<PAGE>

                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 quarterly period ended November 30, 2005

        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.
                            -------------------------
             (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
                                                                  --------------


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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes __X__ No _____

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes _____ No __X__

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 January 4, 2006
-------                                 -------------------------------------

Common Stock, No Par Value                            44,694,682

<PAGE>

                            ARROW INTERNATIONAL, INC.

                                 Form 10-Q Index


                                                                            Page
                                                                            ----

PART I.    FINANCIAL INFORMATION

           Item 1.  Financial Statements (Unaudited)

                    Consolidated Balance Sheets at November 30, 2005
                    and August 31, 2005                                      3-4

                    Consolidated Statements of Income                          5

                    Consolidated Statements of Cash Flows                    6-7

                    Consolidated Statements of Comprehensive Income            8

                    Notes to Consolidated Financial Statements              9-16

           Item 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                    17-24

           Item 3.  Quantitative and Qualitative Disclosures About
                    Market Risk                                            24-25

           Item 4.  Controls and Procedures                                   25


PART II.   OTHER INFORMATION


           Item 6.  Exhibits                                                  26

Signature                                                                     27

Exhibit Index                                                                 28

Certifications                                                             29-32




                                      (2)
<PAGE>

PART I          FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
<CAPTION>
                                           ARROW INTERNATIONAL, INC.
                                          CONSOLIDATED BALANCE SHEETS

                                                (In thousands)
                                                  (Unaudited)


                                                              November 30,                    August 31,
                                                                 2005                            2005
                                                          --------------------            -------------------
<S>                                                       <C>                             <C>
ASSETS
Current assets:
     Cash and cash equivalents                            $            115,535            $           119,326
     Accounts receivable, net                                           90,542                         91,029
     Inventories                                                        99,775                         95,356
     Prepaid expenses and other                                         11,167                          8,410
     Deferred income taxes                                              16,065                         16,338
                                                          --------------------            -------------------
     Total current assets                                              333,084                        330,459
                                                          --------------------            -------------------

Property, plant and equipment                                          324,373                        321,603
Less accumulated depreciation                                         (174,085)                      (170,895)
Property, plant and equipment held for sale, net                         1,499                          1,499
                                                          --------------------            -------------------
                                                                       151,787                        152,207
                                                          --------------------            -------------------

Goodwill                                                                42,753                         42,772
Intangible assets, net                                                  42,375                         43,674
Other assets                                                            10,473                         10,372
Prepaid pension costs                                                   25,356                         21,006
                                                          --------------------            -------------------
     Total other assets                                                120,957                        117,824
                                                          --------------------            -------------------

     Total assets                                         $            605,828            $           600,490
                                                          ====================            ===================




                          See accompanying notes to consolidated financial statements
</TABLE>

                                                   Continued


                                                     (3)
<PAGE>
<TABLE>
<CAPTION>

                                            ARROW INTERNATIONAL, INC.
                                           CONSOLIDATED BALANCE SHEETS

                                       (In thousands, except share amounts)
                                                   (Unaudited)


                                                                  November 30,                   August 31,
                                                                      2005                          2005
                                                              --------------------           -------------------
<S>                                                           <C>                            <C>
LIABILITIES

Current liabilities:
      Current maturities of long-term debt                    $             1,023            $            1,054
      Notes payable                                                        27,540                        26,891
      Accounts payable                                                     17,782                        17,391
      Cash overdrafts                                                       1,658                           400
      Accrued liabilities                                                  22,206                        24,571
      Accrued dividends                                                     6,702                         6,693
      Accrued compensation                                                 12,426                        12,908
      Accrued income taxes                                                  5,651                         1,945
                                                              --------------------           -------------------
      Total current liabilities                                            94,988                        91,853


Long-term debt                                                                  -                             -

Accrued postretirement and pension benefit obligations                     17,904                        20,557

Deferred income taxes                                                       9,174                         9,573

Commitments and contingencies

SHAREHOLDERS' EQUITY

Preferred stock, no par value;
    5,000,000 shares authorized;
    none issued                                                                 -                             -

Common stock, no par value;
    100,000,000 shares authorized;
    52,957,626 shares issued                                               45,661                        45,661

Additional paid-in capital                                                 29,287                        27,404

Retained earnings                                                         464,309                       459,181
      Less treasury stock at cost:
          8,275,336 and 8,339,767 shares, respectively                    (54,306)                      (54,728)

Accumulated other comprehensive (loss) / income                            (1,189)                          989
                                                              --------------------           -------------------
      Total shareholders' equity                                          483,762                       478,507
                                                              --------------------           -------------------
      Total liabilities and shareholders' equity              $           605,828            $          600,490
                                                              ====================           ===================




                           See accompanying notes to consolidated financial statements
</TABLE>

                                                       (4)
<PAGE>
<TABLE>
<CAPTION>

                                            ARROW INTERNATIONAL, INC.
                                        CONSOLIDATED STATEMENTS OF INCOME

                                (In thousands, except share and per share amounts)
                                                   (Unaudited)


                                                                          For the three months ended
                                                              --------------------------------------------------
                                                                  November 30,                   November 30,
                                                                      2005                           2004
                                                              --------------------           -------------------
<S>                                                           <C>                            <C>
Net sales                                                     $           113,644            $          112,725
Cost of goods sold                                                         57,487                        56,305
                                                              --------------------           -------------------
     Gross profit                                                          56,157                        56,420
                                                              --------------------           -------------------

Operating expenses:
     Research and development                                               6,451                         7,919
     Selling, general and administrative                                   32,585                        28,722
     Restructuring charge                                                      13                           391
                                                              --------------------           -------------------
                                                                           39,049                        37,032
                                                              --------------------           -------------------

     Operating income                                                      17,108                        19,388
                                                              --------------------           -------------------
Other (income) expenses:
     Interest expense                                                         180                            90
     Interest income                                                         (609)                         (215)
     Other, net                                                                12                          (166)
                                                              --------------------           -------------------
     Other (income) expenses, net                                            (417)                         (291)
                                                              --------------------           -------------------
Income before income taxes                                                 17,525                        19,679
Provision for income taxes                                                  5,695                         6,396
                                                              --------------------           -------------------

        Net income                                            $            11,830            $           13,283
                                                              ====================           ===================

Basic earnings per common share                               $              0.26            $             0.30
                                                              ====================           ===================

Diluted earnings per common share                             $              0.26            $             0.30
                                                              ====================           ===================

Cash dividends per common share                               $             0.150            $            0.090
                                                              ====================           ===================

Weighted average shares outstanding
    used in computing basic earnings
      per common share                                                 44,646,397                    43,835,821
                                                              ====================           ===================

Weighted average shares outstanding
    used in computing diluted earnings
      per common share                                                 45,167,726                    44,526,195
                                                              ====================           ===================




                           See accompanying notes to consolidated financial statements
</TABLE>

                                                       (5)
<PAGE>
<TABLE>
<CAPTION>

                                                      ARROW INTERNATIONAL, INC.
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                           (In thousands)
                                                             (Unaudited)


                                                                                              For the three months ended
                                                                                 --------------------------------------------------
                                                                                     November 30,                   November 30,
                                                                                         2005                           2004
                                                                                 --------------------           -------------------
<S>                                                                              <C>                            <C>
Cash flows from operating activities:
      Net income                                                                 $            11,830            $           13,283
Adjustments to reconcile net income to
   net cash provided by operating activities:
      Depreciation                                                                             5,037                         5,077
      Amortization                                                                             1,400                         1,382
      401(k) plan stock contribution                                                             230                           241
      Deferred income taxes                                                                      (40)                           57
      Loss (gain) on sale of property, plant and equipment                                       212                           120

      Excess tax benefit from exercise of stock options                                         (175)                          946

      Stock compensation charge                                                                  763                             -
      (Decrease) increase in provision for postretirement and pension
      benefit obligation                                                                      (2,640)                          353
      (Increase) decrease in prepaid pension costs                                            (4,350)                       (3,614)

Changes in operating assets and liabilities, net of effects from acquisition:
      Accounts receivable, net                                                                (1,492)                       (1,156)
      Inventories                                                                             (4,788)                         (123)
      Prepaid expenses and other                                                              (2,808)                       (3,168)
      Accounts payable and accrued liabilities                                                (1,588)                       (1,380)
      Accrued compensation                                                                      (334)                       (1,992)
      Accrued income taxes                                                                     3,955                         4,109
                                                                                 --------------------           -------------------
      Total adjustments                                                                       (6,618)                          852
                                                                                 --------------------           -------------------
           Net cash provided by operating activities                                           5,212                        14,135
                                                                                 --------------------           -------------------

Cash flows from investing activities:)
      Capital expenditures                                                                    (5,678)                       (7,105)
      Proceeds from sale of property, plant and equipment                                          -                            13
      (Increase) decrease in intangible and other assets                                        (210)                         (211)
      Cash paid for business acquired                                                              -                        (4,874)
                                                                                 --------------------           -------------------
           Net cash used in investing activities                                              (5,888)                      (12,177)
                                                                                 --------------------           -------------------

Cash flows from financing activities:
      Increase (decrease) in notes payable                                                     1,867                          (533)
      Reduction of current maturities of long-term debt                                          (31)                           (9)
      Increase (decrease) in book overdrafts                                                   1,258                            46
      Excess tax benefit from exercise of stock options                                          175                             -
      Dividends paid                                                                          (6,693)                       (3,940)
      Proceeds from stock options exercised                                                    1,138                         2,461
                                                                                 --------------------           -------------------
           Net cash used in financing activities                                              (2,286)                       (1,975)
                                                                                 --------------------           -------------------

Effects of exchange rate changes on cash
    and cash equivalents                                                                        (829)                        1,096
Net change in cash and cash equivalents                                                       (3,791)                        1,079
Cash and cash equivalents at beginning of year                                               119,326                        94,176
                                                                                 --------------------           -------------------
Cash and cash equivalents at end of period                                       $           115,535                        95,255
                                                                                 ====================           ===================




                           See accompanying notes to consolidated financial statements
</TABLE>

                                                    Continued


                                                       (6)
<PAGE>
<TABLE>
<CAPTION>
                                                      ARROW INTERNATIONAL, INC.
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

                                                           (In thousands)
                                                             (Unaudited)


                                                                                              For the three months ended
                                                                                 --------------------------------------------------
                                                                                     November 30,                   November 30,
                                                                                         2005                           2004
                                                                                 --------------------           -------------------
<S>                                                                              <C>                            <C>
Supplemental schedule of noncash investing and financing activities:

The Company assumed liabilities in conjunction with the purchase of certain assets as follows:

Estimated fair value of assets acquired                                          $                 -            $            8,361
Accrual for additional payments owed                                                               -                         3,487
                                                                                 --------------------           -------------------
Cash paid for assets                                                             $                 -            $            4,874
                                                                                 ====================           ===================

Cash paid for business acquired:
      Working capital                                                            $                 -            $            3,008
      Intangible assets                                                                            -                         5,353
      Accrual for additional payments owned                                                        -                        (3,487)
                                                                                 --------------------           -------------------
                                                                                 $                 -                         4,874
                                                                                 ====================           ===================
Dividends declared but not paid                                                  $             6,702            $            3,955
                                                                                 ====================           ===================




                                     See accompanying notes to consolidated financial statements
</TABLE>

                                                                (7)
<PAGE>
<TABLE>
<CAPTION>

                                                      ARROW INTERNATIONAL, INC.
                                      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (EXPENSE)

                                                           (In thousands)
                                                             (Unaudited)


                                                                                              For the three months ended
                                                                                 --------------------------------------------------
                                                                                     November 30,                   November 30,
                                                                                         2005                           2004
                                                                                 --------------------           -------------------
<S>                                                                              <C>                            <C>
Net income                                                                       $            11,830            $           13,283

Other comprehensive (expense) income
     Foreign currency translation adjustments                                                 (2,178)                        5,562
                                                                                 --------------------           -------------------

Other comprehensive (expense) income                                                          (2,178)                        5,562
                                                                                 --------------------           -------------------

               Total comprehensive income                                        $             9,652            $           18,845
                                                                                 ====================           ===================




                                     See accompanying notes to consolidated financial statements
</TABLE>

                                                                (8)
<PAGE>

                            ARROW INTERNATIONAL, INC.


