UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the second quarter period ended February 28,
1998
or
( ) Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
For the transition period from ____________ to ____________
Commission File Number 0-20212
ARROW INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1969991
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 Bernville Road, Reading, Pennsylvania 19605
- ------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 378-0131
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Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
-
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class Shares outstanding at April 13, 1998
----- -------------------------------------
Common Stock, No Par Value 23,224,321
<PAGE>
ARROW INTERNATIONAL, INC.
Form 10-Q Index
<TABLE>
<CAPTION>
Page
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<C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Consolidated Balance Sheets at February 28,
1998 and August 31, 1997 3-4
Consolidated Statements of Income 5-6
Consolidated Statements of Cash Flows 7-8
Notes to Consolidated Financial Statements 9-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12-17
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 18-19
Item 6. Exhibits and Reports on Form 8-K 20
Signature 21
Exhibit Index 22
</TABLE>
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ARROW INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(All Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
February 28, August 31,
1998 1997
----------- ----------
(Unaudited)
ASSETS <C> <C>
Current assets:
Cash and cash equivalents $ 5,457 $ 6,276
Accounts receivable, net 65,076 60,801
Inventories 62,817 57,334
Prepaid expenses and other 14,351 8,729
Deferred income taxes 3,101 2,833
--------- ---------
Total current assets 150,802 135,973
--------- ---------
Property, plant and equipment:
Total property, plant and equipment 176,463 171,067
Less accumulated depreciation (66,258) (60,474)
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Property, plant and equipment, net 110,205 110,593
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Other assets:
Goodwill, net 47,465 48,720
Intangible and other assets, net 31,888 24,430
Deferred income taxes 914 657
--------- ---------
Total other assets 80,267 73,807
--------- ---------
Total assets $ 341,274 $ 320,373
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
Continued
-3-
<PAGE>
ARROW INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(All Dollar Amounts in Thousands)
<TABLE>
<CAPTION> February 28, August 31,
1998 1997
------------ ----------
(Unaudited)
LIABILITIES <C> <C>
Current liabilities:
Current maturities of long-term debt $ 1,832 $ 2,675
Notes payable 26,021 21,978
Accounts payable 9,801 9,983
Accrued liabilities 7,474 6,856
Accrued compensation 6,209 9,945
Accrued income taxes 5,606 3,076
----------- ---------
Total current liabilities 56,943 54,513
Long-term debt 11,536 12,043
Accrued postretirement benefit obligation 8,817 7,900
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred Stock, no par value;
5,000,000 shares authorized;
none issued - -
Common Stock, no par value;
50,000,000 shares authorized;
issued 26,478,813 shares 45,603 45,603
Retained earnings 234,793 216,173
Less cost of treasury stock:
3,254,292 and 3,252,687 shares
of Common Stock, respectively (8,423) (8,374)
Unearned compensation (139) (239)
Cumulative translation adjustment (4,965) (5,088)
Unrealized holding loss on
securities, net of tax (2,891) (2,158)
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Total shareholders' equity 263,978 245,917
--------- ---------
Total liabilities and
shareholders' equity $ 341,274 $ 320,373
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
-4-
<PAGE>
ARROW INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(All Dollar Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION> For the Three Months Ended
February 28, February 28,
1998 1997
----------- -----------
<C> <C>
Net sales $ 66,770 $ 61,965
Cost of goods sold 29,831 27,978
Gross profit 36,939 33,987
Operating expenses:
Research, development and engineering 4,330 3,993
Selling, general and administrative 15,349 14,336
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Operating income 17,260 15,658
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Other expenses (income):
Interest expense, net of
amounts capitalized 193 133
Interest income (124) (232)
Other, net 148 697
----------- ----------
Other expenses (income), net 217 598
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Income before income taxes 17,043 15,060
Provision for income taxes 6,391 5,798
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Net income $ 10,652 $ 9,262
=========== ==========
Basic earnings per common share $ .46 $ .40
=========== ==========
Diluted earnings per common share $ .46 $ .40
=========== ==========
Cash dividends per common share $ .050 $ .045
=========== ==========
Average shares of common stock
outstanding 23,224,606 23,226,888
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
-5-
<PAGE>
ARROW INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(All Dollar Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION> For the Six Months Ended
February 28, February 28,
1998 1997
----------- -----------
<C> <C>
Net sales $ 130,539 $ 121,155
Cost of goods sold 57,691 55,383
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Gross profit 72,848 65,772
Operating expenses:
Research, development and
engineering 8,488 7,801
Selling, general and administrative 30,644 28,296
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Operating income 33,716 29,675
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Other expenses (income):
Interest expense, net of amounts
capitalized 309 594
Interest income (310) (431)
Other, net 396 987
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Other expenses (income), net 395 1,150
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Income before income taxes 33,321 28,525
Provision for income taxes 12,495 10,982
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Net income $ 20,826 $ 17,543
========== ==========
Basic earnings per common share $ .90 $ .76
========== ==========
Diluted earnings per common share $ .90 $ .76
========== ==========
Cash dividends per common share $ .095 $ .085
========== ==========
Average shares of common stock
outstanding 23,225,233 23,227,879
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
-6-
<PAGE>
ARROW INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(All Dollar Amounts in Thousands)
<TABLE>
<CAPTION> For the Six Months Ended
February 28, February 28,
1998 1997
----------- ------------
<C> <C>
Cash flows from operating activities:
Net income $ 20,826 $ 17,543
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 5,671 5,869
