<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 JUNE 30, 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 July 31, 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
PART I - FINANCIAL INFORMATION                                                                                 ----
------------------------------
<S>                                                                                                              <C>
ITEM 1: FINANCIAL STATEMENTS

     Condensed Consolidated Balance Sheets as of December 31, 1997 and June 30, 1998. . . . . . . . . . . . .     3
     Condensed Consolidated Statements of Income for the three and six months ended June 30, 1997 and 1998. .     4
     Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 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       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    16
</TABLE>

                                       2

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,          JUNE 30,
                                                                                            1997                 1998
                                                                                        ------------          --------
<S>                                                                                         <C>                <C>
ASSETS                                                                                                        (UNAUDITED)
Current assets:                                                                                          
     Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $ 15,281           $ 12,971
     Receivables:                                                                                        
          Trade accounts, less allowance for doubtful accounts of $2,950 and                             
            $2,728, respectively. . . . . . . . . . . . . . . . . . . . . . . . . .           96,610             94,444
          Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           12,806             14,167
     Inventories, net of LIFO allowance of $15,718 and $19,769, respectively. . . .          103,246             77,394
     Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . .            5,847              7,283
                                                                                            --------           --------
          Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . .          233,790            206,259
                                                                                                         
Property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           56,633             59,069
     Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . .          (28,633)           (31,241)
                                                                                            --------           --------
     Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .           28,000             27,828
Other assets    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            8,277              8,431
Goodwill, net of accumulated amortization of $17,293 and $18,334, respectively. . .           66,513             65,472
                                                                                            --------           --------
                                                                                            $336,580           $307,990
                                                                                            --------           --------
                                                                                            --------           --------
LIABILITIES AND SHAREHOLDERS' EQUITY                                                                     
Current liabilities:                                                                                     
     Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $50,737            $55,453
     Cigarette and tobacco taxes payable. . . . . . . . . . . . . . . . . . . . . .           43,506             44,472
     Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1,085              1,069
     Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .            7,599              7,508
     Other accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . .           28,647             27,594
                                                                                            --------           --------
          Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . .          131,574            136,096
                                                                                                         
Long-term debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          197,012            162,625
Other accrued liabilities and deferred income taxes . . . . . . . . . . . . . . . .            9,030              9,264
                                                                                            --------           --------
     Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          337,616            307,985
                                                                                                         
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (22,286)           (20,935)
     Accumulated other comprehensive income:                                                             
          Foreign currency translation adjustments. . . . . . . . . . . . . . . . .           (2,879)            (3,189)    
     Minimum pension liability adjustment . . . . . . . . . . . . . . . . . . . . .           (2,047)            (2,047)
                                                                                            --------           --------
          Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . .           (1,036)                 5
                                                                                            --------           --------
                                                                                            $336,580           $307,990
                                                                                            --------           --------
                                                                                            --------           --------
</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,
                                                        --------------                --------------
                                                      1997           1998          1997           1998
                                                      ----           ----          ----           ----
<S>                                                 <C>            <C>          <C>            <C>
Net sales . . . . . . . . . . . . . . . . . .       $614,994       $609,051     $1,142,860     $1,172,271
Cost of goods sold. . . . . . . . . . . . . .        568,428        564,627      1,056,184      1,087,160
                                                    --------       --------     ----------     ----------
    Gross profit. . . . . . . . . . . . . . .         46,566         44,424         86,676         85,111
Operating and administrative expenses . . . .         37,708         37,013         72,931         73,050
                                                    --------       --------     ----------     ----------
    Operating income. . . . . . . . . . . . .          8,858          7,411         13,745         12,061

Interest expense, net . . . . . . . . . . . .          4,653          3,692          9,044          7,988
Debt refinancing costs. . . . . . . . . . . .            391          1,199            783          1,573
                                                    --------       --------     ----------     ----------
    Income before income taxes. . . . . . . .          3,814          2,520          3,918          2,500

Income tax expense. . . . . . . . . . . . . .          1,525          1,158          1,567          1,149
                                                    --------       --------     ----------     ----------
    Net income  . . . . . . . . . . . . . . .         $2,289         $1,362         $2,351         $1,351
                                                    --------       --------     ----------     ----------
                                                    --------       --------     ----------     ----------
</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,
                                                                                      --------------
                                                                                     1997          1998
                                                                                     ----          ----
<S>                                                                                <C>            <C>
CASH PROVIDED BY OPERATING ACTIVITIES:

