INTERNATIONAL YOGURT COMPANY
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
Meeting Date:
April 9, 1997
<PAGE>
INTERNATIONAL YOGURT COMPANY
5858 N.E. 87th Avenue
Portland, Oregon 97220
Dear Shareholder:
You are cordially invited to attend International Yogurt Company's
Annual Meeting of Shareholders. The meeting will be held:
Wednesday, April 9, 1997, 10:00 a.m.
in the "Rose Room"
(located on the "Preferred Level")
Rose Garden Arena
One Center Court
Portland, Oregon 97227
The Notice of Annual Meeting of Shareholders, Proxy Statement and Proxy
for International Yogurt Company follow. Even if you plan to attend the
Annual Meeting in person, it is important that you return the enclosed Proxy
to ensure that every shareholder's shares are voted at the meeting. Please
mark, date, sign, and return your Proxy promptly in the enclosed postage-paid
return envelope.
The directors, officers, and employees of International Yogurt Company
look forward to seeing you at the Annual Meeting.
Sincerely,
John N. Hanna
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE>
INTERNATIONAL YOGURT COMPANY
5858 N.E. 87th Avenue
Portland, Oregon 97220
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, APRIL 9, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of International Yogurt Company (the "Company") will be held in
the "Rose Room" (located on the "Preferred Level") at the Rose Garden Arena,
One Center Court, Portland, Oregon, at 10:00 a.m., Pacific Time, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
1. To elect five directors for the ensuing year and until the next
Annual Meeting of Shareholders or until their successors are duly
elected and qualified;
2. To transact such other business as may properly come before the
meeting.
Holders of record of common stock of the Company at the close of business on
February 28, 1997 are entitled to notice of, and to vote at, the Meeting or
any adjournment or adjournments thereof.
By order of the Board of Directors
John N. Hanna
Chairman of the Board of Directors
and Chief Executive Officer
Portland, Oregon
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN
THE ATTACHED PROXY USING THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE
REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF.
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<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF INTERNATIONAL YOGURT COMPANY
April 9, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Shareholders of International
Yogurt Company (the "Company"), to be held in the "Rose Room" (located on the
"Preferred Level") at the Rose Garden Arena, One Center Court, Portland,
Oregon, Wednesday, April 9, 1997, at 10:00 a.m. Pacific Time (the "Meeting").
Proxies in the form enclosed are solicited by the Board of Directors.
Execution of the proxy will not in any way affect a shareholder's right to
attend the Meeting and vote in person, and shareholders giving proxies may
revoke them at any time before they are exercised by submitting (i) a written
revocation prior to commencement of the Meeting to the Secretary of the
Company at 5858 N.E. 87th Avenue, Portland, Oregon 97220 or at the Meeting,
or (ii) a duly executed proxy bearing a later date prior to commencement of
the Meeting with the Secretary of the Company at 5858 N.E. 87th Avenue,
Portland, Oregon 97220 or at the Meeting. Proxies in the form enclosed,
unless previously revoked, will be voted at the Meeting as set forth herein
and in the proxies.
Only the holders of common stock are entitled to vote at the Meeting.
At the close of business on February 28, 1997, the record date, there were
2,233,793 shares of common stock issued and outstanding (the "Common Stock").
These shares are entitled to be voted by the holders thereof on each proposal
submitted to a vote at the Meeting.
The entire cost of solicitation of proxies will be borne by the Company,
including expenses incurred by banks, brokers, and other nominees in
forwarding soliciting materials to their principals and obtaining
authorization for the execution of proxies. Proxies may also be solicited
personally or by telephone or telegraph by directors, officers and other
employees of the Company, but such persons will not be specifically
compensated for this service.
ELECTION OF DIRECTORS
(Notice Item 1)
Solicitation of proxies will be by the Board of Directors. It is
intended that votes will be cast pursuant to the enclosed proxy for the
persons listed below to serve as directors, unless authority to do so is
withheld. The number of directors of the Company is presently set at five
members.
Shares voted at the Meeting may be voted for only up to five nominees
for director. The Company's Articles of Incorporation and Bylaws do not
provide for cumulative voting. The accompanying proxy, when properly
executed and returned to the Company will be voted for the five nominees,
unless authority to vote is withheld for a nominee or all the nominees. If
any of the nominees herein shall unexpectedly become unavailable for
election, the proxies will be voted for a substitute proposed by the Board of
Directors. Directors will be elected by a plurality of the shares, voting in
person or by proxy, at the Meeting.
All of the nominees are currently members of the Board of Directors
whose present terms of office will expire at the Meeting. The nominees, if
elected, will hold office until the next Annual Meeting of Shareholders or
until their duly qualified successors are elected.
