UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended August 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
------------ -------------
Commission file number 0-20212
ARROW INTERNATIONAL, INC. 401(k) PLAN
(full title of the plan)
Arrow International, Inc.
P.0. Box 12888
3000 Bernville Road
Reading, Pennsylvania 19612
(Name of issuer of the securities held pursuant to
the plan and the address of its principal executive offices)
Registrant's telephone number, including area code (610) 378-0131
Notices and communications from the Securities and Exchange
Commission relative to this report should be forwarded to:
John H. Broadbent, Jr.
Arrow International, Inc.
P.0. Box 12888
3000 Bernville Road
Reading, Pennsylvania 19612
(610) 378-0131
This is the first of 21 pages. The Index to Exhibit is on Page
20.
ARROW INTERNATIONAL, INC. 401(k) PLAN
FINANCIAL REPORT
AUGUST 31,1996
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENTS AND
SCHEDULES 1
FINANCIAL STATEMENTS
Statements of net assets available for benefits 2-5
Statements of changes in net assets available for benefits 6-9
Notes to financial statements 10-13
SCHEDULES
Assets held for investment 14
Reportable transactions 15
INDEPENDENT AUDITOR'S REPORT
To the Plan Administrator
Arrow International, Inc. 401(k) Plan
Reading, Pennsylvania
We have audited the accompanying statements of net assets
available for benefits of Arrow International, Inc. 401(k) Plan
as of August 31, 1996 and 1995, and the related statements of
changes in net assets available for benefits for the years then
ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the Arrow International, Inc. 401(k)
Plan as of August 31, 1996 and 1995, and the changes in net
assets available for benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion
on the financial statements taken as a whole. The supplemental
schedules of assets held for investment and reportable
transactions as of or for the year ended August 31, 1996, are
presented for the purpose of additional analysis and are not a
required part of the financial statements, but are supplementary
information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures applied
in our audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
BEARD & COMPANY, INC.
Reading, Pennsylvania
January 27, 1997
-1-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
August 31, 1996
Arrow
International, Money
Inc. Stock Loan Market
Fund Fund Fund
---------------------------------
ASSETS
Investments, at fair value:
Short-term fund, Corefund Cash Reserve Fund $ 3,458 $ - $1,590,168
Balanced fund, Corefund Balanced Fund - - -
Equity funds:
Corefund Growth Equity Fund - - -
Fidelity Retirement Growth Fund - - -
Fidelity Puritan Fund - - -
Corefund International Growth Equity Fund - - -
Arrow International, Inc. common stock 860,307 - -
Participant loans receivable - 402,926 -
--------------------------------
863,765 402,926 1,590,168
Receivables:
Accrued income 1,287 3,144 -
Employee contributions 27,963 - 15,299
Employer contributions 9,595 - 6,181
Cash 143 - 6,602
---------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $902,753 $406,070 $1,618,250
---------------------------------
---------------------------------
See Notes to Financial Statements.
-2-
Fidelity International
Growth Retirement Fidelity Growth
Balanced Equity Growth Puritan Equity
Fund Fund Fund Fund Fund Total
- --------------------------------------------------------------------------
$ - $ - $ - $ - $ - $ 1,593,626
1,574,937 - - - - 1,574,937
- 3,599,339 - - - 3,599,339
- - 2,004,728 - - 2,004,728
- - - 2,275,113 - 2,275,113
- - - - 257,622 257,622
- - - - 860,307
- - - - - 402,926
- --------------------------------------------------------------------------
1,574,937 3,599,339 2,004,728 2,275,113 257,622 12,568,598
- - - - - 4,431
12,812 33,143 30,029 31,062 4,717 155,025
4,997 12,174 10,033 10,888 1,612 55,480
2 8 17 18 2 6,792
- --------------------------------------------------------------------------
$1,592,748 $3,644,664 $2,044,807 $2,317,081 $263,953 $12,790,326
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
-3-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
August 31, 1995
Arrow
International, Money
Inc. Stock Loan Market
Fund Fund Fund
------------------------------
ASSETS
Investments, at fair value:
Short-term funds:
CoreStates Liquidity Fund $ 31,959 $ - $
Corefund Cash Reserve Fund - - 1,359,742
Balanced fund, Corefund Balanced Fund - - -
Equity funds:
Corefund Growth Equity Fund - - -
Fidelity Retirement Growth Fund - - -
Fidelity Puritan Fund - - -
Corefund International Growth Equity Fund - - -
Arrow International, Inc. common stock 738,410 - -
Participant loans receivable - 159,337 -
------------------------------
770,369 159,337 1,359,742
Receivable, accrued income 630 - -
Cash (27,908) - 9,792
------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $743,091 $159,337 $1,369,534
------------------------------
------------------------------
See Notes to Financial Statements.
