<PAGE>

                                      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 MARCH 31, 1998

                                          OR

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

     For the transition period from ______________ to ______________

                           Commission file number 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 April 30, 1998, 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 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
                                                                         ----
<S>                                                                      <C>
PART I - FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS
     Condensed Consolidated Balance Sheets as of 
       December 31, 1997 and March 31, 1998                                 3
     Condensed Consolidated Statements of Income for the 
       three months ended March 31, 1997 and 1998                           4
     Condensed Consolidated Statements of Cash Flows for the 
       three months ended March 31, 1997 and 1998                           5
     Notes to Condensed Consolidated Financial Statements                   6

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
          AND RESULTS OF OPERATIONS                                         8

PART II - OTHER INFORMATION

     Item 1:   Legal Proceedings                                           13
     Item 2:   Changes in Securities                                       14
     Item 3:   Defaults upon Senior Securities                             14
     Item 4:   Submission of Matters to a Vote of Security Holders         14
     Item 5:   Other Information                                           14
     Item 6:   Exhibits and Reports on Form 8-K                            14

Signature                                                                  15

</TABLE>


                                       2

<PAGE>

                    CORE-MARK INTERNATIONAL, INC. AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                              (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>

                                                                              DECEMBER 31,       MARCH 31,
                                                                                 1997              1998
                                                                             -------------    -------------
ASSETS                                                                                          (UNAUDITED)
<S>                                                                          <C>              <C>
Current assets:
  Cash......................................................................    $  15,281         $  13,764
  Receivables:
    Trade accounts, less allowance for doubtful accounts of $2,950 and
      $2,751, respectively..................................................       96,610            91,007
    Other...................................................................       12,806             8,801
  Inventories, net of LIFO allowance of $15,718 and $16,518, respectively         103,246            80,316
  Prepaid expenses and other................................................        5,847             6,323
                                                                             -------------    -------------
    Total current assets....................................................      233,790           200,211

Property and equipment......................................................       56,633            58,021
  Less accumulated depreciation.............................................      (28,633)          (29,960)
                                                                             -------------    -------------
  Net property and equipment................................................       28,000            28,061
Other assets................................................................        8,277             8,126
Goodwill, net of accumulated amortization of $17,293 and $17,813,
     respectively...........................................................       66,513            65,993
                                                                             -------------    -------------
                                                                                $ 336,580         $ 302,391
                                                                             -------------    -------------
                                                                             -------------    -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable....................................................    $  50,737         $  46,182
  Cigarette and tobacco taxes payable.......................................       43,506            46,308
  Income taxes payable......................................................        1,085             2,786
  Deferred income taxes.....................................................        7,599             7,606
  Other accrued liabilities.................................................       28,647            26,176
                                                                             -------------    -------------
    Total current liabilities...............................................      131,574           129,058
Long-term debt..............................................................      197,012           164,818
Other accrued liabilities and deferred income taxes.........................        9,030             9,088
                                                                             -------------    -------------
  Total liabilities.........................................................      337,616           302,964

Commitments and contingencies:
Shareholders' deficit:
  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.......................................................      (22,286)          (22,297)
  Accumulated other comprehensive income:
    Foreign currency translation adjustments................................       (2,879)           (2,405)   
    Minimum pension liability adjustment....................................       (2,047)           (2,047)
                                                                             -------------    -------------
    Total shareholders' deficit.............................................       (1,036)             (573)
                                                                             -------------    -------------
                                                                                $ 336,580         $ 302,391
                                                                             -------------    -------------
                                                                             -------------    -------------

</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
                                                          ENDED MARCH 31,
                                                    ---------------------------
                                                       1997              1998
                                                    ------------      ---------
<S>                                                 <C>               <C>
Net sales.........................................     $527,866       $563,220
Cost of goods sold................................      487,756        522,533
                                                    ------------      ---------
     Gross profit.................................       40,110         40,687
Operating and administrative expenses.............       35,223         36,037
                                                    -----------       ---------
     Operating income.............................        4,887          4,650

