Q1 2020 Earnings Call
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This time, all participants are you listen only mode.
Following management's prepared remarks, well hold acumen day session.
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As a reminder, this conference is being recorded today May 720 20.
I would now I'll turn the conference over to Jody Cain. Please go ahead.
This is Jody Cain with L.A.J.. Thank you all for participating in today's call. Please note that spot [laughter] that much principally could watch this space.
On the Investor Relations section of the video website at <unk> deal Dot com.
Joining me from P. deal or Dominic will need president and CEO and Edward in Park, No Vice President and Chief Financial Officer.
Please turn to slide two and let me remind you that during this call management will be making forward looking statements regarding the Companys financial performance.
The matters and actual results may differ materially from those expressed in or implied by the forward looking statements in particular, there six new significant uncertainty about the population and potential impact of cope with Nike pandemic. This means that results could change at any time and you have to cope with Nike.
On P. deals operations financial results and outlook, it's a best estimates based on the information available for today's discussion.
Factors that may cause differences between current expectations and actual results are described in the company's FCC filings, which are available at FCC dotcom and in the Investor section of PDL Dot com.
The forward looking statements made during this conference call should be considered accurate only as of the data like broadcast may 7th 2020, Although the company may elect to update forward looking statements from time to time the future. The company, specifically disclaims any duty or obligation to do so even if new information becomes available.
<unk> or other events occur in the future.
Today's conference call remarks will include a discussion of both GAAP and non-GAAP financial results PDL believes the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of this business enables a comparison of financial results between periods for certain items may vary.
Independently of business performance and allow for greater transparency with respect to keep metrics used by management in the operating the business.
These non-GAAP financial measures are presented solely for the information comparative perch purposes, and should not be regarded as a replacement for corresponding GAAP measures reconciliation between GAAP and non-GAAP financial measures can be set at the end of the financial results news release that was issued earlier today.
Before turning the call over to Dominique Nate I'd like to direct you dislike free in reference to PDL preliminary proxy statement filed with the FCC on May 2020, now I'd like to turn the call over to dominate.
Thanks, Jody good afternoon, everyone and thank you for joining us I would have to begin by thanking my colleagues that PDL and the gene Butlins don't know then well. They did you case, you know just figured on getting the coffee, but David.
Thanks to their hard work engagement adaptive Nate we have managed to continue to advance Alco portfolio E G. While ensuring they working condition.
Our entire team most of will not working on their home Rpcs.
I'm pleased to report today is a good pull grades that we have continued to make during the pandemic.
Turning to slide four wheel, what do you know gauge you could keep your money taxation of all aspects shouldn't look good food that use the company called stockholders.
As you May know all money to build the company as a whole ought to monetize all I said you did you need with deep clean to quote with a focus on maximizing medco seat on the cash all I said school stockholders.
We remain confident the high quality of all I said we.
We believe they are trying to keep the strategy can open for buyers or standalone that'd be good companies.
Moving to slide five.
By now you may have raised the preliminary proxy statement related to all 2020 and won't be teams that we find we see earlier this week.
Stockholders of record at the close of be nice on May 29, 2020, we'd be entitled to vote.
We we'd be holding all I won't be so quoted before formats on July 16, 2020, beginning at 10 Am Pacific time.
We expect to announce the result of booking idea that meeting.
As previously stated that did he had both concerted weve management and financial accounting and legal advisors will try to GE with respect to distribution.
That's it gets pretty cookie doing two weeks timing viability and potentially back to all stockholders of the I tend to teach the volleyball too as you see events.
Whole company family Telcos, you're making.
Devoted to mine, but do you see shanda and does Atlanta dissolution I'm, calling it the preliminary proxy statement you seem to be interest of all stockholders.
A discussion of the many factors from C. Diff doing this process is included in the preliminary hockey stick, but.
Approval for the distribution landy subjected to your pool like the holders of the that's really key about outstanding shares of common stock.
Dissemination of the company after liquidation of its key assets will lose money fishing wind down of the company's operation.
And public shareholders of liability due to claims for the legal after the distribution goodness.
Yeah, I do show.
He said he shouldn't be that allow the company to reduce overhead expenses with the goal of did you might see increasing total distributions to all shareholders.