The following table shows as to each nominee for Director, the
identified information as of February 28, 1997.
Position held with Company
and Principal Occupation Director
Name Age During Past Five Years Since
John N. Hanna 56 Director; Chairman of the Board of 1977
Directors; Chief Executive Officer
David J. Hanna 61 Director; President 1977
James S. Hanna 63 Director; Secretary 1977
William J. Rush 62 Director; Partner in Rush, Hannula 1987
& Harkins, Attorney at Law (1)
Carl G. Behnke 51 Director; President R.E.B. Enterprises; 1994
Chairman of the Board of Skinner
Corporation
(1) The Company has from time-to-time retained Mr. Rush's law firm to
perform certain legal services and may do so from time-to-time in the future.
<PAGE>
The Company's Board of Directors has established a Compensation
Committee consisting of two non-employee directors, James S. Hanna, and
William J. Rush, and an Audit Committee comprised of all Board members.
During the year ended October 31, 1996, the Board of Directors held
nine regularly scheduled and special meetings. All directors attended at
least 75 percent of the meetings and committee meetings they were eligible to
attend.
Compensation of Directors.
Directors of the Company do not receive any cash compensation for
serving on the Company's Board of Directors or for attending meetings of the
Board of Directors or any committee of the Board of Directors. However, each
director of the Company, except for those directors who are employees of the
Company, is on October 16th of each year automatically granted a stock option
under the 1990 Non-Discretionary Stock Option Plan for Non-Employee Directors
(the "1990 Directors Plan"). Each stock option granted under the 1990
Directors Plan is for 5,000 shares of the Company's Common Stock and is
exercisable at any time within a five year period at an exercise price equal
to the average between the closing bid and asked prices of the Company's
Common Stock on the date of the grant.
MANAGEMENT
The following table identifies the executive officers of the Company.
Position(s) with the Company and Principal
Occupation for the Past Five Years
Name of Individual Age
John N. Hanna 56 Director; Chairman of the Board of
Directors; Chief Executive Officer
David J. Hanna 61 Director; President
W. Douglas Caudell 53 Chief Financial Officer since April 1996;
1994 to 1996 independent contract
controller; 1992 to 1994 Controller with
Market Transport, Ltd.
Executive Officers serve at the discretion of the Board of Directors.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid or to be paid by the Company during the years ended
October 31, 1996, 1995 and 1994 to John Hanna, the Company's Chief
Executive Officer. None of the Company's other directors or executive
officers received salaries and bonuses in excess of $100,000 in the year
ended October 31, 1996.
Summary Compensation Table
Annual Compensation
Other Annual
Name and Principal Restricted
Position__________ Year Salary (1) Bonus Compensation
Compensation(3)
JOHN N. HANNA 1996 $ 99,825 N/A N/A
Chairman and Chief 1995 $ 99,825 N/A N/A
Executive Officer 1994 $ 99,825 N/A (2) N/A
Long-Term Compensation
Awards Payout
Name and Principal Option LTIP All Other
Position__________ Year Stock /SAR Payout
Compensation(3)
JOHN N. HANNA 1996 N/A N/A $1,497
Chairman and Chief 1995 N/A N/A $1,583
Executive Officer 1994 N/A N/A $1,497
________________________________
(1) Includes salary and amounts contributed by the identified executive
officer to the Company's 401(k) Employee Savings Plan and Trust.
(2) Perquisites and other personal benefits, if any, did not exceed the
lesser of $50,000 or 10 percent of total annual salary and bonus for
the named executive officer for any of the periods indicated.
(3) The Company's 401(k) Employee Savings Plan and Trust allows for
contributions by the Company for the benefit of employees including
the named executive officer. During the years ended October 31,
1996, October 31, 1995 and October 31, 1994, the Company made
contributions into the 401(k) Employee Savings Plan and Trust equal
to 1.5 percent of the compensation paid to the named executive
officer and all other eligible employees. Does not include the
premium paid by the Company on term life insurance for the benefit
of the named executive officer under a group life policy for all
salaried employees of the Company.<PAGE>
401(k) Plan.
The Company has a 401(k) Employee Savings Plan and Trust ("401(k)
Plan"). The 401(k) Plan is administered by an administrative committee
appointed by the Board of Directors. The trustees for the 401(k) Plan are
John N. Hanna, David J. Hanna and Roger H. Olson and the custodian for the
401(k) Plan is Massachusetts Mutual, which receives all contributions from
employees and any contributions by the Company. All employees, including all
executive officers, are eligible to participate in the 401(k) Plan after
completion of one year of service. Employees may choose to contribute on a
pre-tax basis up to five percent of their compensation, subject to certain
limitations. The 401(k) Plan allows for the Company to make contributions to
the plan on behalf of employees and in each of the last three years the
Company has made a contribution equal to 1.5 percent of the compensation paid
to eligible employees.
