Annual Report (Form 10-K), fiscal year 1994

ITEM 1 - BUSINESS
General Description of Business - The Somerset Group, Inc. ("the Registrant" or "the Company"), is an Indiana Corporation, with its principal executive offices located at 135 North Pennsylvania Street, Suite 2800, Indianapolis, Indiana 46204.
The Registrant conducts business in two industry segments: construction products and services and banking. The construction products and services segment consists of operations conducted by the Registrant under the names of American Precast Concrete and Span-Deck of Indiana, and through two subsidiaries, Precast Concrete Systems Inc. and Concrete Carriers, Inc. The banking segment is conducted through ownership by the Registrant of 1,509,983 shares (as of February 24, 1995) of the common stock of First Indiana Corporation ("First Indiana"), a holding company which owns 100% of First Indiana Bank. The 1,509,983 shares represent 21.0% of the issued and outstanding First Indiana common shares.
Financial Information About Business Segments
Described below are the operations of the Company's segments. Financial information about the segments is incorporated by reference to Note 8 of the Company's consolidated financial statements on page 28 of this report.
Narrative Description of Business
I. Construction Products and Services Segment
Business - The Registrant manufactures and installs precast/prestressed concrete products primarily in the seven-state area of Illinois, Indiana, Kentucky, Michigan, Ohio, Pennsylvania, and West Virginia. Products are distributed from the Indianapolis, Indiana; Westfield, Indiana; and Columbus, Ohio manufacturing sites via commercial carrier, broker drivers or company- operated trucks to the job site. The customers for these products are real estate developers, general contractors and businesses which own and occupy their own structures.
Competition - The products are sold on a contract basis. The contracts are received either by competitive bids or through negotiation. The products can be shipped on a competitive basis over a contiguous seven-state region including Indiana and Ohio, with competition provided by firms located in these states. Competition for precast/prestressed concrete is also provided by other building products such as steel, wood, brick, concrete block, stone, aluminum, and other materials.
Major Customers - 1994 net sales included net sales to an Indianapolis based developer that amounted to 12% of total sales, including a shopping center parking garage that amounted to 10% of net sales. Sales to another Indianapolis based developer amounted to 10% of total sales.
1993 net sales included net sales to an Indianapolis developer that amounted to 26% of the total sales, including a single project (a shopping mall parking garage) that amounted to 15% of net sales.
1992 net sales included net sales for construction of a sports stadium at the University of Illinois that amounted to 25% of total sales during 1992. Products and services provided for construction of a parking structure at an Indianapolis hospital amounted to 14% of total sales.
Backlog of Orders - The dollar amount of backlog is important to the performance of the precast/ prestressed operations because all work is performed under contract, and the dollar value of such backlog represents sales for the immediate future. The sales backlogs at December 31, 1994, 1993, and 1992 were $8.8 million, $8.2 million, and $4.2 million, respectively. The fluctuation in sales backlog is simply a function of the amount of work obtained. The sales backlog is a good indication of the following quarter's results, but not of results for the entire year. All receivables and contracts in progress, unbilled, as of December 31, 1994, are expected to be collected within one year.
Raw materials - Cement, aggregates, steel strand, steel reinforcing bars and wire mesh are essential raw materials and are in adequate supply with several available sources.
Franchise Agreements - The Registrant has an agreement for the production and marketing of products under patents and/or trademarks owned by another company. The agreement is with FABCON, Inc. for production of precast products known as "Span-Deck".
Environmental Laws and Regulations - The construction operations are subject to federal, state and local laws governing air, soil and water pollution. However, the capital expenditures necessary to comply with these requirements are not expected to have a material effect on the earnings or competitive position of the Registrant.
Employees - Certain production and delivery employees of the construction operations are represented by labor unions. During the year ended December 31, 1994, various employees engaged in the concrete operations were represented by two local unions. One labor contract expires in 1995 and the other in 1996.
Seasonality of Business - Somerset's construction operations are seasonal due to weather conditions. These operations are adversely affected by periods of low temperatures, snow and rain, and are dependent on whether the work available during such periods may be produced with weather-protected facilities. The need of the concrete segment for working capital increases in the spring, summer and fall months because of increases in trade accounts receivable and inventories, and generally declines in the winter months.
II. Banking Segment
Information on the Registrant's bank affiliate, First Indiana Corporation, is incorporated into this Report by reference to Item 1 of the 1994 Report on Form 10-K for First Indiana Corporation for the year ended December 31, 1994, filed separately under commission file number 0-14354.
ITEM 2