I'd like to review Civil War coupons in the proposed plan of de solution.
The company, we Steven deceptive, finding the said you'd get to be solution on the state's Delaware like three years.
For the full wind down purposes.
The time period is required and it's a low the Delaware where P.D.A. incorporated.
It allows for managing potential litigation fees will be any claims and dispute and puts speaking distribution and so many times they shouldn't have any remaining assets.
It also provides for the handling of remaining shareholders that needs to TV shoes.
For the final distribution.
The club begins running on the proposed distribution peer you'd want to simply because of distribution is fine with the states have done away.
He still condos do not approved the plan to be solution. We will continue on coal Portuguese pen and the board. We continue to explore all I kinda keys for returning capital to stockholders.
Our board and management thought that that Weve outside spend until then equal devices I've been analyzing how best to maximize the value. We did you didn't draw stockholders.
On Monday taxation process.
Well no last call, we stay Ti Dom dishes goals of competing a whole company sales the money taxation of all focused.
Namely all where your Q whites Lindahl, no, Dan and only book and holding by the end of Twentytwenty.
Well, we are on kuwait's by L. Polk with debt, we recognize that the impact of the coffee 19, Bandini Cornell many taxation Jose and not the Beast nascent potential buyers of I said could go some delays.
Which makes it possible is not problem or the timing of the sale or the position of so tend to be I said, maybe delayed beyond 2020.
So kind of dissolution tell me the board to I've been done or delays of finding simply because of distribution and due to limitations. The solution you can see in circumstances or if it's the best interest of PDL and I'll start quotas.
He view obese flexibility regarding busted decision timeline LTE solution, we believe that getting shareholders' approval for all planned at the solution, we've not to fix the bad you, but we can capture.
Well I think many times station process.
Now on slide six.
As announced on all last conference call, we have engaged leading investment banks to advice Zig Ziglar Genovese monetization caused it.
Let me review our progress to date talking without ownership interest in April thing by responses.
So I always been advised you knock on the seller volleyball have you base.
We announced on May see but I'll board of directors approved the distribution of the totality of 13.3 million shares of common stock available.
Yeah, its special onetime dividend to PDL stockholders.
As mentioned in Tuesday's press release, we made this decision after careful consideration any quantification, we've all financial advisors.
Oh, yeah, and its de link with the later, but I think the board and management or monetization matches.
Since the beginning of the year, we go the numbers I cannot keys and aggressively confuse the sale of always looping shares via private sale.
For a number of reasons, including the impact to cut the Nike we came to conclusion, but the content feeling that stuff distribution isn't the best interest of all shareholders.
Distribution will enable P.D. as shareholders to make their own investment decision regarding people can shift there were some movies distribution.
Let me review the process.
Distribution.
Subject to certain conditions be able can she asked me be distributed on May 20% 2020, DDS stockholders of record Oh, the close of business only 15 2020.
It's a distribution would take place the form of the pullback a dividend of shares available to common stock to each pds stockholders of record on May 15.
As of May see.
PDL I definitely see 2020, P.D. I'd like to ultimately 116.3 million shares of common stock outstanding.
Based on this number we estimate that PDL stockholders, we received approximately 0.115 shale.
Able same common stock for each shale Pee Dee Cummins Toby.
The final distribution ratio will be determined based on the number of P.D. a common shares outstanding onto a record date.
Distributes able can shares will not be subject to any look that period and we'd be fully registered and freely tradable.
Please note that no fractional shares than people think we'd be we'd be distribute.
Instead PDL stockholders, we receive cash in you have any fraction of the sale of people thinking on stuff, but they otherwise we'd have Lucy.
Well, we commenced a PD l. stockholders concept the taxes by just with respect to U.S. federal state local and non U.S. that consistency of the distribution.
Let me share knowledge receptor antibody, both any kids you did that get a chance to listen to their first quarter earnings call yesterday.
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Did you start date of May 20 feet.
Even 10 announced on April Thirtyth, but bear in discussions with D.A. regarding the pools label fixing.
This is not a gallon ti that exceed we'd be approved by 58.
Nonetheless, these poor grace is encouraging.
They will pay more so reported yesterday, but it's a it's all planned for Fixie you maybe send to recording a bad webcast at Eagle came dotcom.
