<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
or
[ _ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 0-22604
WHITE RIVER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 93-1011071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
TWO GANNETT DRIVE, SUITE 200, 10604
WHITE PLAINS, NEW YORK (Zip Code)
(Address of principal executive offices)
(914) 251-0237
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
---
As of May 13, 1998, 4,874,756 shares of White River Corporation common stock,
par value $0.01 per share, were outstanding.
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WHITE RIVER CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Interim Statements of Financial Condition,
March 31, 1998 (Unaudited), and December 31, 1997 3
Consolidated Interim Statements of Operations (Unaudited),
Quarter Ended March 31, 1998, and 1997 4
Consolidated Interim Statements of Cash Flows (Unaudited),
Quarter Ended March 31, 1998, and 1997 5
Notes to Consolidated Interim Financial Statements (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 2. CHANGES IN SECURITIES 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 5. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 16
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WHITE RIVER CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL CONDITION
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Dollars in thousands, except per share amounts March 31, 1998 Dec. 31, 1997
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ASSETS (Unaudited)
Cash and cash equivalents $ 196,465 $ 190,515
Investment securities, at market value (adjusted cost: $40,944 and $63,940) 118,783 122,688
Accounts receivable, less allowances of $2,769 and $2,661 20,843 19,617
Other current assets 8,112 7,091
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Total current assets 344,203 339,911
Investment securities, at market value (adjusted cost: $34,855 and $14,855) 72,338 41,434
Goodwill, less accumulated amortization of $21,418 and $20,051 17,492 18,754
Purchased software and equipment, less accumulated amortization
and depreciation of $51,458 and $46,895 21,299 18,431
Deferred income tax asset 7,162 7,264
Other assets 1,363 1,339
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Total assets $ 463,857 $ 427,133
================================================================================================================
LIABILITIES
Accounts payable and accrued expenses $ 25,851 $ 24,134
Deferred revenues 5,810 5,824
Current portion of notes payable and other debt 80 111
Redeemable preferred stock 7,000 7,000
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Total current liabilities 38,741 37,069
Deferred income tax liability 54,894 44,676
Other liabilities 11,595 10,765
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Total liabilities 105,230 92,510
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REDEEMABLE PREFERRED STOCK 192 189
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MINORITY INTEREST 38,203 33,687
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STOCKHOLDERS' EQUITY
Series B, Participating Cumulative Preferred Stock - par value $1.00
per share; 50,000 shares designated; none issued -- --
Common stock - par value $0.01 per share;
62,500,000 shares authorized; 6,370,000 shares issued 64 64
Common paid-in surplus 251,760 250,942
Retained earnings 42,336 43,166
Accumulated other comprehensive income, net of tax 74,946 55,449
Common stock in treasury, at cost (1,495,244 shares) (48,874) (48,874)
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Total stockholders' equity 320,232 300,747
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Total liabilities, redeemable preferred stock, minority interest
and stockholders' equity $ 463,857 $ 427,133
================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated interim
financial statements.
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WHITE RIVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)
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Quarter Ended
In thousands, March 31,
----------------------
except per share amounts 1998 1997
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REVENUES
Insurance-related services $ 44,692 $ 36,777
Investment income 2,868 2,562
Other revenues 3,341 1,559
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Total revenues 50,901 40,898
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OPERATING EXPENSES
Compensation and benefits 20,248 19,103
Other operating expenses 25,291 21,572
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Total operating expenses 45,539 40,675
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OPERATING INCOME 5,362 223
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NET INVESTMENT GAINS -- 669
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OTHER EXPENSE
Interest expense 65 37
Minority interest 2,807 2,111
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Total other expenses 2,872 2,148
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PRETAX INCOME (LOSS) 2,490 (1,256)
Income tax expense 3,202 1,248
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NET (LOSS) (712) (2,504)
Dividends and accretion on redeemable preferred stock 118 118
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NET LOSS APPLICABLE TO COMMON SHARES $ (830) $ (2,622)
=========== ===========
BASIC AND DILUTED (LOSS) PER COMMON SHARE $ (0.17) $ (0.54)
WEIGHTED AVERAGE SHARES USED IN COMPUTING
BASIC AND DILUTED (LOSS) PER COMMON SHARE 4,874,756 4,874,756
==========================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated interim
financial statements.