ITEM 2 - PROPERTIES
The following chart explains the general character of the Registrant's and subsidiaries' principal properties, total acreage of each property and, where applicable, the square footage of enclosed area.
Total Location Acreage Use and Enclosed Area
Suite 2800 N/A Corporate office facility containing First Indiana Plaza 950 sq. ft. Indianapolis, IN
Precast/Prestressed Concrete: 1030 S. Kitley Ave. 38 Administration, accounting and Indianapolis, IN engineering functions as well as manufacturing, storage and maintenance facility for precast and prestressed concrete products. Enclosed area totals 41,000 sq. ft.
17701 Springmill 27 Manufacturing,storage and maintenance Westfield, IN facility for prestressed concrete products. Enclosed area totals totals 33,000 sq. ft.
3400 Jackson Pike 16.5 Manufacturing,storage and maintenance Grove City, OH facility for prestressed concrete products. Enclosed area totals 34,000 sq. ft.
ITEM 3

ITEM 3 - LEGAL PROCEEDINGS
Information relative to this item is incorporated into this Report by reference to Note 14 of the Notes to Consolidated Financial Statements, on page 33 of this report.
ITEM 4

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the final quarter of the fiscal period covered by this report.
PART II
ITEM 5

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS
This information is set forth under the caption "Market for the Registrant's Common Stock" on page 11 of this Report.
ITEM 6

ITEM 6 - SELECTED FINANCIAL DATA
This information is set forth under the caption "Selected Financial Data" on page 11 of this Report.
ITEM 7

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION AND LIQUIDITY
This information is set forth under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition and Liquidity" on Pages 12 through 17 of this Report.
ITEM 8


ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is contained in the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Independent Auditors' Report on Pages 18 through 33 of this Report. Information on the Registrant's bank affiliate, First Indiana Corporation, is incorporated by reference to Item 8 of the 1994 Report on Form 10-K for First Indiana Corporation, filed separately under commission file number 0-14354.
ITEM 9

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Registrant had no changes in and no disagreements with its accountants regarding accounting and financial disclosure.
PART III
ITEM 10



ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
Information regarding Directors of the Registrant is incorporated into this Report by reference to the definitive proxy statement of the Registrant for the Annual Meeting of Shareholders to be held April 27, 1995, under the caption "Proposal No. 1: Election of Directors", filed separately under commission file number 0-14227.
Executive Officers
Name Office Held Relationship Age
Robert H. McKinney Chairman, CEO Father of President 69 and Director and Vice President
Marni McKinney President, COO Daughter of 38 Jakubovie and Director Chairman
Kevin K. McKinney Vice President Son of 37 and Director Chairman
Joseph M. Richter Exec. V. P., CFO, None 52 and Treasurer
Gary E. Oakes President of None 47 Precast Division
Terms of all officers of the Registrant continue until the first meeting of the Board of Directors following the Annual Meeting of Shareholders on April 27, 1995.
A brief account of the business experience of each Executive Officer during the past five years is as follows:
Robert H. McKinney - Chairman and Chief Executive Officer of the Registrant; Chairman and Chief Executive Officer of First Indiana Corporation, a savings bank holding company; Chairman of First Indiana Bank; Chief Executive Officer until May 1992; retired Partner of Bose McKinney & Evans, attorneys; a Director of First Indiana Corporation and Lilly Industries, Inc.; Chairman, Federal Home Loan Bank Board (1977-1979).
Marni McKinney Jakubovie - President, Chief Operating Officer, and a Director of the Registrant; Vice Chairman and a Director of First Indiana Corporation and First Indiana Bank; formerly Executive Vice President of the Registrant (1987-1992); formerly Vice President and Director of Strategic Planning of First Indiana Bank.
Kevin K. McKinney - Vice President and a Director of the Registrant; Publisher of NUVO Newsweekly and Chairman and President of NUVO, Inc.; formerly President Mid America Media; formerly Chairman, Indianapolis Extra, Ltd.
Joseph M. Richter - Executive Vice President, Chief Financial Officer and Treasurer of the Registrant.
Gary E. Oakes - President of American Precast Concrete, division of the Registrant, since February 1990; formerly Vice President of American Precast Concrete.
ITEM 11

ITEM 11 - EXECUTIVE COMPENSATION
Information relative to this item is incorporated into this Report by reference to the definitive proxy statement of the Registrant for the Annual Meeting of Shareholders to be held April 27, 1995, under the caption "Compensation of Directors and Executive Compensation".
ITEM 12

