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


                                    FORM 10-K


         [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 333-14217

                                  ============

                          Core-Mark International, Inc.

             (Exact name of registrant as specified in its charter)


         Delaware                                                     91-1295550
         (State or other jurisdiction of                        (I.R.S. Employer
              incorporation or organization)                 Identification No.)


         395 Oyster Point Boulevard, Suite 415
         South San Francisco, CA                                           94080
         (Address of principal executive offices)                     (Zip Code)


     Registrant's telephone number, including area code: (650) 589-9445


     Securities registered pursuant to Section 12(b) of the Act: None


        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 __

     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. [x ]

     As of February 28, 2002, all of the  Registrant's  voting stock was held by
affiliates of the Registrant. (See Item 12.)

     Registrant's  Common Stock  outstanding  at February 28, 2002 was 5,500,000
shares.


<PAGE>


                    FORWARD-LOOKING STATEMENTS OR INFORMATION

     Certain  statements  contained in this annual report on Form 10-K under the
captions  "Business"  and  "Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations,"  and elsewhere herein and in the documents
incorporated  herein by reference are not statements of historical  fact but are
future-looking    or    forward-looking    statements    that   may   constitute
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934,  as amended.  Certain,  but not  necessarily  all, of such
forward-looking  statements can be identified by the use of such forward-looking
terminology as the words  "believes,"  "expects,"  "may,"  "will,"  "should," or
"anticipates"  (or the  negative of such terms) or other  variations  thereon or
comparable  terminology,  or  because  they  involve  discussions  of  Core-Mark
International, Inc.'s strategy. Such forward-looking statements are based upon a
number of assumptions  concerning future conditions that may ultimately prove to
be inaccurate.  The ability of Core-Mark International,  Inc. (the "Company") to
achieve the results  anticipated in such  statements is subject to various risks
and uncertainties and other factors which may cause the actual results, level of
activity, performance or achievements of the Company or the industry in which it
operates to be materially different from any future results,  level of activity,
performance  or  achievements  expressed  or  implied  by  such  forward-looking
statements. Such factors include, among others, the general state of the economy
and business  conditions  in the United  States and Canada;  adverse  changes in
consumer  spending;  the  ability  of the  Company  to  implement  its  business
strategy,  including the ability to integrate recently acquired  businesses into
the Company;  the ability of the Company to obtain financing;  competition;  the
level of retail sales of cigarettes and other tobacco products; possible effects
of legal proceedings against manufacturers and sellers of tobacco products;  and
the effect of government regulations affecting such products. As a result of the
foregoing  and  other  factors  affecting  the  Company's  business  beyond  the
Company's  control,  no assurance can be given as to future  results,  levels of
activity,  performance  or  achievements  and  neither the Company nor any other
person  assumes  responsibility  for the  accuracy  and  completeness  of  these
statements.

                                     PART I

ITEM 1. BUSINESS

GENERAL

     The  Company,  with net sales of over $3.4  billion in 2001,  is one of the
largest  broad-line,  full-service  wholesale  distributors of packaged consumer
products to the  convenience  retail  industry  in western  North  America.  The
Company's  principal  customers  include  traditional and petroleum  convenience
stores,  grocery stores,  drug stores, mass merchandisers and liquor stores. The
Company  offers its customers a wide variety of products  including  cigarettes,
candy, snacks, fast food,  groceries,  health and beauty care products and other
general merchandise.

     The  Company's  principal  markets  include the western  United  States and
western Canada. The Company services its United States customers from 15 primary
distribution  facilities,  seven of which are located in California.  In Canada,
the  Company  services  its  customers  from four  distribution  facilities.  In
addition,  the Company operates a significant facility for one of its customers,
which  is  100%  dedicated  to  servicing  that  customers'  convenience  retail
locations.

HISTORY

     The  Company's   origins  date  back  to  1888,   when  Glaser   Bros.,   a
family-owned-and-operated  candy and tobacco distribution business, was founded.
In August 1996, the Company completed a  recapitalization.  The Company's equity
is now  held  75% by  Jupiter  Partners,  L.P.  ("Jupiter")  and  25% by  senior
management.

INDUSTRY OVERVIEW

     Wholesale  distributors  provide valuable services to both manufacturers of
consumer  products  and  convenience   retailers.   Manufacturers  benefit  from
wholesale   distributors'  broad  retail  coverage,   inventory  management  and
efficient processing of small orders. Wholesale distributors provide convenience
retailers  access to a broad product line,  the ability to place small  quantity
orders,  inventory  management  and access to trade credit.  In addition,  large
full-service  wholesale  distributors  such as the Company  offer  retailers the
ability   to   participate   in   manufacturer-sponsored   marketing   programs,
merchandising and category management services and systems focused on minimizing
customers' investment in inventory.

                                      -1-

<PAGE>

     The wholesale  distribution  industry is highly fragmented and historically
has consisted of a large number of small, privately-owned businesses and a small
number of large, full-service wholesale distributors serving multiple geographic
regions. Relative to smaller competitors, large distributors such as the Company
benefit from several  competitive  advantages,  including  purchasing power, the
ability to service chain  accounts,  economies of scale in sales and operations,
the ability to spread fixed  corporate  costs over a larger revenue base and the
resources  to invest in  information  technology  ("IT") and other  productivity
enhancing technology. These factors have led to a consolidation of the wholesale
distribution  industry as companies  either exit the industry or are acquired by
large distributors seeking to further leverage their existing operations.

BUSINESS STRATEGY

     The  Company's  business  strategy  is to  increase  net sales and  improve
operating margins.  To achieve these goals, the Company intends to: (i) increase
sales to existing customers,  particularly of higher gross margin, non-cigarette
products;  (ii) add new  customer  locations in existing  markets,  particularly
along existing  routes;  (iii) continue to implement  distribution  productivity
enhancement programs; and (iv) make selective acquisitions.

     INCREASE SALES TO EXISTING CUSTOMERS. Because the Company generally carries
many  products  that its typical  retail  store  customer  purchases  from other
suppliers,  a primary  element of its growth  strategy is to  increase  sales to
existing  customers.  The Company's typical customer purchases its products from
the Company, from manufacturers who distribute directly to retailers, and from a
variety of smaller local  distributors  or jobbers.  The Company is particularly
focused on becoming the retail customer's primary supplier. The Company attempts
to do  this  by  implementing  programs  designed  to  eliminate  the  need  for
deliveries  provided  by local  distributors  and  jobbers.  Such  programs  are
centered on  increasing  non-cigarette  sales that provide  higher gross margins
than  those  associated  with the  distribution  of  cigarettes.  As part of the
effort, the Company provides compensation  incentives to its sales force as well
as a number of  value-added  services and marketing  programs to its  customers.
These  programs  include:  (i) Smart Sets (which  helps  ensure  that  retailers
display  the  right  product  in the right  place);  (ii)  SmartStock(R)  (which
provides state of the art category management for key, high-volume, high-impulse
convenience  retail  categories);  and (iii) Promo Power (a Company  publication
which offers manufacturer promotions).

     ADD NEW CUSTOMER  LOCATIONS IN EXISTING MARKETS.  The Company also seeks to
leverage  its existing  distribution  network by securing  additional  customers
within existing routes.  The Company  believes it has many  opportunities to add
additional  customers at low marginal  distribution costs. The Company continues
to market to a wide  variety of trade  channels,  including  hotel  gift  shops,
military bases,  correctional  facilities,  college  bookstores and video rental
stores.  The Company believes that there is significant  opportunity to increase
net sales and profitability by adding new customers and maximizing  economies of
scale.

     PRODUCTIVITY  ENHANCEMENT  PROGRAMS.  The Company derives  significant cost
reductions  from  a  variety  of  productivity   enhancement   programs.   These
productivity  enhancement  programs  include:  (i) BOSS, a batch order selection
system that  increases the  efficiency  and reduces the cost of full-case  order
fulfillment;  (ii)  Pick-to-Light,  a paperless  picking system that reduces the
travel time for the selection of  less-than-full-case  order fulfillment;  (iii)
Radio  Frequency,  a hand-held  wireless  computer  technology  that  eliminates
paperwork and updates receiving inventory levels and stocking  requirements on a
real-time basis; (iv) Checker  Automation,  an on-line order verification system
that has  significantly  reduced labor costs by  automating  inspection of order
accuracy;  and (v)  fleet  management  tools  such  as on  board  computers  and
Roadshow,  a software program that optimizes the routing of customer deliveries.
The Company  intends to continue to pursue cost  reductions  by  completing  the
roll-out of some of these and other programs.

     SELECTIVE  ACQUISITIONS.  The  wholesale  distribution  industry  is highly
fragmented  and  comprised  mainly of a large  number  of small,  privately-held
businesses.  Management  believes that the consolidation that has taken place in
recent  years  will   continue   and  that   numerous   attractive   acquisition
opportunities  will arise.  Given the current  utilization  rates of many of the
Company's existing warehouse and distribution  facilities as well as the quality
of the Company's in-house IT capability,  management believes that a significant
amount of  incremental  sales can be selectively  integrated  into the Company's
operations without significant additions to fixed costs.

                                      -2-

<PAGE>

PRODUCTS DISTRIBUTED

     The products  distributed by the Company include cigarettes,  food products
such as candy, fast food,  snacks,  groceries and non-alcoholic  beverages,  and
non-food products such as film, batteries and other sundries,  health and beauty
care products and tobacco  products other than  cigarettes.  Cigarette net sales
constituted approximately 72% of the Company's total net sales in 2001.

     CIGARETTE PRODUCTS

     The Company offers  substantially  all brands of cigarettes from all of the
major manufacturers, including national premium labels such as Marlboro, Winston
and Player;  discount  labels such as Viceroy,  Basic,  GPC and Doral;  and deep
discount labels such as the Company's  private label brand, Best Buy(R), as well
as Best Value and Monarch.

     FOOD AND NON-FOOD PRODUCTS

     The  Company  offers its  customers  a wide  variety  of food and  non-food
products  (approximately  31,000 stock keeping units (SKU's)),  including candy,
snacks, fast food, groceries,  non-alcoholic  beverages,  health and beauty care
products  and  general  merchandise.  The  Company's  strategy  is to offer  its
convenience  retail store  customers a variety of food and non-food  products at
reasonable prices in flexible quantities.

     FOOD PRODUCTS.  The Company's candy products  include such brand name items
as Snickers,  Hershey Kisses,  M&M's,  Lifesavers and Dentyne.  The Company also
offers its own  private  label Cable  Car(R)  candy line.  The  Company's  snack
products include brand names such as Keebler, Nabisco and Planters.

     The Company's  grocery  products  include national brand name items ranging
from canned vegetables, soups, cereals, baby food, frozen foods, soaps and paper
products to pet foods from such manufacturers as Del Monte, Carnation, Kellogg's
and Purina. The Company offers a variety of non-alcoholic  beverages,  including
juices,  bottled  water and sports  drinks under brand names such as  Tropicana,
Veryfine and Gatorade.

     The Company's  fast food products  include  prepared  sandwiches,  hot deli
foods,  slush drinks,  hot  beverages,  pastries and pizza,  as well as packaged
supplies and paper goods,  including  brand name items such as Superior  Coffee,
Tyson  chicken,  Oscar Mayer meats and Kraft and Heinz  condiments.  The Company
targets the hot  beverage  (coffee and hot  chocolate)  and frozen food  product
categories,  which present  significant  growth  opportunities as sales in these
product  categories  are among the  fastest  growing  product  offerings  of the
convenience store industry.

     NON-FOOD  PRODUCTS.  General  merchandise  products range from film,  tape,
batteries,  cigarette lighters and glue to automotive products and include brand
names such as Fuji,  Kodak,  Scotch and Mead  Envelope.  Health and beauty  care
products include analgesics, hair care, cosmetics,  hosiery, dental products and
lotions,  from  manufacturers of brand names such as Crest,  Tylenol,  Johnson &
Johnson Band-Aid, Vicks, Gillette and Jergens. The Company's broad assortment of
tobacco  products  includes  imported and  domestic  cigars,  smokeless  tobacco
(snuff), chewing tobacco, smoking tobacco and smoking accessories.

CUSTOMERS

     The  Company's  current  customer  base is  comprised  of a wide  range  of
retailers,  including  traditional  and petroleum  convenience  stores,  grocery
stores,  drug stores,  mass-merchandisers  and liquor  stores.  The Company also
provides services to hotel gift shops, military bases,  correctional facilities,
college  bookstores  and video rental  stores.  In 2001,  the Company's  largest
customer  accounted  for  5.6% of net  sales,  and  the  Company's  ten  largest
customers  accounted for approximately 29% of net sales. As a result of its size
and geographic coverage,  the Company supplies a number of regional and national
chain  corporations  and,  therefore,  is able to distribute  products to all or
substantially all of such customers' individual store locations in the Company's
market area.

     The Company strives to offer its customers greater flexibility, service and
value than other distributors.  The Company's willingness to work with retailers
to arrive at a suitable  delivery  time,  thereby  allowing  the store  owner to
schedule  its labor  requirements  effectively,  is an  important  facet of this
flexibility.  The Company  believes that its ability to provide fully integrated
technological  services  (electronic  data  interchange  (EDI)  services,  store
automation integration,  consultative services,  retail price management systems
and UPC  control),  bar-coded  shelf labels to assist in  effective  shelf space
management,  timely  communication  of  manufacturer  price change  information,
seasonal  and holiday  special  product/promotional  offerings  and  salesperson
assistance  in order  preparation  are also  important  to the  retailer  in its
selection of the Company as its supplier.

                                      -3-

<PAGE>

SUPPLIERS AND MANUFACTURERS

     The  Company   purchases   products  for  resale  to  its  customers   from
approximately  2,000 suppliers and manufacturers  located  throughout the United
States and Canada. Although the Company purchases cigarette and tobacco products
from all major United States and Canadian manufacturers, approximately 37%, 15%,
8% and 6% of the  Company's  net  sales  in  2001  were  derived  from  products
purchased by the Company from Philip Morris, R.J. Reynolds, Imperial Tobacco and
Brown & Williamson,  respectively. No other supplier's products represented more
than 10% of net sales.  In addition,  Philip Morris  manufactures  the Company's
private  label  Best  Buy(R)  cigarettes.  The loss of or a major  change in the
Company's  relationships  with  any of  these  manufacturers  or in any of their
structured  incentive  programs  (see  Cigarette  Products,  below) could have a
material  adverse  effect on the  Company's  financial  position  or  results of
operations.

     The Company has no long-term purchase agreements and buys substantially all
its products as needed.

     CIGARETTE PRODUCTS

     The Company  controls major  purchases of cigarettes  centrally in order to
minimize inventory levels.  Daily replenishment of cigarette inventory and brand
selection  is  controlled  by the local  division  based on demands of the local
market. The U.S. cigarette manufacturers charge all wholesale customers the same
price for national brand  cigarettes  regardless of volume  purchased.  However,
cigarette   manufacturers  do  offer  certain   structured   incentive  programs
(including Philip Morris' Leaders Program and R.J.  Reynolds'  Partners Program)
to wholesalers  instead of the routine allowances  associated with non-cigarette
products.  These  programs are based upon,  among other  things,  manufacturers'
share of sales,  and often  include  performance-based  criteria  related to the
quality  of the  Company's  efforts  to  keep  certain  brands  and  volumes  of
cigarettes on the retail shelves.

     FOOD PRODUCTS

     Food  products  (other  than  frozen  foods) are  purchased  directly  from
manufacturers by buyers in each of the Company's geographic regions.  Management
believes  that  decentralized  purchasing  of food  products  results  in higher
service levels, improved product availability tailored to individual markets and
reduced inventory  investment.  Although each region has individual  buyers, the
Company  negotiates  corporate  pricing  where  possible to maximize  purchasing
power.

     The Company's  Artic Cascade  division,  a consolidated  frozen  warehouse,
purchases  frozen foods for all of the  Company's  United States  divisions.  By
consolidating  the frozen  food  purchases,  the  Company is able to obtain such
products at lower cost. Buying in one location also allows the Company to reduce
total  inventory and offer a wide selection of quality  products to retailers at
more competitive prices.

     NON-FOOD PRODUCTS

     The majority of the Company's non-food products,  other than cigarettes and
tobacco  products  (primarily  health  and  beauty  care  products  and  general
merchandise), are purchased by Allied Merchandising Industry ("AMI"), one of the
Company's  operating  divisions  that  specializes  in  these  categories.  This
specialization seeks to ensure a better selection and more competitive wholesale
costs and  enables the Company to reduce its  overall  general  merchandise  and
health  and  beauty  care  inventory  levels.   Tobacco  products,   other  than
cigarettes,  are  purchased  directly  from  the  manufacturers  by  each of the
divisions.

DISTRIBUTION

     The Company maintains 19 primary distribution  facilities,  of which 15 are
located in the western  United  States and four are  located in western  Canada.
These distribution  facilities include two consolidating  warehouse  operations,
AMI and Artic Cascade. In addition,  the Company operates a significant facility
for one of its customers,  which is 100% dedicated to servicing that  customers'
convenience  retail  locations.  Each  distribution  facility is outfitted  with
modern  equipment  (including  freezers and coolers as required) for  receiving,
stocking,  order  selection  and loading a large  volume of  customer  orders on
trucks for delivery. Each facility provides warehouse,  distribution,  sales and
support  functions for its geographic  area under the  supervision of a division
manager. In addition, the Company believes that the majority of its distribution
facilities have the capacity to absorb significant future growth in net sales.

                                      -4-
<PAGE>

     The  Company's  trucking  system  includes  straight  trucks  and  tractors
(primarily leased by the Company) and trailers (primarily owned by the Company).
The Company's standard is to maintain its transportation fleet to an average age
of five years or less.  The  Company  employs a  state-of-the-art,  computerized
truck routing system to efficiently construct delivery routes.

