<PAGE>
ADVANCE CIRCUITS, INC.
5929 BAKER ROAD, SUITE 470
MINNETONKA, MINNESOTA 55345
----------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
----------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
----------------
This information statement is being mailed on or about August 21, 1995 as
part of the Company's Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") to holders of the Company's Common Stock $.10 per value
per share (the "Shares"). You are receiving this Information Statement in
connection with the election of persons designated by the Purchaser to seats
on the Board of Directors of Advance Circuits, Inc. (the "Company"). Under the
Merger Agreement, the Company has appointed three directors designated by the
Purchaser, conditioned on and effective as of the closing of the Offer.
Effective upon payment by the Bidder for all Shares accepted for payment
pursuant to the Offer, the Purchaser will be entitled to designate the number
of directors (rounded up to the next whole number) on the Company's Board of
Directors that equals the product of the number of directors on the Company's
Board of Directors (giving effect to the election of additional directors) and
the ratio that the combined voting power of the Shares so purchased bears to
the total combined voting power of all outstanding Shares. The Company has
secured the resignation of four directors, conditioned on and effective as of
the closing of the Offer, to enable the Purchaser's designees (the "Purchaser
Designees") to be appointed to the Board. This Information Statement is
required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
Effective upon the closing of the Offer, Geoffrey Wild, Donald J. Miller and
Daniel McL. Miller, as the Purchaser Designees, will become members of the
Company's Board. Other directors and executive officers of Parent identified
on Schedule I to the Offer to Purchase, a copy of which is being mailed to
shareholders together with this Schedule 14D-9, may also be elected or
appointed to the Company's Board of Directors. The information regarding such
other directors and executive officers is incorporated by reference herein.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used and not otherwise
defined herein shall have the meaning set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning the
Purchaser, Parent and the Purchaser Designees has been furnished to the
Company by such persons, and the Company assumes no responsibility for the
accuracy or completeness of such information.
A-1
<PAGE>
CURRENT DIRECTORS AND DESIGNEES
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
<S> <C> <C>
Robert W. Heller................................................ 49 1978
Thomas I. Mueller............................................... 53 1989
William J. Cadogan.............................................. 47 1995
Thomas F. Leahy................................................. 53 1977
David C. Malmberg............................................... 52 1993
Stephen G. Shank................................................ 51 1993
Geoffrey Wild(1)................................................ 39 --
Donald J. Miller(1)............................................. 34 --
Daniel McL. Miller(1)........................................... 59 --
</TABLE>
--------
(1) Purchaser Designee
Mr. Heller joined the Company as Vice President in 1977. In April 1978, he
was elected to the Board, in December 1979 he was elected Executive Vice
President, and in May 1987 he was elected President and Chief Executive
Officer.
Mr. Mueller joined the Company in December 1984 as Vice President of Finance
and in August 1985 was elected to the additional offices of Secretary and
Treasurer. In May 1987, he was elected Executive Vice President. He was
elected a director in September 1989.
Mr. Cadogan has been a director of the Company since February 1995. He is
currently the President and a director of ADC Telecommunications, Inc., a
position he has held since March 1990. Mr. Cadogan also serves on the board of
directors of Banta Corporation.
Mr. Leahy has been a private investor since February 1990, and has held the
position of Chairman of the Board of Help/Systems Incorporated since 1985. Mr.
Leahy has served continuously since January 1977 as a director of the Company,
and served as Chairman of the Board and a paid consultant to the Company from
May 1987 to September 1993.
Mr. Malmberg has been a private investor since May 1994. He served as Vice
Chairman of National Computer Systems, Inc. ("NCS") (information systems and
services) and President of NCS/Technology from August 1992 to May 1994. Prior
to August 1992, he served as President and Chief Operating Officer of NCS for
more than five years. Mr. Malmberg is also a director of Three Five Systems,
Inc., National City Bank Corporation and Pattern Processing, Inc.
Mr. Shank has been President and Chief Executive Officer of Learning
Ventures, Inc. (education programs and services) since December 1991, and
served as Chairman and Chief Executive Officer of Tonka Corporation for more
than five years prior to September 1991. Mr. Shank is also a director of
National Computer Systems and Polaris Industries, Inc.
Mr. Wild has been the President of Johnson Matthey Electronics, Inc.