Interest expense, net.............................        4,391          4,296
Debt refinancing costs............................          392            374
                                                    ------------      ---------
     Income (loss)  before income taxes...........          104            (20)

Income tax expense (benefit)......................           42             (9)
                                                    ------------      ---------
     Net income (loss)............................     $     62       $    (11)
                                                    ------------      ---------
                                                    ------------      ---------

</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>
                                                                                               THREE MONTHS      
                                                                                              ENDED MARCH 31,    
                                                                                       ----------------------------
                                                                                        1997                  1998
                                                                                    -------------         -----------
<S>                                                                                 <C>                   <C>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income (loss)                                                                      $       62         $       (11)

  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
  LIFO expense...................................................................             396                 800
  Amortization of goodwill.......................................................             506                 520
  Depreciation and amortization..................................................           1,358               1,573
  Amortization of debt refinancing fees .........................................             392                 374
  Deferred income taxes..........................................................               4                  13
  Other adjustments for non-cash and non-operating activities....................             236                (125)

  Changes in operating assets and liabilities, net of acquisitions...............          13,132              28,532
                                                                                    -------------         -----------
Net cash provided by operating activities........................................          16,086              31,676
                                                                                    -------------         -----------
INVESTING ACTIVITIES:

  Net assets of acquired businesses..............................................         (19,680)                 --
  Additions to property and equipment............................................          (1,736)             (1,402)
                                                                                    -------------         -----------
Net cash used in investing activities............................................         (21,416)             (1,402)
                                                                                    -------------         -----------
FINANCING ACTIVITIES:

  Net payments under revolving credit agreement..................................          (6,990)            (32,194)
                                                                                    -------------         -----------
Net cash used in financing activities............................................          (6,990)            (32,194)
                                                                                    -------------         -----------

Effects of changes in foreign exchange rates.....................................             (69)                403
                                                                                    -------------         -----------
Decrease in cash.................................................................         (12,389)             (1,517)
Cash, beginning of period........................................................          25,769              15,281
                                                                                    -------------         -----------
CASH, END OF PERIOD..............................................................     $    13,380         $    13,764
                                                                                    -------------         -----------
                                                                                    -------------         -----------

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments (refunds) during the period for:
  Interest.......................................................................          $6,694              $6,243
  Income taxes...................................................................               2              (1,712)

</TABLE>

           See Notes to Condensed Consolidated Financial Statements.


                                       5

<PAGE>

                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                          THREE MONTHS ENDED MARCH 31, 1998
                                     (UNAUDITED)


1.  BASIS OF PRESENTATION

     The condensed consolidated balance sheet as of March 31, 1998, the 
condensed consolidated statements of income for the three-month periods ended 
March 31, 1997 and 1998, and the condensed consolidated statements of cash 
flows for the three-month periods ended March 31, 1997 and 1998, 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 March 
31, 1998 (subject to year-end adjustments) with respect to the interim 
financial statements, and of the results of its operations and cash flows for 
the interim periods then ended, 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, 1997, 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, 1997 
("1997 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, 1997 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 $396,000 and $800,000 for the three months ended March 31, 
1997 and 1998, 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 paid by the Company on cigarettes were 
$113.9 million and $112.2 million for the three months ended March 31, 1997 
and 1998, respectively. These amounts are included in net sales and cost of 
goods sold for the periods indicated.

4.  ACQUISITION OF THE SOSNICK COMPANIES

     On February 3, 1997, the Company consummated a transaction, pursuant to 
a Purchase Agreement dated January 31, 1997, to acquire certain assets and 
the business of two related companies, Melvin Sosnick Company and Capital 
Cigar Company (collectively "Sosnick" or the "Sosnick Companies"), a 
wholesale distributor to the convenience retail market in northern California 
and northern Nevada. Sosnick operated in the same geographic marketplace as 
the Company and provided similar products and services. 