Amortization of intangible assets 2,140 2,010
Amortization of unearned compensation 90 103
Deferred income taxes (525) (344)
Other 1,377 1,212
Changes in operating assets and liabilities:
Accounts receivable, net (4,483) (8,364)
Inventories (4,399) (4,918)
Prepaid expenses and other (5,822) (2,735)
Accounts payable and accrued liabilities 1,134 5,113
Accrued compensation (3,730) (312)
Accrued income taxes 2,491 52
--------- ---------
Total adjustments (6,056) (2,314)
--------- ---------
Net cash provided by operating activities 14,770 15,229
Cash flows from investing activities:
Capital expenditures (5,384) (9,381)
Increase in intangible and other assets (3,619) (1,519)
Purchase of intangible and other assets (7,321) -
--------- ---------
Net cash used in investing activities (16,324) (10,900)
Cash flows from financing activities:
Increase in notes payable 4,444 7,581
Principal payments of long-term debt (1,524) (4,589)
Dividends paid (2,090) (1,974)
Purchase of treasury stock (38) (32)
--------- ---------
Net cash used in financing activities 792 986
Effect of exchange rate changes on cash
and cash equivalents (57) (351)
Net change in cash and cash equivalents (819) 4,964
Cash and cash equivalents at beginning
of year 6,276 4,807
--------- ---------
Cash and cash equivalents at end of
period $ 5,457 $ 9,771
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
Continued
-7-
<PAGE>
ARROW INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(All Dollar Amounts in Thousands)
<TABLE>
<CAPTION> For the Six Months Ended
February 28, February 28,
1998 1997
------------ -----------
<C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest (net of amounts capitalized) $ 309 $ 594
Income taxes $ 10,060 $ 9,504
</TABLE>
See accompanying notes to consolidated financial statements
-8-
<PAGE>
ARROW INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
(Unaudited)
(All Dollar Amounts in Thousands, Except Per Share Data)
Note 1 - Basis of Presentation
These unaudited consolidated financial statements include
all adjustments, consisting only of normal recurring
accruals, which management considers necessary for a fair
presentation of the Company's consolidated financial
position, results of operations, and cash flows for the
interim periods presented. Results for the interim period
are not necessarily indicative of results for the entire
year.
Note 2 - Inventories
Inventories are summarized as follows:
<TABLE>
<CAPTION>
February 28, August 31,
1998 1997
--------- ----------
<C> <C>
Finished goods $ 20,913 $ 20,718
Semi-finished goods 15,106 13,906
Work-in-process 10,405 9,900
Raw materials 16,393 12,810
--------- ----------
$ 62,817 $ 57,334
========= ==========
</TABLE>
Note 3 - Commitments and Contingencies
The Company is a party to certain legal actions arising in
the ordinary course of its business. Based upon information
presently available to the Company, the Company believes it
has adequate legal defenses or insurance coverage for these
actions and that the ultimate outcome of these actions would
not have a material effect on the Company's financial
position or results of operations.
Note 4 - Related Party Transactions
During the three months ended February 28, 1998, the Company
assumed certain pension and retirement health care benefit
obligations of Arrow Precision Products, Inc. ("Precision"),
which is related to the Company through common
Continued
-9-
<PAGE>
ARROW INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note 4 - Related Party Transactions (Continued)
ownership, to former employees of Precision who are
currently, or previously were, employed by the Company in
exchange for the transfer by Precision to the Company of
appropriate assets to satisfy such obligations.
Consequently, Precision's two pension plans, both of which
were overfunded as of August 31, 1997, were merged with the
Company's pension plans covering comparable employees. The
Company paid Precision $2,975, the amount by which the
value of Precision's pension plan assets exceeded the
actuarially determined present value of Precision's pension
plan obligations. This payment was offset by the payment by
Precision to the Company of $757, the actuarially
determined present value of Precision's retirement heath
care obligations to former Precision employees who are
currently, or previously were, employed by the Company. In
addition, Precision transferred to the Company, with no
payment by either party to the other, its rights and
responsibilities under a split dollar life insurance policy
covering the former Chief Operating Officer of Precision.
During fiscal 1997, certain of the Company facilities,
personnel and services were utilized by Precision.
Effective August 29, 1997, such utilization ended when
Precision Medical Products, Inc., the wholly owned and
remaining operating subsidiary of Precision, was acquired by
a company formed by certain management employees of
Precision.
The Company charged Precision $110 and $131 for certain
facilities, personnel and services utilized by Precision
during the three months and six months ended February 28,
1997, respectively. The Company made purchases from
Precision amounting to $295 and $283 for the three months
and six months ended February 28, 1997, respectively. In
addition, the Company made payments on behalf of Precision
related to certain costs incurred by Precision for which the
Continued
-10-
<PAGE>
ARROW INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note 4 - Related Party Transactions (Continued)
Company was reimbursed, amounting to $447 and $241 during
the three months and six months ended February 28, 1997,
respectively. The Company had a net receivable from
Precision amounting to $200 at February 28, 1997.
Note 5 - Earnings Per Share
Earnings per share have been restated upon adoption of
Statement of Financial Accounting Standards No. 128,
"Earnings per Share". This restatement resulted in no
material change from amounts previously reported. The
following is a reconciliation from the average shares of
common stock used to compute basic earnings per share to the
shares used to compute diluted earnings per share for the
six months ended February 28.
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<C> <C>
Average shares of common stock
outstanding used to compute basic 23,225,233 23,227,879
earnings per share
Dilutive effect of stock options 1,201 0
Average shares of common stock
outstanding used to compute diluted
earnings per shares 23,226,434 23,227,879
Net income per share:
Basic 0.90 0.76
Diluted 0.90 0.76
</TABLE>
Note 6 - Accounting Policies
The effect of exchange rate changes on cash and cash
equivalents have been reclassified and stated as a separate
category in the consolidated statements of Cash Flows for the
six months ended February 28, 1998. Prior periods have been
restated to reflect this change.
