NOTES TO CONSOLIDATED  FINANCIAL STATEMENTS stock has been reserved for issuance under the Program.  equitable conversion of the exercise price under the Baxter stock option plan, with reference to the when-issued price of the Company’s stock and the closing price of Baxter’s common stock on March 31, 2000. The Conversion Options retained the vesting periods under the Baxter stock option plan, resulting in various vesting periods. All of the Conversion Options were vested as of the end of September 2002. On April 3, 2000, the Company granted options to purchase shares of Edwards Lifesciences’ common stock under the Program. The grants include two types of stock options: Founders Options and Conversion Options. The Founders Options were awarded to all salaried employees of the Company, and permit the purchase of approximately  5.7 million shares at an exercise price of $13.88, the fair market value at the date of grant. The Founders Options vested 30% on April 3, 2002, and the balance will vest on April 3, 2003. The Founders Options included approximately 634,000 options granted to non-employees of the Company in Japan (employees of Baxter dedicated to the joint venture as described in Notes 1 and 3). In accordance with SFAS No. 123, “Accounting for Stock-Based Compensation,” the $4.0 million value of these options is being amortized over the three-year vesting period on a straight-line basis. The Conversion Options permitted the purchase of approximately 2.2 million shares at an exercise price based upon an The Company also maintains the Nonemployee Directors and Consultants Stock Incentive Program (the “Nonemployee Program”), which became effective April 1, 2000, and has subsequently been amended. Under the Nonemployee Program, each non-employee director annually receives 10,000 stock options. Additionally, each non-employee director may elect to receive all or a portion of the cash retainer to which the director is otherwise entitled through the issuance of stock options. As of December 31, 2002, 172,962 options were issued under the Nonemployee Program. Stock option activity under the Program and the Nonemployee Program was as follows: The following table summarizes stock options outstanding at December 31, 2002: 2002 2001 2000 Weighted Weighted Weighted Average Average Average Number Exercise Number Exercise Number Exercise (options in thousands) of Options Price of Options Price of Options Price Outstanding, beginning of year 7,716 $ 14.79 7,686 $ 13.59 — $ — Options issued with the Distribution — — — — 7,852 13.37 Options granted during period 2,784 26.03 1,123 22.01 424 16.87 Options exercised (552) 14.17 (481) 12.14 — — Options cancelled (154) 18.17 (612) 14.33 (590) 13.14 Outstanding, end of year 9,794 $ 17.97 7,716 $ 14.79 7,686 $ 13.59 Exercisable, end of year 3,251 $ 14.52 1,857 $ 13.46 523 $ 10.20 Outstanding Exercisable Average Weighted Weighted Remaining Average Average Number Contractual Exercise Number Exercise Range of Exercise Prices (options in thousands) of Options Life (Years) Price of Options Price $13.88 (Founders Options) 4,353 7.3 $ 13.88 1,132 $ 13.88 $10.20 — $15.71 (Conversion options) 1,438 5.4 12.13 1,438 12.13 $15.44 — $28.85 (Other options) 4,003 9.0 24.52 681 20.63 9,794 7.7 $ 17.97 3,251 $ 13.46 S67 Edwards Lifesciences Corporation