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $ 2,351        $ 1,351

    Adjustments to reconcile net income  to
        net cash provided by operating activities:
    LIFO expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,007          4,051
    Amortization of goodwill. . . . . . . . . . . . . . . . . . . . . . . .          1,032          1,041
    Depreciation and amortization . . . . . . . . . . . . . . . . . . . . .          2,726          3,211
    Amortization of debt refinancing fees . . . . . . . . . . . . . . . . .            783          1,573
    Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . .            121             64
    Other adjustments for non-cash and non-operating activities . . . . . .            193             20
    Changes in operating assets and liabilities, net of acquisitions. . . .          6,382         25,048
                                                                                   -------        -------
Net cash provided by operating activities . . . . . . . . . . . . . . . . .         14,595         36,359
                                                                                   -------        -------
INVESTING ACTIVITIES:

    Net assets of acquired businesses . . . . . . . . . . . . . . . . . . .        (21,361)            --
    Additions to property and equipment . . . . . . . . . . . . . . . . . .         (6,196)        (2,699)
                                                                                   -------        -------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . .        (27,557)        (2,699)
                                                                                   -------        -------
FINANCING ACTIVITIES:

    Net borrowings (payments) under revolving credit agreement  . . . . . .          3,998       (104,387)
    Net proceeds from securitization of trade accounts receivable (see Note 6)          --         70,000
    Debt refinancing fees . . . . . . . . . . . . . . . . . . . . . . . . .             --         (1,273)
                                                                                   -------        -------
Net cash provided by (used in) financing activities . . . . . . . . . . . .          3,998        (35,660)
                                                                                   -------        -------

Effects of changes in foreign exchange rates. . . . . . . . . . . . . . . .             24           (310)
                                                                                   -------        -------
Decrease in cash  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (8,940)        (2,310)
Cash, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . .         25,769         15,281
                                                                                   -------        -------
CASH, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $16,829        $12,971
                                                                                   -------        -------
                                                                                   -------        -------

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments during the period for:
    Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $8,778         $7,868               
    Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,248          1,110
</TABLE>

                                          
                       See Notes to Condensed Consolidated Financial Statements.


                                                      5

<PAGE>

                          SIX MONTHS ENDED JUNE 30, 1998
                                   (UNAUDITED)
                                          

1.  BASIS OF PRESENTATION

     The condensed consolidated balance sheet as of June 30, 1998, the condensed
consolidated statements of income for the three-month  and six-month periods
ended June 30, 1997 and 1998, and the condensed consolidated statements of cash
flows for the six-month periods ended June 30, 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 June 30, 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 $0.6 million and $3.3 million for the three months ended June 30,
1997 and 1998, respectively, and $1.0 million and $4.1 million for the six
months ended June 30, 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
$129.6 million and $116.4 million for the three months ended June 30, 1997 and
1998, respectively, and $243.4 million and $228.6 million for the six months 
ended June 30, 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 six-month period ended June 30, 1997 would
have been $1,157 million if the acquisition had occurred as of January 1, 1997.
The Company's net sales for the three-month period ended June 30, 1997 includes
Sosnick sales for the entire period. The impact of the acquisition on net income
would not have been material for the six-month period ended June 30, 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
loss represents foreign currency translation adjustments made during the
respective quarters. Comprehensive income will be presented in the Company's
annual financial statements and prior periods will be reclassified, as required.
The Company's total comprehensive income was as follows (in thousands):

<TABLE>
<CAPTION>
                                      Three Months           Six Months
                                     Ended June 30,         Ended June 30,
                                     --------------         --------------
                                      1997      1998        1997     1998
                                      ----      ----        ----     ----
                                                                           
     <S>                             <C>      <C>          <C>      <C>
     Net income....................  $2,289   $1,362       $2,351   $1,351
     Other comprehensive loss......    (282)    (784)        (330)    (310)
                                     ------   ------       ------   ------
       Total comprehensive income..  $2,007     $578       $2,021   $1,041
                                     ------   ------       ------   ------
                                     ------   ------       ------   ------
</TABLE>

6.  ASSET SECURITIZATION

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

     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 5.66% as of June 30, 1998. The interest rate on the 
variable certificates is 0.50% above the commercial paper rate (as defined in 
the securitization agreement), which was 5.60% as of June 30, 1998.

