SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
__________________________________________
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
__________________________________________
Check the appropriate box:
/ / Preliminary Proxy Statement /x/ Definitive Proxy Statement
/ / Definitive Additional Materials / / Soliciting Material
Pursuant to 240.14a-11(c)
or 240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
_________________________________________
ARROW INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
_________________________________________
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1 N/A
(4) Proposed maximum aggregate value of transaction: N/A
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1 Set forth the amount on which the filing fee is
calculated and state how it was determined.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously.Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
<PAGE>
ARROW INTERNATIONAL, INC.
3000 BERNVILLE ROAD
READING, PENNSYLVANIA 19605
____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 15, 1997
To Our Shareholders:
The Annual Meeting of Shareholders of Arrow International, Inc. will be
held at the Sheraton Berkshire Inn, Route 422 West and Papermill Road Exit,
Wyomissing, Pennsylvania at 4:00 p.m. on January 15, 1997 for the following
purposes:
(1) To elect four directors;
(2) To act upon a proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as the Company's independent
accountants for the fiscal year ending August 31, 1997; and
(3) To transact such other business, if any, as may properly come
before the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on November 29,
1996 as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournments thereof.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU
EXPECT TO ATTEND THE ANNUAL MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON IF YOU DECIDE TO ATTEND THE ANNUAL MEETING.
By Order of the Board of Directors,
T. Jerome Holleran,
Secretary
December 16, 1996
Reading, Pennsylvania
<PAGE>
PROXY STATEMENT
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
ARROW INTERNATIONAL, INC.
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Arrow International, Inc. for the Annual
Meeting of Shareholders to be held on January 15, 1997, or any adjournments
thereof.
The Board of Directors has fixed the close of business on November 29,
1996 as the record date for the determination of the shareholders entitled to
notice of, and to vote at, the Annual Meeting. On that date there were
23,228,899 shares of Common Stock outstanding and entitled to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote. A
majority of the outstanding shares of Common Stock is required to establish a
quorum at the Annual Meeting. The affirmative vote of a plurality of the votes
cast is required for the election of directors. The affirmative vote of a
majority of the votes cast is required to ratify the appointment of independent
accountants for fiscal 1997. Shares represented by proxies will be voted in
accordance with the specifications made on the proxy card by the shareholder.
With regard to the election of directors, votes may be cast in
favor or withheld; votes that are withheld will be counted for purposes of
determining the presence or absence of a quorum for the transaction
of business at the Annual Meeting, but will be excluded entirely from the
vote and will have no effect on the outcome of the voting. With regard to
the ratification of the appointment of independent accountants, abstentions
may be specified. Since the affirmative vote of a majority of the votes
cast is required in respect of such proposal, an abstention with respect to
such proposal will have the same effect as a vote against such proposal.
Any proxy not specifying the contrary will be voted in the election of
directors for each of the Board of Directors' nominees and in favor of the
proposal to ratify the appointment of independent accountants. A shareholder
giving a proxy has the right to revoke it by a duly executed proxy bearing a
later date, by attending the Annual Meeting and voting in person, or by
otherwise notifying the Company prior to the Annual Meeting. Under
applicable Pennsylvania law, broker non-votes (that is, proxies from
brokers or nominees indicating that such persons have not received
instructions from the beneficial owners or other persons entitled to
vote shares on a particular matter as to which the brokers or nominees do
not have discretionary power) may be counted as present or represented
for purposes of determining the presence or absence of a quorum for the
transaction of business, but will not be counted for purposes of
determining whether any non-discretionary proposals to be voted upon at the
Annual Meeting have been approved. The Company believes that the
proposals to be considered at the Annual Meeting are proposals in respect of
which brokers and other nominees typically have discretion. Accordingly,
unless one or more beneficial owners of the Common Stock have withheld
discretionary authority from their brokers or nominees in respect of
these types of proposals, the Company does not anticipate that there will be
any broker non-votes in respect of such proposals. If there are any broker
non-votes in respect of the proposals, however, the Company intends to
treat such broker non-votes as stated above.
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The mailing address of the principal executive offices of the
Company is P.O. Box 12888, 3000 Bernville Road, Reading, Pennsylvania
19612. This Proxy Statement and the enclosed proxy card are being
furnished to shareholders on or about December 16, 1996.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company is currently composed of seven
directors, although up to 12 directors are permitted by the Company's Restated
Articles of Incorporation and By-Laws. If all of the persons currently
nominated for election to the Board are elected, the composition of the Board
of Directors will be increased to nine directors. Under the Company's Restated
Articles of Incorporation and By-laws, the Board is divided into four classes,
as nearly equal in number as possible. At each Annual Meeting of Shareholders,
directors constituting one class are elected for a four-year term (or for such
lesser term as may be specified in the proxy statement furnished in connection
therewith). The Board of Directors has nominated Marlin Miller, Jr. and Robert
L. McNeil, Jr., each of whom is currently a director, and John E. Gurski and
Alan M. Sebulsky, neither of whom has previously served as a director, for
election to the Board of Directors. If elected, Mr. Sebulsky will serve until
the Annual Meeting of Shareholders to be held in 2000, or until such time
as his successor is elected, and each of Messrs. Miller, McNeil and Gurski will
serve until the Annual Meeting of Shareholders to be held in 2001, or until
such time as each's respective successor is elected. The remaining directors
will continue to serve as set forth below. The Board believes that each of the
nominees will be available and able to serve as a director. If a nominee is
unable to serve, the shares of Common Stock represented by all valid proxies
will be voted for the election of such substitute as the Board may recommend,
the Board may reduce the number of directors to eliminate the vacancy or the
Board may fill the vacancy at a later date after selecting an appropriate
nominee. Certain information concerning the nominees and those directors whose
terms of office will continue following the Annual Meeting is set forth in the
following table:
PRINCIPAL OCCUPATION, BUSINESS
NAME AGE EXPERIENCE AND DIRECTORSHIP
____ ___ ______________________________
NOMINEE FOR TERM EXPIRING IN 2000
Alan M. Sebulsky 37 Principal of Lincoln Capital Management,
a private investment management firm
based in Chicago, Illinois, since July
1994, with responsibility for
investments in the health care industry.
Also serves on Lincoln Capital
Management's equity investment
committee. From 1988 to May 1994,
Managing Director at Morgan Stanley &
Company, an international investment
banking and brokerage firm, with
responsibility for equity research
in the pharmaceutical and medical device
industries. From 1982 to 1988, held
various positions at T. Rowe Price &
<PAGE>
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Associates, an investment management
firm, the latest as Vice President, with
responsibility for health care
investment analysis and portfolio
management.
