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, 1999
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. O. Box 12888
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:
Frederick J. Hirt
Arrow International, Inc.
P. O. Box 12888
Reading, Pennsylvania 19612
(610) 378-0131
This is the first of 13 pages. The Index to Exhibit is on Page 13.
ARROW INTERNATIONAL, INC. 401(k) PLAN
FINANCIAL REPORT
AUGUST 31, 1999
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C O N T E N T S
[S] Page
[C]
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENTS AND
SCHEDULES 1
FINANCIAL STATEMENTS
Statements of net assets available for benefits 2
Statements of changes in net assets available for benefits 3
Notes to financial statements 4-8
SCHEDULES
Schedule of assets held for investment purposes 9
Schedule of reportable transactions 10
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, 1999 and 1998, 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, 1999 and 1998, 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, 1999, 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.
Reading, Pennsylvania
February 9, 2000
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-1-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
August 31, 1999 1998
--------------------------
ASSETS
Investments, at fair value:
Arrow International Stock Fund $ 2,000,390 $ 1,622,753
Participant Loan Fund 1,537,118 1,295,828
Fidelity Retirement Growth Fund - 3,872,942
Fidelity Puritan Fund - 4,304,248
Contribution/Distribution Account - 62
T. Rowe Price Prime Reserve Fund 2,999,502 2,522,388
T. Rowe Price Balance Fund 8,791,821 2,706,897
T. Rowe Price Blue Chip Growth Fund 17,975,161 7,243,898
T. Rowe Price International Stock Fund 919,523 630,516
T. Rowe Price Spectrum Income Fund 75,091 -
T. Rowe Price Equity Income Fund 87,447 -
T. Rowe Price Equity Index 500 Fund 1,001,405 -
--------------------------
35,387,458 24,199,532
Receivables:
Accrued income - 69,282
Employee contributions - 10,958
Employer contributions - 2,602
Cash - 769,677
--------------------------
Total assets 35,387,458 25,052,051
LIABILITY, due to broker - 599,506
--------------------------
NET ASSETS AVAILABLE
FOR BENEFITS $35,387,458 $24,452,545
==========================
See Notes to Financial Statements.
-2-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
Years Ended August 31, 1999 1998
---------------------------
Investment income:
Net realized and unrealized
appreciation (depreciation)
in fair value of
investments $ 6,278,117 $ (384,137)
Interest and dividends 854,236 1,891,421
Contributions:
Employee 3,386,808 3,025,626
Employer 1,010,900 939,747
Conversion in C.R. Bard 1,004,825 -
---------------------------
Total additions 12,534,886 5,472,657
---------------------------
Distributions paid to participants 1,578,488 2,257,814
Administrative expenses, net 21,485 33,546
---------------------------
Total deductions 1,599,973 2,291,360
---------------------------
Net increase (decrease) 10,934,913 3,181,297
Net assets available for benefits:
Beginning of year 24,452,545 21,271,248
---------------------------
End of year $35,387,458 $24,452,545
===========================
See Notes to Financial Statements.
-3-
ARROW INTERNATIONAL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
1
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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. (subsequently merged with First Union National
Bank) acted as plan trustee and administered the Plan's assets
through September 30, 1998. T. Rowe Price Retirement Plan Services,
Inc. was appointed plan trustee and administrator of the Plan's
assets effective October 1, 1998. The Plan maintains the following
nine funds under First Union: T. Rowe Price Prime Reserve Fund,
T. Rowe Price Balanced Fund, T. Rowe Price Blue Chip Growth
Fund, Arrow International, Inc. Stock Fund, T. Rowe Price
International Stock Fund, T. Rowe Price Spectrum Income Fund,
T. Rowe Price Equity Income Fund, T. Rowe Price Equity Index 500
Fund and a Loan Fund for the commingled investment of employee
and company contributions. On October 1, 1998, the Fidelity
Retirement Growth Fund net assets were transferred to the T.
Rowe Price Blue Chip Growth Fund and the Fidelity Puritan's
Fund's net assets were transferred to the T. Rowe Price Balanced Fund.
