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, 1997
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:
John H. Broadbent, Jr.
Arrow International, Inc.
P. O. Box 12888
Reading, Pennsylvania 19612
(610) 378-0131
This is the first of 21 pages. The Index to Exhibit is on Page 20.
FINANCIAL REPORT
AUGUST 31, 1997
C O N T E N T S
Page
[S] [C]
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, 1997 and 1996, 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,
1997 and 1996, 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, 1997, 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.
-1-
Reading, Pennsylvania
December 30, 1997
-2-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
August 31, 1997
ARROW COREFUND
INERNATIONAL, CASH
INC. STOCK LOAN RESERVE
FUND FUND FUND
---------------------------------
ASSETS
Investments, at fair value:
Short-term fund, Corefund
Cash Reserve Fund $ - $ - $2,602,534
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 1,507,913 - -
Participant loans receivable - 949,218 -
-----------------------------------
1,507,913 949,218 2,602,534
Receivables:
Accrued income 2,291 18,470 194
Employee contributions 57,144 - 38,280
Employer contributions 18,606 - 13,900
Cash - - 11,484
----------------------------------
Total assets 1,585,954 967,688 2,666,392
LIABILITY, due to broker 1,574 - -
----------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS $1,584,380 $967,688 $2,666,392
==================================
See Notes to Financial Statements.
-3-
COREFUND
COREFUND FIDELITY INTERNATIONAL
COREFUND GROWTH RETIREMENT FIDELITY GROWTH
BALANCED EQUITY GROWTH PURITAN EQUITY
FUND FUND FUND FUND FUND TOTAL
- ------------------------------------------------------------------------
$ - $ - $ - $ - $ - $2,602,534
2,430,305 - - - - 2,430,305
- 5,629,048 - - - 5,629,048
- - 3,366,078 - - 3,366,078
- - - 3,828,629 - 3,828,629
- - - - 405,292 405,292
- - - - - 1,507,913
- - - - - 949,218
- ------------------------------------------------------------------------
2,430,305 5,629,048 3,366,078 3,828,629 405,292 20,719,017
285 - - - - 21,240
33,756 94,532 77,271 83,928 15,996 400,907
11,772 25,445 21,825 25,110 3,402 120,060
22 30 34 17 11 11,598
- ------------------------------------------------------------------------
2,476,140 5,749,055 3,465,208 3,937,684 424,701 21,272,822
- - - - - 1,574
- ------------------------------------------------------------------------
$2,476,140 $5,749,055 $3,465,208 $3,937,684 $424,701 $21,271,248
========================================================================
-4-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
August 31, 1996
Arrow Corefund
International, Cash
Inc. Stock Loan Reserve
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.
-5-
Corefund
Corefund Fidelity International
Corefund 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
===========================================================================
-6-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended August 31, 1997
ARROW COREFUND
INTERNATIONAL, PARTICIPANT CASH
INC. STOCK LOAN RESERVE
FUND FUND FUND
----------------------------------------
Investment income:
Net realized and unrealized appreciation
in fair value of investments $ 87,781 $ - $ -
Interest and dividends 9,377 63,893 121,846
Contributions:
Employee 459,491 - 297,305
Employer 151,631 - 111,101
Transfers between funds (5,375) 375,252 455,401
Transfer in from Kontron Plan - 135,893 725,134
--------------------------------------
Total additions 702,905 575,038 1,710,787
--------------------------------------
Distributions paid to participants 18,500 12,016 661,005
Administrative expenses 2,778 1,404 1,640
--------------------------------------
Total deductions 21,278 13,420 662,645
--------------------------------------
Net increase 681,627 561,618 1,048,142
Net assets available for benefits:
Beginning of year 902,753 406,070 1,618,250
--------------------------------------
End of year $1,584,380 $967,688 $2,666,392
======================================
See Notes to Financial Statements.
-7-
COREFUND
COREFUND FIDELITY INTERNATIONAL
COREFUND GROWTH RETIREMENT FIDELITY GROWTH
BALANCED EQUITY GROWTH PURITAN EQIUTY
FUND FUND FUND FUND FUND TOTAL
- ------------------------------------------------------------------------
$ 231,856 $ 771,537 $ 399,349 $ 392,957 $ 7,167 $1,890,647
169,303 465,201 304,532 315,874 31,568 1,481,594
261,899 623,024 556,256 571,133 100,846 2,869,954
93,291 205,158 164,471 179,073 29,035 933,760
(268,026) (203,317) (266,720) (20,492) (66,723) -
408,453 266,553 270,264 227,773 59,000 2,093,070
- ------------------------------------------------------------------------
896,776 2,128,156 1,428,152 1,666,318 160,893 9,269,025
- ------------------------------------------------------------------------
12,448 21,610 1,802 38,962 - 766,343
936 2,155 5,949 6,753 145 21,760
- ------------------------------------------------------------------------
13,384 23,765 7,751 45,715 145 788,103
- ------------------------------------------------------------------------
883,392 2,104,391 1,420,401 1,620,603 160,748 8,480,922
1,592,748 3,644,664 2,044,807 2,317,081 263,953 12,790,326
- ------------------------------------------------------------------------
$2,476,140 $5,749,055 $3,465,208 $3,937,684 $424,701 $21,271,248
========================================================================
-8-
ARROW INTERNATIONAL, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
Year Ended August 31, 1996
Arrow Corefund
International, Participant Cash
Inc. Stock Loan Reserve
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.