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WHITE RIVER CORPORATION AND SUBSIDIARIES
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CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS(UNAUDITED)
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Quarter Ended March 31,
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In thousands 1998 1997
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NET (LOSS) $ (712) $ (2,504)
ADJUSTMENTS TO RECONCILE NET (LOSS) TO NET CASH
AND CASH EQUIVALENTS PROVIDED FROM (USED FOR) OPERATIONS:
Net investment gains -- (669)
Amortization and depreciation of purchased software and equipment 4,653 2,811
Amortization of goodwill 1,367 1,317
Minority interest 2,807 2,111
Contract funding revenue amortization -- (96)
Deferred income tax expense (benefit) (293) (2,115)
Changes in:
Other current assets and accounts receivable (2,247) (2,090)
Other liabilities 2,539 4,898
Deferred revenues (14) 3,337
Accounts payable and accrued expenses 1,717 893
Other, net 274 (221)
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Net cash and cash equivalents provided from operations 10,091 7,672
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CASH FLOWS PROVIDED FROM (USED FOR) INVESTING ACTIVITIES:
Proceeds from sales of investment securities 31,080 1,207
Purchase of long term investment securities (20,000) --
Purchases of software and equipment (7,557) (1,825)
Purchases of investment securities (8,333) (950)
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Net cash and cash equivalents used for investment activities (4,810) (1,568)
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CASH FLOWS PROVIDED FROM (USED FOR) FINANCING ACTIVITIES:
Proceeds from issuance of subsidiary stock 818 786
Principal payments on notes payable and other debt (31) (29)
Dividends paid on redeemable preferred stock (118) (118)
Other, net -- 5
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Net cash and cash equivalents provided from financing activities 669 644
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NET INCREASE IN CASH AND CASH EQUIVALENTS DURING PERIOD 5,950 6,748
Cash and cash equivalents balance at beginning of period 190,515 188,365
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CASH AND CASH EQUIVALENTS BALANCE AT END OF PERIOD $ 196,465 $ 195,113
=====================================================================================================
Supplemental information:
Income taxes paid $ 773 $ 1,101
Interest paid $ 34 $ 17
=====================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated interim
financial statements.
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WHITE RIVER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying consolidated interim financial statements include the accounts
of White River Corporation (together with its wholly-owned subsidiaries, unless
the context requires otherwise, "White River" or, together with all of its
subsidiaries, the "Company") and its subsidiaries, including those of CCC
Information Services Group, Inc. ("CCC"). The consolidated interim financial
statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial information and the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by GAAP for complete financial
statements. All significant intercompany balances have been eliminated in
consolidation. The consolidated interim financial statements include all
adjustments (consisting solely of normal recurring adjustments) considered
necessary by management to fairly present the financial condition, results of
operations and cash flows of the Company. Notwithstanding the foregoing, these
consolidated interim financial statements may not be indicative of financial
results for the full year or for any other future period. The balance sheet at
December 31, 1997 has been derived from the audited financial statements at that
date. Such consolidated interim financial statements should be read in
conjunction with White River's 1997 Annual Report to Stockholders on Form 10-K
as filed with the Securities and Exchange Commission.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities as well as the disclosure of contingent assets and
liabilities as of the date of the financial statements. Such estimates also have
a pervasive effect upon the reported amounts of revenues and expenses reflected
in the consolidated interim statements of operations. Actual results could
differ from these estimates.
Certain accounts in prior year financial statements have been reclassified for
comparative purposes to conform with the presentation in the current year
financial statements.
