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Edwards Lifesciences Annual Report (Amendment), Year Ended Dec 31, 2002

Filing Date
Filed October 30, 2003
Period End
December 31, 2002
Security
EW
In the record · 2016–202610-K1110-Q328-K88

EW filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 88 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Jan ’17Jan ’17
  2. FY2018 annual report10-K · Feb ’19Feb ’19
  3. Leadership change8-K · May ’21May ’21
  4. Leadership change8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K/A filed October 30, 2003. Cited figures are marked; the original filing is the authoritative source.

Edwards Lifesciences (EW) filed this Amendment No. 1 on Form 10-K/A in October 2003 in response to SEC Staff comments on its Form S-3 registration statement.

The amendment restates the full 2002 annual report for convenience but does not restate financial results. For fiscal 2002, the company reported net sales of $704.0 milliona (up 1.7% from $692.1 million), gross margin expanding to 57.5% from 53.2%, and net income of $55.7 million, or $0.91 per diluted share, versus a net loss of $11.4 million in 2001. Much of the improvement reflects the October 2002 acquisition of the Japan business from Baxter, which moved Japanese sales onto a fully consolidated basis, and the absence of goodwill amortization after SFAS No. 142 was adopted.

Reported results were also shaped by a $67.4 millionb pretax impairment on the WorldHeart preferred stock investment and a $14.7 million gain from a Medtronic patent settlement. Growth is concentrated in cardiac surgery (heart valves and repair), which rose 11.2% to $365.9 million, and critical care, which rose 9.7% to $230.3 million. Perfusion revenue fell sharply to $43.2 million from $102.1 million after the 2000 and 2001 divestitures.

On a pro forma basis that includes Japan for all periods, net sales grew about 6.2% on an adjusted basis, a more relevant measure of underlying demand. Liquidity looks adequate: operating cash flow was $120.6 millionc, capital expenditures were $40.7 million, and long-term debt fell to $245.5 million from $309.8 million. Shareholders' equity rose to $539.4 million.

Risk factors center on product liability, BSE-related concerns over bovine tissue, reimbursement pressure in the U.S. and Japan, and ongoing patent litigation against St. Jude Medical. Investors should note that this is a historical filing covering fiscal 2002, and its key figures have since been superseded by later reports. The amendment's main significance is the additional disclosure SEC staff requested, particularly around non-GAAP adjusted figures and the Japan consolidation, which makes the trend analysis more reliable than the headline reported numbers alone.

02—Key points

Key Highlights

  1. Fiscal 2002 net income of $55.7 million ($0.91 diluted EPS) compared with a net loss of $11.4 million in 2001, driven by the Japan consolidation, lower goodwill amortization, and a 4.3-point gross margin improvement to 57.5%.
  2. Net sales rose 1.7% to $704.0 million on a reported basis, but adjusted for Japan consolidation and divestitures, sales grew roughly 6.2%, showing stronger underlying demand.
  3. Cardiac Surgery (heart valves and repair) grew 11.2% to $365.9 million and Critical Care grew 9.7% to $230.3 million, while Perfusion declined 57.7% after divestitures.
  4. Acquired the Japan cardiovascular business from Baxter on October 1, 2002 for $19.0 million net, moving Japanese results to full consolidation.
  5. Recorded a $67.4 million pretax impairment on the WorldHeart preferred stock investment, partly offset by a $14.7 million gain from the Medtronic patent settlement.
  6. Operating cash flow of $120.6 million and long-term debt reduced to $245.5 million from $309.8 million, with equity rising to $539.4 million.
  7. Ongoing patent litigation against St. Jude Medical and risks around BSE-related bovine tissue concerns, GPO pricing pressure, and Japanese reimbursement changes remain key watch items.

03—Questions

Frequently Asked Questions

  1. Why did Edwards file a 10-K/A for fiscal 2002?

    The amendment responds to SEC Staff comments made during review of the company's July 2003 Form S-3 registration statement. The company states it is not restating its financial results, and it refiled the full annual report for convenience while amending only certain portions.

  2. How did the Japan acquisition affect reported results?

    Beginning October 1, 2002, Edwards consolidated its Japan business after buying it from Baxter, which increased reported international sales and added Japanese sales to product lines. Reported comparisons with 2001 are therefore distorted, so the company also presents adjusted figures that assume Japan was consolidated in all periods.

  3. What were the main drivers of profitability improvement in 2002?

    Gross margin rose to 57.5% from 53.2%, mainly from higher-margin cardiac surgery products. Profitability also benefited from eliminating goodwill amortization under SFAS 142 and from the absence of 2001 divestiture losses, partly offset by higher SG&A (32.4% of sales) and R&D (9.3% of sales) spending.

  4. What risks should investors weigh from this filing?

    Key risks include product liability exposure for implantable devices, supply and BSE-related concerns for bovine tissue valves, consolidation among hospital purchasing groups that pressures prices, reimbursement policy changes in the U.S. and Japan, currency exposure (45.6% of 2002 sales were international), and the outcome of patent litigation with St. Jude Medical.

  5. Is this filing still relevant for investment decisions today?

    This filing reports fiscal 2002 results and is now a historical document. Investors evaluating Edwards today should rely on later annual and quarterly filings, though this report remains useful for understanding the Japan consolidation, the 2000–2001 divestitures, and the company's historical capital structure.

04—Continue

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