-11-
<PAGE>
ARROW INTERNATIONAL, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion includes certain forward-looking
statements. Such forward-looking statements are subject to a
number of factors, including material risks, uncertainties and
contingencies, which could cause actual results to differ
materially from the forward-looking statements. For a
discussion of important factors that could cause actual results
to differ materially from the forward-looking statements, see
Exhibit 99.1 to this Report and the Company's periodic reports
and other documents filed with the Securities and Exchange
Commission.
Results of Operations
Three Months Ended February 28, 1998 Compared to Three Months
Ended February 28, 1997
Net sales for the three months ended February 28, 1998
increased by $4.8 million, or 7.8%, to $66.8 million from $62.0
million in the same period last year. Net sales represent
gross sales invoiced to customers, plus royalty income, less
certain related charges, including freight costs, discounts,
returns and other allowances. This increase was due primarily
to an increase in unit volume in the Company's central venous
catheter products, as well as increased shipments of intra-aortic
balloon ("IAB") products, percutaneous thrombectomy devices, and
implantable infusion pumps. Sales of critical care products
increased 6.4% to $56.0 million from $52.6 million in the comparable
prior period, due to increased shipments of central venous catheters,
percutaneous thrombectomy devices and implantable infusion
pumps. Interventional procedure product sales increased to
$10.7 million from $9.2 million, an increase of 16.0% from the
comparable prior period, due primarily to higher sales of IAB
products. International sales increased by $1.8 million, or
8.6%, to 34.2% of net sales, excluding royalty income, for the
three months ended February 28, 1998, compared to 34.0% of net
sales in the comparable period of fiscal 1997, principally as a
result of a higher sales of IAB products. The increased strength
of the U.S. dollar, relative to currencies in countries where the
Company operates direct sales subsidiaries, reduced net sales for
the quarter by $1.4 million.
Gross profit increased 8.7% to $36.9 million in the three
months ended February 28, 1998 compared to $34.0 million in the
same period of fiscal 1997. As a percentage of net sales,
gross profit increased to 55.3% during the three months
ended February 28, 1998 from 54.8% in the comparable period of
fiscal 1997, due primarily to the reduction in manufacturing costs
resulting from increased production at the Company's international
manufacturing facilities.
-12-
<PAGE>
ARROW INTERNATIONAL, INC.
Research, development and engineering expenses increased by
8.4% to $4.3 million in the three months ended February 28,
1998 from $4.0 million in the comparable prior period,
primarily as a result of increased spending related to
research, product development, process development and clinical
trial activities. As a percentage of net sales, these expenses
increased in the second quarter of fiscal 1998 to 6.5%,
compared to 6.4% in the same period in fiscal 1997. Current
research programs include the development of pullback
atherectomy catheters for treating coronary artery disease,
microwave ablation catheters for the treatment of heart
arrythmias and a fully implantable Left Ventricular Assist
Device.
Selling, general and administrative expenses increased by 7.1%
to $15.3 million in the three months ended February 28, 1998
from $14.3 million in the comparable prior period of fiscal
1997 and decreased as a percentage of net sales to 23.0% in the
second quarter of fiscal 1998 from 23.1% in the comparable
period of fiscal 1997. The increase was due primarily to
increased U.S. sales and marketing expenses and increased
expenses in Japan to implement direct sales of IAB products.
Principally due to the above factors, operating income
increased in the second quarter of fiscal 1998 by 10.2% to
$17.3 million from $15.7 million in the comparable period of
fiscal 1997.
Other expenses (income), net, decreased to $0.2 million in the
second quarter of fiscal 1998 from $0.6 million in the
comparable prior period. Other expenses (income), net, consist
principally of interest expense and foreign exchange gains and
losses associated with the Company's direct sales subsidiaries,
which resulted in a net loss in both periods.
As a result of the factors discussed above, income before
income taxes increased in the second quarter of fiscal 1998 by
13.2% to $17.0 million from $15.1 million in the comparable
prior period. For the second quarter of fiscal 1998, and for
the remainder of fiscal 1998, the Company's effective income
tax rate was, and is expected to be, 37.5%, a decrease from
38.5% in fiscal 1997, principally as a result of a reduction in
tax accruals for certain state and international jurisdictions.
Net income in the second quarter of fiscal 1998 increased by
15.0% to $10.7 million from $9.3 million in the comparable
prior period. As a percentage of net sales, net income
represented 15.9% in the three months ended February 28, 1998,
compared to 14.9% in the comparable prior period of fiscal
1997.
Net income per common share increased to $.46 from $.40 in the
second quarter of fiscal 1997. Average shares of common stock
outstanding decreased to 23,224,606 in the second quarter of
fiscal 1998 from 23,226,888 in the comparable prior period.
-13-
<PAGE>
ARROW INTERNATIONAL, INC.
Six Months Ended February 28, 1998 Compared to Six Months
Ended February 28, 1997
Net sales for the six months ended February 28, 1998
increased by $7.7 million, or 7.7%, to $130.5 million from
$121.2 million in the same period last year. This increase
was due primarily to an increase in unit volume in the
Company's central venous catheter products, as well as
increased shipments of intra-aortic balloon ("IAB") products,
percutaneous thrombectomy devices and implantable infustion
pumps. Sales of critical care products increased 8.0% to
$110.4 million from $102.3 million in the comparable prior period,
due to increased shipments of central venous catheters,
percutaneous thrombectomy devices and implantable infusion pumps.
