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increased expenses, whether related to sales and marketing, raw materials or supplies, product development or administration;



•

changes in the level of economic activity in the United States or other regions in which we do business;



•

costs related to acquisitions of technologies or businesses; and



•

our ability to expand our operations and the amount and timing of expansion-related expenditures.

We face intense competition, and if we do not compete effectively our business will be harmed.

        The cardiovascular medical device industry is highly competitive. We compete with many companies, some of which have longer operating histories, better brand or name recognition, broader product lines and greater access to financial and other resources. Our customers consider many factors when selecting a product, including product reliability, breadth of product line, clinical outcomes, product availability, price, availability and rate of reimbursement, and services provided by the manufacturer. In addition, our ability to compete will depend in large part on our ability to develop and acquire new products and technologies, anticipate technology advances and keep pace with other developers of cardiovascular therapies and technologies. Our competitive position can also be adversely affected by product problems, physician advisories and safety alerts, reflecting the importance of quality in the medical device industry. Market share can shift as a result of any of these factors. See "Competition" under "Business" included herein.

Consolidation in the healthcare industry could have an adverse effect on our revenues and results of operations.

        The healthcare industry has been consolidating and organizations such as GPOs, independent delivery networks, and large single accounts such as the United States Veterans Administration, continue to consolidate purchasing decisions for many of our healthcare provider customers. As a result, transactions with customers are larger, more complex, and tend to involve more long-term contracts. The purchasing power of these larger customers has increased, and may continue to increase, causing downward pressure on product pricing. As an example, many existing and potential domestic customers for our products have combined to form GPOs. GPOs negotiate pricing arrangements with medical supply manufacturers and distributors and these negotiated prices are made available to members of GPOs. If we are not one of the providers selected by a GPO,one of these organizations, we may be precluded from making sales to its members of a GPO.or participants. Even if we are one of the selected providers, we may be at a disadvantage relative to other selected providers that are able to offer volume discounts based on

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purchases of a broader range of medical equipment and supplies. Further, we may be required to commit to pricing that has a material adverse effect on our revenues and profit margins, business, financial condition and results of operations. We expect that market demand, governmental regulation, third-party reimbursement policies and societal pressures will continue to change the worldwide healthcare industry, resulting in further business consolidations and alliances, which may exert further downward pressure on the prices of our products and could adversely impact our business, financial condition, and results of operations.

Our inability to protect our intellectual property could have a material adverse effect on our business.

        Our success and competitive position are dependent in part upon our proprietary intellectual property. We rely on a combination of patents and trade secrets to protect our proprietary intellectual property, and we willexpect to continue to do so. Although we seek to protect our proprietary rights through a variety of means, we cannot guarantee that the protective steps we have taken are adequate to protect these rights. Patents issued to or licensed by us in the past or in the future may be challenged and held invalid. In addition, as our patents expire, we may be unsuccessful in extending their protection through new patents or patent term extensions. The expiration of, or the failure to maintain or extend our patents, could have a material adverse effect on us.

        We also rely on confidentiality agreements with certain employees, consultants and other third parties to protect, in part, trade secrets and other proprietary information. These agreements could be breached and we may not have adequate remedies for such a breach. In addition, others could independently develop substantially equivalent proprietary information or gain access to our trade secrets or proprietary information.

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        We spend significant resources to enforce our intellectual property rights, sometimes resulting in litigation. Intellectual property litigation is complex and can be expensive and time-consuming. However, our efforts in this regard may not be successful. We may not be able to detect infringement. In addition, competitors may design around our technology or develop competing technologies. Patent litigation can result in substantial cost and diversion of effort. Intellectual property protection may also be unavailable or limited in some foreign countries, enabling our competitors to capture increased market position. The invalidation of key intellectual property rights or an unsuccessful outcome in lawsuits filed to protect our intellectual property could have a material adverse effect on our financial condition, results of operations or prospects.

Third parties may claim we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products.

        During recent years, we and our competitors have been involved in substantial litigation regarding patent and other intellectual property rights in the medical device industry. From time to time, we have been and may in the future be forced to defend against claims and legal actions alleging infringement of the intellectual property rights of others, and such intellectual property litigation could beis typically costly and time-consuming. Adverse determinations in any such litigation could result in significant liabilities to third parties or injunctions, or could require us to seek licenses from third parties and, could, if such licenses are not available on commercially reasonable terms, prevent us from manufacturing, selling or using certain products, any one of which could have a material adverse effect on us. In addition, some licenses may be non-exclusive, which could provide our competitors access to the same technologies.