Finally, we continue to push you put pencil path to many times valuable thing wants to purchase up to 3.3 million shares that people can common stock.
Okay, and wireless habits strike price of $6 density of things.
Let me tell now to owe them at the high vision processing on slide seven.
As previously announced a b of a securities is acting as though by not sort of advisors.
In connection with the sale of the whole company, Oh, it's where you'll keep portfolio.
Both work stream on the sale of the whole company or what do people for you I've been brothers.
We have a comedy process for the Sellable, where your T. I said and we're on track we'd be execution.
Oh, yeah, as the leading the process to sell Noden pharma subsidiary and we are encouraged by the quality and not the beats we have received.
Before say, that's not seem to be noticeably affected by the could be 19 pandemic. So we remain on track.
We are now fully committed to land sale success on the development of these next generation technology why do we put skews the appropriate path to maximizing that you for P D or stockholders.
We haven't gates is BB links to lead this pause and evaluating opportunities available to lend out.
The two monetization options at present.
It was seller blend oh, it's a big speed.
You don't see we estimate that does that you have all cash and all the noncash assets that they do you see must be distributed to PDL stockholders ive to say king our liabilities to be between $350 million and 700 million dogs.
I think like <unk> per share distribution of between approximately $3 and he told is in the form of cash and noncash asset based on the current number of outstanding P.D. had shared at.
Hey portfolio do you have 2020.
This is a broad range, because we cannot predict et cetera, and teach him on the cash available to distribute to all stockholders connections. The dissolution nor can we predict with certain pieces that you. Both at no cash I said and liability ebay and T., we are able to dispose of or substantially all of I think and state.
Oh, Oh liabilities.
We made another assumptions in calculating the range of estimated distributable value and I refer you to the preliminary proxy statement to review fees assumptions.
Let me know provide some not dead on L. casting.
On slide eight beginning with Zanesville net sales for the first quarter of $6 million declined 11% over the prior year period.
It could be 19 pandemic imports elective surgeries, including cataract surgery, which I consider selectivity 20.
Sure not most complete hot or across the world.
Started with all key Asian markets, the China South Korea.
And principally advanced across Europe, and the U.S.
In line with all the industry participants, we expect the cataract surgery market, we progressively begin to reopen the later part of the second quarter.
In Asia and subsequently the races, who will then ramping up in the third quarter before returning hopefully to close to pre called the 19 labels in the fourth quarter I'd be here.
He likes the considerable uncertainty in the market.
We have nothing to position to pullback revenue guidance full ends up in 2020 at this time.
[noise] in view of the copies Duncan impact on the cataract surgery market, we expect to extend the timeline for many times they shouldn't blends though.
That said, what makes blends out, particularly attractive company its technology.
Enzyme is well positioned to rebound because he 19 delta, but effectively building on its position as the nobody to for the treatment of catch all right.
Require greater accuracy and put should you have customization.
Let's now features the best in class technology would be streamline for laser.
We didn't they both optimized treatment of tissue specific cacti insurgent management of activities.
Between 70, and 90% of cataract person patients at treatable. These really significant that seems like you said prior to surgery, but does that you might use them remain largely in corrected for surgery.
Importantly, we believe that Glenn So next generation system, which we refer to as Jane too we substantially enhance these competitive position.
Thank you we combine in a single quite pack workstation status. He felt femtosecond laser and you think will it be syndication system.
Well that insurgency ability to suites seamlessly between the two technologies.
Further blends out intellectual property secure the problem, yeah technology position for Jane to develop and commercialization.
The development of Gen. Two is progressing well.
Lets dive targeting submission of the five 10-K application with the U.S. It da by the end of 2020 or 21.
Weve commercial launch of Jane to expected D 2022.
[noise] blends out, okay, which without any third party debt financing.
The case of the public's peanuts, we would ensure butlins out would be well capitalized to conduct it business and to put huge into and other growth opportunities.
Turning to a portfolio of what are your T. I said like nine.
We received $13.6 million net cash why your T spot or all of our oil to your why did the first quarter of 2020.
From $12.6 million a year ago culture.
In assessing the impact of dependent eco now assets. The pharmaceutical products, you know portfolio, mainly related to the treatment of type two diabetes.