     The Company's net sales for the three months ended March 31, 1997 would
have been $542.5 million if the acquisition had occurred as of January 1,  1997.
The impact of the acquisition on net income would not have been material for the
three-month period ended March 31, 1997.


                                       6

<PAGE>

5.  NEW ACCOUNTING PRONOUNCEMENT

     Effective January 1, 1998, the Company adopted Statement of Financial 
Accounting Standards No. 130, "Reporting Comprehensive Income." This 
Statement requires that all items recognized under accounting standards as 
components of comprehensive earnings be reported in an annual financial 
statement that is displayed with the same prominence as other annual 
financial statements. This Statement also requires that an entity classify 
items of other comprehensive earnings by their nature in an annual financial 
statement. Other comprehensive income (loss) represents foreign currency 
translation adjustments made during the respective quarters. Comprehensive 
income will be presented in the Company's annual financial statements for 
prior periods and will be reclassified, as required. The Company's total 
comprehensive earnings were as follows:

<TABLE>
<CAPTION>
                                             Three Months Ended
                                                  March 31,
                                        --------------------------------
                                             1997                1998
                                        ------------        ------------
<S>                                     <C>                 <C>
  Net income (loss)                       $     62            $     (11)
  Other comprehensive income (loss)            (48)                 474
                                        ------------        ------------
     Total comprehensive  income          $     14            $     463
                                        ------------        ------------
                                        ------------        ------------
</TABLE>

6.  SUBSEQUENT EVENT

     On April 1, 1998, the Company entered into a transaction to securitize 
its U.S. trade accounts receivable portfolio. 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; the SPC will issue 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.

     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 5.6875%  as of April 1, 
1998.  The interest rate on the variable certificates is 0.50% above the 
commercial paper rate (as defined in the securitization agreement), which was 
5.55% as of April 1, 1998.

     In connection with the securitization of accounts receivable, the 
Company modified its Revolving Credit Facility. The modification 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 
will write off approximately $0.8 million of unamortized refinancing costs 
related to the Revolving Credit Facility in the second quarter of 1998. 

    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.
                                       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 included in the Company's 1997 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 quarter ended March 31, 1998, approximately 66%, 23% 
and 11% 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 
in the United States are currently facing a number of significant issues that 
affect the business environment in which they operate including proposed 
additional governmental regulation (see Part II, Item 1. "Legal Proceedings 
-Regulatory Matters"); actual and proposed excise tax increases (see "Impact 
of Tobacco Taxes"); increased litigation involving health and other effects 
of cigarette smoking and other uses of tobacco (see Part II, Item 1. "Legal 
Proceedings - Legal Matters"); and proposed legislative action to resolve 
certain regulatory and litigation issues affecting the U.S. tobacco industry 
described below. 

     In June 1997, a so called "national settlement" of many of these issues 
was proposed (referred to herein as the "Proposed Settlement") 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 Proposed Settlement 
can be implemented only by federal legislation. In April 1998, the Senate 
Commerce Committee overwhelmingly approved a Bill sponsored by Senator McCain 
(the "McCain Bill"), which would, if passed by a Congressional vote, replace 
the Proposed Settlement. The McCain Bill would substantially change the 
Proposed Settlement by, among other things, enacting substantial increases to 
federal excise taxes on tobacco products without affording the tobacco 
manufacturers and other industry participants protection from private 
litigation, which is a significant aspect of the Proposed Settlement. The 
tobacco manufacturers have publicly announced that they will oppose the 
McCain Bill and not provide certain industry consents required by the bill. 
At the present time, the Company cannot predict whether federal legislation 
reflecting the Proposed Settlement will be enacted or if other legislation, 
similar to the McCain Bill, would be enacted. The major U.S. cigarette 
manufacturers have disclosed in a report dated October 8, 1997 to a U.S. 
Senate task force that, if the Proposed Settlement were enacted in its 
current form, among other things, prices of cigarettes would increase 
significantly and cigarette consumption would decline, although it is not 
possible to forecast, with any degree of confidence, the magnitude of the 
decline in consumption.

