<PAGE>


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K/A2
                  (Amendment No. 2, amending Item 1 of Part I
                        and Items 6, 7 and 8 of Part II)


(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

                                       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 0-26954

                                   CD&L, INC.
             (Exact name of registrant as specified in its charter)

              Delaware                                      22-3350958
     State or other jurisdiction of                      (I.R.S. Employer
    Incorporation or organization                      Identification No.)

                                80 Wesley Street
                       South Hackensack, New Jersey 07606
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (201) 487-7740

           Securities registered pursuant to Section 12(b) of the Act:

                                                         Name of each exchange
            Title of each class                           on which registered

Common Stock, par value $.001 per share                 American Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

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 |_|

                                       1

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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 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. |_|

The number of shares of the registrant's Common Stock, $.001 par value
outstanding was 7,658,660 and the aggregate market value of voting stock held by
non-affiliates of the registrant was $2,936,048 as of April 9, 2002.

Documents Incorporated by Reference: None.


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                                     PART I

Statements and information presented within this Annual Report on Form 10-K for
CD&L, Inc. (the "Company", "CDL", or "we") include certain statements that may
be deemed to be "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933 (the "Securities Act") and Section 21E of the
Exchange Act. These forward-looking statements include, but are not limited to,
statements about our plans, objectives, expectations and intentions and other
statements contained in this report that are not historical facts. When used in
this report, the words "expects," "anticipates," "intends," "plans," "believes,"
"seeks" and "estimates" and similar expressions are generally intended to
identify forward-looking statements. These statements are based on certain
assumptions and analyses made by the Company in light of its experience and
perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties,
including the risk factors (Item 1. Business Description - Risk Factors)
discussed below, general economic and business conditions, the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company, changes in law or regulations and other factors, many of which are
beyond the control of the Company. Readers are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements. All subsequent written or oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified by these factors.

Item 1. Business Description.

Overview

We are one of the leading national full-service providers of customized,
time-critical, delivery services to a wide range of commercial, industrial,
retail and E-commerce based customers. Our services are provided throughout the
United States, but concentrated on the East Coast.

In conjunction with our initial public offering in November 1995 we acquired 11
time-critical ground and air delivery businesses that operated in 52 cities
across the United States. As of December 31, 2001, we had acquired 15 additional
time-critical ground and air delivery businesses. On March 30, 2001, we
consummated a transaction providing for the sale of certain assets and
liabilities of Sureway Air Traffic Corporation, Inc., our air delivery business.
The selling price for the net assets was approximately $14,150,000 and was
comprised of $11,650,000 in cash, a subordinated promissory note (the "Note
Receivable") for $2,500,000 and contingent cash payments based upon the ultimate
development of certain liabilities retained by us. The Note Receivable bears
interest at the rate of 10.0% per annum, with interest only in monthly
installments. The entire balance of principal, plus all accrued interest, is due
and payable on March 30, 2006. As of December 31, 2001 collection of the Note
Receivable, interest accrued thereon and certain other related receivables was
in doubt. As such, the Company recorded a pre-tax charge of $2,500,000 in Other
expense, net in the accompanying financial statements in the fourth quarter of
2001 to write-off the Note Receivable and the Company recorded a pre-tax charge
of $705,000 in Discontinued Operations in the accompanying financial statements
in the fourth quarter of 2001 to write-off certain other direct expenses
incurred on behalf of Sureway for which collection is in doubt and to true-up
certain accruals that were estimated in 2000 relative to the disposition of
Sureway. Collection efforts on all amounts due will continue. Accordingly, the
financial position, operating results and the provision for loss on the
disposition of the Company's air delivery business have been segregated from
continuing operations and reclassified as a discontinued operation in the
accompanying consolidated financial statements.


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                        We offer the following delivery services:

                  o rush delivery service, typically consisting of delivering
                  time-sensitive packages, such as critical machine parts or
                  emergency medical devices, from-point-to-point on an as-needed
                  basis;

                  o dedicated contract logistics, providing a comprehensive
                  solution to major corporations that want the control,
                  flexibility and image of an in-house fleet with all the
                  economic benefits of outsourcing;

                  o routed services, providing, on a recurring and often daily
                  basis, deliveries from pharmaceutical suppliers to pharmacies,
                  from manufacturers to retailers, and the inter-branch
                  distribution of financial documents in a commingled system;
                  and

                  o facilities management, including providing and supervising
                  mailroom personnel, mail and package sorting, internal
                  delivery and outside local messenger services.

Our Industry

The overall domestic ground delivery industry is composed largely of companies
that provide same-day, next-day and two-day delivery services. We primarily
service the same-day, time-critical delivery segment of that overall market. In
contrast, the next-day and two-day delivery market segments are dominated by
large national entities such as United Parcel Service, Inc., Federal Express
Corp. and the United States Postal Service.

We believe that the same-day delivery industry, which is currently serviced by a
fragmented system of approximately 10,000 companies that include only a small
number of large regional or national operators, is undergoing substantial growth
and consolidation. We believe that several factors, including the following, are
driving that growth and consolidation:

         o Outsourcing and Vendor Consolidation. Commercial and industrial
         businesses, which are major consumers of same-day delivery services,
         have continued to follow the trend of concentrating on their core
         business by outsourcing non-core activities. Businesses also are
         increasingly seeking single-source solutions for their regional and
         national same-day delivery needs rather than utilizing a number of
         smaller, local delivery companies. At the same time, larger national
         and international companies are looking toward decentralized
         distribution systems. We believe that significant opportunities exist
         for larger regional or national carriers that are able to provide a
         full range of services to such businesses.


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         o Heightened Customer Expectations. Increasing customer demand for
         specialized services such as customized billing, enhanced tracking,
         storage, inventory management and just-in-time delivery capabilities
         favor companies with greater resources to devote to providing those
         services. The use of facsimile technology and the Internet have
         increased the speed at which the processing of information and
         transactions occur such that the requirements for immediate delivery of
         a wide range of critical items has become commonplace. This practice
         increases demand for same-day, time-critical delivery services.

         o E-commerce Opportunities. The significant growth in
         business-to-business and business-to-consumer customized and
         time-critical services through E-commerce presents expansion
         opportunities.

Our Services

We provide our customers with a full range of customized, time-critical delivery
service options.

Rush. In providing rush delivery services, or services on demand, our messengers
and drivers respond to customer requests for the immediate pick-up and delivery
of time-sensitive packages. We generally offer one-, two- and four-hour service,
on a 7-days-a-week, 24-hours-a-day basis. Our typical customers for rush service
include commercial and industrial companies, hospitals and service providers
such as accountants, lawyers, advertising and travel agencies and public
relations firms.

Scheduled. Our scheduled delivery services are provided on a recurring and often
daily basis. We typically pick up or receive large shipments of products, which
are then sorted, routed and delivered. These deliveries are made in accordance
with a customer's specific schedule that generally provides for deliveries to be
made at particular times. Typical routes may include deliveries from
pharmaceutical suppliers to pharmacies, from manufacturers to retailers, the
inter-branch distribution of financial documents, payroll data and other
time-critical documents for banks, financial institutions and insurance
companies. We also provide these services to large retailers for home delivery,
including large cosmetic companies, door-to-door retailers, catalog retailers,
home health care distributors and other direct sales companies.

Facilities Management. We provide mailroom management services, including the
provision and supervision of mailroom personnel, mail and package sorting,
internal delivery and outside local messenger services. Typical customers for
our facilities management services include commercial enterprises and
professional firms.

Dedicated Contract Logistics. We offer efficient and cost-effective dedicated
delivery solutions, such as fleet replacement solutions, dedicated delivery
systems and transportation systems management services. These services provide
major pharmaceutical wholesalers, office product companies and financial
institutions with the control, flexibility and image of an in-house fleet and
with all of the economic benefits of outsourcing.



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Our Internal Operations

We operate from 67 leased facilities and 27 customer owned facilities in 21
states. The size of each facility varies, but typically includes dedicated
dispatch and order entry functions as well as delivery personnel. We accomplish
coordination and deployment of our delivery personnel either through
communications systems linked to our computers, through pagers, mobile data
units, or by radio or telephone. A dispatcher coordinates shipments for delivery
within a specific time frame. We route a shipment according to its type and
weight, the geographic distance between its origin and destination and the time
allotted for its delivery. In the case of scheduled deliveries, we design routes
to minimize the unit costs of the deliveries and to enhance route density. We
continue to deploy new hardware and software systems designed to enhance the
capture, routing, tracking and reporting of deliveries throughout our network.
To further improve customer service, we have begun to provide certain customers
the opportunity to access this information via the Internet. Full implementation
of our Internet portal is expected during 2002.

Sales and Marketing

We believe that a direct sales force most effectively reaches customers for
same-day, time-critical delivery services and, accordingly, we do not currently
engage in mass media advertising. We market directly to individual customers by
designing and offering customized service packages after determining their
specific delivery and distribution requirements. We are implementing a
coordinated major account strategy by building on established relationships with
regional and national customers. We also employ certain direct response
marketing techniques.

Many of the services we provide, such as facilities management, dedicated
contract logistics and routed delivery services are determined on the basis of
competitive bids. However, we believe that quality and service capabilities are
also important competitive factors. In certain instances, we have obtained
business by offering a superior level of service, even though we were not the
low bidder for a particular contract. We derive a substantial portion of our
revenues from customers with whom we have entered into contracts. Virtually all
of the scheduled dedicated vehicle and facilities management services that we
provide are pursuant to contracts.

Competition

The market for our delivery services is highly competitive. We believe that the
principal competitive factors in the markets in which we compete are
reliability, quality, breadth of service offerings, technology and price. We
compete on all of those factors. Most of our competitors in the time-critical
delivery market are privately held companies that operate in only one location
or within a limited service area. In addition to our time-critical delivery
services, customers also utilize next-day and second-day services. The market
for next-day and second-day services is dominated by nationwide network
providers, which have built large, capital-intensive distribution channels that
allow them to process a high volume of materials. These companies typically have
fixed deadlines for next-day or second-day delivery services. By contrast, we
specialize in on-demand deliveries or services which, by their nature, are not
governed by rigid time schedules. If one of our customers is unable to meet a
network provider's established deadline, we can pick up the shipment on-demand
and deliver it, in some cases, before the network provider's scheduled delivery
time. Our services are available 24-hours-a-day, 7-days-a-week.



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Acquisitions and Sales of Businesses

We were formed as a Delaware corporation in June 1994. As of December 31, 2001,
we had acquired 26 same-day time-critical delivery businesses, including the 11
companies that we acquired simultaneously with the commencement of our
operations in November 1995. We paid approximately $67,800,000 ($29,600,000 in
cash and 2,935,702 shares of our common stock) to acquire the 11 founding
companies. In addition to the acquisition of those companies, we acquired
certain additional assets from two companies in transactions that we accounted
for as purchases. Those acquired assets were not material.

In 1996, we acquired five additional businesses that had approximately
$15,600,000 in aggregate annual revenues. We paid approximately $3,300,000 to
acquire those companies using a combination of cash, seller-financed debt and
shares of our common stock. Subsequently, the aggregate purchase price paid for
those companies was reduced by approximately $616,000 because the actual
revenues of some of the acquired companies did not reach the revenues projected
by the sellers. We accounted for each of the 1996 acquisitions as purchases.

In 1997, we did not make any acquisitions and instead focused on internal
growth. Consistent with our change of strategic focus, in January 1997 we sold
our contract logistics subsidiary back to its founder in exchange for 137,239
shares of our common stock. In connection with that sale, we recorded a gain of
approximately $816,000 before the effect of Federal and state income taxes.

In December 1997, we sold our direct mail business for $850,000 in cash and
notes. In connection with that sale, we recorded a gain of approximately $23,000
net of Federal and state income taxes of approximately $15,000. Subsequently, in
1999 the company to which we sold our direct mail business went out of business
and defaulted on their note and the Company wrote off the remaining balance of
the note of $661,868.

In 1998, we acquired four same-day, time-critical delivery businesses that had
aggregate annual revenues of approximately $25,100,000. We paid approximately
$14,500,000 for the businesses consisting of a combination of cash, shares of
our common stock, and seller-financed debt. We accounted for each of the 1998
acquisitions as purchases.

In 1999, we acquired four same-day, time critical delivery businesses that had
aggregate annual revenues of approximately $24,800,000. We paid approximately
$12,700,000 for the businesses consisting of a combination of cash, shares of
our common stock and seller-financed debt. The acquisitions were accounted for
as purchase transactions. Under the terms of the purchase agreements, additional
payments of approximately $600,000 were made in 2000 and 2001 upon the
accomplishment of certain financial objectives.



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On December 1, 2000, we made a strategic decision to dispose of our air delivery
business and accordingly have restated the accompanying balance sheets,
statements of operations and statements of cash flows to reflect such as
discontinued operations. On March 30, 2001, we consummated a transaction
providing for the sale of certain assets and liabilities of Sureway Air Traffic
Corporation, Inc., our air delivery business. The selling price for the net
assets was approximately $14,150,000 and was comprised of $11,650,000 in cash, a
subordinated promissory note (the "Note Receivable") for $2,500,000 and
contingent cash payments based upon the ultimate development of certain
liabilities retained by us. The Note Receivable bears interest at the rate of
10.0% per annum, with interest only in monthly installments. The entire balance
of principal, plus all accrued interest, is due and payable on March 30, 2006.
As of December 31, 2001 collection of the Note Receivable, interest accrued
thereon and certain other related receivables was in doubt. As such, the Company
recorded a pre-tax charge of $2,500,000 in Other expense, net in the
accompanying financial statements in the fourth quarter of 2001 to write-off the
Note Receivable and the Company recorded a pre-tax charge of $705,000 in
Discontinued Operations in the accompanying financial statements in the fourth
quarter of 2001 to write-off certain other direct expenses incurred on behalf of
Sureway for which collection is in doubt and to true-up certain accruals that
were estimated in 2000 relative to the disposition of Sureway. Collection
efforts on all amounts due will continue. As a result of this transaction and
the subsequent adjustments to certain receivables and other liabilities retained
by us, provisions for losses on the disposition of the Company's air delivery
business have been provided in Discontinued Operations in the amounts of
$465,000 and $2,807,000 (net of benefit for income taxes of $240,000 and
$125,000, respectively) for the years ended December 31, 2001 and 2000,
respectively.

On June 14, 2001, the Company consummated a transaction providing for the sale
of all the outstanding stock of National Express, Inc., the Company's Mid-West
Region subsidiary. The selling price was approximately $2,530,000 and was
comprised of $880,000 in cash and a subordinated promissory note (the
"Promissory Note") for $1,650,000. The Promissory Note bears interest at the
rate of 7.0% per annum. The Promissory Note is payable in seventeen equal
quarterly installments beginning March 14, 2002 and continuing through March 14,
2006 and a final balloon payment of approximately $1,100,000 on June 14, 2006.
As a result of the transaction, the Company recorded a $2,283,000 loss on the
sale with no related tax benefit.

Regulation

Our delivery operations are subject to various state and local regulations and,
in many instances, we require permits and licenses from state authorities. To a
limited degree, state and local authorities have the power to regulate the
delivery of certain types of shipments and operations within certain geographic
areas. Interstate and intrastate motor carrier operations are also subject to
safety requirements prescribed by the U.S. Department of Transportation ("DOT")
and by state departments of transportation. If we fail to comply with applicable
regulations, we could face substantial fines or possible revocation of one or
more of our operating permits.

Safety

We seek to ensure that all of our employee drivers meet safety standards
established by us and our insurance carriers as well as the U.S. DOT. In
addition, where required by the DOT, state or local authorities, we require that
our independent owner/operators meet certain specified safety standards. We
review prospective drivers in an effort to ensure that they meet applicable
requirements.



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Employees and Independent Contractors

As of December 31, 2001, we employed approximately 1,940 people, 1,287 as
drivers or messengers, 464 in operations, 140 in clerical and administrative
positions, 26 in sales, 16 in information technology and 7 in executive
management. We are not a party to any collective bargaining agreements. We also
had agreements with approximately 1,700 independent contractor drivers as of
December 31, 2001. We have not experienced any work stoppages and believe that
our relationship with our employees and independent contractor drivers is good.

Risk Factors

You should carefully consider the following factors as well as the other
information in this report before deciding to invest in shares of our common
stock.

We have limited capital resources.

As of December 31, 2001, we had total cash on hand and borrowing ability of
$2,200,000 under our revolving credit facility, after adjusting for the
restrictions for outstanding letters of credit and minimum availability
requirements. While we believe that cash flows from operations, together with
our recently amended borrowing facilities are sufficient to meet our liquidity
needs for the foreseeable future, no assurances can be given that cash flows
from operations will be satisfactory, that we will be able to satisfy all terms
and covenants of our lending arrangements and/or that additional borrowing
capacity will be available, if required. Our revolving credit facility, as
amended, expires on January 31, 2003. We are currently in negotiations with two
financial institutions for a replacement credit facility. No assurances can be
given that such negotiations will result in adequate replacement financing or
that we will be able to renew our existing facility.

Price competition could reduce the demand for our service.

The market for our services has been extremely competitive and is expected to be
so for the foreseeable future. Price competition is often intense, particularly
in the market for basic delivery services where barriers to entry are low.

Claims above our insurance limits, or significant increases in our insurance
premiums, may reduce our profitability.

We utilize the services of approximately 720 employee drivers. From time to time
some of those drivers are involved in automobile accidents. We currently carry
liability insurance of $1,000,000 for each driver accident, subject to
applicable deductibles (generally $250,000 per occurrence) and carry umbrella
coverage up to $10,000,000 in the aggregate. However, claims against us may
exceed the amounts of our insurance coverage. If we were to experience a
material increase in the frequency or severity of accidents, liability claims or
workers' compensation claims, or unfavorable resolutions of claims, our
operating results could be materially affected.



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As a same-day delivery company, our ability to service our clients effectively
is often dependent upon factors beyond our control.

Our revenues and earnings are especially sensitive to events that are beyond our
control that affect the same-day delivery services industry, including:

           o  extreme weather conditions;

           o  economic factors affecting our significant customers;

           o  mergers and consolidations of existing customers;

           o  fluctuations in fuel prices; and

           o  shortages of labor, mainly drivers and messengers.

In addition, demand for our same-day delivery services may decrease as a result
of downturns in the level of general economic activity and employment.

Our reputation will be harmed, and we could lose customers, if the information
and telecommunications technologies on which we rely fail to adequately perform.

Our business depends upon a number of different information and
telecommunication technologies as well as the ability to develop and implement
new technology enabling us to manage and process a high volume of transactions
accurately and timely. Any impairment of our ability to process transactions in
this way could result in the loss of customers and diminish our reputation.

Governmental regulation of the transportation industry, particularly with
respect to our independent contractors, may substantially increase our operating
expenses.

From time to time, federal and state authorities have sought to assert that
independent contractors in the transportation industry, including those utilized
by us, are employees rather than independent contractors. We believe that the
independent contractors that we utilize are not employees under existing
interpretations of federal and state laws. However, federal and state
authorities have and may continue to challenge this position. Further, laws and
regulations, including tax laws, and the interpretations of those laws and
regulations, may change. If, as a result of changes in laws, regulations,
interpretations or enforcement by federal or state authorities, we become
required to pay for and administer added benefits to independent contractors,
our operating costs could substantially increase.



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Shareholders will experience dilution when we issue the additional shares of
common stock that we are permitted or required to issue under convertible notes,
options and warrants.

