SEC Filing – Core-Mark

View: Download DOC Download PDF Download XLS

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended March 31, 2009

¨	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: 000-51515

CORE-MARK HOLDING COMPANY, INC.

(Exact name of registrant as specified in its charter)


Delaware		20-1489747
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

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

(650) 589-9445

(Registrant’s telephone number, including area code)

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 requirement for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ¨	Accelerated filer	x
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court. Yes x No ¨

As of March 31, 2009, 10,829,646 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2009

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION		3

ITEM 1.	Financial statements (unaudited)	3

	• Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008	3

	• Condensed Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008	4

	• Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008	5

	• Notes to Condensed Consolidated Financial Statements	6

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	24

ITEM 4.	Controls and Procedures	24

PART II. OTHER INFORMATION		25

ITEM 1.	Legal Proceedings	25

ITEM 1A.	Risk Factors	25

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

ITEM 6.	Exhibits	26

SIGNATURES		27

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)


	March 31, 2009			December 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	12.9		$	15.7
Restricted cash		9.2			11.4
Accounts receivable, net of allowance for doubtful accounts of $9.3 and $8.8, respectively		135.9			146.9
Other receivables, net		39.3			34.1
Inventories, net (Note 2)		214.4			238.4
Deposits and prepayments		45.4			26.5
Deferred income taxes		12.2			12.2

Total current assets		469.3			485.2

Property and equipment, net		75.4			74.2
Deferred income taxes		12.2			12.1
Goodwill		3.7			3.7
Other non-current assets, net		35.6			37.4

Total assets	$	596.2		$	612.6

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	59.7		$	66.0
Book overdrafts		8.4			17.8
Cigarette and tobacco taxes payable		88.6			103.2
Accrued liabilities		71.9			58.1
Income taxes payable		8.6			—
Deferred income taxes		1.5			1.6

Total current liabilities		238.7			246.7

Long-term debt, net (Note 4)		0.8			30.8
Other long-term liabilities		8.1			11.1
Claims liabilities, net of current portion		31.6			31.3
Pension liabilities		19.1			19.1

Total liabilities		298.3			339.0

Stockholders’ equity:
Common stock; $0.01 par value (50,000,000 shares authorized; 10,829,646 and 10,746,416 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively)		0.1			0.1
Additional paid-in capital		210.3			209.3
Treasury stock at cost, 396,716 shares of common stock (Note 10)		(11.0	)		(11.0	)
Retained earnings		105.6			82.3
Accumulated other comprehensive loss		(7.1	)		(7.1	)

Total stockholders’ equity		297.9			273.6

Total liabilities and stockholders’ equity	$	596.2		$	612.6

See accompanying notes to condensed consolidated financial statements.

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2009			2008
Net sales	$	1,391.8		$	1,345.4
Cost of goods sold		1,273.7			1,264.2

Gross profit		118.1			81.2

Warehousing and distribution expenses		45.0			45.9
Selling, general and administrative expenses		37.0			34.1
Amortization of intangible assets		0.6			0.5

Total operating expenses		82.6			80.5

Income from operations		35.5			0.7
Interest expense		0.5			0.5
Interest income		(0.1	)		(0.3	)
Foreign currency transaction losses, net		0.8			1.0

Income (loss) before income taxes		34.3			(0.5	)
Provision for income taxes (Note 5)		11.0			—

Net income (loss)	$	23.3		$	(0.5	)

Basic income (loss) per common share (Note 6)	$	2.22		$	(0.05	)

Diluted income (loss) per common share (Note 6)	$	2.20		$	(0.05	)

Basic weighted average shares (Note 6)		10.5			10.6
Diluted weighted average shares (Note 6)		10.6			10.6

See accompanying notes to condensed consolidated financial statements.