("JMEI"), a direct wholly owned subsidiary of Johnson Matthey Inc., since
October 1994 and a director of Johnson Matthey Inc. since April 1995. He has
also been Vice President, Electronics, Materials Technology Division, Johnson
Matthey Inc. since April 1992 and a director of Ryoka Matthey Corporation
(Japan) since 1994. From April 1992 through October 1994, Mr. Wild was Vice
President of JMEI, and from August 1990 through April 1992, he was General
Manager of JMEI. Mr. Wild is also currently the President and a director of
ACI Acquisition Corporation. Mr. Wild is a citizen of the United Kingdom.
Mr. Donald J. Miller has been Finance Director of JMEI since 1994. From 1990
through 1994, Mr. Miller was a Controller of JMEI. Mr. Miller is a citizen of
the United States.
Mr. Daniel McL. Miller is currently the Vice President and General Counsel
of Johnson Matthey Inc. and Johnson Matthey Investments, Inc., positions he
has held since 1985. Mr. Miller is also a director and Secretary of ACI
Acquisition Corporation. Mr. Miller is a citizen of the United States.
A-2
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not also employed as full-time officers of the Company
receive $15,000 annually and $300 for each committee meeting attended.
BOARD AND COMMITTEE MEETINGS
The Company has established an Audit Committee to review with the Company's
independent accountants the annual financial statements and the results of the
annual audit, and a Compensation Committee to review and make recommendations
respecting executive compensation. During Fiscal 1994 Messrs. Leahy, Malmberg
and Shank were members of both committees. During the fiscal year ended August
27, 1994, the Audit Committee met twice and the Compensation Committee met
once. The Board does not have a nominating committee.
The directors are in close contact with each other and frequently gather or
communicate informally to discuss the affairs of the Company and, when
appropriate, take formal Board action by unanimous written consent of all
directors, in accordance with Minnesota law, rather than hold formal Board
meetings. During the fiscal year ended August 27, 1994, the Board held five
formal meetings. Each current director attended all meetings of the Board and
of Board Committees on which the director served. There are no family
relationships among the directors of the Company.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert W. Heller.................. 49 President, Chief Executive Officer and
Director
Thomas I. Mueller................. 54 Executive Vice President, Secretary,
Treasurer and Director
Jon P. Kerrick.................... 57 Vice President of Engineering
John C. Kimball................... 49 Vice President of Marketing
</TABLE>
The term of office of each officer is one year from the date of the most
recent annual meeting of the Company's Board of Directors, or until the
successor of each is elected. There are no arrangements or understandings
between any officer and any other person pursuant to which such officer was
elected.
Mr. Heller--see discussion under Directors.
Mr. Mueller--see discussion under Directors.
Mr. Kerrick has been employed by the Company for approximately 15 years in
various process engineering positions. In December 1979, he was elected Vice
President of Engineering.
Mr. Kimball joined the Company in 1978 as Vice President, Quality Assurance.
He started the Commercial Sales and Marketing Department in 1983 and was named
Vice President, Commercial Division Sales and Marketing in 1987. In 1989 he
was elected Vice President of Marketing.
A-3
<PAGE>
EXECUTIVE COMPENSATION
General
SUMMARY COMPENSATION TABLE
The following table shows all the cash compensation paid or to be paid by
the Company, as well as certain other compensation paid or accrued during the
fiscal years indicated, to the Chief Executive Officer and the three other
executive officers of the Company for such period in all capacities in which
they served:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- -------------------- -------
RESTRICTED
FISCAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OTHER AWARD($)(2) SARS(#) PAYOUTS COMPENSATION
--------------------------- ------ --------- ----------- ----- ----------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert W. Heller........ 1994 183,022 96,713 -- None None -- --
President, Chief Execu-
tive 1993 162,294 115,618 -- None 11,000 -- --
Officer and Director 1992 159,938 40,000 -- None None -- --
Thomas I. Mueller....... 1994 140,780 73,921 -- None None -- --
Executive Vice 1993 132,809 91,977 -- None 10,000 -- --
President,
Treasurer, Secretary 1992 133,754 31,250 -- None None -- --
and Director
Jon P. Kerrick.......... 1994 125,781 66,220 -- None None -- --
Vice President 1993 117,808 80,895 -- None 10,000 -- --
1992 119,112 28,000 -- None None -- --
John C. Kimball......... 1994 132,499 71,149 -- None None -- --
Vice President 1993 117,527 80,895 -- None 10,000 -- --
1992 119,165 28,000 -- None None -- --
</TABLE>
--------
(1) Bonus amounts represent amounts earned based on fiscal year results. The
amounts are paid in the following year.