We are permitted, and in some cases obligated, to issue shares of common stock
in addition to the common stock that is currently outstanding. If and when we
issue these shares, the percentage of the common stock currently issued and
outstanding will be diluted. The following is a summary of additional shares of
common stock that we have currently reserved for issuance as of December 31,
2001:

o       506,250 shares are issuable upon the exercise of outstanding warrants at
        an exercise price of $.001 per share.

o       3,625,000 shares are issuable upon the exercise of options or other
        benefits under our employee stock option plan, consisting of:

        o       outstanding options to purchase 1,846,216 shares at a weighted
                average exercise price of $3.30 per share, of which options
                covering 1,587,872 shares were exercisable as of December 31,
                2001; and

        o       1,778,784 shares available for future awards after December 31,
                2001.

o       100,000 shares are issuable upon the exercise of options or other
        benefits under our independent director stock option plan, consisting
        of:

        o       outstanding options to purchase 97,500 shares at a weighted
                average exercise price of $2.28 per share, of which options
                covering 97,500 shares were exercisable as of December 31, 2001;
                and

        o       2,500 shares available for future awards after December 31,
                2001.

o       524,961 shares are issuable upon the exercise of outstanding convertible
        notes at a weighted average exercise price of $6.54 per share.

Our success is dependent on the continued service of our key management
personnel.

Our future success depends, in part, on the continued service of our key
management personnel. If certain employees, including those individuals
identified to leading the product-driven groups were unable or unwilling to
continue in their present positions, our business, financial condition,
operating results and future prospects could be materially adversely affected.



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If we fail to maintain our governmental permits and licenses, we may be subject
to substantial fines and possible revocation of our authority to operate our
business in certain jurisdictions.

Our delivery operations are subject to various state, local and federal
regulations that in many instances require permits and licenses. If we fail to
maintain required permits or licenses, or to comply with applicable regulations,
we could be subject to substantial fines or our authority to operate our
business in certain jurisdictions could be revoked.

Our certificate of incorporation, by-laws, shareholder rights plan and Delaware
law contain provisions that could discourage a takeover that current
shareholders may consider favorable.

Provisions of our certificate of incorporation, by-laws and our shareholder
rights plan, as well as Delaware law, may discourage, delay or prevent a merger
or acquisition that you may consider favorable. These provisions of our
certificate of incorporation and by-laws:

           o        establish a classified board of directors in which only a
                    portion of the total number of directors will be elected at
                    each annual meeting;

           o        authorize the board to issue preferred stock;

           o        prohibit cumulative voting in the election of directors;

           o        limit the persons who may call special meetings of
                    stockholders;

           o        prohibit stockholder action by written consent; and

           o        establish advance notice requirements for nominations for
                    the election of the board of directors or for proposing
                    matters that can be acted on by stockholders at
                    stockholder meetings.

In addition, we have adopted a Stockholder Protection Rights Plan in order to
protect against offers to acquire us that our Board of Directors believe to be
inadequate or not otherwise in our best interests. There are, however, certain
possible disadvantages to having the Plan in place, which might adversely impact
us. The existence of the Plan may limit our flexibility in dealing with
potential acquirers in certain circumstances and may deter potential acquirers
from approaching us.

Executive Management

Albert W. Van Ness, Jr., 59, has served as the Chairman of the Board, Chief
Executive Officer and Director of CDL since February 1997. He was formerly the
President and Chief Operating Officer of Club Quarters, LLC, a privately held
hotel management company and remains a member partner. In the early nineties,
Mr. Van Ness served as Director of Managing People & Productivity, a senior
management consulting firm. During most of the eighties, Mr. Van Ness held
various executive positions with Cunard Line Limited, a passenger ship and
luxury hotel company, including Executive Vice President and Chief Operating
Officer of the Cunard Leisure Division and Managing Director and President of
the Hotels and Resorts Division. Earlier in his career Mr. Van Ness served as
the President of Seatrain Intermodal Services, Inc., a cargo shipping company.
Mr. Van Ness held various management positions at the start of his professional
life with Ford Motor Company, Citibank and Hertz. Mr. Van Ness majored in
Sociology and Economics and received a B.A. and M.A. degree and completed his
coursework towards his doctorate in Economics. He attended Duke University,
Northern State University, South Dakota State University and Syracuse
University. Mr. Van Ness has belonged to the New York Athletic Club, the Yale
Club, the Chemists' Club and Knollwood Country Club.



                                      -12-
<PAGE>

William T. Brannan, 53, has served as the President and Chief Operating Officer
of CDL since November 1994. From January 1991 until October 1994, Mr. Brannan
served as President, Americas Region - US Operations, for TNT Express Worldwide,
a major European-based overnight express delivery company. Mr. Brannan has 25
years of experience in the transportation and logistics industry.

Michael Brooks, 47, has served as Director of the Company since December 1995
and as Group Operations President since December 2000. Mr. Brooks previously had
been Southeast Region Manager since August 1996 and the President of Silver Star
Express, Inc., a subsidiary of the Company, since November 1995. Prior to the
merger of Silver Star Express, Inc. into the Company, Mr. Brooks was President
of Silver Star Express, Inc. since 1988. Mr. Brooks has 25 years of experience
in the same-day delivery and distribution industries. In addition, Mr. Brooks is
currently a Director of the Express Carriers Association, an associate member of
the National Small Shipment Traffic Conference and an affiliate of the American
Transportation Association.

Russell J. Reardon, 52, has served as Vice President - Chief Financial Officer
since November 1999. Mr. Reardon previously had been Vice President - Treasurer
of CDL since January 1999. Prior thereto, from September 1998 until January 1999
Mr. Reardon was Chief Financial Officer, Secretary and Vice President - Finance
of Able Energy, Inc. a regional home heating oil supplier. From April 1996 until
June 1998 Mr. Reardon was Chief Financial Officer, Secretary and Vice President
- Finance of Logimetrics, Inc. a manufacturer of broad-band wireless
communication devices.

Mark Carlesimo, 48, has served as Vice President - General Counsel and Secretary
of CDL since September 1997. From July 1983 until September 1997, Mr. Carlesimo
served as Vice President of Legal Affairs of Cunard Line Limited. Earlier in his
career, Mr. Carlesimo served as Staff Counsel to Seatrain Lines, Inc., a cargo
shipping company and was engaged in the private practice of law. He majored in
economics at Fordham University and received his law degree from Fordham
University School of Law.

Anthony Guzzo, 29, was appointed Vice President - Treasurer in March 2002. Prior
to his appointment, Mr. Guzzo served as the Company's Assistant Treasurer since
January 2001. Mr. Guzzo previously had been the Company's Director of Financial
Reporting since June 2000 and before that was a manager in the Consumer Products
and Services Division of Arthur Andersen LLP.



                                      -13-
<PAGE>

Jeremy Weinstein, 39, has served as Vice President - Controller since November
1999. Prior to his appointment, Mr. Weinstein served as the Company's Northeast
Region Controller since March 1997 and before that was controller of the
Company's Manhattan operation.

Item 2. Properties.

As of December 31, 2001, the Company operated from 67 leased facilities (not
including 27 customer-owned facilities). These facilities are principally used
for operations, general and administrative functions and training. In addition,
several facilities also contain storage and warehouse space. The table below
summarizes the location of the Company's current leased facilities.

State                                       Number of Leased Facilities
                                            ---------------------------

New York.................................              19
Florida..................................               7
North Carolina...........................               7
California...............................               4
New Jersey...............................               3
Louisiana................................               3
Indiana..................................               2
Maine....................................               2
Massachusetts............................               2
Ohio.....................................               2
Oklahoma.................................               2
Pennsylvania.............................               2
South Carolina...........................               2
Tennessee................................               2
Washington...............................               2
Arkansas.................................               1
Connecticut..............................               1
Georgia..................................               1
Maryland.................................               1
Texas....................................               1
Vermont..................................               1
                                                       --
Total                                                  67


The Company's corporate headquarters is located at 80 Wesley Street, South
Hackensack, New Jersey. The Company believes that its properties are generally
well maintained, in good condition and adequate for its present needs.
Furthermore, the Company believes that suitable additional or replacement space
will be available when required.

As of December 31, 2001, the Company owned or leased approximately 600 vehicles
of various types, which are operated by drivers employed by the Company. The
Company also hires independent contractors who provide their own vehicles and
are required to carry at least the minimum amount of insurance required by state
law.



                                      -14-
<PAGE>

The Company's aggregate rental expense, primarily for facilities, was
approximately $8,409,000, for the year ended December 31, 2001. See Note 12 to
the Company's Consolidated Financial Statements.

Item 3. Legal Proceedings

In February 1996, Liberty Mutual Insurance Company ("Liberty Mutual") filed an
action against Securities Courier Corporation ("Securities"), a subsidiary of
the Company, Mr. Vincent Brana, an employee of the Company, and certain other
parties in the United States District Court for the Southern District of New
York. Under the terms of its acquisition of Securities, the Company had certain
rights to indemnification from Mr. Brana. In connection with the
indemnification, Mr. Brana has entered into a Settlement Agreement and executed
a Promissory Note in such amount as may be due for any defense costs or award
arising out of this suit. Mr. Brana has agreed to repay the Company on December
1, 2002, together with interest calculated at a rate per annum equal to the rate
charged the Company by its senior lender. Mr. Brana delivered 357,301 shares of
CD&L common stock to the Company as collateral for the note. On September 8,
2000 the parties entered into a settlement agreement in which Securities and Mr.
Brana agreed to pay Liberty Mutual $1,300,000. An initial payment of $650,000
was made by Securities on October 16, 2000, $325,000 plus interest at a rate of
10.5% per annum was paid in monthly installments ending July 1, 2001 and
$325,000 plus interest at a rate of 12.0% per annum is due in monthly
installments ending July 1, 2002.

At December 31, 2001 and 2000 the Company had a receivable due from Mr. Brana
totaling $2,800,000 and $2,908,000, respectively. As of December 31, 2000,
considering the market value of the collateral and Mr. Brana's failure to update
and provide satisfactory evidence to support his ability to pay the promissory
note, the Company recorded a $2,500,000 reserve against the receivable.
Recently, Mr. Brana has disputed his obligation to satisfy the amounts when they
are due.

The Company is, from time to time, a party to litigation arising in the normal
course of its business, most of which involves claims for personal injury and
property damage incurred in connection with its same-day delivery operations. In
connection therewith, the Company has recorded reserves of $575,000 and $455,000
as of December 31, 2001 and 2000, respectively.

Management believes that none of these actions, including the action described
above, will have a material adverse effect on the consolidated financial
position or results of operations of the Company.

Item 4.  Submission of Matters to a Vote of Security Holders

Not applicable.


                                      -15-
<PAGE>

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

The Company's Common Stock has been trading on the American Stock Exchange under
the symbol "CDV" since February 23, 1999. Prior to that date, the Company's
Common Stock was included for quotation on the Nasdaq National Market under the
symbol "CDLI." The following table sets forth the high and low sales prices for
the Common Stock for 2000 and 2001.

           2000                                   Low                    High
           ----                                   ---                    ----

           First Quarter                        $2.50                   $3.87
           Second Quarter                       $1.50                   $2.50
           Third Quarter                        $0.56                   $1.50
           Fourth Quarter                       $0.37                   $0.75

           2001                                   Low                    High
           ----                                   ---                    ----

           First Quarter                        $0.37                   $1.25
           Second Quarter                       $0.33                   $0.62
           Third Quarter                        $0.40                   $0.62
           Fourth Quarter                       $0.30                   $0.49


          On April 9, 2002, the last reported sale price of the Common Stock was
$0.46 per share. As of April 9, 2002, there were approximately 268 shareholders
of record of Common Stock.

Dividends

The Company has not declared or paid any dividends on its Common Stock. The
Company currently intends to retain earnings to support its growth strategy and
does not anticipate paying dividends in the foreseeable future. Payment of
future dividends, if any, will be at the discretion of the Company's Board of
Directors after taking into account various factors, including the Company's
financial condition, results of operations, current and anticipated cash needs
and plans for expansion. The Company's ability to pay cash dividends on the
Common Stock is also limited by the terms of its Revolving Credit Facility. See
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources.

Item 6. Selected Financial Data

The selected financial data with respect to CD&L, Inc.'s consolidated statements
of operations for the years ended December 31, 1999, 2000 and 2001 and with
respect to CD&L, Inc.'s consolidated balance sheets as of December 31, 2000 and
2001 have been derived from CD&L, Inc.'s consolidated financial statements that
appear elsewhere herein. The financial data provided below should be read in
conjunction with these accompanying consolidated financial statements and notes
thereto as well as Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.


                                      -16-
<PAGE>

                             SELECTED FINANCIAL DATA
                    (In thousands, except per share amounts)

Statement of Operations Data:

<TABLE>
<CAPTION>
                                                     CD&L, Inc. and Subsidiaries (2)
                                   ------------------------------------------------------------
                                                          For The Years Ended
                                                             December 31,
                                   ------------------------------------------------------------
                                    1997 (1)      1998         1999       2000          2001
                                   ---------    ---------    ---------   ---------    ---------
<S>                                <C>          <C>          <C>         <C>          <C>
Revenue                            $ 116,235    $ 130,121    $ 158,380   $ 170,079    $ 160,544
Gross profit                          25,043       27,709       35,175      34,463       32,704
Selling, general and
  administrative expenses             21,855       22,121       27,123      33,978       26,881
Goodwill impairment                     --           --           --          --          3,349
Other (income) expense, net             (975)          48           80       2,438        4,685
Income (loss) from
  continuing operations                  909        1,075          950      (6,229)      (5,804)
Net income (loss)                  $     459    $   2,311    $   2,911   ($  7,648)   ($  6,269)
Basic income (loss) per
  share:
  -Continuing operations           $     .14    $     .16    $     .13   ($    .84)   ($    .76)
  -Net income (loss)               $     .07    $     .35    $     .40   ($   1.03)   ($    .82)
                                   =========    =========    =========   =========    =========
Diluted income (loss) per share:
  -Continuing operations           $     .14    $     .16    $     .12   ($    .84)   ($    .76)
  -Net income (loss)               $     .07    $     .34    $     .37   ($   1.03)   ($    .82)
                                   =========    =========    =========   =========    =========

<CAPTION>
Balance Sheet Data:

                                                   CD&L, Inc. and Subsidiaries (1 & 2)
                                   ------------------------------------------------------------
                                                               December 31,
                                   ------------------------------------------------------------
                                      1997         1998         1999        2000         2001
                                   ---------    ---------    ---------   ---------    ---------
<S>                                <C>          <C>          <C>         <C>          <C>
Working capital (deficit)          $   2,519    ($  4,196)   $   5,989   ($  3,430)   $   4,923
Equipment and leasehold
   improvements, net                   4,531        5,299        4,321       2,841        1,961
Total assets                          29,773       46,890       62,513      57,785       35,481
Long-term debt, net of
current  maturities                    1,721        6,137       22,858      17,765       18,233
Stockholders' equity               $   8,614    $  11,407    $  17,369   $   9,884    $   3,615
</TABLE>



       (1) During 1997, the Company disposed of its fulfillment and direct mail
       operation. Accordingly, the operating results and gain on disposition of
       the fulfillment and direct mail business have been reclassified as
       discontinued operations for the periods presented.

       (2) During 2000, the Company discontinued its air operations and
       subsequently disposed of them in 2001. Accordingly, the operating results
       and loss on disposition of the air delivery business have been
       reclassified as discontinued operations for the periods presented.



                                      -17-
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Disclosure Regarding Forward Looking Statements.

The Company is provided a "safe harbor" for forward-looking statements contained
in this report by the Private Securities Litigation Reform Act of 1995. The
Company may discuss forward looking information in this Report such as its
expectations for future performance, growth and acquisition strategies,
liquidity and capital needs and its future prospects. Actual results may not
necessarily develop as the Company anticipates due to many factors including,
but not limited to the timing of certain transactions, unexpected expenses
encountered, the effect of economic and market conditions, the impact of
competition and the factors listed in Item 1. Business Description - Risk
Factors. Because of these and other reasons, the Company's actual results may
vary materially from management's current expectations.

Overview

The consolidated financial statements of the Company including all related
notes, which appear elsewhere in this report, should be read in conjunction with
this discussion of the Company's results of operations and its liquidity and
capital resources.

Discontinued Operations

On December 1, 2000, we made a strategic decision to dispose of our
air delivery business and accordingly have restated the accompanying balance
sheets, statements of operations and statements of cash flows to reflect such as
discontinued operations. On March 30, 2001, we consummated a transaction
providing for the sale of certain assets and liabilities of Sureway Air Traffic
Corporation, Inc. ("Sureway"), our air delivery business. The selling price for
the net assets was approximately $14,150,000 and was comprised of $11,650,000 in
cash, a subordinated promissory note (the "Note Receivable") for $2,500,000 and
contingent cash payments based upon the ultimate development of certain
liabilities retained by us. The Note Receivable bears interest at the rate of
10.0% per annum, with interest only in monthly installments. The entire balance
of principal, plus all accrued interest, is due and payable on March 30, 2006.
As of December 31, 2001 collection of the Note Receivable, interest accrued
thereon and certain other related receivables was in doubt. As such, the Company
recorded a pre-tax charge of $2,500,000 in Other expense, net in the
accompanying financial statements in the fourth quarter of 2001 to write-off the
Note Receivable and the Company recorded a pre-tax charge of $705,000 in
Discontinued Operations in the accompanying financial statements in the fourth
quarter of 2001 to write-off certain other direct expenses incurred on behalf of
Sureway for which collection is in doubt and to true-up certain accruals that
were estimated in 2000 relative to the disposition of Sureway. Collection
efforts on all amounts due will continue. As a result of this transaction and
the subsequent adjustments to certain receivables and other liabilities retained
by us, provisions for losses on the disposition of the Company's air delivery
business have been provided in Discontinued Operations in the amounts of
$465,000 and $2,807,000 (net of benefit for income taxes of $240,000 and
$125,000, respectively) for the years ended December 31, 2001 and 2000,
respectively.



                                      -18-
<PAGE>

The Company reported net losses of $465,000 and $1,419,000 from discontinued
operations for the years ended December 31, 2001 and 2000, respectively
(including provisions for losses on the disposition of the assets of Company's
air delivery business, net of tax of $465,000 and $2,807,000, respectively) and
$1,961,000 income from discontinued operations, net of tax for the year ended
December 31, 1999.

Results of Operations 2001 Compared with 2000

The following discussion compares the year ended December 31, 2001 and the year
ended December 31, 2000, for continuing operations.

Income and Expense as a Percentage of Revenue


                                                   For the Years Ended
                                                       December 31,
                                               -----------------------------
                                                  2001             2000
                                               ---------       ------------

         Revenue                               100.0%           100.0%

         Gross profit                           20.4%            20.3%

         Selling, general and
            administrative expenses             16.8%            20.0%
         Goodwill Impairment                     2.1%             0.0%
         Depreciation and amortization           1.5%             2.0%
         Other expense, net                      2.9%             1.4%
         Interest expense                        1.8%             1.8%

         Loss from continuing operations       (3.6)%           (3.7)%



Revenue for the year ended December 31, 2001 decreased $9,535,000, or 5.6%, to
$160,544,000 from $170,079,000 for the year ended December 31, 2000. The
decrease included approximately $4,500,000 in lost revenue due to the sale of
the Company's Mid-West Region operations on June 14, 2001. The balance of the
decrease in revenue is due to the Company's ongoing efforts to increase its
profit margins and eliminate less profitable business. As a result of a
portfolio review, contracts with certain customers that had unacceptable profit
margins were given notice of rate increases. If the rate increases were not
accepted, the contracts were terminated. This revenue loss was partially offset
by the effect of fuel surcharges and price increases implemented throughout 2000
that remained in effect for 2001.