-9-
Corefund
Corefund Fidelity International
Corefund 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
============================================================================
-10-
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: Corefund Cash Reserve Fund, Corefund Balanced Fund,
Corefund Growth Equity Fund, Arrow International, Inc. Stock
Fund, Fidelity Retirement Growth Fund, Fidelity Puritan Fund,
Corefund International Growth Equity Fund and a Loan Fund for
the commingled investment of employee and company contributions.
The Corefund Cash Reserve Fund, Corefund Balanced Fund,
Corefund Growth Equity Fund, Arrow International, Inc. Stock
Fund, Fidelity Retirement Growth Fund, Fidelity Puritan Fund
and Corefund 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.
-11-
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, 1997 and 1996. 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.
-12-
ARROW INTERNATIONAL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
3
- ----------------------------------------------------------------------
INVESTMENTS
The investments at August 31, 1997 and 1996 as determined by the
trustee are summarized as follows:
1997 1996
-----------------------------------------------
COST FAIR VALUE Cost Fair Value
-----------------------------------------------
Money market fund, Corefund
Cash Reserve Fund $ 2,602,534 $2,602,534* $1,593,626 $1,593,626*
-----------------------------------------------
Balanced fund, Corefund
Balanced Fund 2,016,772 2,430,305* 1,366,027 1,574,937*
-----------------------------------------------
Equity funds:
Corefund Growth Equity
Fund 4,084,949 5,629,048* 2,752,891 3,599,339*
Fidelity Retirement
Growth Fund 2,904,787 3,366,078* 1,935,443 2,004,728*
Fidelity Puritan Fund 3,271,829 3,828,629* 2,103,154 2,275,113*
Corefund International
Growth Equity Fund 381,011 405,292 238,590 257,622*
-----------------------------------------------
10,642,576 13,229,047 7,030,078 8,136,802*
-----------------------------------------------
Stock fund, Arrow
International, Inc. 1,586,955 1,507,913 1,027,130 860,307*
------------------------------------------------
Participant loan fund 949,218 949,218 402,926 402,926
------------------------------------------------
$17,798,055 $20,719,017 $11,419,787 $12,568,598
* Investment represents 5% or more of the Plan's net assets.
-13-
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
- -----------------------------------------------------------------------
PLAN MERGER
On September 1, 1996, the Kontron, Inc. Employees 401(k) Plan,
the Plan of Arrow Interventional, Inc., was merged into the Arrow
International, Inc. 401(k) Plan. Prior to the merger, the plans
covered eligible employees at Arrow International and its
subsidiary, Arrow Interventional, Inc. The transferred net
assets have been recognized in the accounts of Arrow
International, Inc. Plan as of September 1, 1996, at their
balances as previously carried in the accounts of the Kontron,
Inc. Employees 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 September 1,
1996. A summary of transferred net assets follows:
Investments, at fair value:
Short-term fund, Corefund Cash Reserve Fund $ 725,134
Balanced fund, Corefund Balanced Fund 408,453
Equity funds:
Corefund Growth Equity Fund 266,553
Fidelity Retirement Growth Fund 270,264
Fidelity Puritan Fund 227,773
Corefund International Growth Equity Fund 59,000
Participant loans receivable 135,893
----------
$2,093,070
==========
-14-
-15-
ARROW INTERNATIONAL, INC. 401(k) PLAN
ASSETS HELD FOR INVESTMENT
August 31, 1997
Number Of
Description Shares Cost Fair Value
- --------------------------------------------------------------------------------
Short-term fund, Corefund Cash
Reserve Fund 2,602,534 $ 2,602,534 2,602,534*
-------------------------
Balanced fund, Corefund
Balanced Fund 175,473 2,016,772 2,430,305*
------------------------
Equity funds:
Corefund Growth Equity Fund 347,044 4,084,949 5,629,048*
Fidelity Retirement Growth Fund 163,561 2,904,787 3,366,078*
Fidelity Puritan Fund 196,643 3,271,829 3,828,629*
Corefund International Growth
Equity Fund 29,305 381,011 405,292
------------------------
10,642,576 13,229,047
------------------------
Arrow International, Inc. common stock 50,900 1,586,955 1,507,913*
------------------------
Participant loan fund 949,218 949,218 949,218
------------------------
Total investments $17,798,055 $20,719,017
========================
* Represents 5% or more of the net assets available for benefits.
-16-
ARROW INTERNATIONAL, INC. 401(k) PLAN
REPORTABLE TRANSACTIONS
Year Ended August 31, 1997
Total Total
Number Of Number Of
Description Purchases Sales Dollar Dollar Cost Of
of Within Within Value Of Value Of Assets Net
Security Plan Year Plan Year Purchases Sales Sold Gains
- --------------------------------------------------------------------------------
Short-term fund,
Corefund Cash
Reserve Fund 455 329 $5,775,699 $4,766,791 $4,766,791 $ -
Balanced fund,
Corefund
Balanced Fund 35 29 845,331 221,819 194,586 27,233
Equity funds:
Corefund Growth
Equity Fund 36 24 1,583,255 325,083 251,197 73,886
Fidelity Retirement
Growth Fund 29 10 1,095,153 133,151 125,809 7,342
Fidelity Puritan
Fund 33 13 1,290,034 129,476 121,359 8,117
-17-
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, 1998 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 31, 1997.
/s/ Beard & Company, Inc.
-------------------------
BEARD & COMPANY, INC.
Reading, Pennsylvania
February 23, 1998