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relative to this item is incorporated into this Report by reference to the definitive proxy statement of the Registrant for the Annual Meeting of Shareholders to be held April 27, 1995, under the caption "Voting Securities and Principal Holders Thereof".
ITEM 13

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relative to this item is incorporated into this Report by reference to the definitive proxy statement of the Registrant for the Annual Meeting of Shareholders to be held April 27, 1995, under the caption "Certain Transactions".
PART IV
ITEM 14

ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. The financial statements listed in the accompanying Index to Selected Financial Data, Management's Discussion and Analysis of Results of Operations and Financial Condition and Liquidity, Financial Statements and Financial Statement Schedules are filed as part of this report.
2. The financial statement schedules listed in the accompanying Index to Selected Financial Data, Management's Discussion and Analysis of Results of Operations and Financial Condition and Liquidity, Financial Statements and Financial Statement Schedules are filed as part of this report.
Exhibit Number Exhibit 3 Amended Articles of Incorporation and Amended and Restated By- Laws thereto.
10 Material Contracts of the Registrant.
22 Subsidiaries of the Registrant.
23 Definitive Proxy Statement for Annual Meeting of Shareholders to be held April 27, 1995.
24 Consent of Independent Certified Public Accountants, of report dated March 21, 1995, for incorporation into Form S-8 registration statement.
99 First Indiana Corporation's form 10-K for the year ended December 31, 1994.
All other exhibits are not attached since they are not applicable to the Registrant. (b) Reports on Form 8-K. No information need be disclosed.
(c) Financial Statement Schedules
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE SOMERSET GROUP, INC.
By s/ Robert H. McKinney 03/22/95 Robert H. McKinney, Chairman and Principal Executive Officer
By s/ Marni McKinney Jakubovie 03/22/95 Marni McKinney Jakubovie, President and Principal Operating Officer
By s/ Joseph M. Richter 03/22/95 Joseph M. Richter, Executive Vice President and Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in the capacities indicated and on the date indicated.
Signatures Title Date
s/ Robert H. McKinney Director, Chairman 03/22/95 Robert H. McKinney Principal Executive Officer
s/ Marni McKinney Jakubovie Director, President 03/22/95 Marni McKinney Jakubovie and Principal Operating Officer
s/ Kevin K. McKinney Director and Vice President 03/22/95 Kevin K. McKinney
s/ H. J. Baker Director 03/22/95 H. J. Baker
s/ William L. Elder Director 03/22/95 William L. Elder
s/ Douglas W. Huemme Director 03/22/95 Douglas W. Huemme
s/ Michael L. Smith Director 03/22/95 Michael L. Smith
THE SOMERSET GROUP, INC.
Form 10-K for the Year Ended December 31, 1994 Items 5, 6, 7, 8, 14(a) (1) and (2), and 14(c)
Index to Selected Financial Data, Management's Discussion and Analysis of Results of Operations and Financial Condition and Liquidity, Financial Statements and Financial Statement Schedules
Selected Financial Data, Management's Discussion and Analysis of Results of Operations and Financial Condition and Liquidity, Financial Statements and Schedules of the Registrant and its subsidiaries, required to be included in Items 5, 6, 7, 8, 14(a) (1) and (2), and 14(c) are listed below:
MARKET FOR THE REGISTRANT'S COMMON STOCK 11
SELECTED FINANCIAL DATA 11
MANAGEMENT'S DISCUSSION AND ANALYSIS 12
FINANCIAL STATEMENTS: Independent Auditors' Report 19 Consolidated Statements of Income for the years ended December 31, 1994, 1993, and 1992 19 Consolidated Balance Sheets as of December 31, 1994 and 1993 20 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1994, and 1993, and 1992 22 Consolidated Statements of Cash Flows for the years ended December 31, 1994 1993, and 1992 23 Notes to Consolidated Financial Statements 24 Summarized Consolidated Statements of Subsidiary, Not Consolidated with Registrant 34
FINANCIAL STATEMENT SCHEDULES:
Financial statement schedules have been omitted because the required information is contained in the notes to the financial statements or because such schedules are not required or are not applicable.
The individual financial statements of the Registrant have been omitted since the Registrant is primarily an operating company and all subsidiaries included in the consolidated statements being filed, in the aggregate, do not have minority equity interest and/or indebtedness to any person other than the Registrant or its consolidated subsidiaries in amounts which together exceed 25% of consolidated net assets as shown by the most recent consolidated balance sheet. All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.