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Three Months Ended March 31,
	2009			2008
Cash flows from operating activities:
Net income (loss)	$	23.3		$	(0.5	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
LIFO and inventory provisions		3.0			2.3
Amortization of debt issuance costs		0.1			0.1
Amortization of stock-based compensation expense		1.2			1.0
Bad debt expense, net		0.8			0.3
Depreciation and amortization		4.5			4.4
Foreign currency transaction losses, net		0.8			1.0
Changes in operating assets and liabilities:
Accounts receivable		10.0			1.0
Other receivables		(5.5	)		0.1
Inventories		19.8			10.4
Deposits, prepayments and other non-current assets		(18.5	)		0.5
Accounts payable		(6.1	)		9.0
Cigarette and tobacco taxes payable		(13.6	)		(1.8	)
Pension, claims and other accrued liabilities		11.2			1.3
Income taxes payable		8.7			—

Net cash provided by operating activities		39.7			29.1

Cash flows from investing activities:
Restricted cash		1.9			(1.5	)
Additions to property and equipment, net		(4.8	)		(6.0	)
Capitalization of software		(0.1	)		(0.2	)

Net cash used in investing activities		(3.0	)		(7.7	)

Cash flows from financing activities:
Repayments under revolving credit facility, net		(30.0	)		(20.9	)
Repurchases of common stock shares (treasury stock)		—			(2.1	)
Proceeds from exercise of common stock options		—			0.1
Excess tax deductions associated with stock-based compensation		—			0.1
Decrease in book overdrafts		(9.4	)		—

Net cash used in financing activities		(39.4	)		(22.8	)

Effects of changes in foreign exchange rates		(0.1	)		(0.3	)

Decrease in cash and cash equivalents		(2.8	)		(1.7	)
Cash and cash equivalents, beginning of period		15.7			21.3

Cash and cash equivalents, end of period	$	12.9		$	19.6

Supplemental disclosures:
Cash (refunded) paid during the period for:
Income taxes, includes interest paid, net of refunds	$	0.1		$	(3.5	)
Interest	$	0.3		$	0.4

See accompanying notes to condensed consolidated financial statements.

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Summary of Company Information

Business

Core-Mark Holding Company, Inc. and subsidiaries (referred herein as “we,” “us,” “our,” or “Core-Mark”) is one of the leading wholesale distributors to the convenience retail industry in North America in terms of annual sales, providing sales and marketing, distribution and logistics services to customer locations across the United States and Canada. We operate a network of 26 distribution centers (including two distribution facilities that we operate as a third-party logistics provider) in the United States and Canada, distributing a diverse line of national and private label convenience store products to over 24,000 customer locations. The products we distribute include cigarettes, tobacco, candy, snacks, fast food, groceries, fresh products, dairy, non-alcoholic beverages, general merchandise, and health and beauty care products. We service a variety of stores, including traditional convenience stores, grocery stores, drug stores, liquor stores and other stores that carry convenience products.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements of Core-Mark for the three months ended March 31, 2009 and 2008 have been prepared on the same basis as our audited consolidated financial statements and include adjustments necessary for the fair presentation of our consolidated results of operations, financial position and cash flows. Results for the interim periods are not necessarily indicative of results to be expected for the full year or any other future period.

The significant accounting policies and certain financial information that are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, but which are not required for interim reporting purposes, have been omitted. The unaudited consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2008, which are included in our 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 13, 2009.

2. Inventories

Net income reflects the application of the last-in, first-out (LIFO) method of valuing inventories in the United States based upon estimated annual producer price indices. Inventories in Canada are valued on a first-in, first-out (FIFO) basis as LIFO is not a permitted inventory valuation method in Canada. During periods of rising prices, the LIFO method of costing inventories generally results in higher costs being charged against income while lower costs are retained in inventories. We recorded LIFO expense of $3.0 million for the three months ended March 31, 2009 and $1.7 million for the same period in 2008.