Interventional procedure product sales increased to $20.0 million
from $18.8 million, an increase of 6.3% from the comparable prior
period, due primarily to higher sales of IAB products. International
sales increased by $2.6 million, or 6.0%, but decreased to
35.1% of net sales, excluding royalty income, for the six
months ended February 28, 1998, from 35.7% in the comparable
period of fiscal 1997, principally as a result of increased
sales of central venous catheters and IAB products. The increased
strength of the U.S. dollar, relative to currencies in countries
where the Company operates direct sales subsidiaries, reduces net
sales for the six month period ended February 28, 1998 by $3.0 million.
Gross profit increased 10.8% to $72.8 million in the six
months ended February 28, 1998, compared to $65.8 million in
the same period of fiscal 1997. As a percentage of net
sales, gross profit increased to 55.8% during the six months
ended February 28, 1998 from 54.3% in the comparable period
of fiscal 1997, due primarily to the reduction in manufacturing costs
resulting from increased production at the Company's
international manufacturing facilities.
Research, development and engineering expenses increased by
8.8% to $8.5 million in the six months ended February 28,
1998 from $7.8 million in the comparable prior period. As a
percentage of net sales, these expenses increased in the
first half of fiscal 1998 to 6.5%, compared to 6.4% in the
same period in fiscal 1997, primarily as a result of
increased spending related to research, product development,
process development and clinical trial activities. Current
research programs include the development of pullback
atherectomy catheters for treating coronary artery disease,
microwave ablation catheters for the treatment of heart
arrythmias and a fully implantable Left Ventricular Assist
Device.
-14-
<PAGE>
ARROW INTERNATIONAL, INC.
Selling, general and administrative expenses increased by
8.3% to $30.6 million in the six months ended February 28,
1998 from $28.3 million in the comparable prior period and
increased as a percentage of net sales to 23.5% in the first
half of fiscal 1998 from 23.4% in the comparable period of
fiscal 1997. The increase was due primarily to increased
U.S. sales and marketing expenses and increased expenses in
Japan to implement direct sales of IAB products.
Principally due to the above factors, operating income
increased in the first half of fiscal 1998 by 13.6% to $33.7
million from $29.7 million in the comparable period of
fiscal 1997.
Other expenses (income), net, decreased to $0.4 million in
the first half of fiscal 1998 from $1.1 million in the
comparable prior period. Other expenses (income), net,
consist principally of interest expense and foreign exchange
gains and losses associated with the Company's direct sales
subsidiaries, which resulted in a net loss in both periods.
As a result of the factors discussed above, income before
income taxes increased in the first half of fiscal 1998 by
16.8% to $33.3 million from $28.5 million in the comparable
prior period. For the first half of fiscal 1998, and for
the remainder of fiscal 1998, the Company's effective income
tax rate was, and is expected to be, 37.5%, a decrease from
38.5% in fiscal 1997, principally as a result of a reduction
in tax accruals for certain state and international
jurisdictions.
Net income increased 18.7% to $20.8 million in the six
months ended February 28, 1998 from $17.5 million in the
first half of fiscal 1997. As a percentage of net sales,
net income represented 15.9% during the six months ended
February 28, 1998 compared to 14.5% in the comparable period
of fiscal 1997.
Net income per common share was $.90 in the six month period
ended February 28, 1998, an increase of 18.4%, or $.14 per
share, from $.76 per share in the comparable prior period.
Average shares of common stock outstanding decreased to
23,225,233 in the first half of fiscal 1998 from 23,227,879
in the comparable prior period.
-15-
<PAGE>
ARROW INTERNATIONAL, INC.
Liquidity and Capital Resources
For the six months ended February 28, 1998, net cash
provided by operations was $14.8 million, a decrease of $0.5
million from the same period in the prior year. Accounts
receivable increased by $4.5 million in the six months ended
February 28, 1998, compared to a $8.4 million increase in
the same period of fiscal 1997. Accounts receivable,
measured in days sales outstanding during the period,
increased to 88 days at February 28, 1998 from 78 days at
February 28, 1997, due principally to an increase in the
collection period for the Company's international sales.
Net cash used in the Company's investing activities
increased to $16.3 million in the six months ended February
28, 1998 from $10.9 million in the comparable period of
fiscal 1997, principally as a result of the acquisition, for
$7.3 million, of certain assets of the Cardiac Assist
Division of Boston Scientific Corporation.
Financing activities provided $0.8 million in the six month
period ended February 28, 1998, whereas such activities
provided $1.0 million in the comparable period of fiscal
1997, changing principally as a result of a decrease in
repayments of long-term debt and an increase in borrowings
under the Company's revolving credit facilities.
As of February 28, 1998, the Company had U.S bank credit
facilities providing an aggregate of $50.0 million in
available revolving credit, of which $29.0 million remained
unused. In addition, certain of the Company's foreign
subsidiaries had revolving credit facilities totaling the
U.S. dollar equivalent of $11.7 million, of which $6.7
remained unused as of February 28, 1998. Combined
borrowings under these facilities increased $4.0 million
during the six month period ended February 28, 1998.
As a partial hedge against adverse fluctuations in exchange
rates, the Company periodically enters into foreign currency
exchange contracts with certain major financial
institutions. By their nature, all such contracts involve
risk, including the risk of nonperformance by
counterparties. Accordingly, losses relating to these
contracts could have a material adverse effect upon the
Company's business, financial condition and results of
operations. Based upon the Company's knowledge of the
financial condition of the counterparties to its existing
forward contracts, the Company believes that it does not
have any material exposure to any individual counterparty.