NOTE 2. ADOPTION OF ACCOUNTING STANDARDS
As of January 1, 1998, the Company is required to adopt SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's net income or stockholders'
equity. SFAS No. 130 requires unrealized gains or losses on the Company's
available-for-sale securities, which prior to adoption were reported separately
in stockholders' equity, to be included in other comprehensive income. Prior
year financial statements have been reclassified to conform to the requirements
of SFAS No. 130.
During the first quarter of 1998, total comprehensive income amounted to $18.7
million. In the first quarter of 1997, total comprehensive income amounted to a
loss of $3.1 million.
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WHITE RIVER CORPORATION AND SUBSIDIARIES
The components of comprehensive income (loss), net of related tax, for the
three-month periods ended March 31, 1998 and 1997 are as follows:
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Quarter Ended March 31,
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1998 1997
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Net loss $ (830) $ (2,622)
Unrealized gains on available for sale securities 19,497 (436)
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Comprehensive income (loss) $ 18,667 $ (3,058)
=====================================================================================================
</TABLE>
Accumulated other comprehensive income, net of related tax, at March 31, 1998
and December 31, 1997 is comprised solely of unrealized gains on available for
sale securities.
As of January 1, 1998, the Company is required to adopt SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. Under the
provisions of SFAS No. 131, the Company has elected to disclose segment
information for its interim periods commencing with the filing of its 1998
Annual Report on Form 10-K.
NOTE 3. INCOME TAXES
Income tax expense is based on income recognized for financial statement
purposes and includes the effects of temporary differences between such income
and that recognized for tax return purposes. For the quarter ended March 31,
1998, the Company recorded income tax expense of $3.2 million on pretax income
of $2.5 million. For the quarter ended March 31, 1997, the Company recorded
income tax expense of $1.2 million on a pretax loss of $1.3 million. The major
components that caused the Company's effective tax rate to exceed the Federal
statutory rate of 35% in both years are the amortization of goodwill, which is
not deductible for tax purposes, and the undistributed earnings of CCC, for
which the Company provides deferred taxes.
NOTE 4. SUBSEQUENT EVENT
White River has entered into an Amended and Restated Agreement and Plan of
Merger, dated as of December 11, 1997, as amended by Amendment Number 1 to the
Amended and Restated Agreement and Plan of Merger, dated as of April 6, 1998, by
and among certain affiliates of Harvard Private Group, Inc. ("Harvard Private
Capital"), White River and White River Ventures, Inc., a wholly owned subsidiary
of White River (as amended, the "Merger Agreement") pursuant to which, among
other things, (i) an affiliate of Harvard Private Capital will merge with and
into White River, with White River remaining as the surviving corporation (the
"Merger"), (ii) each share of White River common stock, $.01 par value per share
(other than treasury shares and shares with respect to which appraisal rights
are perfected under the Delaware General Corporation Law), outstanding at the
time of the Merger will be converted into the right to receive approximately
$90.67 in cash, without interest and subject to adjustment under certain
circumstances as described in the Merger Agreement and (iii) each share of
Series A Non-Participating Cumulative Preferred Stock, par value $1.00 per
share, will be converted into the right to receive the stated value of $1,000
per share plus any accrued and unpaid dividends until the effective time of the
Merger. In addition, White River has agreed to pay Harvard Private
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WHITE RIVER CORPORATION AND SUBSIDIARIES
Capital a termination fee of $15 million, plus up to $1.5 million in
reimbursable expenses, in the event that the Merger Agreement is terminated
under certain circumstances.
Consummation of the Merger is subject to customary conditions, including the
approval of White River's stockholders and the absence of any material adverse
change. The Merger Agreement may be terminated by any of the parties in the
event that the Board of Directors of White River withdraws its recommendation of
the transaction to stockholders or recommends an alternative transaction. The
parties expect the merger to occur during the second quarter of 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FINANCIAL CONDITION - AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
Book value per common equivalent share, as defined below, increased $4.12, or
6.7%, to $66.00 at March 31, 1998, from $61.88 at December 31, 1997. Such change
reflects an increase of $4.00 per share related to the after tax increase in net
unrealized investment gains, which were recorded directly to stockholders'
equity as part of Accumulated Other Comprehensive Income.