3. Comprehensive Income

Comprehensive income for the three months ended March 31, 2009 and 2008 was as follows (in millions):


	Three Months Ended March 31,
	2009		2008
Net income (loss)	$	23.3	$	(0.5	)
Foreign currency translation adjustment		—		(0.2	)

Total comprehensive income (loss)	$	23.3	$	(0.7	)

4. Long-term Debt

Total long-term debt as presented in the consolidated balance sheets consists of the following (in millions):


	March 31, 2009		December 31, 2008
Amounts borrowed (Credit Facility)	$	—	$	30.0
Notes payable (Capitalized lease equipment)		0.8		0.8

Total long-term debt	$	0.8	$	30.8

In October 2005, we entered into a $250 million five-year revolving credit facility (“Credit Facility”) which expires in October 2010. All obligations under the Credit Facility are secured by first priority liens upon substantially all of our present and future assets. The terms of the Credit Facility permit prepayment without penalty at any time (subject to customary breakage costs with respect to LIBOR or CDOR-based loans prepaid prior to the end of an interest period).

In March 2008, we entered into a Second Amendment to our Credit Facility (the “Second Amendment”). This Amendment established our basket for permitted acquisitions made after the date of the Second Amendment at $100 million and increased our basket for permitted stock repurchases to $30 million.

Net available borrowings, amounts borrowed and outstanding letters of credit under the Credit Facility were as follows (in millions):


	March 31, 2009		December 31, 2008
Net available borrowings	$	212.7	$	186.0

Amounts borrowed	$	—	$	30.0

Outstanding letters of credit	$	28.2	$	24.4

The Credit Facility contains restrictive covenants, including among others, limitations on dividends and other restricted payments, other indebtedness, liens, investments and acquisitions and certain asset sales. As of March 31, 2009, we are in compliance with all of the covenants under the Credit Facility.

Our weighted-average interest rate was calculated based on our daily cost of borrowing which was computed on a blend of prime and LIBOR rates. The weighted-average interest rate on our revolving credit facility for the three months ended March 31, 2009 was 1.9% and 5.1% for the same period in 2008. We paid total unused facility fees of $0.1 million in the first quarters of both 2009 and 2008.

5. Income Taxes

Our effective tax rate was 32.1% for the three months ended March 31, 2009. Included in the provision for income taxes for the three months ended March 31, 2009 was a $1.8 million benefit related primarily to the expiration of the statute of limitations for uncertain tax positions and related interest of $1.0 million. For the three months ended March 31, 2008, we recognized a net income tax benefit of $0.2 million offset by $0.2 million of interest expense, net of tax, related to our uncertain tax positions.

At March 31, 2009, the total amount of unrecognized tax benefits under Financial Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, which was included in other tax liabilities, related to federal, state and foreign taxes, was approximately $4.2 million. The total amount of net unrecognized tax benefits that would impact the effective tax rate, if recognized, would be $3.4 million as of March 31, 2009. The unrecognized tax benefits of $4.2 million as of March 31, 2009 could be impacted further by the expiration of the statute of limitations for certain tax positions in future years. We estimate the impact could be up to $2.9 million through March 31, 2010.

We file U.S. federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2005 to 2007 tax years remain subject to examination by federal and state tax authorities. The 2004 tax year is still open for certain state tax authorities. The 2000 to 2007 tax years remain subject to examination by the tax authorities in certain foreign jurisdictions. In 2007, the Canada Revenue Agency initiated an examination of our Canadian tax returns for 2003 and 2004. The examination was finalized in 2009 and resulted in no significant adjustments.

6. Earnings Per Share

The following tables set forth the computation of basic and diluted net income (loss) per share (in millions, except per share amounts):


	Three Months Ended March 31,
	2009						2008
	Net Income		Weighted Average Shares Outstanding	Net Income Per Common Share			Net Income (Loss)			Weighted Average Shares Outstanding	Net Income (Loss) Per Common Share
Basic EPS	$	23.3	10.5	$	2.22		$	(0.5	)	10.6	$	(0.05	)
Effect of dilutive common share equivalents:
Stock options			0.1		(0.02	)

Diluted EPS	$	23.3	10.6	$	2.20		$	(0.5	)	10.6	$	(0.05	)

Note: Basic and diluted earnings per share are calculated based on unrounded actual amounts.