We believe these are essential drugs that are much less likely to be impacted by company 19.
Switching to Noden pharma on slide 10.
Our strategy to increase the profitability of tick tuning the U.S. and mitigate the impact of generic competition.
Paying off.
No then generating oaky generated operating income to $3.7 million into first quarter of 2020.
We are pleased that 20 pick tuna and I'll, let you know we took a while maintaining an approximate 68% shape the U.S. pocket.
No. They found that products pick two main white delays are used by patients we need these unique drugs to conform felt like returning hypertension.
We haven't seen yet any significant impact from dependent econ values.
The 2020 cancer as well. Thank you for kids do carry certain losses, including the 2019 and 2020 tax years back five years.
Tds, a significant taxable income and paid cash taxes ineligible carry back years.
To record the estimated cost to sell the asset.
Auction to the carrying value of the outset in the first core 2020, we record $6 million is he estimated costs to <unk> assets.
Product revenue from node and was $15 million compared with $20 million in the prior year period.
Revenues for the U.S. and the rest of the world were $3.9 billion and $11.1 million, respectively. In the first quarter of 2020, compared with $12.2 million $7.8 million, respectively. In the first quarter of 2019.
The declining U.S. revenue is primarily a result of the law onto an authorized generic of tekturna as well as the launch of a third party generic form of Aliskiren in March 2019.
U.S. market share for granted tech turn it and the authorized generic of Tech turn of approximately 668% decline put in the market share of 73% as of December 31st 2019.
In the first quarter of 2020, we recorded $1.8 million as you estimated cost to sell him, though I wrote noting down by $4.9 million upon the determination it met to help for sale criteria.
Net loss from discontinued operations for the first quarter of 2020 was approximately $200000 compared with income $15.1 million for the first quarter of 2019.
Decrease was primarily due to the estimated costs to sell the assets classify they sell it for sale upset $7.9 million [noise].
Tend to 4.9 million dollar right, though I've known to reflect a fair value upon us reclassification as an asset help for sale.
On a gap basis, the net loss for the first quarter of 2020 or $31.7 million for 26 cents per share compared with cap net income of $6.7 million or five cents per diluted share for the first quarter of 2019.
Moving onto our Nongaap financial results on site 13.
The adjusted Nongaap net loss attributed P.D.L. stockholders was $6.7 million for the first quarter of 2020 compared with the adjusted Nongaap net income of $11.9 million for the first quarter of 2019.
Turning to our balance sheet inside 14.
We had cashing cash equivalents from continuing operations of $125.5 million as of March 31st 2020, compared with $169 million as of December 31, 2019.
43.5 million dollar reduction was primarily the result of common stock repurchases of $19.2 million. The net cash used for the repurchase of convertible debt of $18 million in that cash Houston operations of $14.6 million. This reduction was partially offset by the proceeds from reality right.
Teen point $6 million.
With that we're ready to open a quote call for questions operator.
As a reminder, if he would like to ask a question. Please press start then the number one on your telephone keypad.
<unk> ASCII question.
<unk>.
Your first question comes from Mac Jacob.
Group.
Hi, guys. Since we're taking my question Oh first question is just on on the evils them distribution I was just wondering what the thinking was to to distribute it like right before the do for date. So I believe the distribution is going to happen on Thursday, and people will be Monday.
Yeah <unk> you take that question. So you know we.
The first and kill rethink D., we we depot Cousineau Bland Amy's with your time to kind of.
Fail, Oh, Shelbyville fan me no food private sales and be suppose mandates by this we say bye bye toy.
As we out 14 and following the financing that a evil been good deed, we came to the conclusion that these <unk>.
And and we thought was you know mess quid Pro Bowl to lead to overfield is to be able to decide on their own to make their own business decision.
Well I'm, hoping for.
The.
Oh, just prior to the to do by date and that is nice city as quickly as we can do it now.
We would enable fan too risky both have both at a time, where they could be enough site to to the shape. We we trust I mean, we of course he done can be approval of the product you need to know for sure, but we are <unk>.
Most importantly, we you know around you approval vases <unk> traditionally in the volume of a chef trading and <unk> <unk> <unk> side, maybe note to hold.
<unk> Fame they would receive all shares doing a period, where we would indeed be great to a port sneaky to sail Bam both.
