Ladies and gentlemen, thank you for standing by. Welcome to the Elbit Systems Ltd. Fourth Quarter 2012 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, March 13, 2013. I would now like to hand the call over to Mr. Ehud Helft of CCG Investor Relations. Ehud, please go ahead.

Thank you, and good day, everybody. On behalf of all investors, I would like to thank Elbit Management for hosting this call. Joining us on the call today are Mr. Joseph Ackerman, Elbit Systems President and CEO; Mr. Bootsy Machlis, Elbit President and CEO designate; and Mr. Yossi Gaspar, Elbit Systems Chief Financial Officer. Yossi will begin by providing a discussion of the financial results of the quarter and the full year, followed by Joseph, who will talk about some of the significant events during the quarter and beyond. I will then turn over the call to the question-and-answer session. Before we begin, I'd like to point out that the Safe Harbor statement in the company's press release issued earlier today also refers to the content of this conference call. With this, I would like now to turn over the call to Yossi. Yossi, please.

Thank you, Ehud. Hello, everyone, and thank you for joining us today. Like last quarter, we will provide you with both our regular GAAP financial data, as well as certain supplemental non-GAAP information. We believe that the presentation of non-GAAP financial measures is beneficial to investors' understanding and assessment of the company's ongoing core operations and prospects for the future. You can find all the detailed GAAP financial data as well as the non-GAAP information in today's press release. Our results of the fourth quarter and the full year of 2012 marked another improvement in year-over-year revenues, margins and backlog. This was due to our careful ongoing control of expenses, as well as continual streamlining of operations, taking advantages of synergies between our acquisitions and the rest of the organization. I will now highlight and discuss some of the key figures and trends. Our fourth quarter revenues were $843.9 million compared with $841.9 million last year. For 2012 as a whole, we reported revenues of $2.9 billion, a 2.5% increase year-over-year. In terms of revenue breakdown across our areas of operation in the quarter, airborne systems was 31%; land vehicles, 13%; C4ISR was 41%; Electro-Optics, 13%; and the rest was 2%. These are around the same level of sales as in the fourth quarter of 2011, except for an increase in the C4ISR area. For 2012 as a whole compared to 2011, airborne systems grew as an overall share of our revenues, while land vehicle systems revenue was low. Starting from this quarter, due to the increased importance to us that some regions have gained, we are providing a breakdown of our revenues from Asia-Pacific and Latin America, which used to come under the rest of the world category. We are also combining the U.S. and Canada under the category…

Thank you, Yossi. We are very pleased with the result of the fourth quarter, closing off 2012 with a record level of revenues and a record level of backlog. We also reported a solid set of financial parameters, demonstrating modest growth and improving profitability. Our activities in Latin America and Asia-Pacific regions are performing well and grew nicely this year. As I have said in the past, we are increasingly focusing on these global markets as we already see a shift in defense spending in the traditional Western markets to a more balanced global spending picture. Our strength in these markets, as well as our focus on the electronic defense sector, has enabled us to recommence our growth in 2012. All this underlies my belief that Elbit Systems is well positioned strategically, operationally and financially for the opportunities ahead in '12, '13 and beyond. While our total revenues coming from Israel were less than last year, in the last few months of the year, we won a number of large important contracts in Israel, some of which, particularly the TOR project, are long term. In September, we announced that TOR - Advanced Flight Training, our partnership with Israeli Aero Industries, won a $603 million with the Israeli Ministry of Defense, of which Elbit Systems' share is $420 million. Initially, we are establishing an enhanced logistic support and maintenance infrastructure for the new trainer aircraft, as well as an advanced ground training array. I am very proud of the success of this relatively new business and that our training products are gaining strong traction. It further strengthens our position as world leaders in the field of advanced technical training. In December, we announced a number of other contracts in Israel. We also received the contracts for the space camera for the…

Thank you, Joseph. I'm pleased to be here speaking with our investors for the first time. I look forward to continuing to interact with the investor community concurrently, as Elbit Systems has been doing for many years. I have already met many of you at our analyst event earlier today in Israel, and I look forward to speaking with all of you in the coming quarters. Back to you, Joseph.

Thank you, Bootsy. And with that, I'll be happy to take your questions, please.

[Operator Instructions] The first question is from Dov Rosenberg of Clal Finance.