Certain options and warrants to purchase common stock were outstanding but were not included in the computation of diluted earnings per share because the effect would be anti-dilutive. There were 406,478 anti-dilutive stock options for the three months ended March 31, 2009 and 668,324 anti-dilutive stock options for the three months ended March 31, 2008. There were 968,628 anti-dilutive warrants (Class 6(B)) for the three months ended March 31, 2009 and no anti-dilutive warrants for the three months ended March 31, 2008.

In May 2004, we issued an aggregate of 9,800,000 shares of our common stock and warrants to purchase an aggregate of 990,616 shares of our common stock to the Class 6(B) creditors of Fleming Inc. (our former parent company) pursuant to its plan of reorganization. We refer to the warrants we issued to the Class 6(B) creditors as the Class 6(B) warrants. We received no cash consideration for the issuance of common stock and the Class 6(B) warrants. The Class 6(B) warrants have an exercise price of $20.93 per share and may be exercised at the election of the holder at any time prior to August 23, 2011. The shares of common stock and the Class 6(B) warrants were issued pursuant to an exemption from registration under Section 1145(a) of the Bankruptcy Code. We also issued warrants to purchase an aggregate of 247,654 shares of our common stock to the holders of our Tranche B Notes, which we refer to as Tranche B warrants. The Tranche B warrants have an exercise price of $15.50 per share and may be exercised at the election of the holder at any time prior to August 23, 2011.

The number of Class 6(B) warrants outstanding was 968,628 as of March 31, 2009 and 2008. The number of Tranche B warrants outstanding was 126,716 as of March 31, 2009 and 2008. The Class 6(B) warrants and the Tranche B warrants have been classified as permanent equity under EITF 00-19, Accounting for Derivative Financial Information Indexed to, and Potentially Settled in, a Company’s Own Stock. We used the treasury stock method, as prescribed by SFAS No. 128, Earnings Per Share, to determine the shares of common stock due to conversion of outstanding warrants as of March 31, 2009.

7. Stock-Based Compensation Plans

Total stock-based compensation cost recognized in the accompanying condensed consolidated statements of operations was $1.2 million and $1.0 million for the three months ended March 31, 2009 and 2008, respectively. Total unrecognized compensation cost related to non-vested share-based compensation arrangements was $8.7 million at March 31, 2009. This balance is expected to be recognized over a weighted-average period of 2.2 years.

The following table presents the assumptions used in the Black-Scholes option pricing model to value the stock options granted during the three months ended March 31, 2009 and 2008. Restricted stock units and performance shares were valued at the fair market value of our common stock at the date of grant.


	Three Months Ended March 31,
	2009			2008
Expected life (years)		4			4
Risk-free interest rate		1.12	%		2.55	%
Volatility		44	%		35	%
Dividend yield		—			—

Weighted-average fair value of grants:
Stock options	$	7.14		$	8.50
Restricted stock units	$	19.18		$	25.80
Performance shares	$	19.18		$	25.80

The following table summarizes the activity for all stock options, restricted stock units (RSU), and performance shares under all of our Long-Term Incentive Plans (LTIP) for the three months ended March 31, 2009:


		December 31, 2008		2009						March 31, 2009
		Outstanding		Granted		Exercised		Canceled/Reclass		Outstanding		Exercisable
Plans	Securities	Number	Price	Number	Price	Number	Price	Number	Price	Number	Price	Number	Price
2004 LTIP	RSU	41,978	$0.01	—	$ —	(16,282)	$0.01	—	$ —	25,696	$0.01	20,691	$0.01
2004 LTIP	Options	593,291	17.39	2,543	19.19	(2,778)	15.50	(419)	36.03	592,637	17.39	570,522	16.79
2004 Directors’ Plan	Options	30,000	15.50	—	—	—	—	—	—	30,000	15.50	30,000	15.50
2005 LTIP	RSU	38,472	0.01	134	0.01	(9,367)	0.01	—	—	29,239	0.01	22,871	0.01
2005 Directors’ Plan	Options	15,000	27.03	—	—	—	—	—	—	15,000	27.03	15,000	27.03
	RSU	146,994	0.01	126,465	0.01	(53,289)	0.01	—	—	220,170	0.01	9,038	0.01
2007 LTIP	Options	199,145	29.39	143,634	19.19	—	—	(5,605)	29.63	337,174	25.04	102,729	30.09
	Perf. Shares	27,500	0.01	83,025	0.01	(11,912)	0.01	—	—	98,613	0.01	—	—