        Third parties could also obtain patents that may require us to either redesign products or, if possible, negotiate licenses from such third parties. Such licenses may materially increase our expenses. If we are unable to redesign products or obtain a license, we might have to exit a particular product offering.

We and our customers are subject to rigorous governmental regulations and we may incur significant expenses to comply with these regulations and develop products that are compatible with these regulations. In addition, failure to comply with these regulations could subject us to substantial sanctions which could adversely affect our business, results of operations and financial condition.

        The medical devices we manufacture and market are subject to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities, including regulations that cover the composition, labeling, testing, clinical study, design, manufacturing, packaging, marketing, advertising, promotion and distribution of our products.

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        We are required to register with the FDA as a device manufacturer. As a result, we are subject to periodic inspection by the FDA for compliance with the FDA's Quality System Regulation ("QSR") requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, design, quality control and documentation procedures. The FDA may also inspect our compliance with requirements related to adverse event reporting, recalls or corrections (field actions), the conduct of clinical studies, and other requirements. In the European Union, we are required to maintain certain CE Mark and ISO certifications in order to sell our products, and are subject to periodic inspections by notified bodies to obtain and maintain these certifications. If we or our suppliers fail to adhere to QSR, CE Mark, ISO or similar requirements, this could delay or interrupt product production or sales and/or lead to fines, difficulties in obtaining regulatory clearances, recalls or other consequences, which in turn could have a material adverse effect on our financial condition and results of operations or prospects.

        Medical devices must receive FDA clearance or approval before they can be commercially marketed in the United States. In addition, the FDA may require testing and surveillance programs to monitor the effects of approved products that have been commercialized, and can prevent or limit further marketing of a product based upon the results of post-marketing programs. In addition, the federal Medical Device Reporting regulations require us to provide information to the FDA whenever there is evidence that reasonably suggests

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that a device may have caused or contributed to a death or serious injury or, if a malfunction were to occur, would be likely to cause or contribute to a death or serious injury. Federal regulations also require us to report certain recalls or corrective actions to the FDA. Furthermore, most major markets for medical devices outside the United States require clearance, approval or compliance with certain standards before a product can be commercially marketed. The process of obtaining regulatory clearances or approvals to market a medical device, particularly from the FDA and certain foreign governmental authorities, can be costly and time-consuming, and clearances or approvals may not be granted for future products or product improvements on a timely basis, if at all. Delays in receipt of, or failure to obtain, clearances or approvals for future products or product improvements could result in delayed realization of product revenues or in substantial additional costs, which could have a material adverse effect on our business or results of operations or prospects. At any time after approval of a product for commercial sale, the FDA may conduct periodic inspections to determine compliance with both QSR requirements, and/or current Medical Device Reporting regulations, or other regulatory requirements. Noncompliance with applicable requirements may subject the Company or responsible individuals to sanctions including civil money penalties, product seizure, injunction, or criminal prosecution. Additionally, product approvals by the FDA can be withdrawn due to failure to comply with regulatory standards or the occurrence of unforeseen problems following initial approval.

        We are also subject to various United States and international laws pertaining to healthcare pricing and fraud and abuse, including prohibitions on kickbacks and the submission of false claims laws and restrictions on relationships with physicians and other referral sources. These laws are broad in scope and are subject to evolving interpretation, which could require us to incur substantial costs to monitor compliance or to alter our practices if theywe are found not to be in compliance. Violations of these laws may be punishable by criminal or civil sanctions against the Company and our officers and employees, including substantial fines, imprisonment and exclusion from participation in governmental healthcare programs.

        In recent years, both the United States and foreign government regulators have increased regulation, enforcement, inspections and governmental investigations of the medical device industry, including increased United States government oversight, including misbranding investigations, and enforcement of the Foreign Corrupt Practices Act. In addition, the recently enacted United Kingdom Bribery Act as well as similar laws in other jurisdictions could give rise to increased enforcement of prohibitions against bribery and other illegal payments or for the failure to have procedures in place that prevent such payments. Despite our implementation of robust compliance processes, we may be subject, from time to time, to increased regulation, as well as inspections, investigations and other enforcement actions by governmental authorities. Whenever the United States or another foreign governmental authority concludes thatIf we are found not to be in compliance with applicable laws or regulations, suchthe applicable governmental authority can impose fines, delay, or suspend, or revoke regulatory clearances or approvals, institute proceedings to detain or seize our products, issue a recall, impose marketing

