The Alliance Group

September 12, 2008

Best “sandbox” results in new jobs Major initiatives since 2005 aimed at improving Indiana’s competitiveness:

• Major Moves –Ten-year fully funded $12 billion highway plan that includes more than 200 new construction and 200 major preservation projects

• Telecommunications Reform - Indiana’s Telecommunications Deregulation Act has brought increased competition, leading to new investments and jobs

• Single Factor Sales Apportionment - Eliminates the tax penalty associated with companies adding jobs and investing in new capital equipment in Indiana

• R&D Tax Credit – Provides a tax credit equal to 15% of a company’s first $1 million of qualifying R&D expenditures, giving Indiana one of the highest R&D tax credit percentages in the country

• Patent Income Exemption - Exempts certain income derived from qualified patents from the calculation of a company’s tax liability

• Buy Indiana – Pumps up to $1.2 billion back into the Indiana economy by directing state agencies to purchase goods from Indiana businesses

• Health Care Plan – Provides insurance for up to 130,000 low-income Hoosiers annually and encourages Hoosiers to stop smoking

1st in the Midwest & 6th nationally

Source: Forbes Best States for Business Index 2008

Indiana Ranks Best in Midwest for Cost of Doing Business

1st in the Midwest and 12th nationally• Illinois (28th), Kentucky (36th), Michigan (29th), Ohio(46th)• Fifth consecutive year of top competitiveness award

Source: Tax Foundation’s 2008 Business Tax Climate Index

Foundation Ranks Indiana Best in Midwest for Low Taxes

CNBC Names Indiana “Most Improved State for Business”

1st in the Midwest and 13th nationally• 3rd Nationally for overall “business friendliness”• 4th Nationally for strength in transportation infrastructure

Source: CNBC, July 2008

1st in the Midwest and 8th nationally• Best Places for Business Survey• 605 top CEOs Source: Chief Executive Magazine, Jan. 2008

Executives Rank Indiana Best in Midwest

$784 M

$2.9 B

$16.0 B

Projected FY 2008-2009 State Budget Shortfalls

$2.0 B

$350 M

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$550 M

$2.5 B

$350 M

$900 M

$194 M

$550 M

$1.2 B$935 M

$565 M

$175 M

$3.0 B

$4.7 B

$530 M

$160 M

$2.1 B

$652 M

$1.3 B

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$210M

Source: Center for Budget and Policy Priorities

Surplus

Deficit

‘Diversifying Economy’ Helps Earn Indiana Best Credit Rating in History

One of 10 States with AAA rating• S&P cited state’s diversifying economy, budgeting,

property tax reform and low debt as rationale for upgrade

Record-breaking Commitments for New Jobs, Investment

New Capital Investment

* As of 9/02/08

• Since its creation, the IEDC has worked with more than 590 businesses who have committed to create more than 72K new jobs and invest more than $17.9B

• The average wage for new jobs committed in 2008 is $20.87/hour –

well above state average of $18/hour.

0

5,000

10,000

15,000

20,000

25,000

7,726 8,519

15,523

21,995 22,627

12,870 *

New Job Commitments

2003 2004 2005 2006 2007 2008

0

1

2

3

4

5

6

7

8

9

2.771

8.442

3.382 3.327 *

2005 2006 2007 2008

Bill

ion

s

• Projects located in 76 counties

• Nearly 80% within 10 miles of interstate

• More than half from existing Indiana companies

• Approx. half in cities/towns of < 25K

Record Success, World-Class Infrastructure

Diversifying Indiana’s Economy Indiana Economic Development Corporation Competitive Projects

2005 to Present*

(9,329)

(447)

(1,753)

(16,155)

(14,193)

(7,136)

(11,934)

(6,602)(3,509)

(1,495)

As of Aug. 11, 2008

13

• More than 13,800 new jobs & $6.4 Billion investment from FDI since 2005

• First in North America for attraction of production jobs through FDI

• Focus on Asia, Europe creating new jobs for Hoosiers

In-Sourcing Jobs

Top Ten Counties – Jobs per Capita

Indiana Economic Development Corporation Competitive Projects

2005 to Present*

• Tipton• Decatur• Boone• Starke• Newton• Clark• Hendricks• Whitley • Blackford• Noble

Top Ten Counties – Deals per Capita

Indiana Economic Development Corporation Competitive Projects

2005 to Present*

• Steuben• Blackford • Noble• Starke• Newton• Whitley• Hendricks• DeKalb• Randolph• Jay

Increasing Hoosier Income

$37,652

$11,699 $11,805 $8,469 $6,816 *0

5000

10000

15000

20000

25000

30000

35000

40000

2004 2005 2006 2007 2008* As of 9/2/08

• Direct state incentives include tax credits, training grants and infrastructure assistance

• Tax credits are performance-based linked to IEDC certification of new jobs• Average time of return on investment: approximately 2.5 years

Low cost of incentives yields quicker return