NOMINEES FOR TERMS EXPIRING IN 2001
Marlin Miller, Jr. 64 President and Chief Executive Officer
and a director of the Company since it
was founded in 1975. From 1972 to 1975,
Vice President and a director of
Connors Investor Services, a research
and investment management firm. From
1959 to 1972, served in several
capacities with Glen Gery Corporation,
a manufacturer of building products,
the latest as Executive Vice President
and a director. Director of Carpenter
Technology Corporation, a manufacturer
of specialty steel, and CoreStates
Financial Corp., a financial
institution. Also, President and a
director of Arrow Precision Products,
Inc., a corporation controlled by
principal shareholders of the Company
("Precision").
Robert L. McNeil, Jr. 81 Director of the Company since
1982. Owner of The Evergreen Company,
a private investment firm, since prior
to 1987. Affiliated with McNeil
Laboratories, a manufacturer of
pharmaceutical products, from 1936
to 1966, during which period served
in various capacities ending with the
office of Chairman. McNeil Laboratories
was acquired by Johnson & Johnson in
1959. Also, a director of Precision.
John E. Gurski 55 Corporate Vice President of AMP
Incorporated, a multinational company
engaged in the development, manufacture
and marketing of systems for electrical
and electronic applications ("AMP"),
since 1989. President, Europe, Middle
East and Africa, of AMP since July
1995 and beginning January 1, 1997,
President, Global Operations, of AMP.
Corporate Vice President, Europe, of
AMP from September 1993 to July 1995
and Corporate Vice President, Business
& Operations Planning International, of
AMP from January 1992 to September 1993.
Corporate Vice President, Capital Goods
Business Sector, of AMP from 1989 to
January 1992 and Divisional Vice
President, Operations, of AMP from 1987
to 1989. From 1972 to 1987, served in
various manufacturing and operating
capacities with AMP. Prior thereto,
was employed by General Motors Corporation.
<PAGE>
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DIRECTORS WHOSE TERMS EXPIRE IN 1998
Raymond Neag 65 Executive Vice President since April
1992 and prior thereto Senior Vice
President of the Company.
Officer and a director of the
Company since it was founded in 1975.
From 1973 until joining the Company,
General Manager of the Arrow Products
Division of Rockwell International
Corporation, the Company's predecessor
(the "Rockwell Division"). From 1971 to
1973, President of Teledyne Dental
Products, a manufacturer of dental
products and a division of Teledyne,
Inc. Prior to 1971, Vice President
and Director of Marketing of Sherwood
Medical, Inc., a medical device company.
Also, Secretary and a director of Precision.
Richard T. Niner 57 Director of the Company since
1982. General partner since 1985 of
Brynwood Management and since 1988 of
Brynwood Management II L.P., entities
that serve as general partners of two
private investment partnerships based
in Greenwich, Connecticut. Director of
Air Express International Corporation,
an international air freight forwarder,
and Hurco Companies, Inc., a
manufacturer of computer numerical
controls ("CNC") and CNC metal working
machines. Also, a director of Precision.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
John H. Broadbent, Jr. 58 Vice President-Finance, Treasurer
and a director of the Company since it
was founded in 1975. From 1966 to 1975,
served in several capacities with
Carpenter Technology Corporation,
a specialty steel manufacturer, the
latest as Manager-Market Planning
& Development. From 1964 to 1966,
consultant in the Management Advisory
Services Department of the international
accounting firm of Price Waterhouse
& Co. Also, Vice President-Finance,
Treasurer and a director of Precision.
George W. Ebright 58 Director of the Company since October
1993. Director of Cytogen Corporation,
a biopharmaceutical company engaged in
the development of diagnostic and
therapeutic substances in human health
care applications ("Cytogen"), from
February 1989 until May 1995. Chairman
of the Board of Cytogen from February
1990 until January 1995 and President
from February 1989 to August 1991.
Prior thereto, President and Chief
Operating Officer and a director
<PAGE>
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of SmithKline Beckman Corporation, a
health care and life services company
engaged in the marketing of a broad
line of prescription and proprietary
products for human and animal health
care, as well as diagnostic and
analytical products and services.
From 1963 through 1987, held several
senior management positions with
SmithKline & French Laboratories
and two of its divisions. Director of
NABI, Inc., a biopharmaceutical
company which develops products
for the prevention and treatment of
infectious diseases, and The West
Company, a supplier of specialized
packaging systems to the health care
and consumer products industries.
Also, a director of Precision.
DIRECTOR WHOSE TERM EXPIRES IN 2000
T. Jerome Holleran 60 Vice President, Secretary and a
director of the Company since it was
founded in 1975. Since February 1986,
Vice President, Chief Operating Officer
and a director of Precision. Since
1991, President of Endovations, Inc., a
subsidiary of Precision that
manufactured and marketed certain
gastroenterological medical products
until the sale in June 1996 of a
portion of its business to the
Company and the remainder to an
unrelated third party. From 1971 to
1975, Director of Business Planning-
Textile Divisions of Rockwell
International Corporation and a
Marketing Manager of the Rockwell
Division. From 1969 to 1971,
consultant with the management
consulting firm of Booz, Allen and
Hamilton.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors conducts its business through meetings of the Board
and through activities of its committees. The Board of Directors held four
meetings during fiscal 1996. All of the directors attended 100% of the
meetings of the Board and any committee on which they served during fiscal
1996. Among the committees of the Board are the Audit Committee and the
Compensation Committee.
The Audit Committee, among other things, recommends the firm to be
appointed as independent accountants to audit the Company's financial
statements, discusses the scope and results of the audit with the independent
accountants, reviews with management and the independent accountants the
Company's interim and year-end operating results, considers the adequacy of
the internal accounting controls and audit procedures of the Company and
reviews the non-audit services to be performed by the independent
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accountants. The members of the Audit Committee currently are Richard
T. Niner, who acts as Chairman of the Committee, Robert L. McNeil, Jr.
and George W. Ebright, none of whom are employees of the Company. The Audit
Committee met twice during the fiscal year ending August 31, 1996.
The Compensation Committee reviews and recommends the compensation
arrangements for executive management of the Company, including salaries,
bonuses and grants of awards under, and administration of, the Company's 1992
Stock Incentive Plan. The Compensation Committee selects employees to whom
awards will be made under the 1992 Stock Incentive Plan, determines the number
of shares to be optioned or awarded, and the time, manner of exercise and
other terms of the awards. The members of the Compensation Committee currently
are Mr. Niner, Mr. McNeil and Mr. Ebright, who acts as Chairman of the
Committee. The Compensation Committee met twice during fiscal 1996.
COMPENSATION OF DIRECTORS
The Company's directors who are not officers or employees of the
Company receive a quarterly fee of $3,500 for Board membership, a fee of
$1,000 for attendance at each Board meeting and a fee of $500 for attendance
at each Committee meeting. Directors are reimbursed for reasonable expenses
incurred in connection with attending Board and Committee meetings. The
Chairmen of the Audit Committee and the Compensation Committee each
receive an additional fee of $2,000 per year.