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or operating restrictions, enjoin future violations and assess civil penalties against us or our officers or employees, and can recommendinstitute criminal prosecution to the Department of Justice.prosecution. Moreover, governmental authorities can ban or request the recall, repair, replacement or refund of the cost of any device or product we manufacture or distribute. Any of the foregoing actions could result in decreased sales as a result of negative publicity and product liability claims, and could have a material adverse effect on our financial condition, results of operations and prospects. In addition to the sanctions for noncompliance described above, commencement of an enforcement proceeding, inspection or investigation could divert substantial management attention from the operation of our business and have an adverse effect on our business, results of operations and financial condition.

Our industry is experiencing greater scrutiny and regulation by governmental authorities, which may lead to greater governmental regulation in the future.

        OurIn recent years, the medical devices and our business activities aredevice industry has been subject to rigorous regulation,increased regulatory scrutiny, including by the FDA, and numerous other federal, state and foreign governmental authorities. These authorities, andas well as members of Congress have been increasing their scrutinyCongress. This has included increased regulation, enforcement, inspections, and governmental investigations of our industry. In addition, certain states have recently passed or are considering legislation restricting our interactionsthe medical device industry and disclosure of financial relationships with health care providers and requiring disclosure of certain payments to them. Also, while recent case law has clarified that the FDA's authority over certain medical devices preempts state tort laws, legislation has been introduced at the federal level to allow state intervention.professionals. We anticipate that the government will continue to scrutinize our industry closely, and that additional regulation by governmental authorities, both foreign and domestic, may increase compliance costs, exposure to litigation and other adverse effects to our operations.

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Unsuccessful clinical trials or developmental procedures relating to products under development could have a material adverse effect on our prospects.

        The development ofregulatory approval process for new products and new indications for existing products requires extensive clinical trials and procedures. Unfavorable or inconsistent clinical data from current or future clinical trials conducted by us, our competitors, or third parties, or perceptions regarding this clinical data, could adversely affect our ability to obtain necessary approvals and the market's view of our future prospects. Such clinical trials are inherently uncertain and there can be no assurance that these trials or procedures will be completed in a timely or cost-effective manner or result in a commercially viable product. Failure to successfully complete these trials or procedures in a timely and cost-effective manner could have a material adverse effect on our prospects. Clinical trials may experience significant setbacks even after earlier trials have shown promising results. Further, preliminary results from clinical trials may be contradicted by subsequent clinical analysis. In addition, results from our clinical trials or procedures may not be supported by actual long-term studies or clinical experience. If preliminary clinical results are later contradicted, or if initial results cannot be supported by actual long-term studies or clinical experience, our business could be adversely affected. Clinical trials may be suspended or terminated by us, the FDA or other regulatory authorities at any time if it is believed that the trial participants face unacceptable health risks.

We are subject to risks arising from concerns and/or regulatory actions relating to "mad cow disease."

        Certain of our products, including pericardial tissue valves, are manufactured using bovine tissue. Concerns relating to the potential transmission of BSE, commonly known as "mad cow disease," from cows to humans may result in reduced acceptance of products containing bovine materials. Certain medical device regulatory agencies have considered whether to continue to permit the sale of medical devices that incorporate bovine material. We obtain bovine tissue only from closely controlled sources within the United States and Australia. The bovine tissue used in our pericardial tissue valves is from tissue types considered by global health and regulatory organizations to have shown no risk of infectibility for the suspected BSE infectious agent. We have not experienced any significant adverse impact on our sales as a result of concerns regarding BSE, but no assurance can be given that such an impact may not occur in the future.

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If third-party payors decline to reimburse our customers for our products or impose other cost containment measures to reduce reimbursement levels, our ability to profitably sell our products will be harmed.

        We sell our products and technologies to hospitals, doctors and other health care providers, all of which receive reimbursement for the health care services provided to patients from third-party payors, such as government programs (both domestic and international), private insurance plans and managed care programs. The ability of customers to obtain appropriate reimbursement for their products from private and governmental third-party payors is critical to the success of medical technology companies. The availability of reimbursement affects which products customers purchase and the prices they are willing to pay. Reimbursement varies from country to country and can significantly impact acceptance of new products.