Note 1 - Basis of Presentation:

These unaudited consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, which management considers
necessary for a fair statement of the consolidated financial position, results
of operations, cash flows and comprehensive income of Arrow International, Inc.
(the "Company") for the interim periods presented. Results for the interim
periods are not necessarily indicative of results for the entire year. Such
statements are presented in accordance with the requirements of Form 10-Q and do
not include all disclosures normally required by generally accepted accounting
principles or those normally made on Form 10-K. These statements should be read
in conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report to Stockholders for the fiscal year
ended August 31, 2005.

Note 2 - Accounting Policies:

The Financial Accounting Standards Board (FASB) issued SFAS No. 123R,
"Share-Based Payment", in December 2004. This statement requires that the cost
of all forms of equity-based compensation granted to employees, excluding
employee stock ownership plans, be recognized in a company's income statement
and that such cost be measured at the fair value of the equity instruments
granted. This statement replaces the guidance in SFAS No. 123, Accounting for
Stock-Based Compensation, and APB No. 25, Accounting for Stock Issued to
Employees. In addition, the Securities and Exchange Commission (the "SEC")
issued SAB No. 107 "Share-Based Payment" in March 2005, which provides
supplemental SFAS No. 123R application guidance based on the views of the SEC.

The Company adopted the provisions of SFAS No. 123R effective September 1, 2005
using the modified prospective method. The adoption of this statement resulted
in a charge of $763 to income from continuing operations and income before
income taxes, of which $127 was recorded to cost of sales, $93 to research and
development, and $543 to selling, general administrative expenses. The adoption
of SFAS 123R resulted in a charge to net income of $647, or $0.01 basic and
diluted earnings per share, in the first quarter of fiscal 2006. The tax benefit
from this stock option expense is less than the statutory tax benefit because
the Company cannot recognize the tax benefit on future disqualifying
dispositions of incentive stock options until such time as these dispositions
occur. Prior to September 1, 2005, the Company had applied the existing
accounting rules under Accounting Principles Board (APB) No. 25, as amended by
SFAS No. 148, and provided pro forma net income and pro forma earnings per share
disclosures for employee stock option grants made as if the fair value method in
measuring compensation costs for stock options granted subsequent to December
15, 1995 had been applied.

Had compensation expense for stock options granted in fiscal 2005 been recorded
based on the fair market value at the grant date, the Company's net income and
basic and diluted earnings per share, net of related income tax effects, for the
period ended November 30, 2004 would have been reduced to the pro forma amounts
indicated in the table below:

<TABLE>
<CAPTION>
                                                         For the three months ended November 30, 2004
                                                         --------------------------------------------
<S>                                                                   <C>
Net income applicable to common shareholders

As reported                                                           $         13,283
Deduct:  Total stock-based employee compensation expense
determined under fair value based method for all awards, net
of related tax effects                                                            (408)
Pro forma                                                             $         12,875

Basic earnings per common share
As reported                                                           $           0.30
Pro forma                                                             $           0.29

Diluted earnings per common share
As reported                                                           $           0.30
Pro forma                                                             $           0.29
</TABLE>

The pro forma effects are not representative of the effects on reported net
income for future years, as most of the stock option awards granted by the
Company vest in cumulative increments over a period of either four or five
years. The information provided in the table above includes the impact of both
vested and non-vested options.


                                      (9)
<PAGE>

                            ARROW INTERNATIONAL, INC.


Accounts Receivable and Allowance for Doubtful Accounts:

Trade accounts receivable are recorded at the invoiced amount and do not bear
interest. The Company maintains an allowance for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
This allowance is used to report trade receivables at estimated net realizable
value. The Company relies on prior payment trends while giving consideration to
other criteria such as political risk, financial status and other factors to
estimate the amounts of cash that ultimately will be received. Such amounts
cannot be known with certainty at the financial statement date. The Company
regularly reviews individual past due balances over 90 days and over a specific
amount for collectability and maintains a specific allowance for customer
accounts that will likely not be collectible due to customer liquidity issues.
The Company also maintains an allowance for estimated future collection losses
on existing receivables, determined based on historical trends.

The following are the changes in the allowance for doubtful accounts for the
three months ended November 30, 2005 and 2004:

                                               For the three months ended
                                        ----------------------------------------
                                           November 30,          November 30,
                                               2005                  2004
                                        ------------------    ------------------
       Balance at September 1           $           2,176     $           2,198
       Net additions  (recoveries)                    120                   206
       Write-offs                                       -                  (800)
                                        ------------------    ------------------
       Balance at November 30           $           2,296     $           1,604
                                        ==================    ==================

The Company has disclosed in Note 1 to its consolidated financial statements
included in its Annual Report on Form 10-K for the fiscal year ended August 31,
2005 those accounting policies that it considers to be significant in
determining its results of operations and financial position. There have been no
material changes to the critical accounting policies previously identified and
described in the Company's 2005 Form 10-K. The accounting principles utilized by
the Company in preparing its consolidated financial statements conform in all
material respects to generally accepted accounting principles in the United
States of America.

The preparation of these consolidated financial statements requires the
Company's management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses, as well as the disclosure
of contingent assets and liabilities at the date of its financial statements.
The Company bases its estimates on historical experience, actuarial valuations
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Some of those judgments can be subjective and complex and,
consequently, actual results may differ from these estimates under different
assumptions or conditions. While for any given estimate or assumption made by
the Company's management there may be other estimates or assumptions that are
reasonable, the Company believes that, given the current facts and
circumstances, it is unlikely that applying any such other reasonable estimate
or assumption would materially impact the financial statements.

The FASB issued SFAS No. 151, "Inventory Costs, an Amendment of Accounting
Research Bulletin (ARB) No. 43, Chapter 4", in November 2004. This statement
amends the guidance in ARB No. 43 Chapter 4 "Inventory Pricing" to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs and wasted material. SFAS No. 151 requires that those items be recognized
as current period charges regardless of whether they meet the criterion of "so
abnormal." In addition, this statement requires that allocation of fixed
production overheads to the costs of conversion be based on the normal capacity
of the production facilities. The Company has adopted the provisions of SFAS No.
151, effective September 1, 2005. The impact of this statement on the Company's
financial statements was not material to its results of operations for the three
months ended November 30, 2005.

Certain prior period information has been reclassified for comparative purposes.



Note 3 - Commitments and Contingencies:

The Company is a party to certain legal actions, including product liability
matters, arising in the ordinary course of its business. From time to time, the
Company is also subject to legal actions involving patent and other intellectual
property claims.

The Company had been a defendant in a lawsuit in the United States District
Court in the Southern District of New York, in which the plaintiffs, Thierry
Pourchez and Bard Access Systems, Inc., alleged that the Company's
Cannon-Cath(TM) split-tip hemodialysis catheters, which were acquired as part of
the Company's acquisition in November 2002 of specified assets of Diatek, Inc.,
infringed a patent owned by or licensed to the plaintiffs. In November 2003,
this lawsuit was stayed pending the U.S. Patent and Trademark Office's ruling on
its re-examination of the patent at issue. In September 2005, the Court
dismissed this lawsuit because the U.S. Patent and Trademark Office had not yet
concluded its re-examination of the patent at issue. The plaintiffs may seek
reinstatement of this lawsuit when the re-examination is concluded, which is
expected to occur in the first half of calendar 2006, although the Company


                                      (10)
<PAGE>

                            ARROW INTERNATIONAL, INC.


cannot presently predict the precise timing. Based on information presently
available to the Company, the Company believes that its products do not infringe
any valid claim of the plaintiff's patent and that, consequently, it has
meritorious legal defenses with respect to this action in the event it were to
be reinstated.

The Company is currently a plaintiff in a patent infringement lawsuit in the
United States District Court in Baltimore, Maryland against Datascope Corp. of
Montvale, New Jersey. The Company manufactures and sells the Arrow-Trerotola(TM)
Percutaneous Thrombolytic Device (PTD(R)), which is used to mechanically declot
native arterio-venous fistulae and synthetic hemodialysis grafts. The PTD was
invented by Dr. Scott Trerotola while working at Johns Hopkins University. Johns
Hopkins University, the owner of two patents covering the PTD, is also a
plaintiff, and the Company is the exclusive licensee of the Trerotola patents.
The Company has alleged that Datascope infringes these two patents. A trial is
anticipated during calendar year 2006.

The Company also commenced a patent infringement lawsuit in the United States
District Court in Boston, Massachusetts against Spire Corporation of Bedford,
Massachusetts. The Company is the owner of United States Patent No. 6,872,198,
which covers a method of inserting a double-Y-shaped multi-lumen catheter. The
Company has alleged that the use of Spire's Pourchez RetrO(TM) High Flow
Kink-Resistant Catheter infringes this patent. The case is at the beginning of
the discovery phase, and trial is anticipated during the 2007 calendar year.

Although the ultimate outcome of any of these actions is not expected to have a
material adverse effect on the Company's business or financial condition,
whether an adverse outcome in any of these actions would materially adversely
affect the Company's reported results of operations in any future period cannot
be predicted with certainty.


