NOTES TO CONSOLIDATED  FINANCIAL STATEMENTS The components of net periodic benefit cost are as follows: Edwards Lifesciences sponsors defined benefit pension plans in Puerto Rico, Japan and in certain European countries. A reconciliation of these plans’ benefit obligations, assets, funded status and net liability are as follows: Years Ended December 31,  Years Ended December 31,  Significant assumptions used in determining benefit obligations and net periodic benefit cost are summarized as follows:  Defined Contribution Plans The Company’s employees in the United States and Puerto Rico are eligible to participate in a qualified 401(k) and 1165(e) plan, respectively. Participants may contribute up to 15% of their annual compensation (subject to tax code limitation) to the plans. Edwards Lifesciences matches the first 3 percent of the participant’s annual eligible compensation contributed to the plan on a dollar-for-dollar basis. Edwards Lifesciences matches the next 2 percent of the participant’s annual eligible compensation to the plan on a 50% basis. Matching contributions relating to Edwards Lifesciences employees were $4.4 million and $3.9 million, $3.2 million 2002, 2001 and 2000, respectively.  The Company has a nonqualified deferred compensation plan for a select group of management that provides the opportunity to defer a specified percentage of their cash compensation. Participants may elect to defer up to 100% of bonus and 15% of total annual compensation. The Company’s obligations under this plan are unfunded. The amount accrued under this plan was $3.3 million at  December 31, 2002 and $2.2 million at December 31, 2001. (in millions) 2002 2001 Benefit Obligations: Beginning of period $ 28.1 $ 23.0 Service cost 1.6 1.5 Interest cost 1.7 1.7 Participant contributions 0.2 0.2 Actuarial loss 4.1 2.6 Addition of Japan plan 8.6 — Curtailment gains (0.2) (1.6) Benefits paid (0.3) — Currency exchange rate  changes and other 0.9 0.7 End of year $ 44.7 $ 28.1 Fair value of plan assets: Beginning of period $ 20.3 $ 17.6 Actual return on plan assets (0.7) (0.4) Employer contributions 1.6 2.1 Participant contributions 0.2 0.2 Addition of Japan plan 1.1 — Benefits paid (0.3) — Currency exchange rate  changes and other 0.7 0.8 End of year $ 22.9 $ 20.3 Funded status of plans: Funded status of plans $ (21.8) $ (7.7) Unrecognized net transition  obligation 0.6 — Unrecognized net losses 13.5 4.6 Unrecognized prior service cost 1.6 2.6 Net liability on balance sheet $ (6.1) $ (0.5) Net liability on balance sheet  consists of: Prepaid benefit cost $ 0.1 $ 0.9 Accrued benefit liability (11.8) (1.4) Other assets 3.1 — Accumulated other  comprehensive loss 1.6 — Deferred tax asset 0.9 — Net liability on balance sheet $ (6.1) $ (0.5) (in weighted averages) 2002 2001 Discount rate 4.96% 6.31% Expected return on plan assets  6.77% 7.74% Rate of compensation increase  3.66% 3.83% Years Ended December 31,  (in millions) 2002 2001 2000 Service cost $ 1.6 $ 1.5 $ 1.1 Interest cost 1.7 1.7 1.1 Expected return on  plan assets (1.5) (1.5) (1.0) Amortization of  prior service cost  and other 0.1 0.3 0.2 Net periodic pension  benefits cost $ 1.9 $2.0 $ 1.4 S70 Edwards Lifesciences Corporation