Cost of revenue consists primarily of payments to employee drivers and
independent contractors, agents, other direct pick-up and delivery costs and the
costs of dispatching drivers and messengers. These costs decreased $7,776,000,
or 5.7%, from $135,616,000 for 2000 to $127,840,000 in 2001. Stated as a
percentage of revenue, these costs were flat, amounting to 79.6% for 2001 and
79.7% for 2000. This reflects the impact of a reduction in vehicle operating and
insurance costs partially offset by higher labor costs. The decrease in
insurance costs was primarily attributable to decreased medical, workers'
compensation and auto liability claims. The increased labor costs, as a
percentage of revenue, were partially attributable to the effect of the
September 11, 2001 events on the Company's New York City operations. The
elimination of less profitable business and better utilization of direct labor
have contributed to increased gross profit margins in other areas of the Company
where a slowing economy has helped in recruiting and retaining reliable couriers
and subcontractors at reasonable costs.



                                      -19-
<PAGE>

As a result of the above, gross profit decreased by $1,759,000, from $34,463,000
in 2000 to $32,704,000 in 2001. As a percentage of revenue gross profit was
consistent, and amounted to 20.4% in 2001 and 20.3% in 2000.

Selling, general and administrative expense ("SG&A") includes costs incurred at
the terminal level related to taking orders and administrative costs related to
such functions. Also included are costs to support the Company's marketing and
sales effort and the expense of maintaining information systems, human
resources, financial, legal and other corporate administrative functions. SG&A
decreased by $7,097,000, or 20.9%, from $33,978,000 in 2000 to $26,881,000 in
2001. As a percentage of revenue SG&A decreased to 16.8% in 2001 compared to
20.0% of revenue in 2000. SG&A expense was favorably impacted by decreases in
payroll costs, medical insurance claims, telecommunications costs, professional
fees, facilities rental costs, and bad debt expense. The decrease in such costs
is due primarily to both the Company's ongoing efforts to reduce and better
control such costs and certain non-recurring items recorded during 2000,
primarily the bad debt expense related to the bankruptcy of a significant
customer. Additionally, the sale of the Mid-West Region operations reduced SG&A
by approximately $1,000,000.

Goodwill impairment for 2001 was $3,349,000 compared to $0 for 2000. The charge
taken in 2001 was the result of a comprehensive review of the Company's
intangible assets under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" ("SFAS 121"). As a result of recording
significant losses on the dispositions of Sureway and the Mid-West Region and as
a result of inadequate cash flows from certain acquired businesses due to the
loss of customers, the Company determined that the carrying amount of certain
assets might not be fully recoverable. The measurement of impairment losses
recognized in 2001 is based on the difference between the fair values, which
were calculated based upon the present value of projected future cash flows, and
the carrying amounts of the assets.

Depreciation and amortization decreased by $879,000, or 26.2%, from $3,355,000
for 2000 to $2,476,000 for 2001. The decrease was primarily attributable to the
full depreciation of certain vehicles held under a capital lease that ended
during 2000 and reduced capital expenditures in 2000 and 2001.



                                      -20-
<PAGE>

Other expense increased by $2,247,000, to $4,685,000 in 2001 from $2,438,000 in
2000. The 2001 expense is primarily due to two transactions. As of December 31,
2001, the Company wrote-off the Note Receivable received on March 30, 2001 in
the transaction to dispose of certain assets and liabilities of Sureway, as
collection of the Note Receivable, interest accrued thereon and certain other
related receivables was in doubt. The Company also recorded a $2,283,000 loss on
the sale of all of the outstanding stock in National Express, Inc. on June 14,
2001. The selling price of the stock was approximately $2,530,000 and was
comprised of $880,000 in cash and a subordinated promissory note (the
"Promissory Note") for $1,650,000. The Promissory Note bears interest at the
rate of 7.0% per annum. The Promissory Note is payable in seventeen equal
quarterly installments beginning March 14, 2002 and continuing through March 14,
2006 and a final balloon payment of approximately $1,100,000 on June 14, 2006.
The 2000 loss is primarily as a result of recording a reserve related to a note
receivable from a stockholder related to the Company's funding of litigation
defense and settlement expenses in connection with the action filed by Liberty
Mutual Insurance Company against Securities Courier Corporation ("Securities"),
a subsidiary of the Company, and Mr. Vincent Brana, an employee of the Company.
Under the terms of its acquisition of Securities, the Company has certain rights
to indemnification from Mr. Brana. In connection with the indemnification, Mr.
Brana has entered into a settlement agreement and executed a Promissory Note due
and payable on December 1, 2002. Mr. Brana has delivered 357,301 shares of CD&L
common stock to the Company as collateral for the note. Considering the market
value of the collateral and Mr. Brana's failure to update and provide
satisfactory evidence to support his ability to pay the note when due, the
Company recorded a $2,500,000 reserve against the note receivable.

Interest expense decreased by $163,000 from $3,060,000 in 2000 to $2,897,000 in
2001. The decrease is primarily attributable to decreased borrowings on the
Company's revolving line of credit as a result of the sales of Sureway and the
Mid-West Region operations, partially offset by an increase in the interest
rates paid on the seller-financed debt from acquisitions.

Benefit for income taxes decreased by $359,000 from a benefit for income taxes
of $2,139,000 in 2000 to a benefit for income taxes of $1,780,000 in 2001. The
decrease was caused by the decrease in pre-tax loss in 2001 and the recording of
a non-deductible $2,283,000 loss on the sale of the stock of National Express,
Inc., the Company's Mid-West Region subsidiary, on June 14, 2001, partially
offset by the recording in 2000 of a $1,000,000 valuation allowance against the
deferred tax assets recorded by the Company.


Results of Operations 2000 Compared with 1999

The following discussion compares the year ended December 31, 2000 and the year
ended December 31, 1999, for continuing operations.



                                      -21-
<PAGE>


Income and Expense as a Percentage of Revenue


                                                 For the Years Ended
                                                      December 31,
                                              -----------------------------
                                                 2000             1999
                                              ------------     ------------

         Revenue                                   100.0%           100.0%

         Gross profit                               20.3%            22.2%

         Selling, general and
            administrative expenses                 20.0%            17.1%
         Depreciation and amortization               2.0%             2.3%
         Other expense, net                          1.4%             0.0%
         Interest expense                            1.8%             1.7%

         (Loss) income from continuing
           operations                               (3.7)%            0.6%

Revenue for the year ended December 31, 2000 increased $11,699,000, or 7.4%, to
$170,079,000 from $158,380,000 for the year ended December 31, 1999. The
increase included $2,978,000 contributed by the businesses acquired in 1999
as well as increased sales from the Company's existing operations.

Cost of revenue consists primarily of payments to employee drivers and
independent contractors, agents, other direct pick-up and delivery costs and the
costs of dispatching drivers and messengers. These costs increased $12,411,000,
or 10.1%, from $123,205,000 for 1999 to $135,616,000 in 2000. Stated as a
percentage of revenue, these costs increased to 79.7% for 2000 from 77.8% for
1999. This increase reflects the impact of higher insurance, facilities, vehicle
and labor costs offset, partially, by a reclassification of $2,400,000 in
administrative salaries and benefits previous considered a component of cost of
revenue to selling, general and administrative expenses. The increase in
insurance costs was primarily attributable to increased medical, workers'
compensation and auto liability claims. Additionally, the expense related to
unreported claims increased as a result of the increase in the reserve for
claims that have been incurred but not yet reported. The increase in facilities
costs includes the impact of opening 11 new facilities and the closing of 16
facilities during the year.

As a result of the above, gross profit decreased by $712,000, from $35,175,000
in 1999 to $34,463,000 in 2000. As a percentage of revenue gross profit
decreased to 20.3% in 2000 compared to 22.2% of revenue in 1999.



                                      -22-
<PAGE>

SG&A includes costs incurred at the terminal level related to taking orders and
administrative costs related to such functions. Also included are costs to
support the Company's marketing and sales effort and the expense of maintaining
information systems, human resources, financial, legal and other corporate
administrative functions. SG&A increased by $6,855,000, or 25.3%, from
$27,123,000 in 1999 to $33,978,000 in 2000. As a percentage of revenue SG&A
increased to 20.0% in 2000 compared to 17.1% of revenue in 1999. In addition to
the $2,400,000 reclassification from cost of revenue, SG&A expense was
unfavorably impacted by increases in medical insurance claims, bad debt expense
related to the bankruptcy of a significant customer, professional fees,
administrative costs of the companies acquired in 1999, legal expenses and
acquisition and merger related expenses.

Depreciation and amortization decreased by $317,000, or 8.6%, from $3,672,000
for 1999 to $3,355,000 for 2000. The decrease was primarily attributable to the
full depreciation of certain vehicles held under a capital lease that ended
during 2000. Replacement vehicles under a similar capital lease were not
received until January 2001.

Other expense increased by $2,358,000, to $2,438,000, primarily as a result of
recording a reserve related to a note receivable from a stockholder related to
the Company's funding of litigation defense and settlement expenses in
connection with the action filed by Liberty Mutual Insurance Company against
Securities, a subsidiary of the Company, and Mr. Vincent Brana, an employee of
the Company. Under the terms of its acquisition of Securities, the Company has
certain rights to indemnification from Mr. Brana. In connection with the
indemnification, Mr. Brana has entered into a settlement agreement and executed
a Promissory Note due and payable on December 1, 2002. Mr. Brana has delivered
357,301 shares of CD&L common stock to the Company as collateral for the note.
Considering the current market value of the collateral and Mr. Brana's failure
to update and provide satisfactory evidence to support his ability to pay the
note when due, the Company has recorded a $2,500,000 reserve against the
$2,908,000 note receivable.


Interest expense increased by $329,000 from $2,731,000 in 1999 to $3,060,000 in
2000. The increase is primarily attributable to increased borrowings on the
Company's revolving line of credit and an increase in interest rates.

(Benefit) provision for income taxes decreased by $2,758,000 from a provision
for income taxes of $619,000 in 1999 to a (benefit) for income taxes of
($2,139,000) in 2000. The decrease was caused by the decrease in pre-tax income
to a pre-tax loss in 2000 of ($8,368,000), partially offset by the recording of
a $1,000,000 valuation allowance against the deferred tax assets recorded by the
Company.

                                      -23-
<PAGE>

Liquidity and Capital Resources

The following tables summarize our contractual and commercial obligations as of
December 31, 2001:

<TABLE>
<CAPTION>
                                                                              Payments Due By Period
                                                                              ----------------------
Contractual Obligations                                                                                  2007-
(dollars in thousands)                                      2002         2003-2004     2005-2006       Thereafter     Total
                                                            ----         ---------     ---------       ----------     -----
<S>                                                        <C>           <C>          <C>              <C>           <C>
Long-term debt                                             $2,049         $2,932       $14,299           $706        $19,986

Capital leases                                               $349           $312            $-             $-           $661

Operating leases (Primarily for facilities)                $3,508         $3,904        $1,703            $62         $9,177

<CAPTION>
                                                                      Amount of Commitment Expiration Per Period
                                                                      ------------------------------------------
Other Commercial Commitments                                                                              2007-
(dollars in thousands)                                       2002        2003-2004     2005-2006        Thereafter     Total
                                                             ----        ---------     ---------        ----------     -----
<S>                                                        <C>           <C>          <C>              <C>           <C>
Working Capital Facility
(Including Standby Letters of Credit)                         $-         $15,000           $-             $-          $15,000

Standby Letters of Credit                                     $-          $7,081           $-             $-           $7,081
</TABLE>

The Company's working capital increased by $8,353,000 from a deficit of
($3,430,000) as of December 31, 2000 to $4,923,000 as of December 31, 2001. The
increase is a result of the sales of Sureway and the Mid-West Region and the use
of the proceeds to pay down short-term borrowings and the refinancing of certain
of the notes issued to sellers in connection with the acquisitions consummated
in 1998 and 1999.

Cash and cash equivalents increased slightly during 2001. Cash of $3,942,000 was
provided from operations and $12,420,000 was provided by investing activities
due to the sales of Sureway and the Mid-West Region, while $14,177,000 was used
by net financing activities to pay down debt. Cash used by the discontinued
operations was $1,339,000.

Capital expenditures amounted to $333,000, $859,000 and $746,000 for the years
ended December 31, 2001, 2000 and 1999, respectively. These expenditures
primarily upgraded and expanded computer system capability, expanded and
improved Company facilities in the ordinary course of business and upgraded the
Company fleet.

Outstanding borrowings under the Company's revolving credit facility were $0 and
$7,080,644 was outstanding in Standby Letters of Credit as of December 31, 2001.
The Company also had $13,750,000 in principal outstanding under its 12% Senior
Subordinated Notes ($13,012,000 net of unamortized discount). The Company also
had $614,000 of capital lease obligations and various equipment notes, $192,000
of debt related to litigation settlements and $6,777,000 of seller financed
debt. The Company had total cash on hand of $1,165,000 and borrowing ability of
$1,100,000 under the revolving credit facility, after adjusting for the
restrictions for outstanding letters of credit and minimum availability
requirements, as of December 31, 2001.

During 2001 and 2000, the Company has had liquidity difficulties and has had to
renegotiate certain covenants and terms of its revolving credit facility, senior
subordinated notes and seller notes, including during the first quarter of 2002.
This is further discussed in Note 9. Additionally, the Company has an
accumulated deficit of ($9,114,000) as of December 31, 2001. The Company's
amended revolving credit facility with First Union expires on January 31, 2003.
There can be no assurances that the Company's lenders will agree to waive any
future covenant violations (if necessary), continue to renegotiate the terms of
their loans, or further extend the expiration date of the Company's financing
facilities. Furthermore, there are no guarantees that the Company will be able
to meet its financial plan and projections, upon which the debt covenants are
based.

                                      -24-
<PAGE>

Management believes that cash flows from operations and its borrowing capacity
(see Note 9 of the accompanying notes to the consolidated financial statements)
are sufficient to support the Company's operations and general business and
capital liquidity requirements for the foreseeable future.

Inflation

While inflation has not had a material impact on the Company's results of
operations for the last three years, fluctuations in fuel prices can and do
affect the Company's operating costs.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

CDL is exposed to the effect of changing interest rates. At December 31, 2001,
the Company's debt consisted of approximately $20,595,000 of fixed rate debt
with a weighted average interest rate of 11.70% and $0 of variable rate debt
with a weighted average interest rate of 5.00%. The amount of variable rate debt
fluctuates during the year based on CD&L's cash requirements. Maximum borrowings
of variable rate debt at any quarter end were $301,000. If interest rates on
such variable rate debt were to increase by 50 basis points (approximately
one-tenth of the rate at December 31, 2001), the net impact to the Company's
results of operations and cash flows would be an increase of approximately
$13,000.


                                      -25-
<PAGE>

Item 8.  Financial Statements and Supplementary Data.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>

<CAPTION>

                                                                                                                     Page
                                                                                                                     ----
<S>                                                                                                                  <C>
Report of Independent Public Accountants..............................................................................27

Consolidated Balance Sheets as of December 31, 2001 and 2000..........................................................28

Consolidated Statements of Operations For The Years Ended December 31, 2001, 2000 and 1999............................29

Consolidated Statements of Changes in Stockholders' Equity For The Years Ended December 31, 2001, 2000 and 1999.......30

Consolidated Statements of Cash Flows For The Years Ended December 31, 2001, 2000 and 1999............................31

Notes to Consolidated Financial Statements............................................................................32
</TABLE>




                                      -26-
<PAGE>

This audit report of Arthur Andersen LLP, our former independent public
accountants, is a copy of the original report dated February 26, 2002 rendered
by Arthur Andersen LLP on our consolidated financial statements included in our
Form 10-K filed on April 16, 2002, and has not been reissued by Arthur Andersen
LLP since that date. Such audit report was issued prior to the changes in the
consolidated financial statements disclosed in Footnote 19. We are including
this copy of the Arthur Andersen LLP audit report pursuant to Rule 2-02(e) of
Regulation S-X under the Securities Act of 1933.


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CD&L, Inc.:

We have audited the accompanying consolidated balance sheets of CD&L, Inc. (a
Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the three years in the period ended December 31,
2001. These consolidated financial statements and the schedule referred to below
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and schedule based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 referred to above present
fairly, in all material respects, the financial position of CD&L, Inc. and
subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statement schedules is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Roseland, New Jersey
February 26, 2002
(except with respect to the matters discussed in Note 9, as to which the date is
April 15, 2002)


                                      -27-
<PAGE>

                           CD&L, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)


<TABLE>
<CAPTION>
                                       ASSETS
                                                                                                     December 31,
                                                                                                     ------------
                                                                                                2001                2000
                                                                                                ----                ----
<S>                                                                                          <C>                  <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 2)                                                            $1,165                 $319
Accounts receivable, less allowance for doubtful accounts of $951
and $1,840 in 2001 and 2000, respectively (Note 9)                                            15,077               17,596
Deferred income taxes (Notes 2 and 11)                                                           221                1,369
Prepaid expenses and other current assets (Note 5)                                             1,962                1,548
Net assets of discontinued operations (Note 3)                                                     -                4,591
                                                                                             -------              -------
Total current assets                                                                          18,425               25,423


EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net (Notes 2 and 6)                                      1,961                2,841
INTANGIBLE ASSETS, net (Notes 2, 4 and 7)                                                     12,252               20,666
NOTE RECEIVABLE FROM STOCKHOLDER, less allowance of $2,500
in 2001 and 2000 (Note 16)                                                                       300                  408
SECURITY DEPOSITS AND OTHER ASSETS                                                             1,928                  402
DEFERRED INCOME TAXES (Notes 2 and 11)                                                           615                   -
NET ASSETS OF DISCONTINUED OPERATIONS (Note 3)                                                     -                8,045
                                                                                             -------              -------
            Total assets                                                                     $35,481              $57,785
                                                                                             =======              =======

                         LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings (Note 9)                                                                     $-             $11,169
Current maturities of long-term debt (Note 9)                                                   2,362               5,752
Accounts payable                                                                                3,790               4,316
Accrued expenses and other current liabilities (Note 8)                                         7,350               7,616
                                                                                              -------             -------
Total current liabilities                                                                      13,502              28,853

LONG-TERM DEBT, net of current maturities (Note 9)                                             18,233              17,765

DEFERRED INCOME TAXES (Notes 2 and 11)                                                              -               1,159

OTHER LONG-TERM LIABILITIES                                                                       131                 124
                                                                                              -------             -------

            Total liabilities                                                                  31,866              47,901
                                                                                              -------             -------

COMMITMENTS AND CONTINGENCIES (Notes 12 and 13)                                                     -                  -
                                                                                              -------             -------

STOCKHOLDERS' EQUITY (Notes 13, 14 and 15):

Preferred stock, $.001 par value; 2,000,000 shares authorized; no
shares issued and outstanding                                                                       -                  -
Common stock, $.001 par value; 30,000,000 shares authorized,
7,688,027 shares issued in 2001 and 2000                                                            8                   8
Additional paid-in capital                                                                     12,883              12,883
Treasury stock, 29,367 shares at cost                                                            (162)              (162)
Accumulated deficit                                                                            (9,114)            (2,845)
                                                                                              -------             -------

Total stockholders' equity                                                                      3,615               9,884
                                                                                              -------             -------
             Total liabilities and stockholders' equity                                       $35,481             $57,785
                                                                                              =======             =======

</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.


