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and no later than March 31, 2005. From April 1, 2000 to September 30, 2002, Edwards Lifesciences (a) recognized its shipments into the joint venture as sales at distributor price at the time the joint venture sold to the end customer, and (b) utilized the equity method of accounting to record its 90% profit interest in the operations of the joint venture in Other Operating Income. 

On October 1, 2002, the Company acquired from Baxter for $19.0 million, net, the cardiovascular business in Japan. The purchase price excluded approximately $30 million of securitized accounts receivable. In the three months ended September 30, 2002, the Company recorded a $3.3 million 

## MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

charge for legal, administrative and regulatory expenses related to the acquisition. Commencing October 1, 2002 the Company began reporting the results of the Japan business on a fully consolidated basis. The acquisition did not materially impact the Company’s net income as the terms of the joint venture agreement enabled Edwards Lifesciences to record substan- tially all of the net profit generated by the Japan business. 

Net Sales Trends The following table is a summary of domestic and international net sales: 

## Results of Operations 

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The net sales decreases in the United States during 2002 and 2001 were due primarily to the sale of the Company’s perfusion services business in the United States effective June 30, 2001, partially offset by an increase in sales of card- iac surgery products. The 2001 decrease was also impacted by the sale of the Company’s perfusion products line effective August 31, 2000 (see “Disposition of Assets and Other Non- Recurring Charges, net” for more information regarding the sales of the perfusion services and products lines). 

The increase in international net sales in 2002 and the decrease in 2001 resulted primarily from the change in accounting for sales in Japan (see “Joint Venture in Japan”). Assuming the Japan business was consolidated for all periods presented, international net sales for the years 2002 and 2001 would have increased 4.5% and decreased 7.2%, respectively. Additionally, excluding the impact of changes in foreign currency exchange rates (primarily the movement 

of the United States dollar against the Euro and the Japanese Yen), international net sales for the years 2002 and 2001 would have increased 5.5% and 1.3%, respectively. These adjusted fluctuations were due primarily to an increase in sales of cardiac surgery products, offset in 2001 by the partial sale of the Company’ perfusion products line effective August 31, 2000. 

The impact of foreign currency exchange rate fluctuations on net sales would not necessarily be indicative of the impact on net income due to the corresponding effect of foreign currency exchange rate fluctuations on international manufacturing and operating costs, and Edwards Lifesciences’ hedging activities. For more information, see “Quantitative and Qualitative Disclosure About Market Risk.” 

Net Sales by Product Line The following table is a summary of net sales by product line: 

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