-4-
Fidelity International
Growth Retirement Fidelity Growth
Balanced Equity Growth Puritan Equity
Fund Fund Fund Fund Fund Total
- -------------------------------------------------------------------------
$ - $ - $ - $ - $ - $ 31,959
36,328 55,835 - - - 1,451,905
1,319,895 - - - - 1,319,895
- 2,693,962 - - - 2,693,962
- - 1,398,977 - - 1,398,977
- - - 1,409,710 - 1,409,710
- - - - 123,290 123,290
- - - - - 738,410
- - - - - 159,337
- -------------------------------------------------------------------------
1,356,223 2,749,797 1,398,977 1,409,710 123,290 9,327,445
- - - - - 630
2,639 4,572 36,454 39,556 5,533 70,638
- -------------------------------------------------------------------------
$1,358,862 $2,754,369 $1,435,431 $1,449,266 $128,823 $9,398,713
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
-5-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
August 31, 1996
Arrow
International, Money
Inc. Stock Loan Market
Fund Fund Fund
Investment income:
Net realized and unrealized appreciation ------------------------------
(depreciation) in fair value of investments $(375,935) $ - $ -
Interest and dividends 4,920 26,365 73,338
Contributions:
Employee 423,409 - 261,627
Employer 142,570 - 99,798
Transfers between funds (13,387) 241,186 (45,818)
------------------------------
Total additions 181,577 267,551 388,945
------------------------------
Distributions paid to participants 19,720 20,652 136,788
Administrative expenses 2,195 166 3,441
------------------------------
Total deductions 21,915 20,818 140,229
-----------------------------
Net increase 159,662 246,733 248,716
Net assets available for benefits:
Beginning of year 743,091 159,337 1,369,534
------------------------------
End of year $ 902,753 $406,070 $1,618,250
------------------------------
See Notes to Financial Statements.
-6-
Fidelity International
Growth Retirement Fidelity Growth
Balanced Equity Growth Puritan Equity
Fund Fund Fund Fund Fund Total
- -----------------------------------------------------------------------
$ 104,599 $ 459,009 $ (66,508) $ 68,856 $ 11,011 $ 201,032
58,163 105,050 155,351 98,437 4,892 526,516
228,383 488,296 438,349 465,569 53,626 2,359,259
88,697 177,156 129,896 148,791 15,885 802,793
(214,177) (177,233) 35,824 123,471 50,134 -
- ------------------------------------------------------------------------
265,665 1,052,278 692,912 905,124 135,548 3,889,600
- ------------------------------------------------------------------------
28,330 154,513 79,544 33,273 - 472,820
3,449 7,470 3,992 4,036 418 25,167
- ------------------------------------------------------------------------
31,779 161,983 83,536 37,309 418 497,987
- ------------------------------------------------------------------------
233,886 890,295 609,376 867,815 135,130 3,391,613
1,358,862 2,754,369 1,435,431 1,449,266 128,823 9,398,713
- ------------------------------------------------------------------------
$1,592,748 $3,644,664 $2,044,807 $2,317,081 $263,953 $12,790,326
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
-7-
ARROW INTERNATIONAL, INC. 401 (k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
Arrow
International, Money
Inc. Stock Loan Market
Fund Fund Fund
---------------------------------
Investment income:
Net realized and unrealized appreciation
in fair value of investments $188,236 $ - $ -
Interest and dividends 2,424 9,565 68,250
Contributions:
Employee 277,293 - 361,537
Employer 94,445 - 124,273
Transfers between funds 5,577 92,407 (109,931)
---------------------------------
Total additions (deductions) 567,975 101,972 444,129
---------------------------------
Distributions paid to participants - - 82,818
Administrative expenses 855 1,794 2,942
---------------------------------
Total deductions 855 1,794 85,760
---------------------------------
Net increase (decrease) 567,120 100,178 358,369
Net assets available for benefits:
Beginning of year 175,971 59,159 1,011,165
---------------------------------
End of year $743,091 $ 159,337 $1,369,534
---------------------------------
---------------------------------
See Notes to Financial Statements.
