FORM 10-Q


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



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


                  For the quarterly period ended June 30, 1999



                                       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

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

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.

                                 _x_ Yes ___ No

                  At July 31, 1999, Registrant had outstanding
                       5,500,000 shares of Common Stock.

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


<PAGE>



                 Core-Mark International, Inc. and Subsidiaries

                    FORWARD-LOOKING STATEMENTS OR INFORMATION

     Certain  statements  contained in this quarterly  report on Form 10-Q under
the caption  "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 (the
"Company'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 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;
increases in federal and state taxes on tobacco products that have the effect of
increasing the prices of such 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.
<TABLE>
<CAPTION>


                                                                            Page
PART I - FINANCIAL INFORMATION
<S>                                                                          <C>

Item 1: Financial Statements

     Condensed  Consolidated Balance Sheets as of December 31, 1998 and
     June 30, 1999............................ .............................   3
     Condensed  Consolidated  Statements  of Income for the three and six
     months ended June 30, 1998 and  1999...... ............................   4
     Condensed  Consolidated  Statements  of Cash Flows for the six months
     ended June  30,  1998 and  1999............ ...........................   5
     Notes  to  Condensed  Consolidated Financial Statements................   6

Item 2: Management's Discussion and Analysis of Financial Condition and
        Results of Operations    ............... ...........................   8

Item 3: Quantitative and Qualitative Disclosures About Market
        Risk................................................................  13

PART II - OTHER INFORMATION

     Item 1:  Legal Proceedings.............................................  14
     Item 2:  Changes in Securities and Use of Proceeds.....................  15
     Item 3:  Defaults Upon Senior Securities...............................  15
     Item 4:  Submission of Matters to a Vote of Security Holders...........  15
     Item 5:  Other Information.............................................  15
     Item 6:  Exhibits and Reports on Form 8-K..............................  15

Signature     ..............................................................  16
</TABLE>
                                      -2-



<PAGE>




                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                            (In Thousands of Dollars)
<TABLE>
<CAPTION>

                                                                                       December 31,             June 30,

                                                                                           1998                   1999
                                                                                         --------              --------
Assets                                                                                                        (Unaudited)
<S>                                                                                         <C>                   <C>
Current assets:
     Cash ......................................................................        $  24,586             $  13,877
     Receivables:
         Trade accounts, less allowance for doubtful accounts of $2,761 and
              $2,727, respectively..............................................          103,412               108,976
         Other .................................................................           12,578                13,495
     Inventories, net of LIFO allowance of $34,332 and $34,557, respectively....          112,481                74,284
     Prepaid expenses and other.................................................            6,576                 6,018
                                                                                         --------              --------
         Total current assets ..................................................          259,633               216,650

Property and equipment .........................................................           61,332                63,631
     Less accumulated depreciation .............................................          (33,283)              (35,436)
                                                                                         --------              --------
     Net property and equipment ................................................           28,049                28,195

Other assets  ..................................................................            7,227                 6,528
Goodwill, net of accumulated amortization of $19,375 and $20,416,
     respectively ..............................................................           64,481                63,440
                                                                                         --------              --------
                                                                                         $359,390              $314,813
                                                                                         ========              ========
Liabilities and Shareholders' Equity Current liabilities:
     Trade accounts payable.....................................................        $  48,867             $  55,998
     Cigarette and tobacco taxes payable........................................           45,073                54,077
     Income taxes payable.......................................................            2,698                 3,483
     Deferred income taxes......................................................            6,992                 6,833
     Other accrued liabilities..................................................           34,514                30,027
                                                                                         --------              --------
         Total current liabilities..............................................          138,144               150,418

Long-term debt..................................................................          208,124               142,100
Other accrued liabilities and deferred income taxes.............................            9,260                10,339
                                                                                         --------              --------
     Total liabilities..........................................................          355,528               302,857

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
     Accumulated deficit........................................................          (15,077)               (8,037)
     Accumulated other comprehensive loss:
         Foreign currency translation adjustments...............................           (4,225)               (3,171)
Minimum pension liability adjustment............................................           (3,012)               (3,012)
                                                                                         --------               --------
         Total shareholders' equity.............................................            3,862                11,956
                                                                                         --------               --------
                                                                                         $359,390               $314,813
                                                                                         ========               ========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                      -3-
<PAGE>



