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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
                                  
                               FORM 10-K/A     
                                
                             AMENDMENT NO. 1     
                                       
                                    TO     
 
                               ----------------
 
  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
 
                                      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 IDENTIFICATION NO.)
    INCORPORATION OR ORGANIZATION)
 
           2 GANNETT DRIVE, SUITE 200, WHITE PLAINS, NEW YORK 10604
         (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
 
      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 251-0237
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
 
     TITLE OF EACH CLASS        NAME OF EACH EXCHANGE ON WHICH REGISTERED
     -------------------        -----------------------------------------
             NONE                                  NONE
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                         COMMON STOCK, $0.01 PAR VALUE
                               (TITLE OF CLASS)
 
  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 [_]
 
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
 
  The aggregate market value of voting shares (based on the closing price of
those shares listed on the Nasdaq National Market and the consideration
received for those shares not listed on a national or regional exchange) held
by non-affiliates (as defined in Rule 405) of the registrant as of April 13,
1998, was $240,908,059.
 
  As of April 13, 1998, 4,874,756 shares of Common Stock with a par value of
$0.01 per share were outstanding.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
                                    (None)
 
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                    WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                               TABLE OF CONTENTS
 
ANNUAL REPORT ON FORM 10-K
 
<TABLE>
<S>       <C>                                                                                     <C>
                                                  PART I
Item  1.  Business...............................................................................   1
Item  2.  Properties.............................................................................   9
Item  3.  Legal Proceedings......................................................................   9
Item  4.  Submission of Matters to a Vote of Security Holders....................................   9
                                                  PART II
Item  5.  Market for Registrant's Common Equity and Related Stockholder Matters..................  10
Item  6.  Selected Financial Data................................................................  11
Item  7.  Management's Discussion and Analysis of Financial Condition and Results of Operations..  13
Item  8.  Financial Statements and Supplementary Data............................................  20
Item  9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...  20
                                                 PART III
Item 10.  Directors and Executive Officers of the Registrant.....................................  20
Item 11.  Executive Compensation.................................................................  22
Item 12.  Security Ownership of Certain Beneficial Owners and Management.........................  25
Item 13.  Certain Relationships and Related Transactions.........................................  26
                                                  PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......................  27
Signatures......................................................................................   30
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                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                                    PART I
 
ITEM 1. BUSINESS.
 
THE COMPANY
 
  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"), formerly named FF Re Inc., was incorporated in
Delaware in September 1989 and commenced operations in its present form on
September 24, 1993, concurrent with the purchase and other transfer of
selected assets and the assumption of certain liabilities (collectively, the
"Capitalization") from its former parent company, Fund American Enterprises
Holdings, Inc. and certain of its subsidiaries (together, "Fund American").
Additionally, on September 24, 1993, the Fund American board of directors
approved in principle a plan to distribute (the "Distribution") approximately
75% of the outstanding shares of White River common stock, par value $0.01 per
share (the "Common Stock"), to all holders of Fund American common stock. The
Distribution commenced on December 22, 1993.
 
  Prior to the Capitalization, White River served as the holding company for
Fund American's investment management subsidiaries (the "Investment Management
Group") and certain of Fund American's insurance subsidiaries. The insurance
subsidiaries have had essentially no activity since their formation and White
River ceased the operations of the Investment Management Group during August
1994.
 
  During June 1994, White River completed its acquisition of a majority of the
total outstanding shares of common stock, par value $0.10 per share (the "CCC
Common Stock"), of CCC Information Services Group Inc., formerly InfoVest
Corporation, (together with its subsidiaries, unless the context requires
otherwise, "CCC"). During August 1996, CCC completed an initial public
offering of approximately 29% of the resulting total outstanding CCC Common
Stock for net proceeds of $72.1 million (the "CCC IPO"). As of December 31,
1997, White River held: (i) approximately 35% of the total outstanding shares
of CCC Common Stock, (ii) 630 shares of CCC Series C Cumulative Redeemable
Preferred Stock, stated value $1,000 per share (the "CCC Series C Preferred"),
(iii) 3,601 shares of CCC Series D Cumulative Redeemable Preferred Stock,
stated value $1,000 per share (together with the Series C Preferred, the "CCC
Preferred Stock"), and 500 shares of CCC Series E Cumulative Redeemable
Preferred Stock, stated value $1,000 per share (the "CCC Series E Preferred").
According to the terms of the CCC Series E Preferred, White River continues to
have a majority of the voting power associated with CCC's total outstanding
voting stock. CCC is a supplier of automobile claims information and
processing, claims management software and communications services.
 
  On December 11, 1997, White River announced the signing of a merger
agreement under which an affiliate of Harvard Private Capital Group, Inc. ("
Harvard Private Capital") would acquire White River for approximately $400
million in cash. Under the Amended and Restated Agreement and Plan of Merger
(the "Merger Agreement"), among other things, WRC MergerCorp. ("MergerCo")
would be merged with and into White River (the "Merger"), and each share of
Common Stock, (other than treasury shares held by White River or Dissenting
Shares), outstanding at the effective time of the merger ("Effective Time")
would be converted into the right to receive approximately $82.02 in cash,
without interest and subject to adjustment under certain circumstances as
described further in the Merger Agreement. The transaction would be fully
financed and would not be subject to a financing condition. The merger price
would be subject to adjustment under certain circumstances, and, therefore,
the price per share actually received upon consummation of the
merger could be greater or less than $82.02. Holders of White River's Series A
Preferred Stock would receive the stated value of $1,000 per share plus any
accrued and unpaid dividends.
 
  In connection with the transaction, White River amended its shareholders'
rights plan (as discussed in Note 13 to the accompanying financial statements)
to provide, among other things, that the exercisability of rights will
 
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not be triggered by the merger agreement and that the rights will expire
immediately prior to the consummation of the merger. Accordingly, the rights
will not be redeemed and no payment will be made to stockholders in respect of
their rights.
 
  On March 10, 1998, Fund American made a proposal to White River to negotiate
the acquisition of all of the outstanding shares of common stock of White
River not owned by Fund American for a total consideration of up to $85.00 per
share in cash, subject to satisfactory completion of due diligence and to
successful negotiation, Fund American Board approval and signing of a
definitive agreement.
 
  On March 23, 1998, Harvard Private Capital proposed an amendment to the
Merger Agreement. The proposed amendment would modify the Merger Agreement by:
1) increasing the merger consideration to approximately $434 million ($89.00
per share), subject to certain adjustments; and 2) requiring White River to
pay a "break up" fee of $13.5 million in the event that the merger is not
successfully concluded by June 30, 1998 for reasons other than a breach of the
Merger Agreement by Harvard Private Capital.
 
  On March 30, 1998, Fund American increased its proposal to purchase all
shares of White River not owned by Fund American to $90 cash per share,
contingent, among other things, on White River Board acceptance by Monday,
April 6, 1998, and execution of a mutually satisfactory definitive agreement,
and certain other contingencies.
 
  On April 2, 1998, Harvard Private Capital proposed another amendment to the
Merger Agreement. The proposed amendment would modify the Merger Agreement by,
among other things: 1) increasing the merger consideration to approximately
$442 million ($90.67 per share), subject to certain adjustments; and 2)
requiring White River to pay a "break up" fee of $13.5 million in the event
that the merger is not successfully concluded by June 30, 1998 for reasons
other than a breach of the Merger Agreement by Harvard Private Capital.
 
  On April 3, 1998, Fund American reaffirmed its proposal to purchase all
shares of White River not owned by Fund American for $90 cash per share, and
removed certain contingencies.
 
  On April 6, 1998, after further discussions with Harvard Private Capital and
Fund American, the White River Board evaluated the two proposals based on its
fiduciary duty to maximize shareholder value and decided to accept the Harvard
Private Capital proposal. Under the terms of the amended agreement, Harvard
Private Capital, among other things, will pay White River shareholders $90.67
per share in cash, subject to adjustment which could result in a higher or
lower price at closing. In addition, White River agreed to pay Harvard Private
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.
 
REGULATION
 
  Based upon the composition of its assets at the time of the Capitalization,
White River met the definition of an investment company (an "Investment
Company") under the Investment Company Act of 1940 (the "Investment Company
Act") and, accordingly, was subject to registration and regulation under such
legislation. However, on December 6, 1993, White River received from the
Securities and Exchange Commission (the "Commission") a temporary exemption
(the "Exemptive Order") from registering as an Investment Company and was
exempted from some, but not all, of the provisions of the Investment Company
Act for a period of up to two years from the date of the Exemptive Order.
White River requested this temporary exemption to provide management with time
to dispose of a sufficient amount of investments, to acquire a majority
interest in one or
 
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more operating businesses, or to take such other actions necessary to cause
White River not to meet the definition of an Investment Company. During
October 1995, White River filed a report with the Commission which concluded
that, effective September 30, 1995, White River no longer met the definition
of an Investment Company. Accordingly, White River no longer needs to rely
upon the relief provided by the Exemptive Order.
 
  White River ceased to be an Investment Company because the value of its
holdings of investment securities was less than 40 percent of its total assets
(excluding Government securities and cash) on an unconsolidated basis. This
change was principally the result of a significant increase in the investment
in White River's majority-owned operating subsidiary, CCC, which was acquired
by White River in 1994. In addition, since it began operating independently in
1993, White River has conducted its business so that it is not an investment
company. White River has continued to seek and acquire new operating
businesses and has been actively involved in the management and operations of
its subsidiaries. It has disposed of its holdings of investment securities to
the greatest extent possible, given pre-existing restrictions and other limits
on its ability to sell or otherwise dispose of certain of those holdings. So
as to be ready to make appropriate acquisitions of operating business, White
River has maintained its reserves in "cash and cash items," as those terms are
used in the Investment Company Act, that is, in deposits with banks that are
payable on demand or on less than seven days' notice. White River has
purchased no new investment securities.
 
INVESTMENT OPERATIONS
 
  In accordance with its plan to cease to meet the definition of an Investment
Company, White River disposed of investments for proceeds and other
consideration totaling $308.3 million during the period from the
Capitalization through December 31, 1997. Such dispositions include $90.0
million of investments which were transferred during 1995 to Fund American in
settlement of outstanding balances under a credit agreement between White
River and Fund American (the "Credit Agreement").
 
  As of December 31, 1997, White River's investments totalled $164.4 million,
as compared to a total of $99.1 at December 31, 1996. The increase in 1997
related primarily to an increase of $55.6 million in the carrying values of
White River's investment in Cross Timbers Oil Company ("Cross Timbers") common
stock and the increase in value associated with the Company's interest in the
Richard C. Blum & Associates--NWA Partners, L.P. ("NWA Partners") (see Note 2
to accompanying financial statements), and to CCC's additional net purchase of
$21.1 million of U.S. Treasury Bills. The disposition of McFarland Energy
Corporation ("McFarland") common stock and the distribution by NWA Partners,
as described below, reduced investments by $11.3 million.
 
  During 1997, White River disposed of certain investments and received
proceeds of approximately $39.0 million. Such dispositions include proceeds of
$26.3 million in connection with its investment in NWA Partners. The
distribution represented White River's share of proceeds arising primarily
from the distribution by NWA Partners, which holds equity securities in
Northwest Airlines Corporation ("NWA Corp."). The distribution represented
White River's share of proceeds arising primarily from the redemption of NWA
Partners investment in preferred stock of NWA Corp, but also in part due to
the sale of 0.7 million shares of NWA Corp. Common Stock subject to a call
option. Additionally, White River received proceeds of $12.0 million from the
sale of its entire investment in common stock of McFarland due primarily to
the purchase of McFarland by Monterey Investment Acquisition Corporation.
 
  As of December 31, 1996, White River's investments totalled $99.1 million,
as compared to a total of $76.3 million as of December 31, 1995. The increase
during 1996 relates primarily to CCC's purchase of U.S. Treasury Bills and the
increase in value of White River's investment in Cross Timbers common stock.
The 1996 year end investment balances consisted primarily of White River's
interests in Cross Timbers ($60.8 million) and in NWA Partners ($21.8
million), as well as U.S. Treasury Bills ($9.1 million) held by CCC.
 
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  During 1996, White River disposed of certain investments and received
proceeds of $21.1 million. Such dispositions included proceeds of $14.5
million from the sale of White River's investment in common and preferred
stock of Newflo Corporation ("Newflo") in connection with the purchase of
Newflo by Precision Castparts Corporation. Additionally, White River received
proceeds of $6.5 million from the sale of a portion of its investment in the
common stock of Cross Timbers.
 
  White River's dispositions of investments totaled $118.9 million during the
year ended December 31, 1995. The 1995 investment dispositions included the
transfer of $90.0 million of investments to Fund American in settlement of
outstanding balances under a credit agreement White River entered into in 1993
with Fund American (The "Credit Agreement"), which resulted in pretax net
investment gains of $11.0 million (see Note 7 to accompanying financial
Statements).
 
  Investment income, including interest earned on cash and cash equivalent
balances, totalled $11.4 million, $9.0 million and $8.3 million for the years
ended December 31, 1997, 1996 and 1995, respectively. Net investment gains
totalled $27.5 million, $16.2 million and $36.3 million, for the years ended
December 31, 1997, 1996 and 1995, respectively.
 
  White River, through its wholly-owned subsidiary White River Partners, Inc.
("Partners"), seeks to acquire and operate distressed companies in various
industries. During April 1996, Partners, through its wholly-owned subsidiary
Hanover Accessories, Inc. ("Hanover"), acquired the business and assets of a
company engaged in the design, distribution, sale and retail servicing of
popular-priced fashion accessories, primarily for the children's market.
Hanover currently markets over 3,500 different styles of products, many of
which are exclusive designs available only to Hanover. All of Hanover's
products are supplied through contract manufacturers. Hanover's revenues were
$9.0 million in 1997 and $5.4 million from its commencement of operations
during April 1996 through December 31, 1996.
 
  Effective November 7, 1997, Partners purchased from European American Bank
certain assets of Just Kiddie Rides, Inc. Through its indirect wholly-owned
subsidiary, Just Kiddie Rides Enterprises, Inc., ("JKRE"), a Delaware
corporation, White River will market and manufacture licensed kiddie rides.
Revenues of JKRE from its commencement of operations in November 1997 through
December 31, 1997 were $0.5 million.
 
INSURANCE-RELATED SERVICES
 
  The Company's revenues from insurance-related services totalled $159.1
million, $131.0 million and $115.5 million for the years ended December 31,
1997, 1996 and 1995 respectively.
 
  During the years ended December 31, 1997, 1996 and 1995, 66%, 69%, and 70%,
respectively, of total insurance-related services revenue were attributable to
the insurance industry.
 
PRODUCTS
 
  The principal services and products offered by CCC automate the process of
evaluating and settling both total loss and repairable automobile claims. When
a vehicle cannot be repaired, CCC's vehicle valuation services and products,
primarily Total Loss, provide insurance companies with the ability to effect
total loss settlements on the basis of market-specific vehicle values. When a
vehicle is repairable, CCC's collision estimating services and products,
principally EZEst and Pathways, provide insurance appraisers and collision
repair facilities with up-to-date pricing, interactive decision support and
computer-assisted logic to produce accurate collision repair estimates. CCC's
claims outsourcing services and products include ACCESS, a vehicle restoration
and management service. The Company also offers a complete auto claims
outsourcing solution that handles the entire process from initial loss report
through settlement. Communication services offered by CCC connect insurers,
appraisers and collision repair facilities, providing the information required
for decision making. CCC also provides a wide variety of related services and
products intended to facilitate the overall management of the automobile
claims process. CCC's Pathways workflow management software is designed to
integrate each of CCC's product offerings on a common platform with a common
graphical user interface, facilitating the learning
 
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of new applications while providing CCC's customers with a broader tool set
for claims completion. CCC's services and products represent an integrated
solution, combining information, claims management software and secure
communication systems to improve the efficiency of the automobile claims
process.
 
  CCC's services and products are integrated for use with one another across
multiple platforms and are designed for ease of use by the large number of
people involved in the automobile claims process on a daily basis.
Approximately 66% of CCC's consolidated revenue for 1997 was from the sale of
services and products to insurance companies with the remainder sold to
collision repair facilities and other customers. Revenues from Total Loss
valuation services and EZEst and Pathways Collision Estimating software
licensing accounted for 32% and 47%, respectively, of CCC's consolidated 1997
revenue.
 
  Vehicle Valuation Services and Products. CCC's Total Loss service provides
insurance companies the ability to effect total loss settlements on the basis
of market-specific values based upon physically inspected used car
inventories. CCC's management believes that CCC's vehicle database, which
contains detailed information about millions of vehicles either physically
inventoried from one of more than 4,500 dealer lots or taken from recent
advertisements, is the most comprehensive in North America. CCC uses its
proprietary database and valuation software to provide insurance companies
with independent, current, local, market values and vehicle identification
data. CCC's Total Loss product complies with the regulatory requirements of
all 50 states. Each total loss valuation includes a vehicle identification
search under VINguard, CCC's vehicle identification number fraud protection
program which matches current claims against CCC's database of previously
totalled or stolen vehicles.
 
  Collision Estimating Services and Products. EZEst was the first stand-alone,
PC-based collision estimating system utilizing intelligent logic to automate
the process of eliminating repair activity overlaps and automating all
included operations and ancillary repair work in preparing an estimate.
Intelligent logic represents automation of procedure pages from crash
estimating guides that detail the steps involved in repairing various parts of
a damaged vehicle depending on the extent of the damage. EZEst provides
automobile insurers with fast and reliable estimates at a low cost. EZEst runs
on any IBM-compatible laptop or desktop computer and contains all nine volumes
of the Motor Crash Estimating Guide and other data necessary to build an
estimate. CCC licenses the Motor Crash Estimating Guide data from a subsidiary
of The Hearst Corporation. A unique feature of EZEst is its recycled part
valuation upgrade which will display and automatically insert into the
estimate a predicted price of those recycled or salvage automotive parts
statistically known to be available in the local market in which the estimate
is written. The EZEst software, Motor Crash Estimating Guide database and
other associated databases are updated via a monthly CD-ROM. EZEst is sold
under multi-year contracts on a monthly subscription basis to both insurers
and collision repair facilities. In April 1996, CCC began delivery of its
next-generation estimating product, Pathways Collision Estimating, which
provides all of the functionality of the EZEst product while adding the
functionality of total loss and settlement processing, claim payment, salvage
disposal and custom electronic forms. In November 1996, CCC introduced a
collision repair facility version of Pathways Collision Estimating.
 
  EZWorks Productivity Tools. EZWorks is a set of modular applications that
assist collision repair businesses with a variety of management functions such
as job costing, operations analysis, and accounting interfaces. EZWorks
provides an important interface between EZEst and a leading commercial
accounting product.
 
  Claims Outsourcing Services and Products. ACCESS is an outsourced vehicle
appraisal and restoration management service. Insurance companies use ACCESS
to appraise and settle claims without hiring either additional staff or
independent appraisers. ACCESS uses a network of CCC certified, fully equipped
repair facilities and CCC's claims management tools to provide fast, low cost
claims settlement with high customer satisfaction. In addition, CCC provides
reinspection and restoration management staff for quality assurance. ACCESS is
sold on a per claim basis under multi-year agreements. The Company offers a
complete claims outsourcing service that manages all aspects of the claim
process. Using a proprietary, state-of-the-art, paperless claims management
system, the outsourcing service takes the initial loss notification and
manages the file through settlement.
 
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  EZNet Communications Network. EZNet connects insurers with their appraisers
and repair network partners. EZNet's process management capabilities provide
the information required to make appropriate and timely decisions, regardless
of location or settlement process. EZNet is used principally for the complete
electronic communication of work files and estimates to staff appraisers or
insurance company direct repair program ("DRP") partners and for the receipt
of auditable estimate data. (A DRP allows an insured whose automobile is
involved in a collision to have the repair performed within a network of
approved repair facilities.) EZNet is the only communications network tailored
to provide automated communication services to participants in the automobile
physical damage claim process, including: mailboxing, messaging, routing,
imaging, assignment tracking, record library and third-party gateways. A
unique feature of EZNet is the electronic appraisal review feature that
provides real-time exception reporting to target re-inspections and improves
management control of DRP networks and appraisers. EZNet also facilitates the
management of car rental and salvage disposition. EZNet is sold both on a per
transaction basis and on a monthly subscription basis.
 
  Digital Imaging. The computerized digital photo imaging system allows
automobile insurers and collision repairers to visually document vehicle
damage and electronically communicate the image. This reduces claims cycle
time while eliminating film cost and saving travel and overnight delivery
expense. In September 1997, CCC began delivery of its next generation system,
Pathways Digital Imaging.
 