The calculation of book value per common and common equivalent share reflects
the potentially dilutive effects of White River's outstanding incentive and
directors' compensation awards. In the calculation of book value per common and
common equivalent share: (i) the numerator is the sum of stockholders' equity
and the tax benefit which would result from the settlement of outstanding
performance units, directors' compensation awards and balances within White
River's retirement plans with shares of Common Stock, based upon the current
market price of the Common Stock and assuming a statutory tax rate of 35%, and
(ii) the denominator is the sum of the shares of Common Stock outstanding and
shares deemed issued in settlement of outstanding performance units, directors'
compensation awards and balances within such retirement plans.
As of March 31, 1998, the Company had consolidated cash and cash equivalents of
$196.5 million, (which included $7.8 million related to the operations of CCC,
Hanover, and JKRE), as compared to $190.5 million as of December 31, 1997.
Substantially all of the cash and cash equivalent balances of $188.7 million
held by White River as of March 31, 1998, other than those of CCC, Hanover and
JKRE, were deposited with several major banking institutions in interest-bearing
accounts with maturities of six days or less. As of March 31, 1998, such
deposits earned a weighted average interest rate of 5.4% per annum.
Working capital (current assets less current liabilities) increased by $2.7
million to $305.5 million at March 31, 1998 from $302.8 million at December 31,
1997 primarily due to an increase in the Company's balances of cash and cash
equivalents of $6.0 million, which was in part offset by a reduction in the
Company's investment securities (in large part the result of the sale of certain
of CCC's short-term investments in U.S. Treasury Bills and the subsequent
purchase by CCC of long-term investments in U.S. Treasury Securities).
Capital expenditures were $7.6 million for the quarter ended March 31, 1998
compared to $1.8 million during the quarter ended March 31, 1997 primarily due
to expansion of CCC's office space as well as expenditures related to CCC's new
products.
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WHITE RIVER CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS -- QUARTERS ENDED MARCH 31, 1998 AND 1997
The consolidated net loss applicable to common stock totalled $0.8 million for
the quarter ended March 31, 1998, or $0.17 per diluted common share, as compared
to a net loss of $2.6 million, or $0.54 per diluted common share for the quarter
ended March 31, 1997.
Investment Operations
Under SFAS No. 115, changes in net unrealized investment gains and losses
relating to White River's marketable equity securities and debt which are
classified as available for sale are reported net of tax as a separate component
of stockholders' equity (Accumulated Other Comprehensive Income) and, except for
declines in value which are deemed to be other than temporary in nature, changes
in net unrealized investment gains and losses relating to White River's other
investments are not recognized until realized. Pretax net unrealized gains of
$30.0 million were recorded directly to stockholders' equity as part of
Accumulated Other Comprehensive Income during the quarter ended March 31, 1998,
and pretax net investment losses of $0.7 million were recorded directly to
stockholders' equity as part of Accumulated Other Comprehensive Income during
the quarter ended March 31, 1997.
For the quarter ended March 31, 1998, pretax investment income totalled $2.9
million, including $2.6 million of interest income generated from the cash and
cash equivalents balances held during the first quarter 1998. Pretax investment
income totalled $2.6 million for the quarter ended March 31,1997, including $2.3
million of interest income generated from the cash and cash equivalent balances
held during the first quarter 1997.
Proceeds from dispositions of investments during the quarters ended March 31,
1998 and March 31, 1997 were $31.1 million and $1.2 million, respectively. The
increase in 1998 relates to CCC's dispositions of short-term investments in U.S.
Treasury bills.
Insurance-Related Services
Revenues for the quarter ended March 31, 1998 of $44.7 million were $7.9
million, or 21.5%, higher than the same period in 1997. The increase in revenues
was due primarily to higher revenues from workflow/collision estimating software
licensing and valuation services. Workflow/collision estimating software revenue
increased due to an increase in the number of units sold in both the autobody
and insurance markets. Valuation services revenue increased due to higher
transaction volume.