Note 4 - Inventories:

Inventories are summarized as follows:

                                    November 30, 2005        August 31, 2005
                                  ---------------------   ---------------------
     Finished goods               $             34,860    $             32,954
     Semi-finished goods                        30,225                  26,875
     Work-in-process                             8,423                  11,699
     Raw materials                              26,267                  23,828
                                  ---------------------   ---------------------
                                  $             99,775    $             95,356
                                  =====================   =====================


Note 5 - Segment Reporting:

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", requires the reporting of certain financial information for each
operating segment. The Company has one operating segment as defined in this
standard, based on the fact that its various business components do not possess
the defined characteristics meeting the standard's definition of operating
segments. For instance, the Company's current management structure is designed
to operate the business as a whole, with no divisional responsibilities. In
addition, over 90% of the Company's net sales are generated from catheter and
catheter-related products. Therefore, the Company continues to operate as a
single operating segment. The Company operates in four main geographic regions,
therefore, information about products and geographic areas is presented below.

The following table provides quarterly information about the Company's sales by
product category:

<TABLE>
<CAPTION>
                                        Quarter ended                        Quarter ended
                                      November 30, 2005                    November 30, 2004
                                -------------------------------     --------------------------------
                                  Critical          Cardiac           Critical           Cardiac
                                    Care             Care               Care              Care
                                -------------    --------------     -------------    ---------------
<S>                               <C>              <C>                <C>               <C>
Sales to external customers       $ 96,900         $ 16,700           $ 96,000          $ 16,700
</TABLE>

The following tables present quarterly information about geographic areas:

<TABLE>
<CAPTION>

                                                     Quarter ended November 30, 2005
                                  ---------------------------------------------------------------------------
                                     United        Asia and                       Other
                                     States         Africa         Europe        Foreign       Consolidated
                                  ------------   ------------   ------------   -----------   ----------------
<S>                                  <C>           <C>             <C>            <C>            <C>
Sales to unaffiliated customers      $70,000       $16,600         $19,600        $7,400         $113,600

</TABLE>


                                      (11)
<PAGE>

                            ARROW INTERNATIONAL, INC.

<TABLE>
<CAPTION>
                                                          Quarter ended November 30, 2004
                                  ---------------------------------------------------------------------------
                                     United        Asia and                       Other
                                     States         Africa         Europe        Foreign       Consolidated
                                  ------------   ------------   ------------   -----------   ----------------
<S>                                  <C>           <C>             <C>            <C>            <C>
Sales to unaffiliated customers      $68,700       $17,700         $20,000        $6,300         $112,700
</TABLE>


Note 6 - Business Acquisitions:

On September 3, 2004, the Company purchased certain assets of one of its
distributors in Italy, AB Medica S.p.A. (ABM), for a total purchase price of
approximately $8,952, with additional amounts payable contingent upon the sales
levels of products under sales contracts purchased by the Company. ABM had been
one of the Company's distributors in Italy since 1982. The asset purchase
agreement includes the purchase of customer lists, distributorship rights, as
well as the inventory and specified tender contracts associated with the sale by
ABM of the Company's products. The Company began selling directly in Italy
through its subsidiary, Arrow Italy S.p.A., in the first quarter of fiscal 2005.
As of November 30, 2005, pursuant to the asset purchase agreement, the Company
has paid $8,749 in cash and recorded a current liability of $203 for additional
payment installments. The purchase price for this acquisition did not exceed the
estimated fair value of the net assets acquired and, therefore, no goodwill has
been recorded by the Company in connection therewith. Intangible assets acquired
of $5,731, consisting of customer lists and distributorship rights, are being
amortized over five years based on the anticipated period over which the Company
expects to benefit from the transaction. Included in the first quarter of fiscal
2005 was a $1,467 charge to cost of goods sold, or $990 against net income, for
the step-up of inventory purchased from ABM. The results of operations of this
business are included in the Company's consolidated financial statements from
the date of acquisition. The purchase price for this acquisition was allocated
as follows:

        Inventories                             $   3,221
        Intangible assets                           5,731
                                                ---------
             Total purchase price               $   8,952
                                                =========

Pro forma amounts are not presented as the acquisition described above did not
have any material effect on the Company's results of operations or financial
condition for any of the periods presented.


Note 7 - Stock Option Plans:

The Company has adopted three stock plans, the 1992 Stock Incentive Plan (the
"1992 Plan"), which was adopted on April 1, 1992, the Directors' Stock Incentive
Plan, as amended (the "Directors' Plan"), which was approved by the Company's
shareholders on January 17, 1996, with amendments thereto approved by the
Company's shareholders on January 19, 2000, and the 1999 Stock Incentive Plan
(the "1999 Plan"), which was approved by the Company's shareholders on June 19,
2000, with non-material amendments thereto approved by the Company's Board of
Directors on October 27, 2004. The 1992 and 1999 Plans authorize the granting of
stock options, stock appreciation rights and restricted stock. The Directors'
Plan authorizes the granting of a maximum of 300,000 non-qualified stock
options. Under the Directors' Plan, members of the Board of Directors of the
Company and its subsidiaries are eligible to participate if they are not also
employees or consultants of the Company or its subsidiaries, and do not serve on
the Board of Directors as representatives of the interest of shareholders who
have made an investment in the Company. The Directors' Plan authorizes an
initial grant of an option to purchase 10,000 shares of common stock upon each
eligible director's initial election to the Board of Directors and the grant of
an additional option to purchase 3,000 shares of common stock on the date each
year when directors are elected to the Board of Directors.

In the three months ended November 30, 2005 and November 30, 2004, the Company
granted 1,066,000 and 15,000 options, respectively, to key employees to purchase
shares of the Company's common stock pursuant to the 1999 Plan. The exercise
price per share ranged from $29.41 to $29.94 for the options granted during the
three months ended November 30, 2005 and was $29.08 for the options granted in
the same period of fiscal 2005. These amounts represent the fair market value of
the common stock of the Company on the respective dates that the options were
granted. The options expire ten years from the grant date. The options vest
ratably over five years, at one year intervals from the grant date and, once
vested, are exercisable at any time.

In the three months ended November 30, 2005 and November 30, 2004, the Company
granted 10,000 and 0 options, respectively, to a new director to purchase shares
of the Company's common stock pursuant to the Directors' Plan. The exercise
price per share was $30.92 for the options granted during the three months ended
November 30, 2005, which was equal to the fair market value of the common stock
of the Company on the date the options were granted. The options expire ten
years from the grant date. The options fully vest one year from the grant date,
and once vested, are exercisable at any time.


                                      (12)
<PAGE>

                            ARROW INTERNATIONAL, INC.


Stock option activity for the three month periods ended November 30, 2005 and
2004 is summarized in the tables below:

<TABLE>
<CAPTION>
                                                                      For the three months ended
                                          ------------------------------------------------------------------------------------
                                                    November 30, 2005                                  November 30, 2004
                                          --------------------------------------                  ----------------------------
                                                                 Weighted                                           Weighted
                                                                  Average                                            Average
                                                                 Exercise           Aggregate                       Exercise
                                             Shares                Price         Intrinsic Value     Shares           Price
                                          ------------------------------------------------------------------------------------
<S>                                          <C>                   <C>               <C>             <C>              <C>
Outstanding at September 1                   2,381,367             $22.43                            3,084,152        $20.49
Granted                                      1,076,000             $29.93                               15,000        $29.08
Exercised                                      (65,490)            $19.74                             (171,818)       $15.40
Terminated                                     (32,365)            $28.21                              (59,140)       $21.77
                                          --------------                                          -------------

Outstanding at November 30                   3,359,512             $24.83            $19,295         2,868,194        $20.82


Exercisable at  November 30                  1,418,186             $20.62             $6,994         1,536,887        $18.47
</TABLE>

The intrinsic value of the stock options exercised during the three months ended
November 30, 2005 and November 30, 2004 was $351 and $900, respectively.

Stock options outstanding at November 30, 2005 are summarized in the table
below:

<TABLE>
<CAPTION>
                                                       Weighted             Weighted                            Weighted
                                                        Average              Average                            Average
        Range of                   Number              Remaining            Exercise           Number           Exercise
     Exercise Prices             Outstanding        Contractual Life          Price          Exercisable         Price
--------------------------     ---------------    --------------------    -------------    --------------    ---------------
<S>                                <C>                  <C>                 <C>                <C>               <C>
     $12.56 - $17.50                  278,650            3.19                $15.00              278,650         $15.00
     $17.51 - $21.47                  767,049            5.51                $19.05              602,679         $18.98
     $21.48 - $26.42                1,045,813            7.81                $25.34              533,857         $25.37
     $26.43 - $30.92                1,248,000            9.80                $30.08                3,000         $29.08
      $30.93-$33.59                    20,000            9.50                   -                      -            -
                               ---------------                                             --------------
                                    3,359,512                                                  1,418,186
</TABLE>

A summary of the status of the Company's nonvested stock options as of November
30, 2005, and changes during the three months ended November 30, 2005, are
summarized below:

<TABLE>
<CAPTION>
                                                               For the Three Months Ended November 30, 2005
                                                             -------------------------------------------------
                                                                                            Weighted Average
                                                               Number of Shares             Option Grant Date
                                                              Underlying Options               Fair Value
                                                             ---------------------         -------------------
<S>                                                               <C>                            <C>
Nonvested at September 1, 2005                                    1,259,101                      $4.86
Granted                                                           1,076,000                      $7.43
Vested                                                             (362,330)                     $4.50
Terminated                                                          (31,445)                     $5.02
                                                             ---------------------
Nonvested at November 30, 2005                                    1,941,326                      $6.35
</TABLE>

As of November 30, 2005, there was $11,670 of total unrecognized cost related to
nonvested share-based compensation arrangements granted under the Company's
Stock Incentive Plans. This cost is expected to be recognized over a weighted
average period of six years. The total fair value of shares underlying stock
options which vested during the three months ended November 30, 2005 and
November 30, 2004 was $1,632 and $1,991, respectively.


                                      (13)
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                            ARROW INTERNATIONAL, INC.


The fair value of the stock options granted were estimated on the date of the
grant using the Black-Scholes option pricing model that uses the assumption
noted in the following table. The risk-free interest rate is based on the U.S.
Treasury yield curve in effect on the date of the grant. The expected
volatilities are based on the historical volatilities of the Company's common
stock. The Company uses historical data to estimate option exercises and
employee terminations within the valuation model. The expected lives of the
stock options granted are derived from the output of the option valuation model
and represent the period of time that options granted are expected to be
outstanding; the range given below results from certain groups of employees
exhibiting different behavior with respect to the options granted to them.