     The Company believes that, if the Proposed Settlement or the McCain Bill 
were enacted in their current forms, the Company's business of distributing 
tobacco products would be negatively affected by decreases in the volume of 
sales of tobacco products and by the impact of increases in cigarette prices 
on its working capital (see "Liquidity and Capital Resources"). The Company 
does not believe it is able to quantify the impact that the proposed 
legislation or other future legislation or governmental regulation affecting 
cigarettes and other tobacco products will have on future sales of cigarettes 
and other tobacco products. However, based upon current industry estimates of 
wholesale price increases (including enacted federal excise tax increases 
(see "Impact of Tobacco Taxes")) ranging from $4.00 to $8.00 per carton of 
cigarettes over the next two to three years as a result of the Proposed 
Settlement, the Company believes that it would be able to adequately finance 
the corresponding increase in its working capital requirements relating to 
its existing business under its existing credit facilities. If such price 
increases were to occur, the Company's debt levels and interest expense would 
significantly increase. However, if the actual level of wholesale price 
increases (including enacted federal excise tax increases) exceeds $8 per 
carton; federal excise taxes were increased to levels beyond those which have 
already been enacted; payment terms for state and provincial excise taxes 
were adversely changed (see "Impact of Tobacco Taxes"); or the volume of 
cigarettes sold by the Company declines significantly as a result of higher 
prices or taxes, or both, the Company may be required to seek additional 
financing in order to meet such higher working capital requirements.


                                       8

<PAGE>

     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.

RESULTS OF OPERATIONS

     The following table sets forth certain operating results as a percentage 
of net sales for the periods indicated:

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED
                                                      MARCH 31,
                                                --------------------
                                                1997            1998
                                             ------------   -----------
<S>                                          <C>            <C>
     Net sales                                    100.0%         100.0%
     Cost of goods sold                            92.4           92.8
                                             ------------   ------------
     Gross profit                                   7.6            7.2
     Operating & administrative expenses            6.7            6.4
                                             ------------   ------------
     Operating income                               0.9%           0.8%
                                             ------------   ------------
</TABLE>

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

     NET SALES.  Net sales for the three months ended March 31, 1998 were 
$563.2 million, an increase of $35.4 million or 6.7% over the same period in 
1997. The increase in net sales was due to an increase in net sales of 
cigarettes and food and non-food products in 1998 compared to 1997, and also 
partially due to the 1997 Sosnick acquisition, which impacted three-months in 
the 1998 period compared to only two months in the 1997 period.

     Net sales of cigarettes for the three months ended March 31, 1998 were 
$375.1 million, an increase of $19.4 million or 5.5% over the same period in 
1997. The increase in net sales of cigarettes was principally due to 
inflation from increases in manufacturers' list prices. The Company's total 
cigarette unit sales for the three months ended March 31, 1998 were 21.0 
million cartons, which approximates carton sales in the same period of 1997.

     Net sales of food and non-food products for the three months ended March 
31, 1998 were $188.1 million, an increase of $16.0 million or 9.3% over the 
same period in 1997. The increase was due to the Company's continued focus on 
increasing food and non-food product sales. The increase occurred primarily 
in fast food sales, which increased $4.6 million or 25.4%, snack sales, which 
increased $2.7 million or 25.1%, and candy sales, which increased $2.6 
million or 4.5%.