To promote the Company's ability to attract and retain outside
directors and to provide them with an incentive to maintain and enhance the
Company's long-term performance, stock awards are made to directors who are
not also employees or consultants of the Company and who were not shareholders
of the Company at the time of the Company's initial public offering on June 9,
1992. The stock awards are made pursuant to the Company's Directors Stock
Incentive Plan in the form of non-qualified stock options. The plan was
approved by the Company's shareholders at the Company's Annual Meeting of
Shareholders held on January 17, 1996, on which date the plan became
effective (the "Effective Date"). On the later of the Effective Date or
upon an eligible director's first election to the Board, such eligible
director receives options to purchase 5,000 shares of Common Stock. On the
date each year when directors are elected to the Board, eligible directors
receive options to purchase an additional 500 shares of Common Stock.
Mr. Ebright was the only director eligible to receive awards under the plan
during fiscal 1996 and, in accordance with the terms of the plan, was granted
options to purchase 5,000 shares of Common Stock on the Effective Date at an
exercise price of $38.00 per share. If elected to the Board at the Annual
Meeting, each of Messrs. Gurski and Sebulsky will be granted options pursuant
to the plan to purchase 5,000 shares of Common Stock at an exercise price
equal to the closing price per share of the Common Stock on the date of
the Annual Meeting as reported on the Nasdaq National Market System.
In addition, on such date, Mr. Ebright will receive options pursuant to the
plan to purchase an additional 500 shares of Common Stock at such exercise
price.
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EXECUTIVE OFFICERS
The executive officers of the Company, their positions with the
Company, business history and certain other information, as of November 29,
1996, are set forth below.
NAME OFFICE AGE
____ ______ ___
Marlin Miller, Jr. President and Chief Executive Officer 64
Raymond Neag Executive Vice President 65
John H. Broadbent, Jr. Vice President-Finance and Treasurer 58
T. Jerome Holleran Vice President and Secretary 60
Philip B. Fleck Vice President-Research and Manufacturing 52
Paul L. Frankhouser Vice President-Marketing 51
Thomas D. Nickel Vice President-Regulatory Affairs and
Quality Assurance 57
Keith S. Bair Controller 41
Marlin Miller, Jr. has served as President and Chief Executive Officer
and a director of the Company since it was founded in 1975. From 1972 to 1975,
Mr. Miller served as Vice President and a director of Connors Investor
Services, a research and investment management firm. From 1959 to 1972, Mr.
Miller served as Executive Vice President and a director of Glen Gery
Corporation, a manufacturer of building products. Mr. Miller is also President
and a director of Precision, and during fiscal 1996 devoted approximately 10%
of his business time to Precision. See "Certain Transactions." He is a
director of Carpenter Technology Corporation, a manufacturer of specialty
steel, and CoreStates Financial Corp., a financial institution.
Raymond Neag has served as Executive Vice President since 1992 and prior
thereto served as Senior Vice President of the Company. Mr. Neag has been an
officer and a director of the Company since it was founded in 1975. From 1973
until joining the Company, Mr. Neag served as General Manager of the Rockwell
Division. From 1971 to 1973, Mr. Neag was President of Teledyne Dental
Products, a manufacturer of dental products, which is a division of Teledyne,
Inc. Prior to 1971, Mr. Neag was Vice President and Director of Marketing of
Sherwood Medical, Inc., a medical device company. Mr. Neag also serves as
Secretary and a director of Precision.
John H. Broadbent, Jr. has served as Vice President-Finance, Treasurer
and a director of the Company since it was founded in 1975. From 1966 to 1975,
Mr. Broadbent served in several capacities with Carpenter Technology
Corporation, a specialty steel manufacturer, the latest as Manager-Market
Planning & Development. From 1964 to 1966, Mr. Broadbent was employed as a
consultant in the Management Advisory Services Department of Price Waterhouse
& Co. Mr. Broadbent also serves as Vice President-Finance, Treasurer and a
director of Precision, and during fiscal 1996 devoted approximately 10% of his
business time to Precision. See "Certain Transactions."
T. Jerome Holleran has served as Vice President, Secretary and a
director of the Company since it was founded in 1975. Since February 1986,
Mr. Holleran has also been Vice President, Chief Operating Officer and a
director of Precision. During fiscal 1996, Mr. Holleran devoted approximately
90% of his business time to Precision and approximately 10% of his business
<PAGE>
-8-
time to Arrow. Since 1991, Mr. Holleran has also served as President
of Endovations, Inc., a subsidiary of Precision that manufactured and marketed
certain gastroenterological medical products until the sale in June 1996 of a
portion of its business to the Company and the remainder to an unrelated third
party. See "Certain Transactions." From 1971 to 1975, Mr. Holleran served as
Director of Business Planning-Textile Divisions of Rockwell International
Corporation and as a Marketing Manager of the Rockwell Division. From 1969 to
1971, Mr. Holleran was employed as a consultant by Booz, Allen and Hamilton.
Philip B. Fleck has served as Vice President-Research and Manufacturing
since June 1994 and prior thereto served as Vice President-Research and
Engineering of the Company since 1986. From 1975 to 1986, Mr. Fleck served
as Engineering Manager of the Company. From 1971 to 1975, Mr. Fleck served
as Equipment Design Manager and Engineering Manager of the Rockwell Division.
From 1967 to 1971, Mr. Fleck served as Manufacturing Development Engineer of
Atlas Chemical Industries, a manufacturer of aerospace components.
Paul L. Frankhouser has served as Vice President-Marketing of the
Company since 1986. From 1980 to 1986, Mr. Frankhouser served as Manager
of Marketing of the Company. From 1977 to 1980, Mr. Frankhouser served
as Product Manager-Medical Devices of the Company. From 1975 to 1977,
Mr. Frankhouser served as Manager of Medical Products and Process
Development of the Company. Prior to 1975, Mr. Frankhouser served as a
Project Engineer of the Rockwell Division.
Thomas D. Nickel has served as Vice President-Regulatory Affairs
and Quality Assurance of the Company since 1991. From 1986 to 1991, Mr.
Nickel served as Director of Regulatory Affairs and Quality Assurance
of the Company. Prior to joining the Company, Mr. Nickel served as Director
of Regulatory Affairs and Quality Assurance of Omnis Surgical, Inc., a former
subsidiary of Baxter International, Inc. that manufactured anesthesiological
and other related products.
Keith S. Bair has served as Controller of the Company since 1991.