Hopefully about finding the price with the approval news and cigarettes who've used increasing budget.
Okay, yeah that that that totally makes sense. So my my second versus just on LENSAR.
So you're Ah I'm aware of you know what's going on in the yeah. The cataract procedure space and also just kind of.
Surgeries in general I was just running water the.
Contingency plans for if if we have kind of a second wave.
Corona virus.
Corona virus pandemic like in in Cold flu season, So if if we have no additional.
Lockdowns this winter et cetera.
You know Nico C.E.D. I'll see you have been dying on the line, but the point you to me I would say at this point.
You know, we all approaching v.
To to try to make sure that we put take yoga night vision of continued to phones the development of Jane two and a and maintain the capital but it gives the organization three excluded.
And indeed onto the Bayes d. on D.S., something as we laid out that the market would <unk> renting out in in the food quota hopefully be back to 92 or more to sense of the pre could beat stage, he's being say you're right. We neither knew was indeed.
It'd be a certain ways and then if he'd with the case and they would be a second total log domain and we would have to to reconsider boost plan and a and frankly, we would we would hope that <unk> continued to to work with the team you kind of protect a cup of B.D.T. because again.
What matters most too as we do expect that once we <unk>, we all thing.
They will be a number of surgery sensors, which we want to very quickly did back in two b.'s.
And what is most important to add that meant that would be capable to do the first one to study Bible is neat for their customers and that meaning maintaining the team and continuing to phone bill tuition. So they can keep it kept that'd be D.C. intact.
So that's basically the planet yeah I'd be fun.
<unk> mentioning the the.
Jane to development, because that is the deep part of the future and and the value of that for for the future <unk>.
<unk>, who Hebrew your V.C. or <unk> that it's a double digit growth.
And we've only got interrupted when the the cataract surgery market shut down.
<unk> next do you want to add anything.
Just just a couple of things just feels a little data points. So we had a a 24 of our U.S. side opened up for elective surgeries, but again between last week and this week with 19 of those sites actually opening this week, it's interesting because we saw.
Oh, a half a dozen sites or so <unk> you know come back to what would appear to be very close to their pre cold. Good you know volumes and then we've seen the rest of those sites I'm much more conservative intern in terms of of you know kind of trying to.
Under to reopen and understand what they're what they're new normal might be there are some substantial safety measures that most of these practices are taking into consideration to try to let's see keep anything untoward from up happening to their patients or to their employees.
We've redeployed our group we've been on site and many of these sites, we haven't flown to any of the sites yet we've driven to those sites and we've been down servicing these accounts because they've been getting up and running. So you know, we're we're working with the practices and you know where costs.
Optimistic that size on protecting their employees and their patients and and by US doing everything we can to protect our employees with a with P.P.P.C.D. that they traveled with that we're we're adapting to the current current market situation.
And and Mac. Thank you <unk> you know a bear in mind that a significant part of the of <unk> come from outside the U.S. I think it <unk>.
Correct and breakfast and <unk>.
So you go ahead and <unk>.
<unk> <unk>, we we <unk>, we started to see business coming back in Asia in in in in specifically, China in in South Korea, We actually believe that we do have system sales in a in China in in this <unk> and this quarter and so we've we've just a shift a few.
Systems to to China. So that's a good sign that that they're attempting to get back to some some sort of normalcy, they're going in the South Korea, we've seen a reopening of sites there as well and you know and into Germany, they've where we have quite a robust business days with the bus started back with a surgeries there as well.
Yeah, and so we're starting to see other parts open up India still under a a a shut down at the moment.
Yeah, So I I do think that bed deepest vacation geographically.
Yeah, you sound lead not protecting lends now I knew that company funky truly but <unk> outreach, which we need these quite impressive actually for a company or blends outside that'd be good <unk>. The you know that but central risk I mean, they are countries, which clearly I've been doing bad.
<unk>.
In Germany, the case in point and and being able to.
<unk> to manage the the classic now everybody's going to be.
<unk> and.
In the future, but I think we <unk>. The the biggest thing that we're focusing on he's recognizing that meant a tremendous opportunities and a tremendous team Easter continued to protect that kept that'd be D.C. So when the market reopens. If you see now lens out is.