My first question is just on the breakdown. Looking into 2013, between the quarters, should we expect similar to 2012, 2011 sort of decrease in the first quarter, relatively flat midyear and a strong year end?

I think that there will not be any material changes, although, as you know, there might be some changes between the quarters. Not every year is the same as the previous one, but nothing extremely material.

I'm sorry, I didn't understand. Nothing material from the fourth quarter or from the pattern that we've seen in 2012?

From the pattern.

From the pattern, okay. And now just wondering on the tax, what brought the tax down so low this quarter?

We had some audits or tax audits finished in various parts of our subsidiaries in the world. And as you probably know, we are running our books conservatively, and with the finish of the audits, we had some prior year releases as well.

Looking forward, should we expect sort of the same -- I mean, not the same, but the 14% range or the 10% that we saw in 2012?

As you know, we don't give guidance on our financial parameters, but I think that the average that we have seen a year and 2 years ago are representative.

Okay. Last question for me. I was hoping you can give me a little more color and understanding why the subsegment, the Electro-Optics, is especially strong in the year end? What about that subsegment that makes it strong in the fourth quarter?

I don't think that there is a specific pattern. The revenues are related to the specific contracts that we are getting, and the deliveries are accordingly. This may vary from quarter to quarter.

The next question is from Michael Klahr of Citibank.

I've got a few questions. Firstly, on the Digital Army Program in Israel, did that restart in the fourth quarter? And if so, how much did it contribute?

The deliveries on that restarted definitely. And I'm sorry, but we don't give all those details about how much each program contributes, but they definitely restarted.

Okay. But they're not at full speed, so we should expect a continued ramp of that in the first quarter?

It will continue in the first quarter.

Okay. Secondly, on the OpEx, which was very low as a share of sales, I'm just wondering to understand, is that permanent? Will it go below -- can it go below 20%? Just trying to understand how much operating leverage there is.

I think that we are adapting our operating expenses to the level of operations and business development that is our long-term planning. As you probably have observed in the last year to 2 years, we did control our expenses, including that part. The growth that we have seen several years ago in this element does not continue. From quarter to quarter, we might see fluctuations. And overall, we believe that the level of funding that we see now on a yearly basis is adequate to develop our business for the future.

Okay. So we should see some operating leverage there if your revenues grow.

I think we'll have to wait and see how that develops.

Okay. And then just on the working capital, so I've got negative working capital of about $120 million in 2012. And just wanting to understand, is that enough to maintain the current level of business, or is more required, or can that be reduced? How should we look at that?

I think the level of the working capital that we see -- that we have seen in 2012 is quite characteristic of the business that we are doing. It may fluctuate from quarter to quarter one way or another, but essentially, on average, it is adequate.

Okay. And then just lastly, on net debt, which came down to $500 million, should we be -- can we be expecting a pickup in M&A in 2013, '14 or, perhaps, larger dividends? Or what are you going to do with that better capital structure?

As you know, we are continuously looking for acquisitions, and we -- 2013 will not be different from that point of view. And hopefully, we'll find the right targets, and then we'll definitely make acquisition as we did several years ago, quite a lot of them.

And if you can't find acquisitions, could we expect a higher payout maybe? Or how much -- what kind of ratios on absolute net debt are you thinking about that the company needs to hold?

I don't think that I can answer you on that. I think that it is more an issue of the decisions that we will have to take as we go along.

[Operator Instructions] There are no further questions at this time. Before I ask Mr. Ackerman to go ahead with his closing statements, I would like to remind participants that a replay of this call will be available 2 hours after the conference ends. In the U.S., please call 1 (888) 782-4291. In Israel, please call (03) 925-5918 and internationally, please call 9 (723) 925-5918. A replay of this call will also be available on the company's website, www.elbitsystems.com. Mr. Ackerman, would you like to make your concluding statement?

Yes, thank you. I would like to take this opportunity to thank all of our employees for their continued hard work and express my admiration for the thousands of people who make up the Elbit organization, with which I have had the privilege of being associated with for the past 31 years. Everyone on the call, thank you for joining us today and for your continued support and interest in our company. And with that, have a good day, and goodbye.

Thank you. This concludes the Elbit Systems Ltd. Fourth Quarter 2012 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.