     In connection with the securitization of accounts receivable, the Company
amended its Revolving Credit Facility. The amendment reduced the available
credit facility from $175 million to $120 million, reduced its interest rates
from 1.5% to 1.0% above the Prime Rate, and from 2.5% to 2.0% above the
Eurodollar Rate, as defined in the amendment, and extended the maturity through
April, 2003. As a result of this modification, the Company wrote off $0.9
million of unamortized refinancing costs relating to the Revolving Credit
Facility in the second quarter of 1998.

     The net result of the (i) securitization of the Company's U.S. trade
accounts receivable portfolio and (ii) the modification of the Revolving Credit
Facility was to lower the Company's cost of borrowings, and to increase its
variable-rate borrowing capacity from $175 million to $205 million. The Company
incurred approximately $1.7 million for legal, professional and other costs
related to the transactions described above. These costs were capitalized and
classified as other assets and are being amortized over the term of these
transactions.

                                       7
<PAGE>

     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 six-month period ended June 30, 1998, approximately 
67%, 22% 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 have replaced the Proposed Settlement. The 
McCain Bill would have substantially changed 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. In June 1998, the bill 
sponsored by Senator McCain failed to pass the Senate.

     The major U.S. cigarette manufacturers disclosed in a report dated 
October 8, 1997 to a U.S. Senate task force that, if the Proposed Settlement 
were enacted in its then 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. Although 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 Company believes that any form of federal legislation will cause 
significant increases in the prices of cigarettes. In addition, although no 
new federal legislation has been enacted or any type of national settlement 
agreed to, the U.S. cigarette manufacturers have continued to settle lawsuits 
individually, and have been raising the wholesale prices of cigarettes to 
fund the cost of such settlements. 

     The Company believes that significant increases in the prices of 
cigarettes would negatively affect the Company's business of distributing 
tobacco products by decreasing  the volume of sales of tobacco products and 
as a result of 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 Settlement 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 various industry estimates of wholesale price 
increases which would result from different settlement scenarios, the 
Company's debt levels and interest expense would significantly increase. 
Depending upon the ultimate level of actual wholesale price increases, or if 
the terms of state and provincial excise taxes were adversely changed, or if 
the volume of cigarettes sold by the Company significantly declined 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                  SIX MONTHS
                                                           ENDED JUNE 30,                ENDED JUNE 30,
                                                        -------------------          ---------------------
                                                        1997           1998           1997           1998
                                                        ----           ----           ----           ----
     <S>                                               <C>            <C>            <C>            <C>
     Net sales.....................................    100.0%         100.0%         100.0%         100.0%
     Cost of goods sold............................     92.4           92.7           92.4           92.7
                                                       -----          -----          -----          -----
     Gross profit..................................      7.6            7.3            7.6            7.3
     Operating and administrative expenses.........      6.1            6.1            6.4            6.2
                                                       -----          -----          -----          -----
       Operating income............................      1.4%           1.2%           1.2%           1.0%
                                                       -----          -----          -----          -----
                                                       -----          -----          -----          -----
</TABLE>

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997

     NET SALES.  Net sales for the three months ended June 30, 1998 were 
$609.1 million, a decrease of $5.9 million or 1.0% from the comparable period 
in 1997. 

     Net sales of cigarettes for the three months ended June 30, 1998 were 
$408.1 million, a decrease of $0.3 million or 0.1% from the comparable period 
in 1997. The Company's total cigarette unit sales for the three months ended 
June 30, 1998 were 21.9 million cartons, a decrease of 1.8 million cartons or 
7.6% from the comparable period in 1997. The decrease in volume sales was due 
primarily to increased price competition in California. The decrease in net 
sales due to volume declines was significantly offset by increases in 
manufacturers' list prices during the quarter that were passed along to the 
Company's customers.