<unk> and and custom is no, but they can rely on their high quality 72 students to to go on so if you find you know patients neat Oh, so bear in mind that we still quite there he's got dark surgeries elective apt to a point you know patients were way too long at some point.
<unk>.
Yeah. That's that's a really good point go to the fact is the patients are going away. During this time there are certain markets that are better positioned to come back faster for instance, in the U.S., where where are the there's a a a an approach a balance billing.
In in people pay for these elective procedures. The doctors you know they will they will work hard to for to continue to provide the services to the patients in terms of enhancing your visual outcomes.
I need different ways in China, where doctors are more let's say on staff and their employees and and there's bigger issue. There in terms of just trying to get the elderly population into the health care system, you know they'll have a backlog of of of patients but.
Necessarily motivated to do you know make up for last time, so to speak in in other markets positive if a little bit different fan. So we'll just have to you know right. Now. We're we're we just want to make sure that we're in a position that we keep our gentoo project Ontrack.
Because that's that's incredibly important to our future.
And that we continue to provide the quality of service and support to those are college when they need it no matter, where they are and and we're in a pretty good position to do that yeah that and we're being very response is to that and we've you are our relationship with all of our customers as being a more of.
Partnership then, but as a customer given sort of the our our overall size and I think you know that partnership.
Customer centric attitude is a is going to help us in the long run as we as we continue to remove the slower.
Yeah. Thank you Nick <unk> and thank you back for a question as you as you. So from the very long ago. Because you are getting for myself I should make we think about that <unk> I think <unk> wonderful. The T.V.'s wonderful. We we are mentioning that kept the D.T.D.V.D. pool, what what do <unk> reopening.
Any other question.
You have to answer thank you.
Thank you.
Again, if he would like to ask a question. Please start then the number one at this time.
Your next question comes from Canada.
One in common.
Hi, Thanks for taking my question.
Given that there's been such a dramatic impact on elective cataract surgery do you expect that the sale of the link our business will be essentially delayed until the pet then like those balls and potential buyers can build more confidence in the the ongoing performance is that business or or do you think that you've been engaged the fires.
Oh.
The on sound at least one he's actually a a both want us to me <unk> no question that everybody, but <unk>. It's the treaty just when you a demand shut down almost overnight I mean, <unk>, if we market the same time, but overall you saw that way.
Closer than by the time closer I happen it with 95%.
So they you know it what with <unk>, but he's very clear up at Duke Road D. precede growth of.
Of lands, which even in the U.S. and the first quarter was the 17 or 18% and that was taking into consideration that you'd mark. It was already a very sharp reduction in a in business, but you look at January February It was in line with what we're seeing you know in in previous years. So.
The dynamic that anybody interested in a in in basing event that was very what establish and that speaks to the strengthened technology was pretty benign for the second thing, which we do people are interested in when we talk to put central <unk> is is the lens out kind of <unk> <unk>.
Generation system with Jane too you know be set all in one thing to fake cool workstation and whether it be any Bolton boy, we wanted to see whether it'd be <unk> and frankly, my <unk> team because being able I mean.
The teams we've a proposal for distance even when they can continue to manage to to advance that's program and then some of them. You know just the two measures to be able to to do it deal interacting with each other that most people want to be working from home, but that's another way as possible so that program anything pretty much.
<unk>.
No one sent you a question and more <unk> briefly.
The impact is important.
Think everybody's a lead to beat he on wait and see what's going to happen to the market.
<unk>.
Right now a vulnerable workstreams most of them on track.
<unk> it no that is not on track is we have decided to.
Make sure we will not trying to to make it to beat the timeline because right now.
Yeah, but you need time nine to feed go out with going to happen the market and what that does that whole into and everything we stop.
Yeah all of the contacts we <unk>, we have we'll we'll I think data right. The process, but we don't know when these would be based is why I would not be supply you, whether he's going to be as tried to keep transaction always pino v. may steal into 2021.
Okay. Thank you.
There are no further quite <unk> this time.
Well. Thank you. Thank you old once again <unk>, we hope that you and your family's all well and we look forward to <unk>.
<unk>.
One time, we we shoot a wonderful raised to view a day.
<unk>.
Thank you for participating in today's conference you may now disconnect.
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