        Hospital reimbursement in the United States for TAVR procedures is currently aligned with surgical aortic valve replacement codes. In September 2011, CMS initiated a national coverage analysis for TAVR, which was expected to lead to a NCD. In February 2012, CMS issued a draft NCD, and a final NCD is expected by mid-year 2012. We believe a well-written NCD that ensures adequate patient access would be positive for patients and physicians. We cannot predict the outcome of this process, and a negative determination, such as one that restricts the use of our products, could have an adverse effect on our business, results of operations and financial condition.

Third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement for medical products and services. There can be no assurance that levels of reimbursement, if any, will not be decreased in the future, or that future legislation, regulation or reimbursement policies of third-party payors will not otherwise adversely affect the demand for and price

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levels of our products. The introduction of cost containment incentives, combined with closer scrutiny of health care expenditures by both private health insurers and employers, has resulted in increased discounts and contractual adjustments to hospital charges for services performed. Hospitals or physicians may respond to such cost-containment pressures by substituting lower cost products or other therapies. In addition, recently enacted legislation in the 2010 United States to reform health care policieshealthcare law could adversely affect reimbursement levels for our products, or otherwise adversely affect our product pricing and profitability.

        Initiatives to limit the growth of health care costs, including price regulation, are underway in several countries around the world. In many countries, customers are reimbursed for our products under a government operated insurance system. Under such a system, the government periodically reviews reimbursement levels and may limit patient access. If a government were to decide to reduce reimbursement levels, our product pricing could be adversely affected.

        Third-party payors may deny reimbursement if they determine that a device used in a procedure was not used in accordance with cost-effective treatment methods as determined by such third-party payors, or was used for an unapproved indication. Third-party payors may also deny reimbursement for experimental procedures and devices. We believe that many of our existing products are cost-effective, even though the one-time cost may be significant, because they are intended to reduce overall health care costs over a long period of time. We cannot be certain that these third-party payors will recognize these cost savings instead of merely focusing on the lower initial costs associated with competing therapies. If our products are not considered cost-effective by third-party payors, our customers may not be reimbursed for them, resulting in lower sales of our products.

Use of our products in unapproved circumstances could expose us to liabilities.

        The marketing approval from the FDA and other regulators of certain of our products are, or are expected to be, limited to specific indications. We are prohibited by law from marketing or promoting any unapproved use of our products. Physicians, however, can use these products in ways or circumstances other than those strictly within the scope of the regulatory approval. Although the product training we provide to physicians and other healthcare professionals is limited to approved uses, no assurance can be given that claims might not be asserted against us if our products are used in ways or for procedures that are not approved.

Our operations are subject to environmental, health and safety regulations that could result in substantial costs.

        Our operations are subject to environmental, health and safety laws, and regulations concerning, among other things, the generation, handling, transportation and disposal of hazardous substances or wastes, the cleanup of hazardous substance releases, and emissions or discharges into the air or water. We have incurred and may incur expenditures in the future in connection with environmental, health and safety laws, and regulations. New laws and regulations, violations of these laws or regulations, stricter enforcement of existing requirements, or the discovery of previously unknown contamination could require us to incur costs or could become the basis for new or increased liabilities that could be material.

The success of many of our products depends upon strong relationships with certain key physicians.

        The development, marketing and sale of many of our products requires us to maintain working relationships with physicians upon whom we rely to provide considerable knowledge and experience. These physicians may assist us as researchers, marketing consultants, product trainers and consultants, inventors and as public speakers. If new laws, regulations or other developments limit our ability to maintain strong relationships with these professionals or to continue to receive their advice and input, the development and

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marketing of our products could suffer, which could have a material adverse effect on our business, financial condition and results of operations.

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Item 1B.    Unresolved Staff Comments

        None.

Item 2.    Properties

        The locations and uses of the major properties of Edwards Lifesciences are as follows:

        The Irvine, California lease expires in 2021; the Draper, Utah lease expires in 2025; the Dominican Republic property has one lease that expires in 2012 and one that expires in 2016;2019; the Puerto Rico property has one lease that expires in 2018 and one that expires in 2016; the Horw, Switzerland lease is renewed annually with appropriate termination notice provisions;expires in 2013; the Tokyo, Japan lease expires in 2012; and the Changi, Singapore landlease expires in 2036. The Company's properties have been well maintained, are in good operating condition and are adequate for current needs.