COMPETITION

     The convenience retail  distribution  business is comprised of one national
distributor in the United States (McLane, a subsidiary of Wal-Mart), a number of
large,  multi-regional  competitors  in the United States  (participants  with a
presence in several contiguous regional markets), one multi-regional  competitor
in Canada and a large number of smaller  distributors that compete in one or two
markets.  Multi-regionals  in the United States include the Company in the west,
GSC Enterprises in the south and southeast,  H.T. Hackney in the southeast,  and
Eby-Brown Company in the midwest and east. Multi-regionals in Canada include the
Company in the west and Wallace and Carey in the west and  midwest.  Relative to
smaller  competitors,  multi-regional  distributors  such as the Company benefit
from several  competitive  advantages  including  greater  purchasing power, the
ability to service chain accounts,  scale cost advantages in sales and warehouse
operations,  the ability to spread fixed  corporate  costs over a larger revenue
base  and  the  resources  to  invest  in  both  IT and  productivity  enhancing
technology.  These factors have led to a consolidation  of the industry as small
competitors exit the industry and some larger  convenience  retail  distributors
seek acquisitions to increase the utilization of their existing operations.

     The Company also competes with  wholesale  clubs and certain  retail stores
whose sales are  primarily  cigarettes,  characterized  by high volumes and very
aggressive  pricing.  These  competitors  have  become a factor in the  industry
within recent years,  particularly  in California  markets.  The wholesale clubs
have been  aggressive in their pricing of cigarettes and candy,  and wholesalers
have been forced to reduce margins to compete in densely  populated markets with
a large  number of  wholesale  clubs.  Wholesale  clubs  generally  require  the
convenience  store owner to take the time to travel,  to shop at their location,
pay cash and choose from a very limited selection. They also provide none of the
merchandising support that the Company routinely offers. Consequently,  national
chains do not routinely purchase product at the wholesale clubs.

     The principal  competitive factors in the Company's business include price,
customer order fill rates, trade credit and the level and quality of value-added
services  offered.  Management  believes  the Company  competes  effectively  by
offering a full product line, flexible delivery  schedules,  competitive prices,
high levels of customer service and an efficient distribution network.

EMPLOYEES

     As of December 31, 2001, the Company had 2,916 employees.

     The Company is a party to local collective  bargaining  agreements with the
International   Brotherhood  of  Teamsters  covering  clerical,   warehouse  and
transportation personnel at its facilities in Hayward, California, which expires
on January 15, 2003, and covering warehouse and transportation  personnel in Las
Vegas,  Nevada,  which  expires  on March 31,  2002.  The  Company is party to a
collective  bargaining  agreement with United Food Commercial  Workers  covering
warehouse and  transportation  personnel in Calgary,  Alberta,  which expires on
August 31,  2005.  The Company is a party to a collective  bargaining  agreement
with Industrial Wood and Allied Workers of Canada covering  warehouse  personnel
in Victoria,  British  Columbia,  which  expires  April 5, 2002.  The Company is
currently  in  negotiations  with both the  unions  in Las  Vegas and  Victoria,
British Columbia. Based upon the current level of discussions,  the Company does
not  anticipate  any  disruptions  to our  business at those  facilities.  These
agreements cover an aggregate of less than 9% of the Company's employees.

     Management  believes  that the Company's  relations  with its employees are
good.

ITEM 2.  PROPERTIES

     The Company does not own any real property. The principal executive offices
of the Company are located in South San  Francisco,  California,  and consist of
approximately  22,000  square feet of leased  office  space.  In  addition,  the
Company leases approximately  13,000 square feet in Vancouver,  British Columbia
for its tax and information  technology  departments and 8 small offices for use
by sales personnel in certain parts of the United States and Canada. The Company
also leases its 19 primary distribution  facilities,  15 of which are located in
the western United States and four in western Canada. Each distribution facility
is  equipped  with  modern  equipment  (including  freezers  and  coolers  at 18
facilities) for receiving, stocking, order selection and shipping a large volume
of customer  orders.  The Company  believes  that it  currently  has  sufficient
capacity at its distribution  facilities to meet its anticipated  needs and that
its facilities are in satisfactory condition.

                                      -5-
<PAGE>

     The Company's  leases expire on various dates between 2002 and 2011, and in
many  instances  give the Company  renewal  options.  The aggregate rent paid in
connection with the Company's  distribution  facilities,  regional sales offices
and corporate and administrative  offices was approximately $8.0 million in 2000
and $8.4  million in 2001.  The  Company's  distribution  facilities  range from
22,000 to 194,000 square feet and account for  approximately  1.9 million square
feet in aggregate. Management believes that the Company's current utilization of
warehouse facilities is approximately 70% to 80% in the aggregate.

ITEM 3.  LEGAL PROCEEDINGS

REGULATORY AND LEGISLATIVE MATTERS

     Manufacturers and distributors of cigarettes and other tobacco products are
currently  facing a number  of  significant  issues  that  affect  the  business
environment in which they operate including:  proposed  additional  governmental
regulation;  actual and proposed excise tax increases (see Item 7. "Management's
Discussion  and  Analysis Of  Financial  Condition  and Results of  Operations -
Impact of  Tobacco  Taxes");  increased  litigation  involving  health and other
effects of cigarette  smoking and other uses of tobacco;  and  litigation by the
U.S. Department of Justice to recover federal Medicare costs allegedly connected
to  smoking.  The  tobacco  industry is also  currently  subject to  significant
regulatory  restrictions,  such as the requirement that product packages display
warning  labels,   a  prohibition  on  television  and  radio   advertising  and
prohibitions on sales to minors.

     On March 21, 2000, the U.S. Supreme Court ruled that the United States Food
and Drug  Administration  (the "FDA") does not have jurisdiction over cigarettes
and smokeless tobacco products.  Subsequent to this ruling, legislation has been
introduced in Congress  that would grant the FDA  authority to regulate  tobacco
products.  Although  no such  legislation  passed  during  the  year  2001,  the
prospects  for  similar  legislation  in  the  future  are  uncertain.  If  such
legislation  is  passed,  there  could be no  assurance  that the FDA  would not
promulgate  regulations  that  would  result  in a  material  reduction  in  the
consumption of tobacco products in the United States,  or would otherwise have a
material adverse effect on the Company's business and financial position.

     In November 1998, 46 states,  five territories and the District of Columbia
entered into a settlement of approximately  $250 billion with four major tobacco
companies to resolve  litigation  over  smoking-related  costs incurred by state
Medicaid  programs.  The  settlement  - which  takes  effect  in  each  settling
jurisdiction  when the courts in each such  jurisdiction  enter a final  consent
decree and any appeals of such decree are  disposed of or become  time-barred  -
allows for  payment of the agreed  sum by the  cigarette  manufacturers  over 25
years,  settles the state and territory  health-care  claims against the tobacco
industry  and imposes a number of new  marketing,  advertising,  sales and other
restrictions on tobacco products.

     Included  in the  terms  of the  settlement  are  conditions  that  tobacco
companies  participating  in  the  settlement  may  not:  target  youth  in  the
advertising,  promotion or marketing of tobacco  products  (including the use of
cartoons  in such  promotion);  use  tobacco  brand  names to sponsor  concerts,
athletic  events  or other  events  in  which a  significant  percentage  of the
audience  is under 18 years of age;  advertise  products in  conspicuous  places
outdoors  (such as  billboards)  or on transit  vehicles;  merchandise a tobacco
brand  name  through  the  marketing,  distribution  or sale of apparel or other
merchandise;  provide  free  samples of tobacco  products  in any area except an
adults-only  facility;  distribute or sell cigarettes in pack sizes of less than
20; or lobby state  legislatures on certain  anti-tobacco  initiatives  (such as
limitations on youth access to vending  machines).  These provisions took effect
by April 23, 1999.

     Over the past  decade,  various  state and local  governments  have imposed
significant regulatory restrictions on tobacco products,  including sampling and
advertising  bans or  restrictions,  packaging  regulations and  prohibitions on
smoking in  restaurants,  office  buildings  and public  places.  With a limited
number of exceptions,  the state Medicaid  litigation  settlement  prohibits the
participating tobacco manufacturers from challenging any restriction relating to
tobacco  control  enacted  prior to June 1,  1998.  Additional  state  and local
legislative and regulatory actions - including  substantial  increases in excise
taxes - are being considered and are likely to be promulgated in the future. The
Company is unable to assess the future effects that these various  proposals may
have on the  sale of the  Company's  products.  Nonetheless,  the  Company  does
anticipate  that any  increase in  cigarette  prices,  whether as a result of an
increase  in  excise  taxes or some  other  regulatory  initiative,  may cause a
reduction of the consumption of tobacco products in the relevant jurisdiction.

                                      -6-
<PAGE>

     In  addition,  proposals  have been  made in  Congress  in recent  years to
require additional warning notices on tobacco products,  to disallow advertising
and  promotional  expenses as  deductions  under  federal tax law and to further
regulate the production and  distribution  of cigarettes and smokeless  tobacco.
While neither the state Medicaid  litigation  settlement nor recent  legislation
would  impose  restrictions  on the sale of  cigarettes  and  smokeless  tobacco
products to adults, there can be no assurance that such restrictions will not be
proposed  in the future or that any such  proposed  legislation  or  regulations
would not result in a material  reduction of the consumption of tobacco products
in the  United  States  or  would  not have a  material  adverse  effect  on the
Company's business and financial position.

     The Company is subject to various federal,  state and local  environmental,
health and safety laws and regulations. Generally, these laws impose limitations
on the discharge of pollutants  and the presence of hazardous  substances in the
workplace  and establish  standards for vehicle and employee  safety and for the
handling  of solid  and  hazardous  wastes.  These  laws  include  the  Resource
Conservation  and  Recovery  Act,  the  Comprehensive   Environmental  Response,
Compensation  and  Liability  Act,  the Clean Air Act, the  Hazardous  Materials
Transportation   Act  and  the  Occupational   Safety  and  Health  Act.  Future
developments,  such as stricter environmental or employee health and safety laws
and regulations thereunder,  could affect the Company's operations.  The Company
does not currently  anticipate  that the cost of its  compliance  with or of any
foreseeable  liabilities under environmental and employee health and safety laws
and  regulations  will  have a  material  adverse  effect  on its  business  and
financial condition.

LEGAL MATTERS

     On September 22, 1999,  the U.S.  Department of Justice filed "an action to
recover health care costs paid for and furnished...by the federal government for
lung cancer, heart disease, emphysema and other tobacco-related illnesses caused
by the fraudulent and tortious  conduct of..." the major tobacco  manufacturers.
On September  28,  2000,  the U.S.  District  Court for the District of Columbia
dismissed some of the government's claims but allowed the case to proceed on two
"civil RICO" grounds,  on which all parties have filed  procedural  motions that
the court  continues  to  review.  If the  Justice  Department  prevails  in the
litigation,  or if the litigation is settled, there can be no assurance that the
litigation  will not  result in  increased  cigarette  prices  and/or a material
reduction of the  consumption  of tobacco  products in the United  States;  such
circumstances could have a material adverse affect on the Company's business and
financial position.

     On July 14,  2000,  a Florida  state court jury  awarded a class of Florida
smokers  $145  billion  in  punitive  damages  against  the major  U.S.  tobacco
companies.  The  tobacco  companies  moved to set aside the award and remove the
case to federal court; such motions were denied,  as was the tobacco  companies'
request for a new trial. The tobacco companies appealed the judgment. The appeal
is pending in the Third  District  Court of  Appeals in Miami,  Florida.  If the
class of Florida  smokers  prevails in the  litigation,  or if the litigation is
settled,  there  can be no  assurance  that the  litigation  will not  result in
increased  cigarette  prices and/or a material  reduction of the  consumption of
tobacco products in the United States;  such circumstances could have a material
adverse affect on the Company's business and financial position.

     In November  1999,  the Company  was named as a defendant  in two  separate
lawsuits  filed in state court in New Mexico by two individual  plaintiffs.  The
other defendants  include the principal U.S. tobacco  manufacturers,  as well as
other  distributors.  The complaints seek  compensatory and punitive damages for
injuries  allegedly  caused by the use of tobacco  products.  During  2001,  the
Company was dismissed from both of the New Mexico cases.

     In  addition,  the  Company is a party to other  lawsuits  incurred  in the
ordinary course of its business.  The Company believes it is adequately  insured
with respect to such  lawsuits or that such  lawsuits  will not result in losses
material to its consolidated financial position or results of operations.

                                      -7-
<PAGE>

ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.


                                     PART II

ITEM 5.         MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS

     Not applicable.








ITEM 6.                           SELECTED HISTORICAL
                      CONSOLIDATED FINANCIAL AND OTHER DATA


     The following table sets forth selected historical  consolidated  financial
and other data for the Company.  The historical  financial data as of the end of
and for each year in the five year  period  ended  December  31,  2001 have been
derived  from the  Company's  audited  consolidated  financial  statements.  The
consolidated  financial data set forth below should be read in conjunction  with
the historical  consolidated financial statements of the Company and the related
notes thereto and "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations," all contained elsewhere in this Form 10-K.

                                      -8-
<PAGE>



                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                               SELECTED HISTORICAL
                      CONSOLIDATED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>


                                                               Year Ended December 31,
                                                                   (in thousands)
                                            --------------------------------------------------------------
                                               1997         1998         1999         2000         2001
                                            ----------   ----------   ----------   ----------   ----------
<S>                                            <C>           <C>          <C>          <C>          <C>

Statement of Income Data:
     Net sales...........................   $2,395,867   $2,476,376   $2,838,107   $3,035,379   $3,425,024
     Costs of goods sold (a).............    2,216,162    2,295,659    2,643,069    2,840,334    3,211,160
                                            ----------   ----------   ----------   ----------   ----------
     Gross profit (a)....................      179,705      180,717      195,038      195,045      213,864
     Operating and administrative
         expenses........................      148,902      150,977      155,128      160,143      169,691
                                            ----------   ----------   ----------   ----------   ----------
     Operating income (a)................       30,803       29,740       39,910       34,902       44,173
     Interest expense, net...............       18,181       15,402       12,696       12,852       11,121
     Amortization of debt
            refinancing costs (b)........        1,498        2,204        1,274        1,274        1,274
                                            ----------   ----------   ----------   ----------   ----------
     Income before income taxes..........       11,124       12,134       25,940       20,776       31,778
     Income tax expense (c)..............        4,834        4,925        5,740        9,721       14,268
                                            ----------   ----------   ----------   ----------   ----------
     Net income (a)......................   $    6,290   $    7,209   $   20,200   $   11,055   $   17,510
                                            ==========   ==========   ==========   ==========   ==========

Other Data:
     EBITDAL (d).........................   $  41,597    $   56,419   $   53,493   $   50,129   $   59,446
     Cash provided by (used in):
         Operating activities............      17,547         5,933       40,781       (1,925)      28,211
         Investing activities............     (30,739)       (5,311)      (6,575)      (7,620)      (7,916)
         Financing activities............       3,549         9,533      (42,789)      21,282      (23,150)
     Depreciation and amortization (e)...       7,528         8,065        7,912        8,911        9,678
     LIFO expense (a)....................       3,266        18,614        5,671        6,316        5,595
     Capital expenditures................       9,378         5,311        6,575        7,620        7,916
</TABLE>

<TABLE>
<CAPTION>
                                                                 As of December 31,
                                                                   (in thousands)
                                            --------------------------------------------------------------
                                               1997         1998         1999         2000           2001
                                            ---------     ---------     --------   ----------   ----------
<S>                                            <C>           <C>           <C>          <C>          <C>

Balance Sheet Data:
     Total assets.......................    $ 336,580     $ 359,390   $  350,068   $  374,876   $  390,141
     Total debt, including current
         maturities.....................      197,012       208,124      165,335      186,617      163,467
</TABLE>




    See Notes to Selected Historical Consolidated Financial and Other Data.
                                      -9-
<PAGE>


                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                    NOTES TO SELECTED HISTORICAL CONSOLIDATED
                            FINANCIAL AND OTHER DATA


(a)  The Company's U.S.  inventories  are valued at the lower of cost or market.
     Cost of goods sold is  determined  on a last-in,  first-out  (LIFO)  basis.
     During  periods of rising  prices,  the LIFO method of costing  inventories
     generally  results in higher costs being charged against income compared to
     the FIFO  method  ("LIFO  expense")  while  lower  costs  are  retained  in
     inventories.  Conversely,  during periods of declining prices or a decrease
     of  the  Company's  inventory  quantities,   the  LIFO  method  of  costing
     inventories  generally  results in lower costs being charged against income
     compared to the FIFO method ("LIFO income"). During the year ended December
     31, 1998, the Company  recognized LIFO expense of $18.6 million,  primarily
     due to several very large increases in domestic cigarette  wholesale prices
     during  1998.  However,  the LIFO  expense in 1998 was more than  offset by
     profits resulting from such price increases.  See "Management's  Discussion
     and Analysis of Financial  Condition  and Results of  Operations"  for more
     information on the impact of the LIFO inventory  valuation  method on other
     accounting periods.

(b)  Amortization of debt refinancing costs reflects the amortization of all
     costs associated with issuing, restructuring and refinancing debt.

(c)  Prior to 1999, the Company had a significant valuation allowance that
     reduced certain deferred tax assets, based upon management's assessment
     that it was more likely than not that these deferred tax assets would not
     be realized. However, as a result of the Company's strong earnings history,
     in 1999 management concluded that the tax benefits related to future
     deductions, including net operating loss carryforwards, were more likely
     than not to be realized. Therefore, in 1999, the Company recorded a $6.2
     million decrease in its valuation allowance, which resulted in a one-time
     reduction of its tax rate of approximately 24%.

(d)  EBITDAL represents operating income before depreciation, amortization and
     LIFO expense, each as defined herein. EBITDAL should not be considered in
     isolation or as a substitute for net income, operating income, cash flows
     or other consolidated income or cash flow data prepared in accordance with
     generally accepted accounting principles, or as a measure of a company's
     profitability or liquidity. EBITDAL is included because it is one measure
     used by certain investors to determine a company's ability to service its
     indebtedness.