     GROSS PROFIT.  Gross profit for the three months ended March 31, 1998 
was $40.7 million, an increase of $0.6 million or 1.4% over the same period 
in 1997. The increase was primarily due to increased gross profits from 
continued sales growth in the food and non-food product categories. The gross 
profit margin for the three months ended March 31, 1998 decreased to 7.2% of 
net sales as compared to 7.6% of net sales for the same period in 1997 
reflecting lower margins earned on net sales of food and non-food and 
cigarettes compared to 1997.  For the three months ended March 31, 1998, the 
Company recognized LIFO expense of $0.8 million compared to $0.4 million for 
the same period in 1997.

     OPERATING AND ADMINISTRATIVE EXPENSES.  Operating and administrative 
expenses for the three months ended March 31, 1998 were $36.0 million, an 
increase of $0.8 million or 2.3% over the same period in 1997. However, such 
expenses for the three months ended March 31, 1998 decreased to 6.4% of net 
sales as compared to 6.7% for the same period in 1997. The higher expenses in 
the 1997 period  reflect approximately $1.4 million (0.3% of 1997 net sales) 
of one-time duplicative facility costs as a result of the Sosnick acquisition.


                                       9

<PAGE>

     OPERATING INCOME.  As a result of the foregoing factors, operating 
income for the three months ended March 31, 1998 was $4.7 million, a decrease 
of $0.2 million or 4.8% compared to the same period in 1997. As a percentage 
of net sales, operating income for the three months ended March 31, 1998 was 
0.8%, as compared to 0.9% for the same period in 1997.

     NET INTEREST EXPENSE.  Net interest expense for the three months ended 
March 31, 1998 was $4.3 million, a slight decrease of $0.1 million or 2.2% 
compared to 1997. The net decrease resulted from a decrease in the Company's 
average debt obligations and a slight decline in the average borrowing rate 
as compared to 1997.

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 the Revolving Credit Facility and the Notes. The 
Company has no mandatory payments of principal on the Notes scheduled prior 
to their final maturity on September 15, 2003, and has no mandatory payments 
of principal scheduled under the Revolving Credit Facility, which matures 
April 1, 2003. The Company has historically financed its operations through 
internally generated funds and borrowings under its credit facilities. 

     Significant increases in the cost of cigarettes to the Company would 
occur if legislation were approved to enact the Proposed Settlement or the 
McCain Bill (See "Tobacco Industry Business Environment"). Based upon current 
industry estimates of wholesale price increases (including enacted federal 
excise tax increases (see "Impact of Tobacco Taxes")) ranging from $4.00 to 
$8.00 per carton of cigarettes over the next two to three years as a result 
of the Proposed Settlement, the Company believes that it will be able to 
adequately finance the corresponding increase in its working capital 
requirements relating to its existing business under its existing credit 
facilities. If such price increases were to occur, the Company's debt levels 
and interest expense would significantly increase. However, if the actual 
level of wholesale price increases (including enacted federal excise tax 
increases) exceeds $8 per carton; federal excise taxes were increased to 
levels beyond those which have already been enacted; payment terms for state 
and provincial excise taxes were adversely changed (see "Impact of Tobacco 
Taxes"); or the volume of cigarettes sold by the Company declines 
significantly as a result of higher prices or taxes, or both, the Company may 
be required to seek additional financing in order to meet such higher working 
capital requirements.

     The Company's debt obligations totaled $164.8 million at March 31, 1998, 
a decrease of $32.2 million from $197.0 million at December 31, 1997. 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 revolving credit facility. 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 lower at the end of any fiscal year compared to interim periods. 
However, at March 31, 1997, the Company's inventory levels were higher than 
at March 31, 1998 due to higher cigarette inventory resulting from 
manufacturers'  price increases that occurred in March of 1997. As a result, 
net cash provided by operating activities was significantly lower for the 
three months ended March 31, 1997 compared to the three months ended March 
31, 1998.

     The Company made capital expenditures of $1.4 million for the three 
months ended March 31, 1998. For the remainder of 1998, the Company estimates 
it will spend approximately $6 million for capital requirements, principally 
consisting of warehouse facilities and other equipment. These expenditures 
are expected to be funded out of net cash provided by operating activities 
and its revolving credit facility.