Item 3.    Legal Proceedings

        In February 2008, Edwards Lifesciences filed a lawsuit against CoreValve, Inc. ("CoreValve") in the United States District Court for the District of Delaware alleging that its ReValving System infringes three of the Company's U.S. Andersen patents, later narrowed to one patent ("the '552 patent"). CoreValve was acquired by Medtronic, Inc. ("Medtronic") in April 2009. In April 2010, a federal jury found that patent to be valid and found that CoreValve willfully infringes it. The jury also awarded Edwards $73.9 million in damages. In February 2011, the District Court reaffirmed the jury decision and ruled that Edwards is entitled to recover additional damages due to CoreValve's continued infringing sales from the trial through the life of the patent, plus interest. In the same ruling, the court denied Edwards' motions for a permanent injunction, andas well as its motion for increased damages relating to CoreValve's willful infringement. Both Edwards and CoreValve has appealed and Edwards plans to file a cross-appeal.have appealed. A second lawsuit is pending in the same court against CoreValve and Medtronic alleging infringement of three U.S. Andersen patents. In September 2010, the United States Patent and Trademark Office ("USPTO") granted Medtronic's third request to reexamine the validity of the claim of the '552 patent and later issued an initial Office Action rejectingin July 2011 confirmed the claimvalidity of the '552that patent. The reexamination process is ongoing.

        Earlier, in May 2007, the CompanyIn June 2011, Medtronic filed a lawsuit against CoreValve alleging infringement of the Company's European Andersen patent. The lawsuit was filed in the U.S. District Patent Court for the District of Minnesota alleging that certain surgical valve holders and a surgical embolic filter device infringe its patents. Edwards counterclaimed against Medtronic, alleging that the Medtronic Contour 3D annuloplasty ring infringes an Edwards ring patent. By the Order of a Magistrate Judge in Dusseldorf,January 2012, the lawsuit has been stayed pending the outcome of future reexamination findings by the USPTO.

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Germany, seeking injunctive and declaratory relief. In October 2008, the Court rejected this assertion and dismissed the infringement lawsuit. In February 2010, a German Appeals Court affirmed. In May 2007 and June 2007, CoreValve filed separate lawsuits in London, United Kingdom, and Munich, Germany, respectively, alleging the patent to be invalid. The Company then asserted that CoreValve's ReValving System infringes the Andersen patent in the United Kingdom. In January 2009, the United Kingdom Court determined that the Andersen patent is valid but not infringed by CoreValve. In May 2010, a United Kingdom Appeals Court affirmed the lower court. In January 2010, the German Courts also determined that the Andersen patent is valid. In December 2010, these lawsuits were resolved pursuant to a confidential settlement between the parties.

        In February 2008, Cook, Inc. ("Cook")June 2011, Medtronic also filed aanother lawsuit in the U.S. District Patent Court in Dusseldorf, Germany, against Edwards Lifesciencesfor the Central District of California alleging that theEdwards SAPIEN transcatheter heart valve infringes on a CookMedtronic patent. Edwards Lifesciences subsequently filed lawsuits in London, United Kingdom, and in Munich, Germany,counterclaimed against CookMedtronic, alleging that the patents were invalid. InMedtronic CoreValve heart valve infringes Edwards' U.S. Letac-Cribier transcatheter heart valve patent. Edwards' counterclaim was subsequently transferred to the United Kingdom lawsuit, Cook counterclaimed, alleging infringement by Edwards. In March 2009,U.S. District Court for the German Courts ruled that the Company does not infringe the Cook patent. In June 2009, the United Kingdom Court also ruled that the Company does not infringe the Cook patent and, further, that the Cook patent is invalid. In June 2010, a United Kingdom Appeals Court affirmed. In April 2010, the German Courts also determined that the Cook patent is invalid.District of Delaware.

        In March and September 2010, the Company received grand jury subpoenas for documents from the United States Attorney's Office in the Central District of California in connection with an investigation by the FDA. The subpoenas to the Company seek records relating to the Vigilance I Monitor model with software release 5.3 that was the subject of a voluntary field recall by the Company in June 2006. The Company is cooperating fully with the investigation.

        In addition, Edwards Lifesciences is or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits related primarily to products and services currently or formerly manufactured or performed, as applicable, by Edwards Lifesciences. Such cases and claims raise difficult and complex factual and legal issues and are subject to many uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable law. Upon resolution of any such legal matter or other claim, Edwards Lifesciences may incur charges in excess of established reserves. The Company is not able to estimate the amount or range of any loss for legal contingencies for which there is no reserve or additional loss for matters already reserved. While any such charge could have a material adverse impact on Edwards Lifesciences' net income or cash flows in the period in which it is recorded or paid, management does not believe that any such charge relating to any currently pending lawsuit would have a material adverse effect on Edwards Lifesciences' financial position, results of operations or liquidity.