(e)  Depreciation and amortization includes depreciation on property and
     equipment, amortization of goodwill and other non-cash charges, and
     excludes amortization of debt refinancing costs.

                                      -10-
<PAGE>


ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

     The following  discussion  should be read in conjunction with the "Selected
Historical Consolidated Financial and Other Data" and the consolidated financial
statements of Core-Mark  International,  Inc. (the  "Company") and notes thereto
included elsewhere in this Form 10-K.

GENERAL

     The  Company  is one  of the  largest  broad-line,  full-service  wholesale
distributors of packaged consumer products to the convenience retail industry in
western  North  America.   The  products  distributed  by  the  Company  include
cigarettes,  food  products  such as candy,  fast food,  snacks,  groceries  and
non-alcoholic beverages, and non-food products such as film, batteries and other
sundries,  health and beauty  care  products  and  tobacco  products  other than
cigarettes.  In the year ended December 31, 2001, approximately 72%, 19% and 9%,
of the  Company's  net sales were derived  from  cigarettes,  food  products and
non-food products, respectively.

     See Item 3. "Legal  Proceedings - Regulatory and  Legislative  Matters" and
"Impact of Tobacco  Taxes" for  information  on the current  business  and legal
environment in the tobacco industry.

     The Company's  business  strategy has  included,  and continues to include,
increasing  sales of higher margin,  non-tobacco  products,  a strategy which is
intended  to lessen the impact of  potential  future  declines in unit sales and
profitability of its tobacco distribution business.

     During the most recent five-year period,  the Company's sales of cigarettes
were (in thousands):

<TABLE>
<CAPTION>

       FOR THE YEAR ENDED
           DECEMBER 31,                               NET SALES       CARTONS
       ------------------                             ---------       -------
<S>           <C>                                       <C>             <C>

              1997                                   $1,603,362       92,368
              1998                                    1,671,860       87,951
              1999                                    1,989,890       78,972
              2000                                    2,174,700       80,468
              2001                                    2,473,124       86,710
</TABLE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Core-Mark   International's   discussion  and  analysis  of  its  financial
condition  and results of  operations  are based on the  Company's  consolidated
financial  statements,  which have been prepared in accordance  with  accounting
principles  generally  accepted in the United States.  The  preparation of these
financial  statements  requires  management to make estimates and judgments that
affect the reported amounts of assets,  liabilities,  revenues and expenses, and
related  disclosure of contingent assets and liabilities.  The Company bases its
estimates on historical  experience  and on various other  assumptions  that are
believed to be reasonable  under the  circumstances.  Actual  results may differ
from these estimates under different assumptions or economic conditions.

     The Company believes the following critical  accounting policies affect its
more  significant  judgments  and  estimates  used  in  the  preparation  of its
consolidated financial statements.

     ALLOWANCE  FOR DOUBTFUL  ACCOUNTS.  The Company  maintains  allowances  for
doubtful  accounts for  estimated  losses  resulting  from the  inability of its
customers to make required  payments.  The Company estimates its allowance based
on both specific  identification  and  historical  experience.  If the financial
condition  of the  Company's  customers  were to  deteriorate,  resulting  in an
impairment  of their  ability to make  payments,  additional  allowances  may be
required.

     INVENTORY VALUATION.  The Company provides inventory valuation  adjustments
for estimated  spoiled,  aged, and  unrecoverable  inventory based on historical
shrinkage  and  sales  experience.  If actual  recovery  rates  differ  from the
estimates, additions to the inventory valuation adjustments may be required.

                                      -11-
<PAGE>

     GOODWILL.  The Company assesses the  recoverability  of long-lived  assets,
primarily goodwill,  by determining whether the amortization of such assets over
the remaining life can be recovered through  undiscounted  future operating cash
flows of the related  operations.  The Company estimates future cash flows based
on its  experience  and knowledge of the markets in which it operates.  However,
these  estimates  project  cash  flows  several  years  into the  future and are
affected by future economic  conditions.  In June 2001, the Financial Accounting
Standards Board issued  Statement of Financial  Accounting  Standards (SFAS) No.
142,  "Goodwill and Other Intangible  Assets".  The Company is required to adopt
SFAS No.  142 on  January  1,  2002 at which  time  goodwill  will no  longer be
amortized but will be required to be tested for  impairment at least annually at
the  reporting  unit level  based upon an estimate  of implied  fair  value,  as
defined.

     SELF-INSURANCE  RESERVES.  The Company records  estimates related to health
and welfare, and workers'  compensation costs that are principally  self-insured
programs.  Should  the  number  or  severity  of  claims  change  from  what was
estimated,  or  costs of  health  care  increase  beyond  what was  anticipated,
adjustments to the reserves may be required.


IMPACT OF LIFO INVENTORY VALUATION METHOD

     The Company's U.S.  inventories  are valued at the lower of cost or market.
Cost of goods sold is  determined  on a last-in,  first-out  (LIFO)  basis using
Producer Price Indices as determined by the U.S. Department of Labor Statistics.
The Company's  Canadian  inventories are valued on a first-in,  first-out (FIFO)
basis.

     During periods of price inflation in the Company's  product lines, the LIFO
methodology  generally results in higher expenses being charged to cost of goods
sold  ("LIFO   expense")   while  lower  costs  are  retained  in   inventories.
Historically,  increases in the  Company's  cost of  cigarettes  resulted from a
combination  of cost  increases  by  cigarette  manufacturers  and  increases in
federal and state excise  taxes.  In 1999,  2000,  and 2001 LIFO expense of $5.7
million, $6.3 million and $5.6 million, respectively, is primarily the result of
increases in cigarette prices.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     NET SALES. Net sales for 2001 were $3,425.0 million,  an increase of $389.6
million  or 12.8%  over 2000.  The  increase  in net sales was due to higher net
sales in both cigarettes and food and non-food products.

     Net sales of  cigarettes  for 2001 were  $2,473.1  million,  an increase of
$298.4 million or 13.7% over 2000. The Company's  total cigarette unit sales for
2001 were 86.7 million cartons,  an increase of 6.2 million cartons or 7.7% from
2000.  The increase in net sales dollars of cigarettes was due to an increase in
carton sales and increases in manufacturers' list prices, which have been passed
on to the Company's  customers in the form of higher prices. The increase in the
Company's  carton  sales was  attributable  to an  increase  in the U.S.  of 5.9
million  cartons or 8.8%,  and an increase  in Canada of 0.3 million  cartons or
2.3%. The increase in carton sales was primarily due to new customer volume.

     Net sales of food and  non-food  products in 2001 were $951.9  million,  an
increase of $91.2 million or 10.6% over 2000. The increase occurred primarily in
fast food sales, which increased $24.5 million,  or 20.8%,  primarily due to new
customer volume;  general  merchandise,  which increased $15.4 million or 21.2%,
due to increases in new and existing  customer volume;  snacks,  which increased
$13.8 million or 19.8%,  due to increases in new and existing  customer  volume,
and retail  beverages,  which increased $10.3 million or 11.8%, due primarily to
new customer volume.

     GROSS  PROFIT.  Gross  profit for 2001 was $213.9  million,  an increase of
$18.8  million  or 9.6% over 2000.  The gross  profit  margin in 2001  decreased
slightly  to 6.2% of net sales as  compared  to 6.4% of net  sales in 2000.  The
decline in overall gross profit margin was principally due to an increase in the
wholesale  cost of  cigarettes  over the past  year.  Gross  profit  margins  on
cigarettes  are  significantly  lower  than the  margins  on food  and  non-food
products,  and the  faster  growth in  cigarette  revenues  caused  the  overall
reduction  in margins.  In addition  gross  profit  margins on food and non-food
products declined slightly.

     The Company recognized LIFO expense of $5.6 million in 2001, as compared to
$6.3 million in 2000.  The majority of the Company's  LIFO expense is the result
of price increases in the domestic cigarette  categories.  In 2001, in the U.S.,
the wholesale price of cigarettes  increased by $1.90 per carton, as compared to
an  increase  of $3.30 per  carton in 2000.  The  impact of LIFO  expense on the
financial  statements  in 2001 and  2000,  which  was  primarily  caused  by the
increase in the price of  cigarettes,  was largely  offset by profits  resulting
from such price increases.

                                      -12-
<PAGE>

     OPERATING  AND  ADMINISTRATIVE   EXPENSES.   Operating  and  administrative
expenses for 2001 were $169.7 million,  an increase of $9.5 million or 6.0% over
2000. However,  such expenses in 2001 decreased to 5.0% of net sales as compared
to 5.3% for 2000. The decline in operating expenses as a percent of net sales is
the result of the Company continuing to exert tight control over expenses.

     OPERATING  INCOME. As a result of the foregoing  factors,  operating income
for 2001 was $44.2  million,  an increase of $9.3  million or 26.6%  compared to
2000.  As a  percentage  of net sales,  operating  income for 2001 was 1.3%,  as
compared to 1.1% in 2000.

     NET INTEREST  EXPENSE.  Net interest expense for 2001 was $11.1 million,  a
decrease of $1.7  million or 13.5% from 2000.  This was the result of a decrease
in the Company's average debt levels and a decrease in average borrowing rates.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     NET SALES. Net sales for 2000 were $3,035.4 million,  an increase of $197.3
million or 7.0% over 1999. The increase in net sales was due to higher net sales
in both cigarettes and food and non-food products.

     Net sales of  cigarettes  for 2000 were  $2,174.7  million,  an increase of
$184.8 million or 9.3% over 1999. The Company's  total  cigarette unit sales for
2000 were 80.5 million cartons,  an increase of 1.5 million cartons or 1.9% from
1999.  The increase in net sales dollars of cigarettes  was  principally  due to
increases  in  manufacturers'  list  prices,  which  have been  passed on to the
Company's  customers  in the form of higher  prices,  and an  increase in carton
sales.  The  increase  in the  Company's  carton  sales was  attributable  to an
increase  in the U.S. of 1.9  million  cartons or 2.8%,  offset by a decrease in
Canada of 0.4 million cartons or 2.6%. The Company believes the increase in U.S.
carton sales was  attributable  both to  increased  volume with new and existing
customers and a reduction in cigarette  distribution among grey market suppliers
(resellers  of  cigarettes  intended for  international  markets but sold in the
United States) as a result of the passage of California  bill SB702.  This bill,
passed in October  1999 made it illegal to affix state tax stamps to grey market
cigarettes.

     Net sales of food and  non-food  products in 2000 were $860.7  million,  an
increase of $12.5 million or 1.5% over 1999. The increase occurred  primarily in
retail beverage sales, which increased $7.1 million or 8.8% and fast food sales,
which  increased  $6.5  million  or 5.9%,  offset  by a  decrease  in cigar  and
non-cigarette tobacco sales of $8.0 million or 5.4%.

     GROSS PROFIT.  Gross profit for 2000 was $195.0 million,  the same as 1999.
The gross  profit  margin  in 2000  decreased  slightly  to 6.4% of net sales as
compared  to 6.9% of net sales in 1999.  The  decline  in overall  gross  profit
margin was primarily due to an increase in the wholesale cost of cigarettes over
the past year. Gross profit margins on cigarettes are  significantly  lower than
the  margins  on food and  non-food  products,  and the much  faster  growth  in
cigarette  revenues caused the overall  reduction in margins.  In addition gross
profit margins on food and non-food products declined slightly.

     The Company recognized LIFO expense of $6.3 million in 2000, as compared to
$5.7 million in 1999.  The majority of the Company's  LIFO expense is the result
of price increases in the domestic cigarette  categories.  In 2000, in the U.S.,
the wholesale price of cigarettes  increased by $3.30 per carton, as compared to
an  increase  of $1.80 per  carton in 1999.  The  impact of LIFO  expense on the
financial  statements  in 2000 and  1999,  which  was  primarily  caused  by the
increase in the price of  cigarettes,  was largely  offset by profits  resulting
from such price increases.

     OPERATING  AND  ADMINISTRATIVE   EXPENSES.   Operating  and  administrative
expenses for 2000 were $160.1 million,  an increase of $5.0 million or 3.2% over
1999. However,  such expenses in 2000 decreased to 5.3% of net sales as compared
to 5.5% for 1999. The decline in operating expenses as a percent of net sales is
the result of the Company continuing to exert tight control over expenses.

     OPERATING  INCOME. As a result of the foregoing  factors,  operating income
for 2000 was $34.9  million,  a decrease  of $5.0  million or 12.5%  compared to
1999.  As a  percentage  of net sales,  operating  income for 2000 was 1.1%,  as
compared to 1.4% in 1999.

     NET INTEREST EXPENSE.  Net interest expense for 2000 was $12.9 million,  an
increase of $0.2  million or 1.2% from 1999.  This was the result of an increase
in interest rates, offset by a decrease in the Company's average debt levels.

                                      -13-
<PAGE>

     INCOME TAXES.  The tax rate on income increased to 46.8% in 2000 from 22.1%
in 1999.  The increase in 2000 was primarily due to a lower than normal tax rate
on income in 1999. In fiscal 1999 the low tax rate was primarily attributable to
a $6.2  million  reduction  in the  Company's  income  tax  valuation  allowance
recorded during the year due to changes in factors  affecting the  realizability
of the  Company's  deferred  tax  assets.  Prior  to  1999,  the  Company  had a
significant  valuation allowance that reduced certain deferred tax assets, based
upon  management's  assessment  that it was more  likely  than  not  that  these
deferred tax assets would not be realized. However, as a result of the Company's
strong  earnings  history,  in 1999  management  concluded that the tax benefits
related to future deductions,  including net operating loss carryforwards,  were
more likely than not to be realized.  Therefore, in 1999, the Company recorded a
$6.2 million decrease in its valuation  allowance,  which resulted in a one-time
reduction of its tax rate of approximately 24%.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  liquidity  requirements  arise primarily from the funding of
its  working  capital  needs,  capital  expenditure  programs  and debt  service
requirements with respect to its credit facilities. The Company has no mandatory
reductions  of  principal  on  its  Revolving  Credit  Facility,   its  Accounts
Receivable  Facility or its $75 million Senior Subordinated Notes prior to their
final maturities in 2003. The Company has  historically  financed its operations
through internally generated funds and borrowings under its credit facilities.

     On April 1, 1998, the Company  entered into a transaction to securitize its
U.S. trade accounts receivable portfolio ("Accounts  Receivable  Facility").  In
connection  with this  transaction,  the Company formed a  wholly-owned  special
purpose  bankruptcy-remote  subsidiary (the "Special Purpose Company" or "SPC"),
to which the U.S. trade accounts  receivable  originated by the Company are sold
or contributed,  without recourse, pursuant to a receivables sale agreement. The
receivables have been assigned, with a call option by the SPC, to a trust formed
pursuant to a pooling agreement. On April 1, 1998, the SPC issued two classes of
term certificates with an aggregate principal value of $55 million, and variable
certificates of up to $30 million representing fractional undivided interests in
the receivables and the proceeds  thereof.  The SPC is included in the Company's
consolidated  financial  position and results of  operations,  and therefore all
assets and  liabilities  of the SPC are  reflected on the  consolidated  balance
sheet of the Company.

     On a daily basis,  collections related to sold receivables are administered
by the Company acting as servicer,  pursuant to a servicing agreement.  Pursuant
to supplements to the pooling agreement,  certificate  holders' accrued interest
expense and other securitization expenses are reserved out of daily collections,
before such remaining  collections are returned to the Company by the SPC to pay
for the SPC's purchase of newly  originated  receivables  from the Company.  The
revolving period of the securitization expires in January 2003, or earlier if an
early  amortization  event,  as defined in the pooling  agreement,  occurs.  The
interest rate on the fixed term certificates is 0.28% (Class A) and 0.65% (Class
B) above the  Eurodollar  Rate,  which was 1.87% as of December  31,  2001.  The
interest rate on the variable  certificates is 0.25% above the commercial  paper
rate  (as  defined  in the  securitization  agreement),  which  was  1.78% as of
December 31, 2001.

     In connection with the securitization of accounts  receivable,  the Company
amended its  Revolving  Credit  Facility.  The  amendment  reduced the available
credit  facility from $175 million to $120 million,  reduced its interest  rates
from  1.5% to 1.0%  above  the  Prime  Rate,  and from  2.5% to 2.0%  above  the
Eurodollar Rate, as defined in the amendment,  and extended the maturity through
April,  2003.  As a result  of this  modification,  the  Company  wrote off $0.9
million of  unamortized  refinancing  costs  relating  to the  Revolving  Credit
Facility  in the  second  quarter  of 1998.  Based on  certain  criteria  in the
Revolving  Credit  Facility,  the Company  further  reduced its  interest  rates
effective  October  1, 1998 to 0.75%  above the Prime  Rate and 1.75%  above the
Eurodollar  Rate and again  effective  March 16, 1999,  to 0.25% above the Prime
Rate,  and 1.25%  above the  Eurodollar  Rate,  which are the rates in effect at
December  31,  2001.  The bank's  Prime Rate and  Eurodollar  Rate was 4.75% and
1.87%, respectively, at December 31, 2001.

     The net  result  of the (i)  securitization  of the  Company's  U.S.  trade
accounts receivable  portfolio and (ii) the modification of the Revolving Credit
Facility  was to lower the  Company's  cost of  borrowings,  and to increase its
variable-rate  borrowing capacity from $175 million to $205 million. The Company
incurred  approximately  $1.6  million for legal,  professional  and other costs
related to the transactions  described  above.  These costs were capitalized and
classified  as  other  assets  and are  being  amortized  over the term of these
agreements.