From 1984 to 1991, Mr. Bair served as the General Accounting Manager of the
Company. From 1982 to 1984, Mr. Bair served as the Assistant Controller for
AM Cable TV Industries, Inc., a maker of cable distribution systems for cable
television franchise owners. From 1979 to 1982, Mr. Bair was employed as an
accountant by Albert Olsen & Co., Certified Public Accountants.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 29, 1996, the
beneficial ownership of Common Stock by (i) each director and director
nominee who is a shareholder, (ii) each of the executive officers named in
the Summary Compensation Table below, (iii) all directors and officers as a
group (including the named individuals), and (iv) each beneficial owner of
more than 5% of the outstanding Common Stock. Except as otherwise indicated
in the notes immediately following the table, the persons named in the
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table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to community
property laws where applicable.
AMOUNT PERCENT OF
NAME BENEFICIALLY OWNED CLASS OWNED
____ __________________ ___________
Marlin Miller, Jr. .......... 4,232,300(1) 18.2%
Richard T. Niner .......... 3,039,737(2) 13.1
Robert L. McNeil, Jr. ....... 2,433,344(3) 10.5
Raymond Neag ................ 2,067,000(4) 8.9
John H. Broadbent, Jr. ...... 951,840(5) 4.1
T. Jerome Holleran . ........ 777,925(6) 3.3
Paul L. Frankhouser ......... 46,633(7) *
Philip B. Fleck ............. 40,000(8) *
George W. Ebright ........... 500 *
All directors and officers as a
group (11 persons) .......... 13,604,340(9) 58.6
Richard T. Niner and
Robert W. Cruickshank,
as Trustees of the Robert L.
McNeil, Jr. 1983 Intervivos
Trust dated November 30,
1983 ..................... 2,312,247 10.0
c/o Morgan Guaranty Trust
Company of New York
9 West 57th Street
New York, New York 10019
Attention: Mr. Eugene Wilks
___________________________
* Less than one percent.
(1) Includes 1,000 shares owned by Mr. Miller's wife, as to which Mr.
Miller disclaims beneficial ownership.
(2) Shares beneficially owned include an aggregate of 9,075 shares
owned by Mr. Niner's wife and two children, as to which Mr. Niner disclaims
beneficial ownership, and 2,312,247 shares held by Kingsley & Co., as nominee
for the Robert L. McNeil, Jr. 1983 Intervivos Trust (the "McNeil Trust"), of
which Mr. Niner is one of two trustees who have shared power to vote and
dispose of the shares of Common Stock held in such trust.
(3) Includes 500 shares owned by Mr. McNeil's wife, as to which Mr.
McNeil disclaims beneficial ownership. Excludes 2,312,247 shares held by
Kingsley & Co., as nominee for the McNeil Trust, of which Mr. McNeil was the
grantor for the benefit of Mr. McNeil and his lineal descendants. Mr. McNeil
disclaims beneficial ownership of such shares held in the McNeil Trust.
(4) Includes 200,000 shares owned by the estate of Evelyn J. Neag
(who was Mr.Neag's wife), of which Mr. Neag is the administrator.
(footnotes continued on next page)
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(5) Includes 15,000 shares owned by Mr. Broadbent's wife, as to
which Mr. Broadbent disclaims beneficial ownership. Also includes 31,400
shares held by a charitable foundation of which Mr. Broadbent is one of three
trustees who have shared power to vote and dispose of the shares of Common
Stock held by such foundation.
(6) Includes 25,000 shares owned by Mr. Holleran's wife, as to which
Mr. Holleran disclaims beneficial ownership.
(7) Includes 300 shares owned by Mr. Frankhouser's children, as to
which Mr. Frankhouser disclaims beneficial ownership.
(8) Includes 10,000 shares owned by Mr. Fleck's wife, as to which
Mr. Fleck disclaims beneficial ownership.
(9) See footnotes (1) through (8) above.
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules promulgated thereunder require
the Company's officers and directors and persons who own more than ten percent
of a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and to furnish to the Company copies of all such filings. The Company
has determined, based solely upon a review of (i) those reports and amendments
thereto furnished to the Company during and with respect to the year ended
August 31, 1996, and (ii) written representations from certain reporting
persons, that Paul L. Frankhouser, Vice President-Marketing of the Company, in
filing a Form 4 to report his sale of 134 shares of Common Stock, inadvertently
overstated the amount of such sale by two shares, which error was subsequently
corrected by an amendment to the Form 4.
EXECUTIVE COMPENSATION
The following table summarizes, for the Company's past three fiscal years,
all compensation paid to the Company's Chief Executive Officer and the four
most highly compensated other executive officers of the Company whose salary
and bonus exceed $100,000 for the fiscal year ended August 31, 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual
Compensation(1) Long-Term Compensation(1)
--------------------- --------------------------
Restricted Securities
Name and Fiscal Stock Underlying All Other
Principal Position Year Salary($) Bonus($)(2) Awards($)(3) Options(#) Compensation($)
- ------------------ ------ --------- ----------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Marlin Miller, Jr. 1996 284,116(4) -0- -0- -0- 197,355(5)
President and Chief 1995 270,583(4) 262,466 -0- -0- 199,716(5)
Executive Officer 1994 257,698(4) 235,149 -0- -0- 201,451(5)
Raymond Neag 1996 228,864 -0- -0- -0- 113,327(6)
Executive Vice 1995 217,968 169,143 -0- -0- 113,981(6)
President 1994 207,589 151,540 -0- -0- 125,716(6)
John H. Broadbent, Jr. 1996 177,574(7) -0- -0- -0- 70,734(8)
Vice President-Finance 1995 169,117(7) 145,817 -0- -0- 70,953(8)
and Treasurer 1994 161,060(7) 130,638 -0- -0- 70,589(8)
(table continued on next page)
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<CAPTION>
Annual
Compensation Long-Term Compensation(1)
----------------------- -------------------------
Restricted Securities
Name and Fiscal Stock Underlying All Other
Principal Position Year Salary($) Bonus($)(2) Awards($)(3) Options (#) Compensation($)
- ------------------ ------ --------- ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Philip B. Fleck 1996 173,250 24,272 -0- 10,000(9) 4,733(10)
Vice President-Research 1995 165,000 88,062 -0- -0- 4,794(10)
and Manufacturing 1994 141,300 72,270 41,500(11) -0- 4,176(10)
Paul L. Frankhouser 1996 173,250 24,272 -0- 10,000(12) 4,556(10)
Vice President- 1995 165,000 88,062 -0- -0- 4,881(10)
Marketing 1994 127,200 96,588 41,500(13) -0- 4,415(10)
_____________________________
</TABLE>
(1) Column with respect to "Other Annual Compensation" has not been included
in this table because there has been no such Other Annual Compensation
awarded to, earned by or paid to any of the executive officers named
above for any fiscal year covered in the table.
(2) Includes annual incentive and profit sharing bonuses earned with respect
to fiscal 1996, part of which were paid in fiscal 1997.
(3) Recipients of restricted stock awards are entitled to dividends, if any,
paid on Common Stock in respect of restricted shares of Common Stock held
by them.