-8-
Fidelity International
Growth Retirement Fidelity Growth
Balanced Equity Growth Puritan Equity
Fund Fund Fund Fund Fund Total
- ----------------------------------------------------------------------------
$ 150,090 $ 499,564 $ 150,421 $ 112,679 $ 9,271 $1,110,261
53,090 41,155 438 14,024 161 189,107
393,092 716,183 142,984 146,309 13,300 2,050,698
145,445 259,528 44,582 49,986 4,827 723,086
(884,583) (1,433,269) 1,101,557 1,126,919 101,323 -
- ---------------------------------------------------------------------------
(142,866) 83,161 1,439,982 1,449,917 128,882 4,073,152
- ---------------------------------------------------------------------------
13,337 174,034 3,887 - - 274,076
3,738 7,001 664 651 59 17,704
- ---------------------------------------------------------------------------
17,075 181,035 4,551 651 59 291,780
- ---------------------------------------------------------------------------
(159,941) (97,874) 1,435,431 1,449,266 128,823 3,781,372
1,518,803 2,852,243 - - - 5,617,341
- ---------------------------------------------------------------------------
$1,358,862 $2,754,369 $ 1,435,431 $1,449,266 $ 128,823 $9,398,713
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- 9 -
ARROW INTERNATIONAL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
1
- -------------------------------------------------------------------------
SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting:
The accompanying financial statements have been prepared on
the accrual basis of accounting.
Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Valuation of investments and income recognition:
CoreStates Bank, N.A. acts as plan trustee and administers
the Plan's assets. The Plan maintains the following
eight funds: Money Market Fund, Balanced Fund, Growth
Equity Fund, Arrow International, Inc. Stock Fund, Fidelity
Retirement Growth Fund, Fidelity Puritan Fund,
International Growth Equity Fund and a Loan Fund for the
commingled investment of employee and company contributions.
The Money Market Fund, Balanced Fund, Growth Equity Fund,
Arrow International, Inc. Stock Fund, Fidelity
Retirement Growth Fund, Fidelity Puritan Fund and
International Growth Equity Fund are stated at fair value as
determined by the bank which holds the investments.
The loans receivable in the Loan Fund are stated at
their unpaid principal balance which approximates their fair
value. The change in the difference between fair
value and the cost of investments is reflected in the statements
of changes in net assets available for benefits as a component of
the net realized and unrealized appreciation
(depreciation) in fair value of investments.
Purchases and sales of securities are recorded on a trade
date basis. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend date.
Payment of benefits:
Benefits are recorded when paid.
- 10 -
ARROW INTERNATIONAL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
2
- ------------------------------------------------------------------------
DESCRIPTION OF THE PLAN
The Arrow International, Inc. 401(k) Plan (the Plan) is a
contributory, defined contribution plan which was adopted
effective September 1, 1991 to establish a deferred
compensation arrangement under the provisions of Section
401(a) of the Internal Revenue Code (the Code). The Plan is
subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) and is intended to be a
qualified plan under Section 401 (a) of the Code.