                                      -14-
<PAGE>

     The Company's debt obligations totaled $163.5 million at December 31, 2001,
a decrease of $23.2  million or 12.4% from $186.6  million at December 31, 2000.
As of December 31,  2001,  the amount  outstanding  under the  Revolving  Credit
Facility  was  $12.0  million,  with a  sufficient  borrowing  base  to  draw an
additional  $108.0  million,  the limit under this  facility.  In addition,  the
amount outstanding under the Accounts  Receivable  Facility was $76.5 million as
of  December  31,  2001.  At December  31,  2001,  the  Company  had  sufficient
collateral,  with  respect  to this  facility,  to issue up to its limit of this
facility, of an additional $8.5 million. The net decrease in outstanding debt is
due primarily to an increase in net cash provided from  operating  activities in
2001.  Debt  requirements  are  generally  the  highest at  December 31 when the
Company historically carries higher inventory.

     The  following  table  summarizes  the  Company's  significant  contractual
commitments at December 31, 2001 (in thousands):

<TABLE>
<CAPTION>
CONTRACTUAL OBLIGATIONS                                                     PAYMENTS DUE BY YEAR
-----------------------                                                     --------------------
                                                 Total        2002       2003          2004         2005      Thereafter
                                               ---------   ---------   ---------    ---------    ---------    ---------
<S>                                                <C>         <C>         <C>          <C>          <C>          <C>

Long term debt.....................
     Accounts Receivable facility              $  76,500   $    0      $  76,500    $     0      $     0     $     0
     Revolving Credit facility.....               11,967        0         11,967          0            0           0
     Senior Subordinated notes.....               75,000        0         75,000          0            0           0
Operating Leases...................               54,716      12,242      10,409        8,908        7,473      15,684
                                               ---------   ---------   ---------    ---------    ---------   ---------

Total..............................            $ 218,183   $  12,242   $ 173,876    $   8,908    $   7,473   $  15,684
                                               =========   =========   =========    =========    =========   =========
</TABLE>

     The revolving period of the Accounts Receivable Facility expires in January
2003.  This facility is structured such that,  upon  expiration,  the subsequent
collections of U.S. trade  receivables are used to pay the  outstanding  balance
until it is paid in full.  The Revolving  Credit  Facility  expires on April 30,
2003.  The Senior  Subordinated  notes mature on September 15, 2003. The Company
intends to refinance all  outstanding  long-term debt prior to their  maturities
and is currently exploring alternatives. These alternatives include arrangements
similar  to   existing   arrangements   such  as  a  new   accounts   receivable
securitization,  a revolving facility, new senior subordinated notes, as well as
other financing vehicles.  Depending on the market conditions at the time of the
refinancing,  the terms  obtained by the Company may, or may not be as favorable
as the current terms.

     Under the Revolving  Credit  Facility,  the Company must  maintain  certain
financial  covenants as prescribed in the credit agreement,  including,  but not
limited to, current ratio, net worth, debt leverage and interest  coverage,  and
operating  income  before  certain  non-cash  items.  At December 31, 2001,  the
Company was  solidly in  compliance  with all  financial  covenants  of all debt
facilities.

     The  Company's  principal  sources of  liquidity  are net cash  provided by
operating  activities  and its credit  facilities.  In 2001 net cash provided by
operating activities was $28.2 million as compared to net cash used in operating
activities of $1.9 million in 2000. The increase in operating cash flow in 2001,
as compared to 2000, was the result of an increase in net income in 2001, and an
improvement  in net  working  capital.  In both  2001 and  2000,  inventory  and
accounts  receivable  increased  primarily due to the increase in U.S. wholesale
cigarette prices. In 2001, the increase in inventory was significantly offset by
a corresponding increase in trade accounts payable.

     The Company made capital expenditures of $7.9 million in 2001. In 2002, the
Company  estimates  it  will  spend   approximately  $6-7  million  for  capital
requirements, principally consisting of warehouse and delivery equipment.

     In November 1998,  the four largest U.S.  cigarette  manufacturers  and the
state  attorneys  general  of  almost  all  of the  fifty  states,  agreed  to a
multi-billion  dollar  settlement  over public health costs connected to smoking
(see Item 3. "Legal  Proceedings - Regulatory and  Legislative  Matters").  As a
direct  result  of this  settlement,  the  cigarette  manufacturers  raised  the
wholesale price of cigarettes by $4.50 per carton,  effective November 24, 1998,
in order to cover initial costs of the settlement, bringing the total per-carton
price  increase in the U.S. in 1998 to $6.35.  In addition,  the U.S.  cigarette
manufacturers  have raised the wholesale price of cigarettes by $1.80 per carton

                                      -15-
<PAGE>

in 1999,  $3.30  per  carton  in 2000,  and  $1.90  per  carton  in 2001.  These
manufacturer  price  increases  resulted in an increase in inventories and trade
accounts  receivable  for the  Company,  and  correspondingly  higher  debt  and
interest  levels.  At current  levels of  business  activity,  the  Company  has
substantial  excess  borrowing  capacity  under its current  credit  facilities.
However, if manufacturers' price increases or federal excise tax increases (over
and above  currently  enacted  increases)  continue to sharply  escalate,  or if
payment terms for state and provincial taxes were adversely changed (see "Impact
of Tobacco Taxes"),  the Company might be required to seek additional  financing
in order to meet such higher working capital requirements.

     The Company believes that price and tax increases of the magnitude recently
experienced,  as well as  increases  which occur in the future  (see  "Impact of
Tobacco Taxes"),  will have a negative impact on overall industry unit sales and
will negatively affect the Company's sales of tobacco  products.  The Company is
not able to quantify the impact of these higher prices and taxes on future sales
of cigarettes and other tobacco products.

IMPACT OF TOBACCO TAXES

     State and Canadian provincial tobacco taxes represent a significant portion
of the Company's net sales and cost of goods sold attributable to cigarettes and
other  tobacco  products.  During  2001,  such taxes on  cigarettes  represented
approximately  22% of  cigarette  net sales in the U.S.  and 43% in  Canada.  In
general, such taxes have been increasing, and many states and Canadian provinces
are currently weighing proposals for higher excise taxes on cigarettes and other
tobacco products.

     Under  current  law,  almost all state and  Canadian  provincial  taxes are
payable by the Company  under  credit  terms  which,  on the  average,  are more
favorable  than the credit terms the Company has  approved for its  customers to
pay for products  which  include such taxes.  This  practice has  benefited  the
Company's  cash flow. If the Company were required to pay such taxes at the time
such  obligation was incurred  without the benefit of credit terms,  the Company
would incur a substantial permanent increase in its working capital requirements
and might be required to seek additional  financing in order to meet such higher
working capital  requirements.  Consistent with industry practices,  the Company
has  secured  a bond to  guarantee  its tax  obligations  to  those  states  and
provinces  requiring  such a surety  (a  majority  of  states  in the  Company's
operating areas).

     As of January 1, 2002,  the U.S.  federal excise tax on cigarettes is $3.90
per carton of cigarettes,  which  includes a $.50 per carton  increase that took
effect on January  1, 2002.  Unlike  the state and  provincial  taxes  described
above,  U.S.  federal  excise  taxes on  cigarettes  are  paid by the  cigarette
manufacturers  and passed  through to the Company as a component  of the cost of
cigarettes.  Increases in U.S. federal excise taxes raise the Company's  working
capital  requirements by increasing the balances of its inventories and accounts
receivable.  While the Company is unaware of any pending  legislation that might
further increase the federal excise tax on cigarettes, there can be no assurance
that similar proposals will not be considered in the future.

INFLATION

     In response to increases or decreases in manufacturers' prices with respect
to any of the  Company's  products,  the Company  historically  has adjusted its
selling  price  in  order to  maintain  its  gross  profit  dollars.  Therefore,
inflation and deflation generally do not have a material impact on the Company's
gross profit.  As described in "Liquidity  and Capital  Resources",  significant
increases in  manufacturers'  prices of  cigarettes  have  occurred,  due to the
settlement of a number of legal issues facing the industry. The Company has been
able to pass  along  to its  customers  all of the  price  increases  that  have
occurred to date,  and,  based upon the past  experience  of the Company,  would
expect to pass along any future price or tax increases.

     During  the past  several  years,  low  levels of  overall  inflation  have
resulted in historically low interest rates,  which have benefited the Company's
results of  operations  because of the  Company's  high degree of  leverage.  If
interest  rates  were  to  increase,  as a  result  of  increased  inflation  or
otherwise, the Company could be adversely affected.

NEW ACCOUNTING PRONOUNCEMENTS

     See Note 2 "Summary of  Significant  Accounting  Policies"  included in the
Notes to the Consolidated  Financial Statements contained elsewhere in this Form
10-K.

                                      -16-
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's major market risk exposure is changes in short-term  interest
rates on its domestic  variable rate debt.  At December 31, 2001,  variable rate
debt  represented  54% of the Company's total debt.  However,  on average during
2001, variable rate debt represented 44% of the Company's total debt.  Depending
upon the borrowing  option  chosen,  the variable rate debt is based upon either
the bank's Prime Rate, the Eurodollar  Rate, or the Commercial  Paper rate, plus
an applicable margin over one of these base rates. If interest rates on existing
variable rate debt rose 22 basis points (which  approximates 10%), the Company's
results from operations and cash flows would not be materially affected.

     The  Company  conducts  business  in  Canada.   However,   changes  in  the
U.S./Canadian exchange rate had no material impact on the overall results of the
Canadian  operation,  as virtually all revenues and expenses of such  operations
are Canadian dollar based.







ITEM 8.                         FINANCIAL STATEMENTS

                                                                            Page

Independent Auditors' Report................................................  18

Consolidated Balance Sheets as of December 31, 2000 and 2001................  19

Consolidated Statements of Income for the years ended December 31,
1999, 2000 and 2001.........................................................  20

Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1999, 2000 and 2001............................................  21

Consolidated Statements of Cash Flows for the years ended December 31,
1999, 2000 and 2001.........................................................  22

Notes to Consolidated Financial Statements..................................  23

                                      -17-

<PAGE>


                          INDEPENDENT AUDITORS' REPORT


TO THE BOARD OF DIRECTORS
CORE-MARK INTERNATIONAL, INC.:

     We have audited the accompanying  consolidated  balance sheets of Core-Mark
International,  Inc. and  subsidiaries as of December 31, 2000 and 2001, and the
related consolidated  statements of income,  shareholders' equity and cash flows
for each of the three years in the period ended  December  31, 2001.  Our audits
also included the  financial  statement  schedule of the Company  listed in Item
14(a)2. These consolidated financial statements and financial statement schedule
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these  consolidated  financial  statements  and  financial
statement schedule based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  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,  such financial  statements present fairly, in all material
respects,   the  financial  position  of  Core-Mark   International,   Inc.  and
subsidiaries  as of  December  31,  2000  and  2001,  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 of America.  Also in our opinion,  such financial statement
schedule,  when  considered  in  relation  to the basic  consolidated  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.

                            /s/ Deloitte & Touche LLP




SAN FRANCISCO, CALIFORNIA
FEBRUARY 22, 2002

                                      -18-

<PAGE>


                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 2001
                            (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                                                  2000          2001
                                                                                --------     --------
<S>                                                                                <C>          <C>
ASSETS
------
Current assets:
     Cash..................................................................     $ 28,129     $ 24,230
     Receivables:
         Trade accounts, less allowance for doubtful
              accounts of $2,660 and $3,798, respectively..................      109,594      112,166
         Other.............................................................       17,055       20,002
     Inventories, net of LIFO allowance of $46,319 and
         $51,914, respectively.............................................      111,983      128,168
     Prepaid expenses and other............................................        7,694        8,547
                                                                                --------     --------

         Total current assets..............................................      274,455      293,113

Property and equipment:
     Equipment.............................................................       61,816       66,589
     Leasehold improvements................................................       11,138       11,438
                                                                                --------     --------

                                                                                  72,954       78,027
     Less accumulated depreciation and amortization........................      (41,888)     (45,180)
                                                                                --------     --------

         Net property and equipment........................................       31,066       32,847

Other assets...............................................................        9,588        6,497
Goodwill, net of accumulated amortization of
     $23,540 and $25,623, respectively.....................................       59,767       57,684
                                                                                --------     --------

Total assets...............................................................     $374,876     $390,141
                                                                                ========     ========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
     Trade accounts payable................................................     $ 51,791     $ 63,364
     Cigarette and tobacco taxes payable...................................       52,933       53,771
     Income taxes payable..................................................        3,476        4,067
     Deferred income taxes.................................................        3,759        4,879
     Other accrued liabilities.............................................       31,851       37,620
                                                                                --------     --------

         Total current liabilities.........................................      143,810      163,701

Long-term debt.............................................................      186,617      163,467
Other accrued liabilities and deferred income taxes........................        8,591       12,345
                                                                                --------     --------

     Total liabilities.....................................................      339,018      339,513

Commitments and contingencies

Shareholders' equity:
     Common stock; $.01 par value; 10,000,000 shares authorized;
         5,500,000 shares issued and outstanding...........................           55           55
     Additional paid-in capital............................................       26,121       26,121
     Retained earnings.....................................................       16,178       33,688
     Accumulated comprehensive loss:
         Cumulative currency translation adjustments.......................       (3,836)      (5,408)
         Additional minimum pension liability..............................       (2,660)      (3,828)
                                                                                --------     --------

     Total shareholders' equity............................................       35,858       50,628
                                                                                --------     --------

     Total liabilities and shareholders' equity............................     $374,876     $390,141
                                                                                ========     ========
</TABLE>
     The accompanying Notes to Consolidated Financial Statements are an integral
     part of these statements.
                                      -19-
<PAGE>

                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                            (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                              1999               2000               2001
                                                           ----------         ----------         ----------
<S>                                                            <C>                <C>                <C>
Net sales............................................      $2,838,107         $3,035,379         $3,425,024
Cost of goods sold...................................       2,643,069          2,840,334          3,211,160
                                                           ----------         ----------         ----------

      Gross profit...................................         195,038            195,045            213,864

Operating and administrative expenses................         155,128            160,143            169,691
                                                           ----------         ----------         ----------

      Operating income...............................          39,910             34,902             44,173

Interest expense, net................................          12,696             12,852             11,121
Amortization of debt refinancing costs...............           1,274              1,274              1,274
                                                           ----------         ----------         ----------

      Income before income taxes.....................          25,940             20,776             31,778

Income tax expense...................................           5,740              9,721             14,268
                                                           ----------         ----------         ----------

Net income...........................................      $   20,200         $   11,055         $   17,510
                                                           ==========         ==========         ==========
</TABLE>
























The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

                                      -20-
<PAGE>



                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                  (IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>


                                                                                RETAINED   ACCUMULATED
                                                                     ADDITIONAL EARNINGS      OTHER        TOTAL
                                                      COMMON STOCK    PAID-IN (ACCUMULATED COMPREHENSIVE SHAREHOLDERS' COMPREHENSIVE
                                                     SHARES   AMOUNT  CAPITAL   DEFICIT)   INCOME (LOSS)   EQUITY         INCOME
                                                   ---------  ------  -------   --------   -------------   ------         ------
<S>                                                   <C>      <C>     <C>        <C>           <C>          <C>           <C>

        Balance, December 31, 1998...............  5,500,000   $55   $26,121   $(15,077)     $(7,237)      $ 3,862

        Net income...............................         --    --        --     20,200           --        20,200       $20,200
        Additional minimum pension liability.....         --    --        --         --          612           612           612
        Foreign currency translation adjustments.         --    --        --         --        1,276         1,276         1,276
                                                   ---------    --    ------      -----        -----        ------       -------
        Balance, December 31, 1999...............  5,500,000    55    26,121      5,123       (5,349)       25,950       $22,088
                                                                                                                         =======

        Net income...............................         --    --        --     11,055           --        11,055       $11,055
        Additional minimum pension liability.....         --    --        --         --         (260)         (260)         (260)
        Foreign currency translation adjustments.         --    --        --         --         (887)         (887)         (887)
                                                   ---------    --    ------    ---- --        -----        ------       -------
        Balance, December 31, 2000...............  5,500,000    55    26,121     16,178       (6,496)       35,858       $ 9,908
                                                                                                                         =======

        Net income...............................         --    --        --     17,510           --        17,510       $17,510
        Additional minimum pension liability.....         --    --        --         --       (1,168)       (1,168)       (1,168)
        Foreign currency translation adjustments.         --    --        --         --       (1,572)       (1,572)       (1,572)
                                                   ---------   ---   -------   --------      -------       -------       -------
        Balance, December 31, 2001...............  5,500,000   $55   $26,121   $ 33,688      $(9,236)      $50,628       $14,770
                                                   =========   ===   =======   ========      =======       =======       =======
</TABLE>





























       The accompanying Notes to Consolidated Financial Statements are an
       integral part of these statements.