                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                   Condensed Consolidated Statements of Income
                            (In Thousands of Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                   Three Months                      Six Months
                                                                  Ended June 30,                   Ended June 30,
                                                           -----------------------------    -----------------------------
                                                                1998          1999              1998            1999
                                                              --------      --------          --------        --------
<S>                                                              <C>            <C>               <C>             <C>

Net sales............................................        $  609,051   $  707,406          $1,172,271     $1,336,858
Cost of goods sold...................................           564,627      656,734           1,087,160      1,240,616
                                                               --------     --------            --------       --------
    Gross profit.....................................            44,424       50,672              85,111         96,242
Operating and administrative expenses................            37,013       39,101              73,050         76,972
                                                               --------     --------            --------       --------
    Operating income.................................             7,411       11,571              12,061         19,270

Interest expense, net................................             3,692        3,100               7,988          6,495
Debt refinancing costs...............................             1,199          319               1,573            637
                                                               --------     --------            --------       --------
    Income before income taxes.......................             2,520        8,152               2,500         12,138

Income tax expense...................................             1,158        3,424               1,149          5,098
                                                               --------     --------            --------       --------
    Net income.......................................        $    1,362   $    4,728          $    1,351     $    7,040
                                                               ========     ========            ========       ========
</TABLE>





























            See Notes to Condensed Consolidated Financial Statements.

                                      -4-
<PAGE>



                 CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                            (In Thousands of Dollars)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                                  Six Months
                                                                                                Ended June 30,
                                                                                   ----------------------------------------
                                                                                           1998                  1999
                                                                                         --------              --------
CASH PROVIDED BY OPERATING ACTIVITIES:
<S>                                                                                          <C>                   <C>

Net income    ..................................................................       $    1,351            $    7,040

     Adjustments to  reconcile  net  income to net cash  provided  by  operating
         activities:
     LIFO expense...............................................................            4,051                   225
     Depreciation and amortization..............................................            3,211                 3,178
     Amortization of goodwill...................................................            1,041                 1,041
     Amortization of debt refinancing fees......................................            1,573                   637
     Deferred income taxes......................................................               64                   965
     Changes in operating assets and liabilities................................           25,068                44,270
                                                                                         --------              --------
Net cash provided by operating activities ......................................           36,359                57,356
                                                                                         --------              --------
INVESTING ACTIVITIES:

     Additions to property and equipment .......................................           (2,699)               (3,095)
                                                                                         --------              --------
Net cash used in investing activities ..........................................           (2,699)               (3,095)
                                                                                         --------              --------
FINANCING ACTIVITIES:

     Net borrowings (payments) under accounts receivable securitization.........           70,000                (6,900)
     Net payments under revolving credit agreement .............................         (104,387)              (59,124)
     Debt refinancing fees......................................................           (1,273)                   --
                                                                                         --------               --------
Net cash used in financing activities ..........................................          (35,660)              (66,024)
                                                                                         --------               --------

Effects of changes in foreign exchange rates....................................             (310)                1,054
                                                                                         --------               --------
Decrease in cash ...............................................................           (2,310)              (10,709)
Cash, beginning of period ......................................................           15,281                24,586
                                                                                         --------               --------
CASH, END OF PERIOD.............................................................      $    12,971           $    13,877
                                                                                         ========               ========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments during the period for:
     Interest ..................................................................           $7,868                $6,466
     Income taxes ..............................................................            1,110                 3,325
</TABLE>



            See Notes to Condensed Consolidated Financial Statements.

                                     -5-
<PAGE>



              Notes to Condensed Consolidated Financial Statements
                         Six Months Ended June 30, 1999
                                   (Unaudited)


1.  Basis of Presentation

     The condensed consolidated balance sheet as of June 30, 1999, the condensed
consolidated  statements of income for the  three-month  and  six-month  periods
ended June 30, 1998 and 1999, and the condensed consolidated  statements of cash
flows for the six-month periods ended June 30, 1998 and 1999, have been prepared
by Core-Mark International,  Inc. (the "Company"). In the opinion of management,
all adjustments,  consisting only of normal recurring adjustments,  necessary to
present  fairly the  financial  position  of the  Company at June 30,  1999 with
respect to the interim financial  statements,  and the results of its operations
and cash flows for the interim  periods ended June 30, 1998 and 1999,  have been
included.  The results of operations for the interim periods are not necessarily
indicative of the operating results for the full year.

