Ladies and gentlemen, thank you for standing by. Welcome to the Elbit Systems Ltd. First Quarter 2013 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, May 8, 2013. I would now like to hand the call over to Mr. Ehud Helft of CCG Investor Relations. Ehud, please go ahead.

Thank you, operator, and good day, everybody. On behalf of all the investors, I would like to thank Elbit management for hosting this call. Joining us today on the call are Mr. Bezhalel Machlis, Elbit Systems' President and CEO; and Mr. Yossi Gaspar, Elbit Systems' Chief Financial Officer. Yossi will begin by providing a discussion of the financial results of the quarter, followed by Butzi, who will talk about some of the significant events during the quarter and beyond. We will then turn over the call for 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 that, 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. As usual, I will provide you with both our regular GAAP financial data, as well as certain supplemental non-GAAP information. You can find all the detailed financial data in today's press release. Our results for the first quarter mark an improvement in both the operating income and margins compared with the first quarter of last year due to careful ongoing control of expenses, continuous streamlining of operations, as well as taking advantage of intercompany sharing of resources and synergies. We are also particularly pleased that we have shown continued growth in our backlog for 4 consecutive quarters, which bodes well for the future. I will now highlight and discuss some of the key figures and trends. Revenues in the first quarter of 2013 were $680.2 million as compared to $690.8 million in the first quarter of last year. If you remember, our revenues were particularly high in the first quarter of last year compared with previous periods. In terms of revenue breakdown across our areas of operations in the quarter, Airborne Systems was 40%, Armored Vehicle Systems was 9%, C4ISR was 35%, Electro-Optics was 12% and the rest was 4%. Compared with last year, we saw growth in C4ISR and Electro-Optics, while Armored Vehicles was a lower portion of our revenue. On a geographic basis, the United States remained our largest region at 32% of revenues. Israel was 20%, Europe was 18%, Asia-Pacific was 19%, Latin America, 10% and the rest of the world was 1%. We do not see the quarterly fluctuations in our revenue breakdown as indicative of any long-term trends. However, compared with last year, North America, Europe and Latin America grew while a lower portion of the revenues came from Asia-Pacific in this particular…

Thank you, Yossi. I would like to open by saying I very much look forward to working with and getting to know our investor and analyst day [ph], and I intend to continue the good work that has been done over the past years. I'm pleased to be reporting a solid start to 2013 with a strong first quarter, especially as Yossi mentioned, the operating and net margin profit. In the past year, all divisions at Elbit Systems have worked very hard at improving their efficiency. At the same time, we look to leverage our global intercompany synergies. This effort has enabled us to reduce our operating expenses substantially since last year, improving our operating margins. Another positive facet of our results is our ongoing improvement in the backlog. This continued increase gives all of us a higher level of confidence that our performance and growth can continue in the future. Our growth in backlog is being driven by a continued stream of new project wins across all divisions. In January, we won a $35 million contract from the Israeli Ministry of Defense for the development of advanced features for Unmanned Aircraft Systems. In March, we won a $50 million contract from Boeing Systems to provide logistics support for the C34, C44 and C6 aircraft. Later that month, we won a $115 million contract to supply an Asian customer with Electronic Warfare systems for multi-purpose land missions. We also won an $18 million electro-optics contract to upgrade an Asian customer armored fighting vehicle. In the past few weeks, we announced a $40 million C4ISR contract to supply a country in Africa with a Wise Intelligence Technology system for Intelligence Analysis and Cyber Defense. In summary, 2013 has started strongly, both in terms of our current performance and new business. Before moving on to the questions-and-answers session, I would like to take this opportunity to thank Mr. Yossi Ackerman, the company former President and CEO, for his hard work and contribution over the many years. I am pleased that we will still continue to gain his valuable insight and experience as he remains involved in our company at the board level. I look forward to continuing to build on his successful legacy. With that, I would like now to open the call for questions-and-answers. Operator?

[Operator Instructions] The first question is from Joseph Wolf of Barclays Capital.