The per share weighted average value of stock options granted in the first three
months of fiscal 2006 and 2005 was $7.35 and $5.15, respectively. The fair value
was estimated as of the grant date using the Black-Scholes option pricing model
with the following average assumption:

                                     November 30, 2005      November 30, 2004
                                    -------------------    -------------------
Risk-free interest rate                3.71% - 4.30%              2.58%
Dividend yield                             2.13%                  1.33%
Expected Volatility factor            23.59% - 23.77%            20.86%
Expected lives                             6 years              4 years

Note 8 - Warranty

The Company's primary warranty obligation relates to sales of its intra-aortic
balloon pumps, for which the Company offers a warranty of one year to its U.S.
customers and two years to its international customers. As of November 30, 2005
and November 30, 2004, the Company's total estimated product warranty obligation
was $600 and $659, respectively. Because this estimate is based primarily on
historical experience, actual costs may differ from the amounts estimated. The
change in the warranty obligation for the three months ended November 30, 2005
and November 30, 2004 is as follows:

                                             For the Three Months Ended
                                             --------------------------

                                      November 30, 2005     November 30, 2004
                                     -------------------   -------------------
Balance as of September 1            $              660    $              740
Additional warranties issued                        273                   229
Expenditures/Expirations                           (333)                 (310)
                                     -------------------   -------------------
Balance as of November 30            $              600    $              659
                                     ===================   ===================


Note 9 - Retirement Benefits

Pension Plans:

The Company has three noncontributory pension plans that cover substantially all
employees. Benefits under the plans are based upon an employee's compensation
and years of service and, where applicable, the provisions of negotiated labor
contracts. It is the Company's policy to make contributions to these plans
sufficient to meet the minimum funding requirements of applicable laws and
regulations plus such additional amounts, if any, as the Company's actuarial
consultants advise to be appropriate. The projected unit credit method is
utilized for determination of actuarial amounts.

Plan assets consist principally of U.S. government securities, short-term
investments, other equity securities and cash equivalents.

On September 1, 2000, the Company established a Defined Benefit Supplemental
Executive Retirement Plan to provide pension benefits to selected executives and
retired executives/directors of the Company. The plan is unfunded and the
benefits provided under the plan are intended to be in addition to other
employee retirement benefits offered by the Company, including but not limited
to tax-qualified employee retirement plans.

Postretirement Benefits Other Than Pensions:

The Company provides limited amounts of postretirement health and life insurance
benefit plan coverage for some of its employees. The determination of the cost
of postretirement health benefit plans is based on comprehensive hospital,
medical, surgical and dental benefit provisions ("Other Benefits"). The
determination of the cost of postretirement life insurance benefits is based on
stated policy amounts.


                                      (14)
<PAGE>

                            ARROW INTERNATIONAL, INC.


The following summarizes the components of the net periodic benefit costs for
the three months ended November 30, 2005 and 2004:

<TABLE>
<CAPTION>
                                               Pension Benefits                          Other Benefits
                                     ------------------------------------     ------------------------------------
                                          For the Three Months Ended               For the Three Months Ended
                                     ------------------------------------     ------------------------------------
                                       November 30,        November 30,         November 30,        November 30,
                                          2005                2004                 2005                2004
                                     ----------------    ----------------     ----------------    ----------------
<S>                                  <C>                 <C>                  <C>                 <C>
Service cost                         $         1,207     $           885      $           161     $           111
Interest cost                                  1,526               1,361                  313                 259
Expected return on plan assets                (2,146)             (1,803)                   -                   -

Amortization of prior service costs              290                 302                   (3)                (40)

Amortization of transition
   obligation (asset)                            (19)                (36)                  12                  13

Amortization of net
   actuarial (gain) loss                         681                 279                  180                  53

Plan acquisition
   Differential                                    -                   -                    -                  (7)
                                     ----------------    ----------------     ----------------    ----------------
     Net periodic (benefit) cost     $         1,539     $           988      $           663     $           389
                                     ================    ================     ================    ================
</TABLE>

Note 10 - Restructuring Charges:

In August 2004, the Company initiated the consolidation of its operations at its
Winston-Salem, North Carolina and San Antonio, Texas facilities into other
existing manufacturing facilities. These steps are part of the Company's overall
manufacturing realignment and capacity increases announced in June 2004. The
work on the consolidation is expected to continue through the first half of
fiscal 2006. Severance payments relate to 53 employees primarily in
manufacturing at both facilities and the remaining accrual balance is expected
to be paid later in fiscal 2006. All other restructuring costs are expected to
be paid over the remainder of fiscal 2006. Restructuring charges related to this
manufacturing realignment are summarized in the table below:

<TABLE>
<CAPTION>
                                                                         Actual Costs Expensed
                                                   --------------------------------------------------------
                                                                                                                     Costs
                                                                                     For the                        expensed
                                   Estimate of        For the         For the         Three                         but not
                                      Total           Twelve          Twelve          Months                        yet paid
                                     Expected      Months Ended    Months Ended       Ended                          as of
                                  Restructuring     August 31,      August 31,       November       Total         November 30,
                                     Charges           2004            2005          30, 2005      to Date            2005
                                 ---------------  --------------  --------------   ------------   ---------      --------------
<S>                                   <C>             <C>              <C>           <C>            <C>               <C>
Severance and related Expenses        $763            $208             $555              -           $763               $87

Property, plant and
   equipment carrying
   cost, costs of
   disposal, and gain on
   sale                               (227)              -               48              -             48              (275)*

Other, including
   equipment and
   inventory moving costs,
   employee relocation
   costs, and external
   consulting fees                     119               -              118              1            119                 -
                                 ---------------  --------------  --------------   ------------   ---------      --------------
Total restructuring charges           $655            $208             $721             $1           $930             $(188)
                                 ===============  ==============  ==============   ============   =========      ==============
</TABLE>

*The Company had segregated its San Antonio, Texas facility and certain related
equipment as held for sale on the Company's consolidated balance sheet as of
November 30, 2005. On December 2, 2005, the Company sold this facility and, as a
result, will recognize a pre-tax gain of $275 in the second quarter of fiscal
2006.

                                      (15)
<PAGE>

                            ARROW INTERNATIONAL, INC.


As part of its plans to rationalize its production operations and related
logistics in Europe, in November 2004, the Company determined to move its
European Distribution Center, previously situated in Weesp, Netherlands, to a
more centralized European location in the Limberg region of Belgium in order to
have better access to existing carrier transportation networks and allow for
more cost-competitive expansion of its European operations in the future. The
Company continued to implement this relocation in the first quarter of fiscal
2006 and expects to complete the relocation and related logistics by the end of
fiscal 2006, at an estimated total cost of $1,634. Restructuring charges related
to this distribution center relocation and related logistics are summarized
below:

<TABLE>
<CAPTION>
                                                           Actual Costs Expensed
                                                  -----------------------------------------
                                                                                                      Costs
                                                                     For the                         expensed
                                   Estimate of        For the         Three                          but not
                                      Total           Twelve          Months                         yet paid
                                     Expected      Months Ended       Ended                           as of
                                  Restructuring     August 31,       November       Total          November 30,
                                     Charges           2005          30, 2005      to Date            2005
                                 ---------------  --------------  -------------   ---------      --------------
<S>                                   <C>             <C>              <C>           <C>            <C>
Severance and related expenses             $868            $618              $        $618                $337
Lease termination costs                     253             227              -         227                  98

Property, plant and
   equipment carrying cost
   and costs of disposal                    120              38              9          47                   -

Other, including
   equipment and
   inventory moving costs,
   employee relocation
   costs, and external
   consulting fees                          393             282              3         285                   -
                                 ---------------  --------------  -------------   ---------      --------------
Total restructuring charges              $1,634          $1,165            $12      $1,177                $435
                                 ===============  ==============  =============   =========      ==============
</TABLE>

Note 11 - Earnings Per Share

The following is a reconciliation of weighted average common shares outstanding
assuming dilution used in the calculation of earnings per share for the three
months ended November 30, 2005 and 2004:

<TABLE>
<CAPTION>
                                                         For the Three Months        For the Three Months
                                                                Ended                       Ended
                                                          November 30, 2005           November 30, 2004
                                                       ------------------------    -----------------------
<S>                                                                    <C>                        <C>
Net income                                                             $11,830                    $13,283

Weighted average common shares outstanding                              44,646                     43,836

Incremental common shares issuable: stock options
   and awards                                                              522                        690
                                                       ------------------------    -----------------------

Weighted average common shares outstanding
   assuming dilution                                                    45,168                     44,526
                                                       ========================    =======================

Basic earnings per common share                                          $0.26                      $0.30
                                                       ========================    =======================

Diluted earnings per common share                                        $0.26                      $0.30
                                                       ========================    =======================
</TABLE>

Stock options outstanding to purchase 457,418 and 15,000 shares of common stock
were not included in the computation of earnings per share assuming dilution
because the options' exercise prices were higher than the average market price
of the Company's common stock at November 30, 2005 and 2004, respectively.


                                      (16)
<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 ITEM 1. BUSINESS - "CERTAIN
RISKS RELATING TO ARROW" IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED AUGUST 31, 2005 AND THE COMPANY'S OTHER PERIODIC REPORTS AND
DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

RESULTS OF OPERATIONS

Three Months Ended November 30, 2005 Compared to Three Months Ended November 30,
2004

NET SALES. Net sales for the three months ended November 30, 2005 increased by
$0.9 million, or 0.8%, to $113.6 million from $112.7 million in the same period
of last year due primarily to an increase in critical care product sales offset
in part by an unfavorable foreign exchange impact during the first quarter of
fiscal 2006 as a result of the strength of the U.S. dollar relative to
currencies of countries in which the Company operates direct sales subsidiaries.
This foreign exchange impact resulted in decreased sales for the quarter of $1.1
million or 1.0% of total Company sales. Net sales represent gross sales invoiced
to customers, less certain related charges, discounts, returns and rebates. The
following is a summary of the Company's sales by product platform:

   Sales by Product Platform
   (in millions)                                        Quarter ended
                                          November 30, 2005    November 30, 2004
                                          -----------------    -----------------

         Central Venous Catheters               $ 58.7               $ 59.3
         Specialty Catheters                      36.1                 34.8
         Non-Arrow distributed products            2.1                  1.9
                                                ------               ------
              Subtotal Critical Care              96.9                 96.0
         Cardiac Care                             16.7                 16.7
                                                ------               ------
              TOTAL                             $113.6               $112.7
                                                ======               ======

Sales of critical care products increased 0.9% to $96.9 million in the first
quarter of fiscal 2006 from $96.0 million in the comparable prior year period
due primarily to increased sales of specialty catheters offset in part by
decreased sales of central venous catheters. Sales of specialty catheters
increased in the first quarter of fiscal 2006 due to improved sales of epidural
products and arterial products. Sales of central venous catheters decreased
slightly in the first quarter of fiscal 2006 primarily because there were no
sales of neonatal products in the first quarter of fiscal 2006 as a result of
the Company's previously reported decision in January 2005 to temporarily cease
manufacturing, shipping and selling of its NEOCare product line until it
completes the integration of its NEOCare manufacturing operations and
implementation of all corrective actions in response to previously reported
compliance concerns of the Food and Drug Administration (the "FDA"). NEOCare
product sales in the first quarter of fiscal 2005 were $1.9 million. Sales of
the Company's other central venous catheter products increased in the quarter
due to a continued increase in the number of hospitals that are purchasing the
Company's procedure kits featuring its safety devices and ARROWg+ard(R)
antiseptic surface treatments. Sales of cardiac care products were $16.7 million
in each of the first quarters of fiscal 2006 and fiscal 2005. Total Company U.S.
sales increased 1.9% to $70.0 million from $68.7 million in the prior year
period due primarily to increased sales of specialty catheters and central
venous catheters. International sales decreased by 0.9% to $43.6 million in the
first quarter of fiscal 2006 from $44.0 million in the comparable prior year
period principally as a result of decreased sales of central venous catheters
primarily attributable to unusually high sales to a major distributor in the
first quarter of fiscal 2005 and the effect of foreign currency exchange rates,
as noted above. International sales represented 38.4% of net sales in the first
quarter of fiscal 2006 compared to 39.0% in the same prior year period.