     Net sales of food and non-food products for the three months ended June 
30, 1998 were $200.9 million, a decrease of $5.6 million or 2.7% from the 
comparable period in 1997. The decrease was due primarily to increased 
competition in California. The decrease occurred primarily in candy sales, 
which decreased $6.1 million or 9.5%, cigar and tobacco sales, which 
decreased $2.2 million or 5.7%, and retail beverage sales, which decreased 
$1.1 million or 5.2%. The decreases were partially offset by increases in 
sales of fast food of $1.2 million or 5.1% and increases in snack sales of 
$0.9 million or 6.0%.

     GROSS PROFIT.  Gross profit for the three months ended June 30, 1998 was 
$44.4 million, a decrease of $2.1 million or 4.6% from the comparable period 
in 1997. The decrease was primarily due to declines in sales volume in the 
cigarette category, and from sales declines in the food and non-food product 
categories. The gross profit margin for the three months ended June 30, 1998 
decreased to 7.3% of net sales as compared to 7.6% of net sales for the 
comparable period in 1997. This was primarily due to the fact that while 
cigarette gross profit per unit remained unchanged, overall cigarette prices 
per unit have increased due to increases in manufacturers' list prices. For the 
three months ended June 30, 1998, the Company recognized LIFO expense of $3.3 
million compared to $0.4 million for the comparable period in 1997. The 
increase in LIFO expense was due to manufacturers' price increases, and was 
significantly offset by gains resulting from increases in manufacturers' list 
prices during the quarter.

     OPERATING AND ADMINISTRATIVE EXPENSES.  Operating and administrative 
expenses for the three months ended June 30, 1998 were $37.0 million, a 
decrease of $0.7 million or 1.8% from the comparable period in 1997. 
Operating expenses were 6.1% of net sales for the three months ended June 30, 
1998 and June 30, 1997.

                                       9
<PAGE>

     OPERATING INCOME.  As a result of the foregoing factors, operating 
income for the three months ended June 30, 1998 was $7.4 million, a decrease 
of $1.5 million or 16.6% compared to the comparable period in 1997. As a 
percentage of net sales, operating income for the three months ended June 30, 
1998 was 1.2%, as compared to 1.4% for the comparable period in 1997.

     NET INTEREST EXPENSE.  Net interest expense for the three months ended 
June 30, 1998 was $3.7 million, a decrease of $1.0 million or 20.7% compared 
to the 1997 period. The net decrease resulted from a decrease in the 
Company's borrowing rates as a result of the asset securitization and a 
decrease in average debt levels.

     DEBT REFINANCING COSTS.  Debt refinancing costs for the three months 
ended June 30, 1998 were $1.2 million, an increase of $0.8 million or 206.6% 
over the comparable period in 1997. This increase resulted primarily from a 
one-time write off of unamortized costs relating to the modification of the 
Revolving Credit Facility (see Note 6 - Asset Securitization).

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

     NET SALES.  Net sales for the six months ended June 30, 1998 were 
$1,172.3 million, an increase of $29.4 million or 2.6% over the comparable 
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.

     Net sales of cigarettes for the six months ended June 30, 1998 were 
$783.3 million, an increase of $19.1 million or 2.5% over the prior year. The 
increase in net sales of cigarettes was principally due to increases in 
manufacturers' list prices that were passed along to the Company's customers. 
The Company's total cigarette unit sales for the six months ended June 30, 
1998 were 42.9 million cartons, a decrease of 1.8 million or 4.1% from the 
same period in 1997. Substantially all of this decline occurred in the second 
quarter.

     Net sales of food and non-food products for the six months ended June 
30, 1998 were $389.0 million, an increase of $10.3 million or 2.7% over the 
comparable period in 1997. The increase resulted from the Company's continued 
focus on increasing food and non-food product sales and occurred primarily in 
fast food sales, which increased $5.8 million or 13.8%, snack sales, which 
increased $3.6 million or 13.9%, and general merchandise sales, which 
increased $2.3 million or 7.9%. The increases were partially offset by a 
decrease in candy sales of $3.5 million or 2.8% which resulted primarily from 
increased competition in California.