The Company's policy prohibits the use of derivative
instruments for trading purposes.
-16-
<PAGE>
ARROW INTERNATIONAL, INC.
During the six month periods ended February 28, 1998 and
February 28, 1997, the percentage of the Company's sales
invoiced in currencies other than U.S. dollars was 24.6% and
24.9%, respectively. As of February 28, 1998, outstanding
foreign currency exchange contracts totaling the U.S. dollar
equivalent of $20.3 million mature at various dates through
December 1998. The Company expects to continue to utilize
foreign currency exchange contracts to manage its exposure,
although there can be no assurance that the Company's effort
in this regard will be successful.
The Company recognizes the need to ensure its operations
will not be adversely impacted by Year 2000 software
failures. Software failures due to processing errors
potentially arising from calculations using the Year 2000
date are a known risk. The Company is addressing this risk
to the availability and integrity of financial systems and
the reliability of operational systems. Based upon a review
of its technology and software, the Company has concluded
that there are no material issues regarding its Year 2000
compliance that will not be resolved through normal software
upgrades and replacements that will be made through 1999.
While the Company believes its planning efforts are adequate
to address its Year 2000 concerns, there can be no guarantee
that the systems of other companies on which the Company's
systems and operations rely will be converted on a timely
basis and will not have a material adverse effect on the
Company.
Based upon its present plans, the Company believes that
operating cash flow and available credit resources will be
adequate to repay current portions of long-term debt, to
finance currently planned capital expenditures and to meet
the currently foreseeable liquidity needs of the Company.
Overall effects of inflation and seasonality in the
Company's business during the periods discussed above were
not significant.
-17-
<PAGE>
ARROW INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 4. Submission of matters to a vote of security holders.
(a) The Company held its annual meeting of shareholders on
January 21, 1998.
(b) At the annual meeting, the following matters were voted
upon: (i) the election of four directors (in
connection with which (A) proxies were solicited
pursuant to Regulation 14D under the Securities Exchange
Act of 1934, (B) there was no solicitation in opposition
to management's nominees as listed in the proxy statement
and (C) such nominees were elected); and (ii) ratification
of the appointment of Coopers & Lybrand L.L.P. as independent
accountants of the Company for the current fiscal year.
With respect to the election of directors, votes were cast
as follows:
R. James Macaleer
-----------------
Votes for 19,530,982
Withheld 32,282
Carl G. Anderson, Jr.
---------------------
Votes for 19,530,961
Withheld 32,303
Raymond Neag
---------------------
Votes for 19,530,982
Withheld 32,282
Richard T. Niner
---------------------
Votes for 19,530,982
Withheld 32,282
-18-
<PAGE>
ARROW INTERNATIONAL, INC.
PART II. OTHER INFORMATION (Continued)
Item 4. Submission of matters to a vote of security holders. (Continued)
With respect to other matters, votes were cast as follows:
Ratification of the Appointment
of Independent Accountants
-------------------------------
Votes for 19,560,059
Votes against 1,320
Abstentions 1,885
There were no broker non-votes in respect of these matters.
-19-
<PAGE>
ARROW INTERNATIONAL, INC.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
The following exhibits will be filed as part of
this Form 10-Q:
Exhibit 27.1 Financial Data Schedule for
the quarter ended February 28, 1998
Exhibit 27.2 Restated Financial Data Schedule
for the quarter ended November 30, 1997
and for the year ended August 31, 1997
Exhibit 27.3 Restated Financial Data Schedule for
the quarter ended May 31, 1997 and
the quarter ended February 28, 1997
Exhibit 27.4 Restated Financial Data Schedule for the
quarter ended November 30, 1996
and the year ended August 31, 1996
Exhibit 27.5 Restated Financial Data Schedule for the
quarter ended May 31, 1996
Exhibit 99.1 Cautionary Statement for Purposes
of the Safe Harbor Provisions of the
Private Securities Litigation Reform
Act of 1995
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter ended February 28, 1998.
-20-
<PAGE>
ARROW INTERNATIONAL, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
ARROW INTERNATIONAL, INC.
(Registrant)
Date: April 14, 1998 By: /s/ John H. Broadbent, Jr.
---------------------------
(signature)
John H. Broadbent, Jr.
Vice President-Finance
and Treasurer (Principal
Financial Officer and
Chief Accounting Officer)
-21-
<PAGE>
EXHIBIT INDEX
Exhibit Description
Number of Exhibit Method of Filing
- ------ ---------- ----------------
27.1 *Financial Data Schedule EDGAR
for the quarter ended
February 28, 1998
27.2 Restated Financial Data EDGAR
Schedule for the quarter
ended November 30, 1997
and for the year ended August
31, 1997
27.3 Restated Financial Data EDGAR
Schedule for the quarter ended
May 31, 1997 and the quarter
ended February 28, 1997
27.4 Restated Financial Data EDGAR
Schedule for the quarter
ended November 30, 1996
and for the year ended
August 31, 1996
27.5 Restated Financial Data EDGAR
Schedule for the quarter
ended May 31, 1996
99.1 Cautionary Statement for Page 23 of this report
Purposes of the Safe
Harbor Provisions of the
Private Securities
Litigation Reform Act of
1995
*Not deemed filed for purposes of Section 11 of the
Securities Act of 1933, Section 18 of the Securities
Exchange Act of 1934 and Section 323 of the Trust Indenture
Act of 1939, or otherwise subject to the liabilities of such
sections and not deemed part of any registration statement
to which such exhibit relates.