Note: Price is weighted-average price per share.

8. Employee Benefit Plans

Pension and Post-Retirement Defined-Benefit Plans

We sponsor a qualified defined-benefit pension plan and a post-retirement benefit plan for employees hired before September 1986. There have been no new entrants to the pension or non-pension post-retirement benefit plans after those benefit plans were frozen on September 30, 1989. Pursuant to a plan of reorganization (May 2004) set forth in Exhibit 2.1 to our Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated by reference, we were assigned the obligations for three former Fleming defined-benefit pension plans. These three pension benefit plans, along with the Core-Mark defined-benefit plan, are collectively referred to as the Pension Plans.

Our defined-benefit pension plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA, the Pension Benefit Guaranty Corporation (PBGC) has the authority to terminate an underfunded pension plan under

limited circumstances. In the event our pension plan is terminated for any reason while it is underfunded, we will incur a liability to the PBGC that may be equal to the entire amount of the underfunding. Our post-retirement benefit plan is not subject to ERISA. As a result, the post-retirement benefit plan is not required to be pre-funded, and, accordingly, has no plan assets.

Pension costs and other post-retirement benefit costs charged to operations are estimated on the basis of annual valuations with the assistance of an independent actuary. Adjustments arising from plan amendments, changes in assumptions and experience gains and losses, are amortized over the average future life expectancy of inactive participants for our defined-benefit plan, and expected average remaining service life of active participants for our post-retirement benefit plan.

The following table provides the components of the net periodic pension and other post-retirement benefit costs for the three months ended March 31, 2009 and 2008 (in millions):


	Three Months Ended March 31,
	2009			2008
PENSION BENEFITS
Interest cost	$	0.5		$	0.5
Expected return on plan assets		(0.4	)		(0.5	)
Amortization of net actuarial loss		0.1			—

Net periodic benefit cost	$	0.2		$	—


	Three Months Ended March 31,
	2009		2008
OTHER POST-RETIREMENT BENEFITS
Interest cost	$	0.1	$	0.1

Net periodic benefit cost	$	0.1	$	0.1

During the three months ended March 31, 2009, a contribution credit of $0.2 million was made to our pension and post-retirement benefit plans through a reduction from our carryover credit balance of $0.9 million from prior years. We did not make a contribution to these plans during the three months ended March 31, 2008.

During the second quarter of 2009, we expect a contribution credit of $0.2 million to our pension and post-retirement benefit plans which will most likely be applied as a reduction to our carryover credit balance.

9. Segment and Geographic Information

We are one of the leading wholesale distributors to the convenience retail industry in North America in terms of annual sales, and provide sales and marketing, distribution and logistics services to customer locations across the United States and Canada. We distribute consumable goods including cigarettes, tobacco, candy, snacks, fast food, groceries, fresh products, dairy, non-alcoholic beverages, general merchandise and health and beauty care products to customers in 50 states and 5 Canadian provinces. We service a variety of store formats, including traditional convenience stores, grocery stores, drug stores, liquor stores, gift shops, specialty stores and other stores that carry convenience products.

As of March 31, 2009, we operated 24 distribution centers (excluding two distribution facilities we operated as a third-party logistics provider) which support our wholesale distribution business. Twenty of our distribution centers are located in the United States and four in Canada. Two of the facilities we operated in the United States are consolidating warehouses which buy products from our suppliers in bulk quantities and then distribute the

products to our other distribution centers, including the two distribution facilities we operated as a third-party logistics provider.