     GROSS PROFIT.  Gross profit for the six months ended June 30, 1998 was 
$85.1 million, a decrease of $1.6 million or 1.8% from the comparable period 
in 1997. The decrease was primarily due to declines in sales volume in the 
cigarette category. The gross profit margin for the six months ended June 30, 
1998 decreased to 7.3% of net sales as compared to 7.6% of net sales for the 
first six months of 1997. This decrease was primarily due to the fact that 
while cigarette gross profit per unit remained unchanged, overall cigarette 
prices per unit have increased due to increases in manufacturers' list 
prices, and lower margins earned on net sales from the food and non-food 
categories.  For the six months ended June 30, 1998, the Company recognized 
LIFO expense of $4.1 million compared to $1.0 million for the comparable 
period in 1997. The increase in LIFO expense was due to inflation in the 
cigarette category, and was significantly offset by gains resulting from 
increases in manufacturers' list prices.

     OPERATING AND ADMINISTRATIVE EXPENSES.  Operating and administrative 
expenses for the six months ended June 30, 1998 were $73.1 million, an 
increase of $0.1 million or 0.2% over the comparable period in 1997. However, 
such expenses for the six months ended June 30, 1998 decreased to 6.2% of net 
sales as compared to 6.4% for the comparable period in 1997. The higher 
expenses as a percent of sales in the 1997 period reflect approximately $2.2 
million (0.2% of 1997 net sales) of one-time duplicative facility costs as a 
result of the Sosnick acquisition.

     OPERATING INCOME.  As a result of the foregoing factors, operating 
income for the six months ended June 30, 1998 was $12.0 million, a decrease 
of $1.7 million or 12.4% compared to the comparable period in 1997. As a 
percentage of net sales, operating income for the six months ended June 30, 
1998 was 1.0%, as compared to 1.2% for the comparable period in 1997.

     NET INTEREST EXPENSE.  Net interest expense for the six months ended 
June 30, 1998 was $8.0 million, a decrease of $1.0 million or 11.7% compared 
to 1997. The net decrease resulted primarily from a decrease in the Company's 
borrowing rates as a result of the asset securitization and a decrease in 
average debt levels.

     DEBT REFINANCING COSTS.  Debt refinancing costs for the six months ended 
June 30, 1998 were $1.6 million, an increase of $0.8 million or 100.9% over 
the comparable period in 1997. This increase resulted primarily from a 
one-time write off of unamortized costs relating to the modification of the 
Revolving Credit Facility (see Note 6 - Asset Securitization).

                                       10
<PAGE>

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 
scheduled prior to their final maturities in 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 would occur if 
legislation were approved to enact the Proposed Settlement, or if future 
legislation similar to the McCain Bill were enacted. Based upon various 
industry estimates of wholesale price increases which would result from 
different settlement scenarios, the Company's required working capital would 
increase significantly. Depending upon the ultimate level of actual wholesale 
price increases, or if the terms of state and provincial excise taxes were 
adversely changed, or if the volume of cigarettes sold by the Company 
significantly declined as a result of higher prices, or taxes, or both, the 
Company could be required to seek additional financing in order to meet such 
higher working capital requirements. Any significant increase in debt would 
also increase the company's interest expense.

     The Company's debt obligations totaled $162.6 million at June 30, 1998, a
decrease of $34.4 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 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 
lower at the end of any fiscal year compared to interim periods.

     The Company made capital expenditures of $2.7 million for the six months 
ended June 30, 1998. For the remainder of 1998, the Company estimates it will 
spend approximately $5 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 credit facilities.

     On April 1, 1998, the Company entered into a transaction to securitize 
its U.S. trade accounts receivable portfolio ("Accounts Receivable 
Facility"). In connection with this transaction, the Company formed a 
wholly-owned special purpose, bankruptcy-remote subsidiary (the "Special 
Purpose Company" or "SPC"), to which the U.S. trade accounts receivable 
originated by the Company are sold or contributed, without recourse, pursuant 
to a receivables sale agreement. The receivables have been assigned, with a 
call option by the SPC, to a trust formed pursuant to a pooling agreement; 
the SPC issued two classes of term certificates with an aggregate principal 
value of $55 million, and variable certificates of up to $30 million 
representing fractional undivided interests in the receivables and the 
proceeds thereof. The 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 
5.66% as of June 30, 1998. The interest rate on the variable certificates is 
0.50% above the commercial paper rate (as defined in the securitization 
agreement), which was 5.60% as of June 30, 1998.