     The  condensed  consolidated  balance  sheet as of December  31,  1998,  is
derived  from  the  audited  financial  statements  but  does  not  include  all
disclosures  required by generally  accepted  accounting  principles.  The notes
accompanying  the consolidated  financial  statements of the Company included in
the Company's  Annual  Report on Form 10-K for the year ended  December 31, 1998
("1998 Form 10-K") include a description of the Company's significant accounting
policies and additional  information  pertinent to an  understanding of both the
December 31, 1998 balance sheet and the interim  financial  statements  included
herein.

2.  Inventories

     The condensed  consolidated  financial  statements have been prepared using
the LIFO  method  of  accounting  for  inventories.  The use of the LIFO  method
resulted in an increase  in cost of goods sold and a  corresponding  decrease in
inventories of $3.3 million and $0.1 million for the three months ended June 30,
1998 and 1999,  respectively,  and $4.1  million  and $0.2  million  for the six
months ended June 30, 1998 and 1999, respectively. Interim LIFO calculations are
based on management's estimates of year-end inventory levels and inflation rates
for the year.

3.  Excise Taxes

     State and provincial  excise taxes on cigarettes  included in the Company's
net sales and cost of goods sold were $116.4  million and $146.3 million for the
three months ended June 30, 1998 and 1999,  respectively  and $228.6 million and
$275.1 million for the six months ended June 30, 1998 and 1999, respectively.

4.  Comprehensive Income

     The Company's  total  comprehensive  income was $578,000 and $5,425,000 for
the three months ended June 30, 1998 and 1999, respectively,  and $1,041,000 and
$8,094,000 for the six months ended June 30, 1998 and 1999, respectively,  which
reflects net income and foreign currency translation adjustments.

                                      -6-
<PAGE>



Notes to Condensed Consolidated Financial Statements (cont.)


5. Segment Information

     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.  There has been no
change in the segment  reported or the basis of measurement of segment profit or
loss from that which was  reported in the  Company's  1998 Form 10-K.  Wholesale
distribution segment information for the three-month and six-month periods ended
June 30, and segment  assets as of  December  31, 1998 and June 30, 1999 are set
forth below (dollars in thousands):

<TABLE>
<CAPTION>


                                                                               Three Months               Six Months
                                                                               Ended June 30              Ended June 30
                                                                               -------------              ------------

                                                                              1998       1999          1998         1999
                                                                            --------   --------      --------     --------
<S>                                                                           <C>          <C>          <C>         <C>

         Net sales from external customers .............................   $ 609,051   $ 707,406   $1,172,271   $1,336,858

         Segment pretax operating income (1) ...........................   $   4,917   $   9,078   $    6,970   $   13,962
         Less: Goodwill and other unallocated amortization .............         658         565        1,312        1,126
                 Interest expense: unallocated and other ...............         540          43        1,585           61
                 Amortization of debt refinancing costs ................       1,199         318        1,573          637
                                                                            --------    --------     --------     --------
         Consolidated income before income taxes .......................   $   2,520   $   8,152   $    2,500   $   12,138
                                                                            ========    ========     ========     ========
</TABLE>


<TABLE>
<CAPTION>


         Assets                                                            December 31,  June 30,
                                                                              1998         1999
                                                                            --------    --------
<S>                                                                            <C>         <C>

         Segment assets................................................    $ 341,583   $ 304,050
         Add: Corporate and other......................................       17,807      10,763
                                                                            --------    --------
         Consolidated assets...........................................    $ 359,390   $ 314,813
                                                                            ========    ========

</TABLE>

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

                                      -7-

<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


     The following  discussion  should be read in conjunction with  Management's
Discussion and Analysis and the discussion under the heading "Legal Proceeding -
Regulatory and Legislative Matters" included in the Company's 1998 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.  For the six months ended June 30, 1999,  approximately 69%, 21% and
10% of the Company's net sales were derived from  cigarettes,  food products and
non-food products, respectively.


