UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(Mark One)*
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended December 31, 1998 or [ ] Transition
report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from to
Commission file number 0-20405
IOS CAPITAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2493042
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1738 Bass Road, Macon, Georgia 31210
(Address of principal executive offices)
(Zip Code)
(912) 471-2300
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
* Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes ___ No ___
* Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of January 31, 1999.
Common Stock, $.01 par value per share 1,000 shares
Registered Debt Outstanding as of January 31, 1999 $1,714,750,000
The registrant, an indirect wholly owned subsidiary of IKON Office Solutions,
Inc. ("IKON"), meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-Q and is, therefore, filing with the reduced disclosure format
contemplated thereby.
<PAGE>
INDEX
IOS CAPITAL, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets--December 31, 1998 and
September 30, 1998
Statements of Income--Three months ended
December 31, 1998 and December 31, 1997
Statements of Cash Flows--Three months ended
December 31, 1998 and December 31, 1997
Notes to Financial Statements--December 31, 1998
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
PART I . FINANCIAL INFORMATION
Item 1: Financial Statements (unaudited)
IOS CAPITAL, INC.
BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
December 31, September 30,
1998 1998
----------- -----------
Assets
<S> <C> <C>
Investment in leases:
Direct financing leases $ 1,584,300 $ 2,002,012
Less: Unearned income (264,124) (343,211)
----------- -----------
1,320,176 1,658,801
Funded leases, net 599,935 592,827
----------- -----------
1,920,111 2,251,628
Retained interest in lease receivables 109,935
Cash 2,621
Accounts receivable 67,860 63,066
Due from IKON Office Solutions 17,175 52,060
Prepaid expenses and other assets 42,590 14,224
Leased equipment-operating rentals at cost
less accumulated depreciation of:
12/98 - $47,049; 9/98 - $ 43,411 70,860 76,551
Property and equipment at cost, less
accumulated depreciation of:
12/98 - $6,065; 9/98 - $ 5,596 10,902 11,491
----------- -----------
Total assets $ 2,239,433 $ 2,471,641
=========== ===========
Liabilities and shareholder's equity
Liabilities:
Accounts payable and accrued expenses $ 78,079 $ 59,206
Accrued interest 7,781 33,467
Notes payable to banks 100,000
Medium term notes 1,714,750 1,849,750
Deferred income taxes 105,630 95,115
----------- -----------
Total liabilities 1,906,240 2,137,538
Shareholder's equity:
Common Stock - $.01 par value, 1,000 shares
authorized, issued, and outstanding
Contributed capital 119,415 149,415
Retained earnings 212,809 184,688
Accumulated other comprehensive income 969
----------- -----------
Total shareholder's equity 333,193 334,103
----------- -----------
Total liabilities and shareholder's equity $ 2,239,433 $ 2,471,641
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
IOS CAPITAL, INC.
STATEMENTS OF INCOME
(in thousands)
Three Months Ended
December 31
-------------------
1998 1997
---- ----
Revenues:
Lease finance income $60,527 $51,479
Rental income 9,842 9,051
Interest on IKON tax deferrals 4,196 3,661
Other income 3,477 2,235
------- -------
78,042 66,426
Expenses:
Interest 29,202 25,865
General and administrative 17,032 17,771
------- -------
46,234 43,636
Gain on sales of investment in leases 16,676 564
------- -------
Income before taxes 48,484 23,354
Provision for income taxes
Current 9,848 2,575
Deferred 10,515 7,000
------- -------
20,363 9,575
------- -------
Net income $28,121 $13,779
======= =======
See notes to financial statements.