(4) In addition, Precision paid $31,568, $30,065 and $28,633 as salary to Mr.
Miller in fiscal 1996, 1995 and 1994, respectively, in respect of Mr.
Miller's devotion of approximately 10% of his business time to Precision
during each such fiscal year. See "Certain Transactions."
(5) Consists of (i) matching contributions in the amount of $4,294, $4,903
and $5,225 made by the Company to Mr. Miller's account under the
Company's 401(k) Plan in fiscal 1996, 1995 and 1994, respectively, and
(ii) insurance premiums in the amount of $193,061, $194,813 and $196,226
paid by the Company in fiscal 1996, 1995 and 1994, respectively, in
respect of term life insurance policies owned by certain trusts
established by Mr. Miller, which premium payments must be repaid to the
Company from either (a) the cash surrender value of such policies or (b)
the death benefits of such policies.
(6) Consists of (i) matching contributions in the amount of $4,765, $4,719
and $4,306 made by the Company to Mr. Neag's account under the Company's
401(k) Plan in fiscal 1996, 1995 and 1994, respectively, and (ii)
insurance premiums in the amount of $108,562, $109,262 and $121,410 paid
by the Company in fiscal 1996, 1995 and 1994, respectively, in respect of
the term life insurance policies owned by certain trusts established
by Mr. Neag, which premium payments must be repaid to the Company from
either (a) the cash surrender value of such policies or (b) the death
benefit of such policies.
(7) In addition, Precision paid $19,730, $18,791 and $17,896 as salary to
Mr. Broadbent in fiscal 1996, 1995 and 1994, respectively, in respect of
Mr.Broadbent's devotion of approximately 10% of his business time to
Precision during each such fiscal year. See "Certain Transactions."
(footnotes continued on next page)
<PAGE>
-12-
(8) Consists of (i) matching contributions in the amount of $4,745, $4,653
and $3,972 made by the Company to Mr. Broadbent's account under the
Company's 401(k) Plan in fiscal 1996, 1995 and 1994, respectively, and
(ii) insurance premiums in the amount of $65,989, $66,300 and $66,617
paid by the Company in fiscal 1996, 1995 and 1994, respectively, in
respect of term life insurance policies owned by a certain trust
established by Mr. Broadbent, which premium payments must be repaid to
the Company from either (a) the cash surrender value of such policies or
(b) the death benefits of such policies.
(9) Represents an award to Mr. Fleck on January 17, 1996 of incentive stock
options to purchase 10,000 shares of Common Stock at an exercise price
of $38.00 per share under the Company's 1992 Stock Incentive Plan.
Subject to Mr. Fleck's continued employment with the Company, 20% (i.e.,
2,000 options) of such stock option award will vest on each of the first
through the fifth anniversary of the date of such award (i.e., January
17). The options are subject to immediate vesting upon the occurrence
of certain change in control events. See "Option Grants."
(10) Represents matching contributions made by the Company to the account of
each of Messrs. Fleck and Frankhouser under the Company's 401(k) Plan in
fiscal 1996, 1995 and 1994, respectively.
(11) Represents an award to Mr. Fleck of 2,000 shares of restricted Common
Stock on December 1, 1993 under the Company's 1992 Stock Incentive Plan.
Subject to Mr. Fleck's continued employment with the Company, 20% (i.e.,
400 shares) of such restricted stock award will vest on each of the
first through the fifth anniversary of the date of such award (i.e.,
December 1), and such restricted stock will be entitled to all
dividends paid in respect of the Common Stock during such vesting
period. As of August 31, 1996, Mr. Fleck owned 38,800 shares of vested
restricted Common Stock and 1,200 shares of non-vested restricted
Common Stock having an aggregate value of $1,070,000, based upon a
closing price of $26.75 per share on August 30, 1996 as reported on
the Nasdaq National Market System.
(12) Represents an award to Mr. Frankhouser on January 17, 1996 of incentive
stock options to purchase 10,000 shares of Common Stock at an exercise
price of $38.00 per share under the Company's 1992 Stock Incentive Plan.
Subject to Mr. Frankhouser's continued employment with the Company, 20%
(i.e., 2,000 options) of such stock option award will vest on each of
the first through the fifth anniversary of the date of such award (i.e.,
January 17). The options are subject to immediate vesting upon the
occurrence of certain change in control events. See "Option Grants."
(13) Represents an award to Mr. Frankhouser of 2,000 shares of restricted
Common Stock on December 1, 1993 under the Company's 1992 Stock
Incentive Plan. Subject to Mr. Frankhouser's continued employment with
the Company, 20% (i.e., 400 shares) of such restricted stock award will
vest on each of the first through the fifth anniversary of the date
of such award (i.e., December 1), and such restricted stock will be
entitled to all dividends paid in respect of the Common Stock during
such vesting period. As of August 31, 1996, Mr. Frankhouser owned
45,433 shares of vested restricted Common Stock and 1,200 shares of
non-vested restricted Common Stock having an aggregate value of
$1,247,433, based upon a closing price of $26.75 per share on August 30,
1996 as reported on the Nasdaq National Market System.
OPTION GRANTS
The following table sets forth certain information, as of August
31, 1996, concerning individual grants of stock options made during the
fiscal year ended August 31, 1996 to the persons named in the Summary
Compensation Table above.
<PAGE>
-13-
<TABLE>
OPTION GRANTS IN FISCAL 1996
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Appreciation for Option Term
--------------------------------------------------------------------- -----------------------------
Number of Percent of Total
Securities Options Granted
Underlying Options to Employees in Exercise Expiration
Name Granted (#) Fiscal Year (1) Price ($/sh) Date 5% 10%
- ------------------ ------------------ ---------------- ------------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Philip B. Fleck 10,000(2) 5.8% $38.00 01/17/06 $238,980 $605,622
Paul L. Frankhouser 10,000(2) 5.8% 38.00 01/17/06 238,980 605,622
__________________
</TABLE>
(1) Based upon total grants of options in respect of 171,700 shares of
Common Stock made during fiscal 1996.
(2) Granted pursuant to the Company's 1992 Stock Incentive Plan on
January 17, 1996. Subject to continued employment by the Company, 20%
(i.e., 2,000) of such options will vest on each of the first through the
fifth anniversary of such date. The options are subject to immediate
vesting upon the occurrence of certain change in control events.
AGGREGATE YEAR-END OPTION VALUES
The following table provides information concerning stock
options exercised during fiscal 1996 and the number of unexercised
options held by the individuals named in the Summary Compensation
Table as of August 31, 1996. As of August 31, 1996, there were no
unexercised, "in the money" options because the exercise price of such
options exceeded the fair market value of the Common Stock as of such
date.