Tobacco Industry Business Environment

     Manufacturers  and  distributors  of cigarettes and other tobacco  products
face 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  "Impact of  Tobacco  Taxes"  below);
increased litigation involving health and other effects of cigarette smoking and
other uses of  tobacco;  and  potential  litigation  by the U.S.  Department  of
Justice to recover federal Medicare costs allegedly connected to smoking.

     In August 1996, the United States Food and Drug  Administration (the "FDA")
determined  that it had  jurisdiction  over  cigarettes  and  smokeless  tobacco
products  and  issued  regulations   restricting  the  sale,   distribution  and
advertising of cigarette and smokeless tobacco  products,  especially to minors.
The FDA regulations are  significant  not only because of their  substance,  but
also because the FDA determined  that it has  jurisdiction  over  cigarettes and
smokeless  tobacco  as  "combination  products  having  both a  drug  component,
including  nicotine,  and device  components."  The  regulations  regulate  such
products as "devices."  In April 1997,  the U.S.  District  Court for the Middle
District of North Carolina held that the FDA could impose restrictions on access
to and labeling of tobacco products,  but did not have authority to restrict the
promotion and advertisement of such products. The court stayed implementation of
the FDA  regulations  except for those  establishing a federal minimum age of 18
for the sale of tobacco products and requiring proof of age for anyone under the
age of 27. On August 14, 1998,  however,  the United States Court of Appeals for
the Fourth Circuit reversed the decision of the District Court, finding that the
FDA lacked  statutory  authority to regulate tobacco  products  altogether.  The
FDA's  petitions for rehearing and rehearing en banc by the Fourth  Circuit were
denied,  but, on April 26, 1999, the Supreme Court granted  certiorari to review
the decision of the Court of Appeals.  A date for  arguments on the case has not
yet been set.

     In June 1997, a so called "national settlement" of many of these issues was
proposed following  negotiations among major U.S. tobacco  manufacturers,  state
attorneys general,  representatives of the public health community and attorneys
representing  plaintiffs in certain smoking and health litigation.  The national
settlement required  implementation by federal  legislation,  however,  and such
legislation  was  considered  but not passed by the  Congress  in 1998.  Similar
federal legislation has not been introduced to date in 1999.

     In light of failure of the  national  settlement  legislation,  in November
1998, the four largest U.S. cigarette manufacturers and the attorneys general of
46 states, five territories, and the District of Columbia agreed to a settlement
of approximately $400 billion for public  health-care costs allegedly  connected
to smoking.  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.  As a direct result of this  settlement,  the major cigarette
manufacturers  raised the  wholesale  price of  cigarettes  by $4.50 per carton,
effective November 24, 1998, bringing the total per-carton price increase in the
United States in 1998 to $6.35.

     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; use tobacco brand names
to sponsor concerts, athletics events or other events in which a significant

                                      -8-
<PAGE>

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).  Many of these
provisions  took effect in November  1998 and most of the  remaining  provisions
took effect by April 23, 1999.  The Company is unable to assess the effects that
this agreement will have on the sale of the Company's products;  there can be no
assurance that these new restrictions will not result in a material reduction of
the consumption of tobacco  products in the United States and thus will not have
a material adverse effect on the Company's business and financial position.

     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 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.

     In early 1999, the President of the United States  requested the Department
of Justice to review whether the United States can recover various  expenditures
for  medical  costs  incurred  by smokers or former  smokers  which were paid or
reimbursed by the federal  government.  To date, the Justice  Department has not
taken any such action, but there can be no assurance that the federal government
will not  commence  litigation  against the tobacco  manufacturers  or as to the
outcome of any such litigation.

     Effective  January 1, 1999,  the State of  California  increased  the state
excise  tax on  cigarettes  by $5.00 per  carton.  California  is the  Company's
largest market,  representing  approximately  37% of carton sales during the six
months ended June 30, 1999.