     On April 1, 1998, the Company entered into a transaction to securitize 
its U.S. trade accounts receivable portfolio. 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; the SPC will issue 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 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 5.6875%  as of April 1, 
1998.  The interest rate on the variable certificates is 0.50% above the 
commercial paper rate (as defined in the securitization agreement), which was 
5.55% as of April 1, 1998.


                                       10

<PAGE>

     In connection with the securitization of accounts receivable, the 
Company modified its Revolving Credit Facility. The modification 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 
will write off approximately $0.8 million of unamortized refinancing costs 
related to the Revolving Credit Facility in the second quarter of 1998. 

    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 is currently in the process of modifying or replacing its 
computer systems for the year 2000 compliance. This activity is expected to 
continue through 1999, and is not expected to have a material impact on the 
financial position or results of operations of the Company in any given year. 
However, due to the interrelated nature of computer systems, the Company may 
be impacted in the year 2000 depending on whether entities not affiliated 
with the Company have addressed this issue successfully. Expenses related to 
this process are being expensed as incurred.

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. In general, such taxes have been 
increasing, and several 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, 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 requiring such a surety (a majority of states in the Company's 
operating areas). 

     The U.S. federal excise tax on cigarettes is currently $2.40 per carton 
of cigarettes. In August 1997, legislation was enacted that will raise the 
federal excise tax 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 increase the Company's working capital requirements by 
increasing the balances of its inventories and accounts receivable. The 
President as well as various members of Congress have suggested additional 
excise taxes on cigarette and tobacco products, either as part of the 
Proposed Settlement discussed above or to finance unrelated federal spending. 
If the actual level of wholesale cigarette price increases (including enacted 
federal excise taxes) exceeds $8.00 per carton over the next two to three 
years or if federal excise taxes were increased to levels beyond those which 
have already been enacted, the Company may be required to seek additional 
financing in order to meet its higher working capital requirements.

NEW ACCOUNTING STANDARDS

     In February 1998, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 132, "Employers' Disclosures 
about Pensions and Other Postretirement Benefits." This Statement revises 
employers' disclosures about pension and other postretirement benefit plans. 
It does not change the measurement or recognition of those plans. This 
Statement standardizes the disclosure requirements for pensions and other 
postretirement benefits to the extent practicable, requires additional 
information on changes in the benefit obligations and fair values of plan 
assets that will facilitate financial analysis, and eliminates certain 
disclosures. Restatement of disclosures for earlier periods is required. This 
Statement is effective for the Company's  financial statements for the year 
ended December 31, 1998.


                                       11
<PAGE>

     In March 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. Earlier application is encouraged in fiscal 
years for which annual financial statements have not been issued.


                                       12

<PAGE>

                         PART II - OTHER INFORMATION
                                       

ITEM 1.        LEGAL PROCEEDINGS

REGULATORY MATTERS

     The tobacco industry is currently subject to significant regulatory 
restrictions, such as the requirement that product packages display warning 
labels, a prohibition on television and radio advertising and the 
establishment of a federal minimum age of 18 for the sale of tobacco products 
with proof of age for anyone under the age of 27.  The status of U.S. Food 
and Drug Administration (the "FDA") regulation is described in more detail in 
the Company's 1997 Annual Report on Form 10-K. While neither the FDA 
regulations nor the pending legislation would impose restrictions on the sale 
of cigarettes and smokeless tobacco products to adults, there can be no 
assurance 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.

     Over the past decade, various state and local governments have imposed 
or are considering future significant regulatory restrictions on tobacco 
products which are more fully described in the Company's 1997 Annual Report 
on Form 10-K. The Company is unable to assess the future effects that these 
various proposals may have on the sale of the Company's products.

     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 
affect on its business and financial condition. 