                                      -28-
<PAGE>


                          CD&L, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                             As Restated (Note 19)

<TABLE>
<CAPTION>
                                                             For the Years Ended December 31,
                                                            ------------------------------------
                                                               2001          2000          1999
                                                            ---------     ---------     ---------
<S>                                                        <C>           <C>           <C>
Revenue (Note 2)                                            $ 160,544     $ 170,079     $ 158,380
Cost of revenue                                               127,840       135,616       123,205
                                                            ---------     ---------     ---------

  Gross profit                                                 32,704        34,463        35,175
                                                            ---------     ---------     ---------

Costs and Expenses:
Selling, general and administrative expenses                   26,881        33,978        27,123
Goodwill impairment                                             3,349          --            --
Depreciation and amortization                                   2,476         3,355         3,672
Other expense, net (Notes 3,4 and 16)                           4,685         2,438            80
Interest expense                                                2,897         3,060         2,731
                                                            ---------     ---------     ---------

Total Costs and Expenses                                       40,288        42,831        33,606
                                                            ---------     ---------     ---------

(Loss) income from continuing operations before
  (benefit) provision for income taxes                         (7,584)       (8,368)        1,569
(Benefit) provision for income taxes
 (Notes 2 and 11)                                              (1,780)       (2,139)          619
                                                            ---------     ---------     ---------

(Loss) income from continuing operations                       (5,804)       (6,229)          950
                                                            ---------     ---------     ---------

Discontinued operations (Note 3)
  Income from discontinued operations, net of provision
  for income taxes of  $0, $796 and $1,276, respectively
                                                                 --           1,388         1,961
  Provision for loss on disposal of assets, net of
  benefit for income taxes of $240, $125 and $0,
  respectively                                                   (465)       (2,807)         --
                                                            ---------     ---------     ---------
Net (loss) income from discontinued operations                   (465)       (1,419)        1,961
                                                            ---------     ---------     ---------
   Net (loss) income                                        ($  6,269)    ($  7,648)    $   2,911
                                                            =========     =========     =========

Basic (loss) income per share:
  Continuing operations                                     ($    .76)    ($    .84)    $     .13
  Discontinued operations                                   ($    .06)    ($    .19)    $     .27
                                                            ---------     ---------     ---------
  Net (loss) income per share                               ($    .82)    ($   1.03)    $     .40
                                                            =========     =========     =========

Diluted (loss) income per share:
  Continuing operations                                     ($    .76)    ($    .84)    $     .12
  Discontinued operations                                   ($    .06)    ($    .19)    $     .25
                                                            ---------     ---------     ---------
  Net (loss) income per share                               ($    .82)    ($   1.03)    $     .37
                                                            =========     =========     =========

Basic weighted average common
  shares outstanding                                            7,659         7,430         7,214
                                                            =========     =========     =========
Diluted weighted average common
  shares outstanding                                            7,659         7,430         7,868
                                                            =========     =========     =========
</TABLE>

The accompanying notes to consolidated financial statements are an
integral part of these statements.


                                     -29-
<PAGE>


                           CD&L, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                  (Accumulated
                                        Common Stock       Additional                Deficit)     Total
                                   ---------------------    Paid-in     Treasury     Retained   Stockholders'
                                     Shares     Amount      Capital      Stock       Earnings     Equity
                                   ---------   ---------   ---------   ---------    ---------    ---------
<S>                                <C>         <C>         <C>         <C>        <C>           <C>
BALANCE AT
        DECEMBER 31, 1998          6,843,702           7       9,670        (162)       1,892       11,407
Discount for warrants issued in
connection with private
placement                                 --          --       1,265          --           --        1,265
Shares issued in connection with
Employee Stock Purchase
Plans                                 73,172          --         251          --           --          251
Shares issued in connection with
executive compensation                47,051          --         150          --           --          150
Shares issued in connection with
acquisitions of businesses           389,533          --       1,385          --           --        1,385
Net income                                --          --          --          --        2,911        2,911
                                   ---------   ---------   ---------   ---------    ---------    ---------

BALANCE AT
        DECEMBER 31, 1999          7,353,458           7      12,721        (162)       4,803       17,369
Shares issued in connection with
Employee Stock Purchase
Plan                                 305,202           1         162          --           --          163
Net loss                                  --          --          --          --       (7,648)      (7,648)
                                   ---------   ---------   ---------   ---------    ---------    ---------

BALANCE AT
        DECEMBER 31, 2000          7,658,660           8      12,883        (162)      (2,845)       9,884
Net loss                                  --          --          --          --       (6,269)      (6,269)
                                   ---------   ---------   ---------   ---------    ---------    ---------

BALANCE AT
        DECEMBER 31, 2001          7,658,660          $8     $12,883       ($162)     ($9,114)      $3,615
                                   =========   =========   =========   =========    =========    =========
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.


                                      -30-
<PAGE>


                          CD&L, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                             As Restated (Note 19)


<TABLE>
<CAPTION>
                                                                                    For The Years Ended December 31,
                                                                                   ----------------------------------
                                                                                     2001         2000         1999
                                                                                   --------     --------     --------
<S>                                                                                <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income                                                                ($ 6,269)    ($ 7,648)    $  2,911
  Adjustments to reconcile net (loss) income to net cash provided by
     operating activities of continuing operations -
  Gain on disposal of equipment and leasehold improvements                              (26)        (116)         (36)
  Income from discontinued operations                                                  --         (1,388)      (1,961)
  Loss on sale of subsidiary                                                          2,283         --           --
  Loss on disposal of assets of discontinued operations                                 465        2,807         --
  Goodwill impairment                                                                 3,349         --           --
  Depreciation and amortization                                                       2,476        3,355        3,672
  Write-off of note receivable                                                        2,500         --           --
  Provision for doubtful note receivable                                               --          2,500         --
  Provision for doubtful accounts                                                       (69)       1,995          522
  Deferred income tax (benefit) provision                                              (626)        (959)         488
  Changes in operating assets and liabilities
      (Increase) decrease in -
           Accounts receivable                                                        1,381       (2,073)      (1,852)
          Prepaid expenses and other current assets                                  (1,195)       1,089       (1,927)
           Note receivable from stockholder, security deposits and other assets         159         (250)        (149)
      Increase (decrease) in -
          Accounts payable, accrued expenses and other current liabilities             (493)       1,438          115
           Other long-term liabilities                                                    7            4          (77)
                                                                                   --------     --------     --------
             Net cash provided by operating activities of continuing
               operations                                                             3,942          754        1,706
                                                                                   --------     --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to equipment and leasehold improvements                                    (333)        (859)        (746)
   Proceeds from sales of equipment and leasehold improvements                          222          213          433
   Proceeds from sales of businesses, net                                            12,531         --           --
   Purchases of businesses, net of cash acquired                                       --           --         (3,360)
                                                                                   --------     --------     --------
             Net cash provided by (used in) investing activities of
               continuing operations                                                 12,420         (646)      (3,673)
                                                                                   --------     --------     --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Short-term (repayments) borrowings, net                                           (11,169)       3,981       (6,389)
   Proceeds from long-term debt                                                        --           --         15,000
   Repayments of long-term debt                                                      (3,008)      (2,821)      (3,487)
   Issuance of debt in connection with acquisition of assets included in
    discontinued operations (retained by continuing operations)                        --           --          2,170
   Issuance of common stock                                                            --            163          401
   Deferred financing costs                                                            --           --         (1,171)
                                                                                   --------     --------     --------
             Net cash (used in) provided by financing activities of continuing
               operations                                                           (14,177)       1,323        6,524
                                                                                   --------     --------     --------

CASH USED IN DISCONTINUED OPERATIONS                                                 (1,339)      (1,438)      (4,514)
                                                                                   --------     --------     --------

             Net increase (decrease) in cash and cash equivalents                       846           (7)          43
CASH AND CASH EQUIVALENTS, beginning of year                                            319          326          283
                                                                                   --------     --------     --------
CASH AND CASH EQUIVALENTS, end of year                                             $  1,165     $    319     $    326
                                                                                   ========     ========     ========
</TABLE>


The accompanying notes to consolidated financial statements are an
integral part of these statements.


                                     -31-
<PAGE>

                           CD&L, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS:

CD&L, Inc. (the "Company") was founded in June 1994. In November 1995,
simultaneous with the closing of the Company's initial public offering (the
"Offering") separate wholly owned subsidiaries of the Company merged (the
"Merger") with each of eleven acquired businesses. Consideration for the
acquisition of these businesses consisted of a combination of cash and common
stock of the Company, par value $0.001 per share. The assets and liabilities of
the acquired businesses at September 30, 1995 were recorded by the Company at
their historical amounts.

CD&L, Inc. and subsidiaries ("CDL") provides an extensive network of same-day
delivery services to a wide range of commercial, industrial and retail
customers. CDL operations currently are concentrated on the East Coast, with a
strategic presence on the West Coast.

During 2001 and 2000, the Company has had liquidity difficulties and has had to
renegotiate certain covenants and terms of its revolving credit facility, senior
subordinated notes and seller notes, including during the first quarter of 2002.
This is further discussed in Note 9. Additionally, the Company has an
accumulated deficit of ($9,114,000) as of December 31, 2001. The Company's
amended revolving credit facility with First Union expires on January 31, 2003.
There can be no assurances that the Company's lenders will agree to waive any
future covenant violations (if necessary), continue to renegotiate the terms of
their loans, or further extend the expiration date of the Company's financing
facilities. Furthermore, there are no guarantees that the Company will be able
to meet its financial plan and projections, upon which the debt covenants are
based.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation -

The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany balances
and transactions have been eliminated.

Use of Estimates in Preparation of the Financial Statements -

The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.



                                      -32-
<PAGE>

Cash and Cash Equivalents -

CDL considers all highly liquid investments with maturities of three months or
less when purchased to be cash equivalents. Cash equivalents are carried at
cost, which approximates market value.

Equipment and Leasehold Improvements -

Equipment and leasehold improvements are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets. Leasehold improvements and assets subject to capital leases are
amortized over the shorter of the terms of the leases or the estimated useful
lives of the assets.

Deferred Financing Costs -

The costs incurred for obtaining financing, including all related fees are
included in other assets in the accompanying consolidated balance sheets and are
amortized over the life of the related financing, from 2 - 7 years.

Intangible Assets -

Intangible assets consist of goodwill, non-compete agreements, customer lists
and deferred financing costs. See Note 7.

Insurance -

The Company maintains certain insurance risk through insurance policies with a
$250,000 deductible for workmens' compensation and automobile liability and a
$125,000 deductible for employee health medical costs. The Company reserves the
estimated amounts of uninsured claims and deductibles related to such insurance
retentions for claims that have occurred in the normal course of business. These
reserves are established by management based upon the recommendations of
third-party administrators who perform a specific review of open claims, with
consideration of incurred but not reported claims, as of the balance sheet date.
Actual claim settlements may differ materially from these estimated reserve
amounts. The Company's estimated cumulative losses for workmens' compensation
and automobile liability claims for the period January 1, 1999 through December
31, 2001 amounted to $9,654,000, of which $9,534,000 has been funded to the
Company's insurance carrier. The net liability of $120,000 is included in
accrued expenses in the accompanying financial statements. Additionally, the
Company has accrued $300,000 for incurred but unpaid employee health medical
costs as of December 31, 2001.

Revenue Recognition -

Revenue is recognized when the shipment is completed, or when services are
rendered to customers, and expenses are recognized as incurred. Certain
customers pay in advance, giving rise to deferred revenue.



                                      -33-
<PAGE>

Income Taxes -

CDL accounts for income taxes utilizing the liability approach. Deferred income
taxes are provided for differences in the recognition of assets and liabilities
for tax and financial reporting purposes. Temporary differences result primarily
from accelerated depreciation and amortization for tax purposes and various
accruals and reserves being deductible for tax purposes in future periods.

Long-Lived Assets -

CDL reviews its long-lived assets and certain related intangibles for impairment
whenever changes in circumstances indicate that the carrying amount of an asset
may not be fully recoverable. The measurement of impairment losses to be
recognized is based on the difference between the fair values and the carrying
amounts of the assets. Impairment would be recognized in operating results if a
diminution in value occurred. During 2001 the Company believes that such a
change occurred and recorded a goodwill impairment loss of $3,349,000. The
charge taken in 2001 was the result of a comprehensive review of the Company's
intangible assets under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" ("SFAS 121"). As a result of recording
significant losses on the dispositions of Sureway and the Mid-West Region and as
a result of inadequate cash flows from certain acquired businesses due to the
loss of customers, the Company determined that the carrying amount of certain
assets might not be fully recoverable. The measurement of impairment losses
recognized in 2001 is based on the difference between the fair values, which
were calculated based upon the present value of projected future cash flows, and
the carrying amounts of the assets.

Fair Value of Financial Instruments -

Due to the short maturities of CDL's cash, receivables and payables, the
carrying value of these financial instruments approximates their fair values.
The fair value of CDL's debt is estimated based on the current rates offered to
CDL for debt with similar remaining maturities. CDL believes that the carrying
value of its debt estimates the fair value of such debt instruments.

Stock Based Compensation -

SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") requires
that an entity account for employee stock compensation under a fair value based
method. However, SFAS 123 also allows an entity to continue to measure
compensation cost for employee stock-based compensation plans using the
intrinsic value based method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees," ("Opinion 25"). CDL has elected to
continue to account for employee stock-based compensation under Opinion 25 and
provide the required pro forma disclosures as if the fair value based method of
accounting under SFAS 123 had been applied (see Note 13).



                                      -34-
<PAGE>

Income (Loss) Per Share -

Basic earnings per share represents net income (loss) divided by the weighted
average shares outstanding. Diluted earnings per share represents net income
(loss) divided by weighted average shares outstanding adjusted for the
incremental dilution of common stock equivalents. Because of the Company's net
loss for the years ended December 31, 2001 and 2000, equivalent shares
represented by 1,842 and 1,840 Stock Options and 505,351 and 505,955 Warrants
respectively, for which the exercise or conversion price was less than the
average market price of common shares, would be anti-dilutive and therefore are
not included in the loss per share calculations for the years ended December 31,
2001 and 2000.

A reconciliation of weighted average common shares outstanding to weighted
average common shares outstanding assuming dilution follows:


<TABLE>
<CAPTION>
                                                   2001                 2000                  1999
                                                   ----                 ----                  ----
<S>                                            <C>                   <C>                  <C>
Basic weighted average common
shares outstanding                             7,658,660             7,430,175            7,214,426
Effect of dilutive securities:
Stock options and warrants                             -                    -               648,952
Employee stock purchase plan                           -                    -                 4,450
                                               ---------             ---------            ---------

Diluted weighted average common
shares outstanding                             7,658,660             7,430,175            7,867,828
                                               =========             =========            =========
</TABLE>


The following common stock equivalents were excluded from the computation of
diluted Earnings Per Share because the exercise or conversion price was greater
than the average market price of common shares -

<TABLE>
<CAPTION>

                                                   2001                2000                    1999
                                                   ----                ----                    ----
<S>                                            <C>                 <C>                     <C>
Stock options                                  1,917,202            1,982,534               522,546
Subordinated convertible debentures                9,863              109,098               145,750
Seller financed convertible notes                524,961              593,333               593,333
                                               =========            =========               =======
</TABLE>

Accounting Pronouncements -

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations" ("SFAS 141"), and No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"). SFAS 141 changes the accounting for business
combinations, requiring that all business combinations be accounted for using
the purchase method and that intangible assets be recognized as assets apart
from goodwill if they arise from contractual or other legal rights, or if they
are separate or capable of being separated from the acquired entity and sold,
transferred, licensed, rented or exchanged. SFAS 141 is effective for all
business combinations initiated after June 30, 2001. SFAS 142 specifies the
financial accounting and reporting for acquired goodwill and other intangible
assets. Goodwill and intangible assets that have indefinite useful lives will
not be amortized but rather will be tested at least annually for impairment.
SFAS 142 is effective for fiscal years beginning after December 15, 2001.

SFAS 142 requires that the useful lives of intangible assets acquired on or
before June 30, 2001 be reassessed and the remaining amortization periods
adjusted accordingly. Previously recognized intangible assets deemed to have
indefinite lives shall be tested for impairment. Goodwill recognized on or
before June 30, 2001, will be tested for impairment as of the beginning of the
fiscal year in which SFAS 142 is initially applied in its entirety.



                                      -35-
<PAGE>


Adoption of SFAS 142 will increase earnings by approximately $675,000 for the
year ended December 31, 2002. Amortization of goodwill and other intangibles was
$929,000, $1,113,000 and $1,120,000 for the years ended December 31, 2001, 2000
and 1999, respectively. (See Note 7).

In September 2001, the FASB issued SFAS No. 144, "Accounting for Impairment or
Disposal of Long-lived Assets" ("SFAS 144"). This statement addresses the
financial accounting and reporting for the impairment or disposal of long-lived
assets. SFAS 144 supercedes SFAS 121, but retains SFAS 121's fundamental
provisions for (a) recognition/measurement of impairment of long-lived assets to
be held and used and (b) measurement of long-lived assets to be disposed of by
sale. SFAS 144 also supercedes the accounting/reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations--Reporting the Effects of a
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions" ("APB No. 30") for segments of a business to
be disposed of, but retains APB No. 30's requirement to report discontinued
operations separately from continuing operations and extends that reporting to a
component of an entity that either has been disposed of or is classified as held
for sale. SFAS 144 is effective for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years, with earlier application
encouraged. The Company plans to adopt SFAS 144 effective December 31, 2001. The
adoption is not expected to have a material impact on the Company's financial
statements.

Reclassifications -

Certain reclassifications have been made to the prior years' consolidated
financial statements in order to conform to the 2001 presentation.

(3) DISCONTINUED OPERATIONS:

On December 1, 2000, the Company made a strategic decision to dispose of its air
delivery business. Subsequently, on March 30, 2001, the Company consummated a
transaction providing for the sale of certain assets and liabilities of Sureway
Air Traffic Corporation, Inc. ("Sureway"), its air delivery business. The
selling price for the net assets was approximately $14,150,000 and was comprised
of $11,650,000 in cash, a subordinated promissory note (the "Note Receivable")
for $2,500,000 and contingent cash payments based upon the ultimate development
of certain liabilities retained by the Company. The Note Receivable bears
interest at the rate of 10.0% per annum, with interest only payable in monthly
installments. The entire balance of principal, plus all accrued interest, is due
and payable on March 30, 2006. As of December 31, 2001 collection of the Note
Receivable, interest accrued thereon and certain other related receivables was
in doubt. As such, the Company recorded a pre-tax charge of $2,500,000 in Other
expense, net in the accompanying financial statements in the fourth quarter of
2001 to write-off the Note Receivable and the Company recorded a pre-tax charge
of $705,000 in Discontinued Operations in the accompanying financial statements
in the fourth quarter of 2001 to write-off certain other direct expenses
incurred on behalf of Sureway for which collection is in doubt and to true-up
certain accruals that were estimated in 2000 relative to the disposition of
Sureway. Collection efforts on all amounts due will continue. As a result of
this transaction and the subsequent adjustments to certain receivables and other
liabilities retained by us, provisions for losses on the disposition of the
Company's air delivery business have been provided in Discontinued Operations in
the amounts of $465,000 and $2,807,000 (net of benefit for income taxes of
$240,000 and $125,000, respectively) for the years ended December 31, 2001 and
2000, respectively.



                                      -36-
<PAGE>

Accordingly, the financial position, operating results and the provision for
loss on the disposition of the Company's air delivery business have been
segregated from continuing operations and reclassified as a discontinued
operation in the accompanying consolidated financial statements.

Results from the discontinued air delivery business were as follows (in
thousands) -

<TABLE>
<CAPTION>
                                                     For the Year     For the Year      For the Year
                                                         Ended           Ended            Ended
                                                     December 31,      December 31,     December 31,
                                                         2001            2000              1999
                                                       --------         --------         --------

<S>                                                    <C>              <C>              <C>
Revenue                                                $   --           $ 61,037         $ 66,184
                                                       ========         ========         ========

Income from discontinued
   operations,  net  of  provision  for  income
   taxes of $0, $796 and $1,276, respectively
                                                       $   --           $  1,388         $  1,961
                                                       ========         ========         ========
Provision  for loss on disposal of assets,  net
   of benefit  for income  taxes of $240, $125
   and $0, respectively                                   ($465)         ($2,807)        $   --
                                                       ========         ========         ========

</TABLE>


The income from discontinued operations includes allocated interest of $0,
$642,000 and $460,000 for the years ended December 31, 2001, 2000 and 1999,
respectively. Such interest was allocated based upon the proportion of net
assets employed in the discontinued operations to the total net assets of the
Company.