<PAGE>
Report of the Compensation Committee on Executive Compensation
The Company's Board of Directors has established a Compensation
Committee consisting of two non-employee directors. The Compensation
Committee is responsible for establishing and administering the policies of
the Board with respect to the annual compensation of the Company's Chief
Executive Officer and other executive officers. The Compensation Committee
is also responsible for administering the 1987 Restated Non-Qualified
Employee Stock Option Plan and the 1994 Combined Incentive and Non-Qualified
Stock Option Plan, including determination of the timing and amount of stock
option grants under those plans.
In February of each year the Compensation Committee receives the
recommendations of the Company's Chief Executive Officer as to the salaries
and other benefits of the Company's Executive officers for the coming year by
the Compensation Committee. These recommendations are then considered and
acted upon by the Compensation Committee taking into account the following
objectives:
* Reward successes in resolving critical issues in the development of
new markets for the Company's products.
* Preservation of cash resources to fund operations and new product
development.
* Increase the profitability of the Company, and, accordingly,
increase shareholder value.
* Align the interests of management with those of the Company's
shareholders through equity based incentive compensation.
The Compensation Committee also considers the cash compensation and other
benefits paid to executive officers with similar responsibilities by other
companies in the same industry and by other publicly held companies of
similar size. It is perceived by the Compensation Committee that the cash
compensation paid by the Company to its executive officers, including its
Chief Executive Officer, are significantly below the cash compensation paid
by other similar companies. However, the Company continues to need to
utilize its available cash resources to finance operations and new product
development and, as a result, salaries paid to executive officers have only
been increased modestly.
In order to supplement the cash compensation paid to executive
officers, the Compensation Committee has from time-to-time granted them stock
options under the 1987 Restated Non-Qualified Employee Stock Option Plan.
These stock options have all been granted with exercise prices equal to the
then market value of the Company's Common Stock and thus they provide the
executive officers and the other employees with long-term incentives directly
tied to the enhancement of shareholder values by allowing them to share in
the appreciation of the market value of Company's Common Stock.
During 1997, the Compensation Committee will continue to carefully
consider executive compensation in relation to the Company's performance and
the opportunities and challenges which the Company faces.
COMPENSATION COMMITTEE
James S. Hanna
William J. Rush
Compensation Committee Interlocks and Insider Participation in Compensation
Committee
James S. Hanna is the brother of John N. Hanna and David J. Hanna
and, together with John N. Hanna and David J. Hanna is a member of the Pente
Investments LLC which leases the Company's principal place of business to the
Company (see "TRANSACTIONS WITH AFFILIATES AND MANAGEMENT"). William J. Rush
is a partner in the Tacoma, Washington law firm of Rush, Hannula & Harkins
which has on occasion provided legal services to the Company. During the
year ended October 31, 1996, the Company did not pay any legal fees to that
firm. No other relationships exist between the members of the Compensation
Committee and the Company's executive officers.
Stock Option Grants and Exercises During Latest Fiscal Year.
The following table sets forth information as to the stock options
granted by the Company during the year ended October 31, 1996 to John N.
Hanna, the Company's Chief Executive Officer. All of the stock options were
granted under the Company's 1994 Combined Incentive and Non-Qualified Stock
Option Plan (the "1994 Stock Option Plan"). Grants of stock options under
the Stock Option Plan are made and the Stock Option Plan is administered by
the Company's Compensation Committee.
Option Grants in Last Fiscal Year
Percent Potential
of Total Realizable Value at
Options Assumed Annual Rates of
Granted to Stock Price
Employees in Appreciation of
Fiscal Year Option Term
Exercise
Options Price per Expiration (1)
Name Granted Per Share(2) Date 5% 10%
John N. Hanna 7,000 17.0% $1.75 03/15/01 $3,384 $7,479
_______________________
(1) The potential realizable value portion of the foregoing table
illustrates values that might be realized upon exercise of the options
immediately prior to the expiration of their term based upon the assumed
annual compounded rates of appreciation in the value of the Company's Common
Stock as specified in the table over the term of the options. These numbers
are not discounted to their present value and do not take into account
provisions of the stock options providing for termination of the option
following termination of employment and the nontransferability of the stock
options.
(2) Each of the stock options were granted at 100% of the fair market
value of the Company's Common Stock on the date of the stock option grant
based upon the average between the closing bid and asked prices on that date.