  GuidePost Decision Support. GuidePost is an executive information and data
navigation software package. GuidePost allows managers to electronically
evaluate results, format reports, drill down for subject or personnel review
and compare performance to industry and regional indices. GuidePost updates
are distributed monthly on diskettes and development for network delivery is
underway. While introduced as an element of CCC's suite of electronic DRP and
collision estimating tools, GuidePost will be made available for all CCC's
products, extending the integration of a multi-channel claims process.
 
  ACCLAIM Litigation Management. ACCLAIM is an outsourcing service offered to
insurance companies for the processing and management of defined soft-tissue
bodily injury claims. ACCLAIM uses CCC's licensed case management software and
information management tools in connection with a national network of lawyers
(the "Lawyers Network") to defend and dispose of lawsuits filed against
insured-parties. ACCLAIM services are sold to insurance companies on a fixed
fee, per claim basis.
 
  Pathways Appraiser Workstation Software. Pathways is a windows-based
appraiser workstation software platform designed to better serve the overall
workflow needs of insurance field staffs. Pathways offers a common, graphical
user interface across all applications which organizes claims in tabbed,
electronic workfiles and reduces the time required to learn or develop new
software functions or applications. Pathways includes a workflow manager which
assists users in managing all aspects of their day-to-day activities,
including receipt of new assignments, communication of completed activity,
electronic file notes and reports as well as the automatic logging of key
events in the claims process. CCC intends to integrate all of its existing
field applications into this platform and develop all future field
applications on Pathways. Pathways is fully integrated with CCC's
communications network, allowing claim adjusters to operate in the field, and
thereby reduce office and other expenses. The first Pathways application was
Pathways Collision Estimating which provides all of the functionality of the
EZEst product while adding the functionality of total loss and settlement
processing, claim payment, salvage disposal and custom electronic forms.
Pathways is sold under multi-year contracts on a monthly subscription basis.
 
CUSTOMERS
 
  CCC's business is based on relationships with the two primary users of CCC's
services: automobile insurance companies and collision repair facilities.
CCC's customers include the largest U.S. automobile insurance companies and
most of the small to medium size automobile insurance companies in the
country.
 
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  CCC's products are used by approximately 12,000 collision repair facilities.
CCC has collision repair customers in all 50 states, including most major
metropolitan markets. In addition to assisting collision repair facilities in
managing their businesses, many of these customers use CCC's services and
products as a means to participate in insurance DRP programs, thereby making
the use of CCC's services and products important to the customer's business
growth.
 
  Over 60% of CCC's revenue for 1997 was for services and products sold
pursuant to contracts, which generally have multi-year terms. A substantial
portion of CCC's remaining revenue represented sales to customers that have
been doing business with CCC for many years. CCC's services and products are
sold either on a monthly subscription or a per transaction basis.
 
PRODUCT DEVELOPMENT AND PROGRAMMING
 
  CCC's ability to maintain and grow its position in the claims industry is
dependent upon the expansion of its products and services. Investments in
development are therefore critical to obtaining new customers and renewals
from existing customers. CCC's product development and programming efforts
principally consist of software development, development of enhanced
communication protocols and custom user interfaces and applications, and
database design and enhancement. The custom interfaces and applications are
developed through CCC's Business Solution Group. CCC employs approximately 300
people in its product development organization. This group is comprised of
database analysts, software engineers, business systems analysts, product
managers and quality assurance employees responsible for client systems,
server systems, data warehousing and distribution systems. Product engineering
activities focus on improving speed to market of new products, services, and
enhancements, adding new business functions without affecting existing
services and products, and reducing development costs. CCC uses its class
library of objects, knowledge of its clients' workflows and its automated
testing tools to deliver quality workflow-oriented solutions to the
marketplace quickly. CCC develops products in close collaboration with its
clients based on specific needs. CCC's total product development and
programming expense was $20.2 million, $17.0 million and $14.9 million for the
years ended December 31, 1997 and 1996, and 1995, respectively.
 
INTELLECTUAL PROPERTY
 
  CCC relies primarily on a combination of contracts, intellectual property
laws, confidentiality agreements and software security measures to protect its
proprietary technology. CCC distributes its products under written license
agreements, which grant end-users a license to use CCC's services and products
and which contain various provisions intended to protect CCC's ownership and
confidentiality of the underlying technology. CCC also requires all of its
employees and other parties with access to its confidential information to
execute agreements prohibiting the unauthorized use or disclosure of CCC's
technology.
 
  CCC has trademarked virtually all of its services and products. These marks
are used by CCC in the advertising and marketing of CCC's services and
products. EZEst and CCC are well-known marks within the automobile insurance
and collision repair industries. CCC has patents for its collision estimation
product pertaining to the comparison and analysis of the "repair or replace"
and the "new or used" parts decisions. While the Total Loss calculation
process is not patented, the methodology and processes are trade secrets of
CCC and are essential to CCC's Total Loss business. Despite these precautions,
management believes that existing laws provide only limited protection for
CCC's technology and that it may be possible for a third party to
misappropriate CCC's technology or to independently develop similar
technology.
 
  Certain data used in CCC's services and products is licensed from third
parties for which they receive royalties. Management does not believe that
CCC's services and products are significantly dependent upon licensed data,
other than the Motor Crash Estimating Guide data, because management believes
it can find alternative sources for such data. CCC's management does not
believe that it has access to an alternative database that would provide
comparable information to the Motor Crash Estimating Guide, licensed from the
Hearst Corporation through a scheduled expiration of April 30, 2002. Absent
notification of cancellation by either CCC
 
                                       7
<PAGE>
 
or the Hearst Corporation two years before the license's scheduled expiration,
the license agreement is automatically extended for one year on a rolling
annual basis. Any interruption of CCC's access to the Motor Crash Estimating
Guide data could have a material adverse effect on CCC's business, financial
condition and results of operations.
 
  CCC is not engaged in any material disputes with other parties with respect
to the ownership or use of CCC's proprietary technology. CCC has been
previously involved, however, in intellectual property litigation concerning
certain data ownership rights, the resolution of which resulted in substantial
payments by CCC. There can be no assurance that other parties will not assert
technology infringement claims against CCC in the future. The litigation of
such a claim may involve significant expense and management time. In addition,
if any such claim were successful, CCC could be required to pay monetary
damages and may also be required to either refrain from distributing the
infringing product or obtain a license from the party asserting the claim
(which license may not be available on commercially reasonable terms).
 
COMPETITION
 
  The market for CCC's products is highly competitive. CCC competes primarily
on product differentiation, customer service and price. CCC's principal
competitors are small divisions of two well capitalized, multinational firms,
Automatic Data Processing ("ADP") and Thomson Publishing Corporation
("Thomson"). ADP offers both a PC-based collision estimating system and a
total loss product to the insurance industry. ADP offers a different collision
estimating system and a digital imaging system to the collision repair
industry. Thomson publishes crash guides for both the insurance and automobile
collision repair industries and markets collision estimating, shop management
and imaging products. In addition, there are several very small collision
estimating programs sold into the market which do not use intelligent logic.
CCC has experienced steady competitive price pressure, particularly in the
collision estimating market, over the past few years and expects that trend to
continue. The strength of this trend may cause CCC to alter its mix of
services, features and prices.
 
  CCC intends to address the competitive price pressures by providing high
quality, feature enhanced products and services to its clients. CCC intends to
continue to develop user-friendly claims products and services incorporating
its comprehensive proprietary inventory of data. CCC expects that the Pathways
workflow manager will provide the necessary position with its insurance
customers to effectively compete against competitive price pressures.
 
  At times, insurance companies have entered into agreements with service
providers (including ADP, Thomson and CCC) wherein the agreement provides, in
part, that the insurance company will either use the product or service of
that vendor on an exclusive basis or designate the vendor as a preferred
provider of that product or service. If it is an exclusive agreement, the
insurance company mandates that collision repair facilities, independent
appraisers and regional offices use the particular product or service. If the
vendor is a preferred provider, the collision repair facilities, appraisers
and regional offices, are encouraged to use the preferred product, but may
still choose another vendor's product or service. Additionally, some insurance
companies mandate that all products be tested and approved at the companies'
national level before regional levels can purchase such products. The benefits
of being an endorsed product or on the approved list of an insurance company
include immediate customer availability and a head start over competitors who
may not be so approved. With respect to those insurance companies that have
endorsed ADP or Thomson, but not CCC, CCC will be at a competitive
disadvantage.
 
  In connection with CCC's strategy to provide outsourced claims processing
services, CCC will compete with other third-party service providers, some of
whom may have more capital and greater resources than CCC.
 
  CCC currently processes the majority of insurer-to-collision repair facility
repair assignment and estimate retrieval for DRPs through its EZNet
communications network. Management believes there is a wide range of
prospective competitors in this service area, many of which have greater
resources than CCC.
 
                                       8
<PAGE>
 
EMPLOYEES
 
  At December 31, 1997, the Company had approximately 1,200 full-time
employees, of which approximately 1,100 individuals were employed by CCC and
approximately 75 individuals were employed by Hanover and approximately 14 by
JKRE. The Company's employees are not covered by a collective bargaining
agreement and the Company considers its employee relations to be satisfactory.
 
ITEM 2. PROPERTIES.
 
  White River leases approximately 500 square feet of office space as its
principal executive office in White Plains, New York, on a month-to-month
basis.
 
  CCC leases approximately 150,000 square feet of a multi-tenant facility as
its principal office in Chicago, Illinois, under several leases, the last of
which expire in 2008. CCC also leases approximately 84,000 square feet in
Glendora, California, under a lease expiring in 2000. The Glendora facility
consists of a satellite development and distribution center.
 
  Hanover leases approximately 22,700 square feet of space as its principal
office and warehouse in Plymouth, Minnesota, under a lease expiring in 2001.
Hanover also leases approximately 4,000 square feet of space in two additional
locations under separate leases, the last of which expires in 2001.
 
  JKRE leases approximately 12,000 square feet of space as its office and
warehouse in Edgewood, New York under a single lease expiring in 2003.
 
  Management believes that its existing facilities and additional or
alternative available space are adequate to meet the Company's requirements
for the foreseeable future. Future requirements may be impacted by the growth
of the Company.
 
ITEM 3. LEGAL PROCEEDINGS.
 
  The Company is a party to various other legal proceedings in the ordinary
course of its business. The Company's management believes that the ultimate
resolution of these matters will not have a material effect on the Company's
consolidated financial position.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
  None.
 
                                       9
<PAGE>
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
  White River's Common Stock trades on the Nasdaq National Market tier of The
Nasdaq Stock Market under the symbol WHRC. The low and high sales prices for
shares of Common Stock for each quarter of 1997 and 1996 are set forth below:
 
<TABLE>
<CAPTION>
                        1997                                    1996
           -------------------------------------   ---------------------------------
            FIRST    SECOND     THIRD    FOURTH     FIRST  SECOND   THIRD    FOURTH
           QUARTER   QUARTER   QUARTER   QUARTER   QUARTER QUARTER QUARTER   QUARTER
           -------   -------   -------   -------   ------- ------- -------   -------
<S>        <C>       <C>       <C>       <C>       <C>     <C>     <C>       <C>
Low.......  $54 1/2   $61 1/2   $59 1/2   $65 1/8  $36 1/2 $37 1/4  $44 1/2    $52
High......  $69       $73       $84       $81      $38 3/4 $46 7/8  $65        $65
</TABLE>
 
  Since the Capitalization, no dividends have been declared on shares of
Common Stock and the White River Board currently does not intend to declare
ordinary periodic dividends to holders of Common Stock. However, the White
River Board intends to reevaluate from time to time the declaration of
ordinary dividends with due consideration given to the financial
characteristics of White River's remaining investments, its continuing
operations and the amount and regularity of its cash flows as of that time.
There can be no assurance as to when or whether the White River Board will
declare any ordinary dividends. In addition, under certain circumstances,
White River may make an extraordinary distribution of investments, cash, or a
combination thereof to stockholders if, in the judgment of the White River
Board, the available resources of White River exceed the internal and
acquisition needs of White River.
 
  As of April 13, 1998, there were 4,874,756 shares of Common Stock issued and
outstanding. As of such date, there were approximately 525 stockholders of
record, plus an indeterminate number of stockholders who hold shares of Common
Stock in the names of nominees.
 
                                      10
<PAGE>
 
ITEM 6. SELECTED FINANCIAL DATA.
 
CONSOLIDATED STATEMENT OF OPERATIONS DATA
 
  Selected consolidated statement of operations data for the years ended
December 31, 1997, 1996, 1995 and 1994, and for the period from September 24,
1993, through December 31, 1993, follows:
 
<TABLE>
<CAPTION>
                                 1997     1996   1995(A)   1994(B)     1993(C)
                               -------- -------- --------  --------    -------
                                 IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<S>                            <C>      <C>      <C>       <C>         <C>
Revenues.....................  $179,910 $145,398 $123,795  $ 62,539    $ 1,843
Operating expenses...........   174,355  138,559  127,210    87,263(d)   1,688
                               -------- -------- --------  --------    -------
Operating income (loss)......     5,555    6,839   (3,415)  (24,724)       155
Net investment gains
 (losses)....................    27,492   16,150   36,255    49,678     (8,501)
Interest expense.............       171    2,562    8,936     6,464        823
Minority interest............    10,065      971      --        --         --
                               -------- -------- --------  --------    -------
Pretax income (loss).........    22,811   19,456   23,904    18,490     (9,169)
Income tax expense
 (benefit)...................    15,610   14,306    7,909    (8,580)       --
                               -------- -------- --------  --------    -------
Income (loss) before
 extraordinary item..........     7,201    5,150   15,995    27,070     (9,169)
Extraordinary loss on early
 retirement of debt, net of
 tax.........................       --       678      --        --         --
                               -------- -------- --------  --------    -------
Net income (loss)............     7,201    4,472   15,995    27,070     (9,169)
Dividends and accretion on
 redeemable preferred stock..       473      727      585       530         88
                               -------- -------- --------  --------    -------
Net income (loss) applicable
 to common stock.............  $  6,728 $  3,745 $ 15,410  $ 26,540    $(9,257)
                               ======== ======== ========  ========    =======
Earnings (loss) per common
 share:
Basic:
  Income (loss) before
   extraordinary item........  $   1.38 $   0.91 $   2.94  $   4.47    $ (1.45)
  Net income (loss)..........  $   1.38 $   0.77 $   2.94  $   4.47    $ (1.45)
Diluted:
  Income (loss) before
   extraordinary item........  $   1.31 $   0.85 $   2.84  $   4.38    $ (1.45)
  Net income (loss)
   applicable to common
   stock.....................  $   1.31 $   0.73 $   2.84  $   4.38    $ (1.45)
Cash dividends declared per
 common share................  $    --  $    --  $    --   $    --     $   --
</TABLE>
--------
(a) As discussed in Note 2 to the consolidated financial statements, White
    River adopted the provisions of Statement of Financial Accounting
    Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt
    and Equity Securities", effective September 30, 1995.
(b) See Note 3 to the consolidated financial statements for a discussion of
    the acquisition of CCC by White River.
(c) White River commenced operations in its present form on September 24,
    1993, concurrent with the Capitalization. See Note 1 to the consolidated
    financial statements for a discussion of the Capitalization.
(d) Includes write-off of purchased in-process research and development of
    $27,582.
 
                                      11
<PAGE>
 
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DATA
 
  Selected consolidated statement of financial condition data as of December
31, 1997, 1996, 1995, 1994 and 1993 follows:
 
<TABLE>
<CAPTION>
                                      1997     1996   1995(A)  1994(B)    1993
                                    -------- -------- -------- -------- --------
                                       IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<S>                                 <C>      <C>      <C>      <C>      <C>
              ASSETS
Cash and cash equivalents.........  $190,515 $188,365 $139,245 $ 94,985 $ 62,349
Investment securities, at market
 value............................   122,688   72,699   48,154   16,400   50,204
Accounts receivable and other
 current assets...................    26,708   15,206   14,482   14,044    7,044
                                    -------- -------- -------- -------- --------
  Total current assets............   339,911  276,270  201,881  125,429  119,597
Investment securities, at market
 value(d).........................    41,434      --       --       --       --
Other investments.................       276   26,420   28,103  129,383  131,835
Goodwill, net.....................    18,754   23,730   34,806   41,000      --
Purchased software and equipment,
 net..............................    18,431   20,478   25,791   36,239      135
Deferred income taxes and other
 assets...........................     8,327    7,614    6,174    9,462      176
                                    -------- -------- -------- -------- --------
  Total assets....................  $427,133 $354,512 $296,755 $341,513 $251,743
                                    ======== ======== ======== ======== ========
           LIABILITIES
Accounts payable, accrued expenses
 and deferred revenues............  $ 29,958 $ 27,043 $ 26,260 $ 18,918 $  5,758
Current portion of contract
 funding..........................       --       123    3,328   10,133      --
Current portion of notes payable
 and other debt...................       111      120    7,660    5,340      --
Redeemable preferred stock........     7,000      --       --       --       --
                                    -------- -------- -------- -------- --------
  Total current liabilities.......    37,069   27,286   37,248   34,391    5,758
Notes payable and other debt......       --       111   27,220   85,753   50,000
Deferred income taxes and other
 liabilities......................    55,441   44,458   30,751   17,981    1,122
                                    -------- -------- -------- -------- --------
  Total liabilities...............    92,510   71,855   95,219  138,125   56,880
                                    -------- -------- -------- -------- --------
Redeemable preferred stock........       189    7,175    8,275    8,162    7,000
                                    -------- -------- -------- -------- --------
Minority interest.................    33,687   18,950      --       --       --
                                    -------- -------- -------- -------- --------
Stockholders' equity(d)...........   300,747  256,532  193,261  195,226  187,863
                                    -------- -------- -------- -------- --------
  Total liabilities, minority
   interest and stockholders'
   equity.........................  $427,133 $354,512 $296,755 $341,513 $251,743
                                    ======== ======== ======== ======== ========
Book value per common and common
 equivalent share(c)..............  $  61.88 $  51.98 $  39.01 $  33.75 $  29.29
</TABLE>
--------
(a) As discussed in Note 2 to the consolidated financial statements, White
    River adopted the provisions of SFAS No. 115, effective September 30,
    1995.
(b) See Note 3 to the consolidated financial statements for a discussion of
    the acquisition of CCC by White River.
(c) 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. See Note 2 to the
    consolidated financial statements.
(d) See Note 2 to the consolidated financial statements for a discussion of
    the investment in Richard C. Blum & Associates--NWA Partners, L.P.
 
                                      12
<PAGE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
 
FINANCIAL CONDITION--AS OF DECEMBER 31, 1997 AND 1996
 
  Book value per common equivalent share, as defined below, increased $9.90,
or 19.0%, to $61.88 at December 31, 1997, from $51.98 at December 31, 1996.
Such change reflects an increase of $7.33 per share relative to the after tax
increase in net unrealized investment gains (including $3.51 per share related
to the increase in value of White River's interest in NWA Partners, as
discussed in Note 2 to the accompanying financial statements), which were
recorded directly to stockholders equity, and realized gains on the
distribution received from NWA Partners of $2.55 per share after tax.
 
  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. See Note 9 of the accompanying financial
statements for a discussion of White River's retirement plans and Notes 10 and
11 of the accompanying financial statements for a discussion of the incentive
and directors' compensation plans which gives rise to White River's
potentially dilutive securities.
 
  As of December 31, 1997, the Company had consolidated cash and cash
equivalents of $190.5 million, (which included $2.9 million related to the
operations of CCC, Hanover, and JKRE), as compared to $188.4 million as of
December 31, 1996. Substantially all of the cash and cash equivalent balances
of $187.3 million held by White River as of December 31, 1997, 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 December 31, 1997, such deposits earned a weighted average
interest rate of 5.5% per annum.
 
  Working capital (current assets less current liabilities) increased by $53.9
million to $302.8 million at December 31, 1997 from December 31, 1996
primarily due to a net increase in the Company's investments of $50.0 million.
Additionally, accounts receivable and other current assets increased by $11.5
million during the same period. The inclusion of the current portion of
redeemable preferred stock at December 31, 1997 reduced working capital by
$7.0 million.
 
  The reclassification of White River's investment in NWA Partners from "other
investments" to "investment securities-non current" resulted in a $41.4
million increase in total "investment securities", as discussed in Note 2 to
the accompanying financial statements.
 
  Capital expenditures were $9.8 million during the year ended December 31,
1997 compared to $5.6 million during the year ended December 31, 1996
primarily due to expansion of CCC's office space as well as expenditures
related to CCC's new products.
 