The ARROWg+ard(R) conversion percentages, which are the number of units sold
with the ARROWg+ard(R) antiseptic surface treatments as a percentage of the
Company's total multilumen and hemodialysis unit sales, was 38% of total Company
sales in each of the first quarters of fiscal 2006 and fiscal 2005. The
ARROWg+ard(R) conversion percentages for the U.S. market increased to 66% in the
first quarter of fiscal 2006 from 64% in the comparable prior year period.

The safety device procedure kits conversion percentages, which are the number of
units sold with the Company's procedure kits featuring its safety devices as a
percentage of the total number of units sold of the Company's products that
could potentially include safety device procedure kits, increased to 9% of total
Company sales in the first quarter of fiscal 2006 from 8% in the comparable
prior year period. The safety device procedure kit conversion percentages for
the U.S. market in the first quarter of fiscal 2006 increased to 18% from 16% in
the comparable prior year period.


                                      (17)
<PAGE>

                            ARROW INTERNATIONAL, INC.


GROSS PROFIT.
Gross profit decreased 0.4% to $56.2 million in the three months ended November
30, 2005 from $56.4 million in the same period of fiscal 2005. As a percentage
of net sales, gross profit decreased to 49.4% during the three months ended
November 30, 2005 from 50.0% in the comparable prior year period. The decrease
in gross margin was due primarily to higher manufacturing costs recognized in
the first quarter of fiscal 2006 associated with short-term inefficiencies, and
the training of new employees in connection with the Company's manufacturing
capital investment program. Comparison with the prior year period was also
affected by lower margins realized in the first quarter of fiscal 2005 on the
sale of inventories of products acquired as part of the Company's purchase of
the net assets of AB Medica, the Company's former Italian distributor, in
September 2004, as further discussed below under "Liquidity and Capital
Resources - Investing Activities".

PRODUCT RECALL.
As previously reported, on December 3, 2004, the Company announced a voluntary
nationwide recall of all of its NEOPICC(R) 1.9 FR Peripherally Inserted Central
Catheters (the "NeoPICC Catheters") as a result of having received several
reports of adverse events involving the utilization of the NeoPICC Catheters.
The NeoPICC Catheter is part of the Company's NEOCare product line of catheters
and related procedure kits for neonatal intensive care that it acquired from
Klein Baker Medical, Inc. in March 2003. The Company cooperated with the FDA in
conducting the voluntary recall. As of January 9, 2006, the Company had not
received any product liability claims in connection with the product recall.

In the first quarter of fiscal 2005, the Company recorded a charge against net
sales of $0.5 million, representing its issued sales credits as of January 7,
2005 and an estimate for those sales credits yet to be issued relating to
returned NeoPICC Catheters. As of November 30, 2005, the Company had issued
sales credits totaling the full $0.5 million and does not anticipate the need to
issue any additional credits.

To address the inspectional observations of the FDA, the Company in January 2005
temporarily ceased the manufacture, shipment and sale of its entire NEOCare
product line, including the NeoPICC Catheters. In addition, the Company moved
its NEOCare manufacturing operations into its existing manufacturing structure
and suspended sales until it implements all corrective actions related to the
FDA'S December 2004 inspections of the Company's facilities in San Antonio,
Texas and Reading, Pennsylvania. Shipments of the NEOCare product line, other
than the NeoPICC Catheters, are presently expected to resume in calendar year
2006. Shipment of the NeoPICC Catheters will resume after receipt of FDA
clearance of a new 510(k) premarket notification for these products, which is
also presently expected to occur in calendar year 2006.

The Company's NEOCare product line sales were $7.6 million for all of fiscal
2004 and were $2.0 million in fiscal 2005 through January 2005, when it
temporarily suspended all NEOCare product sales, as described above. Inventories
of NeoPICC Catheters at November 30, 2005 amounted to $0.3 million, which the
Company fully reserved for as of November 30, 2005. Inventories of other NEOCare
products were approximately $1.4 million at November 30, 2005.

RESEARCH AND DEVELOPMENT.
Research and development expenses decreased by 17.7% to $6.5 million in the
three months ended November 30, 2005 from $7.9 million in the comparable prior
year period. This decrease was due primarily to there being no research and
development spending in the first quarter of fiscal 2006 on the Company's
LionHeartTM Left Ventricular Assist System, or LVAS, as a result of the
Company's Board of Directors' decision during the third quarter of fiscal 2005
to discontinue the development, sales and marketing programs related to its
LionHeart program, whereas there was $2.1 million of LionHeart-related spending
in the first quarter of fiscal 2005. As a percentage of net sales, these
expenses decreased in the first quarter of fiscal 2006 to 5.7% compared to 7.0%
in the same period in fiscal 2005, or 5.2% excluding the fiscal 2005 first
quarter LionHeart related spending.

AUTOCAT(R)2 WAVE. The Company continues to market and make improvements to its
AutoCAT(R)2 WAVETM intra-aortic balloon pump and associated LightWAVE(TM)
catheter system, which utilizes fiber optic pressure-sensing catheter
instrumentation and provides total automation of the pumping process for all
patients, including those with severely arrhythmic heartbeats. This product
continues to generate interest, resulting in increased customer feedback
providing the Company with valuable information for making additional product
enhancements. This customer feedback has enabled the Company to upgrade the
software for this product and implement related hardware changes, which it
believes have increased the overall competitiveness of the device. In the first
quarter of fiscal 2006, the Company released a new upgrade of the software for
this product, which it anticipates will result in increased customer demand for
the device. Development of the AutoCAT(R)2 WAVETM is an ongoing process, with
product improvements constantly being made and introduced as the underlying
technology advances and the Company learns more about customer requirements.

Although the Company is encouraged by the early sales results of its AutoCAT(R)2
WAVETM and related LightWAVE(TM) catheter system, the selling cycle for IAB
pumps is long and involves a number of decision-makers in any given hospital. As
a result, the Company is cautiously optimistic about the time frame for this
product's future sales growth. The Company continues to believe that this new
technology represents a major step forward in IAB pumping and should enable the
Company to gain market share based on superior performance across a range of
cardiac requirements.

CORAIDE(TM) LVAS. During the first quarter of fiscal 2006, the Company continued
its previously reported European clinical trials of the CorAide(TM)LVAS. The
clinical trial results to date have been encouraging, showing that the CorAide
is operating as expected. Since the resumption of the European clinical trials
in February 2005 through the latest implant of the device in December 2005,
there have been no issues with hemolysis, thrombosis or with the performance of
the device itself. In addition, the device has provided patients


                                      (18)
<PAGE>

                            ARROW INTERNATIONAL, INC.


with a much improved quality of life, in many cases allowing them to live at
home. The Company recognizes that while the clinical investigators are pleased
with the performance of the device, these results are relatively preliminary and
the number of patients is small, making it too early in the trial process to
draw definitive conclusions regarding the long-term viability of the device. The
Company plans to continue these clinical trials throughout the remainder of
fiscal year 2006.

The Company views the CorAide(TM) LVAS as a long-term development program. The
current version of the CorAide(TM) device is not fully implantable and is
intended to provide support for patients waiting for heart transplantation or
considered candidates for bridging to natural recovery of ventricular function.
The Company believes that the CorAide(TM)'s smaller size, less invasive surgical
approach and inherently simpler design promises better opportunities for broader
market acceptance than currently marketed LVAS devices.

HEMOSONIC(TM). During the first quarter of fiscal 2006, the Company continued to
support its Hemsonic(TM) cardiac output monitoring system that continuously
measures descending aortic blood flow using a non-invasive esophageal ultrasound
probe. The Company is continuing its development of a second generation version
of the device that will have a more extensive feature set, which the Company
believes will be more user-friendly and better able to meet the needs of a
broader range of clinicians. Market evaluation of the second generation device
is expected to begin in calendar year 2006.

SELLING, GENERAL AND ADMINISTRATIVE.
Selling, general and administrative expenses increased by 13.6% to $32.6 million
during the three months ended November 30, 2005 from $28.7 million in the
comparable prior year period and, as a percentage of net sales, increased to
28.7% in the first quarter of fiscal 2006 from 25.5% in the comparable period of
fiscal 2005. This increase was due primarily to the following factors: (1)
incremental expenses related to the continuation of various special Company-wide
programs, including $0.5 million incurred as a result of the Company's
previously reported Project Operational Excellence program and $0.5 million
related to the Company's review of its internal control over financial reporting
in compliance with Section 404 of the Sarbanes-Oxley Act of 2002; (2) increased
employee-related expenses of $1.0 million, which included personnel additions
and associated relocation costs and placement agency fees and pension costs; (3)
increased expenses of $0.6 million related to the timing of the recognition of
expenses for the Company's annual national sales team meeting in fiscal 2006
versus fiscal 2005; (4) increased expenses of $0.5 million for the cost of
equity-based compensation incurred as a result of the Company's adoption of SFAS
No. 123R in September 2005; and (5) increased expenses of $0.4 million related
to legal costs associated with the Company's continuation of its various patent
infringement lawsuits. These increases were offset in part by decreased expenses
of $0.6 million due to a reduction in the provision for the Company's income
growth incentive bonus plan for its executive officers and key management
employees.

RESTRUCTURING CHARGES.
The Company recorded less than $0.1 million of restructuring expenses in the
first quarter of fiscal 2006 compared to $0.4 million ($0.3 million after tax,
or $0.01 diluted earnings per share) in the first quarter of fiscal 2005. The
restructuring expenses recorded in the first quarter of fiscal 2005 related
primarily to accrued severance payments associated with the Company's
consolidation of operations at its Winston-Salem, North Carolina and San
Antonio, Texas facilities into other existing manufacturing facilities and
severance, lease termination and other costs associated with the relocation of
its European Distribution Center from Weesp, Netherlands to a more centralized
European location in the Limberg region of Belgium. See "-Liquidity and Capital
Resources - Investing Activities - Multi - Year Capital Investment Plan."