The T. Rowe Price Prime Reserve Fund, T. Rowe Price Balanced
Fund, T. Rowe Price Blue Chip Growth Fund, Arrow International,
Inc. Stock Fund, T. Rowe Price International Stock Fund, T. Rowe
Price Spectrum Income Fund, T. Rowe Price Equity Income Fund and
T. Rowe Price Equity Index 500 Fund are stated at fair value as
determined by the trustee who 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.
-4-
ARROW INTERNATIONAL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
2
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DESCRIPTION OF THE PLAN
General:
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 immediately upon hire,
contingent upon scheduled annual work hours, following their
date of hire and reaching age 21. Prior to September 1, 1998,
eligible employees were permitted to enter the Plan after one
year of service following their date of hire.
Participant accounts:
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.
Summary plan description:
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.
Termination:
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.
Forfeitures:
Forfeitures will be used to reduce Company contributions.
Vesting:
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.
Funding policy:
Participants may contribute up to 10% of their earnings. The
Company may 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, 1999 and 1998.
-5-
ARROW INTERNATIONAL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
2
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DESCRIPTION OF THE PLAN (CONTINUED)
Plan benefits:
Included in plan benefits at August 31, 1998 are approximately
$416,368 of distributions to employees whose division was sold
by the Company. All funds were rolled over to qualified plans.
3
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INVESTMENTS
The investments at August 31, 1999 and 1998 as determined by the
trustee are summarized as follows:
1999 1998
------------------------------------------------
Cost Fair Value Cost Fair Value
------------------------------------------------
Money market fund,
T. Rowe Price Prime
Reserve Fund $ 2,999,502 $2,999,502* $2,522,450 $2,522,450* -
------------------------------------------------
Balanced funds:
T. Rowe Price
Balanced Fund 7,873,768 8,791,821* 3,005,603 2,706,897* -
------------------------------------------------
Equity funds:
T. Rowe Price Blue Chip
Growth Fund 14,421,416 17,975,161* 8,739,861 7,243,898*
T. Rowe Price International
Stock Fund 779,550 919,523 717,747 630,516
T. Rowe Price Spectrum
Income Fund 78,930 75,091 - -
T. Rowe Price Equity
Income Fund 87,790 87,447 - -
T. Rowe Price Equity
Index 500 Fund 991,556 1,001,405 - -
Fidelity Retirement
Growth Fund - - 4,035,768 3,872,942*
Fidelity Puritan Fund - - 3,919,600 4,304,248*
-----------------------------------------------
16,359,242 20,058,627 17,412,976 16,051,604
-----------------------------------------------
Stock fund, Arrow
International, Inc. 2,120,414 2,000,390* 1,894,863 1,622,753*
------------------------------------------------
Participant loan fund 1,537,118 1,537,118 1,295,828 1,295,828*
------------------------------------------------
$30,890,044 $35,387,458 $26,131,720 $24,199,532
================================================
* Investment represents 5% or more of the Plan's net assets.
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-6-
ARROW INTERNATIONAL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
3
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INVESTMENTS (CONTINUED)
During 1999 and 1998, the Plan's investments (including gains
and losses on investments bought and sold, as well as held during
the year) appreciated (depreciated) in value by $6,278,117 and
(384,137) as follows:
1999 1998
-------------------------------
Arrow International Stock Fund $ 112,852 $ (189,374)
Fidelity Retirememt Growth Fund 432,822 (602,459)
Fidelity Puritan Fund 139,151 (113,001)
T. Rowe Price Balanced Fund 1,164,625 128,007
T. Rowe Price Blue Chip Growth Fund 4,289,752 413,293
T. Rowe Price International Stock Fund 132,209 (20,603)
T. Rowe Price Spectrum Income Fund (4,679) -
T. Rowe Price Equity Income Fund (1,130) -
T. Rowe Price Equity Index 500 Fund 12,515 -
--------------------------------
$6,278,117 $ (384,137)
================================
4
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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
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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.
-7-
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ARROW INTERNATIONAL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
6
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CHANGE IN INVESTMENT OPTIONS
Effective October 1, 1998, investments in the Fidelity Retirement
Growth Fund transferred to the T. Rowe Price Blue Chip Growth Fund
and the Fidelity Puritan Funds investments transferred to the T. Rowe
Price Balanced Fund.