RESULTS OF OPERATIONS--YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
  Consolidated net income applicable to common stock totalled $6.7 million for
the year ended December 31, 1997, or $1.31 per diluted common share, as
compared to $3.7 million, or $0.73 per diluted common share, for the year
ended December 31, 1996, and $15.4 million, or $2.84 per diluted common share,
for the year ended December 31, 1995. The 1997 results reflect pretax net
investment gains of $27.5 million, as compared to $16.2 million reported for
1996 and $36.3 million for 1995.
 
                                      13
<PAGE>
 
INVESTMENT OPERATIONS
 
 Investment Results
 
  Based upon the composition of its assets at the time of the Capitalization,
White River met the definition of an Investment Company under the Investment
Company Act. As such, White River's accounting policies regarding the carrying
value of investments as well as the treatment of changes in unrealized gains
and losses relating to such investments conformed to generally accepted
accounting principles ("GAAP") for Investment Companies until such time as
White River ceased to meet the definition of an Investment Company. White
River ceased to meet the definition of an Investment Company effective
September 30, 1995, and, accordingly, as discussed further in Note 2 to the
accompanying financial statements, adopted the provisions of SFAS No. 115, as
of such date. 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 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
$55.5 million and $17.0 million were recorded directly to stockholders' equity
during 1997 and 1996, respectively.
 
  For the year ended December 31, 1997, pretax investment income totalled
$11.4 million, including $10.2 million of interest income generated from
higher cash and cash equivalents balances held during 1997. Pretax investment
income totalled $9.0 million for the year ended December 31, 1996, and $8.3
million for the year ended December 31, 1995.
 
  White River's proceeds from dispositions of investments totalled $39.0
million, $21.2 million and $118.9 million during the years ended December 31,
1997, 1996 and 1995, respectively. See Item 1 Business--Investment Operations
for a discussion of 1997 and 1996 investment dispositions. The 1995 investment
dispositions include the transfer of certain securities with a carrying value
of $93 million and a fair value of $104 million to Fund American. In
conjunction with the transfer of such securities, White River also received an
additional $14 million in cash from Fund American. The assets transferred by
White River were in satisfaction of the outstanding borrowings under the
Credit Agreement. Accordingly, management accounted for the transaction as a
retirement of debt with no corresponding gain or loss, and the remaining $11
million was recognized as realized investment gains.
 
 Investment Holdings
 
  The Company's investment holdings as of December 31, 1997 consist primarily
of its interests in Cross Timbers; U.S. Treasury Bills held by CCC, and NWA
Partners which represented 54.6%, 18.5% and 25.2%, respectively, of White
River's total investments. White River's management believes that this
concentration may make the value of White River's investments more volatile
than the value of a more diversified portfolio.
 
  Cross Timbers was organized in 1990 and is engaged in the acquisition and
development of producing oil and gas properties and the marketing and
transportation of oil and natural gas. Cross Timbers' oil and gas properties
are concentrated in major producing basins in Oklahoma, East Texas and the
Permian Basin of West Texas and New Mexico. Based upon information available
to the Company, White River's holdings represented 13.6% of the total
outstanding Cross Timbers common stock as of December 31, 1997. The Cross
Timbers common stock held by White River generally is not registered for sale
in the open market; however, White River does have limited demand registration
rights with regard to such shares. In addition, White River can sell its
holdings of Cross Timbers common stock in accordance with the volume
restrictions under Rule 144 of the U.S. Securities Act of 1933, as amended.
During 1997, such sales totalled 20,000 shares resulting in gross proceeds of
$0.6 million.
 
  The common stock of Cross Timbers is traded on the New York Stock Exchange
under the symbol "XTO", and during the 52-week period ended December 31, 1997,
its daily closing market price ranged between a high
 
                                      14
<PAGE>
 
of $28 11/16 and a low of $14 11/16 per share. The closing market price of
such shares as of December 31, 1997, was $24 15/16 per share. Such prices were
as listed on the New York Stock Exchange during 1997, and do not reflect the
stock split noted below. In recognition of White River's demand registration
rights with respect to its shares of Cross Timbers common stock, White River
began carrying its interest in Cross Timbers at market value effective
September 30, 1995, upon the adoption of SFAS No. 115. Accordingly, White
River's interest in Cross Timbers was carried at $89.8 million and $60.8
million under the caption investment securities in the accompanying
consolidated statement of financial condition as of December 31, 1997 and
1996, respectively.
 
  On January 30, 1998, Cross Timbers announced a three-for-two stock split, to
be effective on February 24, 1998 for stockholders of record on February 12,
1998. As a result of the stock split, White River's holdings of Cross Timbers
common stock increased from 3,600,009 shares to 5,400,013 shares.
 
  White River recognized dividend income of $0.8 million for each of the years
ended December 31, 1997, 1996 and 1995, from its interest in Cross Timbers.
There can be no assurance that Cross Timbers will continue to pay dividends on
its common stock at this level, or if dividends will be paid at all.
 
  The energy and natural resources industries, particularly the oil and
natural gas industries, are highly competitive, require significant capital
expenditures, and are subject to extensive regulation at both the national and
local levels. Unpredictable fluctuations in the prices of oil, natural gas and
other natural resources, as well as changes in the level of development and
production expenditures by the operators of companies in this sector,
generally affect the market price of the securities of such companies. For
these reasons, among others, management believes that the value of its
interest in Cross Timbers may be subject to additional market price volatility
not applicable to the securities markets in general.
 
  NWA Partners is a limited partnership formed during 1989 under the laws of
the State of California for the purpose of investing in Northwest Airlines
Corporation ("Northwest Airlines") equity securities. During December 1993,
NWA Partners entered into a stockholders' agreement (the "NWA Stockholders'
Agreement") with the participants in the Northwest Airlines leveraged buyout
(the "Northwest LBO"), which, among other things, restricted transfer of most
of the shares of Northwest Airlines common stock held by the parties to the
Northwest LBO until June 1997. Accordingly, the Company considered such
investments as restricted in accordance with SFAS No. 115, and carried such
investments at adjusted carring value (see Note 2 to the accompanying
financial statements) until such time as the restrictions expired (June 1997).
Thereafter, the Company accounted for its investment in NWA Partners as an
available for sale security. NWA Partners has an original term of ten years,
which is extendable at the discretion of the general partner for up to two
additional years.
 
  White River acquired its interest in NWA Partners in connection with the
Capitalization. White River's interest in NWA Partners represented
approximately 21% of partnership assets as of December 31, 1997 and 1996.
During the year ended December 31, 1997, White River received a $26.3 million
partial distribution on its investment resulting in a pretax investment gain
of $19.4 million. The distribution represented White River's share of proceeds
arising primarily from the redemption of NWA Partners' investment in preferred
stock of NWA Corp., but also in part due to the sale of 0.7 million shares of
NWA Corp. common stock subject to a call option. No distributions were
received during 1996. During the year ended December 31, 1995, White River
received distributions totaling $3.5 million from NWA Partners, resulting in
pretax net investment gains of $2.8 million. These distributions represented
White River's share of the proceeds from the sale of a portion of NWA
Partners' assets. As of December 31, 1997, NWA Partners' remaining assets
consisted primarily of 4.7 million shares of Northwest Airlines Class A common
stock, par value $0.01 per share (the "Northwest Common Stock").
 
  As discussed in Note 1 of the accompanying financial statements, prior to
September 30, 1995, investments classified by White River as "other
investments" included its partnership interest in NWA Partners, which had no
established market value at the time. White River carried its interest in NWA
Partners at internally appraised values, giving due consideration to the
current market value of the unrestricted Northwest Common Stock and
 
                                      15
<PAGE>
 
the estimated value of the Northwest Preferred Stock. To arrive at fair value,
White River applied a significant discount to such values due to liquidity
restrictions caused in part by restrictions on transfer imposed by the NWA
Stockholders' Agreement, as well as the partnership terms of NWA Partners.
Upon White River ceasing to meet the definition of an Investment Company,
White River adopted SFAS No. 115, and the Company recorded its limited
partnership interest investment in NWA Partners at its then carrying value
(due to the restrictions on the investments held by the NWA Partnership).
Since the lapse of the restrictions on such investment in June 1997, the
Company recorded its investment in NWA Partners as an available for sale
security. Accordingly, the carrying value of NWA Partners at December 31, 1997
was $41.4 million, as compared to a carrying value of $21.8 million at
December 31, 1996, which reflected the adjusted cost basis at that time.
 
  Since the passage of the Airline Deregulation Act of 1978, the airline
industry has been characterized by strong competition and industry
consolidation. A number of airlines have filed for bankruptcy and/or ceased
operations. Airlines offer discount fares, a wide range of schedules, frequent
flyer mileage programs, and ground and in-flight services as competitive tools
to attract passengers and increase market share. Because of the relative ease
with which U.S. carriers can enter new markets, each carrier's domestic
service is subject to potential increases in competition from other air
carriers, the extent and effect of which cannot be predicted. The airline
industry is subject to substantial price competition as U.S. carriers are free
to determine domestic pricing policies without government regulation. Domestic
price competition has accelerated the efforts of airline management to reduce
costs and improve productivity. Although the U.S. government retains authority
over international fares, such fares are also subject to the jurisdiction of
the foreign countries being served. For these reasons, among others, White
River's management believes that the value of its interest in NWA Partners may
be subject to additional price volatility not applicable to the securities
markets in general.
 
INSURANCE-RELATED SERVICES
 
  Revenues for the year ended December 31, 1997 of $159.1 million were $28.1
million, or 21.5%, higher than the prior year. 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.
 
  Revenues for the year ended December 31, 1996 of $131.0 million were $15.5
million, or 13.4%, higher than the prior year. The increase in revenues was
due primarily to higher revenues from collision estimating software licensing,
from ACCESS claims services and from Total Loss vehicle valuation services.
Collision estimating software licensing revenues increased primarily because
of an increase in the number of software licenses, particularly at collision
repair facilities. ACCESS claims services revenues increased primarily as a
result of higher transaction volume. Total Loss revenues increased as a result
of both higher volume and a slightly higher rate per transaction.
 
  On a stand-alone basis, CCC reported net income before accretion and
dividends on preferred stock of $15.8 million, $14.8 million and $1.3 million
for the years ended December 31, 1997, 1996 and 1995, respectively. The 1995
results include the $4.5 million pretax provision for loss relating to the
MacLean Hunter litigation claim. White River's adjustment for the amortization
of goodwill and purchased software related to the CCC acquisition (see Note 2
to the accompanying financial statements), as well as the minority
shareholders' interest in the earnings of CCC during these periods, reduced
net income by $17.4 million, $14.8 million and $9.0 million for the years
ended December 31, 1997, 1996 and 1995, respectively.
 
  During August 1996, CCC completed the initial public offering of 6.9 million
newly issued shares of Common Stock, resulting in net proceeds to CCC of $72.1
million. As a result of the IPO, CCC's $49.6 million deficiency in
stockholders equity was eliminated resulting in stockholders' equity of $22.5
million immediately after the IPO. Prior to CCC's IPO, the minority interest
in CCC was not reflected in the consolidated statements of financial condition
because the minority interest did not guarantee the obligations of CCC nor was
it otherwise committed to provide further financial support. However, as a
result of eliminating CCC's deficiency in
 
                                      16
<PAGE>
 
stockholders' equity, a minority interest liability was included in the
Company's statement of financial condition. Such minority interest liability
was $33.7 million and $19.0 million for the years ended December 31, 1997 and
1996, respectively.
 
OTHER REVENUES--CONSOLIDATED
 
 1997 versus 1996
 
  Other revenue of $9.6 million for the year ended December 31, 1997 consisted
of Hanover sales of $9.0 million, and JKRE sales of $0.5 million. The
corresponding sales amount of $5.4 million in 1996 is not comparable since
Hanover operations did not commence until April 1996, while JKRE was not
established until November 1997.
 
  Hanover, which began operations in April 1996, generated $9.0 million in
revenue from the sale of fashion accessories for the year ended December 31,
1997, with a net loss of $0.5 million. As of December 31, 1997, White River's
investment in and advances to Hanover totalled $3.8 million.
 
  Hanover generated revenues of $5.4 million for the year ended December
31,1996. Hanover's operations had breakeven operating results for the period
April 1996 to December 31, 1996, and the dollar amount of the investment in
and advances to this entity totalled $1.6 million at December 31, 1996.
 
OPERATING EXPENSES
 
 1997 versus 1996
 
  For the year ended December 31, 1997, compensation and benefits expense
totalled $82.0 million, as compared to $63.7 million for 1996. The 1997 year
results include a $7.3 million increase in White River's provision for stock
based incentive awards, a $1.7 million increase related to Hanover which began
operations in April 1996, and a $8.8 million increase in CCC's compensation
and benefits to recruit and retain key employees.
 
  For the year ended December 31, 1997, other operating expenses totalled
$92.3 million, as compared to $74.8 million for the 1996 period, representing
an increase of 23.4%. Such increase was due to an increase in CCC's operating
expenses of $13.7 million in 1997 which was primarily attributable to an
increase in product development and customer support capacity necessary to
support increased revenues, as well as to efforts to build and upgrade
internal systems. Furthermore, during 1996, CCC had constraints imposed on
operating expenditures due to principal payment obligations and restrictive
covenants attributable to its previous commercial bank credit facility.
Additionally, Hanover's other operating expenses increased by $2.5 million in
1997 primarily because 1997 included a full year of expenses.
 
 1996 versus 1995
 
  Compensation and benefits expense increased by 23.1% to $63.7 million for
the year ended December 31, 1996, as compared to $51.8 million for the year
ended December 31, 1995. The 1996 increase reflects a $5.2 million increase in
White River's provision for stock-based incentive awards, which was due to
increases in the market value of Common Stock during such period as well as to
accelerated vesting of certain awards due in part to the effects of the CCC
IPO upon White River's book value per common and common equivalent share. In
addition, CCC's compensation and benefits increased by $5.5 million for the
year ended December 31, 1996 when compared to the prior year, as a result of
increased staffing required to support revenue growth and product development
activities.
 
  Other operating expenses decreased by 0.8% to $74.8 million for the year
ended December 31, 1996, as compared to $75.4 million for the same period in
1995. The decrease in other operating expenses during the year ended December
31, 1996 is attributable to effective cost containment initiatives and the
postponement by CCC of certain operating expenditures that it would have made
during the first half of 1996 in the absence of covenants under its previous
bank credit facility.
 
                                      17
<PAGE>
 
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.
 
VALUATION ALLOWANCE
 
  As of December 31, 1995, CCC carried a valuation allowance of $5.0 million
against future income tax benefits which were not recognized for book purposes
due to the existence of historical operating losses and the resulting
uncertainties regarding the availability of future taxable income. CCC reduced
valuation allowances by $4.7 million thus reducing its stand-alone income tax
expense in 1996 as a result of its successful recapitalization, through the
CCC IPO, and its demonstrated pattern of profitability. White River treated
its share of the reversal of these CCC tax benefits as a reduction of its
goodwill relating to the CCC acquisition. CCC's remaining valuation allowance
of $0.3 million as of December 31, 1997 and December 31, 1996, pertains to
capital loss carry forwards, the realization of which is not assured.
 
LIQUIDITY AND CAPITAL RESOURCES
   
 Total Company (consolidated basis)     
   
  During the year ended December 31, 1997, the Company's cash and cash
equivalent balances increased by $2.2 million (see "Consolidated Statements of
Cash Flows" on page F-4 of the accompanying financial statements). The major
source of cash provided was $93.1 million from sales of investments, and net
income of $7.2 million which was reduced by net investment gains of $27.5
million and increased by non-cash charges relating to depreciation and
amortization ($17.2 million), minority interest ($10.1 million) and deferred
tax expense ($2.5 million). In addition, the Company's working capital
requirements increased cash used by operations primarily due to an increase in
other current assets and accounts receivable ($11.5 million) and a reduction
in other liabilities ($7.2 million). The Company used $75.2 million for the
purchase of investment securities (all of which were related to CCC's
rollovers of Treasury securities) and $9.8 million for the purchase of
software and equipment.     
   
  During the year ended December 31, 1996, the Company's cash and cash
equivalent balances increased by $49.1 million. The major components of cash
provided were: $11.8 million provided from operations, $21.1 million from
sales of investments, net proceeds of $73.8 million from CCC's IPO in August
1996, and $10.8 million of proceeds from notes payable and other debt. The
Company used cash of $46.7 million for principal payments on notes and other
debt, $11.0 million for the purchase of investment securities (all of which
were related to CCC's rollovers of Treasury securities), and $5.6 million for
the purchase of software and equipment.     
   
  During the year ended December 31, 1995, the Company's cash and cash
equivalent balances increased by $44.3 million. The major components of cash
provided were $10.0 million provided from operations, $30.0 million from sales
of investments and $44.0 million of proceeds from notes payable and other
debt. The Company used cash of $25.7 million for repurchases of common stock,
$11.1 million for principal payments on notes payable and other debt and $3.0
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 December 31, 1997, the Company had consolidated cash and cash
equivalents of $190.5 million, of which $187.3 million relates to balances
held by White River, with the remaining $2.9 million related to the
 
                                      18
<PAGE>
 
operations 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. During the years ended
December 31, 1997, 1996 and 1995, White River generated cash proceeds from the
sale of investments aggregating $39.0 million, $21.1 million and $28.9
million, respectively.
 
  For the foreseeable future, White River does not expect to receive cash
dividends on its holdings of CCC Common Stock, and, based upon the terms of
the CCC Preferred Stock, further dividends will not begin to accrue until June
1998. White River has not made any formal or informal commitment to make
additional investments in or advances to CCC.
 
  The White River Board has not declared, and currently does not intend to
declare, ordinary periodic dividends on the Common Stock. However, the White
River Board intends to reevaluate from time to time the declaration of
dividends with due consideration given to the financial characteristics of
White River's remaining investments, its continuing operations and the amount
and regularity of its cash flows as of that time. There can be no assurance as
to when or whether the White River Board will declare any such dividends.
 
  During the year ended December 31, 1997, the Company did not repurchase any
shares of Common Stock. Cumulative share repurchases since the formation of
White River through December 31, 1997, totalled approximately 1,495,000 shares
of Common Stock at an aggregate cost of $48.9 million. As of December 31,
1997, White River may repurchase an additional 523,000 shares of Common Stock
under its existing share repurchase authorization.
 
  As part of the Capitalization, White River issued to Fund American 7,000
shares of White River Series A NonParticipating Cumulative Preferred Stock,
par value $1.00 per share (the "Redeemable Preferred Stock"), which are
entitled to aggregate annual dividends of $0.5 million and must be redeemed
during September 1998, at a redemption price of $1,000 per share. Fund
American sold the Redeemable Preferred Stock to two unaffiliated institutional
investors at the time of the Distribution.
 
  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 the years ended December 31, 1997 and 1996, CCC generated net cash from
operating activities of $20.1 million and $20.3 million, respectively. CCC
used $8.1 million and $5.6 million, respectively excluding noncash capital
expenditures, to purchase equipment and software and invested the remaining
cash in marketable securities.
 
  On August 21, 1996, CCC completed its initial public offering of common
stock, generating proceeds of $72.1 million, net of underwriters' discounts
and related equity issue costs. Proceeds from the offering of $36.1 million
were used to redeem approximately 87% of the CCC Preferred Stock at stated
value plus accrued dividends. In addition, proceeds from the offering of $28.0
million were used to make principal repayments on long-term debt. The balance
of CCC's principal repayments during the year ended December 31, 1996, was
generated from operations.
   
  On August 22, 1996, CCC secured a $20.0 million revolving credit facility
through a commercial bank. As a result, the balance of deferred financing fees
associated with CCC's previous credit facility, which consisted of a term loan
and a revolving credit facility, was written off in 1996 as an extraordinary
loss, net of income taxes. There have been no borrowings under the current
bank credit facility. Indebtedness under the current bank credit facility
would bear interest at either of two rates as selected by CCC: the London
Inter-Bank Offering Rate plus 1.5% per annum, or the prime rate. Following the
offering, CCC's principal liquidity requirements include its operating
activities, including product development, and its investments in internal and
customer capital equipment.     
 
                                      19
<PAGE>
 
  Under the current credit facility, CCC is, with certain exceptions,
prohibited from making certain sales or transfers of assets, incurring
nonpermitted indebtedness or encumbrances, and redeeming or repurchasing its
capital stock, among other restrictions. In addition, the current credit
facility also requires CCC to maintain certain levels of operating cash flow
and interest expense coverage, and limits CCC's ability to make capital
expenditures and investments and declare dividends.
 
  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 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.
 
  CCC is utilizing both internal and external resources to reprogram, or
replace, and test software for the year 2000 modifications. CCC 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.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
  The information required by this item is contained under "WHITE RIVER
CORPORATION AND SUBSIDIARIES--CONSOLIDATED FINANCIAL STATEMENTS" attached
hereto as ANNEX I.
 
