Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems Fourth Quarter and Full-Year 2018 Results Conference Call. All participants are at present in a listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded. You should have all received by now the Company’s press release. If you have not received it, please contact Elbit’s Investor Relations team at GK Investor and Public Relations at 1-646-688-3559 or view it in the News section of the Company’s website www.elbitsystems.com. I would now like to hand over the call to Mr. Ehud Helft of GK Investor Relations. Ehud, please go ahead.

Thank you and good day to everybody. On behalf of all the investors, I would like to thank Elbit Systems’ management for hosting this call today. Joining us today on the call are Mr. Bezhalel Machlis, Elbit's President and CEO; and Mr. Jose Gaspar, Elbit's Chief Financial Officer. Jose will begin by providing a discussion of the financial results of the fourth quarter and the full-year of 2018, followed by Butzi, who will talk about some of the significant events during the quarter and beyond. We will then turn over the call to the question-and-answer session. Before we begin, I would 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 now like to hand over the call to Jose. Jose, please?

Thank you, Ehud. Hello everyone and thank you for joining us today. As we do every quarter, we will provide you with both our regular GAAP financial data as well as certain supplemental non-GAAP information. This quarter in particular there will be a number of larger differences and some one-time charges. I will then focus more on the non-GAAP numbers which we believe is more as a reflective of the performance of the ongoing business. You can find all the detailed GAAP financial data as well as the non-GAAP information and a reconciliation in today’s press release. Overall, we are pleased with our performance in 2018. With revenue growth of 9% year-over-year, we are now accompanying with the revenue run rate over 4 billion per year and the backlog approaching $10 billion, setting us up very well for over the long-term period. I will now highlight and discuss some of the key figures and trends in our financial results. Our fourth quarter 2018 revenues crossed the $1 billion revenue mark reaching the 1,078 billion, compared with $1,010 billion as reported in the fourth quarter of 2017, up 7% year-over-year. For 2018 as a whole, our revenues were 3.68 billion versus 3.38 billion last year, representing growth of 9%. In terms of revenue breakdown across areas of operation in the quarter, Elbit Systems was 41%, C4I Systems was 26%, land system was 23%, electro-optics was 9% and the rest was 2%. Compared with the fourth quarter last year, we saw increased airborne sales mainly due to our acquisition in the U.S. of Universal Avionics, which is engaged in commercial avionics as well as increased land systems sales primarily to Europe. There was a decrease in the C4I sales due to lower communications systems sales in the Asia-Pacific region. In terms of…

Thank you, Joseph. The fourth quarter of 2018 was an unusual but strategic quarter for Elbit Systems. It closed another solid year in which we were pleased to report 9% revenue growth and positive cash flow reaching over $190 million. Our long-term growth has always been built on both investing in our existing business, growing it on an ongoing basis, while at the same time acquiring and adding synergistic businesses to our organization. As you know, a key recent event was our acquisition of IMI in November for approximately $0.5 billion. We see significant synergies between the capabilities of the two companies. Furthermore, our strong global market position enables us to offer our customers a boarder portfolio, realizing the full potential in the international arena of the strong technologies of IMI. As we move through 2019, Elbit now is a much larger company with our revenue run rate of over $4 billion per year and backlog approaching the $10 billion mark. Since November, we have been working hard and progressing on integrating IMI into our organization, and we are increasingly excited with the potential that our new acquisition brings us. As part of the acquisition, we still have restarted our Land Systems Division, adding to it the IMI activities, and we created a separate C4I and Cyber Division. This reorganization is the first step in extracting the value from the synergies of our new acquisition and allowed us to better address market and customer needs. While the integration process will take time and therefore, Elbit has demonstrated a long and successful track record of assimilating acquisition. I am convinced that this acquisition will be positive for Elbit, our shareholders, employees, and most importantly our customers. Apart from the acquisition, our core business continues to perform well. In the past few months, we have announced a series of orders adding to our backlog in all regions. In many of our target geographies, defense spending is on the right. While at the same time, electronic defense spending is getting a greater portion of the overall defense budget. The ongoing and increasing demand for our solutions are clear indication of the growing operational importance of advanced and combat-proven capabilities that we have in all domain of provisional engagement maritime, land, and air. As always Elbit Systems remain very well positioned to continue to capitalize and build-on this strength. And with that, I will be happy to take your questions.

Thank you, ladies and gentlemen. At this time, we will begin the question-and-answer session. [Operator Instructions] The first question is from Pete Skibitski of Alembic Global. Please go ahead.