The 401(k) portion of the Plan is available to all employees
of the Company and its U.S. affiliates after completing one
year of service following their date of hire and reaching
age 21. Participants may contribute up to 10% of their
earnings. The Company will match an amount equal to a
percentage of the employee contribution as determined for
the plan year. The Company can also make discretionary
contributions based on the profits of the Company as
determined by the Board of Directors. No discretionary
contribution was made for the years ended August 31, 1996
and 1995. A participant becomes 20% vested in the
employer's contribution to the Plan after one year of
service. Vesting increases 20% each year until the
participant is fully vested after five years of credited
service. Forfeitures will be used to reduce Company
contributions.
Each participant's account is credited with the
participant's share of the Company's match, if any, and of
the earnings, expenses, appreciation and depreciation
attributable to the participant's and the Company's
contributions. The benefit to which a participant is
entitled is the benefit that can be provided from the vested
portion of the participant's account.
Additional information about the Plan agreement is contained
in the summary plan description. Copies of the summary plan
description are available from the Administrative Committee.
The Company has the right to terminate the Plan, subject to
the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
- 11 -
ARROW INTERNATIONAL, INC. 401 (k) PLAN
NOTES TO FINANCIAL STATEMENTS
3
- ------------------------------------------------------------------------
INVESTMENTS
The Plan maintains its investments in a Money Market Fund, Balanced
Fund, Growth Equity Fund, Arrow International, Inc. Stock Fund,
Fidelity Retirement Growth Fund, Fidelity Puritan Fund, International
Growth Equity Fund and a Loan Fund. The investments at August 31,
1996 and 1995 as determined by the trustee are summarized as follows:
1996 1995
--------------------------------------------------
Cost Fair Value Cost Fair Value
---------------------------------------------------
Short-term funds:
Corefund Cash Reserve
Fund $1,593,626 $1,593,626* $1,451,905 $1,451,905*
CoreStates Liquidity
Fund - - 31,959 31,959
---------------------------------------------------
1,593,626 1,593,626 1,483,864 1,483,864
---------------------------------------------------
Balanced fund, Corefund
Balanced Fund 1,478,779 1,574,937* 1,194,702 1,319,895*
---------------------------------------------------
Equity funds:
Corefund Growth Equity
Fund 3,157,631 3,599,339* 2,261,045 2,693,962*
Fidelity Retirement
Growth Fund 2,072,811 2,004,728* 1,248,758 1,398,977*
Fidelity Puritan Fund 2,210,431 2,275,113* 1,297,043 1,409,710*
Corefund International
Growth Equity Fund 247,244 257,622 114,019 123,290
---------------------------------------------------
7,688,117 8,136,802 4,920,865 5,625,939
---------------------------------------------------
Stock fund, Arrow
International, Inc. 1,234,624 860,307* 550,174 738,410*
---------------------------------------------------
Participant loan fund 402,926 402,926 159,337 159,337
---------------------------------------------------
$12,398,072 $12,568,598 $8,308,942 $9,327,445
---------------------------------------------------
---------------------------------------------------
* Investment represents 5% or more of the Plan's net assets.
- 12 -
ARROW INTERNATIONAL, INC. 401 (k) PLAN
NOTES TO FINANCIAL STATEMENTS
4
- ----------------------------------------------------------------------------
INCOME TAX STATUS
The Internal Revenue Service has determined that the Plan
meets the requirements of Section 401 (a) of the Internal
Revenue Code and is, therefore, not subject to federal
income tax. As a condition of continued qualification under
Section 401(a), the Plan is required to meet the
qualification rules in operation. The Administrative
Committee is not aware of any circumstances that might
adversely affect the Plan's qualified status.