        Edwards Lifesciences is subject to various environmental laws and regulations both within and outside of the United States. The operations of Edwards Lifesciences, like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. While it is difficult to quantify the potential impact of continuing compliance with environmental protection laws, management believes that such compliance will not have a material impact on Edwards Lifesciences' financial position, results of operations or liquidity.

Item 4.    Mine Safety Disclosures

        Not applicable.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Price

        The principal market for Edwards Lifesciences' common stock is the New York Stock Exchange (the "NYSE"). The table below sets forth, for the calendar quarters indicated, the high and low sales prices as adjusted for the two-for-one stock split paid on May 27, 2010 to shareholders of record on May 14, 2010, of Edwards Lifesciences' common stock as reported by the NYSE.

Number of Stockholders

        On January 31, 20112012 there were 13,91818,026 stockholders of record of Edwards Lifesciences' common stock.

Dividends

        Edwards Lifesciences has never paid any cash dividends on its capital stock and has no current plans to pay any cash dividends. The current policy of Edwards Lifesciences is to retain any future earnings for use in the business of the Company.

Issuer Purchases of Equity Securities

Item 6.    Selected Financial Data

        The following table sets forth selected financial information with respect to Edwards Lifesciences. The information set forth below should be read in conjunction with Edwards Lifesciences'"Management's Discussion and Analysis of Financial Condition and Results of Operations" and"Consolidated Financial Statements" found elsewhere in this Form 10-K. See Note 3 to the"Consolidated Financial Statements" and"Management's

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Discussion and Analysis of Financial Condition and Results of Operations" for discussions of the effect of certain transactions on Edwards Lifesciences' operations.

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion and analysis presents the factors that had a material effect on the results of operations of Edwards Lifesciences during the three years ended December 31, 2010.2011. Also discussed is Edwards Lifesciences' financial position as of December 31, 2010.2011. You should read this discussion in conjunction with the historical consolidated financial statements and related notes included elsewhere in this Form 10-K.

Overview

        Edwards Lifesciences Corporation is a global leader in productsthe science of heart valves and hemodynamic monitoring. Driven by a passion to help patients, the Company partners with clinicians to develop innovative technologies designed to treat advanced cardiovascular disease. The Company is focused specifically on technologies that treatin the areas of structural heart disease and critically ill patients.critical care monitoring that enable them to save and enhance lives.

        The products and technologies provided by Edwards Lifesciences are categorized into four main areas: Heart Valve Therapy; Critical Care; Cardiac Surgery Systems; and Vascular.

        Edwards Lifesciences'Heart Valve Therapy portfolio is comprised of tissue heart valves and heart valve repair products. A pioneer in the development and commercialization of heart valve products, Edwards Lifesciences is the world's leading manufacturer of tissue heart valves and repair products used to replace or repair a patient's diseased or defective heart valve. In theCritical Care area, Edwards Lifesciences is a world

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leader in hemodynamic monitoring systems used to measure a patient's cardiovascular function, and in disposable pressure transducers.function. Prior to September 2009, Edwards Lifesciences provided products for continuous renal replacement therapy ("hemofiltration product line"). The Company sold the hemofiltration

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product line in September 2009. The Company'sCardiac Surgery Systems portfolio comprises a diverse line of products for use during cardiac surgery including cannulae, embolic protection devices and other products used during cardiopulmonary bypass procedures. Cardiac Surgery Systems also includes the Company'sand minimally invasive surgery ("MIS") product line.surgical procedures. Edwards Lifesciences'Vascular portfolio includes a line of balloon catheter-based products, surgical clips and inserts, and artificial implantable grafts.inserts. Edwards Lifesciences manufactured and soldLifeStent balloon-expandable and self-expanding non-coronary stents until the sale of this product line in January 2008. The Company continued to manufacture these products for the buyer until September 2009 when manufacturing was transferred to the buyer.

        The healthcare marketplace continues to be competitive with strong global and local competitors. The Company competes with many companies, ranging from small start-up enterprises to companies that are larger and more established than Edwards Lifesciences with access to significant financial resources. Furthermore, rapid product development and technological change characterize the market in which the Company competes. Global demand for healthcare is increasing as the population ages. There is mounting pressure to contain healthcare costs in the face of this increasing demand, which has resulted in pricing and market share pressures. The cardiovascular segment of the medical device industry is dynamic, and technology, cost-of-care considerations, regulatory reform, industry and customer consolidation, and evolving patient needs are expected to continue to drive change.