On a stand-alone basis, CCC reported net income before accretion and dividends
on preferred stock of $4.4 million and $3.4 million for the quarters ended March
31, 1998 and March 31, 1997, respectively. White River's adjustment for the
amortization of goodwill and purchased software related to the CCC acquisition,
as well as the minority shareholders' interest in the earnings of CCC during
these periods, reduced net income by $4.6 million and $4.0 million for the
quarters ended March 31, 1998, and March 31, 1997, respectively.
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WHITE RIVER CORPORATION AND SUBSIDIARIES
Other Revenues - Consolidated
Other revenue of $3.3 million for the quarter ended March 31, 1998 consisted of
Hanover Accessories, Inc. ("Hanover") sales of $2.8 million, and Just Kiddie
Rides Enterprises, Inc. ("JKRE") sales of $0.5 million. The corresponding sales
amount of $1.6 million for the same period in 1997 includes only the operations
of Hanover, since JKRE was not established until November 1997.
Hanover generated $2.8 million in revenue from the sale of fashion accessories
for the quarter ended March 31, 1998, with a net loss of $0.1 million. As of
March 31, 1998, White River's investment in and advances to Hanover totalled
$3.7 million. Hanover generated revenues of $1.6 million for the quarter ended
March 31,1997, with a net loss of $0.2 million.
JKRE generated $0.5 million in revenue for the quarter ended March 31, 1998,
with a net loss of $0.2 million. As of March 31, 1998, White Rivers investment
in and advances to JKRE totalled $2.1 million.
Operating Expenses
For the quarter ended March 31, 1998, compensation and benefits expense totaled
$20.2 million, as compared to $19.1 million for the same period in 1997. The
first quarter 1998 increase is entirely the result of an increase in CCC's
compensation and benefits to recruit and retain key employees. For the quarter
ended March 31, 1998, other operating expenses totalled $25.3 million, as
compared to $21.6 million for the same period in 1997, representing an increase
of 17.2%. Such increase was due to an increase in CCC's operating expenses of
$3.1 million, which was primarily attributable to product development and
customer service expenses necessary to support increased revenues, as well as to
efforts to build and upgrade internal systems.
Income Taxes
The Company's effective tax rate is higher than the statutory rate of 35% due to
the fact that the Company provides for deferred taxes on its equity interest in
the net income of CCC, as well as due to the effect of the amortization of
goodwill.
The Company provides for deferred income taxes which reflect the effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Furthermore, deferred tax assets are recorded net of a valuation allowance if
management believes that it is more likely than not that some portion or all of
the deferred tax assets will not be realized.
LIQUIDITY AND CAPITAL RESOURCES
Total Company (consolidated basis)
During the quarter ended March 31, 1998, the Company's cash and cash equivalent
balances increased by $6.0 million (see "Consolidated Interim Statements of Cash
Flows (unaudited)" on page 5). The major sources of cash provided were $31.1
million from sales of investments, and net cash provided from operations of
$10.1 million. The Company used $28.3 million for the purchase of long-term
investments and investment securities
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WHITE RIVER CORPORATION AND SUBSIDIARIES
(all of which were related to CCC's purchases of Treasury securities) and $7.6
million for the purchase of software and equipment.
Management believes that cash flows from operations, sales of investment
securities and available borrowings as discussed separately below under "CCC"
will be sufficient to satisfy the Company's capital expenditure and working
capital requirements for the foreseeable future.
White River
As of March 31, 1998, the Company had consolidated cash and cash equivalents of
$196.5 million, of which $188.7 million relates to balances held by White River,
with the remaining $7.8 million related to the operation of CCC, Hanover and
JKRE. White River's primary sources of additional cash include sales of
investments, interest earned on cash equivalents and dividends earned on
investments. There were no cash proceeds generated from the sale of investments
during the quarter ended March 31, 1998, as compared to $1.2 million cash
generated from the sale of investments during the quarter ended March 31, 1997.
Management believes that available cash and funds generated from sales of
investments will be sufficient for White River to satisfy its working capital
requirements for the foreseeable future.