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND YEAR-END OPTION VALUES
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
August 31, 1996 (#) August 31, 1996 ($)(1)
--------------------------- --------------------------
Shares Acquired Value
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Philip B. Fleck -- -- -- 10,000 -- --
Paul L. Frankhouser -- -- -- 10,000 -- --
__________________
</TABLE>
(1) Based upon a closing price of the Common Stock of $26.75 per share on
August 30, 1996 as reported on the Nasdaq National Market System and an
option exercise price of $38.00, none of the options are currently "in
the money."
RETIREMENT PLAN
The Retirement Plan for Salaried Employees of Arrow
International, Inc. became effective on September 1, 1978, and was
amended and restated as of September 1, 1984 and September 1, 1989
(the "Retirement Plan"). The Retirement Plan is a non-contributory
defined benefit pension plan intended to be qualified under Section
401(a) of the Internal Revenue Code. The Retirement Plan covers
salaried employees of the Company who have attained age 21 and
completed one year of service and provides benefits based upon years
of service and compensation. All of the executive officers of the
Company participate in the Retirement Plan. Benefits under the
<PAGE>
-14-
Retirement Plan are based on an annual rate of 1.25% of a
participant's final average earnings multiplied by such participant's
years of credited service with the Company after September 1, 1975,
but may not exceed $25,000 annually. Final average earnings are
defined under the Retirement Plan as the participant's average annual
compensation, excluding discretionary bonuses and subject to annual
limitations on compensation under the Internal Revenue Code, during
the 60 consecutive months in the final 120 months of the participant's
employment which produce the highest average. Benefits under the
Retirement Plan are payable upon normal retirement, which is the later
of age 65 or the fifth anniversary of commencing plan participation,
early retirement at age 55 following ten years of service, death,
disability or other termination of employment following five years of
vesting service, and may be paid under various annuity forms of
payment.
Contributions to the Retirement Plan for any year depend
on the assumptions used by the actuary for the Retirement Plan,
historic investment experience and the level of prior years' funding.
The annual contribution made by the Company to the Retirement Plan
for fiscal 1994, 1995 and 1996 was $46,936, $35,202 and $549,199,
respectively, equivalent to approximately 0.3% for fiscal 1994, 0.2%
for fiscal 1995 and 3.1% for fiscal 1996 of the covered compensation
of all participants in the plan. The amount of the contribution,
payment or account in respect of a specified person is not and cannot
readily be separately or individually calculated by the actuary of the
Retirement Plan. Based on the projected years of credited service and
final average earnings of each of the executive officers of the
Company, each of these executive officers, upon reaching the normal
retirement age, will be entitled to receive as a straight life annuity
the maximum annual benefit of $25,000 under the Retirement Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and establishes,
subject to approval of the Board of Directors, the compensation
arrangements for executive management of the Company, including
salaries, bonuses and grants of awards under, and administration of,
the Company's 1992 Stock Incentive Plan. The Compensation Committee
is composed of three non-employee directors of the Company.
COMPENSATION PHILOSOPHY
Arrow International's executive compensation program is
designed to attract, retain, motivate and reward effective executive
officers and to link executive compensation with the attainment of
financial, operational and strategic objectives. In establishing the
program, the Compensation Committee assesses the performance of
individuals and the Company relative to those objectives.
The Company's compensation program generally provides
incentives to achieve annual and long-term objectives. The principal
elements of the compensation program are base salary, annual incentive
bonuses and long-term incentive awards in the form of stock options,
stock appreciation rights and/or grants of restricted Common Stock.
These elements generally are blended in order to formulate
compensation packages which provide competitive pay, reward the
achievement of financial, operational and strategic objectives and
align the interests of the Company's executive officers and other
higher level personnel with those of the Company's shareholders.
BASE SALARY. Base salary levels for executive officers
are derived from market comparisons with similarly-sized companies
engaged in the manufacture of medical products for the health care
industry with which the Company competes for executive talent. The
Compensation Committee believes that the Company's most direct
competitors for this purpose are not necessarily all of the companies
that would be included in a peer group established to compare
shareholder returns. Therefore, the compensation peer group is not
<PAGE>
-15-
the same as the peer group index set forth in the Performance Graph
included in this Proxy Statement. Based on information currently
available to the Compensation Committee, the Compensation Committee
believes that base salary levels for executive officers, including the
Chief Executive Officer, are, on average, at or near the median of
base salary levels for executive officers of companies included in the
Company's compensation peer group. In determining executive officers'
salaries, the Compensation Committee also considers individual
experience and prior service to the Company, level of responsibility
and overall job performance. The Compensation Committee does not
assign weights to these factors nor necessarily consider any one more
important than the others. The Compensation Committee reviews the
performance of the Chief Executive Officer and, in determining his
level of compensation for fiscal 1996, in addition to consideration
of industry comparisons and individual performance, has taken
particular note of the Company's achievements in fiscal 1996 in the
following key areas: management efficiency; continued expansion of
the Company's international production and marketing presence and, in
particular, the Company's commencement of operations at its recently
completed manufacturing and research facility in the Czech Republic;
the successful introduction of new products into the market and the
advancement of products under development; and the Company's overall
growth and profitability.
ANNUAL INCENTIVE BONUSES. Annual incentive bonuses are
based on two plans: a Company-wide corporate profit sharing plan (the
"Profit Sharing Plan") and a pretax income growth plan limited to
certain executive officers (the "Income Growth Bonus Plan").
Each year of the Profit Sharing Plan begins on November
1st. For purposes of determining the amounts available for
distribution under the Profit Sharing Plan, during each month of each
plan year the pre-tax income of the Company, excluding royalty
revenue, profit sharing expense and other extraordinary income and
expense, for the current and two immediately preceding months is
averaged, and a fixed percentage of this average is allocated to the
Profit Sharing Plan. The amount allocated to the Profit Sharing Plan
is apportioned to each participating employee in proportion to the
fraction that such employee's compensation for that month represents
of the total monthly compensation for all plan participants. Each
month the Company distributes to each plan participant 75% of the plan
proceeds allocable to such participant, while the remainder of such
amount is accumulated for the benefit of such participant and paid out
on an annual basis in December of the immediately following plan year.
Messrs. Miller, Neag, Broadbent and Holleran and the Company's field
sales representatives do not participate in the Profit Sharing Plan.
Pursuant to the Income Growth Bonus Plan, at the
discretion of the Compensation Committee, Messrs. Miller, Neag,
Broadbent, Fleck and Frankhouser are eligible to receive annual
incentive bonuses equal to 4.5, 4.0, 4.0, 2.0 and 2.0 times,
respectively, the percentage growth in pretax income, adjusted for
extraordinary income and expense, of the Company over the previous
year times their respective base pay. For fiscal 1996, the Company's
pretax income, adjusted for extraordinary income and expense,
decreased by 3.2% from fiscal 1995. Consequently, Messrs. Miller,
Neag, Broadbent, Fleck and Frankhouser were not paid any incentive
bonuses in fiscal 1996. The Compensation Committee continues to
believe that payment of bonuses specifically linked to the growth in
profitability of the Company provides appropriate and effective
rewards for successful individual performances that contribute
directly to the overall success of the Company. Therefore, it is the
present intention of the Compensation Committee to approve payment of
incentive bonuses in fiscal 1997 to the eligible senior executive
officers of the Company pursuant to the Income Growth Bonus Plan to
the extent that the Company in fiscal 1997 achieves an increase in
pretax income, adjusted for extraordinary income and expense, over
fiscal 1996.