        In March 2010, significant reforms to the healthcare system were adopted as law in the United States. The law includes provisions that, among other things, reduce or limit Medicare reimbursement, require all individuals to have health insurance (with limited exceptions) and impose increased taxes. Specifically, the law requires the medical device industry to subsidize healthcare reform in the form of a 2.3% excise tax on United States sales of most medical devices beginning in 2013. The excise tax will increase the Company's operating expenses. Because many parts of the 2010 healthcare law remain subject to implementation, the long-term impact on the Company is uncertain. The new law or any future legislation could reduce medical procedure volumes, lower reimbursement for the Company's products, and impact the demand for the Company's products or the prices at which the Company sells its products.

        On April 12, 2010, the Company's Board of Directors declared a two-for-one stock split of its outstanding shares of common stock effected in the form of a stock dividend, paid on May 27, 2010 to shareholders of record on May 14, 2010. The Company distributed its treasury shares in addition to newly issued shares to effect the stock split. All applicable share and per-share amounts in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" have been retroactively adjusted to give effect to this stock split.

Results of Operations

Net Sales by Major Regions
(dollars in millions)

        The $38.0 millionincrease in net sales in the United States in 2011 was due primarily to:

•

Heart Valve Therapy products, which increased net sales by $28.5 million, driven primarily by (1) sales of theEdwards SAPIEN andSAPIEN XT transcatheter heart valves for clinical trials and commercial sales resulting from the United States launch in the fourth quarter of 2011, and (2) the

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Carpentier-Edwards PERIMOUNT Magna Aortic Ease andMagna Mitral Ease valves (launched in the third quarter of 2010); and

•

Critical Care products, which increased net sales by $11.2 million, driven primarily by theFloTrac minimally invasive monitoring system and pressure monitoring products.

        The $193.6 millionincrease in international net sales in 2011 was due primarily to:

•

Heart Valve Therapy products, which increased net sales by $104.3 million, driven primarily by commercial sales of theEdwards SAPIEN XT transcatheter heart valve and theCarpentier-Edwards PERIMOUNT Magna Aortic Ease valve;



•

Critical Care products, which increased net sales by $20.9 million, driven primarily by pressure monitoring products and theFloTrac minimally invasive monitoring system; and



•

foreign currency exchange rate fluctuations, which increased net sales by $58.0 million, due to the strengthening of various currencies against the United States dollar, primarily the Euro and the Japanese yen.

        The $11.5 millionincrease in net sales in the United States in 2010 was due primarily to:

•

Heart Valve Therapy products, which increased net sales by $9.7 million, driven primarily by theCarpentier-Edwards PERIMOUNT Magna Aortic Ease valve (launched in the second quarter of 2009),Magna Mitral Ease valve (launched in the third quarter of 2010),Physio II ring (launched in the first quarter of 2009), and sales of theEdwards SAPIEN transcatheter heart valve for clinical trials;



•

Critical Care products, which increased net sales by $5.7 million, driven primarily by theFloTrac minimally invasive monitoring system; and



•

Cardiac Surgery Systems products, which increased net sales by $2.7 million, driven primarily by the MISminimally invasive surgery ("MIS") product line;

        partially offset by:

•

the discontinuance of manufacturing in September 2009 of the divestedLifeStent product line, which decreased net sales by $8.2 million.

        The $114.1 millionincrease in international net sales in 2010 was due primarily to:

•

Heart Valve Therapy products, which increased net sales by $112.6 million, driven primarily by theEdwards SAPIEN XT transcatheter heart valve, theCarpentier-Edwards PERIMOUNT Magna Ease valve and the newCarpentier-Edwards Physio II ring, which was launched in Europe in the first quarter of 2009 and in Japan in the first quarter of 2010;



•

Critical Care products, which increased net sales by $18.1 million, driven primarily by theFloTrac minimally invasive monitoring system and pressure monitoring products;



•

Cardiac Surgery Systems products, which increased net sales by $4.1 million, driven primarily by specialty cannula products; and



•

foreign currency exchange rate fluctuations, which increased net sales by $8.6 million, due to the strengthening of various currencies against the United States dollar, primarily the Japanese yen, partially offset by the weakening of the Euro against the United States dollar;

        partially offset by:

•

hemofiltration products, which decreased net sales by $32.0 million. The Company sold its hemofiltration product line in September 2009. For more information see "Special Charges (Gains), net."