     The Company believes that price and tax increases of the magnitude recently
experienced  will have a negative impact on overall industry unit sales and will
negatively affect the Company's sales of tobacco products.  The Company does not
believe that it is able to quantify the impact of these higher  prices and taxes
on future sales of cigarettes  and other tobacco  products.  Manufacturer  price
increases will also increase the Company's debt and interest expense levels. The
Company  believes that it has adequate  financing  arrangements  in place at the
present time to finance the additional working capital  requirements of the most
recent  manufacturer price increases.  However,  depending upon future levels of
manufacturer price increases, or if the terms or amounts of state and provincial
excise  taxes were  adversely  changed,  the  Company  may be  required  to seek
additional   financing  in  order  to  meet  future   higher   working   capital
requirements.

     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.


Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998

     NET SALES.  Net sales for the three  months ended June 30, 1999 were $707.4
million, an increase of $98.4 million or 16.2% over the same period in 1998. The
increase  in net  sales  was  primarily  due to an  increase  in  net  sales  of
cigarettes,  as well as increased  sales of food and  non-food  products in 1999
compared to 1998.

     Net sales of  cigarettes  for the three  months  ended  June 30,  1999 were
$489.5  million,  an increase of $81.4  million or 19.9% over the same period in
1998. The increase in net sales of cigarettes was  principally  due to increases
in  manufacturers'  list  prices  as well as the $5.00 per  carton  increase  in
California  state excise taxes which became  effective  January 1, 1999,  all of
which  have been  passed  on to the  Company's  customers  in the form of higher
prices. The Company's total cigarette unit sales for the three months ended June
30, 1999 were 19.9 million  cartons,  a decrease of 2.0 million  cartons or 9.2%
from the same  period  of 1998.  The  decrease  in the  Company's  carton  sales
occurred  primarily  in  California,  and was due to a number  of  factors.  The
competition from so called "grey market" cigarettes also continued to be intense
in  California.  Grey market  cigarettes  are  cigarettes  produced by the major
tobacco companies, and intended for export only, but which are reintroduced into
the domestic market by unauthorized  distributors at prices  substantially lower
then domestic  cigarettes.  For the three months ended June 30, 1999,  cigarette
carton sales in the United States, outside of California, were substantially the
same in 1999 as in the comparable period of 1998.

                                      -9-
<PAGE>

     Net sales of food and non-food products for the three months ended June 30,
1999 were $217.9  million,  an  increase of $17.0  million or 8.4% over the same
period in 1998.

     GROSS  PROFIT.  Gross  profit for the three  months ended June 30, 1999 was
$50.7  million,  an  increase  of $6.2  million or 14.1% over the same period in
1998.  The increase was  primarily  due to the higher level of sales in both the
cigarette  and food and non-food  categories.  The gross  profit  margin for the
three months ended June 30, 1999  decreased to 7.16% of net sales as compared to
7.29% of net sales for the  comparable  period in 1998.  The decrease in overall
gross profit margin was primarily due to the greater increase in cigarette sales
as  compared  to sales of food and  non-food  products,  because  the  margin on
cigarette sales is lower than on food and non-food products.  During the period,
both cigarette gross profit margin and gross profit per carton increased,  while
gross profit margins on food and non-food products remained virtually unchanged.

     OPERATING  AND  ADMINISTRATIVE   EXPENSES.   Operating  and  administrative
expenses  for the three  months  ended  June 30,  1999 were  $39.1  million,  an
increase  of $2.1  million or 5.6% over the same period in 1998.  However,  such
expenses for the three months ended June 30, 1999 decreased to 5.5% of net sales
as  compared  to 6.1% of net sales for the same  period in 1998.  The decline in
operating  expenses  as a percent  of net sales is  primarily  due to the higher
level of cigarette net sales  resulting from cigarette  price  increases,  which
occurred primarily in the last quarter of 1998.

     OPERATING  INCOME. As a result of the foregoing  factors,  operating income
for the three months ended June 30, 1999 was $11.6 million,  an increase of $4.2
million or 56.1%  compared to the same period in 1998.  As a  percentage  of net
sales,  operating  income for the three months ended June 30, 1999 was 1.6%,  as
compared to 1.2% for the same period in 1998.

     NET INTEREST EXPENSE.  Net interest expense for the three months ended June
30, 1999 was $3.1 million, a decrease of $0.6 million or 16.0% compared to 1998.
The net decrease  resulted from a decrease in the Company's  average debt levels
and a decline in the average borrowing rate.