LEGAL MATTERS

     In May 1996, the Court of Appeals for the Fifth Circuit decertified a 
federal class action purportedly brought on behalf of all cigarette smokers 
in the United States. Following the decertification, lawyers for the class 
brought state class action lawsuits in a number of states, with the objective 
of filing such lawsuits in all fifty states, the District of Columbia and 
Puerto Rico. Several of these state lawsuits name cigarette distributors such 
as the Company as defendants.

     In October 1996, a subsidiary of the Company was named as a defendant in 
a class action lawsuit filed in State Court in New Mexico. The other 
defendants include the principal U.S. tobacco manufacturers as well as other 
distributors. The case is brought on behalf of a putative class of smokers 
who reside in New Mexico, each of whom is allegedly nicotine dependent. The 
suit seeks, on behalf of the class, compensatory damages, punitive damages 
and equitable relief, including medical monitoring of the class members.

     In May 1997, a subsidiary of the Company was named as a defendant in an 
action brought by the Attorney General of New Mexico in an action filed in 
State Court in Santa Fe, New Mexico. The other defendants include the 
principal U.S. tobacco manufacturers as well as other distributors. The 
Attorney General alleges, among other things, that the defendants realized 
significant profits from the manufacture, distribution, and sale of tobacco 
products, and that these activities have caused residents of New Mexico to 
suffer illnesses and diseases. The State of New Mexico seeks both monetary 
damages and a permanent injunction to require defendants to fund public 
education and smoking cessation programs. In April 1998, the plaintiff in 
this case agreed to release the Company from litigation; formal action by the 
Court is pending.

     In January 1998, the Company was served with a summons and First Amended 
Complaint in an action brought by Operating Engineers Local 12 Health and 
Welfare Trust (on behalf of itself and all others similarly situated), in the 
United States District Court for the Central District of California, against 
major tobacco manufacturers, the Company, and other distributors and 
retailers of tobacco products. The complaint seeks, inter alia, compensatory 
and punitive damages, restitution for monies expended by the Trust for health 
care of its members who have used tobacco products, and forms of injunctive 
relief.


                                       13

<PAGE>

     In March 1998, the Company was named as a defendant in a class action 
complaint filed in a state court in Salt Lake City, Utah. The other 
defendants include the principal U.S. tobacco manufacturers as well as 
several other distributors. The case is brought on behalf of a class of 
smokers who reside in Utah and who have purchased cigarette products 
distributed by the Company, and alleges, among other things, the members of 
the class have suffered personal injuries and economic losses from the use of 
such cigarettes. The suit seeks, on behalf of the class, compensatory 
damages, punitive damages, equitable relief including the establishment of a 
medical monitoring fund and return of monies spent to purchase cigarette 
products.

     In April and May 1998, the Company was named as a defendant in 9 actions 
brought by various union health and welfare trusts, filed in state courts of 
several counties in Northern California against major tobacco manufacturers 
as well as other distributors. The complaints seek, inter alia, compensatory 
and punitive damages, restitution for monies expended by the trusts for 
health care of its members who have used tobacco products, and forms of 
injunctive relief.

     The Company does not believe that these actions will have a material 
adverse effect on the Company's financial condition.  The Company has been 
indemnified with respect to certain claims alleged in each of the above 
actions.

     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.

Item 2:  Changes in Securities

          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:

          During the first quarter of 1998, the Registrant  filed a Current 
Report on Form 8-K for the following event:

     1.   January 27, 1998 

          Item 4.   Changes in Registrant's Certifying Accountant

          On January 27, 1998,  the Registrant determined not to engage KPMG 
Peat Marwick LLP as the independent public accountants for its 1998 fiscal 
year and has appointed Deloitte & Touche LLP as its independent public 
accountants for its 1998 fiscal year. 


                                       14

<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 May 14, 1998.

                                  CORE-MARK INTERNATIONAL, INC.


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



                                       15