Our distribution centers (operating divisions) produced almost all of our revenues and have been aggregated as operating segments, in accordance with SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information, into two geographic reporting segments (United States and Canada), based on the different economic characteristics and regulatory environments of both countries. Corporate adjustments and eliminations include the net results after intercompany eliminations for our consolidating warehouses, corporate fees for service revenue, reclassifying adjustments, corporate allocations, and elimination of inter-company interest charges. Accounting policies for measuring segment assets and earnings before income taxes are substantially consistent with those described in Note 2—Summary of Significant Accounting Policies, of our Annual Report on Form 10-K, for the year ended December 31, 2008. Inter-segment revenues are not significant and no single customer accounted for 10% or more of our total revenues for the three months ended March 31, 2009.

Information about our business operations based on the two geographic reporting segments follows (in millions):


	Three Months Ended March 31,
	2009			2008
Net sales:
United States	$	1,199.0		$	1,131.7
Canada		188.6			208.1
Corporate adjustments and eliminations		4.2			5.6

Total	$	1,391.8		$	1,345.4

Income (loss) before income taxes:
United States ⁽¹⁾	$	40.3		$	2.6
Canada		(1.5	)		(1.4	)
Corporate adjustments and eliminations		(4.5	)		(1.7	)

Total	$	34.3		$	(0.5	)

Interest expense:
United States	$	5.5		$	4.7
Canada		0.3			0.2
Corporate adjustments and eliminations		(5.3	)		(4.4	)

Total	$	0.5		$	0.5

Interest income:
United States	$	—		$	—
Canada		—			(0.1	)
Corporate adjustments and eliminations		(0.1	)		(0.2	)

Total	$	(0.1	)	$	(0.3	)

Depreciation and amortization:
United States	$	3.1		$	3.4
Canada		0.6			0.6
Corporate adjustments and eliminations		0.8			0.4

Total	$	4.5		$	4.4

(1)	Includes $34.9 million in the first quarter of 2009 for cigarette holding profits related to manufacturers’ price increases in response to the SCHIP legislation. (Please refer to disclosures on the SCHIP legislation and its impact in the MD&A section)

Identifiable assets by geographic reporting segments (in millions):


	March 31, 2009		December 31, 2008
Identifiable assets:
United States	$	518.4	$	530.7
Canada		77.8		81.9

Total	$	596.2	$	612.6

The net sales mix for our primary product categories is as follows (in millions):


	Three Months Ended March 31,
	2009			2008
Cigarettes	$	956.2		$	919.0

Food		164.5			151.6
Candy		95.0			93.5
Other Tobacco Products		95.9			91.2
Health, Beauty & General		50.5			54.3
Non-Alcoholic Beverages		29.9			34.6
Equipment/Other		(0.2	)		1.2

Total Food/Non-Food Products	$	435.6		$	426.4


Total Net Sales	$	1,391.8		$	1,345.4

10. Repurchase of Common Stock

In March 2008, our Board of Directors authorized a share repurchase program of up to $30 million to repurchase shares of our common stock in the open market or in privately negotiated transactions subject to market conditions. The number of shares to be purchased and the timing of the purchases will be based on market conditions, our cash and liquidity requirements, relevant securities laws and other factors. The share repurchase program may be discontinued or amended at any time. We plan to fund the majority of the share repurchases from available cash. Our Credit Facility was amended in March 2008 to increase our basket for permitted stock repurchases to $30 million to allow us to execute the share repurchase program.

We had repurchased 396,716 shares of common stock under the share repurchase program as of December 31, 2008 at a total cost of $11.0 million. We did not repurchase any shares of our common stock during the three months ended March 31, 2009.