                                      -21-
<PAGE>


                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                            (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                                                  1999         2000         2001
                                                                                --------     --------     --------
<S>                                                                                <C>          <C>          <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:

Net income.............................................................         $ 20,200     $ 11,055     $ 17,510
    Adjustments to reconcile net income to
        net cash provided by (used in) operating activities:
         LIFO expense..................................................            5,671        6,316        5,595
         Amortization of goodwill......................................            2,083        2,082        2,083
         Depreciation and amortization.................................            5,829        6,829        7,595
         Amortization of debt refinancing fees.........................            1,274        1,274        1,274
         Deferred income taxes.........................................           (2,828)        (916)       3,338
         Other.........................................................             (683)       1,170        1,451
    Changes in operating assets and liabilities:
         Increase in trade accounts receivable.........................             (260)      (5,537)      (4,544)
         Increase in other receivables.................................           (2,554)      (1,886)      (3,137)
         Increase in inventories.......................................           (1,131)     (10,010)     (22,976)
         (Increase) decrease in prepaid expenses and other.............              319       (8,112)        (737)
         Increase in trade accounts payable............................            1,554        1,221       12,412
         Increase (decrease) in cigarette and tobacco taxes payable....           13,931       (6,389)       1,633
         Increase (decrease) in other accrued
               liabilities and income taxes payable....................           (2,624)         978        6,714
                                                                                --------     --------     --------
Net cash provided by (used in) operating activities....................           40,781       (1,925)      28,211
                                                                                --------     --------     --------

INVESTING ACTIVITIES:
    Additions to property and equipment................................           (6,575)      (7,620)      (7,916)
                                                                                --------     --------     --------
Net cash used in investing activities..................................           (6,575)      (7,620)      (7,916)
                                                                                --------     --------     --------

FINANCING ACTIVITIES:
    Net borrowings (payments) under revolving credit agreement.........          (48,789)      16,282      (14,650)
    Net borrowings (payments) under accounts receivable facility.......            6,000        5,000       (8,500)
                                                                                --------     --------     --------
    Net cash provided by (used in) financing activities................          (42,789)      21,282      (23,150)
                                                                                --------     --------     --------

Effects of changes in foreign exchange rates...........................            1,276         (887)      (1,044)
                                                                                --------     --------     --------
Increase (decrease) in cash............................................           (7,307)      10,850       (3,899)
Cash, beginning of year................................................           24,586       17,279       28,129
                                                                                --------     --------     --------
CASH, END OF YEAR                                                               $ 17,279     $ 28,129     $ 24,230
                                                                                ========     ========     ========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments during the year for:
      Interest.........................................................         $ 12,451     $ 12,354     $ 11,221
      Income taxes.....................................................            7,305       11,159       10,410

</TABLE>








         The accompanying Notes to Consolidated Financial Statements are
         an integral part of these statements.
                                      -22-
<PAGE>

                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001


1. ORGANIZATION AND FORM OF BUSINESS

     Core-Mark  International,  Inc.  and  subsidiaries  (the  "Company")  is  a
full-service  wholesale distributor of tobacco, food and other consumer products
to convenience  stores,  grocery stores,  mass merchandisers and liquor and drug
stores in western North America.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         USE OF ESTIMATES

     These  financial  statements  have been  prepared on the  accrual  basis of
accounting in accordance with accounting  principles  generally  accepted in the
United  States of  America.  This  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 financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period.  Actual results could differ from those estimates.  Management
considers   the   allowance   for   doubtful   accounts,   inventory   reserves,
recoverability of goodwill, and self-insurance obligations to be those estimates
which involve a higher degree of judgments, estimates, and complexity.

         PRINCIPLES OF CONSOLIDATION

     The consolidated  financial  statements  include the Company and all of its
wholly-owned  subsidiaries  including a Special  Purpose  Company  (SPC) used to
securitize  its   receivables.   All  significant   intercompany   balances  and
transactions are eliminated.

         FOREIGN CURRENCY

     Assets and liabilities of the Company's Canadian  operations are translated
at exchange  rates in effect at year-end.  Income and expenses are translated at
average rates for the year.  Adjustments  resulting  from such  translation  are
included in cumulative currency  translation  adjustments in other comprehensive
income (loss), a separate component of shareholders' equity.

         EXCISE TAXES

     State and  provincial  excise taxes paid by the Company on cigarettes  were
$583.5 million,  $597.5 million and $626.5 million, for the years ended December
31, 1999, 2000 and 2001, respectively, and are included in net sales and cost of
goods sold.

         INVENTORIES

     Inventories  are  valued  at the  lower of cost or  market.  In the  United
States,  cost is determined on a last-in,  first-out (LIFO) basis using Producer
Price  Indices as determined by the  Department of Labor and  Statistics.  Under
LIFO, current costs of goods sold are matched against current sales. Inventories
in Canada  amount to $18.6  million and $21.7  million at December  31, 2000 and
2001, respectively, and are valued on a first-in, first-out (FIFO) basis.

     During  periods of rising  prices,  the LIFO method of costing  inventories
generally  results in higher  current costs being charged  against  income while
lower costs are retained in inventories. An increase in cost of goods sold and a
decrease in inventories of $5.7 million,  $6.3 million and $5.6 million resulted
from using the LIFO method for the years ended December 31, 1999, 2000 and 2001,
respectively.

     The Company provides inventory valuation adjustments for estimated spoiled,
aged,  and  unrecoverable  inventory  based on  historical  shrinkage  and sales
experience.

         COST OF GOODS SOLD

     Cost of goods sold  includes  costs of  inventory  sold  during the period,
including product costs net of vendor payment  discounts.  Vendor allowances and
credits that relate to the Company's  buying and  merchandising  activities  are
recognized as a reduction of cost of goods sold as earned.

                                      -23-
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

         PROPERTY AND EQUIPMENT

     Property  and   equipment  are  recorded  at  cost,   net  of   accumulated
depreciation and amortization. Depreciation and amortization are provided on the
straight-line  method  over the  estimated  useful  lives of owned  assets.  The
estimated  useful lives for equipment are  principally 5 to 15 years.  Leasehold
improvements  are amortized  over the  estimated  useful life of the property or
over the term of the lease, whichever is shorter.

         GOODWILL

     Goodwill is amortized on a  straight-line  basis over a forty-year  period.
Amortization  expense for each of the years ended  December 31,  1999,  2000 and
2001 was $2.1 million.

     The Company assesses the  recoverability  of long-lived  assets,  including
goodwill,  by  determining  whether  the  amortization  of such  assets over the
remaining life can be recovered through undiscounted future operating cash flows
of the  related  operations.  Based on this  calculation,  the Company is of the
opinion  that there is no  impairment  of  long-lived  assets as of December 31,
2001.

         REVENUE RECOGNITION

     The Company recognizes  revenue at the time the product is shipped,  or the
services are provided to the  customer.  Promotional  incentives  and  discounts
provided to the Companies' customers are recorded as a reduction of net sales as
they are earned.

         ALLOWANCE FOR DOUBTFUL ACCOUNTS

     The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments.

         SHIPPING AND HANDLING CHARGES

     As a wholesale  distributor,  the Company  classifies the costs of shipping
and handling product to its customers as operating and administrative  expenses.
The Company's net sales to its customers include markups,  which are designed to
cover these costs.

         STOCK-BASED COMPENSATION PLAN

     The Company follows Accounting Principles Board Opinion No. 25, "Accounting
for  Stock  Issued to  Employees"  ("APB  25").  The  Company  has  adopted  the
disclosure-only  provisions of Statement of Financial  Accounting  Standards No.
123 ("SFAS 123"), "Accounting for Stock-Based Compensation."

         PENSION COSTS AND OTHER POSTRETIREMENT BENEFIT COSTS

     Pension  costs and other  postretirement  benefit costs charged to earnings
are  determined  on the basis of annual  valuations by an  independent  actuary.
Adjustments arising from plan amendments,  changes in assumptions and experience
gains and losses are amortized over the expected average  remaining service life
of the employee group.

         INCOME TAXES

     The  Company  accounts  for  income  taxes  under the  liability  method in
accordance  with  Statement of Financial  Accounting  Standards  (SFAS) No. 109,
"Accounting for Income Taxes", see note 6.

         SELF-INSURANCE RESERVES

     The Company  maintains  reserves  related to health and welfare and workers
compensation programs that are principally self-insured programs.

                                      -24-
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

         NEW ACCOUNTING PRONOUNCEMENTS

     In September 2000, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 140,  "Accounting for
Transfers and Servicing of Financial Assets and  Extinguishment of Liabilities,"
which  revises  the  standards  for  accounting  for  securitizations  and other
transfers of financial  assets and  collateral  and requires  entities that have
securitized  financial assets to provide specific  disclosures.  SFAS No. 140 is
effective for transfers and servicing of financial assets and extinguishments of
liabilities  occurring  after March 31, 2001.  The Company  adopted the standard
effective April 1, 2001, as required.  The adoption of SFAS No. 140 did not have
an impact on the Company's consolidated financial statements.


     In June 2001,  the FASB issued SFAS No. 141,  "Business  Combinations"  and
SFAS No.142,  "Goodwill and Other Intangible Assets". SFAS No. 141 requires that
all business  combinations  initiated after June 30, 2001 be accounted for under
the purchase  method and addresses the initial  recognition  and  measurement of
goodwill and other intangible  assets acquired in a business  combination.  SFAS
No. 142 addresses the initial  recognition and measurement of intangibles assets
acquired  outside of a business  combination and the recognition and measurement
of goodwill and other intangibles  assets subsequent to their  acquisition.  The
Company  is  required  to adopt  SFAS No.  142 on  January 1, 2002 at which time
goodwill  will no longer be  amortized  but will be  required  to be tested  for
impairment at least annually.  Intangible  assets with  definitive  useful lives
will  be  amortized  over  their  useful  life  and  intangible  assets  with an
indefinite  useful  life are not  amortized,  but will rather be tested at least
annually for impairment.  The Company is evaluating the impact that the adoption
SFAS No. 142 will have on its financial position, results of operations and cash
flows.  Upon  implementation  of SFAS No. 142,  the Company will cease to record
amortization  expense,  which  totaled  $2.1  million  for the fiscal year ended
December 31, 2001.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived Assets." While SFAS No. 144 supersedes SFAS
No. 121,  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", it retains many of the fundamental provisions of that
Statement.  SFAS No. 144 also supersedes the accounting and reporting  provision
of APB No. 30,  "Reporting  the Results of  Operations-Reporting  the Effects of
Disposal  of  a  Segment  of  a  Business,   and  Extraordinary,   Unusual,  and
Infrequently  Occurring Events and Transactions" for the disposal of a business.
It  retains,  however,  the  requirement  in APB  No.  30 to  report  separately
discontinued 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 No. 144
is  effective  for the  Company on January 1,  2002.  The  Company is  currently
evaluating  the  impact  that  the  adoption  of SFAS No.  144 will  have on its
financial position, results of operations and cash flows.

     Effective  January  1,  2002,  EITF No.  00-25,  "Vendor  Income  Statement
Characterization  of Consideration Paid to a Reseller of the Vendor's Products,"
requires that  consideration  paid to a  distributor  or retailer to promote the
vendor's products, such as slotting fees or buydowns, generally be characterized
as a reduction of revenue when recognized in the vendor's income statement.  The
Company adopted EITF No. 00-25 in 2001 and classified the applicable  costs as a
reduction  of net sales  rather  than as  selling,  general  and  administrative
expense.  The adoption of EITF No. 00-25 did not materially impact the Company's
consolidated financial position, results of operations and cash flows.

3. FINANCING

     Long-term  debt  consisted of the following at December 31 (in  thousands):
<TABLE>
<CAPTION>

                                                             2000          2001
                                                           --------     --------
<S>                                                           <C>           <C>

     Accounts receivable facility....................      $ 85,000     $ 76,500
     Revolving credit facility.......................        26,617       11,967
     Senior subordinated notes.......................        75,000       75,000
                                                           --------     --------

              Long-term debt.........................      $186,617     $163,467
                                                           ========     ========
</TABLE>

                                      -25-
<PAGE>

3. FINANCING (CONT.)

         ACCOUNTS RECEIVABLE FACILITY

     On April 1, 1998, the Company  entered into a transaction to securitize its
U.S. trade accounts receivable portfolio ("Accounts  Receivable  Facility").  In
connection  with this  transaction,  the Company formed a  wholly-owned  special
purpose,  bankruptcy-remote subsidiary (the "Special Purpose Company" or "SPC"),
to which the U.S. trade accounts  receivable  originated by the Company are sold
or contributed,  without recourse, pursuant to a receivables sale agreement. The
receivables have been assigned, with a call option by the SPC, to a trust formed
pursuant to a pooling agreement. On April 1, 1998, the SPC issued two classes of
term certificates with an aggregate principal value of $55 million, and variable
certificates of up to $30 million representing fractional undivided interests in
the receivables and the proceeds  thereof.  The SPC is included in the Company's
consolidated  financial  position and results of  operations,  and therefore all
assets and  liabilities  of the SPC are  reflected on the  consolidated  balance
sheet of the Company.

     On a daily basis,  collections related to sold receivables are administered
by the Company acting as servicer,  pursuant to a servicing agreement.  Pursuant
to supplements to the pooling agreement,  certificate  holders' accrued interest
expense and other securitization expenses are reserved out of daily collections,
before such remaining  collections are returned to the Company by the SPC to pay
for the SPC's purchase of newly  originated  receivables  from the Company.  The
revolving period of the securitization expires in January 2003, or earlier if an
early amortization event, as defined in the pooling agreement, occurs.

     The  interest  rate on the fixed term  certificates  is 0.28% (Class A) and
0.65%  (Class B) above the  Eurodollar  Rate which was 1.87% as of December  31,
2001.  The  interest  rate on the  variable  certificates  is  0.25%  above  the
commercial paper rate (as defined in the  securitization  agreement),  which was
1.78% as of December  31, 2001.  There is a  commitment  fee and facility fee of
0.375%  and  0.1%,  respectively,  on the  total  value  of  available  variable
certificates. As of December 31, 2001, the amount outstanding under the Accounts
Receivable Facility was $76.5 million,  with sufficient  collateral to borrow an
additional $8.5 million, the limit under this facility.


         REVOLVING CREDIT FACILITY

     In connection with the securitization of accounts  receivable,  on April 1,
1998, the Company amended its Revolving Credit Facility.  The amendment  reduced
the Revolving  Credit  Facility from $175 million to $120 million,  extended the
maturity from June 30, 2001 through April 1, 2003, and reduced  interest  rates.
The Revolving Credit Facility initially provided for aggregate  borrowings of up
to $210.0  million,  consisting  of: (i) a $35.0  million  term loan,  which was
repaid in 1996,  and (ii) a revolving  credit  facility (the  "Revolving  Credit
Facility")  under which  borrowings  in the amount of up to $175.0  million were
available for working capital and general corporate  purposes.  Borrowings under
this facility remain subject to borrowing base limitations  based upon levels of
eligible inventories,  accounts receivable, other receivables and cash. Included
in this facility are letters of credit up to a maximum of $40.0 million.

     Under the Revolving  Credit  Facility,  the Company must  maintain  certain
financial  covenants as prescribed in the credit agreement,  including,  but not
limited to,  current  ratio,  net worth,  leverage  and interest  coverage,  and
operating  income before certain  non-cash items.  The Revolving Credit Facility
limits  certain  activities  of the  Company,  including,  but not  limited  to,
indebtedness,   creation  of  liens,  acquisitions  and  dispositions,   capital
expenditures, investments and dividends.

     Under the  Revolving  Credit  Facility the Company has the option to borrow
under: (i) Revolving Credit Loans,  which prior to the amendment,  bore interest
at 1.5% above the bank's Prime Rate; or (ii)  Eurodollar  Loans,  which prior to
the  amendment,  bore  interest at 2.5% above the bank's  Eurodollar  Rate.  The
amendment reduced interest rates to 1.0% above the Prime Rate, and to 2.0% above
the Eurodollar Rate, as defined in the amendment. The Company has the ability to
further  reduce  interest  rates  based on certain  leverage  ratio  criteria as
defined in the  amendment.  Based on this  criteria,  the  Company  reduced  its
interest  rates,  effective  October 1, 1998,  to 0.75% above the Prime Rate and
1.75% above the  Eurodollar  Rate and again  effective  March 16, 1999, to 0.25%
above the Prime Rate and 1.25% above the Eurodollar Rate, which are the rates in
effect at December 31, 2001. The bank's Prime Rate and Eurodollar Rate was 4.75%
and 1.87%, respectively, at December 31, 2001.

                                      -26-
<PAGE>
3. FINANCING (CONT.)

     As of December 31, 2001, the amount  outstanding under the Revolving Credit
Facility  was  $12.0  million,  with a  sufficient  borrowing  base  to  draw an
additional $108.0 million, the limit under this facility.  There is a commitment
fee of 0.325% on the  unused  portion  of the  Revolving  Credit  Facility.  The
obligations are secured by all assets of the Company, with the exception of U.S.
trade accounts receivable, which are utilized to support the Accounts Receivable
Facility.

     The  Company  had  letters  of  credit  of $3.4  million  and $5.3  million
outstanding at December 31, 2000 and 2001,  respectively.  The letters of credit
are issued  primarily to secure the Company's bond and insurance  programs.  The
Company  pays fees of 1.25% per annum on the  outstanding  portion of letters of
credit. Prior to the amendment these fees were 2.50% per annum.

     The net  result  of the (i)  securitization  of the  Company's  U.S.  trade
accounts receivable  portfolio and (ii) the modification of the Revolving Credit
Facility  was to lower the  Company's  cost of  borrowings,  and to increase its
variable-rate  borrowing capacity from $175 million to $205 million. The Company
incurred  approximately  $1.6  million for legal,  professional  and other costs
related to the transactions  described  above.  These costs were capitalized and
classified  as  other  assets  and are  being  amortized  over the term of these
facilities.

         SENIOR SUBORDINATED NOTES

     On September 27, 1996,  the Company  issued $75.0 million of 11 3/8% Senior
Subordinated Notes (the "Notes") which mature on September 15, 2003. Interest on
the Notes is payable  semi-annually  on March 15 and  September 15 of each year.
The Notes limit certain  activities of the Company,  including,  but not limited
to,  changes  in  control,  incurrence  of  indebtedness,   creation  of  liens,
acquisitions and dispositions, investments and dividends.

         MATURITY OF LONG-TERM DEBT IN 2003

     The revolving period of the Accounts Receivable Facility expires in January
2003.  This facility is structured such that,  upon  expiration,  the subsequent
collections of U.S. trade  receivables are used to pay the  outstanding  balance
until it is paid in full.  The Revolving  Credit  Facility  expires on April 30,
2003.  The Senior  Subordinated  notes mature on September 15, 2003. The Company
intends to refinance all  outstanding  long-term debt prior to their  maturities
and is currently exploring alternatives. These alternatives include arrangements
similar  to   existing   arrangements   such  as  a  new   accounts   receivable
securitization,  a revolving facility, new senior subordinated notes, as well as
other financing vehicles.  Depending on the market conditions at the time of the
refinancing,  the terms  obtained by the Company may, or may not be as favorable
as the current terms.