<PAGE>
IOS CAPITAL, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------------
1998 1997
--------- ---------
Operating activities:
<S> <C> <C>
Net income $ 28,121 $ 13,779
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 8,760 8,092
Provision for deferred taxes 10,515 7,000
Gain on sale of investment in leases (16,676) (564)
Changes in operating assets and liabilities:
Accounts receivable (4,794) (8,049)
Prepaid expenses and other assets 2,153 610
Accounts payable and accrued expenses 12,685 2,500
Accrued interest (25,686) (20,395)
--------- ---------
Net cash provided 15,078 2,973
--------- ---------
Investing activities:
Purchases of leased equipment, net (2,601) (18,782)
Disposals of property and equipment, net of additions 121 54
Direct financing leases:
Additions (323,208) (285,578)
Cancellations 76,257 51,870
Collections 187,820 128,893
Proceeds from sale 281,135 25,760
Funded leases:
Additions (41,782) (110,139)
Cancellations 9,858 20,005
Collections 24,816 53,917
--------- ---------
Net cash provided (used) 212,416 (134,000)
--------- ---------
Financing activities:
Payments on bank borrowings (100,000) 0
Proceeds from issuance of medium term notes 0 248,500
Payments on medium term notes (135,000) (85,000)
Capital contributed by IKON 0 5,000
Dividend to IKON (30,000) 0
--------- ---------
Net cash (used) provided (265,000) 168,500
--------- ---------
(Decrease) increase in amounts due from IKON (37,506) 37,473
Cash and Due from IKON at beginning of year 54,681 4,463
--------- ---------
Due from IKON at end of period $ 17,175 $ 41,936
========= =========
</TABLE>
See notes to financial statements.
<PAGE>
IOS Capital, Inc.
Notes to Financial Statements
December 31, 1998
Note 1: Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the financial statements and
footnotes thereto included in the Company's report on Form 10-K for the year
ended September 30, 1998. Certain prior year amounts have been reclassified to
conform with the current year presentation.
Note 2: Medium Term Note Program
During the three months ended December 31, 1998, IOS Capital issued
no medium term notes under its $3.5 billion medium term note program. At
December 31, 1998, $1,714.8 million of medium term notes were outstanding with a
weighted average interest rate of 6.5%. The remaining amount available under
this program is $1,123.3 million.
Note 3: Asset Securitization
In December 1998, the Company entered into an asset securitization
transaction whereby it sold $366.6 million in direct financing lease receivables
for $250 million in cash and a retained interest in the remainder. The agreement
is for an initial three year term with certain renewal provisions and was
structured as a revolving asset securitization so that as collections reduce
previously sold interests in this new pool of leases, additional leases can be
sold up to $250 million. The terms of the agreement provide that the Company
continues to service the lease portfolio for the securitization provider. At
December 31, 1998, the interest-only strip of $27.9 million related to the sale
is included in prepaid expenses and other assets and the servicing obligation of
$5.5 million is included in accounts payable and accrued expenses. The Company
recognized a pretax gain of $14.3 million during the first quarter of fiscal
1999 on this agreement.
The Company has additional asset securitization agreements for $275
million of eligible direct financing receivables that expire in March 1999
($125 million) and September 1999 ($150 million). Both of these agreements are
expected to be renewed. These agreements are also structured as revolving
securitizations, whereby additional leases can be sold as collections reduce the
previously sold interests. During the first quarter of fiscal 1999, collections
reduced previously sold interests on these two agreements and the $250 million
transaction, described above, by $31.1 million. The Company sold an additional
$31.1 million in net eligible direct financing leases and recognized a pretax
gain of $2.4 million.
<PAGE>
IOS Capital, Inc.
Notes to Financial Statements (Cont.)
December 31, 1998
Note 4: Comprehensive Income
As of October 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS
130 establishes rules for the reporting and presentation of comprehensive income
and its components. SFAS 130 requires mark to market adjustments on the retained
interest on lease receivables to be included in other comprehensive income.
Total comprehensive income is as follows (in thousands):
Three Months Ended
December 31
-------------------------
1998 1997
---- ----
Net income $28,121 $13,779
Mark to market adjustment, net of tax 969
------- -------
Total comprehensive income $29,090 $13,779
======= =======
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Pursuant to General Instruction I(2)(a) of Form 10-Q, the following analysis of
the results of operations is presented in lieu of Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Impact of Year 2000
State of Readiness. The Year 2000 issue is the result of computer programs being
written using two digits rather than four to define the applicable year. Any of
the Company's computer programs or hardware that have date-sensitive software or
embedded technology (non-IT systems) may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities. The potential for a problem exists with
all computer hardware and software, as well as in products with embedded
technology: copiers and fax machines; security and HVAC systems; voice/telephony
systems; elevators, etc.