LONG-TERM INCENTIVE AWARDS. To promote the Company's long- term
objectives, stock awards are made to executive officers and other employees
who are in a position to make a significant contribution to the Company's
long-term success. The stock awards are made pursuant to the Arrow
<PAGE>
-16-
International, Inc. 1992 Stock Incentive Plan in the form of stock options,
stock appreciation rights ("SARs") and grants of restricted Common Stock.
Up until May 31, 1992 when such plan terminated, grants of restricted shares
of the Company's previously outstanding Class A Common Stock were made
pursuant to the Company's Restricted Stock Bonus Plan. Executive officers of
the Company who were shareholders of the Company other than through
participation in the Restricted Stock Bonus Plan, including Messrs. Miller,
Neag, Broadbent and Holleran, were ineligible to receive awards of restricted
stock under this plan.
Since the stock options, SARs and restricted stock awards vest and may
grow in value over time, these components of the Company's compensation plan
are designed to reward performance over a sustained period. The Company
intends that these awards will strengthen the focus of its executives and
other key employees on managing the Company from the perspective of a person
with an equity stake in the Company. The Compensation Committee believes
that, as a founder and principal shareholder of the Company, each of Messrs.
Miller, Neag and Broadbent currently have sufficient incentive to promote the
long-term growth of the Company and, therefore, none of such executive
officers has, to date, received any stock awards.
Stock awards are not granted each year. In selecting recipients and
the size of stock awards, the Compensation Committee generally considers
various factors such as the overall job performance and potential of the
recipient, prior grants to and amount of Common Stock currently held by the
recipient, prior service to the Company, a comparison of awards made to
executives and key employees in comparable positions at similar companies,
and the Company's performance. In fiscal 1996, incentive stock options to
purchase an aggregate of 171,700 shares of Company Stock at an exercise price
of $38.00 per share were awarded on January 17, 1996 to certain executive
officers (including Messrs. Fleck and Frankhouser) and other key employees of
the Company. In selecting the recipients and size of these awards, the
Compensation Committee placed particular emphasis on such executives' and
key employees' overall job performance, their potential for continued
excellent service and significant contribution to the Company's growth and
profitability during fiscal 1996 and awards to individuals who had previously
not been selected due to insignificant length of service to the Company.
Stock awards granted to executives at other companies were not considered by
the Compensation Committee in connection with such awards. As a result of
such awards and stock awards made prior to fiscal 1996, each of the Company's
executive officers who were not also founders of the Company, as well as a
significant number of non-executive employees of the Company, have been
afforded the opportunity to enjoy an equity stake in the Company as part of
their long-term compensation.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), imposes limitations
on the federal income tax deductibility of compensation paid to the Company's
chief executive officer and to each of the other four most highly compensated
executive officers of the Company. Under these limitations, the Company may
deduct such compensation only to the extent that during any fiscal year the
compensation does not exceed $1,000,000 or meets certain specified conditions
(such as certain performance-based compensation that has been approved by the
Company's shareholders). Based on the Company's current compensation plans
and policies and proposed regulations interpreting the Code, the Company and
the Compensation Committee believe that, for the near future, there is not a
significant risk that the Company will lose any significant tax deduction for
<PAGE>
-17-
executive compensation. The Company's compensation plans and policies will
be modified to ensure full deductibility of executive compensation if the
Company and the Compensation Committee determine that such an action is in
the best interests of the Company.
COMPENSATION COMMITTEE
George W. Ebright, Chairman
Robert L. McNeil, Jr.
Richard T. Niner
<PAGE>
-18-
<TABLE>
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the yearly cumulative
total shareholder return on the Common Stock with the cumulative total
return of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Medical Products and Supplies Index for the period beginning on the date of
the Company's initial public offering of the Common Stock on June 9, 1992
and ending on August 31, 1996. The comparison assumes $100 was invested on
June 9, 1992 in the Common Stock and in each of the foregoing indices and
also assumes reinvestment of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<CAPTION>
June 9, August 31, August 31, August 31, August 31, August 31,
Indices 1992 1992 1993 1994 1995 1996
- ------------------------ -------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Arrow International, Inc. $ 100.00 $ 133.90 $ 128.91 $ 137.94 $ 229.36 $ 150.28
S&P 500 Stock Index $ 100.00 $ 101.48 $ 116.92 $ 123.31 $ 149.76 $ 163.68
S&P Medical Products and
Supplies Index $ 100.00 $ 104.18 $ 79.94 $ 93.44 $ 143.85 $ 177.81
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended August 31, 1996, the Compensation
Committee of the Board of Directors consisted of Messrs. Ebright, McNeil and
Niner, none of whom is an officer or employee of the Company or any of its
subsidiaries. Each of Messrs. Ebright, McNeil and Mr. Niner is a director of
Precision. See "Certain Transactions."
<PAGE>
-19-
CERTAIN TRANSACTIONS
Arrow Precision Products, Inc. ("Precision") is a former subsidiary
of the Company engaged in the business of manufacturing and marketing certain
gastroenterological and other non-catheter medical products. Precision also
manufactures certain other products, such as ground needles and injection
sites, primarily for use by the Company. At November 29, 1996, certain
officers, directors and principal shareholders of the Company owned
substantially all of Precision's outstanding common stock.
The directors of Precision include Messrs. Miller, Neag, Broadbent,
Holleran, McNeil, Niner and Ebright. Messrs. Miller, Holleran and Broadbent
are the president, the vice president and chief operating officer and the
vice president-finance and treasurer of Precision, respectively. In fiscal
1996, Mr. Holleran devoted approximately 90% of his business time to
Precision, which paid 90% of his salary and bonus, and devoted approximately
10% of his business time to the Company, which paid 10% of his salary and
bonus. In fiscal 1996, Mr. Holleran received salary and bonus amounts of
$173,623, of which amount Precision paid $156,261 and the Company paid
$17,362. In fiscal 1996, Precision also reimbursed the Company for 10% of
the salary of Messrs. Miller and Broadbent, each of whom devoted
approximately 10% of his business time to Precision. In fiscal 1996,
reimbursement payments for the services of Messrs. Miller and Broadbent
amounted to $31,568 and $19,730, respectively.