     In connection with the securitization of accounts receivable, the 
Company amended its Revolving Credit Facility. The amendment reduced the 
available credit facility from $175 million to $120 million, reduced its 
interest rates from 1.5% to 1.0% above the Prime Rate, and from 2.5% to 2.0% 
above the Eurodollar Rate, as defined in the amendment, and extended the 
maturity through April, 2003. As a result of this modification, the Company 
wrote off $0.9 million of unamortized refinancing costs relating to the 
Revolving Credit Facility in the second quarter of 1998.

     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.

YEAR 2000

     The Company is currently in the process of modifying or replacing its 
computer systems in order to be year 2000 compliant. 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.

                                      11
<PAGE>

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. Depending upon the ultimate level of any
increase in federal excise taxes, 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.

     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 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 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.

     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 June 1998 the Court granted a motion to
dismiss the distributors from the litigation.


                                      13

<PAGE>

     In April, May and June 1998, the Company was named as a defendant in 17
similar 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.

     On May 19, 1998, a division of the Company was named a defendant and 
served in an individual tobacco litigation complaint filed in a state court 
in Broward County, Florida. The other defendants include the principal U.S. 
tobacco manufacturers as well as other distributors/retailers. The case is 
brought on behalf of two individuals, residents of Florida, who have 
purchased cigarette products distributed by the Company, and alleges, among 
other things, the plaintiffs have suffered personal injuries and economic 
losses from the use of such cigarettes. The suit seeks, on behalf of the 
plaintiffs, compensatory damages and punitive damages.

     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


        10.14   $120,000,000 Amended and Restated Credit Agreement dated as 
                of April 1, 1998, among Core-Mark International, Inc., the 
                Several Lenders from Time to Time Parties Thereto and The 
                Chase Manhattan Bank, as Administrative Agent.

        10.16   Amended and Restated Security Agreement dated as of April 1, 
                1998, among Core-Mark International, Inc., C/M Products, 
                Inc., Core-Mark Interrelated Companies, Inc., and Core-Mark 
                Midcontinent, Inc., in favor of The Chase Manhattan Bank, as 
                Administrative Agent.

        10.17   Amendment to Borrower Stock Pledge Agreement dated as of 
                April 1, 1998, between Core-Mark International, Inc., and The 
                Chase Manhattan Bank, as Administrative Agent.

                                      14

<PAGE>

        10.18   Pooling Agreement, dated as of April 1, 1998, among Core-Mark
                Capital Corporation, Core-Mark International, Inc., as Servicer,
                and The Chase Manhattan Bank, as Trustee.

        10.19   Series 1998-1 Supplement to the Pooling Agreement, dated as of
                April 1, 1998, among the Core-Mark Capital Corporation, 
                Core-Mark International, Inc., as Servicer, and The Chase 
                Manhattan Bank.

        10.20   Series 1998-2 Supplement to the Pooling Agreement, dated as of
                April 1, 1998, among Core-Mark Capital Corporation, 
                Core-Mark International, Inc., as Servicer, and The Chase
                Manhattan Bank.

        10.21   Servicing Agreement, dated as of April 1, 1998, among Core-Mark
                Capital Corporation, Core-Mark International, Inc., as Servicer,
                Subsidiaries of Core-Mark International, Inc., as Subservicers,
                and The Chase Manhattan Bank.

        10.22   Receivables Sale and Contribution Agreement, dated as of
                April 1, 1998, among Core-Mark Capital Corporation, Core-Mark
                International, Inc., Core-Mark Midcontinent, Inc., and Core-Mark
                Interrelated Companies, Inc., as Sellers.

        21      List of Subsidiaries of the Company

        27      Financial Data Schedule



(b)     Reports on Form 8-K

        During the second quarter of 1998, the Company filed no reports on
        Form 8-K.


                                      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 14, 1998.


                                   CORE-MARK INTERNATIONAL, INC.



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


                                      16