MANAGEMENT’S DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  and the United States. Additionally, in 2001 there was a decline in perfusion services in Western Europe due to a continually increasing number of “beating heart” coronary artery bypass surgeries. The Company anticipates that sales of distributed perfusion products in certain regions and its sales to Jostra will continue to decline. Other Distributed Products Other distributed products includes sales of intra-aortic balloon pumps, pacemakers, angioplasty systems and other products sold though the Company’s distribution network in Japan, and miscellaneous pharmaceutical products sold in the United States. The increase in Adjusted Net Sales in 2002 is spread across several product categories. Years Ended December 31, Percentage Point Increase 2002 2001 2000 2002 2001 Gross profit as a percentage of net sales 57.5% 53.2% 47.3% 4.3 pts. 5.9 pts. Years Ended December 31, Percentage Point Increase 2002 2001 2000 2002 2001 SG&A expenses as a percentage of net sales 32.4% 29.4% 26.8% 3.0 pts. 2.6 pts. Years Ended December 31, Percentage Point Increase 2002 2001 2000 2002 2001 Research and development expenses as a  percentage of net sales 9.3% 7.9% 6.8% 1.4 pts. 1.1 pts. Reflecting the Japanese business on a consolidated basis for all periods presented, and assuming the sales of the mechanical cardiac assist product line, the perfusion products line and the perfusion services business (see “Disposition of Assets and Other Non-recurring Charges, net”) had occurred on January 1, 2000, research and development expenses as a percentage of net sales (“Adjusted Percentage”) would have been 8.7% in 2002, 7.8% in 2001 and 6.7% in 2000. The Adjusted Percentage increases in research and development expenses related primarily to investments in the Company’s peripheral vascular disease platform and other growth initiatives. These increases reflect Edwards Lifesciences’ commitment to ongoing research and development to deliver advanced new products, to enhance the effectiveness, ease S37 Edwards Lifesciences Corporation Reflecting the Japanese business on a consolidated basis for all periods presented, and assuming the sales of the mechanical cardiac assist product line, the perfusion products line and the perfusion services business (see “Disposition of Assets and Other Non-recurring Charges, net”) had occurred on January 1, 2000, SG&A expenses as a percentage of net sales (“Adjusted Percentage”) would have been 33.5% in 2002, 32.8% in 2001 and 31.0% in 2000. The increase in the Adjusted Percentage for 2002 was due primarily to increased spending on heart valve growth opportunities and the impact of foreign exchange. The Adjusted Percentage increase in 2001 was due primarily to additional personnel costs and expenses associated with the Company’s operation as an independent company commencing April 1, 2000. Reflecting the Japanese business on a consolidated basis for all periods presented, and assuming the sales of the mechanical cardiac assist product line, the perfusion products line and the perfusion services business (see “Disposition of Assets and Other Non-recurring Charges, net”) had occurred on January 1, 2000, gross profit as a percentage of net sales (“Adjusted Percentage”) would have been 57.7% in 2002, 57.1% in 2001 and 55.2% in 2000. The increase in the Adjusted Percentage for 2002 and 2001 was due primarily to increased sales of higher-margin cardiac surgery products, offset in 2002 by the impact of foreign exchange. Gross Profit Selling, General and Administrative (“SG&A”) Expenses Research and Development Expenses