The net assets of discontinued operations are comprised of the following (in
thousands) -

                                                                   December 31,
                                                                       2000
                                                                   ------------

Current assets                                                        $11,172
Current liabilities                                                    (6,581)
                                                                       -------

Net current assets                                                      4,591
                                                                        -----

Equipment and leasehold improvements, net                               2,243
Intangible assets, net                                                  5,264
Other non-current assets, net                                             538
                                                                          ---

Net non-current assets                                                  8,045
                                                                        -----

Net assets of discontinued operations                                 $12,636
                                                                      =======

As a result of the sale of its air delivery business, the Company now operates
in only one reportable business segment.



                                      -37-
<PAGE>

(4) BUSINESS COMBINATIONS AND DIVESTITURES:

On February 16, 1999, CDL and its subsidiary, Sureway, entered into and
consummated an asset and stock purchase agreement with Victory Messenger
Service, Inc., Richard Gold, Darobin Freight Forwarding Co., Inc., ("Darobin")
and The Trust Created Under Paragraph Third of the Last Will and Testament of
Charles Gold (the "Trust"), (collectively "Gold Wings"), whereby Sureway
purchased all of the outstanding shares of the capital stock of Darobin and
certain of the assets and liabilities of the other sellers. The purchase price
was comprised of approximately $3,000,000 in cash, including estimated direct
acquisition costs, $1,650,000 in a 7% subordinated note (the "Note") and 200,000
shares of CDL common stock at $3.875 per share. The Note was due April 16, 2001,
with interest payable quarterly commencing April 1, 1999. In 2001 the Note was
renegotiated to include monthly principal and interest payments through April
2004 at an increased interest rate of 9%. The Note is subordinate to all
existing or future senior debt of CDL. In addition, a contingent earn out in the
aggregate amount of up to $520,000 was payable based on the achievement of
certain financial goals during the two year period following the closing. The
earn out was payable 55% in cash and 45% in CDL common stock. The net assets
acquired in this transaction are included in net assets of discontinued
operations in the accompanying financial statements. The obligations under the
Note and earn out, however, remain with CDL following the sale of the air
delivery business. During 2000, approximately $250,000 of the earn out was paid
in cash and the remaining obligation under the earn out was reduced by
approximately $100,000. In 2001, approximately $150,000 was paid to Gold Wings
in full settlement of the earn out. In 2002 the Note was renegotiated to include
monthly principal and interest payments through June 2007 and the interest rate
was changed to a floating rate with a floor of 7% and a ceiling of 9%.

On April 30, 1999, CDL entered into and consummated an asset purchase agreement
with its subsidiary, Silver Star Express, Inc. ("Silver Star") and Metro Parcel
Service, Inc., Nathan Spaulding and Kelly M. Spaulding, (collectively, "Metro
Parcel"), whereby Silver Star purchased certain of the assets and liabilities of
Metro Parcel. The purchase price was comprised of approximately $710,000 in
cash, $202,734 in a 7% subordinated note (the "Metro Parcel Note") and 40,000
shares of CDL's common stock at $3.25 per share. The Metro Parcel Note was due
April 30, 2001 with interest payable quarterly commencing August 1, 1999. The
Metro Parcel Note is subordinate to all existing or future senior debt of CDL.
In 2001 the Metro Parcel Note was renegotiated to include monthly principal and
interest payments through April 2004 at an increased interest rate of 9%. In
2002 the Metro Parcel Note was renegotiated to include monthly principal and
interest payments through June 2007 and the interest rate was changed to a
floating rate with a floor of 7% and a ceiling of 9%.

On April 30, 1999, CDL entered into and consummated an asset purchase agreement
with its subsidiary, Clayton/National Courier Systems, Inc. ("Clayton/National")
and Westwind Express, Inc., Logistics Delivery Systems, Inc., Fastrak Delivery
Systems, Inc., Sierra Delivery Services, Inc., and Steven S. Keihner
(collectively, "Westwind"), whereby Clayton/National purchased certain of the
assets and liabilities of Westwind. The purchase price was comprised of
approximately $2,650,000 in cash, $1,680,000 in various 7% subordinated notes
(the "Westwind Notes") and 149,533 shares of CDL's common stock at $3.21 per
share. The Westwind Notes are comprised of two-year notes due April 30, 2001
with a total principal amount of $1,200,000 and three-year notes due April 30,
2002 with a total principal amount of $480,000. Interest on the Westwind Notes
was payable quarterly commencing July 31, 1999. The Westwind Notes are
subordinate to all existing or future senior debt of CDL. In addition, a
contingent earn out in the aggregate amount of up to $700,000 was payable based
on the achievement of certain financial goals during the two year period
following the closing. The earn out was payable 60% in cash and 40% in one year
promissory notes bearing interest at a rate of 7% per annum having similar terms
as the Westwind Notes referred to above. During 2000, the earn out was settled
for $100,000 payable in twelve monthly cash installments commencing November 1,
2000. In 2001 the Westwind Notes due April 30, 2001 were consolidated and
renegotiated to include monthly principal and interest payments through April
2004 at an increased interest rate of 9%. In 2002 the Westwind Notes due April
30, 2002 were consolidated and renegotiated to include monthly principal and
interest payments through April 2007 and the interest rate was changed to a
floating rate with a floor of 7% and a ceiling of 9%. In addition, the Westwind
Notes amended in 2001 were renegotiated and amended to include monthly principal
and interest payments through June 2007 and the interest rate was changed to a
floating rate with a floor of 7% and a ceiling of 9%.



                                      -38-
<PAGE>

On May 10, 1999, CDL entered into and consummated an asset purchase agreement
(the "Skycab Purchase Agreement") with its subsidiary, Sureway, Skycab, Inc. and
Martin Shulman (collectively, "Skycab"), whereby Sureway purchased certain
assets of Skycab. The purchase price was comprised of approximately $78,100 in
cash and a contingent earn out payable for sixteen quarters following the
closing date. The net assets acquired in this transaction are included in net
assets of discontinued operations in the accompanying financial statements.

CDL financed each of the above acquisitions using proceeds from its revolving
credit facility with First Union Commercial Corporation. All of the above
transactions have been accounted for under the purchase method of accounting.
Accordingly, the allocation of the cost of the acquired assets and liabilities
have been made on the basis of the estimated fair value. The aggregate amount of
goodwill recorded for the Gold Wings and Skycab acquisitions was originally
$5,200,000 and was being amortized over 25 years, but has now been sold. The
goodwill recorded for the Metro Parcel acquisition was approximately $1,100,000
to be amortized over 25 years. The goodwill for the Westwind acquisition was
approximately $5,200,000 to be amortized over 40 years. Under the provisions of
SFAS 142 the Company will stop amortizing such goodwill in 2002 and will begin
annually testing such goodwill for impairment. The consolidated financial
statements include the operating results of Gold Wings, Metro Parcel, Westwind,
and Skycab from their respective acquisition dates.

On June 14, 2001, the Company consummated a transaction providing for the sale
of all the outstanding stock of National Express, Inc., the Company's Mid-West
Region subsidiary. The selling price was approximately $2,530,000 and was
comprised of $880,000 in cash and a subordinated promissory note (the
"Promissory Note") for $1,650,000. The Promissory Note bears interest at the
rate of 7.0% per annum. The Promissory Note is payable in seventeen equal
quarterly installments beginning March 14, 2002 and continuing through March 14,
2006 and a final balloon payment of approximately $1,100,000 on June 14, 2006.
The Promissory Note is included in Security Deposits and Other Assets in the
accompanying balance sheets. As a result of the transaction, the Company
recorded a $2,283,000 loss on the sale with no related tax benefit, which is
included in Other Expense, net in the accompanying statements of operations for
the year ended December 31, 2001. The Company recorded revenues for the Mid-West
Region amounting to $4,500,000, $10,800,000 and $11,700,000 for the years ending
December 31, 2001, 2000 and 1999, respectively.



                                      -39-
<PAGE>

(5) PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of the following (in
thousands) -

                                                    December 31,
                                                    ------------

                                           2001                      2000
                                           ----                      ----

Other receivables                          $205                       $150
Prepaid insurance                           207                        152
Prepaid rent                                 -                          21
Prepaid income taxes                      1,297                      1,025
Other                                       253                        200
                                            ---                        ---

                                         $1,962                     $1,548
                                         ======                     ======

(6) EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

Equipment and leasehold improvements consist of the following (in thousands) -

<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                                     ------------

                                                          Useful Lives             2001               2000
                                                          ------------             ----               ----
<S>                                                       <C>                    <C>              <C>
Transportation and warehouse equipment                     3-7 years             $5,222             $7,652
Office equipment                                           3-7 years              1,648              4,540
Other equipment                                            5-7 years                219                800
Leasehold improvements                                    Lease period              678              1,025
                                                          ------------           ------            -------

                                                                                  7,767             14,017
Less - accumulated depreciation and amortization                                 (5,806)           (11,176)
                                                                                 -------           --------

                                                                                 $1,961             $2,841
                                                                                 ======            ========
</TABLE>

During 2001, the Company performed a comprehensive review of all fully
depreciated and amortized assets to determine if they were still in use. As a
result of this review, approximately $5,500,000 of fully depreciated and
amortized assets was written off.

Leased equipment under capitalized leases (included above) consists of the
following (in thousands) -


                                                          December 31,
                                                          ------------
                                                      2001             2000
                                                      ----             ----

Equipment                                            $3,565           $2,872
Less - accumulated depreciation                      (2,989)          (2,554)
                                                     ------           ------

                                                       $576             $318
                                                     ======           ======

The Company incurred capital lease obligations of $693,000 and $0 in 2001 and
2000 for vehicles and warehouse equipment.


                                      -40-
<PAGE>

(7) INTANGIBLE ASSETS:

Intangible assets (see Note 4) consist of the following (in thousands) -

<TABLE>
<CAPTION>
                                                                              December 31,
                                                                              ------------
                                                     Useful Lives          2001              2000
                                                     ------------          ----              ----
<S>                                                 <C>                  <C>              <C>
Goodwill                                            25 - 40 years        $17,176           $22,080
Non-compete agreements                               3 - 5 years             250               250
Customer lists                                       3 - 5 years               -                53
Deferred financing costs and other                   3 - 7 years           1,283             1,313
                                                     -----------           -----             -----

                                                                          18,709            23,696
Less - accumulated amortization and impairment                            (6,457)           (3,030)
                                                                          -------          -------

                                                                         $12,252           $20,666
                                                                         =======           =======
</TABLE>

Goodwill of $11,531,000 and $19,754,000 as of December 31, 2001 and 2000,
respectively (net of accumulated amortization and impairment of $5,645,000 and
$2,326,000, respectively) represents the excess of acquisition costs over the
fair value of net assets of businesses purchased and was amortized on a
straight-line basis over periods up to 40 years. Under SFAS 142, goodwill
associated with acquisitions subsequent to June 30, 2001 is not amortized (See
Note 4). Effective January 1, 2002, goodwill existing at June 30, 2001 will no
longer be amortized, but rather, evaluated for impairment on an annual basis
using a fair value based test. Other intangibles principally include non-compete
agreements and deferred financing costs of $721,000 and $912,000 as of December
31, 2001 and 2000, respectively (net of accumulated amortization).

During 2001 the Company recorded a goodwill impairment loss of $3,349,000. The
charge taken in 2001 was the result of a comprehensive review of the Company's
intangible assets under the provisions of SFAS 121. As a result of recording
significant losses on the dispositions of Sureway and the Mid-West Region, the
Company determined that the carrying amount of certain assets might not be fully
recoverable. The measurement of impairment losses recognized in 2001 is based on
the difference between the fair values and the carrying amounts of the assets.

(8) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

Accrued expenses and other current liabilities consist of the following (in
thousands) -


                                                         December 31,
                                                         ------------
                                                      2001             2000
                                                      ----             ----

Payroll and related expenses                        $2,725            $2,500
Third party delivery costs                           2,904             2,241
Insurance                                              210               767
Professional fees                                      206               427
Interest                                                36               310
Rent                                                   148                82
Legal judgments and settlements (See Note 12)          575               455
Other                                                  546               834
                                                    ------            ------

                                                    $7,350            $7,616
                                                    ======            ======


                                      -41-
<PAGE>


(9) SHORT-TERM BORROWINGS AND LONG-TERM DEBT:

Short-term borrowings -
At December 31, 2001 and 2000, the Company had a line of credit agreement for
$15,000,000 and $22,500,000, respectively. During 2001, upon the closing of the
sale of its air delivery business, the credit agreement was amended, reducing
the maximum available amount to $15,000,000. The Company's short-term borrowings
on its line of credit are as follows for the years ended December 31 (in
thousands) -

<TABLE>
<CAPTION>

                                                               2001                 2000                 1999
                                                               ----                 ----                 ----
<S>                                                           <C>               <C>                    <C>
End of year balance                                             $-                $11,169               $7,188
Maximum amount outstanding during the year                    11,500               14,000               14,600
Average balance outstanding during the year                    2,700                9,700                5,600
Weighted average borrowing cost during the year               11.0%                 9.5%                 9.8%
Standby letters of credit, end of year balance                 7,081                5,728                3,284
</TABLE>

Subsequent to December 31, 2001, CDL and First Union Commercial Corporation
("First Union") modified an agreement entered into in July 1997, establishing a
revolving credit facility (the "First Union Agreement"). The amendment extended
the agreement until January 31, 2003, increased the standby letter of credit fee
and reset the financial ratios and covenants that the Company must achieve
throughout the term of the First Union Agreement. Credit availability is based
on eligible amounts of accounts receivable, as defined, up to a maximum amount
of $15,000,000 and is secured by substantially all of the assets, including
certain cash balances, accounts receivable, equipment and leasehold improvements
and general intangibles of the Company and its subsidiaries. The First Union
Agreement provides for both fixed and variable rate loans. Interest rates on
fixed rate borrowings are based on LIBOR, plus 1.5% to 2%. Variable rate
borrowings are based on First Union's prime lending rate (which was 4.50% at
December 31, 2001), minus .25% to plus .25%. Based on eligible accounts
receivable at December 31, 2001, $1,100,000 of the credit facility was available
for future borrowings after adjusting for the restrictions for outstanding
letters of credit and minimum availability requirements.

Under the terms of the First Union Agreement, the Company is required to
maintain certain financial ratios and comply with other financial conditions.
The First Union Agreement also prohibits the Company from incurring certain
additional indebtedness, limits certain investments, advances or loans and
restricts substantial asset sales, capital expenditures and cash dividends. At
December 31, 2001 the Company was in compliance with all loan covenants of the
First Union Agreement, as retroactively amended in 2002.

Long-Term Debt -

On January 29, 1999, the Company completed a $15,000,000 private placement of
senior subordinated notes and warrants with three financial institutions. The
notes originally bore interest at 12.0% per annum and are subordinate to all
senior debt including the Company's credit facility with First Union. Under the
terms of the notes, as amended in 2002, the Company is required to maintain
certain financial ratios and comply with other financial conditions for which
the Company was in compliance as of December 31, 2001. The notes mature on
January 29, 2006 and may be prepaid by the Company under certain circumstances.
The warrants expire on January 19, 2009 and are exercisable at any time prior to
expiration at a price of $.001 per equivalent share of common stock for an
aggregate of 506,250 shares of the Company's stock, subject to additional
adjustments. The Company has recorded the fair value of the warrants of
$1,265,000 as a credit to additional paid-in-capital and a debt discount on the
senior subordinated notes. The Company used the proceeds to finance acquisitions
and to reduce outstanding short-term borrowings.



                                      -42-
<PAGE>

As of August 17, 2000, November 21, 2000, March 30, 2001, May 30, 2001, August
20, 2001, November 19, 2001 and April 12, 2002, the Company and the note holders
modified the senior subordinated notes entered into on January 29, 1999 to
change the financial ratios and conditions that the Company must comply with.
The most recent amendment increases the interest rate on the notes to 15.0%
beginning April 1, 2002. The interest rate will be reduced to 12.0%
retroactively to April 1, 2002 contingent upon the Company meeting certain debt
restructuring goals. In addition, as a result of the terms of certain prior
amendments, the Company was required to repay $1,000,000 of the notes in 2001
with the proceeds from the sale of its air delivery business as well as repay an
additional $250,000 of the notes in 2001. Payments totalling $750,000 are
required to be repaid in 2002. Furthermore, as noted above, in order for the
Company to achieve a retroactive interest rate reduction, it will be required to
restructure its debt. This would require the Company to pay an additional
$1,750,000 in 2002 to the noteholders and an additional $750,000 in each of
2003, 2004 and 2005 in order to meet the restructuring goals. As the Company has
not yet achieved this debt restructuring, the accompanying financial statements
reflect the principal payment requirements under the current agreements.

Long-term debt consists of the following (in thousands) -

<TABLE>
<CAPTION>
                                                                                                      December 31,
                                                                                                      ------------
                                                                                                   2001            2000
                                                                                                   ----            ----

<S>                                                                                            <C>               <C>
Senior Subordinated Notes, net of unamortized discount of $738 and $919,
respectively.                                                                                   $13,012          $14,081
10.0% Subordinated Convertible Debentures.      (a)                                                   -              150
Capital lease obligations due through October 2004 with interest at rates ranging
from 5.7% to 8.0% and secured by the related property.                                              609              385
Seller-financed debt on acquisitions, payable in monthly installments through June
2007. Interest is payable at rates ranging between 7.0% and 11.0%.    (b)                         6,777            8,220
Various equipment and vehicle notes payable to banks and finance companies due
through July 2002 with interest ranging from 8.0% to 15.3% and secured by
various assets of certain subsidiaries.                                                               5               83
Debt due to former owners with weekly and quarterly principal and interest payments
through May 2001 together with interest at rates ranging from 8% to 10%.                              -               10

Debt due in settlement of certain litigation against the Company and certain
affiliates with principal and interest payments of $30,000 due monthly and the
entire balance of principal, plus all accrued interest, due on July 1, 2002.                        192              588
                                                                                                    ---              ---

                                                                                                 20,595           23,517
Less - Current maturities                                                                        (2,362)         (5,752)
                                                                                                 -------         -------

                                                                                                $18,233          $17,765
                                                                                                =======          =======

</TABLE>

                                     -43-
<PAGE>

     (a) In September 1995, the Company issued $2,000,000 in the aggregate
     principal amount of its 8% Subordinated Convertible Debentures (the "8%
     Debentures"). On April 1, 1998 the Company converted $740,000 of the
     $2,000,000 of the 8% Debentures to 10% Subordinated Convertible Debentures
     (the "10% Debentures") and issued $150,000 of additional 10% Debentures.
     The remaining 8% Debentures, totaling $1,260,000 were repaid in August
     1998. On August 1, 1999, the 10% Debentures were further amended extending
     the maturity date to August 21, 2001 and reducing the conversion price to
     $5.00 per share. An additional $150,000 of 10% Debentures were issued at
     that time and $311,250 of 10% Debentures were repaid. During 2000, $578,750
     of 10% Debentures were repaid. During 2001, the remaining $150,000 of 10%
     Debentures were repaid.

     (b) In March 2001, the Company renegotiated the repayment terms of certain
     seller-financed debt. Upon maturity, the individual notes were converted
     into four year term loans with principal and interest payments due monthly.
     The thirty-sixth payment was to be a balloon payment of the remaining
     principal and interest due. In April 2002, the Company renegotiated the
     repayment terms of certain seller-financed debt. Effective with the July
     2002 payments, the individual notes convert into five year term loans with
     principal and interest payments due monthly. The interest rate on
     seller-financed debt, as amended in 2002, is generally a floating interest
     rate with a floor of 7% and a ceiling of 9%. The one note not yet
     renegotiated in 2002 has a balance of $1,551,000 at December 31, 2001 and
     bears interest at a rate of 11.0%.