                                      20
<PAGE>
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
 
  None.
 
                                   PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
WHITE RIVER BOARD
 
  The following information with respect to the principal occupation, business
experience and other affiliations of the directors of White River has been
furnished to White River by the respective directors.
 
CLASS I: TERM ENDING 2000
 
  ANDREW DELANEY, age 77, has been a director of White River since September
1993. Mr. Delaney served as Vice Chairman of American General Corporation, a
diversified insurance and financial services organization, from 1982 until his
retirement in 1985. He joined that company in 1954. He also served as a
director of Fund American and certain of its subsidiaries until December 1993.
 
  BONNIE B. STEWART, age 37, was elected to the Board of Directors in December
1997. Ms. Stewart served as Corporate Secretary of White River from September
1996 until December 22, 1997. From 1994 to September 1996 she was Assistant
Corporate Secretary and from 1993 to December 22, 1997, she was Executive
Assistant to Mr. Marto. Prior to 1993, Ms. Stewart held various positions with
Fund American.
 
CLASS II: TERM ENDING 1998
 
  GORDON S. MACKLIN, age 69, has been Chairman of the White River Board since
September 1993. Mr. Macklin was also appointed to the positions of President
and Chief Executive Officer effective as of January 6, 1998. Mr. Macklin
served as Chairman of Hambrecht & Quist, LLC, a venture capital and investment
banking company, from 1987 until 1992. Prior to that, he served as President
of the National Association of Securities Dealers, Inc. from 1970 to 1987. Mr.
Macklin serves as a trustee, director or managing general partner, as the case
may be, of 52 of the investment companies in the Franklin/Templeton Group of
Funds. He is a director of CCC, MCI Communications Corporation, MedImmune,
Inc., Real 3D Inc. and Spacehab, Inc. He has also served, since 1987, as a
director of Fund American.
 
CLASS III: TERM ENDING 1999
 
  ROBERT T. MARTO, age 52, has been a director of White River since September
1993. Mr. Marto was also President and Chief Executive Officer of White River
from 1993 until December 22, 1997. He became affiliated with Fund American in
1985 and served as Executive Vice President and Chief Financial Officer of
Fund American and as President of its subsidiary, Fund American Enterprises,
Inc. ("FAE"), from 1990 to December 1993. He is a director of CCC and VICORP
Restaurants, Inc. He also served as a director of Fund American until December
1993.
 
  PATRICK M. BYRNE, age 35, has been a director of White River since May 1996.
Mr. Byrne has been Chairman since 1994, and President and Chief Executive
Officer since March 1996, of Centricut, LLC, a manufacturer of industrial
torch consumable parts. In addition, since 1991, he has been the managing
general partner of a number of limited partnerships investing in real estate,
gaming, insurance and international trade. He currently serves as Chairman,
President and CEO of Fechheimer Brothers, a subsidiary of Berkshire Hathaway,
Inc. He has also served, since October 1997, as a director of Fund American.
Patrick M. Byrne is the son of John J. Byrne, the Chairman, and former
President and Chief Executive Officer of Fund American. John J. Byrne and Fund
American are the beneficial owners of 17.1% and 20.8%, respectively, of the
total outstanding shares of Common Stock as of April 13, 1998.
 
                                      21
<PAGE>
 
EXECUTIVE OFFICERS
 
  For biographical information relating to Mr. Macklin, see--"White River
Board". Information concerning the other executive officers of White River
follows:
 
  MICHAEL E.B. SPICER, age 44, was hired by White River as Chief Financial
Officer and Treasurer, effective in April 1997. In December 1997, Mr. Spicer
assumed the additional responsibilities of Corporate Secretary. Prior to being
hired by White River, Mr. Spicer was Vice President, Finance and
Administration of The Chinet Company, an international manufacturer and
marketer of packaging products for the consumer and foodservice markets, since
1994.
 
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
  Section 16(a) of the Exchange Act ("Section 16(a)") requires White River's
officers and directors, and persons who own more than ten percent of the total
outstanding shares of Common Stock, to file initial reports of ownership and
reports of changes in ownership of shares of Common Stock with the Commission.
Officers, directors and greater than ten percent stockholders are required by
the Commission regulations to furnish White River with copies of all Section
16(a) forms they file.
 
  To White River's knowledge, based solely on its review of the copies of such
reports received by White River, and written representations from certain
reporting persons that no other reports were required for those persons,
during 1997 all Section 16(a) filing requirements applicable to White River's
officers, directors and greater than ten percent stockholders were complied
with.
 
ITEM 11. EXECUTIVE COMPENSATION.
 
COMPENSATION OF DIRECTORS
 
  Concurrent with the approval by the board of directors of Fund American (the
"Fund American Board") of a plan to distribute (the "Distribution")
approximately 75% of the outstanding shares of Common Stock to holders of Fund
American common stock, Messrs. Macklin and Delaney received, in lieu of annual
retainer and meeting attendance fees, a grant of 48,649 and 16,216 performance
units ("Director Performance Units"), respectively. The initial value of such
Director Performance Units were determined by the Fund American Board based
upon the anticipated relative contribution of such individuals to the
management of White River.
 
  Director Performance Units were payable solely in cash and were scheduled to
vest contingent upon the attainment of an annualized average return on
stockholders' equity ("ROE") by White River of 15% per annum over the period
from September 24, 1993, to December 31, 1996 (the "Director Performance
Target"), which would represent a total increase over the three year period of
approximately 52%. The return is measured as the change in White River's book
value per common and common equivalent share (as adjusted for dividends, stock
splits and other adjustments necessary to reflect true economic value). During
September 1996 (upon the third anniversary of the capitalization of White
River) and based upon the attainment of the Director Performance Target, the
White River Board declared the outstanding Director Performance Units earned
and payable on June 30, 1997, contingent upon the continued voluntary service
of Messrs. Macklin and Delaney through such date. On June 30, 1997, these
64,865 shares became fully vested and were transferred to the Director's
Deferred Compensation Plan.
 
  The Directors' Deferred Compensation Plan was terminated effective as of
December 30, 1997, pursuant to the Merger Agreement. As required by the Merger
Agreement, White River approached each of the participants in the Directors'
Deferred Compensation Plan regarding the possible payment in cash by White
River on or prior to December 30, 1997 of the entire balance of such
participant's "Deferred Compensation Account" (as defined in the Directors'
Deferred Compensation Plan). The following persons, each a director of White
River, received the following amounts on December 24, 1997: Mr. Macklin
$3,879,758 and Mr. Delaney $1,293,226.
 
  In addition to the Director Performance Units described above, during 1997,
Mr. Macklin received a reimbursement of $40,000 for office expenses incurred
in connection with his service as a director of White River and a fee of
$16,350 for his service as a director of CCC.
 
                                      22
<PAGE>
 
COMPENSATION OF EXECUTIVE OFFICERS
 
  Unless otherwise indicated, the table on the following page sets forth
certain information regarding the cash and non-cash compensation earned by the
listed executive officers (the "Named Executive Officers").
 
                          SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                        LONG TERM
                                  ANNUAL COMPENSATION  COMPENSATION
                                  ------------------- --------------  ALL OTHER
NAME AND PRINCIPAL POSITION  YEAR  SALARY     BONUS   LTIP PAYOUT(A) COMPENSATION
---------------------------  ---- ------------------- -------------- ------------
<S>                          <C>  <C>       <C>       <C>            <C>
ROBERT T. MARTO...........   1997 $ 407,452 $ 250,000   $      --     $6,810,230(b)
  Former President and       1996 $ 375,000 $ 250,000   $9,485,280    $  185,476(b)
  Chief Executive
   Officer(d)                1995 $ 375,000 $ 110,000   $      --     $  208,430(b)

MICHAEL E.B. SPICER.......   1997 $ 114,446 $  94,000   $      --     $      --
  Chief Financial Officer,
   Treasurer
  and Corporate
   Secretary(e)

BONNIE B. STEWART.........   1997 $  99,342 $  50,000   $      --     $  345,841(c)
  Former Corporate
   Secretary                 1996 $  90,852 $  50,000   $  583,860    $      --
                             1995 $  85,312 $  22,000   $      --     $      --

BRIAN P. ZWARYCH..........   1997 $  45,390 $     --    $      --     $      --
  Former Chief Financial
   Officer                   1996 $ 145,845 $  70,000   $1,380,000    $      --
  Treasurer(f)               1995 $ 138,846 $  34,000   $      --     $      --
</TABLE>
--------
(a) LTIP payouts include amounts for awards originally granted by Fund
    American. White River assumed the liability for these awards prior to the
    Distribution. The 1996 LTIP payouts included $7,085,280 and $283,860 for
    Mr. Marto and Ms. Stewart, respectively, which related to award
    liabilities assumed from Fund American.
(b) All other compensation includes: (i) a housing allowance of $66,262 and
    $66,528 paid in 1996 and 1995, respectively, (such housing allowance has
    been discontinued); (ii) directors' fees of $40,000 received in 1995, from
    a company in which White River held an equity investment; (iii) deemed
    contributions under the Deferred Benefit Plan of $138,933, $119,214, and
    $101,902 for 1997, 1996, and 1995, respectively; and (iv) gross-up
    incentive payments of $6,671,297 associated with the termination of White
    River's Retirement Plans in December 1997.
(c) Gross-up incentive payment associated with the termination of White
    River's Retirement Plans in December 1997.
(d) Mr. Marto's employment terminated with White River effective December
    1997.
(e) Mr. Spicer's employment commenced with White River effective April 1997.
(f) Mr. Zwarych's employment terminated with White River effective April 1997.
 
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                   NUMBER OF     PERFORMANCE OR
                                                 SHARES, UNITS    OTHER PERIOD
                                                OR OTHER RIGHTS UNTIL MATURATION
NAME                                                  (#)          OR PAYOUT
----                                            --------------- ----------------
<S>                                             <C>             <C>
Michael E.B. Spicer............................      5,000         9/96-9/99
</TABLE>
 
  This award is payable in cash or in shares of Common Stock at the discretion
of the Compensation Committee, based on the attainment of an annualized ROE by
White River of 15% per annum over the performance period, which would
represent a total increase over the three year period of approximately 52%.
The return is measured as the change in White River's book value per common
and common equivalent share (as adjusted for dividends, stock splits, and
other adjustments necessary to reflect true economic value).
 
                                      23
<PAGE>
 
  Other Compensation Arrangements. White River has no formal severance policy
and has not entered into any employment contracts with its Named Executive
Officers. However, pursuant to the Incentive Plan, under certain
circumstances, such as a "Change in Control" or an "Unfriendly Change in
Control", performance units ("Performance Units") will become partially or
fully payable. The terms "Change of Control" and "Unfriendly Change of
Control" are defined as follows:
 
  Change of Control. For purposes of the Long-Term Incentive Plan, a "Change
in Control of the Company" shall occur if: (a) any person or group (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than (i)
the Company and/or its management; (ii) Fund American Enterprises Holdings,
Inc. and/or its management and/or its subsidiaries; or (iii) John J. Byrne
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of thirty-five percent (35%) or more of the Company's then
outstanding voting capital stock; (b) the Incumbent Directors cease for any
reason to constitute a majority of the Board of the Company; (c) the business
of the Company for which the participant's services are principally performed
is disposed of by the Company pursuant to a sale or other disposition of all
or substantially all of the business or business-related assets of the Company
(including stock of a subsidiary of the Company); or (d) the Compensation
Committee determines that the business or value of the Company is
significantly changed or altered by reason of a significant event or
transaction; including, but not limited to, a sale, transfer, merger,
consolidation, reorganization or recapitalization.
 
  In the event of a Change of Control, the participant shall be entitled to
the number or amount of award or awards, as the case may be, based on the sole
discretion of the Compensation Committee; but taking into consideration such
relevant factors including, but not limited to, whether the original
performance objectives are being met at the time of the Change in Control,
whether the market value of the Company's common stock has increased as a
result of such Change of Control, whether the Company has outperformed its
competitors notwithstanding significant adverse economic or market conditions,
etc.
 
  Only with respect to a Change of Control, in no event will any Option become
exercisable or amounts or Shares be paid, awarded in connection with
Performance Units, to the extent that the Company would not be entitled to a
deduction for federal income tax purposes in connection with the immediate
exercise of such Option or payment of such award by reason of the application
of the provisions of Section 280G of the Code; relating to Golden Parachute
Payments.
 
  Unfriendly Change of Control. A Change in Control of the Company shall be
deemed an "Unfriendly Change in Control of the Company" if (a) any person or
group (within the meaning of Section 13(d) and 14(d)(2) of the Exchange Act),
other than (i) the Company and/or its management; (ii) Fund American
Enterprises Holdings, Inc. and/or its management and/or its subsidiaries; or
(iii) John J. Byrne, becomes the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of thirty-five percent (35%) or more of the
Company's then outstanding voting capital stock through a transaction that is
opposed by the Company's President and Chief Executive Officer, and (b) a
majority of the Company's Incumbent Directors by resolution adopted within 30
days following the date the Company becomes aware that the person or group
referred to in this section has become the beneficial owner of thirty-five
percent (35%) or more of the Company's Shares, determines that a Change in
Control has occurred.
 
  In the event an Unfriendly Change In Control occurs, the participant: (a)
may exercise his remaining Options or Tandem SARs (whether vested or unvested)
outstanding as of the Acceleration Date provided, however, that (i) in the
case of an officer subject to Section 16(b) of the Exchange Act, no Option
shall become exercisable until the expiration of the period ending six months
after the date of grant of the Option hereunder, and (ii) no Option shall
become exercisable to the extent that the Company would not be entitled to a
deduction for federal income tax purposes in connection with the immediate
exercisability of such Option by reason of the application of the provisions
of Section 280G of the Code, (b) will receive the Maximum Value of his
Performance Units outstanding, regardless of whether the performance
objectives are being met, as of the date of such Unfriendly Change of Control
and (c) will receive a total Annual Bonus as determined by the Compensation
Committee.
 
                                      24
<PAGE>
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  During 1997, the Compensation Committee was comprised entirely of non-
employee directors, specifically Mssrs. Byrne, Delaney and Macklin. During
1997, Mr. Macklin was a member of the Fund American Board and served as the
Chairman of its Human Resources Committee and Compensation Committee.
 
  In connection with the change of control with respect to the Company that
will occur if the Merger is consummated, it is anticipated that the Company's
Compensation Committee will fully vest certain awards to the Company's
directors under the White River Corporation 1993 Incentive Compensation Plan
(the "Incentive Plan"). It is anticipated that Messrs. Byrne, Delaney and
Macklin will receive awards in the amounts of $634,960, $634,960, and
$1,904,070, respectively.
 
  In connection with entering into the Merger Agreement, the Company entered
into indemnification agreements with each of its officers and directors
(including Messrs. Byrne, Delaney and Macklin) indemnifying such persons
against certain claims and liabilities resulting from having served as an
officer or director of the Company. In addition, under the terms of the Merger
Agreement, an affiliate of Harvard Private Capital Group, Inc. has agreed, if
the Merger is consummated, to keep the Company in existence with net assets of
at least $50 million for a period of two years, or to have such indemnity
agreements assumed by an entity meeting such requirements.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
  The following table sets forth, as of April 13, 1998, information concerning
the beneficial ownership of shares of White River Common Stock by each
director and executive officer of White River individually and by all current
directors and executive officers as a group. As of April 13, 1998, White River
had 4,874,756 outstanding shares of White River Common Stock.
 
MANAGEMENT OF WHITE RIVER
 
<TABLE>
<CAPTION>
                             NUMBER OF SHARES OF WHITE RIVER COMMON STOCK
                             -------------------------------------------------------
                                          RIGHTS TO
                              SHARES       ACQUIRE                     OWNERSHIP
NAME OF BENEFICIAL OWNER(1)  OWNED(2)     SHARES(3)      TOTAL       PERCENTAGE(4)
---------------------------  -----------  ------------  ------------ ---------------
<S>                          <C>          <C>           <C>          <C>
Patrick M. Byrne(4).....              --            --           --            --
Andrew Delaney..........              500           --           500            (5)
Gordon S. Macklin.......            5,000           --         5,000            (5)
Robert T. Marto.........           16,505       294,432      310,937           6.4%
Bonnie B. Stewart.......            1,178           --         1,178            (5)
Michael E. B. Spicer....              --            --           --            --
Brian P. Zwarych........              --            --           --            --
All current directors
 and executive officers
 as a group.............           23,183       294,432      317,615           6.5%
</TABLE>
--------
(1) All current directors and executive officers may be contacted at White
    River's principal executive office at 2 Gannett Drive, Suite 200, White
    Plains, NY 10604.
(2) Determined based on the beneficial ownership provisions specified in Rule
    13d-3(d)(1) of the Exchange Act. Unless otherwise noted, the indicated
    beneficial ownership represents sole voting and investment powers.
(3) Represents shares of White River Common Stock deliverable upon exercise of
    options to purchase shares of White River Common Stock owned by Fund
    American. Such options expire in 1998 and were issued, concurrent with the
    purchase and other transfer of selected assets and the assumption of
    certain liabilities from Fund American, to replace then outstanding
    employee options to purchase Fund American common stock.
(4) Patrick M. Byrne, has voting power with respect to 15,000 shares of White
    River Common Stock held in trust for his benefit, but he disclaims any
    beneficial ownership of such shares of White River Common Stock. In
    addition, he is the son of John J. Byrne, who is the beneficial owner of
    835,112 shares of White River Common Stock, representing 17.1% of the
    total outstanding shares of White River Common Stock. Patrick M. Byrne
    disclaims any beneficial ownership of shares of White River Common Stock
    held by John J. Byrne.
(5) Represents less than 1.0% of the total outstanding shares of White River
    Common Stock.
 
                                      25
<PAGE>
 
CHANGE OF CONTROL
 
  See "Item 1 Business--the Company" for a discussion of the Merger Agreement.
 
CERTAIN BENEFICIAL OWNERS
 
  To the knowledge of White River, as of April 13, 1998, no person or entity
beneficially owns more than 5% of the outstanding White River Common Stock,
except as follows:
 
<TABLE>
<CAPTION>
                                                                    OWNERSHIP
NAME AND ADDRESS OF BENEFICIAL OWNER              SHARES OWNED(1) PERCENTAGE(1)
------------------------------------              --------------- -------------
<S>                                               <C>             <C>
Fund American Enterprises Holdings, Inc.(2)......    1,014,250        20.8%
 80 South Main Street
 Hanover, NH 03755
John J. Byrne(3).................................      835,112        17.1%
 c/o Fund American Enterprises Holdings, Inc.
 80 South Main Street
 Hanover, NH 03755
Robert T. Marto(4)...............................      310,937         6.4%
 Two Gannett Drive, Suite 200
 White Plains, NY 10604
</TABLE>
--------
(1) Determined based on the beneficial ownership provisions specified in Rule
    13d-3(d)(1) of the Exchange Act.
(2) According to filings made by Fund American with the SEC, Fund American
    reported that it and John J. Byrne believe that they do not constitute a
    group with respect to shares of White River Common Stock owned by Fund
    American. In addition, Fund American disclaims any beneficial ownership of
    shares of White River Common Stock owned by John J. Byrne. See note (3).
(3) John J. Byrne is the Chairman, and former President and Chief Executive
    Officer of Fund American. According to a filing made by John J. Byrne with
    the Commission, he believes that he and Fund American do not constitute a
    group with respect to shares of White River Common Stock owned by him, and
    he disclaims any beneficial ownership of shares of White River Common
    Stock owned by Fund American. John J. Byrne has sole voting and investment
    power with respect to shares of White River Common Stock for which he
    claims beneficial ownership. See note (2).
(4) According to a filing made by Mr. Marto with the Commission, the shares of
    White River Common Stock to which Mr. Marto claims beneficial ownership
    include options to purchase 294,432 shares of White River Common Stock
    owned by Fund American. Such options expire in 1998 and were issued,
    concurrent with the purchase and other transfer of selected assets and the
    assumption of certain liabilities from Fund American, to replace then
    outstanding employee options to purchase Fund American common stock.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
  During 1997, Mr. Macklin was a member of the Fund American Board and served
as the Chairman of its Human Resources Committee.
 
  Pursuant to a registration rights agreement (the "Registration Rights
Agreement") dated May 23, 1995, between White River and certain shareholders
identified therein (the "Selling Stockholders"), White River has filed a shelf
registration statement (the "Registration Statement") for 490,000 shares of
Common Stock of which 475,000 are beneficially owned by John J. Byrne and
15,000 shares are held in trust for the benefit of Patrick M. Byrne. In
accordance with the terms of the Registration Rights Agreement, the out-of-
pocket costs incurred by White River in connection with the Registration
Statement have been borne by the Selling Stockholders. In addition, White
River and the Selling Stockholders have agreed under certain circumstances to
indemnify each other with respect to certain claims relating to the
Registration Statement.
 
