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The weighted average interest rate under the Credit Facilities was 4.12 % at December 31 , 2001 , including the effect of interest rate swap agreements. The rates have been calculated using rates in effect at December 31 , 2001 , some of which are floating rates that reset periodically. 

Future minimum lease payments (including interest) under non-cancelable operating leases and aggregate debt maturities at December 31 , 2001 were as follows: 

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Included in debt at December 31 , 2001 were unsecured notes denominated in various foreign currencies as follows: 

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Certain facilities and equipment are leased under operating leases expiring at various dates. Most of the operating leases 

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contain renewal options. Total expense for all operating leases was $ 6 million, $ 5 million and $ 9 million for the years 2001 , 2000 and 1999 , respectively. 

## FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 

Fair Values of Financial Instruments The consolidated financial statements include financial instruments whereby the fair market value of such instruments may differ from amounts reflected on a historical basis. Financial instruments of the Company consist of cash deposits, accounts and other receivables, investments in unconsolidated affiliates, accounts payable, certain accrued liabilities and debt. The fair values of certain investments in unconsolidated affiliates are estimated based on quoted market prices. For other investments, various methods are used to estimate fair value, including external valuations and discounted cash flows. The carrying amount of the Company’s long-term debt approximates fair market value based on prevailing market rates. The Company’s other financial instruments generally approximate their fair values based on the short-term nature of these instruments. 

## Derivative Financial Instruments 

The Company utilizes a variety of derivative financial instru- ments to manage its currency exchange rate and interest rate risks as summarized below. The Company does not enter into these arrangements for trading or speculation purposes. 

## note 7. 

A roll-forward of the activity of the Company’s derivative financial instruments for the year ended December 31 , 2001 is as follows: 

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The fair value of financial instruments was estimated by discounting expected cash flows using quoted market interest rates and foreign exchange rates as of December 31 , 2001 and 2000 . Notional amounts are stated in the United States dollar equivalents at spot exchange rates at the respective dates. Considerable judgment was employed in interpreting market data to develop estimates of fair value; accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies could have a material effect on the estimated fair value amounts. 

At December 31 , 2001 the net fair value of option-based products and forward currency agreements is recorded in Other Current Assets, and the net fair value of interest rate swap agreements is recorded in Accounts Payable and Accrued Liabilities. During 2001 , the Company reclassified from Accumulated Other Comprehensive Loss a net gain of $ 8 million to Cost of Goods Sold and a net loss of $ 10 million to Interest Expense, net. Included in the amounts reclassified to Interest Expense, net is a $ 6 million charge related to the termination of an interest rate swap agreement. The Company expects that during the next 12 months, it will reclassify to earnings a $ 6 million gain currently recorded in Accumulated Other Comprehensive Income. During 2001 the Company expensed $ 2 million due to hedge ineffectiveness related to the net premiums paid for option-based products. 

The Edwards Lifesciences Corporation Long-Term Stock Incentive Compensation Program (the “Program”), which became effective April 1 , 2000 , provides for the grant of incentive and non-qualified stock options, restricted stock and other stock-based incentive awards for employees and contractors of the Company. Under the Program, these grants are generally awarded at a price equal to the fair market value at the date of grant based upon the closing price on the date immediately preceding the grant date. Options to purchase shares of the Company’s common stock granted under the Program generally vest over predetermined periods and expire 10 years after the date of grant. An aggregate of 12.5 million shares of the Company’s common stock has been reserved for issuance under the Program. 

On April 3 , 2000 , the Company granted options to purchase shares of Edwards Lifesciences’ common stock under the Program. The grants include two types of stock options: Founders Options and Conversion Options. The Founders Options were awarded to all salaried employees of the Company, and permit the purchase of approximately 5.7 million shares at an exercise price of $ 13.88 , the fair market value at the date of grant. The Founders Options vest 30 % after two years, and the balance vests after three years. The Founders Options include approximately 634,000 options granted to non-employees of the Company in Japan (employees of Baxter dedicated to the joint venture as described in Note 1 ). In accordance with SFAS No. 123 , “Accounting for Stock-Based Compensation,” the $ 4 million value of these options is being amortized over the three- year vesting period on a straight-line basis. The Conversion Options permitted the purchase of approximately 2.2 million shares at an exercise price based upon an equitable conversion of the exercise price under the Baxter stock option plan, with reference to the when-issued price of the Company’s stock and the closing price of Baxter’s common stock on March 31 , 2000 . The Conversion Options retained the vesting periods under the Baxter stock option plan, resulting in various vesting periods through September 2002 . 

## note 8. 

## COMMON STOCK 