CCC
CCC's primary source of cash includes receipts of customer billings, which are
generally invoiced monthly in advance for EZEst units and Pathways subscriptions
and monthly in arrears for Total Loss and EZNet transactions. During each of the
quarters ended March 31, 1998 and March 31, 1997, CCC generated net cash from
operating activities of $8.0 million. CCC used $6.1 million and $1.8 million,
during the quarters ended March 31, 1998 and March 31, 1997, respectively,
excluding noncash capital expenditures, to purchase equipment and software and
invested the remaining cash in marketable securities.
Management believes that cash flows from operations and the current credit
facility will be sufficient to meet CCC's liquidity needs over the next 12
months. There can be no assurance, however, that CCC will be able to satisfy its
liquidity needs in the future without engaging in financing activities beyond
those described above.
YEAR 2000 ISSUE
The year 2000 issue relates to computer system programs which may not properly
recognize the change in date years from 1999 to 2000. As a result of this time
sensitivity of existing software, any business entity is at risk for possible
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send
invoices, or engage in similar normal business activities. In addition, entities
that provide software solutions to their customers must monitor the year 2000
concerns in the applications their software supports.
Based on risk assessment, CCC is currently modifying or replacing significant
portions of its software so that its computer systems will function properly
with respect to the year 2000 date recognition. White River is currently in the
process of replacing significant portions of its software and expects to have
such upgrades
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WHITE RIVER CORPORATION AND SUBSIDIARIES
completed by December 31, 1998. CCC presently believes that with modifications
to existing software and conversions to new software, the year 2000 issue will
not pose a significant operational problem. However, if such modifications and
conversions are not made, or not completed timely, the year 2000 issue could
have a material adverse effect on CCC's business, financial condition and
results of operations.
The Company is utilizing both internal and external resources to reprogram, or
replace, and test software for the year 2000 modifications. The Company
anticipates completing the year 2000 project in early 1999. The total cost of
the year 2000 project for the Company is not material.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 ("the Act") provides a safe
harbor for forward-looking information made on behalf of the Company. All
statements, other than statements of historical facts, which address activities
or actions that the Company expects or anticipates will or may occur in the
future, including such things as expansion and growth of the Company's
operations and other such matters are forward-looking statements. To take
advantage of the safe harbor provided by the Act, the Company is identifying
certain factors that could cause actual results to differ materially from those
expressed in any forward-looking statements made by the Company.
Any one, or a combination, of these factors could materially affect the results
of the Company's operations. These factors include competitive pressures,
changes in customer preferences, acceptance of new product introductions and
other marketing and sales initiatives, legal and regulatory initiatives and
conditions in the capital markets. Forward-looking statements made by the
Company are based on knowledge of its business and the environment in which it
operates, but because of the factors listed above, as well as other factors,
beyond the control of the Company, actual results may differ from those in the
forward-looking statements.
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<PAGE>
WHITE RIVER CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is party to various claims and routine litigation arising
in the normal course of their businesses. Such claims and litigation
are not expected to have a material adverse effect upon the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) FINANCIAL STATEMENT SCHEDULES
All financial statement schedules are omitted as they are not
applicable or the information required is included in the
consolidated financial statements or notes thereto.
(b) REPORTS ON FORM 8-K
On January 7, 1998, White River Corporation issued a press
release announcing the election of Gordon S. Macklin to the
offices of President and Chief Executive Officer. The information
contained in the press release, which is attached as an exhibit
to this report, is incorporated herein by reference. (Form 8-K
filed January 8, 1998).
White River Corporation announced on April 7, 1998, the signing
of Amendment Number 1 to the Amended and Restated Agreement and
Plan of Merger ("Amendment"), dated as of April 6, 1998, by and
among Demeter Holdings Corporation, WRC Merger Corp., WRV Merger
Corp. White River and White River Ventures, Inc. which amended
the Amended and Restated Agreement and Plan of Merger, dated as
of December 11, 1997, by and among the parties to the Amendment.
(Form 8-K filed on April 20, 1998).