(2) See "Employment Contracts and Change-in-Control Arrangements." The
aggregate number and value of restricted stock holdings using the Offer
price are as follows: R. Heller, 28,750 shares, $646,875; T. Mueller,
20,000 shares, $450,000; J. Kerrick, 20,000 shares, $450,000; J. Kimball,
20,000 shares, $450,000.
OPTION EXERCISES DURING 1994 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table presents information with respect to the named
executives concerning the number and value of options held at the end of
fiscal year 1994. No options were granted to or exercised by any named
executive officer during the fiscal year. The Company does not have any
outstanding stock appreciation rights.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END(#)(1) AT FY-END($)(2)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Heller........ -- -- 4,400 6,600 $5,500 $8,250
Thomas I. Mueller....... -- -- 4,000 6,000 5,000 7,500
Jon P. Kerrick.......... -- -- 4,000 6,000 5,000 7,500
John C. Kimball......... -- -- 4,000 6,000 5,000 7,500
</TABLE>
--------
(1) The Merger Agreement provides that, effective upon closing of the Offer,
all issued and outstanding stock options and warrants to purchase Company
Common Stock will become immediately exercisable and the holders thereof
will receive in cash from the Company an amount per share equal to $22.50
minus the per share exercise price of such option. The options reflected
in the above table each have a per share exercise price of $8.38 per
share.
(2) The value of unexercised options represents the difference between the
exercise price thereof and the closing price of the Common Stock on August
27, 1994. The values were calculated only for "In-the-Money" options,
which consist of those options whose exercise price is less than the
market price per share on the last day of the fiscal year. Using the Offer
price of $22.50 per share, the value of all options held by Messrs.
Heller, Mueller, Kerrick and Kimball would be $155,320, $141,200, $141,200
and $141,200, respectively.
A-4
<PAGE>
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
On July 31, 1995, the Company amended its 1990 Restricted Stock Plan (the
"Restricted Stock Plan") to provide that all remaining restrictions on
outstanding shares of Company common stock issued thereunder would lapse upon
a sale of the Company. There are 326,000 shares of restricted stock issued and
outstanding under the Restricted Stock Plan, including the following shares
owned by the Company's executive officers:
<TABLE>
<CAPTION>
SHARES SUBJECT
NAME TO RESTRICTIONS
---- ---------------
<S> <C>
Robert W. Heller........................................... 28,750
Thomas I. Mueller.......................................... 20,000
Jon P. Kerrick............................................. 20,000
John C. Kimball............................................ 20,000
All executive officers as a group.......................... 88,750
</TABLE>
The restrictions on such shares shall lapse upon closing of the Offer and
the holders thereof have indicated an intent to tender such shares in the
Offer.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Interlocks and Insider Participation. The Company is
engaged in a highly competitive industry. In order to succeed, the Company
believes that it must be able to attract and retain qualified executives. To
achieve this objective, the Company has structured an executive compensation
system tied to operating performance that the Company believes has enabled it
to attract and retain key executives. The Compensation Committee of the Board
of Directors was comprised during fiscal 1994 of Thomas F. Leahy, a former
officer and employee of the Company, David C. Malmberg and Stephen G. Shank,
both outside directors. All decisions by the Compensation Committee relating
to the compensation of the Company's executive officers are reviewed by the
full Board. Messrs. Leahy and Mueller are directors of Help Systems, Inc. and
in such capacity Mr. Mueller participates in the decision regarding
compensation of Mr. Leahy who receives remuneration as chairman of that
corporation.