     DEBT REFINANCING  COSTS.  Debt refinancing costs for the three months ended
June 30, 1999 were $0.3 million, a decrease of $0.9 million or 73.4% compared to
the same period in 1998.  The decrease is a result of the write-off of a portion
of  unamortized  costs  relating to the  modification  of the  revolving  credit
facility, which occurred in 1998.

Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998

     NET SALES.  Net sales for the six months ended June 30, 1999 were  $1,336.9
million,  an increase of $164.6 million or 14.0% over the  comparable  period in
1998.  The  increase  in net  sales  was  due to an  increase  in net  sales  of
cigarettes and food and non-food products in 1999 compared to 1998.

     Net sales of cigarettes  for the six months ended June 30, 1999 were $924.8
million,  an  increase  of $141.6  million  or 18.1%  over the prior  year.  The
increase  in net  sales  of  cigarettes  was  principally  due to  increases  in
manufacturers'  list  prices  as  well  as the  $5.00  per  carton  increase  in
California  state excise taxes which became  effective  January 1, 1999,  all of
which have been passed along to the Company's  customers.  The  Company's  total
cigarette  unit sales for the six months  ended June 30, 1999 were 37.6  million
cartons,  a decrease of 5.3 million cartons or 12.3% from the comparable  period
in 1998.  The  decrease in the  Company's  carton  sales  occurred  primarily in
California,  and was due to a number of factors.  The competition from so called
"grey market" cigarettes also continued to be intense in California. For the six
months ended June 30, 1999, cigarette carton sales in the United States, outside
of California,  were  substantially the same in 1999 as in the comparable period
of 1998.

     Net sales of food and  non-food  products for the six months ended June 30,
1999  were  $412.0  million,  an  increase  of $23.0  million  or 5.9%  over the
comparable period in 1998.

     GROSS PROFIT. Gross profit for the six months ended June 30, 1999 was $96.2
million,  an increase of $11.1  million or 13.1% from the  comparable  period in
1998.  The increase was  primarily  due to sales  increases in the cigarette and
food and non-food  categories.  The gross profit margin for the six months ended
June 30, 1999  decreased  slightly to 7.20% of net sales as compared to 7.26% of
net sales for the first six months of 1998. The decrease in overall gross profit
margin was primarily due to the greater  increase in cigarette sales as compared
to sales of food and non-food products, because the margin on cigarette sales is
lower than on food and  non-food  products.  During the period,  both  cigarette
gross profit  margin and gross profit per carton  increased,  while gross profit
margins on food and non-food products remained virtually unchanged.

     OPERATING  AND  ADMINISTRATIVE   EXPENSES.   Operating  and  administrative
expenses for the six months ended June 30, 1999 were $77.0 million,  an increase
of $3.9  million  or 5.4%  over the  comparable  period in 1998.  However,  such
expenses for the six months  ended June 30, 1999  decreased to 5.8% of net sales
as compared to 6.2% for the comparable  period in 1998. The decline in operating
expenses  as a percent  of net sales is  primarily  due to the  higher  level of
cigarette net sales  resulting from  cigarette  price  increases  which occurred
primarily in the last quarter of 1998.

                                      -10-
<PAGE>

     OPERATING  INCOME. As a result of the foregoing  factors,  operating income
for the six months  ended June 30, 1999 was $19.3  million,  an increase of $7.2
million or 59.8% compared to the  comparable  period in 1998. As a percentage of
net sales,  operating income for the six months ended June 30, 1999 was 1.4%, as
compared to 1.0% for the comparable period in 1998.

     NET INTEREST  EXPENSE.  Net interest  expense for the six months ended June
30, 1999 was $6.5 million, a decrease of $1.5 million or 18.7% compared to 1998.
The net decrease  resulted from a decrease in the Company's  average debt levels
and a  decline  in the  average  borrowing  rates  primarily  as a result of the
accounts receivable securitization program, which was effective April 1, 1998.

     DEBT REFINANCING  COSTS.  Debt  refinancing  costs for the six months ended
June 30, 1999 were $0.6  million,  a decrease of $0.9  million or 59.5% over the
comparable  period  in 1998.  The  decrease  is a result of the  write-off  of a
portion of  unamortized  costs  relating to the  modification  of the  revolving
credit facility, which occurred in 1998.


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.