-13-
<PAGE>
WHITE RIVER CORPORATION AND SUBSIDIARIES
As contemplated by Section 19 of Amendment Number 1 to the Amended and
Restated Agreement and Plan of Merger, dated as of April 6, 1998 (the
"Amendment"), which amended the Amended and Restated Agreement and Plan
of Merger, dated as of December 11, 1997 (the "Merger Agreement"), by and
among Demeter Holdings Corporation ("Demeter"), WRC Merger Corp., White
River Corporation ("White River"), and White River Ventures, Inc.,
Patrick M. Byrne, Robert T. Marto, Andrew Delaney, Gordon S. Macklin and
Bonnie B. Stewart, each an officer or director of White River, and John
J. Byrne and an individual who votes certain shares of White River Common
Stock (as defined in the Merger Agreement) for the benefit of John J.
Byrne, have entered into a voting agreement with Demeter, in
substantially the form of Exhibit 1 to the Amendment, pursuant to which
such persons have agreed to, among other matters, vote the shares of
White River Common Stock that they own and/or vote in favor of the Merger
Proposal (as defined in the Merger Agreement). The foregoing persons own
and/or vote, in the aggregate, approximately 20% of the White River
Common Stock outstanding. (Form 8-K filed April 30, 1998).
(c) EXHIBITS
*2.1 Purchase Agreement, dated as of April 15, 1994, among White River
Ventures, Inc. and Teachers Insurance and Annuity Association of
America, The Mutual Life Insurance Company of New York, TCW Special
Placements Fund II, TCW Capital and BankAmerica Capital Investments
(Current Report on Form 8-K dated April 15, 1994, File No. 0-22604 --
Exhibit 2.1).
*2.1 (a) Index of Omitted Schedules; Agreement to Furnish Upon Request (Current
Report on Form 8-K dated April 15, 1994, File No. 0-22604 -- Exhibit
2.1(a)).
*2.2 Reorganization Agreement, dated as of June 16, 1994, between InfoVest
Corporation and White River Ventures, Inc. (Current Report on Form 8-K
dated June 16, 1994, File No. 0-22604 -- Exhibit 2.1).
*2.2 (a) Index of Omitted Schedules; Agreement to Furnish Upon Request (Current
Report on Form 8-K dated June 16, 1994, File No. 0-22604 -- Exhibit
2.1(a)).
*2.3 Stock and Asset Purchase Agreement, dated as of August 25, 1994, by
and among InfoVest Corporation and Credit Card Service Corporation and
Faneuil, Inc., New Service, Inc. and Faneuil ISG, Inc. (Current Report
on Form 8-K dated August 25, 1994, File No. 0-22604 -- Exhibit 2.1).
*2.3 (a) Index of Omitted Exhibits and Schedules; Agreement to Furnish Upon
Request (Current Report on Form 8-K dated August 25, 1994, File No. 0-
22604 --Exhibit 2.1(a)).
*3.1 Restated Certificate of Incorporation of the Registrant as filed with
the Secretary of State of the State of Delaware (Form 10, File No. 0-
22604 --Exhibit 3.1).
*3.2 By-Laws of the Registrant (Form 10, File No. 0-22604 -- Exhibit 3.2).
*4.1 Rights Agreement between the Registrant and First Chicago Trust
Company of New York, as Rights Agent (Form 8-A, File No. 0-22604 --
Exhibit 1).
-14-
<PAGE>
WHITE RIVER CORPORATION AND SUBSIDIARIES
*4.2 Certificate of Designations of Series A, Non-Participating Cumulative
Preferred Stock (Form 10, File No. 0-22604 -- Exhibit 4.2).
*4.3 Certificate of Designations of Series B, Participating Cumulative
Preferred Stock (Form 10-K for the year ended December 31, 1993, File
No. 0-22604 --Exhibit 4.3).
*4.4 White River Common Stock Certificate (Form 10-K for the year ended
December 31, 1993, File No. 0-22604 -- Exhibit 4.4).