IKON has appointed a Year 2000 Corporate Compliance Team, which has prepared a
compliance program for all business units, including the Company, and is
responsible for coordination and inspecting compliance activities in all
business units. The compliance program requires all business units and locations
in every country to inventory potentially affected systems and products, assess
risk, take any required corrective actions, test and certify compliance. IKON's
Year 2000 Testing and Certification Guidelines delineate the Year 2000
compliance process, testing and quality assurance guidelines, certification and
reporting processes and contingency planning. An independent consulting company
has reviewed the compliance program and any appropriate recommendations have
been implemented. All internal IT systems and non-IT systems have been
inventoried. The Company has completed the assessment phase of its Year 2000
project. The remediation phase is approximately 69% complete and the testing
phase and validation phase is approximately 9% complete. The Company anticipates
completing the Year 2000 project no later than October 31, 1999, which is prior
to any anticipated material impact on its operating systems.
Costs. The Company will use both internal and external resources to reprogram or
replace, test and implement its IT and non-IT systems for Year 2000
modifications. The Company does not separately track the internal costs incurred
on the Year 2000 project. Such costs are principally payroll and related costs
for its internal IT personnel. The total cost of the Year 2000 project,
excluding these internal costs, is estimated at $1.4 million and is being funded
through operating cash flows, all of which will be expensed as incurred. To
date, the Company has expensed approximately $751,000 related to its Year 2000
project.
Risks. Management believes, based on the information currently available to it,
that the most reasonably likely worse case scenario that could be caused by
technology failures relating to the Year 2000 could pose a significant threat
not only to the Company, IKON, its customers and suppliers, but to all
businesses. Risks include:
o Legal risks, including customer, supplier, employee or shareholder lawsuits
over failure to deliver contracted services, product failure, or health and
safety issues.
o Loss of revenues due to failure to meet customer quality expectations.
o Increased operational costs due to manual processing, data corruption or
disaster recovery.
o Inability to bill or invoice.
<PAGE>
The cost of the project and the date on which IKON and the Company believe it
will complete the Year 2000 modifications are based in management's best
estimates, which were derived using numerous assumptions of future events,
including the continued availability of certain resources and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ materially from those anticipated. Specific factors
that might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
Contingency Plans. IKON's Guidelines require that contingency plans be developed
and validated in the event that any critical system cannot be corrected and
certified before the system's failure date. The Company and IKON expect to have
contingency plans in place by October 31, 1999. In addition, IKON is forming a
rapid response team as part of its IT group that will respond to any operational
problems during the Year 2000 date change period.
Three Months Ended December 31, 1998 Compared
with the Three Months Ended December 31, 1997
Comparative summarized results of operations for the three months ended December
31, 1998 and 1997 are set forth in the table below. This table also shows the
increase or decrease in the dollar amounts of major revenue and expense items
between periods, as well as the related percentage increase.
<TABLE>
<CAPTION>
Three Months
(dollars in thousands) Ended December 31 Increase (Decrease)
1998 1997 Amount Percent
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $60,527 $51,479 $9,048 17.6%
Rental income 9,842 9,051 791 8.7%
Interest on IKON tax deferrals 4,196 3,661 535 14.6%
Other income 3,477 2,235 1,242 55.6%
--------- --------- ---------
78,042 66,426 11,616 17.5%
Expenses:
Interest 29,202 25,865 3,337 12.9%
General and administrative 17,032 17,771 (739) (4.2%)
--------- --------- ---------
46,234 43,636 2,598 6.0%
Gain on sale of investment in leases 16,676 564 16,112 2856.7%
--------- --------- ---------
Income before taxes 48,484 23,354 25,130 107.6%
Provision for income taxes 20,363 9,575 10,788 112.7%
--------- --------- ---------
Net income $ 28,121 $ 13,779 $ 14,342 104.1%
========= ========= =========
</TABLE>
Revenues
Total revenues increased $11.6 million or 17.5% in the first quarter of fiscal
1999 compared to the first quarter of fiscal 1998. Approximately 77.9% or $9.0
million of this increase in revenues was a result of increased lease finance
income due to continued growth in the portfolio of direct financing and funded
leases. The lease portfolio, net of lease receivables that were sold in asset
securitization transactions, increased 3.9 % from December 31, 1997 to December
31, 1998, including the retained interest in the leases sold.