                                      26
<PAGE>
 
  Patrick M. Byrne, is the son of John J. Byrne, Chairman, and former
President and Chief Executive Officer of Fund American. John J. Byrne is the
beneficial owner of 17.1% of the total outstanding shares of Common Stock as
of the Record Date.
 
PENDING MERGER
 
  There are certain transactions that have been, or will be, entered into
between the Company and its officers and directors in connection with the
Merger Agreement.
 
  Incentive Plan. All of the current directors and officers of White River are
expected to receive payments under the Incentive Plan. In the event of a
"change in control" (as defined in the Incentive Plan), the participant is
entitled to the number or amount of award or awards, as the case may be, based
on the sole discretion of the Compensation Committee of the White River Board
(the "Compensation Committee"). It is expected that the Compensation Committee
will fully vest the awards of each of the directors and officers of White
River under the Incentive Plan as a result of the change in control and that
the participants will be paid their awards in lump sum cash payments as of the
Effective Time. Based on an assumed price of $90.67 per share of White River
Common Stock, Mr. Marto, Mr. Macklin, Mr. Delaney, Mr. Byrne, Ms. Stewart and
Mr. Spicer are expected to receive awards in amounts of $6,346,900,
$1,904,070, $634,960, $634,960, $634,960 and $453,350, respectively. Each $1
increase in share price will result in an increase in the amount for each of
the above individuals by $70,000, $21,000, $7,000, $7,000, $7,000 and $5,000,
respectively.
 
INDEMNIFICATION
 
  In connection with entering into the Merger Agreement the Company has
entered into Indemnity Agreements with each of its officers and directors. See
Item 11--"Executive Compensation--Compensation Committee Interlocks and
Insider Participation."
 
                                    PART IV
 
ITEM 14. 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 December 22, 1997, White River Corporation issued a press release
announcing the resignation of Robert T. Marto from his position as President
and CEO. (Form 8-K filed December 24, 1997).
 
  Effective November 7, 1997, White River Partners, Inc. purchased from
European American Bank the assets of Just Kiddie Rides, Inc., a subsidiary of
Childrobics, Inc. (CHLD) for $1.3 million. White River Partners, Inc., will
market and manufacture licensed kiddie rides through its new operating
company, Just Kiddie Rides Enterprises, Inc., a Delaware corporation. White
River Partners is a wholly-owned subsidiary of White River Corporation (WHRC).
(Form 8-K filed November 21, 1997).
 
  Effective October 14, 1997, White River Corporation ("White River") received
a $26.3 million distribution on its investment in the Richard C. Blum &
Associates--NWA Partners LP ("NWA Partners"), which holds equity securities in
Northwest Airlines Corporation ("NWA Corp."). The distribution represented
White River's share of proceeds arising primarily from the redemption of NWA
Partners' investment in preferred stock of NWA Corp., but also in part due to
the sale of 0.7 million shares of NWA Corp. common stock subject to a call
option. White River owns a 21.3% interest in NWA Partners, which in turn
continues to own approximately 4.7 million shares of NWA Corp. common stock.
(Form 8-K filed October 17, 1997).
 
                                      27
<PAGE>
 
 (c) Exhibits
 
<TABLE>
 <C>     <S>
  *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.(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.(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.(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).
  *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).
</TABLE>
 
 
                                       28
<PAGE>
 
<TABLE>
 <C>    <S>
 *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).
 *21    Subsidiaries of the Registrant
  23.1  Consent of Ernst & Young LLP
  23.2  Consent of Price Waterhouse LLP
  24    Powers of Attorney
  27.1  Current Financial Data Schedule for fiscal year end December 31, 1997.
  27.2  Restated Financial Data Schedule for quarter ended September 30, 1997.
  27.3  Restated Financial Data Schedule for quarter ended June 30, 1997.
  27.4  Restated Financial Data Schedule for quarter ended March 31, 1997.
  27.5  Restated Financial Data Schedule for year ended December 31, 1996.
  27.6  Restated Financial Data Schedule for quarter ended September 30, 1996.
  27.7  Restated Financial Data Schedule for quarter ended June 30, 1996.
  27.8  Restated Financial Data Schedule for quarter ended March 31, 1996.
</TABLE>
--------
* Previously filed as indicated and incorporated herein by reference.
 
                                       29
<PAGE>
 
                                  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.
 
                                          White River Corporation
 
                                                             *
                                          By: _________________________________
                                              GORDON S. MACKLIN PRESIDENT AND
                                                  CHIEF EXECUTIVE OFFICER
                                             
                                          Date: May 22, 1998     
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>     
<CAPTION>  
              SIGNATURE                        TITLE                 DATE
              ---------                       -------                ---- 
<S>                                    <C>                       <C> 
                  *                    Chairman of the           
-------------------------------------   Board, President &       May 22, 1998
          GORDON S. MACKLIN             Chief Executive              
                                        Officer
 
                  *                    Director                  
-------------------------------------                            May 22, 1998
           ROBERT T. MARTO                                           
 
                  *                    Director                 
-------------------------------------                            May 22, 1998
           ANDREW DELANEY                                            
 
                  *                    Director                 
-------------------------------------                            May 22, 1998
          PATRICK M. BYRNE                                          
 
                  *                    Director                  
-------------------------------------                            May 22, 1998
          BONNIE B. STEWART                                          
 
       /s/ Michael E.B. Spicer         Chief Financial           
-------------------------------------   Officer, (Principal      May 22, 1998
         MICHAEL E.B. SPICER            Accounting Officer)          
                                        Treasurer &
                                        Corporate Secretary
</TABLE>      
 
*By: /s/ Michael E.B. Spicer
-------------------------------------
     
  Michael E.B. Spicer, Attorney-in-
  Fact     
<PAGE>
 
                    WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                                    ANNEX I
 
                       CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
 
                    WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                       CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<S>                                                                         <C>
Consolidated Statements of Financial Condition.............................  F-1
Consolidated Statements of Income..........................................  F-2
Consolidated Statements of Stockholders' Equity............................  F-3
Consolidated Statements of Cash Flows......................................  F-4
Notes to Consolidated Financial Statements.................................  F-5
Report on Management's Responsibilities.................................... F-26
Report of Ernst & Young LLP................................................ F-27
Report of Price Waterhouse LLP............................................. F-28
</TABLE>
 
  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.
<PAGE>
 
                    WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                    --------------------------
                                                        1997          1996
                                                    ------------  ------------
                                                      DOLLARS IN THOUSANDS,
                                                    EXCEPT PER SHARE AMOUNTS
<S>                                                 <C>           <C>
ASSETS
Cash and cash equivalents.........................  $    190,515  $    188,365
Investment securities, at market value (adjusted
 cost: $63,940 and $42,892).......................       122,688        72,699
Accounts receivable, less allowances of $2,661 and
 $1,942...........................................        19,617        10,661
Other current assets..............................         7,091         4,545
                                                    ------------  ------------
  Total current assets............................       339,911       276,270
Investment securities, at market value (adjusted
 cost: $14,855)...................................        41,434           --
Other investments, at adjusted cost (fair value:
 $276 and $39,813)................................           276        26,420
Goodwill, less accumulated amortization of $20,051
 and $14,675......................................        18,754        23,730
Purchased software and equipment, net.............        18,431        20,478
Deferred income tax asset.........................         7,264         6,410
Other assets......................................         1,063         1,204
                                                    ------------  ------------
  Total assets....................................  $    427,133  $    354,512
                                                    ============  ============
LIABILITIES
Accounts payable and accrued expenses.............  $     24,134  $     21,334
Deferred revenues.................................         5,824         5,709
Current portion of contract funding...............           --            123
Current portion of notes payable and other debt...           111           120
Redeemable preferred stock........................         7,000           --
                                                    ------------  ------------
  Total current liabilities.......................        37,069        27,286
Deferred income tax liability.....................        44,676        21,867
Notes payable and other debt......................           --            111
Other liabilities.................................        10,765        22,591
                                                    ------------  ------------
  Total liabilities...............................        92,510        71,855
                                                    ------------  ------------
Redeemable preferred stock........................           189         7,175
                                                    ------------  ------------
Minority interest.................................        33,687        18,950
                                                    ------------  ------------
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............................       250,942       249,546
Retained earnings.................................        43,166        36,438
Net unrealized investment gains, net of tax.......        55,449        19,358
Common stock in treasury, at cost (1,495,244
 shares)..........................................       (48,874)      (48,874)
                                                    ------------  ------------
  Total stockholders' equity......................       300,747       256,532
                                                    ------------  ------------
Total liabilities, redeemable preferred stock,
 minority interest and stockholders' equity.......  $    427,133  $    354,512
                                                    ============  ============
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-1
<PAGE>
 
                    WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                        --------------------------------------
                                            1997         1996         1995
                                        ------------ ------------ ------------
                                        IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<S>                                     <C>          <C>          <C>
REVENUES
Insurance-related services............  $    159,106 $    130,977 $    115,519
Investment income.....................        11,362        8,984        8,276
Other revenues........................         9,442        5,437          --
                                        ------------ ------------ ------------
    Total revenues....................       179,910      145,398      123,795
                                        ------------ ------------ ------------
OPERATING EXPENSES
Compensation and benefits.............        82,028       63,725       51,781
Other operating expenses..............        92,327       74,834       75,429
                                        ------------ ------------ ------------
    Total operating expenses..........       174,355      138,559      127,210
                                        ------------ ------------ ------------
    Operating income (loss)...........         5,555        6,839       (3,415)
                                        ------------ ------------ ------------
NET INVESTMENT GAINS
Net realized investment gains.........        27,492       16,150       25,037
Change in net unrealized investment
 gains and losses.....................           --           --        11,218
                                        ------------ ------------ ------------
Net investment gains..................        27,492       16,150       36,255
                                        ------------ ------------ ------------
OTHER EXPENSE
Interest expense......................           171        2,562        8,936
Minority interest.....................        10,065          971          --
                                        ------------ ------------ ------------
    Total other expense...............        10,236        3,533        8,936
                                        ------------ ------------ ------------
PRETAX INCOME.........................        22,811       19,456       23,904
Income tax expense....................        15,610       14,306        7,909
                                        ------------ ------------ ------------
Income before extraordinary item......         7,201        5,150       15,995
Extraordinary loss on early retirement
 of debt, net of tax of $437..........           --           678          --
                                        ------------ ------------ ------------
Net income............................         7,201        4,472       15,995
Dividends and accretion on redeemable
 preferred stock......................           473          727          585
                                        ------------ ------------ ------------
Net income applicable to common
 shares...............................  $      6,728 $      3,745 $     15,410
                                        ============ ============ ============
EARNINGS PER COMMON SHARE:
 Basic:
  Income before extraordinary items...  $       1.38 $       0.91 $       2.94
  Net income..........................  $       1.38 $       0.77 $       2.94
 Diluted:
  Income before extraordinary items...  $       1.31 $       0.85 $       2.84
  Net income..........................  $       1.31 $       0.73 $       2.84
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-2
<PAGE>
 
                    WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                NET
                                           COMMON            UNREALIZED  COMMON
                                   COMMON PAID-IN  RETAINED  INVESTMENT STOCK IN
                          TOTAL    STOCK  SURPLUS  EARNINGS    GAINS    TREASURY
                         --------  ------ -------- --------  ---------- --------
                                         DOLLARS IN THOUSANDS
<S>                      <C>       <C>    <C>      <C>       <C>        <C>
Balances as of December
 31, 1994............... $195,226   $64   $199,936 $17,283    $   --    $(22,057)
  Net income............   15,995                   15,995
  Dividends and
   accretion on
   redeemable preferred
   stock................     (585)                    (585)
  Adoption of SFAS No.
   115, effective
   September 30, 1995,
   net of tax...........    2,484                               2,484
  Change in unrealized
   investment gains and
   losses, net of tax...    5,835                               5,835
  Repurchases of 762,410
   shares of Common
   Stock................  (25,694)                                       (25,694)
                         --------   ---   -------- -------    -------   --------
Balances as of December
 31, 1995............... $193,261   $64   $199,936 $32,693    $ 8,319   $(47,751)
  Net income............    4,472                    4,472
  Dividends and
   accretion on
   redeemable preferred
   stock................     (727)                    (727)
  Change in unrealized
   investment gains and
   losses, net of tax...   11,039                              11,039
  Repurchases of 28,165
   shares of Common
   Stock................   (1,123)                                        (1,123)
  Effects of initial
   public offering of
   CCC Common Stock, net
   of tax...............   49,506           49,506
  Other, net............      104              104
                         --------   ---   -------- -------    -------   --------
Balances as of December
 31, 1996............... $256,532   $64   $249,546 $36,438    $19,358   $(48,874)
                         --------   ---   -------- -------    -------   --------
  Net income............    7,201                    7,201
  Dividends and
   accretion on
   redeemable preferred
   stock................     (473)                    (473)
  Change in unrealized
   investment gains and
   losses, net of tax...   36,091                              36,091
  Other, net............    1,396            1,396
                         --------   ---   -------- -------    -------   --------
Balances as of December
 31, 1997............... $300,747   $64   $250,942 $43,166    $55,449   $(48,874)
                         ========   ===   ======== =======    =======   ========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-3
<PAGE>
 
                    WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                   YEAR ENDED DECEMBER 31,
                                                  ----------------------------
                                                    1997      1996      1995
                                                  --------  --------  --------
                                                         IN THOUSANDS
<S>                                               <C>       <C>       <C>
Net income......................................  $  7,201  $  4,472  $ 15,995
Adjustments to reconcile net income to net cash
 and cash equivalents provided from (used for)
 operations:
  Net investment gains..........................   (27,492)  (16,150)  (36,255)
  Amortization and depreciation.................    11,823    12,213    14,170
  Repayment of contract funding balances........      (123)   (3,340)  (10,249)
  Deferred income tax expense (benefit).........     2,520    (3,358)    9,002
  Amortization of goodwill......................     5,376     5,186     6,194
  Minority interest.............................    10,065       971       --
  Extraordinary loss on early retirement of
   debt, net of tax.............................       --        678       --
Changes in:
  Other current assets and accounts receivable..   (11,502)     (724)      --
  Accounts payable and accrued expenses.........     2,800       137     6,030
  Other liabilities.............................    (7,154)    9,935     1,990
  Deferred revenues.............................       115       646       --
  Other, net....................................      (490)    1,105     3,117
                                                  --------  --------  --------
Net cash and cash equivalents provided from
 (used for) operations..........................    (6,861)   11,771     9,994
                                                  --------  --------  --------
Cash flows provided from investing activities:
  Proceeds from sales of investments............    93,148    21,106    29,921
  Purchases of investments......................   (75,164)  (11,005)      --
  Purchases of software and equipment...........    (9,776)   (5,568)   (3,003)
  Proceeds from Faneuil Sale, net of expenses...       --        --        500
  Other, net....................................       --        (97)       48
                                                  --------  --------  --------
Net cash and cash equivalents provided from in-
 vesting activities.............................     8,208     4,436    27,466
                                                  --------  --------  --------
Cash flows provided from (used for) financing
 activities:
  Net proceeds from issuance of subsidiary
   stock........................................     1,396    73,795       --
  Proceeds from notes payable and other debt....       --     10,750    44,000
  Payment of equity and debt issue costs........       --     (2,053)      --
  Repurchases of Common Stock...................       --     (1,188)  (25,652)
  Redemption of redeemable preferred stock,
   including accrued dividends..................       --     (1,354)      --
  Principal payments on notes payable and other
   debt.........................................      (120)  (46,740)  (11,101)
  Dividends paid on redeemable preferred stock..      (473)     (473)     (473)
  Other, net....................................       --        176        26
                                                  --------  --------  --------
Net cash and cash equivalents provided from fi-
 nancing activities.............................       803    32,913     6,800
                                                  --------  --------  --------
Net increase in cash and cash equivalents during
 period.........................................     2,150    49,120    44,260
Cash and cash equivalents balance at beginning
 of period......................................   188,365   139,245    94,985
                                                  --------  --------  --------
Cash and cash equivalents balance at end of pe-
 riod...........................................  $190,515  $188,365  $139,245
                                                  ========  ========  ========
Supplemental information:
  Income taxes paid (refunded)..................  $ 10,219  $ 12,690  $   (943)
  Interest paid.................................  $    130  $  2,573  $  7,324
  Non-cash equipment financing..................  $    --   $  1,341  $    888
  Exchanges of investments in settlement of
   notes payable and other debt.................  $    --   $    --   $ 90,000
                                                  ========  ========  ========
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-4
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1. ORGANIZATION
 
  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") commenced operations in its present form on
September 24, 1993, concurrent with the purchase and other transfer of
selected assets and the assumption of certain liabilities (collectively, the
"Capitalization") from its former parent company, Fund American Enterprises
Holdings, Inc. and certain of its subsidiaries (together, "Fund American").
Prior to the Capitalization, White River served as the holding company for
Fund American's investment management subsidiaries, and essentially inactive
insurance subsidiaries. On December 22, 1993 (the "Distribution Date"), Fund
American distributed (the "Distribution") approximately 75% of the outstanding
shares of White River common stock, par value $0.01 per share (the "Common
Stock"), to all holders of Fund American common stock.
 
  During June 1994, White River completed its acquisition of a majority of the
total outstanding common stock, par value $0.10 per share (the "CCC Common
Stock"), of CCC Information Services Group Inc., formerly InfoVest
Corporation, (together with its subsidiaries, unless the context requires
otherwise, "CCC"). CCC, through CCC Information Services Inc. and certain
other subsidiaries, is a supplier of automobile claims information and
processing, claims management software and communication services. As of
December 31, 1997, White River held approximately 35% of the total outstanding
shares of CCC Common Stock and shares of CCC preferred stock that in the
aggregate continue to provide White River with a majority of the voting power
associated with CCC's total outstanding voting stock.
 
  Based upon the composition of its assets at the time of the Capitalization,
White River met the definition of an investment company (an "Investment
Company") under the Investment Company Act of 1940 (the "Investment Company
Act"). In anticipation of the Distribution, White River submitted an
application to the Securities and Exchange Commission (the "Commission")
seeking exemptive relief from various provisions of the Investment Company
Act. During December 1993, White River received from the Commission a
temporary exemption (the "Exemptive Order") from registering as an Investment
Company. As such, White River was exempted from some, but not all, of the
provisions of the Investment Company Act for a period of up to two years from
the date of such Exemptive Order. From September 30, 1993 until October 1995,
White River was an Investment Company as defined in section 3(a)(3) of the
1940 Act. The 1993 exemptive order granted by the Commission did not change
its status, and therefore it was appropriate to use investment company
accounting for White River during this time. During October 1995, White River
filed a report with the Commission which concluded, effective September 30,
1995, that White River no longer met the definition of an Investment Company,
at which time White River commenced the preparation of its financial
statements in accordance with GAAP for operating companies. Accordingly, White
River no longer needs to rely upon the relief provided by the Exemptive Order.
Since the filing of such report, White River has conducted and intends to
continue to conduct its business operations so as to avoid having to register
as an Investment Company under the Investment Company Act.
 
  On December 11, 1997, White River announced the signing of a merger
agreement under which an affiliate of Harvard Private Capital Group, Inc.
("Harvard Private Capital") would acquire White River for approximately $400
million in cash. Under the Merger Agreement, among other things, WRC
MergerCorp. ("MergerCo") would be merged with and into White River (the
"Merger"), and each share of Common Stock, par value $0.01 per share (the
"White River Common Stock") (other than treasury shares held by White River or
Dissenting Shares), outstanding at the Effective Time would be converted into
the right to receive approximately $82.02 in cash, without interest and
subject to adjustment under certain circumstances as described further in the
Merger Agreement. The transaction would be fully financed and would not be
subject to a financing condition. The merger price would be subject to
adjustment under certain circumstances, and,
 
                                      F-5
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
therefore, the price per share actually received upon consummation of the
merger could be greater or less than $82.02. Holders of White River's Series A
Preferred Stock would receive the stated value of $1,000 per share plus any
accrued and unpaid dividends.
 
  In connection with the transaction, White River amended its shareholders'
rights plan to provide, among other things, that the exercisability of rights
will not be triggered by the merger agreement and that the rights will expire
immediately prior to the consummation of the merger. Accordingly, the rights
will not be redeemed and no payment will be made to stockholders in respect of
their rights.
 