*10.1 1993 Incentive Compensation Plan of the Registrant adopted on
September 24, 1993 (Form 10, File No. 0-22604 -- Exhibit 10.1).
*10.2 Voluntary Deferred Compensation Plan of the Registrant adopted on
September 24, 1993 (Form 10, File No. 0-22604 -- Exhibit 10.2).
*10.3 Deferred Benefit Plan of the Registrant adopted on September 24, 1993
(Form 10, File No. 0-22604 -- Exhibit 10.3).
*10.4 Letter Agreement Evidencing Award of Performance Units between the
Registrant and Andrew Delaney (Form 10-K for the year ended December
31, 1993, File No. 0-22604 -- Exhibit 10.4).
*10.5 Letter Agreement Evidencing Award of Performance Units between the
Registrant and Gordon S. Macklin (Form 10-K for the year ended
December 31, 1993, File No. 0-22604 -- Exhibit 10.5).
*10.6 Credit Agreement dated as of December 13, 1993, between the Registrant
and Fund American Enterprises Holdings, Inc. (Form 10-K for the year
ended December 31, 1993, File No. 0-22604 -- Exhibit 10.6).
*10.7 Intercompany Services and Expense Sharing Agreement dated as of
September 24, 1993, between the Registrant and Fund American
Enterprises Holdings, Inc. (Form 10, File No. 0-22604 -- Exhibit
10.8).
*10.8 First Amendment to the Deferred Benefit Plan of the Registrant dated
as of December 17, 1993 (Form 10-K for the year ended December 31,
1993, File No. 0-22604 -- Exhibit 10.10).
*10.9 Stockholders' Agreement, dated as of June 16, 1994, by and among CCC,
White River Ventures, Inc. and the Inside Stockholders of CCC
identified on Exhibit A thereto (Current Report on Form 8-K dated June
16, 1994, File No. 0-22604 -- Exhibit 10.1).
*10.10 Regulatory Contingency Agreement, dated as of June 16, 1994, between
CCC and White River Ventures, Inc. (Current Report on Form 8-K dated
June 16, 1994, File No. 0-22604 -- Exhibit 10.2).
*10.11 Registration Rights Agreement, dated as of May 23, 1995, between the
Registrant and the Selling Stockholders referred to therein
(incorporated by reference to Exhibit 10.1 to the Registrant's
Registration Statement on Form S-3 (File No. 33-93544).
27 Current Financial Data Schedule for quarter ended March 31, 1998.
* Previously filed as indicated and incorporated herein by reference.
-15-
<PAGE>
WHITE RIVER CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements 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.
Date: May 13, 1998 White River Corporation
By: /s/ Gordon S. Macklin
------------------------------
Name: Gordon S. Macklin
Title: President and
Chief Executive Officer
By: /s/ Michael E.B. Spicer
------------------------------
Name: Michael E.B. Spicer
Title: Chief Financial Officer and
Treasurer
-16-
<PAGE>
WHITE RIVER CORPORATION AND SUBSIDIARIES
Exhibit Sequential
Number Exhibit Index Page Number
- --------- ----------------------------------------- -----------------
27 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
1998 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 196,465
<SECURITIES> 118,783
<RECEIVABLES> 23,612
<ALLOWANCES> 2,769
<INVENTORY> 0
<CURRENT-ASSETS> 344,203
<PP&E> 72,757
<DEPRECIATION> 51,458
<TOTAL-ASSETS> 463,857
<CURRENT-LIABILITIES> 38,741
<BONDS> 0
7,192
0
<COMMON> 64
<OTHER-SE> 320,168
<TOTAL-LIABILITY-AND-EQUITY> 463,857
<SALES> 48,033
<TOTAL-REVENUES> 50,901
<CGS> 0
<TOTAL-COSTS> 45,539
<OTHER-EXPENSES> 2,807
<LOSS-PROVISION> 477
<INTEREST-EXPENSE> 65
<INCOME-PRETAX> 2,490
<INCOME-TAX> 3,202
<INCOME-CONTINUING> (712)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (712)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
