In the normal course of business, Edwards Lifesciences provides credit to customers in the health care industry, performs credit evaluations of these customers, and maintains reserves for potential credit losses which, when realized, have been within the range of management’s allowance for doubtful accounts during all periods presented. Sales to Baxter, acting in the capacity of the Company’s distributor subsequent to the Distribution, represented approximately 8%, 11% and 12% of the Company’s total net sales for 2002, 2001 and 2000, respectively. Substantially all of these agreements had been terminated as of  December 31, 2002. In 2002, the Company recorded a $67.4 million pretax charge related to the impairment of its investment in preferred stock of WorldHeart. The investment was written down to In addition to the investment in WorldHeart ($6.1 million at December 31, 2002), Edwards Lifesciences had approximately $17.4 million of investments in equity instruments of other companies. At December 31, 2002, the Company had recorded unrealized losses on these investments of $6.8 million in “Accumulated Other Comprehensive Income,” net of tax. Management considers these declines temporary in nature based upon the individual companies’ operating results, financial condition and achievement of product development milestones. Should these companies experience a decline in financial condition or fail to meet certain development milestones, the decline in the investments values may be considered other than temporary and impairment charges may be necessary. $6.2 million, which represented the value of the Company’s preferred stock investment had it been converted into common stock at October 15, 2002. The decision to record the charge was based primarily on delays in WorldHeart’s product development timelines, arising from its revised strategy. Should WorldHeart fail to meet certain future development and financing milestones, further impairment charges may be necessary. Concentrations of Credit Risk S47 Edwards Lifesciences Corporation MANAGEMENT’S DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  Edwards Lifesciences is exposed to investment risks related to changes in the fair values of its investments. The Company invests in equity instruments of public and private companies. These investments are classified in “Investments in unconsolidated affiliates” on the consolidated balance sheets. Investment Risk