  On March 10, 1998, Fund American made a proposal to White River to negotiate
the acquisition of all of the outstanding shares of common stock of White
River not owned by Fund American for a total consideration of up to $85.00 per
share in cash, subject to satisfactory completion of due diligence and to
successful negotiation, Fund American Board approval and signing of a
definitive agreement.
 
  On March 23, 1998, Harvard Private Capital proposed an amendment to the
Merger Agreement which would modify the Merger Agreement by: 1) increasing the
merger consideration to approximately $434 million ($89.00 per share), subject
to certain adjustments; and 2) requiring White River to pay a "break up" fee
of $13.5 million in the event that the merger is not successfully concluded by
June 30, 1998 for reasons other than a breach of the Merger Agreement by
Harvard Private Capital.
 
  On March 30, 1998, Fund American increased its proposal to purchase all
shares of White River not owned by Fund American to $90 cash per share,
contingent, among other things, on White River Board acceptance by Monday,
April 6, 1998, and execution of a mutually satisfactory definitive agreement,
and certain other contingencies.
 
  On April 2, 1998, Harvard Private Capital proposed another amendment to the
Merger Agreement. The proposed amendment would modify the Merger Agreement by,
among other things: 1) increasing the merger consideration to approximately
$442 million ($90.67 per share), subject to certain adjustments; and 2)
requiring White River to pay a "break up" fee of $13.5 million in the event
that the merger is not successfully concluded by June 30, 1998 for reasons
other than a breach of the Merger Agreement by Harvard Private Capital.
 
  On April 3, 1998, Fund American reaffirmed its proposal to purchase all
shares of White River not owned by Fund American for $90 cash per share, and
removed certain contingencies.
 
  On April 6, 1998, after further discussions with Harvard Private Capital and
Fund American, the White River Board evaluated the two proposals based on its
fiduciary duty to maximize shareholder value and decided to accept the Harvard
Private Capital proposal. Under the terms of the amended agreement, Harvard
Private Capital, among other things, will pay White River shareholders $90.67
per share in cash, subject to adjustment which could result in a higher or
lower price at closing. In addition, White River agreed to pay Harvard Private
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.
 
                                      F-6
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
BASIS OF PRESENTATION
 
  The accompanying consolidated financial statements include the accounts of
White River and its subsidiaries, including those of CCC from the effective
date of the acquisition of CCC by White River. The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles ("GAAP"). All significant intercompany balances have been
eliminated in consolidation. Certain prior period balances have been
reclassified to conform to current financial statement presentation.
 
  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 affect upon the reported amounts of revenues and expenses
reflected in the consolidated statements of operations. Actual results could
differ from these estimates.
 
CASH AND CASH EQUIVALENTS
 
  The Company considers all highly liquid investments with a maturity of three
months or less to be cash equivalents.
 
  Substantially all of the Company's cash and cash equivalents as of December
31, 1997 and 1996 are in interest-bearing deposits with maturities of six days
or less. The majority of such deposits are held by major banking institutions.
 
INVESTMENTS
 
  White River considers its investment securities to be available for sale.
 
  Based on the composition of its assets at the time of the Capitalization,
White River met the definition of an Investment Company under the Investment
Company Act. Accordingly, White River's accounting policies regarding the
carrying value of investments, as well as the treatment of changes in net
unrealized gains and losses relating to investments held, conformed to GAAP
for Investment Companies until such time as White River ceased to meet the
definition of an Investment Company. As discussed in Note 1, effective
September 30, 1995, White River no longer meets the definition of an
Investment Company. Accordingly, White River adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" as of such date. As a
result of the adoption of SFAS No. 115, investments classified by White River
as investment securities continue to be carried at market value; however,
changes in net unrealized gains and losses are reported net of tax as a
separate component of stockholders' equity. Securities classified by White
River as other investments, which had been carried at market value under GAAP
for Investment Companies, are carried at adjusted cost, which reflects such
securities' carrying value immediately preceding the adoption of SFAS No. 115.
 
  As a result of the adoption of SFAS No. 115, the carrying value of White
River's interest in Cross Timbers Oil Company ("Cross Timbers") common stock
increased by $3.8 million to reflect the undiscounted market value of such
interest as of September 30, 1995. Such increase totalled $2.5 million net of
tax and was recorded directly as a separate component of stockholders' equity.
 
  Investments classified by White River as investment securities include
certain common shares, trust units, limited partnership interests and debt
securities that are not restricted by contract or governmental statute or
 
                                      F-7
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
regulation as to resale and which have established fair market values.
Investment securities as of December 31, 1997, include White River's interest
in Cross Timbers common stock due to White River's demand registration rights
relating to such securities, and White River's interest in NWA Partners, due
to the lapsing of restrictions on the investments held by such partnership
(prior to the lapsing of such restrictions, the investment was recorded in
"other investments"). Prior to September 30, 1995, investment securities were
carried at market value and changes in net unrealized gains and losses were
included in net income. Effective September 30, 1995, investment securities
continue to be carried at market value, however, changes in net unrealized
gains and losses are reported net of tax as a separate component of
stockholders' equity. During 1997, the restrictions on the sale of the
underlying assets (marketable equity securities) in NWA Partners lapsed.
Accordingly, at December 31, 1997, the Company has classified its investment
in NWA Partners as an available for sale security and has recorded such
investment at fair value ($41.4 million), resulting in an unrealized gain (net
of tax) of $17.3 million. Prior to June 1997 (lapsing of restrictions), such
investment was carried at adjusted cost (see Note 4).
 
  Prior to September 30, 1995, investments classified by White River as other
investments included certain securities and partnership interests having no
established market value and carried at internally appraised values, certain
convertible securities having no established market value and carried at
internally appraised values based upon their conversion features, and certain
securities which, due to restrictions regarding resale, were carried at a
discount to the quoted market value for similar unrestricted securities. Upon
the adoption of SFAS No. 115, securities which continue to be classified by
White River as other investments are carried at adjusted cost, which reflects
such securities' carrying value immediately preceding the adoption of SFAS No.
115. White River's internal valuation techniques are intended to provide good
faith estimates of the fair values of the underlying securities for which
objective market valuations are unavailable. The actual amounts realized on
disposition of these other investments may differ significantly from such good
faith estimates due to changes in facts and circumstances which occur or
become quantifiable subsequent to the time that such estimates are made,
particularly because changes in estimated fair value of these securities that
occur subsequent to September 30, 1995, will not be reflected in such
securities' carrying values unless the change represents a decline in value
which is deemed to be other than temporary in nature. Prior to September 30,
1995, changes in net unrealized gains and losses relating to other investments
were included as a component of net income.
 
  Purchases and sales of investments are recorded as of the trade date.
Realized gains and losses resulting from sales of investments are accounted
for using the specific identification method. Interest income on debt
securities and interest-bearing cash and cash equivalents is recognized when
earned and dividends on investments are recognized as of the ex-dividend date.
 
ALLOWANCE FOR DOUBTFUL ACCOUNTS
 
  The following is a summary of activity in the allowance for doubtful
accounts ($ in millions):
 
<TABLE>
   <S>                                                                    <C>
   January 1, 1995....................................................... $ 0.9
     Write-offs..........................................................  (1.7)
     Provision...........................................................   2.3
                                                                          -----
   December 31, 1995.....................................................   1.5
     Write-offs..........................................................  (3.4)
     Provisions..........................................................   3.8
                                                                          -----
   December 31, 1996.....................................................   1.9
     Write-offs..........................................................  (2.7)
     Provisions..........................................................   3.5
                                                                          -----
   December 31, 1997..................................................... $ 2.7
                                                                          =====
</TABLE>
 
 
                                      F-8
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
GOODWILL
 
  Goodwill represents the excess of the acquisition cost of CCC, including
liabilities assumed, over the fair value of the net assets acquired. Goodwill
is amortized on a straight-line basis over its expected economic life of seven
years. The original goodwill recorded in connection with the acquisition of
CCC by White River has been adjusted to reflect subsequent changes in the cost
of acquiring CCC and to reflect the reversal of certain deferred tax asset
valuation allowances relating to CCC.
 
  The carrying value of goodwill is periodically reviewed by management and a
write-down for permanent impairment would be recognized if and when the
expected cash flows relating to these assets indicate that such carrying value
is not recoverable.
 
PURCHASED SOFTWARE AND EQUIPMENT
 
  Purchased software is stated at cost, net of accumulated amortization.
Amortization is provided on a straight-line basis over estimated useful lives
ranging from two to five years. Equipment is stated at cost, net of
accumulated depreciation. Depreciation is provided on a straight-line basis
over estimated useful lives ranging from two to 15 years.
 
  The carrying value of purchased software and equipment is periodically
reviewed by management and a write-down for permanent impairment would be
recognized if and when the expected cash flows derived from these assets
indicate that such carrying value is not recoverable.
 
CONTRACT FUNDING
 
  The right to receive future revenue streams under certain end-user collision
estimating contracts (the "Contracts") have been discounted and sold to
various investors ("Contract Funding"). Cash proceeds from a sold Contract
equals the Contract's future revenue stream, discounted at a rate of
approximately 14% per annum, less, for certain Contracts, investor reserves
for customer nonperformance under the Contracts. Sales proceeds and related
interest expense are recognized as revenue and interest expense, respectively,
over the life of the Contract. CCC no longer utilizes Contract Funding as a
source of financing.
 
REVENUE RECOGNITION
 
  Insurance-related services revenue, including vehicle valuation, claims
management and other service revenues, are recognized as services are
provided. During the years ended December 31, 1997 and 1996, and 1995, 66%,
69% and 70%, respectively, of total insurance-related services revenue were
attributable to the insurance industry.
 
INCENTIVE COMPENSATION
 
  White River ratably recognizes expense relating to its long-term incentive
and director compensation plans over the applicable service periods based upon
projected future payments under these plans. For this purpose, such projected
future payments are determined using the current end-of-period market price of
the Common Stock.
 
RESEARCH AND DEVELOPMENT COSTS
 
  Research and development costs incurred by CCC, principally in connection
with the design and development of software products, are expensed as
incurred. Such expenses incurred by CCC of $5.5 million, $4.3 million and $3.5
million are reflected in the accompanying consolidated statements of
operations for the years ended December 31, 1997, 1996, and 1995,
respectively.
 
                                      F-9
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  Software development costs, if material, are capitalized when sufficient
evidence exists that technological feasibility has been established.
Technological feasibility is considered to be established upon completion of a
working model. The time period during which costs would be capitalized, from
the point of attaining technological feasibility until the time of general
product release, is very short and, consequently, the amounts that could be
capitalized are not material to the Company's consolidated financial position
or results of operations.
 
INCOME TAXES
 
  White River and its qualifying subsidiaries file a consolidated Federal
income tax return, and CCC and its qualifying subsidiaries file their own
consolidated Federal income tax return. The consolidated income tax provision
for book purposes is computed by combining the separate tax provisions of
White River and CCC.
 
  The Company provides for deferred income taxes which reflect the tax effects
of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes. In this context, the tax effect is measured using the statutory
tax rate expected to apply to taxable income in the periods in which the
deferred tax liability or asset is expected to be settled or realized.
Furthermore, deferred tax assets are recorded net of a valuation allowance if
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. White River's and CCC's deferred tax assets and
liabilities are not netted for financial reporting purposes.
 
ISSUANCE OF SUBSIDIARY STOCK
 
  White River records the gain or loss associated with issuances of subsidiary
stock as a component of consolidated stockholders' equity within the caption
Common Paid-in Surplus.
 
EARNINGS PER SHARE
 
  In December 1997, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 128 "Earnings Per Share," and restated prior periods.
Under this statement, primary and fully diluted EPS were replaced with basic
and diluted EPS, respectively. In computing basic EPS, the dilutive effect of
stock options and warrants are excluded.
 
  The following table presents the computation of basic and diluted earnings
per share:
 
<TABLE>
<CAPTION>
                                                 1997       1996       1995
                                              ---------- ---------- ----------
   <S>                                        <C>        <C>        <C>
   Numerator:
     Net earnings available to common
      shareholders........................... $6,728,000 $3,745,000 15,410,000
   Denominator:
     Denominator for basic earnings per
      share--weighted-average shares.........  4,874,756  4,881,190  5,237,348
   Dilutive effect of performance-based
    compensation.............................    248,353    298,517    191,348
                                              ---------- ---------- ----------
     Denominator for diluted earnings per
      share..................................  5,123,109  5,179,707  5,428,696
                                              ---------- ---------- ----------
   Basic earnings per share.................. $     1.38 $     0.77 $     2.94
                                              ---------- ---------- ----------
   Diluted earnings per share................ $     1.31 $     0.73 $     2.84
                                              ========== ========== ==========
</TABLE>
 
                                     F-10
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
ADOPTION OF ACCOUNTING STANDARDS
 
  In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". In addition to net income, comprehensive income includes items
recorded directly to stockholders' equity, such as unrealized gains and losses
on certain investments in equity, preferred stock accretion, preferred stock
dividends and the income tax benefit related to the exercise of certain stock
options. This statement establishes new standards for reporting and displaying
comprehensive income and its components in a full set of general-purpose
financial statements. This statement is effective for fiscal years beginning
after December 15, 1997. Adoption of this standard will require an additional
financial statement disclosure detailing the Company's comprehensive income.
 
  In June 1997, the FASB also issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes new
standards for reporting information about operating segments in interim and
annual financial statements. This statement is also effective for fiscal years
beginning after December 15, 1997. The Company is currently evaluating the
impact this statement will have on the consolidated financial statements.
 
NOTE 3. CCC
 
CCC IPO
 
  During August 1996, CCC completed its IPO resulting in net proceeds of $72.1
million. Proceeds from the CCC IPO were used to repay certain bank debt and,
as required by the terms of the CCC Preferred Stock, CCC used 50% of the net
proceeds to redeem 87.4% of the outstanding shares of CCC Preferred Stock at
stated value of $34.1 million, plus accrued dividends of $2.0 million. White
River received principal of $32.8 million and dividends totaling $2.0 million
as a result of the redemption of the CCC Preferred Stock.
 
  As of December 31, 1997, White River held approximately 35% of the total
outstanding shares of CCC Common Stock, all 630 shares of Series C Preferred
Stock with an aggregate stated value of $0.6 million, 3,601 of the 3,785
shares of Series D Preferred Stock with an aggregate stated value of $3.8
million and all 500 shares of Series E Preferred Stock with an aggregate
stated value of $0.5 million, which together with the shares of CCC Common
Stock held by White River, continue to provide White River with a majority of
the voting power associated with CCC's total outstanding voting stock. Since
White River retained in excess of 50% of the voting rights of CCC, and in view
of White River's representation on the CCC Board, White River continues to
consolidate the accounts of CCC.
 
  In connection with the execution of the 1994 CCC Reorganization Agreement,
White River, CCC and certain identified stockholders of CCC executed a
stockholders' agreement dated as of June 16, 1994 (the "CCC Stockholders'
Agreement"), which, among other things, addresses the corporate governance of
CCC and certain other matters relating to the conduct of its business. The CCC
Stockholders' Agreement provides that CCC's board of directors (the "CCC
Board") will consist of seven members, two of whom will be designated by White
River until such time as all of the shares of CCC Preferred Stock have been
redeemed and two of whom will be nominated by White River, subject to CCC's
approval (which will not be unreasonably withheld), until the earlier of: (i)
an initial public offering of CCC Common Stock, or (ii) redemption of all of
the shares of the CCC Preferred Stock. After the CCC IPO, White River's
designees to the CCC Board continue to be the Chairman of the board of
directors of White River (the "White River Board") and an additional director
of White River, and White River continues to provide two additional nominees.
 
  White River and CCC executed an agreement dated as of June 16, 1994,
pursuant to which CCC agreed to issue to White River 500 shares of CCC Series
E Cumulative Redeemable Preferred Stock, stated value $1,000 per share (the
"Series E Preferred Stock"), in exchange for 500 shares of Series D Preferred
Stock. The issuance
 
                                     F-11
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
of the Series E Preferred Stock would occur only in the event that the number
of shares of CCC Common Stock owned by White River represented less than a
majority of the total issued and outstanding shares of CCC Common Stock. When
issued, the Series E Preferred Stock would represent up to a maximum of 51% of
the voting power of CCC when combined with the total shares of CCC Common
Stock already owned by White River. Immediately following the CCC IPO, White
River exchanged 500 shares of Series D Preferred Stock for the Series E
Preferred Stock.
 
  The CCC Preferred Stock is subject to mandatory redemption by CCC five years
from the date of issuance (June 16, 1994) and is subject to earlier
redemption, in full or in part, upon the occurrence of certain events,
including a sale of CCC or public offerings of CCC Common Stock. During August
1996, CCC completed the initial public offering of 6.9 million newly issued
shares of CCC Common Stock, representing approximately 29% of the resulting
total outstanding CCC Common Stock (the "CCC IPO"). The CCC Preferred Stock
accrued cumulative dividends at a rate of 2.75% per annum through the CCC IPO.
Upon the CCC IPO, CCC made the required redemption in accordance with the
terms of the CCC Preferred Stock, and, in accordance with such terms,
dividends from the date of the CCC IPO through June 1998 are eliminated.
Thereafter, dividends will accrue at the rate of 8% per annum and will be paid
quarterly until such time as the CCC Preferred Stock is redeemed.
 
  The Series E Preferred Stock will be redeemed by CCC in proportion to any
redemption of the CCC Preferred Stock, and is also subject to the same
mandatory redemption date of June 16, 1999. In accordance with the terms of
the Series E Preferred Stock, dividends through June 1998 are eliminated.
Thereafter, dividends will accrue at the rate of 8% per annum and will be paid
quarterly until such time as the Series E Preferred Stock is redeemed.
 
  Pursuant to the terms of the Certificate of Designations for Series E
Preferred Stock, the voting power of the outstanding shares of Series E
Preferred Stock is reduced according to a formula to the extent that
outstanding shares of Series E Preferred Stock are either redeemed by CCC or
no longer owned by White River and its affiliates. If White River and its
affiliates were to continue to hold 35.0% of the outstanding shares of CCC's
Common Stock, the Series E Preferred Stock voting power combined with the
voting power of the CCC Common Stock held by White River would be less than a
majority when 353 (or 70.6%) of the 500 shares of Series E Preferred Stock had
been so redeemed or are no longer so owned. The outstanding shares of Series E
Preferred Stock are redeemable pro rata with the outstanding shares of Series
C and Series D Preferred Stock and other parity stock, if any.
 
CCC STOCK OPTION PLAN
 
  CCC sponsors a nonqualified stock option plan (the "CCC Stock Option Plan")
pursuant to which the compensation committee (the "CCC Committee") of the CCC
Board may grant options with an exercise price not less than the greater of
$1.375 or the fair market value of the CCC Common Stock at the date of grant
(the "CCC Stock Options"). CCC Stock Options will generally be exercisable
within 5 years from the date of grant, subject to vesting schedules determined
at the discretion of the CCC Committee. In general, the outstanding CCC Stock
Options vest over 4 years. In accordance with the CCC Reorganization
Agreement, the total number of CCC Stock Options issuable under the CCC Stock
Option Plan were limited to 2,956,040. CCC's Board of Directors has approved a
new stock option plan that provides for the granting to employees of up to
675,800 new options to purchase CCC common stock. The proforma effects upon
reported net income assuming CCC had adopted the fair value based model of
accounting for stock options were insignificant.
 
  As of December 31, 1997, 1,935,603 CCC Stock Options remained outstanding at
a weighted average exercise price of $7.11 per option, and a weighted average
remaining contractual life of 3.18 years. Based upon
 
                                     F-12
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
the number of shares of CCC Common Stock held by White River as of December
31, 1997, if all of the outstanding CCC Stock Options were exercised, White
River would own approximately 32% of the then total outstanding shares of CCC
Common Stock on a pro forma basis. However, as long as all of the shares of
the Series E Preferred Stock are outstanding, White River would continue to
have 51% of the vote associated with the total CCC voting stock outstanding.
 