Could you share with us how much revenue IMI contributed in 2018?

We consolidated just the last month of IMI in our 2018 numbers and it was less than 50 million.

Then looking ahead to 2019; however, you want to look at maybe whole company organically. What kind of growth are you expecting revenue-wise in 2019?

Well, as you know, we are not providing guidance on our financials; however, you can deduct last year our revenues were over 3.6 billion and we just consolidated, as I mentioned earlier, relatively low number from IMI revenues. In overall, the yearly revenues of IMI used to be about 500 million. So just from these two, you can make a calculation, and we also expect some inherent growth on the regular business. So, this gives you at least ground for the calculation.

Then just as a couple questions on margins. I just want to understand. Should we think in terms of the lower margins at IMI for '19, should we think that your gross margins will come down while SG&A on a percent basis stays fairly level? Is that kind of the right way to think about it? Or will SG&A as a percentage of revenue be up as well?

The bottom line is that we have two growth avenues here working. One is that we continuously improve our base legacy business, as you know, with the implementation hopefully in 2019 of new ERP system and other cost cutting activities. IMI is not presently at the profit levels of Elbit that you are familiar with. However, and they use to lose money in the past before the acquisition. However, we believe that 2019 IMI will be profitable, not yet at the levels that we provide for original Elbit, but they will move to profitability. So, in generally, there could be a decline in the rates for a transition period until we bring them up to our nominal rates of profitability.

I think you said in the past it may take around three years or so, is that roughly right?

Probably, we must say that we are presently surprised, as time goes by with what we found in the operations of IMI and definitely with the synergies that we can build on, but also with the potential business growth and cost cutting that we are -- will be able to implement their. So, I would not commit to a specific number to the three years or two years or any other number. But, yes, we will be definitely looking forward to bring them up as quickly as possible to our level.

[Operator Instructions] We have a follow-up question from Pete Skibitski of Alembic Global. Please go ahead.

Post-deal typically many companies book some deal-related amortization expense. I'm just wondering, if you can quantify if there will be any meaningful amount of amortization expense from the IMI deal that we should think about in 2019 and that could linger potentially for several years?

What we have made our initial PPA for the acquisition, and we have definitely calculated the accounting of the acquisition. And in the future years, we are expecting some amortization on this deal. I would not expect that to materially affect the amortization that we are familiar with at the pre-acquisition from Elbit. There will be increase, but most of it will be spread over a quite some years probably somewhere in the 8 to 10 -- 8 to 12 years. So, per year number will be very reasonable

So, are you going back to reporting on a GAAP basis then going forward?

We will report GAAP and on GAAP as we do always.

And then, I had a question -- a couple of question about cash flow. I know you said about $495 million for IMI, but if I look at the fourth quarter cash flow, it looks like the out flow for acquisitions just over 375 million or so. Are you going to make kind of the final payment in 2019?

Yes, half of the payment that we did for the acquisition of IMI, the agreement with the government is that a significant part of that flows back to IMI to fund the pension plans of the employees and some other financial deficits that the IMI had when we bought them. So essentially, a big part of that came back to us in order to bring IMI to the right financial position.

And then, can you share with us anything about your assumptions on the working capital for 2019 whether it continues to build or comes down? Anything to share there would be great?

Well, I think we have our plans. What you have seen in the last two years that we have very strong cash flow in the last quarter of the year, something that was characteristic in the last two quarters. We believe that the working capital levels that you have seen plus some additions, of course, for IMI that is more or less where we are going to be. I don't expect any drastic changes or any material increases except for the need to run the 400 or 500 million operation of IMI.

My very last question guys I know the Israel election I think are coming in Israel. Just wondering, if you expect any kind of material changes to the Ministry of Defense budget as a result of the election?

The answer is no. I assume and I predict that it will continue to be the same. And the Israeli [indiscernible] with the long-term budget with the five-year planning, and this budget will continue probably to be the same, at the same level as it is today.

There are no further 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 two hours after the conference ends. In the U.S., please call 1-888-326-9310. In Israel, please call 03-925-5925. And internationally, please call 972-3925-5925. A replay of this call will also be available at the Company's website at www.elbitsystems.com. Mr. Machlis would you like to make your concluding statement?

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

Thank you. This concludes the Elbit Systems Ltd fourth quarter 2018 results conference call. Thank you for your participation. You may go ahead and disconnect.