OPERATING INCOME.
Principally due to the above factors, operating income decreased in the first
quarter of fiscal 2006 by 11.9% to $17.1 million from $19.4 million in the
comparable prior year period.

OTHER EXPENSES (INCOME), NET.
Other expenses (income), net, was $0.4 million of income in the first quarter of
fiscal 2006 as compared to $0.3 million of income in the same prior year period
due primarily to the Company earning a higher amount of interest in the first
quarter of fiscal 2006 on its investments of cash balances. Other expenses
(income), net, consist principally of interest expense, interest income and
foreign exchange gains and losses associated with the Company's direct sales
subsidiaries.

INCOME BEFORE INCOME TAXES.
As a result of the factors discussed above, income before income taxes decreased
during the first quarter of fiscal 2006 by 11.2% to $17.5 million from $19.7
million in the comparable prior year period. For the first quarter of each of
fiscal 2006 and 2005, the Company's effective income tax rate was 32.5%.

U.S. TAX MATTERS
In October 2004, the President signed The American Jobs Creation Act of 2004
(the "Act"). The Act included some of the most significant changes to corporate
taxation since 1996 and, among other things, eliminates the Extraterritorial
Income Regime (the "ETI") over a three-year phase out period beginning in 2005.
However, the phase out will still allow the Company to obtain a significant
percentage of the ETI benefit for fiscal 2005 and 2006 with a somewhat smaller
benefit for fiscal 2007. The ETI will be totally phased out by the Company's
2008 fiscal year end. Additionally, the Act provides for a deduction for U.S.
domestic manufacturers beginning in the Company's fiscal year 2006. This new
deduction begins at 3% of U.S. domestic manufacturer's income for the Company's
fiscal years 2006 and 2007, increasing to 6% for the Company's fiscal years 2008
to 2010 and achieves its maximum rate of 9% for the Company's fiscal years 2010
and beyond. While the Company is not yet able to make an exact calculation of
the overall effect of these changes, management believes that the phased out
repeal of the ETI benefit during fiscal 2005 and 2006 and the phase in of the
new manufacturing deduction benefit from fiscal 2006 to 2011 should not have a
material adverse effect on the Company's effective tax rate, although it
believes that the net effect will be less of an income tax benefit to the
Company for the remainder of fiscal 2006 and beyond.


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                            ARROW INTERNATIONAL, INC.


CZECH REPUBLIC TAX HOLIDAY.
During the first quarter of fiscal 2006, the Company's effective tax rate
continued to reflect a benefit from a tax holiday in respect of the Company's
Czech Republic operations. This tax holiday is effective through August 2006 and
is limited by the amount of capital permanently invested in the Czech Republic
by way of property, plant and equipment purchased.

NET INCOME.
Net income in the first quarter of fiscal 2006 decreased by 11.3% to $11.8
million from $13.3 million in the comparable fiscal 2005 period. As a percentage
of net sales, net income represented 10.4% in the three months ended November
30, 2005 compared to 11.8% in the same period of fiscal 2005.

PER SHARE INFORMATION.
Basic and diluted earnings per common share were $0.26 in the three months ended
November 30, 2005, down 13.3%, or $0.04 per share, from $0.30 in the comparable
prior year period. Weighted average shares of common stock outstanding used in
computing basic earnings per common share increased to 44,646,397 in the first
quarter of fiscal 2006 from 43,835,821 in the comparable prior year period
primarily a result of additional stock option exercises since November 30, 2004.
Weighted average shares of common stock outstanding used in computing diluted
earnings per common share increased to 45,167,726 in first quarter of fiscal
2006 from 44,526,195 in the comparable prior year period also primarily as a
result of the additional stock option exercises since November 30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES.
CASH FROM OPERATIONS. Arrow's primary source of funds continues to be cash
generated from operations, as shown in the Company's consolidated statements of
cash flows included in Item 1 of this report. For the three months ended
November 30, 2005, net cash provided by operations was $5.2 million, a decrease
of $8.9 million from the comparable prior year period, due to a decrease in net
income, as described above under "Three Months Ended November 30, 2005 compared
to Three Months Ended November 30, 2004", as well as changes in certain working
capital and other accounts, including accrued post-retirement and pension
benefit obligation, inventory, and accrued compensation, as described below.

ACCRUED POST-RETIREMENT AND PENSION BENEFIT OBLIGATION. Accrued post-retirement
benefit and pension obligation decreased $2.7 million in the first quarter of
fiscal 2006 compared to a $0.4 million increase in the first quarter of fiscal
2005 primarily as a result of payments in the first quarter of fiscal 2006
required to fund the Company's post-retirement and pension benefit plans.

INVENTORIES. Inventories increased $4.4 million in the first quarter of fiscal
2006 compared to a $5.0 million increase in the same period of fiscal 2005. The
increase in fiscal 2006 is primarily due to an increase in semi-finished and
finished goods as a result of increased output from the Company's U.S. and Czech
manufacturing facilities attributable to improvements in production technology
implemented as part of the Company's Project Operational Excellence. The Company
expects these increases in manufacturing output to continue as its new
Chihuahua, Mexico manufacturing facility, which began production of multi-lumen
central venous catheters in December 2005 as planned, gradually reaches full
production capacity throughout the remainder of calendar 2006. In addition, the
Company's work-in-process inventory decreased $3.3 million in the first quarter
of fiscal 2006 primarily as a result of the timing of the movement of components
through the Company's manufacturing processes and its continuing efforts to
reduce manufacturing cycle times. The Company's raw material inventory increased
$2.5 million during the first quarter of fiscal 2006 due primarily to the timing
of raw material purchases attributable in part to preparing for the launch of
certain of the Company's new product offerings and strategic raw material buying
designed to help ensure that the Company maintains appropriate levels of
essential components. The increase in fiscal 2005 was primarily due to inventory
acquired in connection with the Company's acquisition of AB Medica during the
first quarter of fiscal 2005, as further discussed below.

ACCRUED COMPENSATION. Accrued compensation decreased $0.5 million in the first
quarter of fiscal 2006 compared to a $1.7 million decrease in the first quarter
of fiscal 2005 due primarily to payment of annual incentive bonuses under the
Company's income growth incentive bonus plan to its executive officers and key
management employees in the first quarter of fiscal 2005 whereas no such bonus
payments were made pursuant to the plan in the first quarter of fiscal 2006.

ACCOUNTS RECEIVABLE. Accounts receivable, measured in days sales outstanding
during the period, was 73 days at both November 30, 2005 and August 31, 2005,
respectively.

As of November 30, 2005, the Company had an accounts receivable balance from its
Italian customers of $8.9 million, of which approximately 75% is related to
Italian Government-backed hospital customers. The Company increased its direct
sales in this region following its acquisition of AB Medica In September 2004.
As of November 30, 2005, the days sales outstanding was currently 243 days,
which is significantly higher than that of the Company's overall November 30,
2005 average customer days sales outstanding of 73 days. However, according to
information provided by Italy's National Health Service as of March 19, 2005,
which represents the most recent data the Company has been able to obtain, the
average days sales outstanding for medical equipment supply companies in the
Italian market ranges from approximately 300 to 330 days, which represents
little change from the range of 285 to 318 days in 1990. The Company's payment
terms in this market are generally 90 days. The Company has concluded that the
Government of Italy typically delays payments to its government-backed
hospitals, which in turn has impacted the Company's overall days sales
outstanding. The Italian Government-backed hospitals have historically paid
customers 100% of their outstanding receivables. As a


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                            ARROW INTERNATIONAL, INC.


result, the Company currently believes that the ultimate collectibility of these
receivables, net of discounts, is not a significant risk. However, because the
Company's assessment of this situation is based in part on political factors
beyond its control, the Company cannot assure that all of these receivables will
be collected or when they will be collected, and will continue to evaluate their
collectibility and establish reserves when and to the extent necessary. As of
November 30, 2005, the Company had recorded an allowance of less than $0.1
million to reserve for specifically identified, potentially uncollectible,
private Italian customer balances.

As of November 30, 2005, the Company had an accounts receivable balance from its
Greek customers of $4.4 million, of which approximately 75% is related to Greek
Government-backed hospital customers. As of November 30, 2005, the days sales
outstanding was 175 days, which is significantly higher than the Company's
overall November 30, 2005 average customer days sales outstanding of 73 days.
The Company's payment terms in this market are generally 45 days. The Company
has concluded that the Government of Greece had been delaying payments to its
government-backed hospitals, which in turn resulted in the Company's abnormally
high days sales outstanding for its receivables from Greek customers. As
previously reported, the Greek Government announced a plan to resume payments on
its trade debt, which allowed its hospitals to repay their outstanding balances
to their vendors. As of December 31, 2005, the Greek Government had made six
such payments, which effectively satisfied its total obligation to its
government-backed hospitals. In addition, Greece has also passed a law requiring
full payment of all outstanding obligations of government-backed hospitals
incurred after December 23, 2004. Therefore, the Company currently believes that
this situation will be satisfactorily resolved and that ultimate collectibility
of these receivables, net of discounts, is not a significant risk. As of
December 31, 2005, the Company had received payment of $4.7 million against its
outstanding receivables from Greek Government-backed hospitals generated prior
to December 24, 2004, of which $4.0 million was received as of November 30,
2005. However, because the Company's assessment of this situation is based in
part on political factors beyond its control, the Company cannot assure that all
of these remaining receivables will be collected or when they will be collected,
and will continue to evaluate their collectibility and establish reserves when
and to the extent necessary. As of November 30, 2005, the Company had recorded
an allowance of $0.4 million to reserve for both specifically identified,
potentially uncollectible, private Greek customer balances, as well as an
estimated amount for the Greek Government's discount on the Company's
outstanding government-backed hospital customer balance.

The Company currently evaluates all of its trade receivables on a regular basis,
including those with its Greek and Italian customers, to ensure that each
receivable is recorded at net realizable value.

INVESTING ACTIVITIES.
Net cash used in the Company's investing activities decreased to $5.9 million in
the three months ended November 30, 2005 from $12.2 million in the comparable
period of fiscal 2005, due primarily to the Company's acquisition, as further
discussed below, of AB Medica in the first quarter of fiscal 2005, and costs
incurred in the first quarter of fiscal 2005 to expand the Company's finished
goods warehouse and distribution center in Asheboro, North Carolina.