NOTE 4. INVESTMENTS
 
  Investment securities as of December 31, 1997 and 1996, consisted of the
following:
 
<TABLE>
<CAPTION>
                                                 1997              1996
                                           ----------------- -----------------
                                           ADJUSTED CARRYING ADJUSTED CARRYING
                                             COST    VALUE     COST    VALUE
                                           -------- -------- -------- --------
                                                      IN THOUSANDS
<S>                                        <C>      <C>      <C>      <C>
Cross Timbers Oil Company; common stock... $30,780  $ 89,777 $31,037  $60,803
United States Treasury Bills..............  30,363    30,363   9,058    9,058
Other.....................................   2,797     2,548   2,797    2,838
                                           -------  -------- -------  -------
  Total investment securities--current....  63,940   122,688  42,892   72,699
                                           -------  -------- -------  -------
Richard C. Blum & Associates--NWA
 Partners, L.P.; limited partnership
 interest.................................  14,855    41,434     --       --
                                           -------  -------- -------  -------
  Total investment securities--
   noncurrent.............................  14,855    41,434     --       --
                                           -------  -------- -------  -------
  Total investment securities............. $78,795  $164,122 $42,892  $72,699
                                           =======  ======== =======  =======
</TABLE>
 
  Other investments as of December 31, 1997 and 1996, consisted of the
following:
 
<TABLE>
<CAPTION>
                                                 1997              1996
                                           ----------------- -----------------
                                           ADJUSTED CARRYING ADJUSTED CARRYING
                                             COST    VALUE     COST    VALUE
                                           -------- -------- -------- --------
                                                      IN THOUSANDS
<S>                                        <C>      <C>      <C>      <C>
Richard C. Blum & Associates--NWA
 Partners, L.P.; limited partnership
 interest.................................   $--      $--    $21,848  $21,848
McFarland Energy, Inc.; common stock......    --       --      4,295    4,295
Other.....................................    276      276       277      277
                                             ----     ----   -------  -------
  Total other investments.................   $276     $276   $26,420  $26,420
                                             ====     ====   =======  =======
</TABLE>
 
  See Note 2 for a discussion of the investment in Richard C. Blum and
Associates--NWA Partners, L.P.
 
  Investment income for the years ended December 31, 1997, 1996 and 1995,
consisted of the following:
 
<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                                       ------------------------
                                                         1997    1996    1995
                                                       -------- ------- -------
                                                             IN THOUSANDS
   <S>                                                 <C>      <C>     <C>
   Interest income.................................... $ 10,570 $ 8,160 $ 6,814
   Dividend, royalty trust and equity income..........      792     824   1,462
                                                       -------- ------- -------
     Total investment income.......................... $ 11,362 $ 8,984 $ 8,276
                                                       ======== ======= =======
</TABLE>
 
                                     F-13
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  The investment securities contained unrealized gains of $85.3 million and
$29.8 million at December 31, 1997 and 1996, respectively. At December 31,
1995, the components of net unrealized gains and losses in the investment
securities portfolio consisted of unrealized gains of $12.9 million and
unrealized losses of $0.1 million.
 
  Pretax net realized investment gains relating to the investment securities
portfolio were $27.5 million and $16.2 million during 1997 and 1996,
respectively. During the period September 30, 1995, through December 31, 1995,
pretax net realized investment losses relating to the investment securities
portfolio of $0.1 million consisted of realized gains of $0.8 million and
realized losses of $0.9 million.
 
  During 1995, certain securities with an aggregate carrying value of $90.0
million were transferred to Fund American as repayment of the outstanding
principal balance due under White River's credit agreement with Fund American
(the "Credit Agreement"). See Note 7 for further discussion.
 
NOTE 5. PURCHASED SOFTWARE AND EQUIPMENT
 
  Purchased software and equipment as of December 31, 1997 and 1996, consisted
of the following:
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                             --------  --------
                                                               IN THOUSANDS
   <S>                                                       <C>       <C>
   Purchased software, licenses and databases............... $ 31,052  $ 29,585
   Computer equipment.......................................   27,934    22,866
   Furniture and other equipment............................    5,720     2,889
   Leasehold improvements...................................      620       219
                                                             --------  --------
     Total cost.............................................   65,326    55,559
   Less accumulated depreciation and amortization...........  (46,895)  (35,081)
                                                             --------  --------
     Total purchased software and equipment, net............ $ 18,431  $ 20,478
                                                             ========  ========
</TABLE>
 
  Purchased software, licenses and databases includes software with an
original cost of $31.9 million acquired by White River through the acquisition
of CCC, as well as software purchased from third-parties and used during
development of software products or for other internal operational activities.
Accumulated amortization of purchased software, licenses and databases
totalled $24.0 million and $17.9 million as of December 31, 1997 and 1996,
respectively.
 
  Computer equipment, net of accumulated depreciation, on lease to customers
under operating leases of $2.4 million and $3.6 million, is included in
purchased software and equipment as of December 31, 1997 and 1996,
respectively. Future minimum lease payments under noncancellable customer
leases aggregate approximately $1.0 million in 1998.
 
  Furniture and other equipment includes equipment under capital leases as
follows:
 
<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                             --------------
                                                              1997    1996
                                                             ------  ------
                                                             IN THOUSANDS
   <S>                                                       <C>     <C>  
   Capital leases........................................... $  574  $  574
   Less accumulated depreciation............................   (474)   (357)
                                                             ------  ------
     Total, net............................................. $  100  $  217
                                                             ======  ======
</TABLE>
 
                                     F-14
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
  Accounts payable and accrued expenses as of December 31, 1997 and 1996,
consisted of the following:
 
<TABLE>
<CAPTION>
                                                                 1997    1996
                                                                ------- -------
                                                                 IN THOUSANDS
   <S>                                                          <C>     <C>
   Accounts payable............................................ $ 7,434 $ 6,760
   Accrued compensation........................................   7,479   5,092
   Income taxes payable........................................   2,712   4,097
   Accrued professional fees...................................   2,725   1,484
   Accrued sales tax...........................................   1,237   1,283
   Accrued commissions.........................................   1,521   1,162
   Other.......................................................   1,026   1,456
                                                                ------- -------
     Total accounts payable and accrued expenses............... $24,134 $21,334
                                                                ======= =======
</TABLE>
 
NOTE 7. NOTES PAYABLE AND OTHER DEBT
 
  Notes payable and other debt as of December 31, 1997 and 1996, consisted of
the following:
 
<TABLE>
<CAPTION>
                                                                  1997    1996
                                                                 ------  ------
                                                                 IN THOUSANDS
   <S>                                                           <C>     <C>
   CCC:
     Equipment financing and capital lease obligations.......... $  111  $  231
     CCC term loan..............................................    --      --
     CCC revolving credit facility..............................    --      --
                                                                 ------  ------
       Total....................................................    111     231
   Less current portion of notes payable and other debt.........   (111)   (120)
                                                                 ------  ------
       Total notes payable and other debt....................... $  --   $  111
                                                                 ======  ======
</TABLE>
 
WHITE RIVER
 
  During December 1993, White River and Fund American entered into the Credit
Agreement which provided White River with a $50.0 million term loan which was
due and payable in March 1996 (the "Term Loan"), and a $40.0 million revolving
credit facility which expired in March 1995 (the "Revolver"). During 1995,
White River drew down $40.0 million under the Revolver prior to its
expiration. The Term Loan accrued interest at 6% per annum. Amounts borrowed
under the Revolver accrued interest at 2% per annum over the prime rate of
interest specified by the Credit Agreement. The interest rate in effect for
advances under the Revolver during 1995 was 11.0% per annum.
 
  During 1995, and in accordance with the terms of the Credit Agreement, White
River repaid the principal balance of both the Term Loan and the Revolver, and
received an additional $14 million in cash from Fund American, by transferring
certain securities to Fund American with a carrying value of $93 million and a
fair value of $104 million. Accordingly, management accounted for the
transaction as retirement of debt with no corresponding gain or loss, and the
remaining $11 million was recognized as realized investment gains. Interest
expense relating to balances due under the Credit Agreement totalled $3.1
million for the year ended December 31, 1995.
 
CCC
   
  In August 1996, CCC negotiated a credit facility with a commercial bank to
replace its prior bank credit facility (a term loan and revolving credit
facility). Upon refinancing of its prior credit facility, CCC wrote off all
unamortized deferred financing fees related to its prior bank credit facility
and recorded the loss as an     
 
                                     F-15
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
extraordinary item, net of tax, in its consolidated statement of income. The
current bank facility provides CCC with the ability to borrow up to $20
million under a revolving line of credit for general corporate purposes. The
interest rate under the current bank facility is the London Interbank Offering
Rate plus 1.5% per annum or the prime rate in effect from time to time, as
selected by CCC. When borrowings are outstanding, interest payments are made
monthly. There were no borrowings under the current bank credit facility
during 1997. CCC pays a commitment fee of 0.25% per annum on any unused
portion of the current bank credit facility. The current bank credit facility
terminates on October 1, 2001.     
 
  Under the current bank credit facility, CCC is, with certain exceptions,
prohibited from making certain sales or transfers of assets, incurring
nonpermitted indebtedness or encumbrances, and redeeming or repurchasing its
capital stock, among other restrictions. In addition, the current bank
facility requires CCC to maintain certain levels of operating cash flow and
debt coverage, and limits CCC's ability to make capital expenditures and
investments and declare dividends.
 
  CCC's prior bank facility consisted of a term loan and revolving credit
facility. The annual average interest rate in effect during the years ended
December 31, 1996 and 1995, for the term loan and revolving credit facility
was 8.7% and 8.7%, and 9.2% and 9.0%, respectively.
 
  White River has not made any formal or informal commitment to make
additional investments in or advances to CCC and is not a direct or indirect
guarantor of any CCC indebtedness.
 
NOTE 8. INCOME TAXES
 
  White River and CCC file separate consolidated Federal income tax returns.
The components of the Company's income tax expense (benefit) for the years
ended December 31, 1997, 1996 and 1995, follow:
 
<TABLE>
<CAPTION>
                                                      1997     1996     1995
                                                     -------  -------  -------
                                                          IN THOUSANDS
   <S>                                               <C>      <C>      <C>
   Current:
     Federal.......................................  $10,919  $16,629  $  (948)
     State.........................................    2,202    1,034     (121)
     International.................................      (31)       1      (24)
                                                     -------  -------  -------
       Total current income tax expense (benefit)..   13,090   17,664   (1,093)
                                                     -------  -------  -------
   Deferred:
     Federal.......................................    2,641   (2,895)   9,011
     State.........................................     (121)    (463)      (9)
                                                     -------  -------  -------
       Total deferred income tax expense
        (benefit)..................................    2,520   (3,358)   9,002
                                                     -------  -------  -------
       Total income tax expense....................  $15,610  $14,306  $ 7,909
                                                     =======  =======  =======
</TABLE>
 
  During the years ended December 31, 1997 and 1996, the following deferred
income tax provisions were recorded directly to stockholders' equity:
 
<TABLE>
<CAPTION>
                                                                  1997    1996
                                                                 ------- ------
                                                                  IN THOUSANDS
   <S>                                                           <C>     <C>
   Change in net unrealized investment gains.................... $19,434 $5,944
   Effects of the CCC IPO....................................... $   --  $4,869
                                                                 ======= ======
</TABLE>
 
                                     F-16
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  A reconciliation of the income tax expense for the years ended December 31,
1997, 1996 and 1995, calculated using the Federal statutory tax rate, to the
Company's income tax expense for such periods follows:
 
<TABLE>
<CAPTION>
                                          YEAR ENDED DECEMBER 31,
                                  --------------------------------------------
                                      1997           1996           1995
                                  -------------  -------------  --------------
                                               IN THOUSANDS
<S>                               <C>      <C>   <C>      <C>   <C>      <C>
Income tax expense at statutory
 rate............................ $ 7,984  35.0% $ 6,810  35.0% $ 8,366   35.0%
Differences in income taxes re-
 sulting from:
  Net earnings relating to CCC...   5,539  24.3    4,855  25.0    1,140    4.8
  State taxes, net of Federal
   benefit and before valuation
   reserve.......................   1,352   5.9    2,426  12.5      105    0.4
  Amortization of goodwill.......   1,845   8.1    1,815   9.3    2,168    9.1
  Dividends received deduction...    (292) (1.3)    (202) (1.0)    (358)  (1.5)
  Adjustment to tax basis in
   certain investments...........     --    --       --    --    (2,450) (10.3)
  Prior year taxes...............    (804) (3.5)     --    --       --     --
  Other, net.....................     (23) (0.1)    (390) (2.0)     198    0.8
  Change in valuation allowance..       9   --    (1,008) (5.2)  (1,260)  (5.2)
                                  -------  ----  -------  ----  -------  -----
Income tax expense (benefit)..... $15,610  68.4% $14,306  73.6% $ 7,909   33.1%
                                  =======  ====  =======  ====  =======  =====
</TABLE>
 
                                     F-17
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  Significant components of the Company's deferred income tax assets and
liabilities as of December 31, 1997 and 1996, measured using the Federal
statutory tax rate, are as follows:
 
<TABLE>
<CAPTION>
                                                          1997      1996
                                                        --------  --------
                                                          IN THOUSANDS
<S>                                                     <C>       <C>      
White River:
Deferred income tax assets related to:
  Employee and director compensation accruals.......... $  2,099  $  6,023
  Other................................................      179       140
                                                        --------  --------
    Deferred income tax asset..........................    2,278     6,163
                                                        --------  --------
Deferred income tax liabilities related to:
  Certain investments..................................  (34,121)  (17,442)
  Unrealized gains and undistributed earnings relating
   to CCC..............................................  (10,201)   (6,128)
  Purchased software...................................   (2,420)   (4,248)
  Investment in CCC Preferred Stock....................     (212)     (212)
                                                        --------  --------
    Deferred income tax liability......................  (46,954)  (28,030)
                                                        --------  --------
      Net deferred income tax liability................ $(44,676) $(21,867)
                                                        ========  ======== 
Deferred income tax assets related to:
CCC:
  Deferred revenue..................................... $  1,993  $  1,893
  Rent.................................................    1,474     1,363
  Depreciation and amortization........................    1,330       997
  Bad debt expense.....................................    1,064       759
  Capital loss carry forward...........................      293       284
  Compensation accruals................................      281       247
  Long-term receivable.................................      143       145
  Lease termination....................................      --         48
  Net operating loss carry forwards....................      --         18
  Other, net...........................................      952       940
  Valuation allowance..................................     (293)     (284)
                                                        --------  --------
    Net deferred income tax asset...................... $  7,237  $  6,410
Other..................................................       27       --
                                                        --------  --------
Net deferred income tax asset.......................... $  7,264  $  6,410
                                                        ========  ========
</TABLE>
 
NOTE 9. RETIREMENT PLANS
 
  White River has established two non-qualified plans under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), for the purpose
of providing deferred compensation benefits for certain management employees.
The White River Voluntary Deferred Compensation Plan (the "Deferred
Compensation Plan") and the White River Deferred Benefit Plan (together with
the Deferred Compensation Plan, the "Retirement Plans") both became effective
on December 31, 1993. The Retirement Plans are unfunded and the employees'
right to receive future payments thereunder represent an unsecured claim
against the general assets of White River. No assets of White River shall in
any way be held in trust for, or be subject to, any claim by a participant or
his beneficiary under the Retirement Plans. In the event that a change in
control, as defined by the Retirement Plans, occurs, the provisions of these
plans require the White River Board to cause the creation and funding by White
River of a trust with cash payments, shares of Common Stock, or a combination
thereof
 
                                     F-18
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
sufficient to cover the value of existing plan balances. The assets of such
trust shall at all times be subject to the claims of the general creditors of
White River. The recorded liabilities related to the Retirement Plans totalled
$0.8 million and $12.5 million as of December 31, 1997 and 1996, respectively.
The Retirement Plans were terminated effective as of December 30, 1997,
pursuant to the Merger Agreement. In connection with the termination of the
Retirement Plans, White River made certain payments to plan participants in
1997 totalling $24.7 million, using the available cash resources of White
River. Benefit payments under such plans were nominal in 1996.
 
NOTE 10. INCENTIVE COMPENSATION PLANS
 
  The White River 1993 Incentive Compensation Plan (the "Incentive Plan") is a
non-qualified plan under ERISA and provides for granting to officers and key
employees of White River and its participating subsidiaries various types of
incentive awards including non-qualified and incentive stock options ("Stock
Options"), stock appreciation rights ("SARs"), and performance units
("Performance Units"). The Compensation Committee is responsible for the
general administration of the Incentive Plan. As of December 31, 1997, no
Stock Options or SARs have been awarded pursuant to the Incentive Plan.
 
  Performance Units are conditional grants of a specified maximum number of
shares of Common Stock or equivalent amount of cash, payable at the end of a
specified period, subject to the achievement of specific financial goals and
measures of individual performance, as determined by the Compensation
Committee. The financial goal for full payment of Performance Units is a 15%
average annual return on stockholders' equity ("ROE") measured as the change
in book value per common and common equivalent share (as adjusted for
dividends paid, stock splits and other adjustments necessary to reflect true
economic value) over the applicable performance period (the "Performance
Target"). At an average ROE of 15% or above, Performance Units will become
fully payable. At an average ROE of less than 15%, the percentage of
Performance Units paid will be determined by the Compensation Committee and
may result in no payout at all.
 
  A summary of Performance Unit award activity follows:
 
<TABLE>
<CAPTION>
                                                                   NUMBER OF
                                                               PERFORMANCE UNITS
                                                               -----------------
   <S>                                                         <C>
   Outstanding as of December 31, 1994........................      259,526
     Canceled.................................................      (16,532)
                                                                   --------
   Outstanding as of December 31, 1995........................      242,994
     Paid.....................................................     (242,994)
     Awarded..................................................       94,500
                                                                   --------
   Outstanding as of December 31, 1996........................       94,500
     Canceled.................................................      (14,000)
     Awarded..................................................        7,500
                                                                   --------
   Outstanding as of December 31, 1997........................       88,000
</TABLE>
 
  Upon the third anniversary of the Capitalization and based upon the
attainment of the Performance Target, the White River Board declared all
outstanding Performance Units payable during September 1996. Of the total
outstanding Performance Units, approximately 196,000 were deferred by
participants in the Deferred Compensation Plan and approximately 46,400 were
paid in cash. The resulting cash payment amount totalled $2.8 million.
 
  All Performance Units outstanding as of December 31, 1997 expire on
September 23, 1999. Compensation and benefits expense for the years ended
December 31, 1997, 1996, and 1995, includes $2.5 million, $8.6 million, and
$3.5 million, respectively, relating to outstanding Performance Units.
 
                                     F-19
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  As of December 31, 1997, approximately 9,000 shares of Common Stock remained
available for future awards under the Incentive Plan.
 
NOTE 11. COMPENSATION OF DIRECTORS
 
  Effective upon the Distribution, White River provided non-employee directors
(the "Eligible Directors") with an aggregate grant of 64,865 performance units
(the "Director Performance Units") in lieu of an annual retainer and meeting
attendance fees. Effective December 31, 1996, all units under such plan were
earned.
 
  During September 1996, The White River Board granted a new award of Director
Performance Units to Eligible Directors totaling 35,000 units. This new grant
of Director Performance Units will become vested on September 23, 1999,
contingent upon the attainment of the Performance Target during the three-year
period then ended. Other operating expenses for the years ended December 31,
1997, 1996, and 1995, includes $1.0 million, $2.0 million, and $1.0 million,
respectively, relating to the Director Performance Units.
 
  Effective August 8, 1996, the White River Board adopted the White River
Directors' Deferred Compensation Plan (the "Directors Plan"). The Directors
Plan allows Eligible Directors to defer receipt of Directors' compensation.
Effective June 30, 1997, the 64,865 Director Performance Units were
transferred by the recipients into the Directors Plan. The Directors Plan will
be unfunded and the directors' right to receive future benefits thereunder
will represent an unsecured claim against the general assets of White River.
The Directors' Deferred Compensation Plan was terminated effective as of
December 30, 1997, pursuant to the Merger Agreement. In connection with the
termination of the Directors' Plan at year end 1997, White River made certain
payments to Plan Participants in 1997 totalling $5.2 million.
 
NOTE 12. REDEEMABLE PREFERRED STOCK
 
WHITE RIVER
 
  White River has authorized the issuance of 5,000,000 shares of preferred
stock, par value $1.00 per share.
 
  In connection with the Capitalization, White River issued 7,000 shares of
Series A, Non-Participating Cumulative Preferred Stock (the "Redeemable
Preferred Stock"), to Fund American. Pursuant to the terms of the Redeemable
Preferred Stock, under certain circumstances following a merger or
consolidation of White River or following a sale by White River of all or
substantially all of its assets, or in the event of liquidation, White River
must redeem the Redeemable Preferred Stock at a price of $1,000 per share plus
accrued and unpaid dividends thereon. In any event, the Redeemable Preferred
Stock must be redeemed on September 24, 1998, at a price of $1,000 per share,
plus any accrued and unpaid dividends. Each share of Redeemable Preferred
Stock is non-voting and is entitled to a preferential quarterly dividend
payment of $16.875. Holders of the Redeemable Preferred Stock will have the
right to elect two additional directors to the White River Board if the
equivalent of six full quarterly dividends payable on the Redeemable Preferred
Stock are in default. Concurrent with the Distribution, Fund American sold the
Redeemable Preferred Stock to two unaffiliated institutional investors.
 
