 as compared to 2005. Business highlights in 2006 In 2006, Bull stepped up the dynamic of its Open Source business with the opening of two dedicated services centers in Marseille and Bordeaux focused on Open Source software, new technologies and the mobile enterprise. Bull also launched Open Office, its services offering dedicated to workstations in an open environment. The Group's expertise in Open Source resulted in it being chosen by the Marine Nationale at Toulon in the framework of its human resources application development project, SI@D/RH, by the Languedoc Roussillon Conseil Regional for developing business applications, and by Dassault Aviation for Real-Time Linux support. Bull's expertise in IT infrastructures and recognized experience in the integration of complex systems and deployment of highly secure infrastructures led to its winning significant contracts in the server field, including the modernization of the Belgian Justice Ministry's IT infrastructures. Reflecting this strategy, Bull has launched a second generation of NovaScale servers, completed in June 2006 with the unveiling of the R600 and T800 models: high-end, open servers. Finally, on the commercial front, Bull established partnerships aimed at extending the penetration of the NovaScale server family, with PowerLeader in China and Basis Bay in Malaysia and Thailand. In the area of High-Performance Computing (HPC) - one of Bull's key target areas for growth - the company confirmed its ability to design the largest computing clusters, for example at the University of Manchester in the UK. Bull was also chosen by the Center for Computing, Research and Technology (CCRT) to deliver France's largest ever civil supercomputer. Pininfarina also opted for Bull NovaScale servers to host its HPC applications. Well aware of the importance of HPC in the industrial sector, Bull established a partnership with Microsoft aimed at increasing the 'democratization' of HPC. Bringing together its expertise with the Microsoft HPC platform, Bull will be offering HPC solutions to companies for which clusters currently represent an environment that is too costly and complex. Also during the course of 2006, Bull extended its range of servers aimed mainly at scientific applications in cluster environments, with the launch of the NovaScale 3005 series, featuring the new Intel Itanium 'Montecito' processors. In the Services business, Bull confirmed the pertinence of its strategy in this sector, by winning a number of major contracts: in the UK, the partnership with Barnsley Metropolitan Borough Council - a contract amounting to EUR110 million over ten years - illustrates the Group's capacity to grow its services business in this country. In order to extend its capabilities in its key target areas, during 2006 Bull acquired HRBC (Human Resources Business Consulting) - a French company specializing in HR information systems - and Agarik, a critical infrastructure outsourcing specialist focusing on Internet environments. In the IT security sector, Bull confirmed its position as the European leader in Identity and Access Management (IAM), with the launch of WiseGuard 3G, the third-generation Single Sign-On tool providing an innovative solution for the advanced management of access rights. In order to reinforce its commercial position, Bull also established an industrial partnership with NEC involving enhancing Bull's products and solutions, and increasing the profile of its IAM offerings in the Asian territories targeted by the partnership by building on NEC's own strong presence in these areas. In Telecommunications - a key strategic focus for Bull's development and a very rapidly growing sector for the Group - the company achieved some notable successes. In the international arena, these activities also experienced strong growth, particularly in Brazil, where the momentum of Bull's subsidiary is gaining recognition. Bull Brazil was named Brazil consulting company of the year by IDG, and won the IT&Government 2006 award with the SERPRO project improving airport security. In the same sector, Bull acquired AMG.net, a Polish consulting and new technology integration company specializing in telecoms, through whom Bull has won many contracts. Still working in partnership with its subsidiary, Bull has also won a large contract to deploy "on-air" telephony services for major European airlines. Outlook: the Group's 2007 EBIT objective is in the range EUR20 million to EUR24 million Bull's objective is for the full year 2007 EBIT to be in the range EUR20 million to EUR24 million, with the objective for the second half of the year being higher than for the first half. Key factors contributing to the achievement of this target will be to continue to reduce the rate of decline in the Maintenance business, to improve the margin in Services, and to grow sales in the open servers market.