ACQUISITION OF AB MEDICA. On September 3, 2004, the Company purchased certain
assets of one of its distributors in Italy, AB Medica S.p.A. ("ABM"), for a
total purchase price of approximately $9.0 million, with additional amounts
payable contingent upon the sales levels of products under sales contracts
purchased by the Company. ABM had been one of the Company's distributors in
Italy since 1982. The asset purchase agreement includes the purchase of customer
lists, distributorship rights, as well as the inventory and specified tender
contracts associated with the sale by ABM of the Company's products. The Company
began selling directly in Italy through its subsidiary, Arrow Italy S.p.A., in
the first quarter of fiscal 2005. As of November 30, 2005, pursuant to the asset
purchase agreement, the Company has paid $8.8 million in cash and recorded a
current liability of $0.2 million for additional payment installments. The
purchase price for this acquisition did not exceed the estimated fair value of
the net assets acquired and, therefore, no goodwill has been recorded by the
Company in connection therewith. Intangible assets acquired of $5.8 million,
consisting of customer lists and distributorship rights, are being amortized
over five years based on the anticipated period over which the Company expects
to benefit form the transaction. Included in the first quarter of fiscal 2005
was a $1.5 million charge to cost of goods sold, or $1.0 million against net
income ($0.02 diluted earnings per share), for the step-up of inventory
purchased from ABM. The results of operations of this business are included in
the Company's consolidated financial statements from the date of acquisition.
The purchase price for this acquisition was allocated as follows:

                (in millions)
                Inventories                        $   3.2
                Intangible assets                      5.8
                                                   -------
                   Total purchase price            $   9.0
                                                   =======

MULTI-YEAR CAPITAL INVESTMENT PLAN. As previously reported, in April 2004 the
Company's Board of Directors authorized the initiation of a multi-year capital
investment plan to increase its worldwide manufacturing capacity and rationalize
its production operations. This plan is being initiated to support projections
for future growth and to integrate operations acquired in recent years. The
first phase of this effort includes the construction or acquisition of
additional manufacturing facilities in Zdar, Czech Republic and Chihuahua,
Mexico, which commenced in the first quarter of fiscal 2005 and is ongoing. In
December 2005, production of multi-lumen central venous catheters began on
schedule and on budget at the new Chihuahua facility. The Company currently
anticipates the total cost of this capacity increase to be between $22.0 million
and $28.0 million over a three-year period. In addition, the Company also
anticipates spending between $13.0 million and $17.0 million over the same
three-year period for equipment related to this expansion of its manufacturing
capacity. As of November 30, 2005, the Company had spent $14.4 million in
connection with this capital investment plan.


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                            ARROW INTERNATIONAL, INC.


As part of its plans to rationalize its operations in the United States, in
August 2004 the Company initiated the consolidation of its operations at its
Winston-Salem, North Carolina and San Antonio, Texas facilities into other
existing manufacturing facilities. The transitional work on this consolidation
is expected to continue into the first half of fiscal 2006. To date, the Company
has accrued costs of $0.9 million in connection with this restructuring,
consisting primarily of severance payments. Additionally, on December 2, 2005,
the Company sold its San Antonio, Texas facility and certain related equipment
and, as a result, will recognize a pre-tax gain of $0.3 million in the second
quarter of fiscal 2006. Severance payments relate to 53 employees primarily in
manufacturing at both facilities. All other restructuring costs are expected to
be paid during the remainder of fiscal 2006.

As part of its plans to rationalize its production operations and related
logistics in Europe, in November 2004 the Company determined to move its
European Distribution Center, previously situated in Weesp, Netherlands, to a
more centralized European location in the Limberg region of Belgium in order to
have better access to existing carrier transportation networks and allow for
more cost-competitive expansion of its European operations in the future. The
Company continued this re-location in the first quarter of fiscal 2006 and
estimates it will incur a total of $1.6 million related to this plan. As of
November 30, 2005, the Company had accrued costs of $1.2 million related to this
re-location, of which $0.7 million had been paid.

PROJECT OPERATIONAL EXCELLENCE. During the first quarter of fiscal 2006, the
Company continued to take additional steps in implementing its Project
Operational Excellence program designed to help it achieve operational process
excellence in four key areas: product quality, safety, customer service and
cost. This program includes (1) as discussed above under "Multi-Year Capital
Investment Plan," restructuring the Company's manufacturing to increase
production capacity and better align its production facilities with the
geographical markets they serve, (2) improving the effectiveness of the
Company's production technology by investing in new, state-of-the-art
manufacturing equipment and processes, and (3) developing and implementing
enhanced good manufacturing practices and quality systems to maintain and
establish process excellence.

In connection with the Company's efforts to enhance its good manufacturing
practices and quality system compliance, it has incurred $0.5 million of outside
consulting costs in the first quarter of fiscal 2006 and anticipates spending an
additional $1.1 million during the remainder of fiscal 2006. The Company
incurred $3.5 million of costs related to this program in fiscal 2005.

FINANCING ACTIVITIES.
Financing activities used $2.3 million of net cash in the three months ended
November 30, 2005 compared to $2.0 million in the same prior year period,
primarily as a result of an increase in dividend payments following the
Company's increase in the amount of its quarterly dividend in the second quarter
of fiscal 2005 and a decrease in proceeds from stock option exercises, offset in
part by the Company's increased borrowing under its U.S. revolving credit
facility.

CREDIT FACILITIES.
To provide additional liquidity and flexibility in funding its operations, the
Company from time to time also borrows amounts under credit facilities and other
external sources of financing. At November 30, 2005, the Company had a revolving
credit facility providing a total of $65.0 million in available revolving credit
for general business purposes, of which $22.7 million was outstanding, all of
which is owed by its foreign subsidiaries. Under this credit facility, the
Company is required to comply with, among others, the following financial
covenants: maintain a ratio of total liabilities to tangible net worth (total
assets less total liabilities and intangible assets) of no more than 1.5 to 1; a
limitation on certain mergers, consolidations and sales of assets by the Company
or its subsidiaries; a limitation on the Company's and its subsidiaries'
incurrence of liens; and a requirement that the lender approve the incurrence of
additional indebtedness unrelated to the revolving credit facility when the
aggregate principal amount of such new additional indebtedness exceeds $75.0
million. At November 30, 2005, the Company was in compliance with all such
covenants. Failure to remain in compliance with these covenants could trigger an
acceleration of the Company's obligation to repay all outstanding borrowings
under this credit facility.

Certain other foreign subsidiaries of the Company had revolving credit
facilities totaling the U.S. dollar equivalent of $30.4 million, of which $4.8
million was outstanding as of November 30, 2005.

Interest rate terms for both U.S. and foreign bank credit facilities are based
on either bids provided by the lender or the prime rate, London Interbank
Offered Rates (LIBOR) or Certificate of Deposit Rates, plus applicable margins.
Certain of these borrowings, primarily those with U.S. banks, are due on demand.
Interest is payable monthly during the revolving credit period. Combined
borrowings under these facilities increased $0.6 million and $1.9 million during
the three months ended November 30, 2005 and November 30, 2004, respectively.

CONTRACTUAL OBLIGATIONS.
A summary of all of the Company's contractual obligations and commercial
commitments as of November 30, 2005 were as follows:

<TABLE>
<CAPTION>
                                                                           PAYMENTS DUE OR COMMITMENT
                                                                              EXPIRATION BY PERIOD
                                                     --------------------------------------------------------------------
           CONTRACTUAL OBLIGATIONS AND                                                                           MORE
              COMMERCIAL COMMITMENTS                                 LESS THAN        1 - 3        3 - 5        THAN 5
                  (IN MILLIONS)                         TOTAL          1 YEAR         YEARS        YEARS         YEARS
--------------------------------------------------   -----------    ------------    ---------    ---------    -----------
<S>                                                       <C>              <C>          <C>          <C>            <C>
Current maturities of long-term debt                      $ 1.0           $ 1.0         $  -         $  -           $  -
Operating leases                                           10.7             3.4          4.1          2.3            0.9
Purchase obligations (1)                                   45.9            45.9            -            -              -
Other long-term obligations                                 0.6             0.1          0.1          0.1            0.3
Lines of credit (2)                                        27.5            27.5            -            -              -
Standby letters of credit                                   2.3             2.3            -            -              -
                                                     -----------    ------------    ---------    ---------    -----------

Total cash contractual obligations and
commercial commitments                                    $88.0           $80.2         $4.2         $2.4           $1.2
                                                     ===========    ============    =========    =========    ===========
</TABLE>

(1)     Includes open purchase orders primarily relating to purchases of raw
        materials, equipment and certain consulting and information system
        services.

(2)     Includes short-term indebtedness of the Company and its subsidiaries
        under various revolving credit facilities, as discussed above.


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                            ARROW INTERNATIONAL, INC.


OUTLOOK.
--------
Based upon its present plans, the Company believes that cash generated from its
operations and available credit resources, including its ability to extend
maturities of borrowings outstanding under its lines of credit in the ordinary
course consistent with past practice, will be adequate to repay current portions
of long-term debt, to finance currently planned capital expenditures, including
those pursuant to the Company's multi-year capital investment plan and other
initiatives related to its Project Operational Excellence, as discussed above,
and to meet the currently foreseeable liquidity needs of the Company.

During the periods discussed above, the overall effects of inflation and
seasonality on the Company's business were not significant.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company has disclosed in Note 1 to its consolidated financial statements in
its Annual Report on Form 10-K for the fiscal year ended August 31, 2005 those
accounting policies that it considers to be significant in determining its
results of operations and financial position. Other than the Company's
compliance with the new accounting requirements of SFAS No. 123R, as described
below under "-New Accounting Standards," there have been no material changes to
the critical accounting policies previously identified and described in the
Company's 2005 Form 10-K. The accounting principles utilized by the Company in
preparing its consolidated financial statements conform in all material respects
to generally accepted accounting principles in the United States of America.

The preparation of these consolidated financial statements requires the
Company's management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses, as well as the disclosure
of contingent assets and liabilities at the date of its financial statements.
The Company bases its estimates on historical experience, actuarial valuations
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Some of those judgments can be subjective and complex and,
consequently, actual results may differ from these estimates under different
assumptions or conditions. While for any given estimate or assumption made by
the Company's management there may be other estimates or assumptions that are
reasonable, the Company believes that, given the current facts and
circumstances, it is unlikely that applying any such other reasonable estimate
or assumption would materially impact the financial statements.

NEW ACCOUNTING STANDARDS

The FASB issued SFAS No. 151, "Inventory Costs, an Amendment of Accounting
Research Bulletin (ARB) No. 43, Chapter 4", in November 2004. This statement
amends the guidance in ARB No. 43 Chapter 4 "Inventory Pricing" to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs and wasted material. SFAS No. 151 requires that those items be recognized
as current period charges regardless of whether they meet the criterion of "so
abnormal." In addition, this statement requires that allocation of fixed
production overheads to the costs of conversion be based on the normal capacity
of the production facilities. The Company has adopted the provisions of SFAS No.
151 effective September 1, 2005. The impact of this statement on the Company's
financial statements was not material to its results of operations.