7
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PLAN MERGER
On April 1, 1999, the C.R. Bard/Arrow International, Inc. 401(k) Plan
was merged into the Arrow International, Inc. 401(k) Plan. Prior to the
merger, the plans covered eligible employees at Arrow Internationl and
its subsidiary, Arrow Interventional, Inc. The transferred net assets
have been recognized in the accounts of Arrow International, Inc. Plan
as of April 1, 1999, at their balances as previously carried in the
accounts of the C.R. Bard/Arrow International, Inc. 401(k) Plan. The
changes in the net assets of the combined plans are included in the
accompanying statement of changes in net assets available for benefits
from April 1, 1999. A summary of transferred net assets follows:
T. Rowe Price Prime Reserve Fund $ 138,203
T. Rowe Price Balanced Fund 44,425
T. Rowe Price Blue Chip Growth Fund 347,268
T. Rowe Price International Stock Fund 3,161
T. Rowe Price Spectrum Income Fund 34,186
T. Rowe Price Equity Income Fund 16,720
T. Rowe Price Equity Index 500 Fund 370,752
T. Rowe Price Participant Loan Fund 50,110
------------
$ 1,004,825
============
8
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SUBSEQUENT EVENT
Effective January 1, 2000, Medical Parameters Inc.'s 401(k) Plan
was merged into Arrow International, Inc. 401(k) Plan which received
$698,876. Medical Parameters Inc. is a wholly-owned subsidiary of
Arrow International, Inc.
-8-
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ARROW INTERNATIONAL, INC. 401 (k) PLAN
LINE 27a -SCHEDULE OF ASSETS HELD FOR INVESTMENTS PURPOSES
EIN: 23-1969991
PN: 004
August 31, 1999
Number Of
Description Shares Cost Fair Value
- --------------------------------------------------------------------------------
Short-term fund, T. Rowe Price Prime Reserve
Fund
2,999,502 $2,999,502 $2,999,502*
------------------------
Balanced fund, T. Rowe Price Balanced Fund 465,915 7,873,768 8,791,821*
------------------------
Equity funds:
T. Rowe Price Blue Chip Growth Fund 559,625 14,421,416 17,975,161*
T. Rowe Price International Stock Fund 57,220 779,550 919,523
T. Rowe Price Spectrum Income Fund 6,858 78,930 75,091
T. Rowe Price Equity Income Fund 3,168 87,790 87,447
T. Rowe Price Equity Index 500 Fund 27,980 991,556 1,001,405
------------------------
16,359,242 20,058,627
Arrow International, Inc. common stock 68,979 2,120,414 2,000,390*
------------------------
Participant loan fund 1,537,118 1,537,118 1,537,118
------------------------
Total investments $30,890,044 $35,387,458
========================
* Represents 5% or more of the net assets available for benefits.
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-9-
ARROW INTERNATIONAL, INC. 401 (k) PLAN
LINE 27d -SCHEDULE OF REPORTABLE TRANSACTIONS
EIN: 23-1969991
PN: 004
Year Ended August 31, 1999
Total Total
Number Of Number Of
Purchases Sales Dollar Dollar Cost of Net
Within Within Value Of Value Of Assets Gain
Description Of Asset Plan Year Plan Year Purchases Sales Sold (Loss)
- --------------------------------------------------------------------------------
Short-term fund:
T. Rowe Price Prime
Reserve Fund 96 70 $3,520,098 $3,043,046 $3,043,046 $ -
Balance fund:
T. Rowe Price
Balanced Fund 83 97 8,709,469 3,758,330 3,841,304 (82,974)
Equity funds:
Fidelity Retirement
Growth Fund 3 2 38,695 4,401,982 4,074,463 327,519
Fideliy Puritan Fund 3 2 390,124 4,563,369 4,309,724 253,645
T. Rowe Price Blue
Chip Growth Fund 94 84 15,507,116 8,971,503 9,825,561 (854,058)
Arrow International, Inc.
common stock 76 76 2,386,500 2,155,393 2,160,949 (5,556)
-10-
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 25, 2000 By:/s/ Frederick J. Hirt
----------------- ----------------------
Frederick J. Hirt
Vice-President, Finance, CFO
and Treasurer
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Index to Exhibit
----------------
Exhibit No.
- ----------
23.1 Consent of Beard & Company, Inc., independent auditors
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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 31, 1998.
BEARD & COMPANY, INC.
Reading, Pennsylvania
February 9, 2000
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