The option exercise price may be paid in cash, by surrender for cancellation
of shares of Common Stock owned by the executive officer or in any other form
of valid consideration or a combination of any of the foregoing as determined
by the Compensation Committee in its discretion.
Stock Option Exercises and Year-End Stock Option Values.
The following table sets forth information as to the value of all
stock options held by John N. Hanna, the Company's Chief Executive Officer,
as of October 31, 1996. These stock options were granted under the Company's
1987 Restated Non-Qualified Employee Stock Option Plan and the 1994 Stock
Option Plan. There were no stock options exercised by John N. Hanna during
the year ended October 31, 1996.
Stock Option Exercises in Last Fiscal Year
and Fiscal Year-End Stock Option Values
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired FY-End FY-End
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable(1)
JOHN N. HANNA -0- -0- 60,500/0 $20,650/$0
(1) On October 31, 1996, the closing price of the Company's Common Stock
was $2.94. For purposes of the foregoing table, stock options with an
exercise price less than this amount are considered to be "in-the-money" and
are considered to have a value equal to the difference between this amount
and the exercise price of the stock option multiplied by the number of
shares covered by the stock option. Stock options issued under the 1987
Restated Non-Qualified Employee Stock Option Plan and the 1994 Stock Option
Plan were "in-the-money" on that date.
Stock Performance Chart
The following chart compares the yearly percentage change in the
cumulative shareholder return on the Company's Common Stock during the five
fiscal years ended October 31, 1996 with the cumulate total return on (i) the
Russell 2000 Index and (ii) the Standard & Poors Food Products Index. This
comparison assumes $100.00 was invested on October 31, 1991 in the Company's
Common Stock and of the comparison groups and assumes the reinvestment of all
cash dividends prior to any tax effect and the retention of all stock
dividends.
<PAGE>
TRANSACTIONS WITH AFFILIATES AND MANAGEMENT
The Company, from time-to-time, has retained the services of Rush,
Hannula & Harkins, a law firm in which William J. Rush, a director of the
Company, is a partner. During the year ended October 31, 1996, the Company
did not pay any legal fees to that law firm.
COMPLIANCE WITH SECTION 16 FILING REQUIREMENTS
Section 16 of the Securities Exchange Act of 1934, as amended,
("Section 16") requires that all executive officers and directors of the
Company and all persons who beneficially own more than 10 percent of the
Company's Common Stock file and initial report of their ownership of the
Company's securities on Form 3 and report changes in their ownership of the
Company's securities on Form 4 or Form 5. These filings must be made with
the Securities and Exchange Commission and the National Association of
Securities Dealers with a copy sent to the Company.
Based solely upon the Company's review of the copies of the filings
which it received with respect to the fiscal year ended October 31, 1996, the
Company believes that all reporting persons made all filings required by
Section 16 on a timely basis.
<PAGE>
STOCK OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of each director, each nominee for director, all executive officers
and directors as a group, and persons, according to information received by
the Board of Directors, holding more than five percent of the outstanding
Common Stock of the Company as of February 28, 1997.
Executive Officers and Directors
Shares Percent
Name and Address Owned (1) of Class
John N. Hanna 333,839 (2) 14.55
5858 N.E. 87th
Portland, Oregon 97220
David J. Hanna 327,782 (3) 14.29
5858 N.E. 87th
Portland, Oregon 97220
James S. Hanna 257,180 (4) 11.38
729 N. Stadium Way
Tacoma, Washington 98403
William J. Rush 141,508 (5) 6.26
715 Tacoma Ave. S.
Tacoma, Washington 9840
Carl G. Behnke 32,500 (6) 1.44
1301 Fifth Avenue
Seattle, WA 98101
All Executive Officers and 1,092,809 (2)-(6) 44.97
Directors as a Group (5 persons)
(footnotes on following page)
<PAGE>
___________________
(1) Unless indicated otherwise, each person or entity separately
possesses sole voting and sole investment power over his or its
respective shares. There are no arrangements, known to the
Company, including any pledge by any person or securities of the
Company the operation of which may at a subsequent date result in a
change of ownership of such stock or in control of the Company.
(2) Includes 60,500 shares issuable on exercise of outstanding options
granted under the 1987 Employee Plan and the 1994 plan. Does not
include shares of common stock or shares issuable on exercise of
options held by adult children of John Hanna. Includes 2,000 shares
held by Pente Investments LLC in which John Hanna is one of five
members.