4. COMMITMENTS AND CONTINGENCIES

         LEASES

     The Company  leases the  majority of its sales and  warehouse  distribution
facilities,  automobiles and trucks under lease  agreements  expiring at various
dates through 2011,  excluding renewal options. The leases generally require the
Company to pay taxes, maintenance and insurance.  Management expects that in the
normal  course of  business,  leases  that expire will be renewed or replaced by
other leases.

     Future minimum rental payments under non-cancelable  operating leases (with
initial or  remaining  lease  terms in excess of one year) were as follows as of
December 31, 2001 (in thousands):

         2002 .........................................................  $12,242
         2003 .........................................................   10,409
         2004 .........................................................    8,908
         2005 .........................................................    7,473
         2006 .........................................................    6,420
         Thereafter....................................................    9,264
                                                                         -------
              Total minimum lease payments.............................  $54,716
                                                                         =======

     Rental expense for operating  leases was $14.4  million,  $15.3 million and
$16.1  million  for  the  years  ended   December  31,  1999,   2000  and  2001,
respectively.

                                      -27-
<PAGE>
4. COMMITMENTS AND CONTINGENCIES (CONT.)

         CLAIMS AND ASSESSMENTS

     The  Company is a defendant  to claims  arising in the  ordinary  course of
business.  Management  believes that the  disposition  of these matters will not
have a material adverse effect on the Company's consolidated financial position,
results of operations or cash flows.

5. EMPLOYEE BENEFIT PLANS

         PENSION PLAN

     The  Company   sponsors  a  qualified   pension  plan  and  a   non-pension
postretirement  benefit plan for  employees  hired before  September  1986.  The
following tables provide a  reconciliation  of the changes in the plans' benefit
obligations  and fair value of assets over the two-year  period ending  December
31, 2001,  and a statement  of the December 31 funded  status for both years (in
thousands):
<TABLE>
<CAPTION>
                                                           Pension Benefits           Other Benefits
                                                        ---------------------     ---------------------
                                                           2000        2001         2000         2001
                                                        --------     --------     --------     --------
<S>                                                        <C>          <C>          <C>           <C>
BENEFIT OBLIGATION RECONCILIATION
   January 1 obligation                                 $ 14,512     $ 14,936     $  1,927     $  2,201
   Service cost                                                -            -           35           39
   Interest cost                                           1,123        1,140          161          164
   Participant contributions                                   -            -           40           37
   Actuarial loss                                            433        1,123          221           83
   Benefit payments                                       (1,132)      (1,182)        (183)        (132)
                                                        --------     --------     --------     --------
   December 31 obligation                               $ 14,936     $ 16,017     $  2,201     $  2,392
                                                        ========     ========     ========     ========
</TABLE>

<TABLE>
<CAPTION>
                                                          Pension  Benefits           Other  Benefits
                                                       ----------------------     ---------------------
                                                          2000         2001         2000         2001
                                                       ---------     --------     --------     --------
<S>                                                        <C>           <C>         <C>          <C>
FAIR VALUE OF PLAN ASSETS RECONCILIATION
   January 1 fair value of plan assets                  $ 13,730     $ 13,462     $      -     $      -
   Actual return on plan assets                              864            6            -            -
   Employer contributions                                      -          722          143           95
   Participant contributions                                   -            -           40           37
   Benefit payments                                       (1,132)      (1,182)        (183)        (132)
                                                        --------     --------     --------     --------
   December 31 fair value of plan assets                $ 13,462     $ 13,008     $      -     $      -
                                                        ========     ========     ========     ========

FUNDED STATUS
   December 31 funded status                            $ (1,474)    $ (3,009)    $ (2,201)    $ (2,392)
   Unrecognized:
     Unamortized prior service cost                            -            -         (134)        (117)
     Actuarial  loss                                       2,833        4,764          770          788
                                                        --------     --------     --------     --------
   Net amount recognized                                $  1,359     $  1,755     $ (1,565)    $ (1,721)
                                                        ========     ========     ========     ========
</TABLE>

                                      -28-
<PAGE>

5. EMPLOYEE BENEFIT PLANS (CONT.)

The  following   table   provides  the  amounts   recognized  in  the  Company's
consolidated balance sheets as of December 31 (in thousands):
<TABLE>
<CAPTION>
                                                          Pension  Benefits           Other  Benefits
                                                        ---------------------     ---------------------
                                                          2000         2001         2000         2001
                                                        --------     --------     --------     --------
<S>                                                        <C>          <C>          <C>          <C>

   Accrued benefit liability                            $ (1,474)    $ (3,009)    $ (1,565)    $ (1,721)
   Additional minimum pension
      liability                                            2,833        4,764            -            -
                                                        --------     --------     --------     --------
   Net amount recognized                                $  1,359     $  1,755     $ (1,565)    $ (1,721)
                                                        ========     ========     ========     ========
</TABLE>


The following  table provides  components of the net periodic  pension and other
benefit cost for fiscal years 1999, 2000 and 2001 (in thousands):
<TABLE>
<CAPTION>

                                                       Pension  Benefits                       Other Benefits
                                              ----------------------------------     ---------------------------------
                                                1999         2000          2001        1999         2000         2001
                                              --------     --------     --------     --------     --------    --------
<S>                                              <C>          <C>           <C>          <C>         <C>          <C>

Service cost                                  $      -     $      -     $      -     $     26     $     35    $     39
Interest cost                                    1,093        1,123        1,140          140          161         164
Expected return on plan assets                  (1,078)        (988)        (989)           -            -           -
Amortization of:
   Prior service cost                                -            -            -          (17)         (17)        (17)
   Net actuarial loss                              141          124          176           58           83          64
                                              --------     --------     --------     --------     --------    --------
Net periodic benefit cost                     $    156     $    259     $    327     $    207     $    262    $    250
                                              ========     ========     ========     ========     ========    ========
</TABLE>

     The amount included within accumulated other comprehensive income (loss) in
the Company's  consolidated  statement of shareholders' equity was $3,828,000 at
December 31, 2001 and  $2,660,000  at December 31, 2000,  which is net of income
taxes.

     The  prior-service  costs are amortized on a  straight-line  basis over the
average  remaining  service period of active  participants.  Gains and losses in
excess of 10% of the greater of the benefit obligation and market-related  value
of assets are  amortized  over the average  remaining  service  period of active
participants.

     The  assumptions   used  in  the  measurement  of  the  Company's   benefit
obligations are shown in the following table:
<TABLE>
<CAPTION>

                                                           Pension  Benefits             Other Benefits
                                                       -------------------------    ----------------------
                                                       1999      2000       2001    1999     2000     2001
                                                       ----      ----       ----    ----     ----     ----
<S>                                                     <C>      <C>        <C>      <C>     <C>       <C>

December 31 weighted-average assumptions:
   Discount rate                                       8.00%     7.75%     7.25%    8.00%    7.75%    7.25%
   Expected return on plan assets                      7.50      7.50      7.50      N/A      N/A      N/A
   Rate of compensation increase                        N/A       N/A       N/A      N/A      N/A      N/A
</TABLE>

     For  measurement  purposes,  a 9% annual rate of increase in the per capita
cost of covered  health care  benefits was assumed for 1999,  8% for 2000 and 7%
for 2001.  The rate was assumed to decrease  gradually each year to a rate of 6%
for 2002 and remain at that level thereafter.

                                      -29-
<PAGE>

5. EMPLOYEE BENEFIT PLANS (CONT.)

     Assumed  health  care cost  trend  rates have a  significant  effect on the
amounts  reported  for the  postretirement  health  care  plans.  A 1% change in
assumed health care cost trend rates would have the following  effects  (dollars
in thousands):
<TABLE>
<CAPTION>
                                                                                                1%
                                                                                     -------------------------
                                                                                     Increase         Decrease
                                                                                     --------         --------
<S>                                                                                    <C>              <C>
Effect on total of service and interest cost components of net periodic
   postretirement health care benefit cost                                             $ 27             $(22)
Effect on the health care component of the accumulated postretirement benefit
   obligation                                                                           480             (380)
</TABLE>

         SAVINGS PLANS

     The Company  maintains  defined  contribution  plans in the United  States,
subject to Section 401(k) of the Internal  Revenue Code, and in Canada,  subject
to the  Department  of  National  Revenue  Taxation  Income  Tax  Act.  Eligible
employees may elect to contribute  on a  tax-deferred  basis from 1% to 22%, and
from 1% to 18% of their  compensation  in the U.S. and Canada,  respectively.  A
contribution  of up to 6% is  considered  to be a "basic  contribution"  and the
Company  makes  a  matching   contribution   of  $0.50  for  each  dollar  of  a
participant's basic contribution.  The Company's contributions to the plans were
$1,145,000, $1,203,000 and $1,241,000 for 1999, 2000 and 2001, respectively.

         STOCK-BASED COMPENSATION PLAN

     During 1997,  the Company  adopted a Stock Option Plan ("Option  Plan") for
its key  employees,  which  provides for  equity-based  incentive  awards.  Upon
adoption of the Option  Plan,  the Company had  300,000  options  available  for
granting.  Granted  options  vest over five years and become  exercisable  after
eight years, with certain exercise acceleration  provisions,  including a change
of control of the  Company or an initial  public  stock  offering.  The  Company
issues  options  to  employees  with a grant  price  equal  to the  fair  value.
Accordingly, no compensation expense has been recognized on the Company's Option
Plan.

A summary  of the  Company's  option  activity  and  related  information  is as
follows:
<TABLE>
<CAPTION>
                                                                               1999       2000       2001
                                                                             -------    -------    -------
<S>                                                                           <C>         <C>        <C>

         Options outstanding, beginning of the year....................      215,000    239,700    238,700
              Granted..................................................       33,000      8,000     24,000
              Forfeitures..............................................       (8,300)    (9,000)    (1,200)
                                                                             -------    -------    -------
         Options outstanding, end of year..............................      239,700    238,700    261,500
                                                                             =======    =======    =======
         Options exercisable at end of year............................           --         --         --
         Options available for grant at end of year....................       60,300     61,300     38,500
</TABLE>


     The  weighted-average  exercise price of the Company's  granted options for
each of the years ended December 31, 1999, 2000 and 2001 was $13.18,  $14.00 and
$16.00,  respectively.  The Company's  options  outstanding at December 31, 2001
range in exercise price from $10.00 to $16.00, with a weighted-average  exercise
price of $11.06 and a weighted-average remaining contractual life of 3.8 years.

     Pro forma information regarding net income is required by SFAS 123, and has
been  determined as if the Company had recorded  compensation  cost based on the
fair value of the awards at the grant dates.  The fair value for the options was
estimated at the date of grant using a  Black-Scholes  option pricing model with
the following assumptions:  risk free interest rate of 6.46% for 1999, 5.29% for
2000 and 4.57% for 2001;  volatility of 0.00%;  dividend yield of 0.00%;  and an
expected  life of the  option of 4 years for 1999,  3 years for 2000 and 2 years
for 2001. The weighted-average  estimated fair value per option granted in 1999,
2000 and 2001, was $2.96, $2.03 and $1.38, respectively.  For the purpose of pro
forma  disclosure,  the  estimated  fair value of the  options is  amortized  to
expense over the options' vesting period. Based on these assumptions,  pro forma
net income for 1999, 2000 and 2001 would have been $20,074,000,  $10,928,000 and
$17,367,000, respectively.

                                      -30-
<PAGE>

6.  INCOME TAXES

     The  Company's  income tax expense  consists of the following for the years
ended December 31 (in thousands):
<TABLE>
<CAPTION>
                                                                              1999        2000        2001
                                                                            --------    --------    --------
<S>                                                                            <C>         <C>          <C>
         Current:
              Federal..................................................     $  6,313    $  8,380    $  8,333
              State....................................................        1,804       1,801       2,048
              Foreign..................................................          451         417         549
                                                                            --------    --------    --------
                                                                               8,568      10,598      10,930
         Deferred:
              Federal..................................................        3,193        (375)      2,860
              State....................................................           63        (396)        243
              Foreign..................................................          155         155         194
                                                                            --------    --------    --------
                                                                               3,411        (616)      3,297

         Increase (decrease) in valuation allowance....................       (6,239)       (261)         41
                                                                            --------    --------    --------
         Income tax expense                                                 $  5,740    $  9,721    $ 14,268
                                                                            ========    ========    ========
</TABLE>

     A reconciliation  between the Company's income tax expense and income taxes
computed by applying  the  statutory  federal  income tax rate to income  before
income taxes is as follows for the years ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                              1999        2000         2001
                                                                            --------    --------    --------
<S>                                                                             <C>         <C>         <C>
         Expected federal income tax expense at the statutory rate.....     $  9,079    $  7,272    $ 11,122
         Increase (decrease) in taxes resulting from:
              Goodwill amortization....................................          692         692         692
              State income tax expense, net of federal tax benefit.....        1,214         913       1,489
              Change in valuation allowances...........................       (6,239)       (261)         41
         Other, net....................................................          994       1,105         924
                                                                            --------    --------    --------
         Income tax expense............................................     $  5,740    $  9,721    $ 14,268
                                                                            ========    ========    ========
</TABLE>

     Deferred tax assets and  liabilities  are measured  using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences  are  expected  to be  recovered  or  settled.  The tax  effects  of
significant  temporary  differences  which  comprise  deferred  tax  assets  and
liabilities are as follows at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                                          2000         2001
                                                                                        --------    --------
<S>                                                                                        <C>          <C>
         Deferred tax assets:
              Net operating loss carryforwards......................................    $  6,220    $  5,237
              Employee benefits, including postretirement benefits..................       3,814       5,118
              Other.................................................................       4,512       4,301
                                                                                        --------    --------
                  Total deferred tax assets.........................................      14,546      14,656
              Less valuation allowance..............................................        (653)       (694)
                                                                                        --------    --------
                  Net deferred tax assets...........................................      13,893      13,962
                                                                                        --------    --------
         Deferred tax liabilities:
              Inventories...........................................................       6,350       7,951
              Property & equipment..................................................       3,898       4,441
              Other.................................................................       8,878       9,309
                                                                                        --------    --------
                  Total deferred tax liabilities....................................      19,126      21,701
                                                                                        --------    --------
                  Net deferred tax liabilities......................................    $  5,233    $  7,739
                                                                                        ========    ========
</TABLE>
                                      -31-
<PAGE>

6.    INCOME TAXES (CONT.)

     In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some  portion or all of the deferred tax
assets will not be realized.  At each balance sheet date, a valuation  allowance
has been  established  against the  deferred  tax assets  based on  management's
assessment.  Prior to 1999,  the Company had a significant  valuation  allowance
that reduced certain  deferred tax assets,  based upon  management's  assessment
that it was more likely  than not that these  deferred  tax assets  would not be
realized.  However,  as a  result  of the  Company's  strong  earnings  history,
management concluded in 1999 that the tax benefits related to future deductions,
including  net  operating  loss  carryforwards,  were more likely than not to be
realized,  and  therefore  reduced the valuation  allowance by $6.2 million.  At
December 31, 2001, the Company had $0.7 million of valuation allowance remaining
on its balance sheet.

     At December 31, 2001, the Company has available for U.S. federal income tax
return  purposes net operating  losses  totaling  approximately  $15.2  million,
subject to certain  limitations,  which will  expire  between the years 2005 and
2007.  The  Company  also has  available  for U.S.  income tax  return  purposes
alternative minimum tax credits totaling $1.1 million,  which have an indefinite
utilization period.

7. FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS

     The carrying  amount for the Company's  cash,  trade  accounts  receivable,
other receivables,  trade accounts payable,  cigarette and tobacco taxes payable
and other  accrued  liabilities  approximates  fair market value  because of the
short maturity of these financial instruments.

     The  carrying  amount  of  the  Revolving   Credit  Facility  and  Accounts
Receivable  Facility,  which are variable rate  instruments,  approximates  fair
market  value.  The rate of  interest,  which is tied to either the bank's Prime
Rate or Eurodollar  Rate or the commercial  paper rate,  fluctuates  with market
conditions.  The fair  value of the  Notes,  calculated  based on quoted  market
prices,  was  $71,250,000  and  $72,000,000  at  December  31,  2000  and  2001,
respectively. The Company's Notes are very thinly traded, and the prices used to
determine the fair value of the Notes, while based on actual  transactions,  may
or may not be indicative of prices received for larger dollar transactions.

8. SEGMENT INFORMATION

     The Company is a broad-line, full service wholesale distributor of packaged
consumer  products to the convenience  retail industry in western North America,
with revenues  generated from the sale of cigarettes,  tobacco products,  candy,
food, health and beauty aids and general  merchandise.  The Company's  principal
customers include traditional and petroleum convenience stores,  grocery stores,
drug stores,  mass  merchandisers  and liquor stores.  Management has determined
that the only  reportable  segment of the Company is its wholesale  distribution
segment, based on the level at which executive management reviews the results of
operations  in order to make  decisions  regarding  performance  assessment  and
resource  allocation.  Wholesale  distribution segment information as of and for
the years ended December 31 is set forth below (dollars in thousands):

<TABLE>
<CAPTION>

                                                                               1999         2000           2001
                                                                           ----------    ----------    ----------
<S>                                                                            <C>           <C>            <C>

         Net sales from external customers.............................    $2,838,107    $3,035,379    $3,425,024
         Segment depreciation and amortization expense (1).............         5,647         6,544         7,299
         Segment interest  expense.....................................        12,980        13,816        16,623
         Segment pre-tax operating income (2)..........................        29,195        23,454        29,928
         Capital expenditures..........................................         6,575         7,620         7,916

         Segment assets................................................       338,038       362,593       382,015
</TABLE>

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

          (1)  Represents   depreciation   of  property   and   equipment,   and
               amortization  of  certain  deferred  assets  that are shown as an
               expense in arriving at segment pre-tax operating income.

          (2)  Represents   operating  income,   including   allocated  interest
               expense,   but  excluding   amortization  of  goodwill  and  debt
               refinancing costs, and income taxes.