The FASB issued "Share-Based Payment, an Amendment of SFAS No. 123 and 95", in
December 2004. This statement requires that the cost of all forms of
equity-based compensation granted to employees, excluding employee stock
ownership plans, be recognized in a company's income statement and that such
cost be measured at the fair value of the stock options. This statement replaces
the guidance in SFAS No. 123, Accounting for Stock-Based Compensation, and APB
No. 25, Accounting for Stock Issued to Employees. In addition, the SEC issued
SAB No. 107 "Share Based Payment" in March 2005, which provides supplemental
SFAS No. 123R guidance based on the views of the SEC. The Company adopted the
provisions of SFAS No. 123R effective September 1, 2005 using the modified
prospective method. The adoption of this statement resulted in a charge of $0.7
million to income from continuing operations and income before income taxes, of
which $0.1 million was recorded to cost of sales, $0.1 million to research and
development, and $0.5 million to selling, general and administrative expenses.
The adoption of SFAS 123R resulted in a charge to net income of $0.6 million, or
$0.01 basic and diluted earnings per share, in the first quarter of fiscal 2006.
The tax benefit from this stock option expense is less than the statutory tax
benefit because the Company cannot recognize the tax benefit on future
disqualifying dispositions of incentive stock options until such time as these
dispositions occur.


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                            ARROW INTERNATIONAL, INC.


CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements contained in this report or in other written or oral
statements made from time to time by the Company may contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934. Such statements may use words such as
"anticipate," "estimate," "expect," "believe," "may," "intend" and similar words
or terms. Although the Company believes that the expectations in such
forward-looking statements are reasonable, the Company cannot assure you that
such expectations will prove to have been correct. The forward-looking
statements are based upon a number of assumptions and estimates that, while
presented with specificity and considered reasonable by the Company, are
inherently subject to significant business, economic and competitive risks,
uncertainties and contingencies which are beyond the control of the Company, and
upon assumptions with respect to future business decisions which are subject to
change. Accordingly, the forward-looking statements are only an estimate, and
actual results will vary from the forward-looking statements, and these
variations may be material. The Company is not obligated to update any
forward-looking statement, but investors are urged to consult any further
disclosures the Company makes in the Company's filings with the SEC.
Consequently, the inclusion of the forward-looking statements should not be
regarded as a representation by the Company of results that actually will be
achieved. Forward-looking statements are necessarily speculative in nature, and
it is usually the case that one or more of the assumptions in the
forward-looking statements do not materialize. Investors are cautioned not to
place undue reliance on the forward-looking statements. The Company cautions
investors that the factors set forth below, which are described in further
detail in Item 1. Business - "Certain Risks Relating to Arrow" in the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2005 and in its
other filings with the SEC, could cause the Company's results to differ
materially from those stated in the forward-looking statements. These factors
include: (1) stringent regulation of the Company's products by the U.S. Food and
Drug Administration and, in some jurisdictions, by state, local and foreign
governmental authorities; (2) the highly competitive market for medical devices
and the rapid pace of product development and technological change in this
market; (3) pressures imposed by the health care industry to reduce the cost or
usage of medical products and services; (4) dependence on patents and
proprietary rights to protect the Company's trade secrets and technology, and
the need for litigation to enforce or defend these rights; (5) risks associated
with the Company's international operations; (6) potential product liability
risks inherent in the design, manufacture and marketing of medical devices; (7)
risks associated with the Company's use of derivative financial instruments; and
(8) dependence on the continued service of key members of the Company's
management.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

Financial Instruments:

During the three month periods ended November 30, 2005 and 2004, the percentage
of the Company's sales invoiced in currencies other than U.S. dollars was 26.5%
and 24.7%, respectively. In addition, a part of the Company's cost of goods sold
is denominated in foreign currencies. The Company enters into foreign currency
forward contracts and foreign currency option contracts, which are derivative
financial instruments, with major financial institutions to reduce the effect of
these foreign currency risk exposures, primarily on U.S. dollar cash inflows
resulting from the collection of intercompany receivables denominated in foreign
currencies and to hedge anticipated sales in foreign currencies to foreign
subsidiaries. Such transactions occur throughout the year and are probable, but
not firmly committed. Foreign currency forward contracts are marked to market
each accounting period, and the resulting gains or losses on these contracts are
recorded in Other (Income) / Expense of the Company's consolidated statements of
income. Gains and losses on these contracts are offset by changes in the U.S.
dollar value of the foreign currency denominated assets, liabilities and
transactions being hedged. The premiums paid on the foreign currency option
contracts are recorded as assets and amortized over the life of the option.
Other than the risk associated with the financial condition of the
counterparties, the Company's maximum exposure related to foreign currency
options is limited to the premiums paid. The total premiums authorized to be
paid in any fiscal year cannot exceed $1.0 million pursuant to the terms of the
Foreign Currency Management Policy Statement approved by the Company's Board of
Directors in fiscal 2001. Gains and losses on purchased option contracts result
from changes in intrinsic or time value. Both time value and intrinsic value
gains and losses are recorded in shareholders' equity (as a component of
comprehensive income) until the period in which the underlying sale by the
foreign subsidiary to an unrelated third party is recognized, at which point
those deferred gains and losses are recognized in net sales. 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 foreign currency 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 speculative purposes. The Company expects to continue
to utilize foreign currency forward contracts to manage its exposure, although
there can be no assurance that the Company's efforts in this regard will be
successful. As of November 30, 2005, outstanding foreign currency forward
contracts totaling the U.S. dollar equivalent of $20.8 million mature at various
dates through April 2006. As of November 30, 2005, the Company had no foreign
currency option contracts outstanding. The Company expects to continue to
utilize foreign currency forward contracts and foreign currency option contracts
to manage its exposure, although there can be no assurance that the Company's
efforts in this regard will be successful.

The Company's exposure to credit risk consists principally of trade receivables.
Hospitals and international dealers account for a substantial portion of trade
receivables and collateral is generally not required. The Company believes its
risk associated with this concentration is limited due to its on-going credit
review procedures.


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<PAGE>

                            ARROW INTERNATIONAL, INC.


At November 30, 2005, the Company had foreign currency forward contracts to sell
foreign currencies which mature at various dates through February 2006. The
following table identifies foreign currency forward contracts to sell foreign
currencies at November 30, 2005 and August 31, 2005:

<TABLE>
<CAPTION>
                                                      November 30, 2005                         August 31, 2005
                                                Notional          Fair Market             Notional          Fair Market
                                                Amounts              Value                Amounts              Value
                                            ---------------    -------------------    ----------------   ------------------
<S>                                         <C>                <C>                    <C>                <C>
    Foreign currency: (U.S. Dollar Equivalents)
    Japanese yen                            $        1,252     $            1,256     $           672    $             680
    Canadian dollar                                    600                    601                 584                  590
    Euro                                            10,022                 10,052              11,322               11,424
    Mexican peso                                       947                    937                 905                  912
    African rand                                       464                    462                 444                  470
                                            ---------------    -------------------    ----------------   ------------------
                                            $       13,285     $           13,308     $        13,927    $          14,076
                                            ===============    ===================    ================   ==================
</TABLE>

At November 30, 2005, the Company also had foreign currency forward contracts to
buy foreign currencies which mature at various dates through April 2006. The
following table identifies forward exchange contracts to buy foreign currencies
at November 30, 2005 and August 31, 2005:

<TABLE>
<CAPTION>
                                                      November 30, 2005                         August 31, 2005
                                                Notional          Fair Market             Notional          Fair Market
                                                Amounts              Value                Amounts              Value
                                            ---------------    -------------------    ----------------   ------------------
<S>                                         <C>                <C>                    <C>                <C>
    Foreign currency: (U.S. Dollar Equivalents)
    Czech koruna                            $        7,535     $            7,567     $         2,666    $           2,727
</TABLE>

From time to time, the Company purchases foreign currency option contracts to
hedge anticipated sales in foreign currencies to foreign subsidiaries. The
option premiums paid are recorded as assets and amortized over the life of the
option. Other than the risk associated with the financial condition of the
counterparties, the Company's maximum exposure related to foreign currency
options is limited to the premiums paid. During the three months ended November
30, 2005 and 2004, the Company did not recognize any time value or intrinsic
value losses against net sales. At November 30, 2005, the Company did not have
any unrealized holding losses related to these foreign currency option
contracts. The Company had no foreign currency option contracts outstanding at
November 30, 2005 and August 31, 2005.


Item 4.  Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of
the Company's management, including its Chief Executive Officer, or CEO, and its
Chief Financial Officer, or CFO, of the effectiveness of the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) as of November 30, 2005. Based on that evaluation, the Company's
management, including its CEO and CFO, have concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports that the Company files or submits under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and is
accumulated and communicated to the Company's management, including its CEO and
CFO, to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in the Company's internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred
during the three months ended November 30, 2005 that have materially affected,
or are reasonably likely to materially affect, the Company's internal control
over financial reporting.


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<PAGE>

                            ARROW INTERNATIONAL, INC.


PART II  OTHER INFORMATION


Item 6.  Exhibits

        (a)     Exhibits

                See Exhibit Index on page 28 for a list of the Exhibits filed or
                furnished as part of this report.




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<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.



Date: January 9, 2006                   By: /s/ Frederick J. Hirt
                                            ---------------------
                                            Frederick J. Hirt
                                            Chief Financial Officer and
                                            Senior Vice President of Finance
                                            (Principal Financial Officer and
                                            Chief Accounting Officer)




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<PAGE>

                                  EXHIBIT INDEX


EXHIBIT    DESCRIPTION
NUMBER     OF EXHIBIT                                         METHOD OF FILING
------     ----------                                         ----------------

10.1       Amendment No. 2005-1 to the Arrow                  Filed herewith
           International, Inc. 401(k) Plan

10.2       Amendment No. 2005-1 to the Retirement Plan        Filed herewith
           for Salaried Employees of the Company

10.3       Amendment No. 2005-1 to the Retirement Plan        Filed herewith
           for Hourly-Rate Employees of the Wyomissing
           Plant of the Company

10.4       Amendment No. 2005-1 to the Retirement Plan        Filed herewith
           for Hourly-Rate Employees of the North
           Carolina and New Jersey Plants of the Company

31.1       Rule 13a-14(a)/15d-14(a) Certification of the      Furnished herewith
           Chief Executive Officer

31.2       Rule 13a-14(a)/15d-14(a) Certification of the      Furnished herewith
           Chief Financial Officer

32.1       Section 1350 Certification of the Chief            Furnished herewith
           Executive Officer

32.2       Section 1350 Certification of the Chief            Furnished herewith
           Financial Officer




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