-22-
<PAGE>
EXHIBIT 99.1
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
From time to time, in both written reports and in oral
statements by the Company's senior management, expectations
and other statements are expressed regarding future
performance of the Company. These forward-looking
statements are inherently uncertain and investors must
recognize that events could turn out to be different than
such expectations and statements. Key factors impacting
current and future performance are discussed in the
Company's Annual Report on Form 10-K for its fiscal year
ended August 31, 1996 and other filings with the Securities
and Exchange Commission (the "Commission"). In addition to
such information in the Company's Annual Report on Form 10-
K and its other filings with the Commission, the following
risk factors should be considered in evaluating the Company
and its business, as well as in reviewing forward-looking
statements contained in the Company's periodic reports filed
with the Commission and in oral statements made by the
Company's senior management. The Company's actual results
could differ materially from such forward-looking statements
due to material risks, uncertainties and contingencies,
including, without limitation, those set forth below.
Stringent Government Regulation
The Company's products are subject to extensive
regulation by the Food and Drug Administration (the "FDA")
and, in some jurisdictions, by state and foreign
governmental authorities. In particular, the Company must
obtain specific clearance or approval from the FDA before it
can market new products or certain modified products in the
United States. With the exception of one product, the
Company has, to date, obtained FDA marketing clearance only
through the 510(k) premarket notification process. Certain
products under development and future product applications,
however, will require approval through the more rigorous
Premarket Approval application ("PMA") process. The process
of obtaining such clearances or approvals can be time
consuming and expensive, and there can be no assurance that
all clearances or approvals sought by the Company will be
granted or that FDA review will not involve delays adversely
affecting the marketing and sale of the Company's products.
The Company is required to adhere to applicable regulations
setting forth current Good Manufacturing Practices ("GMP")
which require that the Company manufacture its products and
maintain its records in a prescribed manner with respect to
manufacturing, testing and control activities. In addition,
the Company is required to comply with FDA requirements for
labeling and promotion of its products. Failure to comply
with applicable federal, state or foreign laws or
regulations could subject the Company to enforcement action,
including product
-23-
<PAGE>
seizures, recalls, withdrawal of clearances or approvals,
and civil and criminal penalties, any one or more of which
could have a material adverse effect on the Company.
Medical device laws and regulations with similar substantive
and enforcement provisions are also in effect in many of the
foreign countries where the Company does business. Federal,
state and foreign laws and regulations regarding the
manufacture and sale of medical devices are subject to
future changes. No assurance can be given that such changes
will not have a material adverse effect on the Company.
Significant Competition and Continual Technological Change
The markets for medical devices are highly competitive.
The Company currently competes with many companies in the
development and marketing of catheters and related medical
devices. Some of the Company's competitors have access to
greater financial and other resources than the Company.
Furthermore, the markets for medical devices are
characterized by rapid product development and technological
change. The present or future products of the Company could
be rendered obsolete or uneconomical by technological
advances by one or more of the Company's current or future
competitors. The Company's future success will depend upon
its ability to develop new products and technology to remain
competitive with other developers of catheters and related
medical devices. The Company's business strategy emphasizes
the continued development and commercialization of new
products and the enhancement of existing products for the
critical care and interventional procedure markets. There
can be no assurance that the Company will be able to
continue to successfully develop new products and to enhance
existing products, to manufacture these products in a
commercially viable manner, to obtain required regulatory
approvals or to gain satisfactory market acceptance for such
products.
Cost Pressures on Medical Technology and Proposed Health
Care Reform
The Company's products are purchased principally by
hospitals, hospital networks and hospital buying groups.
Although the Company's products are used primarily for non-
optional medical procedures, the Company believes that the
overall escalating cost of medical products and services has
led and will continue to lead to increased pressures upon
the health care industry to reduce the cost or usage of
certain products and services, which has included and will
continue to include those of the Company. In the United
States, these cost pressures are leading to increased
emphasis on the price and cost-effectiveness of any
treatment regimen and medical device. In addition, third
party payors, such as governmental programs, private
insurance plans and managed care plans, which are billed by
hospitals for such health care services, are increasingly
negotiating the prices charged for medical products and
services and may deny reimbursement if they determine that a
device was not used in
-24-
<PAGE>
accordance with cost-effective treatment methods as
determined by the payor, was experimental, unnecessary or
used for an unapproved indication. In international
markets, reimbursement systems vary significantly by
country. Many international markets have government managed
health care systems that control reimbursement for certain
medical devices and procedures and, in most such markets,
there also are private insurance systems which impose
similar cost restraints. There can be no assurance that
hospital purchasing decisions or government or private third
party reimbursement policies in the United States or in
international markets will not adversely affect the
profitability of the Company's products.
In recent years, several comprehensive health care
reform proposals have been introduced in the U.S. Congress.
While none of these proposals have to date been adopted, the
intent of these proposals was, generally, to expand health
care coverage for the uninsured and reduce the rate of
growth of total health care expenditures. In addition,
certain states have made significant changes to their
Medicaid programs and have adopted various measures to limit
costs. Implementation of government health care reform and
other private sector efforts to control costs may limit the
price of, or the level at which reimbursement is provided
for, the Company's products. Similar initiatives to limit
the growth of health care costs, including price regulation,
are also under way in several other countries in which the
Company does business. The Company anticipates that
Congress, state legislatures, foreign governments and the
private sector will continue to review and assess
alternative health care delivery and payment systems. The
Company cannot predict what additional legislation or
regulation, if any, relating to the health care industry may
be enacted in the future or what impact the adoption of any
federal, state or foreign health care reform, private sector
reform or market forces may have on its business. No
assurance can be given that any such reforms will not have a
material adverse effect on the medical device industry in
general, or the Company in particular.