     The Company's debt  obligations  totaled $142.1 million at June 30, 1999, a
decrease of $66.0 million or 31.7% from $208.1 million at December 31, 1998. The
net decrease in outstanding debt is primarily due to decreased borrowings needed
to finance working capital funding requirements. Debt requirements are generally
the  highest at  December  31,  when the  Company  historically  carries  higher
inventory.

     The  Company's  principal  sources of  liquidity  are net cash  provided by
operating  activities  and  its  credit  facilities.  At year  end  the  Company
typically  carries  higher  inventories  which  are then  liquidated  in  future
periods.  Therefore,  net cash  provided by  operating  activities  is typically
higher at interim periods than at the end of any fiscal year.

     The Company  made capital  expenditures  of $3.1 million for the six months
ended June 30, 1999.  For the remainder of 1999,  the Company  estimates it will
spend  approximately  $4 to $5 million  for  capital  requirements,  principally
consisting of warehouse and other equipment.


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.  For the six months ended June 30, 1999,  such taxes on
cigarettes represented  approximately 26% of cigarette net sales in the U.S. and
45% 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.

     Effective  January 1, 1999, the State of California  increased excise taxes
on cigarettes by $5.00 per carton and also  increased  taxes on cigars 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,  exceed 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).

                                      -11-
<PAGE>

     The U.S.  federal excise tax on cigarettes is currently $2.40 per carton of
cigarettes.  The federal excise tax is scheduled to increase by $1.00 per carton
of cigarettes  starting in the year 2000 and by an additional $.50 per carton of
cigarettes in 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.  Such
increases in U.S.  federal  taxes will increase the  Company's  working  capital
requirements  by  increasing  the  balances  of  its  inventories  and  accounts
receivable.

     In 1997 and 1999,  the  President  and  various  members of  Congress  have
suggested  additional excise taxes on cigarette and tobacco products,  either as
part of the proposed legislative resolution of various issues affecting the U.S.
tobacco industry  discussed above or to finance unrelated federal spending.  The
Company is not aware of any  significant  proposals  for excise tax increases in
the current Congress.

Impact of Year 2000 Compliance Issues

     In accordance with the safe harbor provisions of the Private Securities Act
of 1995,  the Company notes that certain  statements  contained in the following
discussion  concerning year 2000 compliance issues are forward-looking in nature
and  are  subject  to  many  risks  and  uncertainties.   These  forward-looking
statements  include such matters as the Company's  projected state of readiness,
the  Company's  projected  cost of  remediation,  the expected  date or state of
completion  of each  phase  and the  expected  date or  state of  completion  of
contingency   plans.  Such  statements  also  constitute  "year  2000  readiness
disclosure"  within  the  meaning  of the year 2000  Information  and  Readiness
Disclosure Act.

     The Company relies upon various information  technology and non-information
technology  systems  that are  required  to be year  2000  compliant.  Year 2000
compliance  indicates that computer software,  hardware and embedded  processors
are able to  correctly  process  the year 2000 date  parameter.  The Company has
completed  the  assessment,  modification  or  conversion  and  testing  of  the
Company's systems for year 2000 compliance as of June 30, 1999. The systems that
were  assessed,  modified or  converted  for year 2000  compliance  included the
Company's  computer  programs,   certain  building   infrastructure   components
(including elevators,  alarm systems and certain HVAC systems), and certain data
collection and  transmission  devices.  Additionally,  the systems of customers,
vendors and other constituents with whom the Company has material  relationships
that could have an impact on the  Company's  operations  were  assessed for year
2000 compliance.  The third party assessment process was complete as of June 30,
1999.  Procedures  have been  undertaken  by third  parties to  remediate  their
non-compliant  systems,  however  there can be no assurance  that the systems of
other  companies  will be modified  or  converted  on time,  which could have an
adverse  effect on the Company's  operations.  Non-compliance  could result in a
disruption of the business,  which could have a material impact on the Company's
results of operations, financial position and/or cash flows.