  As more fully discussed in Note 13, the White River Board has designated and
authorized for issuance 50,000 shares of Series B, Participating Cumulative
Preferred Stock (the "Participating Preferred Stock").
 
NOTE 13. SHAREHOLDERS' RIGHTS PLAN
 
  On December 14, 1993, the White River Board adopted a shareholders' rights
plan (the "Rights Plan") under which rights to purchase Participating
Preferred Stock (the "Rights") were issued and attached to shares of Common
Stock at the rate of one Right for each share of Common Stock outstanding.
Each Right entitles the registered holder under certain circumstances to
purchase from White River one one-thousandth ( 1/1000) of a
 
                                     F-20
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
share of Participating Preferred Stock at a price of $90, subject to
adjustment to prevent dilution. Each share of Participating Preferred Stock is
non-redeemable and will be entitled to a minimum preferential quarterly
dividend payment of $50 per share, and will be entitled to an aggregate
dividend equal to 1,000 times the dividend declared, if any, per share of
Common Stock. In addition, holders of Participating Preferred Stock will have
the right to elect two additional directors to the White River Board if the
equivalent of six full quarterly dividends payable on the Participating
Preferred Stock are in default. The terms of the Participating Preferred Stock
will be such that each one one-thousandth (1/1000) of a share would be
entitled to vote on an equivalent basis with one whole share of Common Stock.
The Rights are non-voting and do not participate in dividends.
 
  The Rights will be exercisable only if an unrelated person or group (an
"Acquiring Person") acquires 25% or more or a tender offer or exchange offer
is commenced for 25% or more of the outstanding shares of Common Stock (a
"Triggering Event"). For this purpose, an Acquiring Person excludes, among
others, subsidiaries of White River, Fund American and Fund American's
Chairman, President and Chief Executive Officer ("Fund American's Chairman").
The Rights will enable the holder to acquire additional equity in either White
River or the Acquiring Person.
 
  Once a Triggering Event has occurred, the Rights would trade separately from
shares of Common Stock and separate certificates representing the Rights would
be issued. The Rights will expire ten years after their issuance and will be
redeemable earlier by White River at a price of $0.01 per Right at any time
until White River learns of the existence of an Acquiring Person. Under
certain circumstances, the White River Board will be able to redeem the Rights
if a majority of the "disinterested directors", as defined by the Rights Plan,
agrees that the redemption is in the best interests of White River and its
stockholders. White River will reserve 50,000 of its authorized preferred
shares as Participating Preferred Stock for issuance under the terms of the
Rights Plan.
 
  In connection with the pending merger, White River amended its shareholders'
rights plan to provide, among other things, that the exercisability of rights
would not be triggered by the merger agreement and that the rights would
expire immediately prior to the consummation of the merger. Accordingly, if
the merger is consummated, the rights will not be redeemed and no payment will
be made to stockholders in respect of their rights.
 
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
  The estimated fair values of the Company's financial instruments as of
December 31, 1997 and 1996, were as follows:
 
<TABLE>
<CAPTION>
                                                   1997              1996
                                             ----------------- -----------------
                                             CARRYING   FAIR   CARRYING   FAIR
                                              VALUE    VALUE    VALUE    VALUE
                                             -------- -------- -------- --------
                                                        IN THOUSANDS
<S>                                          <C>      <C>      <C>      <C>
Financial assets:
  Cash and cash equivalents................. $190,515 $190,515 $188,365 $188,365
  Investment securities -- current..........  122,688  122,688   72,699   72,699
  Accounts receivable, net..................   19,617   19,617   10,661   10,661
  Investment securities--noncurrent.........   41,434   41,434      --       --
  Other investments.........................      276      276   26,420   39,813
  Other financial assets....................      457      457      403      403
                                             -------- -------- -------- --------
Financial liabilities:
  Total notes payable and other debt........ $    111 $    111 $    234 $    234
  Total contract funding....................      --       --       123      123
  Other financial liabilities...............   23,979   23,979   20,513   20,513
  Redeemable preferred stock................    7,189    6,943    7,175    6,948
                                             ======== ======== ======== ========
</TABLE>
 
 
                                     F-21
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The following methods and assumptions were used by White River to estimate
the fair value of each class of financial instruments for which it is
practicable to estimate such value:
 
  Cash and Cash Equivalents and Accounts Receivable. The carrying amount of
these assets approximates or equals their fair value.
 
  Investment Securities and Other Investments. Fair values of investment
securities are based on quoted market prices which equal carrying value, and
fair values of other investments have been derived from quoted market values
for similar unrestricted securities or determined using internal appraisal
techniques and policies.
 
  Other Financial Assets. This caption includes investment income receivable,
receivables on sales of securities, and certain trade receivables. The
carrying amount of these assets approximates their fair value.
 
  Contract Funding, Notes Payable and Other Debt, and Redeemable Preferred
Stock. Fair value is estimated by discounting future cash flows using
estimated incremental rates for similar types of arrangements.
 
  Other Financial Liabilities. This caption includes accrued interest payable,
payables on purchases of securities, and certain other payables. The carrying
amount of these liabilities approximates their fair value.
 
NOTE 15. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 
  As of December 31, 1997, Fund American held 1.0 million shares, or 20.8% of
the total outstanding shares of Common Stock. Also, as of December 31, 1997,
Fund American's Chairman claimed beneficial ownership of 0.8 million shares,
or 17.1% of the total outstanding shares of Common Stock. During 1995, White
River repurchased 100,000 shares of Common Stock from Fund American's Chairman
at an aggregate purchase price of $3.4 million. The Chairman of the White
River Board is also a director of Fund American.
 
  As more fully discussed in Note 7, White River executed the Credit Agreement
with Fund American, and during 1995 repaid balances totaling $90.0 million by
transferring certain securities to Fund American, resulting in pretax net
investment gains of $11.0 million. Interest expense relating to balances due
under the Credit Agreement totalled $3.1 million for the year ended December
31, 1995.
 
NOTE 16. COMMITMENTS AND CONTINGENCIES
 
  The Company leases facilities, computers, telecommunications and office
equipment under the terms of noncancellable operating lease agreements which
expire at various dates through 2008. At December 31, 1997, future minimum
lease payments were as follows:
 
<TABLE>
<CAPTION>
                                                                  FUTURE MINIMUM
                                                                  LEASE PAYMENTS
                                                                  --------------
                                                                   IN THOUSANDS
   <S>                                                            <C>
   Payments due in:
     1998........................................................    $ 4,330
     1999........................................................      4,704
     2000........................................................      3,304
     2001........................................................      2,249
     2002........................................................      2,182
     Thereafter..................................................     14,428
                                                                     -------
       Total.....................................................    $31,197
                                                                     =======
</TABLE>
 
                                     F-22
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  Operating lease expense was $3.9 million, $3.4 million, $3.1 million for the
years ended December 31, 1997, 1996 and 1995, respectively.
 
  CCC entered into a contract with Faneuil, a former subsidiary, under which
Faneuil is to provide certain computer services to CCC through June 1999. The
contract provides that CCC make minimum payments to Faneuil through June 1997,
and contains an option under which CCC can elect to extend the contract for
certain services through June 1999. For the years ended December 31, 1997 and
1996 and 1995, charges from Faneuil to CCC for computer services have totalled
$3.1 million, $3.6 million and $3.2 million, respectively.
 
NOTE 17. LEGAL PROCEEDINGS
 
  During March 1991, CCC sought a declaratory judgment in the U.S. District
Court for the District of Connecticut (the "District Court") against MacLean
Hunter Market Reports, Inc. ("MacLean Hunter"), an independent corporate
publisher of used car valuation books, that would render certain of such
publisher's copyright claims invalid or unenforceable. MacLean Hunter, in
turn, filed a counterclaim against CCC for copyright infringement. During June
1993, the District Court granted CCC's request for summary judgment on the
copyright issue. MacLean Hunter filed a notice of appeal with the U.S. Court
of Appeals for the Second Circuit which, during December 1994, reversed the
decision of the District Court and remanded the case to the District Court for
a determination of damages and injunctive relief. In a related matter, CCC
received claims from another licensee of the MacLean Hunter data alleging
copyright infringement, unfair competition arising under the Trademark Act of
1946 and common law unfair competition. During December 1995, substantive
settlement discussions were held. As a result of such discussions, CCC and all
parties in these matters conditionally agreed to a settlement structure that
would resolve all outstanding disputes. All conditions precedent to such
settlement agreement were satisfied in 1996. As a result, all issues arising
out of the litigation between the parties have been fully and completely
settled and each civil action had been dismissed with prejudice. The
settlement amount approximated the settlement charge of $4.5 million recorded
during 1995 in connection with such matter. In conjunction with the settlement
agreement, CCC received a three-year license to MacLean Hunter's used car
valuation book data at market rates.
 
  The Company is a party to various other legal proceedings in the ordinary
course of its business. The Company's management believes that the ultimate
resolution of these matters will not have a material effect on the Company's
consolidated financial position.
 
NOTE 18. SUBSEQUENT EVENTS
 
  On February 10, 1998, CCC signed an agreement with InsurQuote Systems, Inc.
("Insur-Quote") and invested $20 million to acquire 333,750 shares of common
stock (or 19.9% of the common stock), an $8.9 million subordinated note, and
shares of Series C redeemable convertible preferred stock, and Series D
convertible preferred stock. The subordinated note, which bears interest at
7.5%, carries warrants to acquire additional shares of common stock and is
exercisable by CCC through February 10, 2008, subject to potential early
termination provisions. The Series C stock is redeemable in full at the end of
five years, or earlier under certain conditions, if not converted prior to
that time. Each share of Series C and D preferred stock is initially
convertible into one share of common stock at the option of CCC.
 
  InsurQuote is a provider of insurance rating information and the software
tools used to manage that information. Its range of products is primarily
focused towards insurance companies, insurance agents, and the related
consumer market.
 
  Under the terms of the investment agreement and at InsurQuote's request, CCC
has the opportunity to purchase additional shares of Series C Preferred Stock
after January 1, 1999. Furthermore, the investment
 
                                     F-23
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
agreement provides that at any time after July 1, 2000 and until as late as
July 1, 2010, under certain conditions, CCC has the option to purchase
sufficient shares of InsurQuote's common stock at the then fair market value
to increase CCC's voting interest to at least 51%. This right may be
terminated or be converted to a fixed number of shares subject to a warrant
with a strike price equal to 120% of a public offering price, if not exercised
earlier in connection with a sale of InsurQuote or on an initial public
offering of InsurQuote's common stock. If this right is exercised, Series E
Preferred Stock carrying super voting rights will be issued to the Company.
The transaction has an "earn out" component measured on June 30, 2000, that
may have the effect of decreasing the percentage ownership of the Company or
requiring an increasing in the investment by the Company.
 
NOTE 19. INFORMATION ON BUSINESS SEGMENTS
 
  Information on business segments as of and for the years ended December 31,
1997, 1996 and 1995, follows:
 
<TABLE>
<CAPTION>
                                      1997                           1996                           1995
                         ------------------------------ ------------------------------ ------------------------------
                         INSURANCE-                     INSURANCE-                     INSURANCE-
                          RELATED   INVESTMENT CONSOLI-  RELATED   INVESTMENT CONSOLI-  RELATED   INVESTMENT CONSOLI-
                          SERVICES  OPERATIONS  DATED    SERVICES  OPERATIONS  DATED    SERVICES  OPERATIONS  DATED
                         ---------- ---------- -------- ---------- ---------- -------- ---------- ---------- --------
<S>                      <C>        <C>        <C>      <C>        <C>        <C>      <C>        <C>        <C>
Statement of
 Operations Data:
Revenues...............   $159,106   $ 20,804  $179,910  $130,977   $ 14,421  $145,398  $115,519   $  8,276  $123,795
Operating expenses:
 Compensation and
  benefits and other
  operating expenses...    124,114     33,042   157,156   102,942     18,218   121,160    99,215      7,631   106,846
 Depreciation and
  amortization (a).....     16,932        267    17,199    17,370         29    17,399    20,336         28    20,364
                          --------   --------  --------  --------   --------  --------  --------   --------  --------
 Total operating
  expenses.............   $141,046     33,309   174,355   120,312     18,247   138,559   119,551      7,659   127,210
                          --------   --------  --------  --------   --------  --------  --------   --------  --------
 Operating income
  (loss)...............   $ 18,060   $(12,505) $  5,555  $ 10,665   $ (3,826) $  6,839  $ (4,032)  $    617  $ (3,415)
                          ========   ========  ========  ========   ========  ========  ========   ========  ========
Statement of Financial
 Condition Data:
Identifiable assets
 (b)...................   $ 98,972   $301,582  $400,554  $ 82,895   $271,617  $354,512  $ 84,973   $211,782  $296,755
Capital expenditures...   $  8,051   $  1,725  $  9,776  $  6,909   $    --   $  6,909  $  3,891   $    --   $  3,891
</TABLE>
--------
(a) Insurance-related services' depreciation and amortization expense includes
    amortization of goodwill and purchased software relating to the
    acquisition of CCC by White River of $10.5 million, $12.1 million and
    $14.8 million for the years ended December 31, 1997, 1996 and 1995,
    respectively.
(b) Insurance-related services' identifiable assets include goodwill of $18.5
    million, $23.7 million and $34.8 million and purchased software of $6.9
    million, $12.1 million and $19.0 million relating to the acquisition of
    CCC by White River as of December 31, 1997, 1996 and 1995, respectively.
 
                                     F-24
<PAGE>
 
                   WHITE RIVER CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 
  Selected quarterly financial data for 1997 and 1996 is shown in the
following table. Such data includes, in the opinion of management, all
recurring adjustments necessary for a fair presentation of the results of
operations for such interim periods.
 
<TABLE>
<CAPTION>
                                        1997                                1996
                          ----------------------------------  ------------------------------------
                           FIRST    SECOND    THIRD  FOURTH    FIRST     SECOND    THIRD   FOURTH
                          QUARTER   QUARTER  QUARTER QUARTER  QUARTER   QUARTER   QUARTER  QUARTER
                          --------  -------  ------- -------  --------  --------  -------  -------
                                        IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<S>                       <C>       <C>      <C>     <C>      <C>       <C>       <C>      <C>
Revenues................  $ 40,898  $42,799  $45,852 $50,361  $ 33,338  $ 33,892  $38,115  $40,053
Operating expenses......    40,675   38,769   38,518  56,393    31,070    33,765   40,337   33,387
                          --------  -------  ------- -------  --------  --------  -------  -------
 Operating income
  (loss)................       223    4,030    7,334  (6,032)    2,268       127   (2,222)   6,666
                          --------  -------  ------- -------  --------  --------  -------  -------
Net investment gains....       669      505    6,966  19,352       --        996   15,148        6
Interest expense........        37       35       34      65     1,032       950      526       54
Minority interest.......     2,111    2,443    2,532   2,979                         (335)   1,306
                          --------  -------  ------- -------  --------  --------  -------  -------
Pretax income (loss)....    (1,256)   2,057   11,734  10,276     1,236       173   12,735    5,312
Income tax expense......     1,248    2,353    6,179   5,830     2,744     2,869    7,866      827
                          --------  -------  ------- -------  --------  --------  -------  -------
Income (loss) before
 extraordinary item.....    (2,504)    (296)   5,555   4,446    (1,508)   (2,696)   4,869    4,485
Extraordinary loss on
 early retirement of
 debt, net of income
 taxes..................       --       --       --      --        --        --       678      --
                          --------  -------  ------- -------  --------  --------  -------  -------
Net income (loss).......    (2,504)    (296)   5,555   4,446    (1,508)   (2,696)   4,191    4,485
Dividend and accretion
 on redeemable preferred
 stock..................       118      118      118     119       149       147      309      122
                          --------  -------  ------- -------  --------  --------  -------  -------
Net income (loss)
 applicable to common
 stock..................  $ (2,622) $  (414) $ 5,437 $ 4,327  $ (1,657) $ (2,843) $ 3,882  $ 4,363
Earnings (loss) per
 common share:
Basic:
 Income(loss) before
  extraordinary item....  $  (0.54) $ (0.08) $  1.12 $  0.89  $  (0.34) $  (0.58) $  0.94  $  0.90
 Net income (loss)......  $  (0.54) $ (0.08) $  1.12 $  0.89  $  (0.34) $  (0.58) $  0.80  $  0.90
Diluted:
 Income (loss) before
  extraordinary items...  $  (0.54) $ (0.08) $  1.05 $  0.88  $  (0.34) $  (0.58) $  0.88  $  0.84
 Net income (loss)......  $  (0.54) $ (0.08) $  1.05 $  0.88  $  (0.34) $  (0.58) $  0.75  $  0.84
                          ========  =======  ======= =======  ========  ========  =======  =======
</TABLE>
 
                                     F-25
<PAGE>
 
                    REPORT ON MANAGEMENT'S RESPONSIBILITIES
 
  The financial data included in this Annual Report to Stockholders and Form
10-K (the "Annual Report"), including the consolidated financial statements,
has been prepared by the management of White River Corporation ("White River"
or the "Company"). The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles and, where necessary,
include amounts based on informed estimates and judgments. In those instances
where there is no single specified accounting principle or standard,
management makes a choice from reasonable, accepted alternatives which are
believed to be most appropriate under the circumstances. Financial data
presented elsewhere in this Annual Report is consistent with that shown in the
consolidated financial statements.
 
  The Company maintains internal financial and accounting controls ("Internal
Controls") designed to provide reasonable and cost effective assurance that
assets are safeguarded from loss or unauthorized use, that transactions are
recorded in accordance with management's policies and that financial records
are reliable. The Company's business ethics policies require adherence to the
highest ethical standards in the conduct of its business. Compliance with
these Internal Controls, policies and procedures is continuously maintained
and monitored by management.
 
  Our independent auditors provide an objective, independent review and
evaluation of the structure of Internal Controls to the extent they consider
necessary in their audit of the Company's consolidated financial statements.
Management reviews all recommendations of the independent auditors concerning
the structure and implementation of Internal Controls and responds to such
recommendations with corrective actions, as deemed appropriate.
 
  The Audit Committee of the White River board of directors (the "Audit
Committee") is comprised of all non-management directors and has general
responsibility for the oversight and surveillance of the accounting, reporting
and financial control practices of White River. The Audit Committee annually
reviews the effectiveness of management and the independent auditors with
respect to the financial reporting process and the adequacy of Internal
Controls. The independent auditors have at all times free access to the Audit
Committee, without members of management present, to discuss the results of
their audits, the adequacy of Internal Controls and any other matter that they
believe should be brought to the attention of the Audit Committee.
 
Gordon S. Macklin                         Michael E.B. Spicer
President and Chief Executive Officer     Chief Financial Officer,
                                          Treasurer and Corporate Secretary
 
                                     F-26
<PAGE>
 
                        REPORT OF INDEPENDENT AUDITORS
 
To the Board of Directors and Stockholders of White River Corporation
 
  We have audited the accompanying consolidated statements of financial
condition of White River Corporation and subsidiaries as of December 31, 1997
and 1996, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of CCC Information Services Group Inc., a subsidiary, as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997. The financial statements of CCC Information Services Group
Inc. reflect approximately 23% and 13% of total assets as of December 31, 1997
and 1996, respectively. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to
data included for CCC Information Services Group Inc., is based solely on the
report of the other auditors.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.
 
  In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of White River Corporation and
subsidiaries at December 31, 1997 and 1996, and the consolidated results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles.
 
                                          /s/ Ernst & Young LLP
 
Stamford, Connecticut
April 6, 1998
 
                                     F-27
<PAGE>
 
                        REPORT OF PRICE WATERHOUSE LLP
 
To the Board of Directors and Stockholders of CCC Information Services Group
Inc.
 
  We have audited the consolidated balance sheet of CCC Information Services
Group Inc. (a subsidiary of White River Corporation) and its subsidiaries as
of December 31, 1997 and 1996, and the related consolidated statements of
operations, of stockholders' equity and of cash flows for each of the three
years in the period ended December 31, 1997 (not presented separately herein).
These consolidated financial statements are the responsibility of CCC
Information Services Group Inc's. management. Our responsibility is to express
an opinion on these financial statements based on our audit.
 
  We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements audited by us present
fairly, in all material respects, the financial position of CCC Information
Services Group Inc. and its subsidiaries as of December 31, 1997 and 1996, and
the results of their operations and their cash flow for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
 
                                          Price Waterhouse LLP
 
Chicago, Illinois
January 21, 1998
Except as to Note 15 which is as of February 10, 1998
 
                                     F-28