Dependence on Patents and Proprietary Rights
The Company owns numerous U.S. and foreign patents and
has several U.S. and foreign patent applications pending.
The Company also has exclusive license rights to certain
patents held by third parties. These patents relate to
aspects of the technology used in certain of the Company's
products. From time to time, the Company is subject to
legal actions involving patent and other intellectual
property claims. Successful litigation against the Company
regarding its patents or infringement by the Company of the
patent rights of others could have a material adverse effect
on the Company. In addition, there can be no assurance that
pending patent applications will result in issued patents or
that patents issued to or licensed-in by the Company will
not be challenged or circumvented by competitors or found to
be valid or sufficiently broad to protect
-25-
<PAGE>
the Company's technology or to provide it with any
competitive advantage. The Company also relies on trade
secrets and proprietary technology that it seeks to protect,
in part, through confidentiality agreements with employees,
consultants and other parties. There can be no assurance
that these agreements will not be breached, that the Company
will have adequate remedies for any breach, that others will
not independently develop substantially equivalent
proprietary information or that third parties will not
otherwise gain access to the Company's trade secrets.
There has been substantial litigation regarding patent
and other intellectual property rights in the medical
devices industry. Historically, litigation has been
necessary to enforce certain patent and trademark rights
held by the Company. Future litigation may be necessary to
enforce patent and other intellectual property rights
belonging to the Company, to protect trade secrets or know-
how owned by the Company or to defend the Company against
claimed infringement of the rights of others and to
determine the scope and validity of the proprietary rights
of the Company and others. Any such litigation could result
in substantial cost to and diversion of effort by the
Company. Adverse determinations in any such litigation
could subject the Company to significant liabilities to
third parties, could require the Company to seek licenses
from third parties and could prevent the Company from
manufacturing, selling or using certain of its products, any
of which could have a material adverse effect on the
Company's business, financial condition and results of
operations.
Risks Associated with International Operations
The Company generates significant sales outside the
United States and is subject to risks generally associated
with international operations, such as unexpected changes in
regulatory requirements, tariffs, customs, duties and other
trade barriers, difficulties in staffing and managing
foreign operations, longer payment cycles, problems in
collecting accounts receivable, political risks,
fluctuations in currency exchange rates, foreign exchange
controls which restrict or prohibit repatriation of funds,
technology export and import restrictions or prohibitions,
delays from customs brokers or government agencies and
potentially adverse tax consequences resulting from
operating in multiple jurisdictions with different tax laws,
which could materially adversely impact the success of the
Company's international operations. As its revenues from
its international operations increase, an increasing portion
of the Company's revenues and expenses are denominated in
currencies other than U.S. dollars, and changes in exchange
rates could have a greater effect on the Company's results
of operations. There can be no assurance that such factors
will not have a material adverse effect on the Company's
future operations and, consequently, on the Company's
business, results of operations and financial condition. In
addition, there can be no assurance that laws or
administrative practices relating to regulation of medical
devices, taxation, foreign exchange or other matters of
countries within which the Company operates will not change.
Any such change could have a material adverse effect on the
Company's business, financial condition and results of
operations.
-26-
<PAGE>
Potential Product Liability
The Company's business exposes it to potential product
liability risks which are inherent in the testing and
marketing of catheters and related medical devices. The
Company's products are often used in intensive care settings
with seriously ill patients. In addition, many of the
medical devices manufactured and sold by the Company are
designed to be implanted in the human body for long periods
of time and component failures, manufacturing flaws, design
defects or inadequate disclosure of product-related risks
with respect to these or other products manufactured or sold
by the Company could result in an unsafe condition or injury
to, or death of, the patient. The occurrence of such a
problem could result in product liability claims and/or a
recall of, or safety alert relating to, one or more of the
Company's products. There can be no assurance that the
product liability insurance maintained by the Company will
be available or sufficient to satisfy all claims made
against it or that the Company will be able to obtain
insurance in the future at satisfactory rates or in adequate
amounts. Product liability claims or product recalls in the
future, regardless of their ultimate outcome, could result
in costly litigation and could have a material adverse
effect on the Company's business or reputation or on its
ability to attract and retain customers for its products.
Risks Associated with Derivative Financial Instruments
As a partial hedge against adverse fluctuations in
exchange rates, the Company periodically enters into foreign
currency exchange contracts with certain major financial
institutions. By their nature, all such contracts involve
risk, including the risk of nonperformance by
counterparties. Accordingly, losses relating to these
contracts could have a material adverse effect upon the
Company's business, financial condition and results of
operations. The Company's policy prohibits the use of
derivative instruments for speculative purposes.
Dependence on Key Management
The Company's success depends upon the continued
contributions of key members of its senior management team,
certain of whom have been with the Company since its
inception in 1975. Accordingly, loss of the services of one
or more of these key members of management could have a
material adverse effect on the business of the Company.
None of these individuals has an employment agreement with
the Company.