     The most  reasonable  and  likely  result  of  non-compliance  would be the
Company's   inability  to  utilize  its  computer   systems  to  process   daily
transactions,  which  could  result in  increased  operating  costs and  delayed
shipments to customers and, as a result,  possible monetary losses from canceled
future  business and lawsuits for breach of contract with these  customers.  The
Company has developed contingency plans for various business disruptions,  which
will  include  procedures  to  mitigate  the effect of year 2000  non-compliance
issues.  The contingency  plans include  procedures for alternate  processing of
daily  transactions  in the event of an inability to use the Company's  computer
systems,  as well as procedures for  transmitting  and receiving data from third
parties with non-compliant systems.

     The Company utilized  internal  resources to assess,  modify or convert and
test for year 2000 compliance.  The total cost for the assessment,  modification
or  conversion  and  testing  of the  Company's  systems is  approximately  $1.1
million,  all of which were incurred as of June 30, 1999.  These costs represent
approximately 44% of the fiscal 1999 information  technology department budgeted
expenses and are comprised of $0.1 million for  assessment  and $1.0 million for
software  modification  or conversion.  As a result of the year 2000  compliance
effort, the Company believes that no information  technology  projects have been
deferred that will have a material  impact on the Company's  operations.  All of
the costs  related to year 2000  compliance  have been  expensed as incurred and
have been funded through  operating cash flows.  The costs  associated with year
2000  compliance are based on management's  estimates,  which were derived using
numerous assumptions of resources, and other factors.

                                      -12-


<PAGE>




New Accounting Standards

     In 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities,"  which  standardizes  the accounting for  derivatives,
requiring  recognition  as either assets or liabilities on the balance sheet and
measurement at fair value.  The Company plans to adopt this statement for fiscal
2001. The Company has not yet  determined the effect  adoption of this statement
will  have  on  the  Company's  consolidated  financial  position,   results  of
operations or cash flows.

     In 1998,  the American  Institute of Certified  Public  Accountants  issued
Statement  of  Opinion  ("SOP")  98-1,  "Accounting  for the  Costs of  Computer
Software  Developed or Obtained for Internal Use." This SOP provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. This SOP requires that entities  capitalize certain  internal-use  software
costs once certain criteria are met.  Currently,  the Company generally expenses
the costs of  developing  or obtaining  internal-use  software as incurred.  The
Company  is  currently  evaluating  SOP 98-1,  but does not  expect it to have a
material impact on its consolidated financial statements.  This SOP is effective
for the Company's financial statements for the year ended December 31, 1999.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


     The Company  believes there has been no material  change in its exposure to
market risk from that  discussed in the Company's  1998  Consolidated  Financial
Statements.

                                      -13-
<PAGE>



                           PART II - OTHER INFORMATION


ITEM 1.           Legal Proceedings


     As of the beginning of the second quarter,  the Company had previously been
named in three tobacco-related  lawsuits. During the second quarter, the Company
was dismissed from each of those lawsuits, as detailed below:

     In May  1998,  a  division  of the  Company  was  named a  defendant  in an
individual  litigation  complaint filed in a state court in Broward County,  FL.
The Company was dismissed from this case in March 1999.

     From January 1998 through the early part of 1999,  the Company was named in
25 legal actions brought by various union health and welfare trusts,  which were
consolidated  into a single  proceeding  in the  Superior  Court  for San  Diego
County. The Company was dismissed from these cases in June 1999.

     In November 1998, the Company was served with a summons and complaint in an
action brought by the Pechanga Band of Luiseno  Mission  Indians.  This case was
terminated in a voluntary dismissal filed by the plaintiff in June 1999.

     The Company is not  currently  named as a defendant in any  tobacco-related
litigation.

     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.

                                      -14-


<PAGE>



Item 2:  Changes in Securities and Use of Proceeds

         Not applicable


Item 3: Defaults Upon Senior Securities

         Not applicable


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

         Not applicable


Item 5: Other Information

         Not applicable


Item 6: Exhibits and Reports on Form 8-K

(a)      Exhibits


         27       Financial Data Schedule


(b)      Reports on Form 8-K:

                  None.

                                      -15-
<PAGE>



 SIGNATURE



     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned,  thereunto  duly  authorized  in the City of South  San  Francisco,
California, on August 12, 1999.


                          CORE-MARK INTERNATIONAL, INC.



                          By     /s/  Leo F. Korman
                              -----------------------------------
                              Leo F. Korman, Senior Vice President and
                              Chief Financial Officer

                                      -16-