        The $12.5 millionincrease in net sales in the United States in 2009 was due primarily to:

•

Heart Valve Therapy products, which increased net sales by $33.6 million, driven primarily by theCarpentier-Edwards PERIMOUNT Magna Ease valve,Magna withThermaFix valve, and thePhysio II ring;

        partially offset by:

•

the divestiture of theLifeStent product line in mid-January 2008, which decreased net sales by $23.2 million.LifeStent sales after the divestiture resulted from the on-going manufacturing requirements of the sale agreement, which continued until the transfer of manufacturing to the buyer in September 2009.

        The $71.2 millionincrease in international net sales in 2009 was due primarily to:

•

Heart Valve Therapy products, which increased net sales by $80.0 million, driven primarily by theEdwards SAPIEN transcatheter heart valve, theCarpentier-Edwards PERIMOUNT Magna Ease valve and theMagna aortic valve in Japan; and

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•

Critical Care products, which increased net sales by $19.6 million, driven primarily by theFloTrac minimally invasive monitoring system and pressure monitoring products;

        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $15.2 million, due primarily to the weakening of the Euro against the United States dollar, partially offset by the strengthening of the Japanese yen against the United States dollar; and



•

hemofiltration products, which decreased net sales by $10.6 million. The Company sold its hemofiltration product line in September 2009.

        The impact of foreign currency exchange rate fluctuations on net sales is not necessarily indicative of the impact on net income due to the corresponding effect of foreign currency exchange rate fluctuations on international manufacturing and operating costs and the Company's hedging activities. For more information see"Quantitative and Qualitative Disclosures About Market Risk."

Net Sales by Product Line
(dollars in millions)

Heart Valve Therapy

        The $172.4 million increase in net sales of Heart Valve Therapy products in 2011 was due primarily to:

•

transcatheter heart valves, which increased net sales by $111.7 million primarily as a result of theEdwards SAPIEN XT transcatheter heart valve;



•

surgical heart valves, which increased net sales by $21.1 million, primarily as a result of theCarpentier-Edwards PERIMOUNT Magna Aortic Ease andMagna Mitral Ease valves; and



•

foreign currency exchange rate fluctuations, which increased net sales by $33.6 million due primarily to the strengthening of the Euro and the Japanese yen against the United States dollar.

        The $123.4 million increase in net sales of Heart Valve Therapy products in 2010 was due primarily to:

•

theEdwards SAPIEN XT transcatheter heart valve, which increased net sales by $99.0 million; and



•

pericardial tissue valves, which increased net sales by $26.2 million, primarily as a result of theCarpentier-Edwards PERIMOUNT Magna Aortic Ease valve.

        The $107.5 million increase in net sales        In November 2011, the Company received approval from the FDA for the transfemoral delivery of Heart Valve Therapy products in 2009 was due primarily to:

•

theEdwards SAPIEN transcatheter heart valve which increased net sales by $59.5 million;



•

pericardial tissue valves, which increased net sales by $41.7 million, primarily as a resultfor treatment of theCarpentier-Edwards PERIMOUNT Magna Ease valve, theMagnacertain inoperable patients withThermaFix mitral valve and theMagna severe symptomatic aortic valve in Japan; and



•

the launch of theCarpentier-Edwards Physio II ring in the first quarter of 2009, which increased net sales by $12.0 million;

        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $8.6 million, due primarily to the weakening of the Euro against the United States dollar, partially offset by the strengthening of the Japanese yen against the United States dollar.

        The Company expects that itsSAPIEN andSAPIEN XT transcatheter heart valves will continue to be strong contributors to 2011 sales. The Company also expects that sales of its other new products will

        Net cash used in investing activities of $61.5 million in 2010 consisted primarily of capital expenditures of $61.8 million.

        Net cash provided by investing activities of $40.1 million in 2009 consisted primarily of $55.9 million of cash received from the sale of the hemofiltration product line, $42.0 million of cash received for milestone achievements associated with theLifeStent pre-market approval, and $11.4 million in cash redemptions associated with the Bank of America Columbia Strategic Cash fund, partially offset by capital expenditures of $64.0 million.

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        Net cash used infinancing activities of $135.2 million in 2011 consisted primarily of net purchases of treasury stock of $303.4 million, partially offset by net proceeds from debt of $104.4 million and proceeds from stock plans of $59.5 million.