(3) Includes 60,500 shares issuable on exercise of outstanding options
granted under the 1987 Employee Plan and the 1994 plan. Does not
include 8,000 shares of Common Stock issuable to Francis Hanna,
David J. Hanna's wife, on exercise of outstanding stock options
granted under the 1987 Employee Plan. David J. Hanna disclaims
beneficial ownership of those shares.
(4) Includes 25,000 shares issuable on exercise of outstanding options
granted under the 1990 Directors Plan. Does not include 8,915
shares of common stock held by James S. Hanna's wife nor shares of
common stock held by two adult children of James S. Hanna.
James S. Hanna disclaims beneficial ownership of those shares.
(5) Includes 25,000 shares issuable upon exercise of options granted
pursuant to the 1990 Director Plan.
(6) Includes 25,000 shares issuable upon exercise of options granted
pursuant to the 1990 Director Plan.
OTHER MATTERS
(Notice Item 2)
The Board of Directors is not aware of any matters to be presented
for action at the Meeting other than those set forth in the Notice of Annual
Meeting. However, if any other matters properly come before the Meeting or
any adjournment thereof, the person or persons voting the proxies will vote
them in accordance with their best judgment.
INDEPENDENT AUDITORS
The Board of Directors has designated Grant Thornton LLP,
independent certified public accountants, as auditors for the Company for the
year ended October 31, 1997.
The audit services performed by Grant Thornton LLP during 1996
included an audit of annual financial statements, assistance and consultation
in connection with filings with the Securities and Exchange Commission and
audit related accounting matters.
A representative of Grant Thornton LLP is expected to be at the
annual meeting and answer questions.<PAGE>
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<PAGE>
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to have considered for
inclusion in the Company's proxy solicitation materials for the 1998 Annual
Meeting of Shareholders ("Annual Meeting") must be received at the main
office of the Company no later than 120 days prior to the mailing of proxy
materials to shareholders in connection with that Annual Meeting. That
deadline for receipt of proposals is currently estimated to be September 30,
1997. If such proposal is in compliance with all of the requirements of the
Company's Restated Articles of Incorporation, and of Rule 14a-8 promulgated
under the Securities Exchange Act of 1934, it will be included in the Proxy
Statement and set forth on the form of proxy issued for the next Annual
Meeting of Shareholders. It is urged that any such proposals be sent by
certified mail, return receipt requested.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Shareholders for the year
ended October 31, 1996, accompanies this Proxy Statement. Additional copies
of the Company's Annual Report to shareholders may be obtained by written
request to the Secretary of the Company at the address indicated below. Such
Annual Report is not part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
shareholder without charge a copy of the Company's Annual Report on Form 10-K
for the year ended October 31, 1996, and the list of exhibits thereto
required to be filed with the Securities and Exchange Commission. Such
written request should be directed to James S. Hanna, Secretary,
International Yogurt Company, 5858 N.E. 87th Avenue, Portland, Oregon 97220.
The Form 10-K Annual Report is not part of the proxy solicitation materials.
By order of the Board of Directors,
John N. Hanna
Chairman of the Board of Directors
and Chief Executive Officer
DATED: February 28, 1997
NOTE: Please send in your Proxy immediately, using the enclosed postage paid
envelope.
<PAGE>
REVOCABLE PROXY
FOR INTERNATIONAL YOGURT COMPANY
ANNUAL MEETING OF SHAREHOLDERS
April 9, 1997
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints John N. Hanna, David J. Hanna, James
S. Hanna, and each of them, proxies with power of substitution to vote on
behalf of the undersigned all shares of common stock of International Yogurt
Company (the "Company") at the Annual Meeting to be held on April 9, 1997 and
any adjournments thereof, with all powers the undersigned would possess if
personally present, with respect to the following:
1. Election of directors. [ ] FOR all nominees [ ] WITHHOLD
listed below (except AUTHORITY to
as marked to the vote for all
contrary below) nominees
listed below
(INSTRUCTION: To withhold authority to vote for any individual, strike a
line through the nominee's name below.)
John N. Hanna, David J. Hanna, James S. Hanna, William J. Rush, and
Carl G. Behnke.
2. Other Matters. At the discretion of the proxy holders on such other
business as may properly come before the meeting and any adjournments
thereof. A majority of the proxy holders present at the Annual Meeting may
exercise all powers granted hereby.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE, BUT IF
NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES AND FOR ALL PROPOSALS LISTED ABOVE. The proxy holders may vote in
their discretion as to other matters which may come before the meeting.
Dated: , 1997
[Attach Label Here]
Please date and sign exactly as name is imprinted hereon, including
designation as executor, trustee, etc., if applicable. A corporation
must sign its name by the president or other authorized officer.
All co-owners should sign.