                                      -32-
<PAGE>

8. SEGMENT INFORMATION (CONT.)

     A reconciliation of certain of the segment  information  reported above, to
the applicable items in the consolidated financial statements are as follows (in
thousands):

        INCOME BEFORE INCOME TAXES
        --------------------------
<TABLE>
<CAPTION>
                                                                              1999        2000        2001
                                                                            --------    --------    --------
<S>                                                                            <C>         <C>         <C>

         Segment information...........................................     $ 29,195    $ 23,454    $ 29,928
         Less: Goodwill and other unallocated amortization.............        2,265       2,368       2,378
            Interest expense: unallocated and other....................         (284)       (964)     (5,502)
            Amortization of debt refinancing costs.....................        1,274       1,274       1,274
                                                                            --------    --------    --------
         Consolidated total............................................     $ 25,940    $ 20,776    $ 31,778
                                                                            ========    ========    ========
</TABLE>

         INTEREST EXPENSE
         ----------------
<TABLE>
<CAPTION>
                                                                              1999        2000        2001
                                                                            --------    --------    --------
<S>                                                                           <C>          <C>          <C>

         Segment information...........................................     $ 12,980    $ 13,816    $ 16,623
         Add: Unallocated and other....................................         (284)       (964)     (5,502)
                                                                            --------    --------    --------
         Consolidated total............................................     $ 12,696    $ 12,852    $ 11,121
                                                                            ========    ========    ========
</TABLE>


         DEPRECIATION AND AMORTIZATION
         -----------------------------
<TABLE>
<CAPTION>
                                                                              1999        2000        2001
                                                                            --------    --------    --------
<S>                                                                           <C>          <C>         <C>

         Segment information...........................................     $  5,647    $  6,544    $  7,299
         Add: Unallocated and other....................................          182         285         296
                                                                            --------    --------    --------
         Consolidated total............................................     $  5,829    $  6,829    $  7,595
                                                                            ========    ========    ========
</TABLE>
<TABLE>
<CAPTION>
         ASSETS
         ------
                                                                                          2000        2001
                                                                                        --------    --------
<S>                                                                                       <C>          <C>


         Segment information...........................................                 $362,593    $382,015
         Add: Corporate assets.........................................                   12,283       8,126
                                                                                        --------    --------
         Consolidated total............................................                 $374,876    $390,141
                                                                                        ========    ========
</TABLE>

                                      -33-
<PAGE>
8. SEGMENT INFORMATION (CONT.)

         The Company operates in the United States and Canada. Foreign and
domestic net sales and identifiable assets are as follows as of and for the
years ended December 31, (in thousands):
<TABLE>
<CAPTION>
                                                                              1999        2000         2001
                                                                          ----------   ----------   ----------
<S>                                                                           <C>         <C>           <C>

  Net Sales:
         United States.................................................   $2,371,252   $2,565,330   $2,932,500
         Canada........................................................      466,855      470,049      492,524
                                                                          ----------   ----------   ----------
         Total.........................................................   $2,838,107   $3,035,379   $3,425,024
                                                                          ==========   ==========   ==========

  Identifiable Assets:
         United States.................................................                $  323,733   $  339,665
         Canada........................................................                    38,860       42,350
         Corporate.....................................................                    12,283        8,126
                                                                                       ----------   ----------
         Total.........................................................                $  374,876   $  390,141
                                                                                       ==========   ==========
</TABLE>








ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

         None.




                                      -34-
<PAGE>

                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  executive  officers and directors of the Company are as follows (as of
December 31, 2001):

       Name                   Age           Position
       ----                   ---           --------
Gary L. Walsh............     60 Chairman and Director
Robert A. Allen..........     52 President, Chief Executive Officer and Director
Leo F. Korman............     54 Senior Vice President, Chief Financial Officer
                                 and Secretary
Basil P. Prokop..........     58 President, Canada Division
J. Michael Walsh.........     53 Executive Vice President, Sales
Gerald J. Bolduc.........     56 Chief Information Officer, Vice President,
                                 Information Technology
Henry J. Hautau..........     59 Vice President, Employee and Corporate Services
Todd L. Stevens..........     40 Senior Vice President, Distribution
Thomas A. Berglund.......     41 Director
Terry J. Blumer..........     43 Director
John F. Klein............     38 Director
John A. Sprague..........     49 Director

     Gary L. Walsh has been  Chairman and a director of the Company  since 1990.
He served as Chief  Executive  Officer of the Company  from 1990  through  1997.
Effective  January  1,  1998,  Mr.  Walsh  retired  from his  position  as Chief
Executive Officer. Mr. Walsh served as President from 1990 until 1996.

     Robert A.  Allen has been Chief  Executive  Officer  of the  Company  since
January 1998 and President  since  January  1996.  He served as Chief  Operating
Officer of the Company  from January 1996 to December  1997.  Prior to 1996,  he
served as Senior Vice  President,  Distribution  from 1992 through  1995. He has
been a director of the Company since 1994.

     Leo F. Korman has been Senior Vice President and Chief Financial Officer of
the Company since January 1994 and served as Vice President and Chief  Financial
Officer from 1991 to 1994.

     Basil P. Prokop has been  President of the Canada  Division since 1992. Mr.
Prokop joined the Company in 1984.

     J. Michael Walsh has been  Executive  Vice  President,  Sales since October
1999.  He served as Senior Vice  President,  Distribution  from  January 1996 to
September 1999.  Prior thereto,  he served as Senior Vice President,  Operations
since 1992.

     Gerald J. Bolduc has been Chief  Information  Officer of the Company  since
December 1997 and Vice President, Information Technology since May 1985.

     Henry J. Hautau has been Vice President, Employee and Corporate Services of
the Company since May 1992.

     Todd L. Stevens has been Senior Vice President,  Distribution since October
1999. He served as Division  Manager of the Denver  division from August 1996 to
September 1999 and the Spokane division from September 1992 to July 1996.

     Thomas A. Berglund has been a director of the Company since August 1996. He
is a Partner at Jupiter and has been associated with the firm since 1994.  Prior
to that he served for three years as an employee of the Invus Group, a privately
funded buy-out group specializing in food-related companies.

     Terry J. Blumer has been a director of the Company since August 1996. Prior
to co-founding Jupiter in 1994, Mr. Blumer was associated with Goldman,  Sachs &
Co. for over eight years, most recently as an Executive Director.

     John F. Klein has been a director of the Company since August 1996. He is a
Partner at Jupiter and has been  associated  with the firm since 1995.  Prior to
that, he served for three years as a consultant at Bain & Company,  a management
consulting firm.

     John A. Sprague has been a director of the Company since August 1996. Prior
to co-founding Jupiter in 1994, Mr. Sprague was associated with Forstmann Little
& Co. for eleven years, most recently as a partner.

                                      -35-
<PAGE>


ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONT.)


     Directors  are  elected  for one year  terms and hold  office  until  their
successors  are elected and  qualified  or until their  earlier  resignation  or
removal.  Executive  officers of the Company are  appointed  by and serve at the
discretion of the Board of Directors.  The only family relationship  between any
of the  executive  officers or directors is between Gary L. Walsh and J. Michael
Walsh, who are brothers.


ITEM 11. EXECUTIVE COMPENSATION


COMPENSATION OF DIRECTORS

     Directors  of the  Company  do not  receive  compensation  for  service  as
directors  other  than   reimbursement  for  reasonable   expenses  incurred  in
connection with attending the meetings.

EXECUTIVE COMPENSATION

     The following table summarizes the compensation paid to the Company's chief
executive officer and its four other most highly compensated  executive officers
for the years ended December 31, 2001, 2000 and 1999.


                           SUMMARY COMPENSATION TABLE

                               ANNUAL COMPENSATION

                                                           OTHER        ALL
                                                          ANNUAL       OTHER
                              FISCAL  SALARY   BONUS   COMPENSATION COMPENSATION
Name and Principal Position     YEAR     ($)    ($)       ($)(1)    ($)(2)(3)(4)
---------------------------   ------  ------   -----   ------------ ------------

Robert A. Allen..............   2001  $336,960  $320,000                  $7,810
  President and Chief           2000  $324,000  $145,800                  $7,997
  Executive Officer             1999  $311,538  $300,000                  $7,992


J. Michael Walsh.............   2001  $215,765  $150,000                  $7,083
  Executive Vice President,     2000  $214,785  $ 82,500                  $7,289
  Sales                         1999  $206,524  $127,500                  $7,135

Leo F. Korman................   2001  $232,311  $150,000                  $7,182
  Senior Vice President and     2000  $223,376  $ 87,500                  $7,344
  Chief Financial Officer       1999  $214,785  $145,000                  $7,203

Todd L. Stevens..............   2001  $192,115  $100,000                  $6,941
  Senior Vice President,        2000  $185,000  $ 46,666                  $7,096
  Distribution                  1999  $130,384  $ 56,200    $203,455      $5,031

Basil P. Prokop..............   2001  $174,338  $103,299                  $4,640
  President, Canada Division    2000  $176,621  $      0                  $4,970
                                1999  $170,100  $ 60,578                  $4,618

-----------

(1)  Consists of relocation costs.

(2)  These  figures  for  2001  consist  of the sum  of:  (i)  Company  matching
contributions to the Savings Plan (defined below) in the following amounts:  Mr.
Allen,  $5,100;  Mr. J.M. Walsh,  $5,100;  Mr. Korman,  $5,100; and Mr. Stevens,
$5,100; (ii) Company matching contributions to the Registered Retirement Savings
Plan (defined  below) for Mr.  Prokop,  $2,905;  (iii) life and other  insurance
premiums in the following amounts:  Mr. Allen,  $2,710; Mr. J.M. Walsh,  $1,983;
Mr. Korman, $2,082; Mr. Stevens, $1,841; and Mr. Prokop $1,735.

                                      -36-
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION (CONT.)

(3)  These  figures  for  2000  consist  of the sum  of:  (i)  Company  matching
contributions to the Savings Plan (defined below) in the following amounts:  Mr.
Allen,  $5,100;  Mr. J.M. Walsh,  $5,100;  Mr. Korman,  $5,100; and Mr. Stevens,
$5,100; (ii) Company matching contributions to the Registered Retirement Savings
Plan (defined  below) for Mr.  Prokop,  $3,028;  (iii) life and other  insurance
premiums in the following amounts:  Mr. Allen,  $2,897; Mr. J.M. Walsh,  $2,189;
Mr. Korman, $2,244; Mr. Stevens, $1,996; and Mr. Prokop $1,942.

(4)  These  figures  for  1999  consist  of the sum  of:  (i)  Company  matching
contributions to the Savings Plan (defined below) in the following amounts:  Mr.
Allen,  $4,800;  Mr. J.M. Walsh,  $4,800;  Mr. Korman,  $4,800; and Mr. Stevens,
$4,069; (ii) Company matching contributions to the Registered Retirement Savings
Plan (defined  below) for Mr.  Prokop,  $2,580;  (iii) life and other  insurance
premiums in the following amounts:  Mr. Allen,  $3,192; Mr. J.M. Walsh,  $2,335;
Mr. Korman, $2,403; Mr. Stevens, $962; and Mr. Prokop $2,038.

STOCK OPTIONS

     During the year ended December 31, 2001 there were no stock options granted
to  the  Company's  chief  executive  officer  or its  four  other  most  highly
compensated executive officers.

     The following table  summarizes  information  with respect to the Company's
chief  executive  officer and its four other most highly  compensated  executive
officers  concerning the exercise of options during 2001 and unexercised options
held on  December  31,  2001.  The only  executive  officer  holding  options at
December 31, 2001 is Todd L. Stevens.

      AGGREGATED OPTION EXERCISES IN 2001 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
                                                                               NUMBER OF SHARES                 VALUE OF UNEXERCISED
                                                                             UNDERLYING UNEXERCISED             IN-THE-MONEY OPTIONS
                                                                          OPTIONS AT FISCAL YEAR-END              AT FISCAL YEAR-END
                                                                          --------------------------            --------------------
                              SHARES ACQUIRED
NAME                          ON EXERCISE (#)     VALUE REALIZED ($)     EXERCISABLE     UNEXERCISABLE  EXERCISABLE($) UNEXERCISABLE
----                          ---------------     ------------------     -----------     -------------  -------------- -------------
<S>                                <C>                  <C>                  <C>              <C>            <C>           <C>

Todd L Stevens...............       0                  $ 0                    0              29,000         $ 0           N/A (1)
</TABLE>

(1) Because the Company does not have publicly traded stock this column has been
deemed not applicable.

CERTAIN AGREEMENTS WITH MANAGEMENT

     Each of the following named executive officers; Mr. Robert A. Allen, Mr. J.
Michael  Walsh,  Mr. Leo F. Korman,  and Mr. Basil P. Prokop has entered into an
agreement with the Company which provides that if the employment of such officer
party  thereto is terminated  other than for Cause (as defined  therein) or as a
result of such officer's  resignation for Good Reason (as defined therein),  the
Company  may, in its sole  discretion,  continue to pay to such  officer,  for a
period of up to one year following such termination,  such officer's base salary
as in effect on the effective date of such  termination.  Under these agreements
each of such officers has agreed not to engage in  activities  that compete with
those of the  Company  (i) while such  officer is an employee of the Company and
(ii) if the  Company  makes  the  severance  payments  described  above  to such
officer, for an additional period of one year after such employment terminates.

INDEMNIFICATION AGREEMENTS

     Each of the Company's  directors and Mr. Leo F. Korman, the Company's Chief
Financial Officer, and certain other officers of the Company (collectively,  the
"Indemnitees"),  is party to an  identical  indemnification  agreement  with the
Company.  Pursuant  to such  agreements,  the Company  has agreed  generally  to
indemnify  and hold  harmless  each  Indemnitee  against any losses  incurred in
connection  with  any  suit,  arbitration  or  proceeding  resulting  from  such
Indemnitee's service as an officer,  agent, employee or director of the Company,
provided  that the  Company  will  generally  not be required  to  indemnify  an
Indemnitee  in  connection  with  losses  arising  out of the  Indemnitee's  own
fraudulent or willful misconduct. Each indemnification agreement terminates upon
the  occurrence  of a Change of Control  (as defined in the  agreements)  of the
Company,  provided  that the  Company's  obligations  to  indemnify  for  events
occurring prior to such Change of Control continue.

                                      -37-
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION (CONT.)

THE SAVINGS PLAN

     The Company  maintains the Core-Mark  International,  Inc. Nest Egg Savings
Plan (the "Savings Plan"),  which is a defined  contribution plan with a cash or
deferred  arrangement (as described under Section 401(k) of the Internal Revenue
Code of 1986, as amended).  All non-union U.S.  employees of the Company and its
affiliates (unless a bargaining  agreement expressly provides for participation)
are eligible to  participate  in the Savings Plan after  completing  one year of
service.

     Eligible  employees may elect to contribute on a tax-deferred basis from 1%
to 22% of their  compensation  (as  defined  in the  Savings  Plan),  subject to
statutory  limitations.  A contribution of up to 6% is considered to be a "basic
contribution"  and the Company makes a matching  contribution  of $0.50 for each
dollar of a  participant's  basic  contribution  (all of which may be subject to
certain statutory limitations).

     Each  participant  has a  fully  vested  (nonforfeitable)  interest  in all
contributions made by the individual and all earnings thereon.  Each participant
must be employed at the end of each quarter to receive an allocation of matching
contribution for the most recent calendar quarter.

     The amount of Company matching  contributions  that the following  officers
have accrued in the Savings  Plan as of December 31, 2001 is as follows:  Robert
A. Allen, $43,756; J. Michael Walsh,  $43,639; Leo F. Korman,  $43,013; and Todd
L. Stevens, $35,226.

THE REGISTERED RETIREMENT SAVINGS PLAN (CANADA)

     The Company  maintains the Core-Mark  International,  Inc. Group Retirement
Savings Plan  (Canada)  (the  "Registered  Retirement  Savings Plan" or "RRSP"),
which is a defined  contribution  plan with a cash or deferred  arrangement  (as
described under the Department of National Revenue Taxation Income Tax Act). All
non-union  Canadian  employees  of the  Company  and its  affiliates  (unless  a
bargaining  agreement  expressly  provides  for  participation)  are eligible to
participate in the Registered  Retirement Savings Plan after completing one year
of service.

     Eligible  employees may elect to contribute on a tax-deferred basis from 1%
to 18% of their  compensation  (as  defined in the RRSP),  subject to  statutory
limitations.  A  contribution  of  up  to  6%  is  considered  to  be  a  "basic
contribution"  and the Company makes a matching  contribution  of $0.50 for each
dollar of a  participant's  basic  contribution  (all of which may be subject to
certain statutory limitations).

     Basil P.  Prokop  has  $36,325  of Company  matching  contributions  in the
Registered Retirement Savings Plan as of December 31, 2001.

                                      -38-
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


     The following table sets forth as of December 31, 2001, certain information
regarding  the  beneficial  ownership  of the common stock of the Company (i) by
each person who is known by the Company to own beneficially  more than 5% of the
outstanding shares of common stock of the Company, (ii) by each of the Company's
directors  and  executive  officers  and (iii) by all  directors  and  executive
officers as a group.  The Company  believes  that the  beneficial  owners of the
securities  listed below,  based on information  furnished by such owners,  have
sole  investment and voting power with respect to all the shares of common stock
of the Company shown as being  beneficially  owned by them.