The aggregate annual principal maturities of debt (excluding capital lease
obligations) as of December 31, 2001 are as follows (in thousands) -

2002                                                                   $2,049
2003                                                                    1,292
2004                                                                    1,640
2005                                                                      983
2006                                                                   13,316
Thereafter                                                                706
                                                                          ---

Total                                                                 $19,986
                                                                      =======

The Company leases certain transportation and warehouse equipment under capital
lease agreements that expire at various dates. At December 31, 2001, minimum
annual payments under capital leases, including interest, are as follows (in
thousands) -

2002                                                                     $349
2003                                                                      309
2004                                                                        3

Total minimum payments                                                    661
Less - Amounts representing interest                                      (52)
                                                                         ----

Net minimum payments                                                      609
Less - Current portion of obligations under capital leases               (313)
                                                                        -----

Long-term portion of obligations under capital leases                    $296
                                                                         ====

                                      -44-
<PAGE>

(10) EMPLOYEE BENEFIT PLANS:

The Company adopted a 401(k) retirement plan during 1996 and merged all of the
existing subsidiary plans into the newly adopted plan. Substantially all
employees are eligible to participate in the plan and are permitted to
contribute between 1% and 20% of their annual salary. The Company has the right
to make discretionary contributions that will be allocated to each eligible
participant. The Company did not make discretionary contributions for the years
ended December 31, 2001, 2000 and 1999.

(11) INCOME TAXES:

Federal and state income tax (benefit) provision for continuing operations for
the years ended December 31, 2001, 2000 and 1999 are as follows (in thousands) -

                               2001            2000            1999
                            -------         -------         -------
Federal-
  Current                   ($1,061)        ($  988)        ($   37)
  Deferred                     (535)           (962)            666
State                          (184)           (189)            (10)

                            -------         -------         -------
                            ($1,780)        ($2,139)        $   619
                            =======         =======         =======

The Company has estimated Federal Net Operating Losses ("NOLs") available to
offset future income of approximately $550,000 and $0 as of December 31, 2001
and 2000, respectively. Such NOLs expire in 2021. As of December 31, 2001
utilization of such NOLs was in doubt and the Company recorded a valuation
allowance of $190,000 in conjunction with such NOLs.


The components of deferred income tax assets and liabilities, are as follows (in
thousands) -


<TABLE>
<CAPTION>
                                                                         December 31,
                                                                     -------------------
                                                                       2001        2000
                                                                     -------     -------
<S>                                                                  <C>         <C>
Deferred income tax assets -
  Current -
     Allowance for doubtful accounts                                 $   630     $ 1,785
     Basis differential of items included in discontinued
       operations resulting in current deferred tax asset
       (retained by continuing operations)                              --           269
     Federal NOL carryforwards                                           190        --
     Reserves and other, net                                             591         520
                                                                     -------     -------
         Total current deferred income tax assets                      1,411       2,574
  Non-current -
     Accumulated depreciation and amortization                           909        --
                                                                     -------     -------
         Total non-current deferred income tax assets                    909        --
                                                                     -------     -------
Valuation Allowance                                                   (1,190)     (1,000)
                                                                     -------     -------
          Net total deferred income tax assets                       $ 1,130     $ 1,574
                                                                     =======     =======

Deferred income tax liabilities -
  Current -
     Reserves and other, net                                         $  --       $  (146)
     Basis differential of items included in discontinued
       operations resulting in current deferred tax liability
       (retained by continuing operations)                              --           (59)
                                                                     -------     -------
         Total current deferred income tax liabilities                  --          (205)
                                                                     -------     -------
  Non-current -
     Accumulated depreciation and amortization                          --          (190)
     Cash to accrual differences                                        --           (72)
     Basis differential of items included in discontinued
       operations resulting in non-current deferred tax liability
       (retained by continuing operations)                              --          --
      Other                                                             (294)       (897)
                                                                     -------     -------
         Total non-current deferred income tax liabilities              (294)     (1,159)
                                                                     -------     -------
         Total deferred income tax liabilities                       ($  294)    ($1,364)
                                                                     -------     -------

        Net deferred tax asset                                       $   836     $   210
                                                                     =======     =======
</TABLE>


                                      -45-
<PAGE>

The differences in Federal income taxes provided and the amounts determined by
applying the Federal statutory tax rate (34%) to (loss) income from continuing
operations before income taxes for the years ended December 31, 2001, 2000 and
1999, result from the following (in thousands) -

<TABLE>
<CAPTION>
                                                           2001        2000        1999
                                                          -------     -------     -------
<S>                                                       <C>         <C>         <C>
Tax at statutory rate                                     ($2,578)    ($2,845)    $   533
Add (deduct) the effect of-
  State income taxes, net of Federal benefit                 (129)       (126)         (7)
   Reserve on deferred tax asset                              190         850        --
   Capital loss on sale of subsidiary (no tax benefit)        776        --          --
  Nondeductible expenses and other, net                       (39)        (18)         93


                                                          -------     -------     -------
  (Benefit) provision for income taxes                    ($1,780)    ($2,139)    $   619
                                                          =======     =======     =======

</TABLE>


(12) COMMITMENTS AND CONTINGENCIES:

Operating Leases -

The Company leases its office and warehouse facilities under non-cancelable
operating leases, which expire at various dates through January 2007. The
approximate minimum rental commitments of the Company, under existing agreements
as of December 31, 2001, are as follows (in thousands) -

2002                                                            $3,508
2003                                                             2,427
2004                                                             1,477
2005                                                             1,016
2006                                                               687
Thereafter                                                          62


Rent expense, primarily for facilities, amounted to approximately $8,409,000,
$10,769,000 and $9,583,000 for the years ended December 31, 2001, 2000 and 1999,
respectively.

Litigation -

In February 1996, Liberty Mutual Insurance Company ("Liberty Mutual") filed an
action against Securities Courier Corporation ("Securities"), a subsidiary of
the Company, Mr. Vincent Brana, an employee of the Company, and certain other
parties in the United States District Court for the Southern District of New
York. Under the terms of its acquisition of Securities, the Company had certain
rights to indemnification from Mr. Brana. In connection with the
indemnification, Mr. Brana has entered into a Settlement Agreement and executed
a Promissory Note in such amount as may be due for any defense costs or award
arising out of this suit. Mr. Brana has agreed to repay the Company on December
1, 2002, together with interest calculated at a rate per annum equal to the rate
charged the Company by its senior lender. (See Note 16) Mr. Brana delivered
357,301 shares of CD&L common stock to the Company as collateral for the note.
On September 8, 2000 the parties entered into a settlement agreement in which
Securities and Mr. Brana agreed to pay Liberty Mutual $1,300,000. An initial
payment of $650,000 was made by Securities on October 16, 2000, $325,000 plus
interest at a rate of 10.5% per annum was paid in monthly installments ending
July 1, 2001 and $325,000 plus interest at a rate of 12.0% per annum is due in
monthly installments ending July 1, 2002. Recently, Mr. Brana has disputed his
obligation to satisfy the amounts when they are due.



                                      -46-
<PAGE>

The Company is, from time to time, a party to litigation arising in the normal
course of its business, most of which involves claims for personal injury and
property damage incurred in connection with its same-day delivery operations. In
connection therewith, the Company has recorded reserves of $575,000 and $455,000
as of December 31, 2001 and 2000, respectively. Management believes that none of
these actions, including the action described above, will have a material
adverse effect on the consolidated financial position or results of operations
of the Company.

Earn-Outs

Certain of the companies acquired by the Company are eligible to earn additional
amounts, consisting of a combination of cash and notes payable, as adjustments
to the purchase prices paid for those companies. At December 31, 1999, the
Company had recorded an accrual for the estimated earn-outs for Gold Wings,
Westwind and Skycab in the amounts of $520,000, $700,000 and $100,000, in
connection with recording their respective acquisitions. Due to applicable
targets not being met, the earn outs for Everready Express and Manteca
Enterprises were reduced by $242,000 and $679,000, respectively during 1999. The
Company recorded an increase in purchase price for a settlement reached in
connection with the acquisition of Metro Courier in the amount of $167,000
during 1999. At December 31, 2000, the Company had recorded an accrual for the
estimated earn-outs for Gold Wings and Westwind in the amounts of $170,000 and
$75,000, in connection with their respective acquisitions. Due to applicable
targets not being met, the earn outs for Gold Wings and Westwind were reduced by
$100,000 and $600,000, respectively during 2000. In 2001, approximately $150,000
was paid to Gold Wings in full settlement of the earn out on that acquisition
and the $75,000 was paid to Westwind. As of December 31, 2001, the Company has
recorded and paid all required earn-outs.

(13) Stock Option Plans:

The Company has two stock option plans under which employees and independent
directors may be granted options to purchase shares of Company Common Stock at
or above the fair market value at the date of grant. Options generally vest in
one to four years and expire in 10 years.


                                      -47-
<PAGE>


Employee Stock Compensation Program -

In September 1995, the Board of Directors adopted, and the stockholders of the
Company approved the Company's Employee Stock Compensation Program (the
"Employee Stock Compensation Program"). The Employee Stock Compensation Program
authorizes the granting of incentive stock options, non-qualified supplementary
options, stock appreciation rights, performance shares and stock bonus awards to
key employees of the Company, including those employees serving as officers or
directors of the Company. The Company initially reserved 1,400,000 shares of
Common Stock for issuance in connection with the Employee Stock Compensation
Program. In June 1998 the Board of Directors adopted and the stockholders of the
Company approved an additional 500,000 shares for issuance under the Employee
Stock Compensation Program. In June 2000 the Board of Directors adopted and the
stockholders of the Company approved the Year 2000 Employee Stock Compensation
Program, which provided an additional 1,350,000 shares for issuance to key
employees of the Company. In June 2001 the Board of Directors adopted and the
stockholders of the Company approved an amendment to the Year 2000 Employee
Stock Compensation Program, which provided an additional 375,000 shares for
issuance to key employees of the Company. The Employee Stock Compensation
Programs are administered by a committee of the Board of Directors (the
"Administrators") made up of directors who are disinterested persons. Options
and awards granted under the Employee Stock Compensation Programs will have an
exercise or payment price as established by the Administrators provided that the
exercise price of incentive stock options may not be less than the fair market
value of the underlying shares on the date of grant. Unless otherwise specified
by the Administrators, options and awards will vest in four equal installments
on the first, second, third and fourth anniversaries of the date of grant.

1995 Stock Option Plan for Independent Directors -

In September 1995, the Board of Directors adopted, and the stockholders of the
Company approved, the Company's 1995 Stock Option Plan for Independent Directors
(the "Director Plan"). The Director Plan authorizes the granting of
non-qualified stock options to non-employee directors of the Company. The
Company has reserved 100,000 shares of Common Stock for issuance in connection
with the Director Plan. The Director Plan is administered by a committee of the
Board of Directors (the "Committee"), none of whom will be eligible to
participate in the Director Plan. The Director Plan provided for an initial
grant of an option to purchase 1,500 shares of Common Stock upon election as a
director of the Company, a second option to purchase 1,000 shares of Common
Stock upon the one-year anniversary of such director's election and subsequent
annual options for 500 shares of Common Stock upon the anniversary of each year
of service as a director. In June 1998 the stockholders of the Company approved
amendments to the Director Plan. The amendments replaced the annual stock option
grants of the original plan with quarterly grants of 1,250 shares of stock
options on the first trading day of each fiscal quarter commencing on October 1,
1997. In August of 1998 and February of 1999, the Committee approved further
amendments to the Plan. These amendments replaced the time period to exercise
vested options after a participating director has served as a director for a
period of three consecutive years or more. The Director Plan was amended to
provide that in the event any holder, who has served as a director for three or
more consecutive years, shall cease to be a director for any reason, including
removal with or without cause or death or disability, all options (to the extent
exercisable at the termination of the director's service) shall remain
exercisable by the holder or his lawful heirs, executors or administrators until
the expiration of the ten year period following the date such options were
granted.



                                      -48-
<PAGE>


Information regarding the Company's stock option plans is summarized below:

                                                                 Weighted
                                             Number               Average
                                               of                Exercise
                                             Shares                Price
                                             ------                -----

Shares under option:
Outstanding at December 31, 1998           1,154,315               $6.34

Granted                                      381,229               $3.15
Exercised                                          -                  -
Canceled                                     (75,225)              $8.92
                                             --------              -----

Outstanding at December 31, 1999           1,460,319               $5.33

Granted                                    1,522,500               $1.91
Exercised                                          -                  -
Canceled                                    (559,134)              $2.76
                                            ---------              -----

Outstanding at December 31, 2000           2,423,685               $3.77

Granted                                       55,000               $0.56
Exercised                                          -                  -
Canceled                                    (534,969)              $4.79
                                            ---------              -----

Outstanding at December 31, 2001           1,943,716               $3.25
                                           =========               =====

Options exercisable at:
December 31, 1999                          1,099,297               $6.08
                                           =========               =====

December 31, 2000                          1,611,928               $4.57
                                           =========               =====

December 31, 2001                          1,685,372               $3.41
                                           =========               =====

At December 31, 2001, options available for grant under the Employee Stock
Compensation Plans and the Director Plan total 1,778,784 and 2,500,
respectively.

The following summarizes information about option groups outstanding and
exercisable at December 31, 2001:

<TABLE>
<CAPTION>
                                         Outstanding Options                                   Exercisable Options
                                         -------------------                                   -------------------
                             Number                                                         Number
                           Outstanding            Weighted            Weighted           Exercisable             Weighted
Range of                      as of                Average            Average               as of                Average
Exercise                  December 31,            Remaining           Exercise           December 31,            Exercise
Prices                       2001                   Life               Price                2001                   Price
------                       ----                   ----               -----                ----                   -----
<S>                       <C>                     <C>                 <C>               <C>                       <C>
$0.450 -
        $1.438                  70,000               9.09                $0.65               70,000                $0.65
$1.813 -
        $1.813                 650,000               8.45                $1.81              500,000                $1.81
$2.000 -
        $2.625                 584,085               6.77                $2.33              540,085                $2.36
$2.688 -
        $4.875                 423,138               6.58                $3.59              358,794                $3.67
$6.000 -
        $13.000                216,493               4.62               $10.20              216,493               $10.20
                               -------               ----               ------              -------               ------
</TABLE>


                                      -49-
<PAGE>

The Company adopted the provisions of SFAS 123 and has chosen to continue to
account for stock-based compensation using the intrinsic value method.
Accordingly, no compensation expense has been recognized for its stock-based
compensation plans. Pro forma information regarding net (loss) income and (loss)
earnings per share is required, and has been determined as if the Company had
accounted for its stock options under the fair value method. The fair value for
these options was estimated at the date of grant using the Black-Scholes
option-pricing model with the following assumptions for 2001, 2000 and 1999.

<TABLE>
<CAPTION>
                                            2001                 2000                1999
                                            ----                 ----                ----
<S>                                       <C>                  <C>                 <C>
Weighted average fair value                $0.53                $1.83                $2.33
Risk-free interest rate                    4.80%                6.50%                6.00%
Volatility factor                           141%                 140%                  76%
Expected life                             7 years              7 years              7 years
Dividend yield                             None                  None                 None
                                           ----                  ----                 ----
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
changes in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma net (loss) income and (loss) income per share were as follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                      2001          2000          1999
                                                    ---------     ---------     ---------
<S>                                                 <C>           <C>           <C>
(Loss) income from continuing operations - as
  reported                                            ($5,804)      ($6,229)         $950
Net (loss) income from discontinued operations -
as reported                                              (465)       (1,419)        1,961
                                                    ---------     ---------     ---------
Net (loss) income - as reported                       ($6,269)      ($7,648)       $2,911
                                                    =========     =========     =========
(Loss) income from continuing operations - pro
forma                                                 ($5,928)      ($7,356)         $533
Net (loss) income from discontinued operations -
pro forma                                                (465)       (1,419)        1,961
                                                    ---------     ---------     ---------
Net (loss) income - pro forma                         ($6,393)      ($8,775)       $2,494
                                                    =========     =========     =========

Basic (loss) income per share:
    Continuing operations - as reported                 ($.76)        ($.84)         $.13
    Discontinued operations - as reported               ($.06)        ($.19)         $.27
                                                    ---------     ---------     ---------
   Net (loss) income per share - as reported            ($.82)       ($1.03)         $.40
                                                    =========     =========     =========
    Continuing operations - pro forma                   ($.77)        ($.99)         $.07
    Discontinued operations - pro forma                 ($.06)        ($.19)         $.27
                                                    ---------     ---------     ---------
   Net (loss) income per share - pro forma              ($.83)       ($1.18)         $.34
                                                    =========     =========     =========
Diluted (loss) income per share:
    Continuing operations - as reported                 ($.76)        ($.84)         $.12
    Discontinued operations - as reported               ($.06)        ($.19)         $.25
                                                    ---------     ---------     ---------
   Net (loss) income per share - as reported            ($.82)       ($1.03)         $.37
                                                    =========     =========     =========
    Continuing operations - pro forma                   ($.77)        ($.99)         $.07
    Discontinued operations - pro forma                 ($.06)        ($.19)         $.25
                                                    ---------     ---------     ---------
   Net (loss) income per share - pro forma              ($.83)       ($1.18)         $.32
                                                    =========     =========     =========

</TABLE>

                                      -50-
<PAGE>

(14) EMPLOYEE STOCK PURCHASE PLAN

Effective April 1, 1998, CDL adopted an Employee Stock Purchase Plan (the
"Employee Purchase Plan") which was amended in 1999. The Employee Purchase Plan
permitted eligible employees to purchase CDL common stock at 85% of the closing
market price on the last day prior to the commencement or the end of the
purchase period. The Employee Purchase Plan provided for the purchase of up to
500,000 shares of common stock. During 2001, 2000 and 1999, 0, 305,202 and
73,172 shares were issued under the Employee Purchase Plan, respectively.

(15) SHAREHOLDER PROTECTION RIGHTS AGREEMENT

On December 27, 1999, the Board of Directors of the Company announced the
declaration of a dividend of one right (a "Right") for each outstanding share of
Common Stock of the Company held of record at the close of business on January
6, 2000, or issued thereafter and prior to the time at which they separate from
the Common Stock and thereafter pursuant to options and convertible securities
outstanding at the time they separate from the Common Stock. The Rights were
issued pursuant to a Stockholder Protection Rights Agreement, dated as of
December 27, 1999, between the Company and American Stock Transfer & Trust
Company, as Rights Agent. Each Right entitles its registered holder to purchase
from the Company, after the Separation Time, one one-hundredth of a share of
Participating Preferred Stock, par value $0.01 per share, for $27.00 (the
"Exercise Price"), subject to adjustment. The holders of Rights will, solely by
reason of their ownership of Rights, have no rights as stockholders of the
Company, including, without limitation, the right to vote or to receive
dividends.

The Rights will separate from the Common Stock if any person or group (subject
to certain exceptions) becomes the beneficial owner of fifteen percent or more
of the Common Stock or any person or group (subject to certain exceptions) makes
a tender or exchange offer that would result in that person or group
beneficially owning fifteen percent or more of the Common Stock. Upon separation
of the Rights from the Common Stock, each Right (other than Rights beneficially
owned by the acquiring person or group, which Rights shall become void) will
constitute the right to purchase from the Company that number of shares of
Common Stock of the Company having a market price equal to twice the Exercise
Price for an amount equal to the Exercise Price. In addition, if a person or
group who has acquired beneficial ownership of fifteen percent or more of the
Common Stock controls the board of directors of the Company and the Company
engages in certain business combinations or asset sales, then the holders of the
Rights (other than the acquiring person or group) will have the right to
purchase common stock of the acquiring company having a market value equal to
two times the Exercise Price.