5
- ---------------------------------------------------------------------------
TRANSACTIONS WITH PARTIES-IN-INTEREST
Fees paid during the year for administrative services
rendered by parties-in-interest were based on customary and
reasonable rates for such services.
6
- --------------------------------------------------------------------------
SUBSEQUENT EVENT
Effective September 1, 1996, the Board of Directors of Arrow
International, Inc. resolved to merge the assets and
liabilities of the Kontron, Inc. Employees 401(k) Plan into
the Arrow International, Inc. 401(k) Plan. The Kontron
401(k) Plan, which is the Plan of Arrow Interventional,
Inc., a subsidiary of Arrow International, Inc., would
thereupon cease to exist as a separate plan.
7
- ------------------------------------------------------------------------
AMENDMENT TO THE PLAN
Effective June 1, 1996, the Board of Directors of Arrow
International, Inc. resolved to amend the Arrow
International, Inc. 401(k) Plan to permit eligible employees
of Arrow Therex Corporation to participate in the Plan.
Arrow Therex Corporation is a wholly-owned subsidiary of
Arrow International, Inc. with 37 employees.
-13-
ARROW INTERNATIONAL, INC. 401 (k) PLAN
ASSETS HELD FOR INVESTMENT
August 31, 1996
Number Of
Description Shares Cost Fair Value
- ------------------------------------------------------------------------------
Short-term fund, Corefund Cash Reserve Fund 1,593,626 $ 1,593,626 $ 1,593,626*
-----------------------
Balanced fund, Corefund Balanced Fund 127,011 1,478,779 1,574,937*
-----------------------
Equity funds:
Corefund Growth Equity Fund 258,759 3,157,631 3,599,339*
Fidelity Retirement Growth Fund 110,210 2,072,811 2,004,728*
Fidelity Puritan Fund 130,006 2,210,431 2,275,113*
Corefund International Growth Equity Fund 18,985 247,244 257,622
-----------------------
7,688,117 8,136,802
-----------------------
Arrow International, Inc. common stock 32,161 1,234,624 860,307*
-----------------------
Participant loan fund 402,926 402,926 402,926
-----------------------
Total investments $12,398,072 $12,568,598
-----------------------
-----------------------
*Represents 5% or more of the net assets available for benefits.
- 14 -
ARROW INTERNATIONAL, INC. 401 (k) PLAN
REPORTABLE TRANSACTIONS
August 31, 1996
Total Total
Number Of Number Of
Purchases Sales Dollar Dollar Cost Of Net
Description Within Within Value Of Value Of Assets Gain
Security Plan Year Plan Year Purchases Sales Sold (Loss)
- -------------------------------------------------------------------------------
Short-term fund,
Corefund Cash
Reserve Fund 336 297 $3,507,380 $3,365,659 $3,365,659 $ -
Equity funds:
Corefund Growth
Equity Fund 37 26 672,110 225,742 208,441 17,301
Fidelity Retirement
Growth Fund 24 5 858,885 186,626 185,051 1,575
Fidelity Puritan
Fund 29 7 892,353 95,807 91,633 4,174
- 15 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees (or other persons who administer the
Plan) have duly caused this annual report to be signed by the
undersigned hereunto duly authorized.
ARROW INTERNATIONAL, INC.
401 (k) PLAN
Date: February 27, 1997 By:/s/ John H. Broadbent, Jr.
------------------------ ---------------------------
John H. Broadbent, Jr.
Vice-President, Finance and Treasurer
Index to Exhibit
-----------------
Exhibit No.
- -----------
23.1 Consent of Beard & Company, Inc. independent auditors
Exhibit 23.1
------------
CONSENT OF BEARD & COMPANY, INC., INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-71568)
pertaining to the Arrow International, Inc. 401(k) Plan, of the
financial statements of the Arrow International, Inc. 401(k) Plan
included in this annual Report(Form 11-K)for the year ended
August 3l, 1996.
BEARD & COMPANY, INC.
Reading, Pennsylvania
February 27, 1997
