The Indianapolis Star from Indianapolis, Indiana on January 1, 2007 · Page C1
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The Indianapolis Star from Indianapolis, Indiana · Page C1

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Indianapolis, Indiana
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Monday, January 1, 2007
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Page C1
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BUSINESS SECTION C THE INDIANAPOLIS STAR MONDAY, JANUARY 1, 2007 INDYSTAR.COMBUSINESS b ':'tr INSIDE Building their business Networking organizations in Central Indiana help small businesses connect with clients and others in their field. C3 INSIDER ACTION DANIEL LEE Ocean Tomo patent fund invests in good ideas Cummins produces diesel engines. Biomet produces artificial hips and knees. Both produce patents. Those two businesses, along with utility NiSource, are the only Indiana companies included in a new patent-focused investment fund. The Ocean Tomo 300 Patent Index seeks to identify companies with promising intellectual property by analyzing patent portfolios. The Ocean Tomo index itself is an innovative, if still unproven, approach to investing. Its emergence should be a reminder to Indiana's companies of just how vital intellectual property is to success today. It's a "knowledge economy," said Keith Cardoza, managing director of Ocean Tomo, a Chicago investment bank specializing in intellectual property. Gone are the days when investors analyze companies based mainly on tangible assets such as factories and machines. Cardoza sees Cummins, despite being a stalwart of Indiana's industrial economy, as a good example: "It's certainly their patents and knowledge that have allowed them to remain a competitive company." The index includes a wide variety of companies, including tech players Intel and Apple Computer, but it also lists Exxon Mobil and Campbell Soup. The fund, ClaymoreOcean Tomo Patent EFT, trades on the American Stock Exchange under the ticker OTP. This exchange-traded fund, like the S&P 500 index fund, performs based on the overall performance of the stock index. One local portfolio manager said he likes the idea of analyzing innovation but also said that's no easy task. "The intellectual property that a company creates is extremely important to their future growth," said Donald Woodley, co-founder and principal at Woodley Farra Manion Portfolio Management in Indianapolis. "However, it is important to take the intellectual property you create and turn it into revenue and profits." He said a company might have many patents that never result in actual products. Ocean Tomo picks the members of the patent index by using its own PatentRatings software to select the companies with the most valuable patents relative to their book value, or physical assets. The software gives each company's patent portfolio an "Intellectual Property Quotient," or IPQ, using factors such as the number of claims a patent has and the patent's life expectancy. Ocean Tomo says that a higher IPQ does not directly measure a patent's worth, just as a high IQ would not be related directly to a person's net worth. However, high-scoring patents have a "statistically higher probability of generating economic benefit," according to Ocean Tomo. For instance, a Cummins patent for internal-combustion engines core to the company's business received a stellar 186.7 IPQ, significantly higher than the median patent score of 100. Cummins' average patent IPQ was 113.2. Biomet's average IPQ was 130.5. Last week, Cardoza said the patent fund, available to investors since Dec. 15, had assets of about $15 million. Ocean Tomo touts that its index outperformed the S&P 500 in a theoretical 10-year comparison looking back from October 2006. Now the true test begins. Call Star reporter Daniel Lee at (317) 444-6311 or e-mail him at daniel.leeindystar.com. Peering into 2007 The new year will set the stage for a grand hotel, a spurt of new shopping options, and a push for new jobs in Indiana F Star report rom a growing skyline to an expanded shopping scene, 2007 will lay the groundwork for many changes in the Indiana business landscape. Here's what to watch for: LILLY'S LEGAL OBSTACLES Eli Lilly and Co.'s best-selling drug, Zyprexa, is certain to get more than its share of headlines, with the first product-liability trials tentatively set for April in U.S. District Court in Brooklyn, N.Y. Thousands of patients claim the antipsychotic drug caused diabetes-related symptoms, including weight gain and high blood-sugar levels. Already, Lilly has settled with more than 8,000 claimants at a cost of $700 million, making it the largest liability settlement in the Indianapolis company's history. But thousands more patients were not included in those settlements and are pushing their suits forward. JOB GAINS, JOB LOSSES Some of the big business expansions won by Indiana in the past year will start to yield new jobs in 2007. But some of the big cutbacks announced last year will take affect, too. Chief