Sales of products by Precision to the Company in fiscal 1996 amounted
to $1,222,230. Although the Company has made substantially all of its
purchases of such products from Precision, the Company solicits competitive
quotations from unrelated suppliers and expects to purchase such products
from Precision only when justified by product availability, price, quality
and delivery considerations. The Company provides certain operating and
administrative services to Precision, at rates which the Company believes to
be comparable to those which would be charged by unrelated third parties. In
fiscal 1996, the Company charged Precision $215,832 for such services.
Historically, the Company also has maintained employee benefit accounts,
including medical benefits, for Precision's employees, at Precision's
expense. In fiscal 1996, Precision reimbursed the Company $492,796 for such
expenses. Precision leases on a net lease basis approximately 34,000 square
feet of office and manufacturing space at the Company's Wyomissing,
Pennsylvania facility at rates believed by the Company to represent current
market rates. In fiscal 1996, the Company charged Precision rent of $261,972
for such space at this facility.
On June 1, 1996, Arrow Tray Products, Inc. (formerly known as
Endovations, Inc.), a subsidiary of Precision ("ATP"), sold certain of its
assets pertaining to its liver biopsy and paracentesis tray product lines to
the Company for an aggregate purchase price of $1,135,178. On such date, ATP
sold the remainder of its business to an unaffiliated third party. The
Company believes that the terms of its purchase of such assets from ATP were
generally as favorable to the Company as those which would have been
available from an unaffiliated third party.
The Board of Directors of the Company has completed a thorough review
of the business and operations of Precision and concluded that Precision's
business and operations are complementary to and not in competition with the
business and operations of the Company. In addition, Precision and the
Company have agreed that the Company shall have a right of first refusal to
pursue for the Company's own benefit any business opportunity presented to
Precision, or of which it has knowledge, that is within the scope of the
Company's current or anticipated lines of business.
<PAGE>
-20-
PROPOSAL 2 - RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Company's independent accountants and auditors are Coopers &
Lybrand L.L.P., certified public accountants. Coopers & Lybrand L.L.P. has
served as the Company's independent accountants and auditors since fiscal
1985. At the Annual Meeting, the shareholders will consider and vote upon a
proposal to ratify the appointment of independent accountants for the
Company's fiscal year ending August 31, 1997. The Audit Committee of the
Board of Directors has recommended that Coopers & Lybrand L.L.P. be re-
elected as independent accountants for the 1997 fiscal year. The Board of
Directors unanimously recommends that shareholders vote FOR this proposal.
Proxies solicited by the Board of Directors will be voted FOR the foregoing
proposal unless otherwise indicated.
Representatives of Coopers & Lybrand L.L.P. will be present at
the Annual Meeting to make a statement, if desired, and to respond to
appropriate questions from shareholders.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does
not intend to present any matter for action at the Annual Meeting other than
as set forth in the Notice of Annual Meeting. If any other matters properly
come before the Annual Meeting, it is intended that the holders of the
proxies will act in accordance with their judgment on such matters.
In order to be eligible for inclusion in the proxy materials for the
Company's 1998 Annual Meeting of Shareholders, any shareholder proposal to
take action at such meeting must be received at the Company's principal
executive offices by August 19, 1997. Proposals should be directed to the
Secretary of the Company at the principal executive offices of the Company.
The cost of the solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by mail, certain of the
officers and employees of the Company, without extra compensation therefor,
may solicit proxies personally or by telephone or telegraph. The Company
will also request brokers, banks and other nominees, custodians and
fiduciaries to forward soliciting materials to their principals and to
request authority for the execution of proxies and will reimburse such
persons for forwarding such materials.
A copy of the 1996 Annual Report accompanies this Proxy Statement.
Additional copies may be obtained from the Secretary, Arrow International,
Inc., P.O. Box 12888, 3000 Bernville Road, Reading, Pennsylvania 19612.
By Order of the Board of Directors,
T. Jerome Holleran,
Secretary
December 16, 1996
Reading, Pennsylvania
<PAGE>
ARROW INTERNATIONAL, INC.
P.O. BOX 12888, 3000 BERNVILLE ROAD, READING, PENNSYLVANIA 19612
SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS ON JANUARY 15, 1997
P The undersigned hereby appoints John H. Broadbent, Jr. and Raymond Neag,
and each of them, his/her Proxies, each with full power to appoint his/her
R substitute, and hereby authorizes them to represent and to vote, as
designated hereon, all shares of capital stock of ARROW INTERNATIONAL, INC.
O (the "Company") held of record by the undersigned on November 29, 1996, at
the Annual Meeting of Shareholders to be held on January 15, 1997 and any
X adjournments thereof, and hereby further authorizes each of them, in their
discretion, to vote upon any other business that may properly come before
Y the meeting.
(change of address/comments)
Election of Directors, Nominees: ______________________________________
______________________________________
For term expiring in 2000: ______________________________________
Alan M. Sebulsky ______________________________________
(if you have written in the above
For terms expiring in 2001: space, please mark the corresponding
Marlin Miller, Jr. box on the reverse side of this card)
Robert L. McNeil, Jr.
John E. Gurski
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any box with regard to a particular
proposal if you wish to vote FOR such proposal. The Proxies cannot vote your
shares unless you sign and return this card.
SEE REVERSE
SIDE
_______________________________________________________________________________
FOLD AND DETACH HERE
<PAGE>
/x/PLEASE MARK YOUR 0395
VOTES AS IN THIS
EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
THEREIN. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS
PROXY WILL BE VOTED FOR SUCH PROPOSAL.
_______________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
_______________________________________________________________________________
1. Election of FOR WITHHELD 2. Ratification of appointment FOR AGAINST ABSTAIN
Directors. / / / / of Coopers & Lybrand / / / / / /
(see reverse) L.L.P. as independent
accountants.
For, except vote withheld from the following nominee(s):
________________________ _________________________
________________________________________________________________________________
Change of
Address/Comments
on Reverse Side / /
The signer hereby revokes all proxies heretofore
given by the signer to vote at said meeting or any
adjornments thereof.
NOTE: Please sign exactly as name appears hereon.
If shares are registered in more than one name,
the signatures of all such persons are required. A
corporation should sign in its full corporate name
by a duly authorized officer, stating his/her
title. Trustees, guardians, executors and
administrators should sign in their official
capacity giving their full title as such. If a
partnership, please sign in the partnership name
by authorized persons.
SIGNATURE(S) ____________________________ DATE ________________________
SIGNATURE(S) ____________________________ DATE ________________________
_______________________________________________________________________________
FOLD AND DETACH HERE
ARROW (REGISTERED TRADEMARK)
INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 15, 1997
4:00 P.M.
SHERATON BERKSHIRE INN
ROUTE 422 WEST AND PAPERMILL ROAD EXIT
WYOMISSING, PENNSYLVANIA