Just a question on -- the backlog has been growing, and I'm wondering if you could talk a little bit on a year-on-year basis about the optimism of your customers in terms of -- or maybe not optimism but the order patterns, the willingness to spend, what kind of spending is going on and whether you think budgets are being freed up a little bit in 2013 versus last year, and then whether the environment has become more competitive because of that or you're seeing some share gains because of that?

We have a very vast portfolio with many systems and products. And we believe that there are many opportunities for us all over the world for these unique technologies. Of course, there are, in some areas, budget cuts. On the other hand, some -- other areas are growing, especially in South America and in Asia-Pacific. And we believe we are positioned in a very good way from -- on one hand, from looking into our portfolio and also via our local presence into -- in the growing areas. Therefore, we are optimistic that -- that we are optimistic for the future of this company.

[Operator Instructions] The next question is from Ron Senator of Sphera Funds.

A question for Yossi. Yossi, can you comment on the backlog? What's the currency impact on this and whether the increasing of the backlog reflects any depreciation of the dollar versus the shekel? And another question regarding the balance sheet maybe as a follow-up.

The impact of the currency dollar-shekel and so on, on the backlog is very minimal, if at all, being nothing really material there. As you know, some of our backlog that comes even from the Israeli market is supported by foreign currency and it is done in foreign currency. So even that is not really a factor. So I would say definitely not material.

Okay. And on the balance sheet, again, that reflects in the cash flow. When I look at your accounts receivable and the inventory, there's a fairly substantial increase in the last 3 months. Can you -- I mean, what do you account for that?

Regarding the accounts receivables, we definitely have several contracts which are quite long term in terms of performance and payment, with definitely the adequate arrangements with our customers for the long-term payment included in the contract. And therefore, you may see some fluctuations in the growth and growth in the accounts payable. All of these customers are very high graded, some of them, the Ministry of Defense here in Israel and others. So this is mainly the reason for the changes in the accounts receivables.

But going forward for the rest of the year, as you look at the nature of the backlog, is it fair to assume that the conversion from net income to cash flow is pretty straightforward or with some fluctuation, or there's a trend here?

Well, if you look back over several years, we do see that our cash flow keeps quite well, keeps up quite well with our reported profits, and I expect that to continue into the future. Definitely, there might be some fluctuations quarter-over-quarter or even year end to some extent. But I don't see any drastic changes. Just to remind ourselves that last year, 2012, we had some weak cash flow performance in the first several quarters, and then we had a very strong fourth quarter in the cash flow performance. These things happen. And you all know that we are a project-oriented company. Meeting a milestone in December or in January can move quite a lot of cash from one year to another.

Okay. And if you don't mind one last question on my part, very nice job on the cost reduction side. Can you be a little bit more specific from Q4 to Q1 here, what are really the drivers in terms of driving the cost down?

Well, first of all, thank you for the compliment. I think what we are seeing is a long-term -- the result of a long-term activity in the company. We are adapting our cost basis for some time now, seeing what's happening around us, seeing the competition that we are facing so that we are taking all necessary measures that our cost base fits our business environment on one hand, and that includes definitely reducing the G&A. You might be able to see in the last 6 quarters what happened with our general and administrative expenses, significantly reduced, including in the last quarter. And the same goes for other activities like research and development and marketing activities, which are mainly driven by focusing on the -- focusing our activities better on the business [indiscernible] and technology development and specific activities. So we are canceling these applications. We are consolidating anything -- any activities that can be consolidated, and all that results in improving our effectiveness.

The next question is from Aviran Revivo of Sphera Fund.

I actually got the answers to my questions, so you can go on.

There are no more questions at this time. Before I ask Mr. Machlis to go ahead with his closing statement, 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) 326-9310. In Israel, please call 03 925-5904; and internationally, please call 9 (723) 925-5904. A replay of this call will also be available at the company's website, www.elbitsystems.com. Mr. Machlis, would you like to make your concluding statement?

Yes. I would like to thank management and all our employees for their continued hard work. To everyone on the call, thank you for joining us today, for your continued support and interest in our company. Have a good day, and goodbye.

Thank you. This concludes the Elbit Systems Ltd. First Quarter 2013 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.