Notes to Consolidated Financial Statements As part of the transaction with WorldHeart, the Company invested $ 20 million in WorldHeart convertible preferred stock. The preferred stock bears a cumulative dividend, matures in June  2007 , is callable at any time by WorldHeart and is convertible by Edwards Lifesciences into WorldHeart common stock commencing July  2006 . Edwards Lifesciences reports its investments in WorldHeart as available-for-sale securities. The following unaudited pro forma consolidated condensed statement of operations gives effect to the sales to Jostra AG and WorldHeart by Edwards Lifesciences as if the sales had occurred on January  1 , 2000 and exclude the $ 302 million loss on sale to Jostra AG and the $ 35 million gain on sale to WorldHeart. The unaudited pro forma consolidated condensed statement of operations does not purport to be indicative of either the results of future operations or the results of operations that would have occurred had the sales been consummated on January  1 , 2000 . The following amounts are in millions, except per share amounts: Other Non-Recurring Charges ($45 million) As a result of Edwards Lifesciences’ continuing efforts to focus the Company’s product portfolio and effect the Company’s business strategy following the spin-off from Baxter, during  2000 the Company decided to discontinue certain products in its portfolio that did not meet the objectives of its business strategy. The long- lived assets or the investments in these products were evaluated to determine whether any impairment in their recoverability existed at the determination date. As a result, Edwards Lifesciences assessed whether the estimated cash flows of the products over the estimated lives of the related assets were sufficient to recover their costs. Where such cash flows were insufficient, the Company utilized a discounted cash flow model to estimate the fair value of assets or investments and recorded an impairment charge to adjust the carrying values to estimated fair values. As a result of this evaluation, Edwards Lifesciences recorded a non-cash charge of $ 45 million during 2000 primarily related to the impairment of goodwill unrelated This two-step transaction is accounted for as a sale of receivables under the provisions of SFAS No. 140 , “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” Sales of receivables under this program result in a reduction of accounts receivable on the Company’s Consolidated Balance Sheets. Retained interests are carried at their fair value estimated as the net realizable value, which considers the relatively short liquidation period and includes an estimated provision for credit losses, and  are included in Other Current Assets. Pursuant to the terms Edwards Lifesciences has an agreement (the “Receivables Facility”) with a financial institution whereby it sells on a continuous basis an undivided interest in certain eligible trade accounts receivable. Pursuant to the Receivables Facility, the Company formed Edwards Lifesciences Financing LLC (“ELF”), a wholly owned, special purpose, bankruptcy-remote subsidiary, for the sole purpose of buying and selling receivables generated by the Company. Under the Receivables Facility, Edwards Lifesciences, irrevocably and without recourse, transfers certain of its accounts receivables to ELF. ELF has sold and, subject to certain conditions, may from time to time sell an undivided interest in these receivables and is permitted  to receive advances for the sale of such undivided interest. The Company retained servicing responsibilities and subordi- nated interests. The Company receives annual servicing fees approximating  1 percent of the outstanding balance and rights to future cash flows arising after the investors in the securitization trust have received their contractual return. The investors and the securitization trust have no recourse to the Company’s other assets for failure of debtors to pay when due. The Company’s retained interests are subordinate to the investors’ interests. The value of the accounts receivable is subject primarily to credit risks on the transferred accounts receivable. The Receivables Facility expires each December and is renewable for one-year periods at the Company’s option. The Company renewed the Receivables Facility on December  21 , 2001 . to perfusion products ($ 37 million), the impairment of other intangibles ($ 5 million) and the write-down of non-productive assets ($ 3 million). note 4. ACCOUNTS RECEIVABLE SECURITIZATION Notes to Consolidated Financial Statements note 6. LONG-TERM DEBT, CREDIT FACILITIES  AND LEASE OBLIGATIONS of the Receivables Facility, the Company had sold approximately  $ 42 million of trade accounts receivable at December  31 , 2001 , resulting in a reduction of trade accounts receivable on the Company’s Consolidated Balance Sheets, and received funding of approximately $ 37 million. Costs associated with the sale of receivables were $ 1.4 million and $ 0.4 million in  2001 and 2000 , respectively, and are included in Other Expense, net. At December  31 , 2001 , key economic assumptions and the sensitivity of the current fair value of residual cash flows to immediate  10 percent and  20 percent adverse changes in those assumptions are as follows: These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a  10 or  20 percent variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Sensitivity analyses of prepayment speed assumption and residual cash flows discount rate are not performed because they do not materially impact the fair value of the retained interests due to the short-term nature of the receivables. Edwards Lifesciences utilizes interest rate swap agree- ments in managing its exposure to interest rate fluctuations. Interest rate swap agreements are executed as an integral part of specific debt transactions. Edwards Lifesciences’ interest rate swap agreements involve agreements to receive a floating rate and pay a fixed rate, at specified intervals, calculated on an agreed-upon notional amount. As of December  31 , 2001 , Edwards Lifesciences had in place three interest rate swaps with a total notional amount of $ 168 million to swap floating rate United States dollar and Japanese Yen denominated debt obtained under the Company’s revolving credit facilities for fixed rates. The original maturities of the interest rate swap agreements are between three and five years. Edwards Lifesciences has two unsecured revolving credit agreements (“the Credit Facilities”) providing for up to an aggregate of $ 605 million in borrowings in multiple currencies. Borrowings currently bear interest at the London interbank offering rate plus  0.78 %, which includes a facility fee. One of the credit agreements provides for long-term borrowings up to an aggregate of $ 430 million and expires on March  30 , 2005 . The other credit agreement provides for short-term borrowings up to an aggregate of $ 175 million and expires on March  29 , 2002 . The Company anticipates that it will replace the $ 175 million credit agreement with a credit agreement for $ 100 million through March  2003 . As of December  31 , 2001 , approximately $ 310 million was outstanding under the $ 430 million credit agreement and no borrowings were outstanding under the  $ 175 million credit agreement. Edwards Lifesciences pays a facility fee, regardless of available or outstanding borrowings, currently at an annual rate of  0.15 % for the $ 430 million credit agreement and  0.125 % for the $ 175 million credit agreement. The Credit Facilities contain various financial and other covenants of Edwards Lifesciences, including a maximum leverage ratio and a minimum interest coverage ratio. All amounts outstanding under the $ 430 million credit agreement have been classified as long-term obligations, as these borrowings will continue to be refinanced pursuant to this credit agreement. 41 Edwards Lifesciences Corporation Year Ended December 31, 2000 Net sales $ 772 Net income 8 Net income per share: Basic 0.14 Diluted 0.13 40 Edwards Lifesciences Corporation December 31, (in millions) 2001 2000 Accounts payable $ 51 $ 63 Employee compensation  and withholdings 33 41 Property, payroll and other taxes 31 17 Other accrued liabilities 68 56 $ 183 $ 177 note 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (in millions) Carrying amount/fair value  of retained interests $ 4.7 Weighted-average life (in days) 38.7 Expected credit losses (annual rate) 11.9 % Impact on fair value of  10 % adverse change $ 0.1 Impact on fair value of  20 % adverse change $ 0.1