<PAGE>
Office equipment placed on rental by the IKON marketplaces to customers, with
cancelable terms, may be purchased by the Company. During the first quarter of
fiscal 1999 and 1998, IOS Capital purchased operating lease equipment of $5.7
million and $19.5 million, respectively. Operating leases contributed $9.8
million in rental income during the first quarter of fiscal 1999, compared to
$9.1 million in the first quarter of fiscal 1998. Effective October 1, 1998, the
Company has limited the funding of rental equipment to the IKON marketplaces to
select accounts.
The Company earns interest income on the deferred tax liabilities of the IKON
marketplaces associated with leases funded through the Company at a rate
consistent with the Company's weighted average outside borrowing rate of
interest. The Company's average rate was 6.4% for the first quarter of fiscal
1999 compared to 6.6% for the first quarter of fiscal 1998. The deferred tax
base upon which these payments are calculated increased 7.0% to $254.3 million
at December 31, 1998 from $237.6 million at December 31, 1997. Primarily as a
result of the increased deferred tax liabilities, interest income on deferred
taxes rose $535,000 or 14.6% when comparing the three months ended December 31,
1998 to the three months ended December 31, 1997.
Other income consists primarily of late payment charges and various billing
fees. The structure of these fees has remained basically unchanged from fiscal
1998. The growth in other income from fees is primarily due to the increased
size of the lease portfolio upon which these fees are based. Overall, fee income
from these sources grew by $1.2 million or 55.6%, when comparing the first
quarter of fiscal 1999 to the same period of fiscal 1998.
Expenses
Borrowings to finance the lease portfolio in the form of loans from banks and
the issuance of medium term notes in the public market decreased by .9% from the
prior year, with $1,714.8 million outstanding at December 31, 1998. The decrease
was the result of the asset securitization in December 1998. Excluding the
securitization, debt would have increased $234 million, or 13.5%. The Company
paid a weighted average interest rate on all borrowings of 6.4% in the first
quarter of fiscal 1999 compared to 6.6% in the first quarter of fiscal 1998. The
increased borrowings prior to the securitization in December 1998, net of a
decrease in the overall average interest rate, resulted in an increase in
interest expense of $3.3 million, or 12.9%, when comparing the first quarter of
fiscal 1999 to the first quarter of fiscal 1998. At December 31, 1998, the
Company's debt to equity ratio, including intercompany amounts due from IKON,
was 5.1 to 1.
Total general and administrative expenses for the quarter ended December 31,
1998 decreased by $739,000 or 4.2%, compared to the quarter ended December 31,
1997. The general and administrative expense category in the first quarter of
fiscal 1999 includes depreciation expense on leased equipment totaling $8.3
million, compared to $7.7 million for the first quarter of fiscal 1998. In
addition, lease bonus subsidy payments included in the general and
administrative expense category were $2.8 million in the first quarter of fiscal
1999 compared to $3.8 million in the first quarter of fiscal 1998. Excluding the
effects of increased depreciation expense on operating leases and a decrease in
lease bonus subsidy payments, remaining general and administrative expenses
decreased by $424,000 or 6.7% when comparing the first quarter of fiscal 1999 to
the first quarter of fiscal 1998, as the Company continues to control its costs.
Gain on Sale of Investment in Leases
In December 1998, the Company entered into an asset securitization transaction
whereby it sold $366.6 million in direct financing lease receivables for $250
million in cash and a retained interest in the remainder. The agreement is for
an initial three year term with certain renewal provisions and was structured as
a revolving asset securitization so that as collections reduce previously sold
interests in this new pool of leases, additional leases can be sold up to $250
million. The terms of the agreement provide that the Company continues to
service the lease portfolio for the securitization provider. The Company
recognized a pretax gain of $14.3 million during the first quarter of fiscal
1999 on this agreement.
<PAGE>
The Company has additional asset securitization agreements for $275 million of
eligible direct financing receivables that expire in March 1999 ($125 million)
and September 1999 ($150 million). Both of these agreements are expected to be
renewed. These agreements are also structured as revolving securitizations,
whereby additional leases can be sold as collections reduce the previously sold
interests. During the first quarter of fiscal 1999, collections reduced
previously sold interests on these two agreements and the $250 million
transaction, described above, by $31.1 million. The Company sold an additional
$31.1 million in net eligible direct financing leases and recognized a pretax
gain of $2.4 million.