In certain circumstances, the Board of Directors may elect to exchange all of
the then outstanding Rights (other than Rights beneficially owned by the
acquiring person or group, which Rights become void) for shares of Common Stock
at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect certain changes in the capital stock of the Company. In
addition, the Board of Directors may, prior to separation from the Common Stock,
redeem all (but not less than all) the then outstanding Rights at a price of
$.01 per Right. Unless redeemed, exchanged or amended on an earlier date, the
Rights will expire on the tenth anniversary of the record date.



                                      -51-
<PAGE>

(16) RELATED PARTY TRANSACTIONS:

Leasing Transactions -

Certain subsidiaries of the Company paid approximately $173,000, $523,000 and
$536,000 for the years ended December 31, 2001, 2000 and 1999, respectively, in
rent to certain directors, stockholders or companies owned and controlled by
directors or stockholders of the Company. Rent is paid for office, warehouse
facilities and transportation equipment.

Note Receivable from Stockholder -

In connection with his indemnification to CDL under the terms of CDL's
acquisition of Securities, Mr. Vincent Brana, an employee of the Company, has
entered into a settlement agreement and executed a promissory note in the amount
of $500,000 or such greater amount as may be due under the settlement agreement.
The Company has agreed to advance certain legal fees and expenses related to
certain litigation involving Securities, for which Mr. Brana has indemnified
CDL. At December 31, 2001 and 2000 the Company had a receivable due from Mr.
Brana totaling $2,800,000 and $2,908,000, respectively. Mr. Brana has agreed to
repay the Company on December 1, 2002, together with interest calculated at a
rate per annum equal to the rate charged the Company by its senior lender. The
Company holds 357,301 shares of common stock as security for the promissory
note. As of December 31, 2000, considering the market value of the collateral
and Mr. Brana's failure to update and provide satisfactory evidence to support
his ability to pay the promissory note, the Company recorded a $2,500,000
reserve against the receivable. Recently, Mr. Brana has disputed his obligation
to satisfy the amounts when they are due.

(17) SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid (net refund received) for interest and income taxes for the years
ended December 31, 2001, 2000 and 1999 was as follows (in thousands) -

                          2001                 2000              1999
                          ----                 ----              ----

Interest                 $3,171               $2,969           $2,666
Income taxes            ($1,132)                 $33           $2,752
                        --------                 ---           ------




                                      -52-
<PAGE>


Supplemental schedule of non-cash financing activities for the years ended
December 31, 2001, 2000 and 1999 was as follows (in thousands) -

<TABLE>
<CAPTION>
                                                                             2001                  2000            1999
                                                                             ----                  ----            ----
<S>                                                                        <C>                   <C>           <C>
Capital lease obligations incurred                                           $693                   $-             $564
Seller financed debt related to purchase of businesses                          -                    -            4,752
Debt and capital leases assumed in connection with
acquisitions                                                                    -                    -              787
Issuance of common stock in connection with acquisitions
of businesses                                                                   -                    -            1,385
Issuance of warrants in connection with private
placement                                                                       -                    -            1,265
Reduction of purchase price for businesses
previously acquired, net                                                      559                  600              497
</TABLE>

(18) QUARTERLY FINANCIAL DATA (UNAUDITED):

Unaudited quarterly financial data for the years ended December 31, 2001 and
2000 was as follows (in thousands, except per share amounts) -


<TABLE>
<CAPTION>
                                                                 Quarter Ended
                                               -------------------------------------------------
                                               March 31,    June 30,  September 30,  December 31,
                                               --------     -------   ------------   -----------
<S>                                           <C>          <C>          <C>          <C>
Year ended December 31, 2001:
  Revenue                                     $ 40,037     $ 39,797     $ 40,566     $ 40,144
  Gross Profit                                   8,584        8,561        8,287        7,272
  (Loss) Income From Continuing Operations         (12)      (2,058)         114       (3,848)
  Net (Loss) Income                                (12)      (2,058)         114       (4,313)
  Basic (Loss) Income Per Share                   (.00)        (.27)         .01         (.56)
  Diluted (Loss) Income Per Share                 (.00)        (.27)         .01         (.56)
  Basic Weighted Average Common Shares
  Outstanding                                    7,659        7,659        7,659        7,659
  Diluted Weighted Average Common Shares
  Outstanding                                    7,659        7,659        8,164        7,659

Year ended December 31, 2000:
  Revenue                                     $ 42,903     $ 41,878     $ 43,040     $ 42,258
  Gross Profit                                   8,722        9,167        9,175        7,399
  Loss From Continuing Operations               (1,354)        (212)        (400)      (4,263)
  Net (Loss) Income                             (1,110)         128          116       (6,782)
  Basic (Loss) Income Per Share                   (.15)         .02          .02         (.89)
  Diluted (Loss) Income Per Share                 (.15)         .02          .01         (.89)
  Basic Weighted Average Common Shares
  Outstanding                                    7,353        7,353        7,353        7,659
  Diluted Weighted Average Common Shares
  Outstanding                                    7,353        7,915        8,034        7,659
</TABLE>

(19)   SUBSEQUENT EVENT (UNAUDITED):

Pursuant to a letter from the Securities and Exchange Commission dated November
12, 2002 and follow-up correspondence, the Company has amended its financial
statements for the year ended December 31, 2001 to reflect two requested
changes. The "Operating (loss) income" subtotal on the Consolidated Statements
of Operations has been eliminated and the write-off of the $2,500,000 Note
Receivable from the purchasers of Sureway has been reclassified from
"Discontinued Operations" to "Other expense, net." Footnotes numbered 3, 11, 13
and 18 as well as all references related to these two items have been adjusted
to reflect such changes.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures

None.


                                      -53-
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

         Set forth below are the names and ages (as of February 1, 2002) of each
of the directors and executive officers, the other positions and offices
presently held by each such person within the Company, the period during which
each such person has served on the Board of Directors of the Company, and the
principal occupations and employment of each such person during the past five
years. In each instance in which dates are not provided in connection with a
director's business experience, such director has held the position indicated
for at least the past five years.

         William T. Brannan, 53, has served as the President and Chief Operating
Officer of CD&L since November 1994. From January 1991 until October 1994, Mr.
Brannan served as President, Americas Region - US Operations, for TNT Express
Worldwide, a major European-based overnight express delivery company. Mr.
Brannan has 25 years of experience in the transportation and logistics industry.

         Michael Brooks, 47, has served as Director of the Company since
December 1995 and as Group Operations President since December 2000. Mr. Brooks
previously had been Southeast Region Manager since August 1996 and the President
of Silver Star Express, Inc., a subsidiary of the Company, since November 1995.
Prior to the merger of Silver Star Express, Inc. into the Company, Mr. Brooks
was President of Silver Star Express, Inc. since 1988. Mr. Brooks has 25 years
of experience in the same-day delivery and distribution industries. In addition,
Mr. Brooks is currently a Director of the Express Carriers Association, an
associate member of the National Small Shipment Traffic Conference and an
affiliate of the American Transportation Association.

         Thomas E. Durkin III, 48, Director since 1999. Mr. Durkin was appointed
as Vice President of Corporate Development, General Counsel and Secretary of
Capital Environmental Resource, Inc. in October 2001. He is also a partner to
Durkin & Durkin, a New Jersey based law firm, with whom Mr. Durkin practiced as
a partner from September 1978 until September 1997. Mr. Durkin served as a
consultant to Waste Management Inc., a multibillion dollar publicly held
international solid waste management company from January 2000 to September
2001. From October 1997 through December 1999, Mr. Durkin served as area Vice
President of Business Development of Waste Management Inc. In addition Mr.
Durkin has served as a partner of two privately held real estate brokerage
companies. Mr. Durkin graduated from Fordham University in 1975 and graduated
Cum Laude from Seton Hall University School of Law in 1978.

         Jon F. Hanson, 65, Director since 1997. Mr. Hanson has served as the
President and Chairman of Hampshire Management Company, a real estate investment
firm since December 1976. From April 1991 to the present, Mr. Hanson has served
as a director to the Prudential Insurance Company of America. In addition, Mr.
Hanson currently serves as a director with the United Water Resources and the
Orange and Rockland Utilities from April 1985 and September 1995, respectively.

         Marilu Marshall, 56, Director since 1997. Vice President Human
Resources - North America for Estee Lauder Co. Inc. since October 1998. From
November 1987 until September 1998, Ms. Marshall served as Senior Vice-President
and General Counsel for Cunard Line Limited. Prior thereto, from July 1984 to
September 1987 Ms. Marshall served as the Vice-President and General Counsel of
GNOC, Corp., t/a Golden Nugget Hotel & Casino.



                                      -54-
<PAGE>

         Matthew Morahan, 52, Director since 2000. Mr. Morahan has been a
private investor since 1997. From 1994 until 1997, Mr. Morahan served as
Executive Vice President of the Macro Hedge Fund of Summit Capitol Advisors LLC.
Prior thereto, Mr. Morahan served as Managing Director of the High Yield
Department of Paine Webber Group from 1991 to 1994. From 1976 to 1990, he served
as Partner and Managing Director of Wertheim & Co. Mr. Morahan served as Vice
President of the Corporate Bond Department for Hornblower & Weeks, Hemphill,
Noyes & Co. from 1971 to 1976.

         John A. Simourian, 66, Director since 1999. Mr. Simourian has served as
Chairman of the Board and Chief Executive Officer of Lily Transportation Corp.
("Lily"), a privately held truck leasing and dedicated logistics company, since
1958 when Mr. Simourian founded Lily. Lily currently employs approximately 750
employees and leases and or operates 4,000 vehicles out of 27 locations from New
England to North Carolina. Mr. Simourian attended Harvard University where he
received his undergraduate degree in 1957 and his graduate degree from the
Harvard Business School in 1961. In 1982 Mr. Simourian was elected to the
Harvard University Hall of Fame. Mr. Simourian also served in the United States
Navy from 1957 to 1959.

         Albert W. Van Ness, Jr., 59, has served as the Chairman of the Board,
Chief Executive Officer and Director of CD&L since February 1997. He was
formerly the President and Chief Operating Officer of Club Quarters, LLC, a
privately held hotel management company and remains a member partner. In the
early nineties, Mr. Van Ness served as Director of Managing People &
Productivity, a senior management consulting firm. During most of the eighties,
Mr. Van Ness held various executive positions with Cunard Line Limited, a
passenger ship and luxury hotel company, including Executive Vice President and
Chief Operating Officer of the Cunard Leisure Division and Managing Director and
President of the Hotels and Resorts Division. Earlier in his career Mr. Van Ness
served as the President of Seatrain Intermodal Services, Inc., a cargo shipping
company. Mr. Van Ness held various management positions at the start of his
professional life with Ford Motor Company, Citibank and Hertz. Mr. Van Ness
majored in Sociology and Economics and received a B.A. and M.A. degree and
completed his coursework towards his doctorate in Economics. He attended Duke
University, Northern State University, South Dakota State University and
Syracuse University. Mr. Van Ness has belonged to the New York Athletic Club,
the Yale Club, the Chemists' Club and Knollwood Country Club.

         John S. Wehrle, 49, Director since 1997. Managing Director of Gryphon
Holdings, L.P. since January 1999. From August 1997 to December 1998, Mr. Wehrle
served as President and CEO of Heartland Capital Partners, L.P. Prior thereto,
Mr. Wehrle served as Vice President and Head of Mergers & Acquisitions for A.G.
Edwards & Sons, Inc. from July 1994 to July 1997. From 1989 to 1994 Mr. Wehrle
served as Vice President-Financial Planning for The Dyson-Kissner-Moran
Corporation where he was a key participant in acquisitions and corporate
development. He also served as Managing Director of Chase Manhattan Bank, N.A.
for three years from August 1986 to October 1989 where he was engaged in the
execution of Leveraged Acquisitions. From 1976 to 1986 Mr. Wehrle held various
positions with both Price Waterhouse and Touche Ross & Co. in both New York and
London.



                                      -55-
<PAGE>


         Russell J. Reardon, 52, has served as Vice President - Chief Financial
Officer since November 1999. Mr. Reardon previously had been Vice President -
Treasurer of CD&L since January 1999. Prior thereto, from September 1998 until
January 1999 Mr. Reardon was Chief Financial Officer, Secretary and Vice
President - Finance of Able Energy, Inc. a regional home heating oil supplier.
From April 1996 until June 1998 Mr. Reardon was Chief Financial Officer,
Secretary and Vice President - Finance of Logimetrics, Inc. a manufacturer of
broad-band wireless communication devices.

         Jeremy Weinstein, 39, has served as Vice President - Controller since
November 1999. Prior to his appointment, Mr. Weinstein served as the Company's
Northeast Region Controller since March 1997 and before that was controller of
the Company's Manhattan operation.

         Anthony Guzzo, 29, was appointed Vice President - Treasurer in March
2002. Prior to his appointment, Mr. Guzzo served as the Company's Assistant
Treasurer from January 2001 to February 2002. Mr. Guzzo previously had been the
Company's Director of Financial Reporting since June 2000 and before that was a
manager in the Consumer Products and Services Division of Arthur Andersen LLP.

         Mark Carlesimo, 48, has served as Vice President - General Counsel and
Secretary of CD&L since September 1997. From July 1983 until September 1997, Mr.
Carlesimo served as Vice President of Legal Affairs of Cunard Line Limited.
Earlier in his career, Mr. Carlesimo served as Staff Counsel to Seatrain Lines,
Inc., a cargo shipping company and was engaged in the private practice of law.
He majored in economics at Fordham University and received his law degree from
Fordham University School of Law.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Exchange Act requires the Company's directors,
certain officers and persons holding more than 10% of a registered class of the
Company's equity securities to file with the Securities and Exchange Commission
and to provide the Company with initial reports of ownership, reports of changes
in ownership and annual reports of ownership of Common Stock and other equity
securities of the Company. A Form 4 for reporting certain stock purchases in
August 2001 for Mr. Matthew Morahan was filed late in September 2001. Based
solely upon a review of such reports furnished to the Company by its directors
and executive officers, the Company believes that all other Section 16(a)
reporting requirements were timely fulfilled during 2001.

Item 11. Executive Compensation

         The following table summarizes certain information relating to
compensation for services rendered during the years ended December 31, 1999,
2000 and 2001 to each person serving as the Chief Executive Officer of the
Company and each of the Company's four other most highly paid executive officers
whose compensation exceeded $100,000.



                                      -56-
<PAGE>

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                                                      Long-Term
                                                                                    Compensation
                                          Annual Compensation                            (1)
                                          -------------------                  -----------------------
                                                                                       Awards
                                                                               -----------------------
                                                                   Other                    Securities
                                                                   Annual      Restricted   Underlying
                                                                  Compen-        Stock       Options/     All Other
         Name and                      Salary        Bonus         sation        Awards        SARs      Compensation
    Principal Position       Year        ($)          ($)          ($)(2)         ($)           (3)          ($)
    ------------------       ----        ---          ---          ------         ---           ---          ---
<S>                         <C>      <C>          <C>             <C>        <C>            <C>          <C>
Albert W. Van Ness, Jr.     2001      288,119       173,625          -             -           25,000         -
   Chairman and Chief       2000      280,198        75,000(4)       -             -           25,000         -
   Executive Officer        1999      150,000        75,000          -        150,000(5)       67,229         -

William T. Brannan          2001      276,764        39,375          -             -             -            -
   President and Chief      2000      241,760        10,000          -             -          150,000         -
   Operating Officer        1999      224,658        48,621          -             -           40,000         -

Michael Brooks              2001      218,461        32,500          -             -             -            -
   Group Operations         2000      193,454        10,380          -             -          150,000         -
   President                1999      175,005        30,438          -             -           28,000         -

Russell Reardon             2001      185,385        37,500          -             -             -            -
   Chief Financial Officer  2000      167,231         5,975          -             -          150,000         -
                            1999      120,085        15,675          -             -           27,500         -

Jeremy Weinstein            2001      160,250        28,900          -             -             -            -
   Corporate Controller     2000      149,369        19,392          -             -             -            -
                            1999      145,692        36,970          -             -             -            -
</TABLE>


-----------------

(1) The Company did not grant any stock appreciation rights or make any
long-term incentive plan pay-out during the years ended December 31, 1999, 2000
and 2001.
(2) Excludes certain personal benefits, the total value of which was less than
the lesser of either $50,000 or 10% of the total annual salary and bonus for
each of the executives.
(3) Comprised solely of incentive or non-qualified stock options. See "Stock
Option Plans - Employee Stock Compensation Program and Year 2000 Stock Incentive
Plan."
(4) Additional bonus earned for extension of his employment agreement.
(5) The restricted stock award of 47,051 shares of the Company's Common stock
was made on April 9, 1999 under the Company's Employee Stock Compensation
Program and is not subject to forfeiture.

Employment Agreements; Covenants-Not-To-Compete

         Effective as of January 5, 2000, Mr. Van Ness entered into an
employment agreement with the Company (the "2000 Agreement") commencing upon
termination of the employment agreement with the Company entered into on January
4, 1999. In January 2001, certain terms of the 2000 Agreement were modified by
an Amendatory Agreement which was further orally modified in June 2001 to
provide for an annual salary of $300,000 per year for the duration of the 2000
Agreement with the right to receive an annual bonus equal to up to 100% of Mr.
Van Ness' then-current base salary based upon the Company attaining certain
targets. For the period January 1, 2001 to present, Mr. Van Ness has continued
to serve as the Company's Chairman of the Board and Chief Executive Officer. Mr.
Van Ness and the Company are currently negotiating an extension of the 2000
Agreement at a reduced salary.

                                      -57-
<PAGE>

         The employment agreement provides that, in the event of a termination
of employment by the Company for any reason other than "cause" or "disability"
(as defined in the 2000 Agreement) or by Mr. Van Ness as a result of a material
breach by the Company, then Mr. Van Ness will be entitled to receive for the
remainder of the term all base salary due, all annual bonuses and all other
benefits and prerequisites. In the event that Mr. Van Ness' employment
terminates within 360 days of a "change in control" (as defined in the 2000
Agreement), Mr. Van Ness will be entitled to receive two times the sum of his
then-current base salary and the highest annual bonus earned by him during his
employment with the Company (subject to certain limitations under the Internal
Revenue Code). Mr. Van Ness' employment agreement is subject to certain
non-competition, non-solicitation and anti-raiding provisions.

         Effective as of May 1, 2000 Messrs. Brannan, Brooks and Reardon entered
into five year employment agreements with the Company. Salaries for those
individuals under the agreement in 2001 were, respectively, $300,000, $240,000
and $200,000.

                  Each agreement contains identical terms and conditions (other
than salary) including covenants against competition and change in control
provisions. The change in control provision provides that if the employment with
the Company is terminated for any reason by either the employee or the Company
within six months following a change in control of the Company, the employee
will be entitled to receive a lump sum payment equal to two (2) times the sum of
employee's then current base salary plus the highest approved bonus payment made
to the employee during his employment with the Company (subject to certain
limitations under the Internal Revenue Code). Each employment agreement also
contains non-competition covenants that will continue for two years following
termination of employment unless termination was by the Company without cause or
by the employee as a result of a breach of the employment agreement by the
Company in which event the covenants against competition will cease upon
termination of employment.



                                      -58-
<PAGE>

Stock Option Plans

         The following table summarizes certain information relating to the
grant of stock options to purchase Common Stock to each of the executives named
in the Summary Compensation Table above.