                                                  Number of
                                                  Shares of
                                               Common Stock of     Percentage of
                                                  the Company    Total shares of
                 Name and Address of              Beneficially   Common Stock of
                 Beneficial Owners (a)            Owned            the Company
                 ---------------------            -----            -----------

 Jupiter.......................................   4,125,000            75.0%
 Robert A. Allen...............................     281,875              5.1
 Leo F. Korman.................................     213,125              3.9
 Basil P. Prokop...............................     164,999              3.0
 Gary L. Walsh.................................     343,751              6.2
 J. Michael Walsh..............................     213,125              3.9
 Thomas A. Berglund............................   4,125,000 (b)         75.0
 Terry J. Blumer...............................   4,125,000 (b)         75.0
 John F. Klein.................................   4,125,000 (b)         75.0
 John A. Sprague...............................   4,125,000 (b)         75.0
 All directors and executive officers
     as a group (9 persons) (b)................   5,341,875            97.1%

-----------

(a) The address for Jupiter, Mr. Berglund, Mr. Blumer, Mr. Klein and Mr. Sprague
is 30 Rockefeller  Plaza,  Suite 4525, New York, New York 10112. The address for
Gary L. Walsh,  Mr. Allen,  Mr.  Korman,  Mr. Prokop and J. Michael Walsh is 395
Oyster Point Boulevard, Suite 415, South San Francisco, California 94080.

(b) Represents the shares owned by Jupiter.  Messrs.  Sprague,  Blumer, Berglund
and Klein exercise  investment and voting power over the shares owned by Jupiter
and accordingly are deemed to "beneficially  own" such shares in accordance with
Rule 13d-3 promulgated under the Exchange Act. Each of Messrs. Sprague,  Blumer,
Berglund and Klein  disclaim  beneficial  ownership of all shares of the Company
owned by Jupiter,  except to the extent of their respective  ownership interests
in such partnership.

STOCKHOLDERS AGREEMENT

     On August 7, 1996, the Company  entered into a Stockholders  Agreement (the
"Stockholders   Agreement")   with  Jupiter  and  certain   executive   officers
(individually,  a "Management  Stockholder"  and  collectively,  the "Management
Stockholders"),   which  parties   constitute   all  of  the  Company's   common
stockholders.  The Stockholders Agreement (a) places significant restrictions on
the ability of a Management Stockholder to transfer, pledge or otherwise dispose
of 60% of his shares of common  stock of the Company (the  "Restricted  Shares")
prior to the Company's  initial public offering of common stock,  and limits the
amount of  Restricted  Shares  that may be sold by such  Management  Stockholder
after such initial  public  offering,  (b) restricts the ability of a Management
Stockholder  to  pledge  his  shares  of  common  stock  that do not  constitute
Restricted Shares, (c) grants "tag-along" rights (i.e., rights to participate in
a sale on a pro rata basis) to each  stockholder in connection with the sale (i)
by Jupiter of any of its common  stock of the Company  and (ii) by a  Management
Stockholder  of any  of  his  Restricted  Shares,  and  (d)  grants  to  Jupiter
"drag-along"  rights  (i.e.,  the right to require  Management  Stockholders  to
participate  on a pro rata basis in a sale by Jupiter) with respect to shares of
common  stock held by the  Management  Stockholders,  whether or not  Restricted
Shares,  in connection  with a sale by Jupiter of common stock  constituting  at
least 1% of the Company's common stock.  The Stockholders  Agreement also grants
to the Company, first, and Jupiter,  second, certain call rights with respect to
the purchase of Restricted Shares held by a Management  Stockholder in the event
that, prior to the fifth anniversary of the date of the Stockholders  Agreement,
such Management  Stockholder's  employment with the Company is terminated (other
than as a result of death, disability or resignation for Good Reason (as defined
therein)).  The  call  provision  also  applies  in the  event  such  Management

                                      -39-
<PAGE>

Stockholder  breaches his  obligations  under the Severance and  Non-Competition
Agreement  described under "Certain  Agreements with  Management".  The purchase
price with respect to such call rights under the  Stockholders  Agreement is the
lower  of  $10  per  share  and  a  specified  formula  described  therein  (the
"Repurchase  Formula"),  in the event the call right  arises as a result of such
Management  Stockholder's  termination  for  Cause  (as  defined  therein),  his
resignation  other than for Good Reason or a breach of his obligations under the
Severance  and  Non-Competition  Agreement to which he is a party.  The purchase
price with respect to a call right  arising as a result of any other  employment
termination is the Repurchase Formula.

REGISTRATION RIGHTS AGREEMENT

     Pursuant to a  Registration  Rights  Agreement,  dated as of August 7, 1996
(the  "Registration  Rights  Agreement"),  the Company  granted  certain  demand
registration rights to Jupiter and certain  "piggy-back"  registration rights to
Jupiter and the Management Stockholders with respect to the sale of common stock
of the  Company  held by  them.  In  addition  to  customary  priority  cut-back
provisions relating to underwritten offerings, the Registration Rights Agreement
imposes  limitations on the number of shares of common stock of the Company that
may be included in a "piggy-back" registration by a Management Stockholder.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


         None.

                                      -40-


<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(a) The following financial statements, schedules and exhibits are filed as part
of this report or are incorporated herein as indicated.

         1.  Financial Statements

     The  consolidated   financial   statements  listed  in  Item  8.  Financial
Statements, which appear on page 17, are included herein.

         2.   Financial Statement Schedule

     The following financial statement schedule of Core-Mark International, Inc.
for the fiscal years ended December 31, 1999, 2000, and 2001 is filed as part of
this Report and should be read in conjunction  with the  Consolidated  Financial
Statements of Core-Mark International, Inc. and subsidiaries.

         Schedule II - Valuation and Qualifying Accounts

     Schedules  not  listed  above  have  been  omitted  because  they  are  not
applicable  or are not  required  or the  information  required  to be set forth
therein is included in the Consolidated Financial Statements or Notes thereto.

         3.   Exhibits

     The following  Exhibits are filed as part of, or  incorporated by reference
into, this Report:


         EXHIBIT
         NUMBER                         EXHIBIT


          2.1  Stock Subscription  Agreement,  dated June 17, 1996, by and among
               Jupiter  Partners,  L.P.,  as  amended,  incorporated  herein  by
               reference  from  Exhibit 2.1 to Core-Mark  International,  Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

          2.2  Stock  Purchase  Agreement,  dated June 17, 1996,  by and between
               Core-Mark L.L.C. and the Company, as amended, incorporated herein
               by reference from Exhibit 2.2 to Core-Mark International,  Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

        3.1.1  Articles of Incorporation of the Company,  incorporated herein by
               reference  from  Exhibit 3.1 to Core-Mark  International,  Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

        3.1.2  Restated  Articles of  Incorporation  of the Company dated August
               18, 1998,  incorporated herein by reference from exhibit 3.1.2 of
               Core-Mark  International,  Inc.  Annual Report on Form 10-K filed
               March 19, 1999 (Registration No. 333-14217).

          3.2  Amended By-laws of the Company,  incorporated herein by reference
               from exhibit 3.2 of Core-Mark  International,  Inc. Annual Report
               on Form 10-K filed March 19, 1999 (Registration No. 333-14217).

          4.1  Indenture,  dated as of September  27, 1996,  between the Company
               and  Bankers  Trust  Company as Trustee,  incorporated  herein by
               reference  from  Exhibit 4.1 to Core-Mark  International,  Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

          4.2  Form  of  Face  of  Exchange  Security,  incorporated  herein  by
               reference  from  Exhibit 4.4 to Core-Mark  International,  Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

         10.1  Manufacturing  Rights Agreement by and among Famous Value Brands,
               Core-Mark  International Inc., Core-Mark Interrelated  Companies,
               Inc. and C/M  Products,  Inc.,  incorporated  herein by reference
               from Exhibit 10.1 to Core-Mark International, Inc.'s Registration
               Statement on Form S-4 (Registration No. 333-14217).

      *10.1.1  Amendment  dated  December 31, 1997 to  Manufacturing  Rights
               Agreement   by  and  among   Famous   Value   Brands,   Core-Mark
               International Inc., Core-Mark  Interrelated  Companies,  Inc. and
               C/M Products, Inc., incorporated herein by reference from exhibit
               10.11 to Core-Mark  International  Inc.'s  Annual  Report on Form
               10-K filed March 20, 1998 (Registration No. 333-14217).

                                      -41-
<PAGE>

          10.2 Manufacturing  Agreement for "Best Buy" Cigarettes by and between
               Famous Value Brands and C/M Products,  Inc.,  incorporated herein
               by reference from Exhibit 10.2 to Core-Mark International, Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

       *10.2.1 Amendment dated December 31, 1997 to  Manufacturing  Agreement
               for "Best Buy"  Cigarettes by and between Famous Value Brands and
               C/M Products, Inc., incorporated herein by reference from exhibit
               10.12 to Core-Mark  International  Inc.'s  Annual  Report on Form
               10-K filed March 20, 1998 (Registration No. 333-14217).

          10.3 Trademark  License  Agreement by and between  Famous Value Brands
               and Core-Mark Interrelated  Companies,  Inc., incorporated herein
               by reference from Exhibit 10.3 to Core-Mark International, Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

        10.3.1 Amendment  dated  December  31,  1997  to  Trademark   License
               Agreement  by and  between  Famous  Value  Brands  and  Core-Mark
               Interrelated  Companies,  Inc.,  incorporated herein by reference
               from  exhibit  10.13 to  Core-Mark  International  Inc.'s  Annual
               Report  on Form  10-K  filed  March 20,  1998  (Registration  No.
               333-14217).

          10.4 Stockholders  Agreement  dated as of August 7, 1996, by and among
               the  Company  and  all  of  the  holders  of  its  Common  Stock,
               incorporated  herein by reference  from Exhibit 10.5 to Core-Mark
               International,   Inc.'s   Registration   Statement  on  Form  S-4
               (Registration No. 333-14217).

        10.5.1 Severance and Noncompetition  Agreement,  dated August 7, 1996,
               between the Company  and Gary L.  Walsh,  incorporated  herein by
               reference from Exhibit 10.6.1 to Core-Mark International,  Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

        10.5.2 Schedule of Severance and Non  Competition  Agreements  omitted
               pursuant  to  Instruction  no. 2 to Item 601 of  Regulation  S-K,
               incorporated herein by reference from Exhibit 10.6.2 to Core-Mark
               International,   Inc.'s   Registration   Statement  on  Form  S-4
               (Registration No. 333-14217).

          10.6 Letter, dated August 7, 1996, from Jupiter Partners LP to Gary L.
               Walsh,  incorporated  herein by  reference  from  Exhibit 10.7 to
               Core-Mark  International,  Inc.'s Registration  Statement on Form
               S-4 (Registration No. 333-14217).

          10.7 Purchase  Agreement,   dated  September  24,  1996,  between  the
               Company,  Chase Securities Inc. and Donaldson,  Lufkin & Jenrette
               Securities  Corporation,  incorporated  herein by reference  from
               Exhibit  10.8 to  Core-Mark  International,  Inc.'s  Registration
               Statement on Form S-4 (Registration No. 333-14217).

        10.8.1 Indemnification Agreement, dated November 12, 1996, between the
               Company and John F. Klein,  incorporated herein by reference from
               Exhibit 10.9.1 to Core-Mark  International,  Inc.'s  Registration
               Statement on Form S-4 (Registration No. 333-14217).

        10.8.2 Schedule  of  Indemnification  Agreements  omitted  pursuant to
               Instruction  No. 2 to Item 601 of  Regulation  S-K,  incorporated
               herein  by   reference   from   Exhibit   10.9.2   to   Core-Mark
               International,   Inc.'s   Registration   Statement  on  Form  S-4
               (Registration No. 333-14217).

          10.9 Purchase Agreement dated January 31, 1997 between the Company and
               Melvin Sosnick  Company and Capital Cigar  Company,  incorporated
               herein by reference from Exhibit (i) to Core-Mark  International,
               Inc.'s  Current  Report  on Form  8-K  filed  February  18,  1997
               (Registration  No.  333-14217).

         10.10 $120,000,000  Amended and Restated  Credit  Agreement dated as of
               April 1, 1998, among Core-Mark  International,  Inc., the Several
               Lenders from time to time Parties Hereto and The Chase  Manhattan
               Bank, as Administrative  Agent,  incorporated herein by reference
               from exhibit  10.14 to  Core-Mark  International  Inc.  Quarterly
               Report on Form 10-Q  filed  August  14,  1998  (Registration  No.
               333-14217).

                                      -42-
<PAGE>

         10.11 Amended  and  Restated  Security  Agreement  dated as of April 1,
               1998, among Core-Mark  International,  Inc., C/M Products,  Inc.,
               Core-Mark   Interrelated    Companies,    Inc.,   and   Core-Mark
               Midcontinent,  Inc.,  in favor of The Chase  Manhattan  Bank,  as
               Administrative  Agent,  incorporated  herein  by  reference  from
               exhibit 10.16 to Core-Mark International Inc. Quarterly Report on
               Form 10-Q filed August 14, 1998 (Registration No. 333-14217).

         10.12 Amendment to Borrower  Stock Pledge  Agreement  dated as of April
               1, 1998,  between  Core-Mark  International,  Inc., and The Chase
               Manhattan Bank, as Administrative  Agent,  incorporated herein by
               reference  from exhibit  10.17 to Core-Mark  International,  Inc.
               Quarterly Report on Form 10-Q filed August 14, 1998 (Registration
               No. 333-14217).

         10.13 Pooling  Agreement,  dated as of April 1, 1998,  among  Core-Mark
               Capital Corporation,  Core-Mark International, Inc., as Servicer,
               and The Chase Manhattan Bank, as Trustee,  incorporated herein by
               reference  from exhibit  10.18 to Core-Mark  International,  Inc.
               Quarterly Report on Form 10-Q filed August 14, 1998 (Registration
               No.  333-14217).

         10.14 Series 1998-1  Supplement to the Pooling  Agreement,  dated as of
               April 1, 1998,  among Core-Mark  Capital  Corporation,  Core-Mark
               International,  Inc., as Servicer,  and The Chase Manhattan Bank,
               incorporated  herein by reference from exhibit 10.19 to Core-Mark
               International,  Inc.  Quarterly  Report on Form 10-Q filed August
               14, 1998 (Registration No. 333-14217).

         10.15 Series 1998-2  Supplement to the Pooling  Agreement,  dated as of
               April 1, 1998,  among Core-Mark  Capital  Corporation,  Core-Mark
               International,  Inc., as Servicer,  and The Chase Manhattan Bank,
               incorporated  herein by reference from exhibit 10.20 to Core-Mark
               International,  Inc.  Quarterly  Report on Form 10-Q filed August
               14, 1998 (Registration No. 333-14217).

         10.16 Servicing  Agreement,  dated as of April 1, 1998, among Core-Mark
               Capital Corporation,  Core-Mark International, Inc., as Servicer,
               Subsidiaries of Core-Mark  International,  Inc., as Subservicers,
               and The Chase  Manhattan Bank,  incorporated  herein by reference
               from exhibit  10.21 to Core-Mark  International,  Inc.  Quarterly
               Report on Form 10-Q  filed  August  14,  1998  (Registration  No.
               333-14217).

         10.17 Receivables  Sale and Contribution  Agreement,  dated as of April
               1,  1998,   among  Core-Mark   Capital   Corporation,   Core-Mark
               International,  Inc., Core-Mark Midcontinent, Inc., and Core-Mark
               Interrelated Companies, Inc., as Sellers,  incorporated herein by
               reference  from exhibit  10.22 to Core-Mark  International,  Inc.
               Quarterly Report on Form 10-Q filed August 14, 1998 (Registration
               No. 333-14217).

          21   List of  Subsidiaries  of the  Company,  incorporated  herein  by
               reference  from  Exhibit 21 to  Core-Mark  International,  Inc.'s
               Registration Statement on Form S-4 (Registration No. 333-14217).

          *    Portions of these exhibits have been omitted pursuant to an Order
               Granting Confidential Treatment Under the Securities Exchange Act
               of 1934 by the  Company  with  the  Commission  pursuant  to Rule
               24b-2, under the Securities Exchange Act of 1934, as amended.




(b) Reports on Form 8-K

    None.

                                      -43-
<PAGE>


                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized in the City of South
San Francisco, California, on March 29, 2002.


                          CORE-MARK INTERNATIONAL, INC.



                              By /s/ Leo F. Korman
                       -----------------------------------
                    Leo F. Korman, Senior Vice President and
                             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 dates indicated.


             Signature                    Title                       Date
             ---------                    -----                       ----

        /s/ Gary L. Walsh
      -------------------------
            Gary L. Walsh          Chairman and Director          March 29, 2002

        /s/ Robert A. Allen
      -------------------------
            Robert A. Allen        President, Chief Executive
                                       Officer and Director       March 29, 2002

        /s/ Leo F. Korman
      -------------------------
            Leo F. Korman          Senior Vice President,
                                   Chief Financial Officer and    March 29, 2002
                                   Principal Accounting Officer

        /s/ Thomas A. Berglund
      -------------------------
            Thomas A. Berglund              Director              March 29, 2002

        /s/ Terry J. Blumer
      -------------------------
            Terry J. Blumer                 Director              March 29, 2002

        /s/ John F. Klein
      -------------------------
            John F. Klein                   Director              March 29, 2002

        /s/ John A. Sprague
      -------------------------
            John A. Sprague                 Director              March 29, 2002

                                      -44-

<PAGE>


                                                                     SCHEDULE II

                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
              For the Years Ended December 31, 1999, 2000 and 2001
                                 (in thousands)
<TABLE>
<CAPTION>
               Column A               Column B                Column C                 Column D       Column E
                                                             Additions
               --------               ----------       -------------------------      ----------     ----------

                                      Balance at       Charged to     Charged to                      Balance at
                                      Beginning        Costs and        Other                          End of
               Description            of Year           Expenses       Accounts       Deductions        Year
               -----------            ----------       ----------     ----------      ----------     ----------
<S>                                       <C>              <C>              <C>          <C>               <C>

ALLOWANCE FOR DOUBTFUL ACCOUNTS
Year Ended December 31,
   1999.........................        $ 2,761          $  308          $    _        $ (749)(a)      $ 2,320
   2000.........................          2,320             969               _          (629)(a)        2,660
   2001.........................          2,660           2,031               _          (893)(a)        3,798
</TABLE>


(a)  Deductions  consist of accounts  determined to be uncollectible and charged
     against reserves, net of collections on accounts previously charged off.

                                      -45-