Income Before Taxes
Income before taxes for the first quarter of fiscal 1999 increased by $25.1
million or 107.6% over the first quarter of fiscal 1998. This increase in income
before taxes was essentially the effect of the gain on the asset securitization
completed in the first quarter of fiscal 1999, higher earnings on a larger lease
portfolio base and decreased general and administrative expenses, partially
offset by higher borrowing costs.
Provision for Income Taxes
Income taxes for the first quarter of fiscal 1999 increased by $10.8 million or
112.7% over the first quarter of fiscal 1998. This increase in income taxes is
directly attributable to the increase in income before taxes in the first
quarter of fiscal 1999 compared to the first quarter of fiscal 1998. The
effective tax rate was 42% for the first quarter of fiscal 1999 and 41% for the
first quarter of 1998.
FORWARD-LOOKING INFORMATION
This document includes or incorporates by reference information which may
constitute forward-looking statements about the registrant or IKON within the
meaning of federal securities laws. Although the Registrant believes the
expectations contained in such forward-looking statements are reasonable, no
assurances can be given that such expectations will prove correct. Such
forward-looking information is based upon the Registrant and IKON's current
plans or expectations and is subject to a number of risks and uncertainties that
could significantly affect the Registrant's and/or IKON's current plans,
anticipated actions and future financial condition and results. These
uncertainties and risks include, but are not limited to, those relating to
IKON's successfully managing the integration of acquired companies, including
companies with technical services and products that are relatively new to IKON,
and also including companies outside the United States, which present additional
risks relating to international operations; risks and uncertainties (applicable
to both the Registrant and IKON) relating to conducting operations in a
competitive environment; delays, difficulties, technological changes, management
transition and employment issues (applicable to both the Registrant and IKON)
with consolidation of business operations; risks and uncertainties relative to
potential Year 2000 deficiencies associated with internal systems (applicable to
both the Registrant and IKON) and IKON's distributed products; risks and
uncertainties relating to material litigation; debt service requirements
(applicable to both the Registrant and IKON) including sensitivity to
fluctuation in interest rates; and general economic conditions. As a
consequence, current plans, anticipated actions and future financial condition
and results may differ materially from those expressed in any forward-looking
statements made by or on behalf of the Registrant or IKON.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following Exhibits are furnished pursuant to Item 601 of
Regulation S-K:
Exhibit No. (27) Financial Data Schedule
(b) Reports on Form 8-K
On November 5, 1998, the registrant filed a Current Report on Form
8-K to file, under Item 5 of the form, information contained in a
press release of its parent, IKON Office Solutions, Inc. (IKON),
dated November 4, 1998 concerning IKON's earnings for the fiscal
quarter and year ended September 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. This report has also been signed by the
undersigned in his capacity as the chief accounting officer of the Registrant.
IOS CAPITAL, INC.
Date February 12, 1998 /s/ Harry G. Kozee
----------------- ------------------------
Harry G. Kozee
Vice President - Finance
(Chief Accounting Officer)
<PAGE>
Index to Exhibits
Exhibit Number
(27) Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of IOS Capital, Inc. and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,987,971,000<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 134,876,000<F2>
<DEPRECIATION> 53,114,000<F2>
<TOTAL-ASSETS> 2,239,433,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,714,750,000
0
0
<COMMON> 0<F3>
<OTHER-SE> 333,193,000
<TOTAL-LIABILITY-AND-EQUITY> 2,239,433,000
<SALES> 0
<TOTAL-REVENUES> 78,042,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,032,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,202,000
<INCOME-PRETAX> 48,484,000
<INCOME-TAX> 20,363,000
<INCOME-CONTINUING> 28,121,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,121,000
<EPS-PRIMARY> 0<F4>
<EPS-DILUTED> 0<F4>
<FN>
(1) Includes net investments in leases of $1,920,111,000 and other accounts
receivable.
(2) Includes leased equipment of: cost - $117,909,000; accumulated depreciation
- $47,049,000.
(3) Common stock, $.01 par value, 1,000 shares outstanding. Since total is less
than $1,000, zero is reported.
(4) Not required as the registrant is a wholly-owned subsidiary.
</FN>
</TABLE>