Compensation Policy. The goal of the Company's executive compensation policy
is to ensure that an appropriate relationship exists between executive pay and
the creation of shareholder value, while at the same time motivating and
retaining key employees. The compensation program is viewed in total
considering all of the component parts: base salary, annual performance
incentives, benefits, and long-term incentive opportunity in the form of stock
options. The annual compensation components consist generally of lower base
salaries than of comparative companies combined with higher incentive plans
based on the Company's financial performance. Long-term incentive is based on
the Company's financial performance. Long-term incentive is based on stock
performance through stock options. The Compensation Committee's position is
that stock ownership by management is beneficial in maintaining a proper
balance between management's and shareholders' interests in the enhancement of
shareholder value. Overall, the intent is to have more significant emphasis on
variable compensation components and less on fixed cost components. The
Committee believes this philosophy and structure are in the best interests of
the shareholders.
Performance Measures. In evaluating annual executive compensation, the
Committee examines earnings per share, return on equity, sales growth and
total return to shareholders. These factors are compared with prior years'
performance, performance of other companies in the industry, and designated
Company goals.
Fiscal 1994 Compensation. For fiscal 1994, the Company's executive
compensation program consisted of (i) base salary and (ii) an incentive bonus
based on achieving net income over a predetermined return to shareholders. In
1994, base salaries of Mr. Heller and the other executive offers were
increased as a result of comparing the Company's net profit and return on
investment to other companies in the printed circuit board industry. The
Committee believes that options and other stock based performance compensation
arrangements
A-5
<PAGE>
are an effective incentive for managers to create value for shareholders since
the value of an option bears a direct relationship to the Company's stock
price.
The Company's objective is to obtain a financial performance that achieves
financial goals over a period of time, including a return on equity of over
15%, and sales volume and earnings per share growth of 10% or more. The
Company's performance in fiscal 1994 included all time record sales levels and
slightly higher after tax income. In fiscal 1994, sales increased 14% and
earnings per share remained the same as the prior year. The Company's return
on equity decreased as a result of a higher equity and only slightly higher
net income. Mr. Heller's and the other executive officers' bonuses for fiscal
1994 reflect this decrease in return.
The Committee believes that linking executive compensation to corporate
performance results in a better alignment of compensation with corporate goals
and shareholder interest. As performance goals are met or exceeded, resulting
in increased value to shareholders, executives are rewarded commensurately.
The Committee believes that compensation levels during fiscal 1994 adequately
reflect the Company's compensation goals and policies.
Thomas F. Leahy
David C. Malmberg
Stephen G. Shank
A-6
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five fiscal
years ended August 27, 1994 with the cumulative total return for the NASDAQ
Market Index and a peer group selected by the Company (the "SIC Peer Group
Index"). The SIC Peer Group Index includes the following NASDAQ companies:
Advance Circuits, Inc., Altron, Inc., Benchmark Electronics, Circuit Systems,
Inc., DDL Electronics, Electronic Associates Inc., Electronic Fab Technology,
Hadco CP, IEC Electronics CP, Jabil Circuit, Inc., Level One Comm, Inc., M-
Wave, Inc., Media Vision Technology, Merix CP, Micronics Computers, Inc., Park
Electrochemical CP, Parlex CP, Plexus CP, QLogic CP, Sanmina CP, SCI Systems
Inc., Sheldahl, Inc., Sigma Circuits, Inc., Solectron CP, U.S. Technologies,
Inc., and Video Display CP. All of the members of the peer group have the same
four-digit SIC (Standard Industrial Classification) code labeled 3672--Printed
Circuit Boards. The comparison assumes $100 was invested on August 27, 1989 in
the Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG ADVANCE CIRCUITS INC., INDUSTRY INDEX AND BROAD MARKET
<CAPTION>
Measurement period ADVANCE INDUSTRY BROAD
(Fiscal Year Covered) CIRCUITS INDEX MARKET
--------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
08/27/89 $ 100.00 $ 100.00 $ 100.00
FYE 08/27/90 $ 138.73 $ 81.37 $ 87.46
FYE 08/27/91 $ 143.35 $ 109.38 $ 99.42
FYE 08/27/92 $ 124.28 $ 156.27 $ 101.10
FYE 08/27/93 $ 236.99 $ 207.06 $ 131.61
FYE 08/27/94 $ 222.54 $ 202.26 $ 143.81
</TABLE>
A-7
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and greater than ten percent shareholders ("Insiders") are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, during the fiscal year ended August 27,
