NOTES TO CONSOLIDATED  FINANCIAL STATEMENTS Note 12.  RELATED PARTY TRANSACTIONS Prior to the Distribution, Baxter provided to the Edwards Lifesciences Business certain legal, treasury, employee benefit, insurance and administrative services. Charges for these services were based on actual costs incurred by Baxter. The amounts charged to Edwards Lifesciences varied depending on the nature of the service, but generally were determined using headcount, sales, payroll, square footage or other appropriate data, or were determined on actual utilization of services. Management believes that the allocation of service charges is reasonable. However, the terms of these transactions may differ from those that would result from transactions with unrelated third parties or had Edwards Lifesciences performed these functions on its own.  Prior to the Distribution, Edwards Lifesciences participated in a centralized cash management program administered by Baxter. Short-term advances from Baxter or excess cash sent to Baxter have been treated as an adjustment to the Investment by Baxter International Inc., net account as of and through March 31, 2000. No interest was allocated to Edwards Lifesciences on this balance. The following table summarizes the charges from Baxter for the above-mentioned services, as recorded in Edwards Lifesciences’ Consolidated Statements of Operations for the year ended December 31, 2000:  S71 Edwards Lifesciences Corporation Years Ended December 31, (in millions) 2002 2001 2000 Legal settlement, net $ (14.7) $ — $ — Foreign exchange  (gain) loss (4.1) 5.0 2.3 Asset dispositions and  write downs, net 2.3 6.5 0.5 Investment write-offs 1.4 — — Other (0.3) (0.9) 1.0 $ (15.4) $ 10.6 $ 3.8 Note 13.  OTHER (INCOME) EXPENSE, NET In December 2001, the Chief Executive Officer of the Com- pany received a $2.5 million loan pursuant to his employment agreement with the Company as approved by the Board of Directors. The loan was used for the purchase of his primary residence in connection with his relocation. The loan is  non-interest bearing and is due in December 2006 or upon resignation or the termination of employment. The loan is col- lateralized by the Chief Executive Officer’s primary residence. 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.  Effective on the Distribution, Baxter and Edwards Lifesciences entered into a series of administrative services agreements pursuant to which Baxter and Edwards Lifesciences continued to provide, for a specified period of time, certain administrative services (primarily information systems support, payroll, accounting and warehousing and logistics support) that each entity historically provided to the other. These agreements required the parties to pay each other a fee that approximated the actual costs of these services. Additionally, subsequent to March 31, 2000, Edwards Lifesciences had continuing relationships with Baxter as a customer and supplier for certain products, and used Baxter as a distributor of the Company’s products in certain regions of the world. Substan- tially all of these service agreements and relationships had been terminated as of December 31, 2002. (in millions) Cost of goods sold $ 1.6 Selling, general and administrative expenses 10.5 Research and development expenses 0.7 The Edwards Lifesciences Corporation Executive Option Plan (the “Executive Plan”) became effective for participation by eligible employees in 2001. Eligible employees who participate in the Executive Plan may not participate in the Company’s nonqualified deferred compensation plan. Under the Executive Plan, executive officers and certain other key employees may elect to forgo a portion of their annual salary and bonus for an option to purchase shares of mutual funds or the Company’s common stock. The options are granted quarterly with an initial exercise price equal to 25% of the fair market value per share (as defined in the Executive Plan) of the respective security on the grant date. The number of shares subject to each option is determined such that the difference between the aggregate fair market value (as defined in the Executive Plan) and the aggregate exercise price under the option is equal to the amount of forgone compensation attributable to the option. A total of 95,000 shares of the Company’s common stock have been registered for issuance under the Executive Plan.