among the expansions is Toyota, which in the spring will start producing Camry sedans on a new assembly line at the Subaru plant in Lafayette. Subaru plans to hire 1,000 new workers ...... DARRON CUMMINGS Associated Press LEGAL WARS: Eli Lilly and Co. will likely face product-liability trials in April with regards to Zyprexa, which some patients say causes diabetes-related side-effects. by year's end. More than 10,000 people have applied for the jobs. Other bright spots such as a new Honda assembly plant and a new Nestle beverage plant won't produce jobs until at least 2008. Look for a decision on a potential DaimlerChrysler transmission plant See Peering, Page C2 f tap " h 3 I V Va Jlw)kea.o -" 1 IT 17V I - i T (. C I lttf I 1 V si r . r n i i i B 1 1 1 I V it j i ns. -yHjbaiaift I I i v r r ,M 0Vsi ii ii ' w v 1 A b 1 IbMIII JUST PUT POST-HOLIDAY SPENDING BACK ON TRACK The flurry of gift shopping near bought more than planned. MINUTE ASST. MANAGING EDITORBUSINESS: Steve Berta BUSINESS PHONE: 317.444.6868 the end of the year leads some down the path of least resistance and into the land of credit-card debt. The average household has $10,000 in debt, and the holiday spend-a-thon no doubt puts pressure on consumers to buy more and boost their personal deficits. The Consumer Credit Counseling Service offers tips to consumers who find themselves having Know how much you owe: Add up all your credit-card and other bills to get a realistic picture of what is owed. Make spending plan: Decide what needs to be paid, then put in place a plan for your income. Pay off card debt: Stop new charges and pay down what you owe. Build a savings cushion: The goal is to have enough to cover expenses for three to six months. Associated Press FIGURATIVELY SPEAKING 1, 2, 3, 4,5 Rank of Warren Buffett, Bill and Melinda Gates, George Soros, Gordon and Betty Moore, and Herbert and Marion Sandler among BusinessWeek's 50 Most Generous Philanthropists. Source: BusinessWeek. Compiled by John Maclntyre NOTE TO READERS Starting Saturday, The Indianapolis Star will eliminate its week-in-review stock listings. On Sundays, we also will stop running the weekly mutual funds report. The changes reflect readers' new habits of increasingly going online for market information. Accordingly, we will continue to offer complete market listings online at lndyStar.commarkets. In the newspaper, we will continue to publish daily stock listings for companies with Indiana ties and a daily market report noting the big winners and losers on the Nasdaq and New York Stock Exchange. To comment on these changes, call (317) 444-6350. In need of a loan? Beware of car equity Consumers can incur big debt, and lose vehicles, with new auto title lending By Sue Kirchhoff USA Today Strapped for cash, James Haga of Marion, Va., took out a $1,600 loan last year, using his truck as collateral. In August, when he couldn't keep up with the escalating balance, Haga's Ford was repossessed. Total cost for the loan? A $13,000 auto, plus $4,500 in payments. "I was at home in the shower getting ready to go to work, and I went out to get my truck and it was gone," said Haga, 44, whose loan carried an effective 300 percent annual interest rate. Adding to his worries, Haga's girlfriend, Brandy Smith, 31, is carrying a similar $700 loan. Haga is one of thousands of consumers who have turned to auto title lenders for quick cash and ended up with big problems. Under the loans, sometimes called auto equity lines of credit or auto pawns, individuals offer fully owned cars or trucks as backing for loans of several hundred to several thousand dollars. Lenders take the title to the vehicle and, often, a duplicate set of keys. Title lending is one of the lesser-known, high-cost loans now proliferating across the country. But consumer advocates call it one of the more dangerous. If borrowers can't pay back the loans, often due in 30 days, they often roll them over, with multiplying fees. If they still fall behind, their cars can be repossessed. That contributes to a downward spiral, with people unable to get to work, a doctor or drive their kids to school. Rod Aycox, president of Loan-Max auto title and its affiliated companies throughout the country, made about half a million loans this year and repossessed cars in 5 percent of the cases, or 25,000 autos, according to a statement from his firm. The average age of cars offered as collateral was 10 to 12 years. Lenders like LoanMax are See Car equity, Page C2 THE COST OF GOOD LUCK Superstition in the South holds that eating hog jowls, collard greens and black-eyed peas on Jan. 1 makes one healthy, wealthy and wise for the next 12 months. But wholesale prices for hog jowls have tripled since 2002, spurred by rising demand among Southerners and an 11 percent jump in pork exports. Jowls a tough cut of pork sometimes ground into sausage sells at grocery stores for about $1.89 a pound, said Graham McDonald, who sells jowls for Morty Pride Meats of Fayetteville, N.C. Bloomberg News

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