<TABLE>
<CAPTION>

                                  OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
                                             Individual Grants
------------------------------------------------------------------------------------------------------------------
                             Number of         % of Total
                            Securities        Options/SARs
                            Underlying         Granted to       Exercise or                        Grant Date
                           Options/SARs       Employees in      Base Price       Expiration          Present
         Name               Granted(#)         Fiscal Year        ($/sh)            Date           Value $(2)
------------------------ ------------------ ------------------ -------------- ----------------- ------------------
<S>                      <C>                <C>                <C>            <C>               <C>
Albert W. Van Ness, Jr.       25,000             100%              $0.625         1/5/2011           14,792
William T. Brannan              --                --               --                --                --
Michael Brooks                  --                --               --                --                --
Russell Reardon                 --                --               --                --                --
Jeremy Weinstein                --                --               --                --                --
</TABLE>

-------------
(1) The Company did not grant any stock appreciation rights in 2001.
(2) The present value of the options granted was determined using the
Black-Scholes pricing model and based on the following assumptions: the risk
free interest rate was 4.8%, the expected term of the option was 7 years, the
volatility factor was 141% and the dividend yield was 0.

               AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                         AND FY-END OPTION/SAR VALUES(1)

<TABLE>
<CAPTION>
                                                                                                      Value of
                                                                        Number of Securities         Unexercised
                                                                       Underlying Unexercised       In-The-Money
                                                                            Options/SARs            Options/SARs
                                 Shares                                    at FY-End (#)          at FY-End ($)(3)
                                Acquired               Value          -----------------------     ----------------
                              On Exercise             Realized              Exercisable/             Exerisable/
          Name                   (#)(2)                ($)(2)              Unexercisable            Unexercisable
          ----                   ------                ------              -------------            -------------
<S>                           <C>                     <C>             <C>                         <C>
Albert W. Van Ness, Jr.            --                    --                  647,814/0                  - / -
William T. Brannan                 --                    --                196,166/65,000               - / -
Michael Brooks                     --                    --                139,461/64,000               - / -
Russell Reardon                    --                    --                115,000/62,500               - / -
Jeremy Weinstein                   --                    --                32,756/10,000                - / -
</TABLE>
-------------

(1) No stock appreciation rights have been granted by the Company.
(2) No options were exercised in 2001.
(3) As of December 31, 2001, the fair market value of a share of Common Stock
(presumed to equal the closing sale price as reported on the American Stock
Exchange) was $0.35.



                                      -59-
<PAGE>

Compensation of Directors

         Directors who are employees of the Company do not receive additional
compensation for serving as directors. Effective in 1997, each director who is
not an employee of the Company received an annual retainer of $16,000 ($18,000
for any committee chairperson). The total directors fees earned by non-employee
directors in 2001 was $100,000. Directors of the Company are reimbursed for
out-of-pocket expenses incurred in their capacity as directors of the Company.
Non-employee directors also receive stock options under the Company's 1995 Stock
Option Plan. The Company granted quarterly options of 1,250 shares at fair
market value to each of the non-employee directors.

Compensation Committee Interlocks and Insider Participation

         The Company's Compensation Committee is comprised currently of Ms.
Marilu Marshall, Chair, Mr. Thomas E. Durkin III, Mr. Matthew J. Morahan, and
Mr. John S. Wehrle. None of the Committee's members have been an officer or
employee of the Company. At present, no executive officer of the Company and no
member of its Compensation Committee is a director or compensation committee
member of any other business entity which has an executive officer that sits on
the Company's Board of Directors or Compensation Committee.

Item 12. Security Ownership of Certain Beneficial Owners and Management

         Based upon information available to the Company, the following
stockholders beneficially owned more than 5% of the Common Stock as of April 9,
2002.

<TABLE>
<CAPTION>
                 NAME AND ADDRESS                     NUMBER OF SHARES                   PERCENT OF
               OF BENEFICIAL OWNER                   BENEFICIALLY OWNED                    CLASS
<S>                                                  <C>                                 <C>
       Albert W. Van Ness, Jr.                           808,974(1)                         9.7%
       80 Wesley Street
       South Hackensack, New Jersey 07606

       Thomas LoPresti                                   638,708(2)                         8.3%
       24-30 Skillman Avenue
       Long Island City, New York 11101

       William T. Beaury                                 638,708(2)                         8.3%
       3 Fairway Court
       Upper Bronxville, New York 11771

       Michael Brooks                                    398,416(3)                         5.1%
       80 Wesley Street
       South Hackensack, New Jersey 07606
</TABLE>

--------------------
(1) Includes 672,814 shares of Common Stock issuable upon the exercise of
options pursuant to the Employee Stock Compensation Program which are
exercisable within 60 days of April 9, 2002.
(2) Includes 638,708 shares of Common Stock held by a company which is jointly
owned by Mr. Beaury and Mr. LoPresti, each of whom may be deemed to be the
beneficial owner of all of such shares.
(3) Includes 146,461 shares of Common Stock issuable upon the exercise of
options pursuant to the Employee Stock Compensation Program which are
exercisable within 60 days of April 9, 2002.



                                      -60-
<PAGE>

Security Ownership of Management

         The following table sets forth information as of April 9, 2002 with
respect to beneficial ownership of the Common Stock by (i) each director, (ii)
each executive named in the Summary Compensation Table (the "Named Executives")
and (iii) all executive officers and directors as a group. Unless otherwise
indicated, the address of each such person is c/o CD&L, Inc., 80 Wesley Street,
South Hackensack, New Jersey 07606. All persons listed have sole voting and
investment power with respect to their shares unless otherwise indicated.

<TABLE>
<CAPTION>

                                    Amount of Beneficial Ownership (1)
                                    ----------------------------------

                                                          Shares
                                                         Issuable
                                                       Upon Exercise
                                                         of Stock               Total             Percentage
          Name                     Shares             of Options (1)            Shares              Owned
          ----                     ------             --------------            ------              -----
<S>                         <C>                       <C>                   <C>                   <C>
Albert W. Van Ness, Jr.         136,160                    672,814            808,974                  9.7%
William T. Brannan              113,796                    203,666            317,462                  4.0
Michael Brooks                  251,955(2)                 146,461            398,416                  5.1
Thomas E. Durkin III               -                        15,000             15,000                  *
John F. Hanson                   59,000(3)                  23,750             82,750                  1.1
Marilu Marshall                    -                        23,750             23,750                  *
Matthew J. Morahan              222,008                     10,000            232,008                  3.0
John A. Simourian                  -                        15,000             15,000                  *
John S. Wehrle                     -                        22,500             22,500                  *
Russell Reardon                  74,238                    115,000            189,238                  2.4
Jeremy Weinstein                 61,488                     35,256             96,744                  1.3
All executive officers
   and directors as a
   group (13 persons)           918,645                  1,318,822          2,237,467                 24.9%
</TABLE>

------------
*   Less than 1%
(1) Includes options granted pursuant to the Employee Stock Compensation Program
and the Director Plan, which are exercisable within 60 days of April 9, 2002.
(2) Includes 3,500 shares held by Mr. Brooks' wife.
(3) Represents 59,000 shares held by Ledgewood Employees Retirement Plan of
which Mr. Hanson is a beneficiary.

Item 13. Certain Relationship and Related Transactions

Mr. Brooks and members of his immediate family own various real estate
partnerships which lease properties to Silver Star, a subsidiary of the Company
for use as terminals in Miami, Florida, Atlanta and Valdosta, Georgia and
Dayton, Ohio. In 2001, Silver Star paid approximately $137,000 in rent for these
properties. As of January 1, 2002, the Company is obligated to pay rentals of
approximately $58,000 for these properties, which the Company believes to be the
fair market rental value of the properties.


                                      -61-
<PAGE>


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(1) Financial Statements

See Item 8. Financial Statements and Supplementary Data.

(a)(2) Financial Statement Schedules

                     INDEX TO FINANCIAL STATEMENT SCHEDULES

Page

                          CD&L, INC. AND SUBSIDIARIES:

Schedule II - Valuation and Qualifying Accounts -
              For the years ended December 31, 2001, 2000 and 1999         S-1

All other schedules called for by Regulation S-X are not submitted because they
are not applicable or not required or because the required information is not
material or is included in the financial statements or notes thereto.

(a)(3) Exhibits

The Exhibits listed in (b) below are filed herewith.

(b) Exhibits

<TABLE>
<CAPTION>
Exhibit Number                                                 Description
--------------------- -----------------------------------------------------------------------------------------------
<S>                   <C>
3.1                   Second  Restated  Certificate  of  Incorporation  of CD&L,  Inc.  (filed as Exhibit 3.1 to the
                      Company's  Registration  Statement on Form S-1 (File No. 33-97008) and incorporated  herein by
                      reference).
--------------------- -----------------------------------------------------------------------------------------------
3.2                   Certificate of Amendment of Second Amended and Restated  Certificate of Incorporation of CD&L,
                      Inc.  (filed as Exhibit 3ci) to the  Company's  Form 10-Q for the quarter  ended June 30, 2000
                      and incorporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
3.3                   Amended and Restated  By-laws of CD&L, Inc.  amended through November 6, 1997 and incorporated
                      herein by reference.
--------------------- -----------------------------------------------------------------------------------------------
4.1                   Form of certificate  evidencing  ownership of Common Stock of CD&L, Inc. (filed as Exhibit 4.1
                      to the  Company's  Registration  Statement on Form S-1 (File No.  33-97008)  and  incorporated
                      herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
</TABLE>


                                      IV-1
<PAGE>

<TABLE>
<CAPTION>
--------------------- -----------------------------------------------------------------------------------------------
<S>                   <C>
4.2                   Instruments  defining  the  rights of  holders  of the  Company's  long-term  debt (not  filed
                      pursuant to  Regulation  S-K Item  601(b)(4)(iii);  to be  furnished  to the  Commission  upon
                      request).
--------------------- -----------------------------------------------------------------------------------------------
4.3                   CD&L, Inc.  Shareholder  Protection  Rights  Agreement  (filed as Exhibit 4.1 to the Company's
                      Form 8-K dated December 27, 1999 and incorporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.1                  CD&L,  Inc.  Employee  Stock  Compensation  Program  (filed as Exhibit  10.1 to the  Company's
                      Registration Statement on Form S-1 (File No. 33-97008) and incorporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.2                  CD&L,  Inc. 1995 Stock Option Plan for Independent  Directors as amended and restated  through
                      March 31, 1999 (filed as Exhibit A to the  Company's  1999 Proxy  Statement  and  incorporated
                      herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.3                  CD&L,  Inc. year 2000 Stock  Incentive  Plan (filed as Exhibit A to the  Company's  2000 Proxy
                      Statement and incporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.4                  Loan and Security Agreement, dated July 14, 1997 by and between First Union Commercial
                      Corporation and CD&L, Inc. and Subsidiaries (filed as Exhibit 10.1 to the Company's
                      Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997 and incorporated herein
                      by reference)(hereinafter "First Union Credit Agreement").
--------------------- -----------------------------------------------------------------------------------------------
10.5                  Amendment dated March 30, 2001 to First Union Credit  Agreement  (filed as Exhibit 10.5 to the
                      Company's  Annual  Report on Form 10-K for the year ended  December 31, 2000 and  incorporated
                      herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.6                  Amendment dated as of March 31, 2002 to First Union Credit Agreement.
--------------------- -----------------------------------------------------------------------------------------------
10.7                  Senior Subordinated Loan Agreement dated as of January 29, 1999 with Paribas Capital Funding,
                      LLC, Exeter Venture Lenders, L.P. and Exeter Capital Partners IV, L.P. (filed as Exhibit 99.3
                      to the Company's Current Report on Form 8-K/A filed on July 23, 1999 and incorporated herein by
                      reference)(hereinafter "Parabas Agreement").
--------------------- -----------------------------------------------------------------------------------------------
10.8                  Warrant  Agreement dated as of January 29, 1999 with Paribas Capital  Funding,  Exeter Venture
                      Lenders,  L.P. and Exeter  Capital  Partners IV, L.P.  (filed as Exhibit 99.4 to the Company's
                      Current Report on Form 8-K/A filed on July 23, 1999 and incorporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.9                  Amendment  dated March 30, 2001 to Paribas  Agreement  (filed as Exhibit 10.8 to the Company's
                      Annual  Report on Form 10-K for the year ended  December 31, 2000 and  incorporated  herein by
                      reference).
--------------------- -----------------------------------------------------------------------------------------------
</TABLE>

                                      IV-2

<PAGE>


<TABLE>
<CAPTION>
--------------------- -----------------------------------------------------------------------------------------------
<S>                   <C>
10.10                 Amendment dated April 12, 2002 to Paribas Agreement.
--------------------- -----------------------------------------------------------------------------------------------
10.11                 Form of Employment  Agreement,  dated as of May 1, 2000,  with William T. Brannan  (Employment
                      agreements  of Michael  Brooks and Russell J. Reardon are in the same  form)(filed  as Exhibit
                      10.9 to the  Company's  Annual  Report on From 10-K for the year ended  December  31, 2000 and
                      incorporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.12                 Amendment  to Albert W. Van Ness,  Jr.  Employment  Agreement  dated  March 15, 2001 (filed as
                      Exhibit  10.18 to the  Company's  Annual  Report on Form 10-K for the year ended  December 31,
                      2000 and incorporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.13                 Employee Stock Purchase  Program (filed as Exhibit B to the Company's 2000 Proxy Statement and
                      incorporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.14                 Asset Purchase  Agreement by and among Sureway  Worldwide LLC, Global Delivery  Systems,  LLC,
                      Sureway  Air Traffic  Corporation  and CD&L,  Inc.  (filed as Exhibit  10.16 to the  Company's
                      Annual  Report on Form 10-K for the year ended  December 31, 2000 and  incorporated  herein by
                      reference) (hereinafter "Sureway Agreement").
--------------------- -----------------------------------------------------------------------------------------------
10.15                 $2,500,000 Subordinated Note in favor of CD&L, Inc. issued pursuant to Sureway Agreement by
                      the purchaser, Sureway Worldwide, LLC (filed as Exhibit 10.16 to the Company's Annual Report
                      on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.16                 Stock Purchase  Agreement dated June 14, 2001 by and among Executive  Express,  Inc.,  Charles
                      Walch,  National Express Company,  Inc. and CD&L, Inc. (filed as Exhibit 10.1 to the Company's
                      Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 and  incorporated  herein by
                      reference).
--------------------- -----------------------------------------------------------------------------------------------
10.17                 Promissory  Note in the sum of  $1,650,000  of  Executive  Express,  Inc.  dated June 14, 2006
                      (filed as Exhibit 10.2 to the  Company's  Quarterly  Report on Form 10-Q for the quarter ended
                      June 30, 2001 and incorporated by reference).
--------------------- -----------------------------------------------------------------------------------------------
10.18                 Amendment  Number 2 dated June 6, 2001 to the Employment  Agreement  dated June 5, 2000 by and
                      between  the  Company  and Albert W. Van Ness,  Jr.  (filed as Exhibit  10.6 to the  Company's
                      Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 and  incorporated  herein by
                      reference).
--------------------- -----------------------------------------------------------------------------------------------
11.1                  Statement Regarding Computation of Net (Loss) Income Per Share.
--------------------- -----------------------------------------------------------------------------------------------
21.1                  List of subsidiaries of CD&L, Inc.
--------------------- -----------------------------------------------------------------------------------------------
23.1                  Notice of Inability to Obtain Consent From Arthur Andersen LLP
--------------------- -----------------------------------------------------------------------------------------------
</TABLE>

                                      IV-3


<PAGE>

<TABLE>
<CAPTION>
--------------------- -----------------------------------------------------------------------------------------------
<S>                   <C>
25.1                  Power of Attorney
--------------------- -----------------------------------------------------------------------------------------------
99.1                  Letter from Registrant to the Securities and Exchange  Commission  relating to Arthur Andersen
                      LLP
--------------------- -----------------------------------------------------------------------------------------------
</TABLE>

                                      IV-4

<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 Amendment No. 2 to its
Annual Report on Form 10-K for the year ended December 31, 2001 to be signed on
its behalf by the undersigned, thereunto duly authorized.



                                              CD&L, INC.



                                              By: /s/ Russell J. Reardon
                                                  --------------------------
                                                  Russell J. Reardon
Dated:  March 25, 2003                            Chief Financial Officer


         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 date indicated.


<TABLE>
<CAPTION>

             Signature                                     Title                                   Date
             ---------                                     -----                                   ----
<S>                                  <C>                                                       <C>
/s/ Albert W. Van Ness, Jr.          Chairman  of the Board,  Chief  Executive  Officer        March 25, 2003
------------------------------       (Principal Executive Officer) and Director
Albert W. Van Ness, Jr.

        *                            President, Chief Operating Officer and Director           March 25, 2003
------------------------------
William T. Brannan

        *                            Vice   President,    Chief    Financial    Officer        March 25, 2003
------------------------------       (Principal Financial and Accounting Officer)
Russell J. Reardon

        *                            Group Operations President and  Director                  March 25, 2003
------------------------------
Michael Brooks

        *                            Director                                                  March 25, 2003
------------------------------
Thomas E. Durkin

        *                            Director                                                  March 25, 2003
------------------------------
Jon F. Hanson

        *                            Director                                                  March 25, 2003
------------------------------
Marilu Marshall

</TABLE>


                                      IV-5


<PAGE>

<TABLE>
<S>                                  <C>                                                       <C>

        *                            Director                                                  March 25, 2003
------------------------------
Matthew Morahan

        *                            Director                                                  March 25, 2003
------------------------------
John Simourian

        *                            Director                                                  March 25, 2003
------------------------------
John S. Wehrle


*By:  /s/ Albert W. Van Ness, Jr.
     ----------------------------
        Albert W. Van Ness, Jr.
        Attorney-in-Fact
</TABLE>


                                      IV-6

<PAGE>

                                   Schedule II

                           CD&L, INC. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>

                                         Balance            Charged                                                Balance
                                            at             to Costs          Write-offs                             at End
                                        Beginning             And             (Net of                                 of
          Description                   of Period          Expenses          Recoveries)         Other (a)          Period
          -----------                   ---------          --------          -----------         ---------          ------
<S>                                     <C>                <C>               <C>                 <C>                <C>
For the year ended
December 31, 2001 -
Allowance for doubtful
accounts                                $1,840              ($69)             ($720)             ($100)             $951
                                        ======              =====             ======             ======             ====

Allowance for doubtful
note receivable                         $2,500                 -                -                   -              $2,500
                                        ======                 =                =                   =              ======

For the year ended
December 31, 2000 -
Allowance for doubtful
accounts                                $1,195             $1,995            ($1,350)               -              $1,840
                                        ======             ======            ========               =              ======

Allowance for doubtful
note receivable                          $-                $2,500               -                   -              $2,500
                                         ==                ======               =                   =              ======

For the year ended
December 31, 1999 -
Allowance for doubtful
accounts                                $1,153              $522              ($480)                -              $1,195
                                        ======              ====              ======                =              ======
</TABLE>


(a) Represents allowance for doubtful accounts of company disposed of.

The accompanying notes to consolidated financial statements are an integral part
of this schedule.


                                      S-1

<PAGE>


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibits                                                                                                 Page
<S>               <C>                                                                                    <C>
10.6              Amendment dated as of March 31, 2002 to First Union Credit Agreement                     2

10.10             Amendment dated April 12, 2002 to Paribas Agreement                                     12

11.1              Statement Regarding Computation of Net (Loss) Income Per Share                          24

21.1              List of Subsidiaries of CD&L, Inc.                                                      25

23.1              Notice of Inability to Obtain Consent From Arthur Andersen LLP                          26

25.1              Power of Attorney                                                                       27

99.1              Letter from Registrant to the Securities and Exchange Commission
                  relating to Arthur Andersen LLP                                                         28

</TABLE>


                                       1