-27-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ARROW INTERNATIONAL, INC. FOR THE QUARTER ENDED FEBRUARY
28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<CASH> 5,457
<SECURITIES> 0
<RECEIVABLES> 65,937
<ALLOWANCES> 861
<INVENTORY> 62,817
<CURRENT-ASSETS> 150,802
<PP&E> 176,463
<DEPRECIATION> 66,258
<TOTAL-ASSETS> 341,274
<CURRENT-LIABILITIES> 56,943
<BONDS> 0
0
0
<COMMON> 45,603
<OTHER-SE> 218,375
<TOTAL-LIABILITY-AND-EQUITY> 341,274
<SALES> 130,539
<TOTAL-REVENUES> 130,539
<CGS> 57,691
<TOTAL-COSTS> 39,132
<OTHER-EXPENSES> 395
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 33,321
<INCOME-TAX> 12,495
<INCOME-CONTINUING> 20,826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,826
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ARROW INTERNATIONAL, INC. 1ST QTR 10Q 98 AND 10K 97
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> AUG-31-1998 AUG-31-1997
<PERIOD-END> NOV-30-1997 AUG-31-1997
<CASH> 1,105 6,276
<SECURITIES> 0 0
<RECEIVABLES> 62,672 61,656
<ALLOWANCES> 812 855
<INVENTORY> 59,777 57,334
<CURRENT-ASSETS> 136,783 135,973
<PP&E> 172,395 171,067
<DEPRECIATION> 63,690 60,474
<TOTAL-ASSETS> 327,249 320,373
<CURRENT-LIABILITIES> 52,413 54,513
<BONDS> 0 0
0 0
0 0
<COMMON> 45,603 45,603
<OTHER-SE> 209,103 200,314
<TOTAL-LIABILITY-AND-EQUITY> 327,249 320,373
<SALES> 63,769 245,889
<TOTAL-REVENUES> 63,769 245,889
<CGS> 27,860 110,811
<TOTAL-COSTS> 47,313 184,126
<OTHER-EXPENSES> 248 2,028
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 3
<INCOME-PRETAX> 16,278 59,732
<INCOME-TAX> 6,104 22,997
<INCOME-CONTINUING> 10,174 36,735
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 10,174 36,735
<EPS-PRIMARY> .44 1.58
<EPS-DILUTED> .44 1.58
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ARROW INTERNATIONAL, INC. 3QTR 10Q 97 AND 2ND QTR 10Q 97
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS
<FISCAL-YEAR-END> AUG-31-1997 AUG-31-1997
<PERIOD-END> MAY-31-1997 FEB-28-1997
<CASH> 3,288 9,771
<SECURITIES> 0 0
<RECEIVABLES> 57,459 57,092
<ALLOWANCES> 883 842
<INVENTORY> 48,556 46,877
<CURRENT-ASSETS> 120,561 126,184
<PP&E> 168,232 166,357
<DEPRECIATION> 57,809 55,302
<TOTAL-ASSETS> 305,540 313,554
<CURRENT-LIABILITIES> 110,693 60,385
<BONDS> 0 0
0 0
0 0
<COMMON> 45,580 45,580
<OTHER-SE> 219,773 186,852
<TOTAL-LIABILITY-AND-EQUITY> 305,540 313,554
<SALES> 183,262 121,155
<TOTAL-REVENUES> 183,262 121,155
<CGS> 83,283 55,383
<TOTAL-COSTS> 137,837 91,480
<OTHER-EXPENSES> 1,324 987
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 138 163
<INCOME-PRETAX> 43,963 28,525
<INCOME-TAX> 16,926 10,982
<INCOME-CONTINUING> 27,037 17,543
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 27,037 17,543
<EPS-PRIMARY> 1.17 .76
<EPS-DILUTED> 1.17 .76
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ARROW INTERNATIONAL, INC. 1ST QTR 10Q97, 10K 96
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> AUG-31-1997 AUG-31-1996
<PERIOD-END> NOV-30-1996 AUG-31-1996
<CASH> 7,763 4,807
<SECURITIES> 0 0
<RECEIVABLES> 51,981 50,867
<ALLOWANCES> 805 774
<INVENTORY> 45,350 43,509
<CURRENT-ASSETS> 13,218 110,693
<PP&E> 163,118 158,551
<DEPRECIATION> 52,423 49,552
<TOTAL-ASSETS> 305,548 299,421
<CURRENT-LIABILITIES> 57,429 55,607
<BONDS> 0 0
0 0
0 0
<COMMON> 45,580 45,580
<OTHER-SE> 180,228 174,193
<TOTAL-LIABILITY-AND-EQUITY> 305,548 299,421
<SALES> 59,190 229,945
<TOTAL-REVENUES> 59,190 229,945
<CGS> 27,405 107,272
<TOTAL-COSTS> 45,173 175,532
<OTHER-EXPENSES> 91 1,062
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 461 1,238
<INCOME-PRETAX> 13,465 52,113
<INCOME-TAX> 5,184 19,282
<INCOME-CONTINUING> 8,281 32,831
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 8,281 32,831
<EPS-PRIMARY> .36 1.41
<EPS-DILUTED> .36 1.41
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ARROW INTERNATIONAL, INC. 3RD QTR 10Q 96
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> MAY-31-1996
<CASH> 3,428
<SECURITIES> 0
<RECEIVABLES> 48,812
<ALLOWANCES> 690
<INVENTORY> 41,235
<CURRENT-ASSETS> 106,363
<PP&E> 154,102
<DEPRECIATION> 47,170
<TOTAL-ASSETS> 293,823
<CURRENT-LIABILITIES> 58,726
<BONDS> 0
0
0
<COMMON> 45,499
<OTHER-SE> 167,073
<TOTAL-LIABILITY-AND-EQUITY> 293,823
<SALES> 170,838
<TOTAL-REVENUES> 170,838
<CGS> 80,158
<TOTAL-COSTS> 129,746
<OTHER-EXPENSES> 907
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 822
<INCOME-PRETAX> 39,363
<INCOME-TAX> 14,564
<INCOME-CONTINUING> 24,799
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,799
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