1994, all Section 16(a) filing requirements applicable to Insiders were
complied with except that one report covering one transaction was filed late
by David C. Malmberg, and Robert W. Heller was late filing a Form 5 reporting
a gift of stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table provides information concerning those persons known by
the Company to be the beneficial owners of more than five percent (5%) of the
Company's outstanding voting capital stock as of June 30, 1995, unless
otherwise indicated:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) CLASS
------------------------------------ ------------------- ----------
<S> <C> <C>
Dimensional Fund Advisors, Inc.............. 396,098(2) 5.2%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Heartland Advisors, Inc..................... 565,000(3) 7.5%
790 North Milwaukee Street
Milwaukee, WI 53202
Prudential Insurance Co. of America......... 548,800(4) 7.3%
5 Prudential Plaza
751 Broad Street, 5th Floor
Newark, NJ
Robert W. Heller............................ 416,662(5) 5.5%
5929 Baker Road, Suite 470
Minnetonka, MN 55345
</TABLE>
--------
(1) Unless otherwise indicated, the shareholder has sole power to vote and
sole power to direct the disposition of all shares listed as beneficially
owned.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, has advised the Company that, as of June 30, 1995, all of the
shares listed are held in portfolios of DFA Investment Dimensions Group,
Inc. (the "Fund"), a registered open-end investment company, or in series
of The DFA Investment Trust Company (the "Trust"), a Delaware business
trust, or the DFA Group Trust and the DFA Participating Group Trust,
investment vehicles for qualified employee benefit plans, for all of which
Dimensional serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares. Dimensional has sole voting power as to
234,611 of the shares. Persons who are officers of Dimensional also serve
as officers of the Fund and the Trust, each an open-end management
investment company. In their capacity as officers of the Fund and the
Trust, such persons vote 154,012 additional shares which are owned by the
Fund and 7,475 shares which are owned by the Trust (both included in the
shares listed in the table).
(3) Shareholdings are as of July 31, 1995.
(4) Shareholdings are as of June 30, 1995.
A-8
<PAGE>
(5) Amount includes 4,500 shares held by Mr. Heller's children and 6,600
shares which may be acquired upon exercise of options which are
exercisable as of August 14, 1995 or will become exercisable within 60
days of such date. Mr. Heller may, prior to the closing of the Offer, give
a portion of the above-listed shares to family members, a charitable
trust, and/or non-profit organizations with the understanding that such
recipients will tender such shares in the Offer.
MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of Company Common Stock
beneficially owned as of August 14, 1995, by each executive officer of the
Company named in the Summary Compensation Table, by each director or nominee
for election as a director, and by all directors and executive officers
(including the named individuals) as a group:
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER SHARES BENEFICIALLY
OR IDENTITY OF GROUP OWNED (1) PERCENT OF CLASS
-------------------- ------------------- ----------------
<S> <C> <C>
Robert W. Heller...................... 416,662(2) 5.5%
Thomas F. Leahy....................... 241,636(3) 3.2%
William J. Cadogan.................... 0 *
Thomas I. Mueller..................... 71,406(4) *
John C. Kimball....................... 56,375(4) *
Jon P. Kerrick........................ 47,637(4) *
David C. Malmberg..................... 1,000 *
Stephen G. Shank...................... 1,000 *
Executive Officers and Directors as a
Group (8 persons).................... 835,716(5) 11.0%
</TABLE>
--------
* Less than one percent.
(1) See Note (1) to the preceding table.
(2) See Note (5) to the preceding table.
(3) Amount includes 4,218 shares held by Mr. Leahy's spouse.
(4) Amount includes 6,000 shares which may be acquired upon exercise of
options which are exercisable as of August 14, 1995 or will become
exercisable within 60 days of such date.
(5) Amount includes 24,600 shares which may be acquired upon exercise of
options which are exercisable as of August 14, 1995 or will become
exercisable within 60 days of such date. One or more of the above listed
persons may, prior to the closing of the Offer, give a portion of the
above-listed shares to family members, a charitable trust, and/or non-
profit organizations with the understanding that such recipients will
tender such shares in the Offer.
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on May 27, 1995, there were outstanding 7,564,895
shares of Common Stock, par value $.10, which is the only outstanding class of
voting stock of the Company. Each share of Common Stock is entitled to one
vote.
A-9