11. Asset Acquisition of Auburn Merchandise Distributors, Inc.

In June 2008, we acquired substantially all of the assets of Auburn Merchandise Distributors, Inc., (“AMD”) located in Whitinsville, Massachusetts, a wholly-owned subsidiary of Warren Equities, Inc., for approximately $28.7 million, including transaction costs. The assets purchased include primarily accounts receivable, inventory, fixed assets and other intangibles, with no significant liabilities. AMD operates out of a 130,000 sq. ft. facility and conducts business primarily in the Northeastern region of the United States. The purchase price exceeded the estimated fair value of net assets acquired by approximately $0.9 million, which was recorded as goodwill. AMD conducts operations as the “New England” division of Core-Mark. Results of operations of AMD have been included in Core-Mark’s consolidated statements of operations since June 2008.

12. Federal Excise Tax Liability Impact for the State Children’s Health Insurance Program (SCHIP)

In February 2009, the State Children’s Health Insurance Program (SCHIP) was signed into law, which increased federal cigarette excise taxes (FET) levied on manufacturers of cigarettes from 39¢ to $1.01 per pack, effective April 1, 2009. The SCHIP also imposed a one-time floor stock tax on tobacco products held for sale on April 1, 2009. As of March 31, 2009, we included in our consolidated balance sheet in inventory and accrued liabilities the impact of the federal floor stock tax liability in the amount of approximately $12.6 million, which is due and payable by July 31, 2009. We recorded in other receivables approximately $1.8 million in reimbursements from cigarette and tobacco manufacturers to offset part of the federal floor stock tax. The net floor stock tax amount of $10.8 million will be reflected in our results of operations for the second quarter of 2009 as the related inventory is sold.

ITEM 2.

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

You should read the following discussion together with the condensed consolidated financial statements, including the related notes, and the other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. See “Forward Looking Statements” at the end of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our Business

Core-Mark is one of the leading wholesale distributors to the convenience retail industry in North America in terms of annual sales, providing sales and marketing, distribution and logistics services to customer locations across the United States and Canada. We operate a network of 26 distribution centers (including two distribution facilities we operate as a third-party logistics provider) in the United States and Canada, distributing a diverse line of national and private label convenience store products to over 24,000 customer locations. The products we distribute include cigarettes, tobacco, candy, snacks, fast food, groceries, fresh products, dairy, non-alcoholic beverages, general merchandise, and health and beauty care products. We service a variety of stores, including traditional convenience stores, grocery stores, drug stores, liquor stores and other stores that carry convenience products.

First Quarter Overview

Net sales for the first quarter of 2009 increased 3.5% to $1.4 billion compared to the first quarter last year. On a constant currency basis, net sales increased approximately 6.8% for the quarter. This increase was driven primarily by the addition of our New England division, inflation in cigarette prices offset by declines in carton sales and an increase in food/non-food sales. Cigarette sales increased in absolute dollars, compared with the first quarter of 2008, as a result of price increases by cigarette manufacturers in response to the federal excise tax levied on manufacturers by the SCHIP legislation, offset by a 3.9% decrease in overall cigarette carton sales. In the U.S., carton sales declined 9.5% for the quarter excluding the New England division. We believe this decrease in U.S. carton sales was negatively impacted by retailers who curtailed their purchases at the end of the quarter in order to minimize the Federal Excise Tax (FET) liability that would be levied on their inventories. Cigarette carton sales in Canada increased approximately 13.9% in the first quarter of 2009, driven primarily by market share gains, sales from additional product lines and the addition of our Toronto division in late January 2008.

Curtailed customer purchases, in response to the FET tax, compounded the existing decline in overall consumer demand which we believe is influenced by, among other factors, manufacturer price and state tax increases and legislative actions to regulate where a consumer can smoke. We expect consumption trends will continue to be impacted by these factors which may adversely impact our cigarette carton sales, primarily in the U.S., for the remainder of 2009. Further, we believe declines in consumer spending had some impact on our sales for the first quarter of 2009. We continue to monitor current macroeconomic conditions including consumer confidence and spending levels. If consumer spending declines further and/or the current decline persists for a prolonged period of time, our sales and associated gross profit may be materially impacted in future quarters.

Gross profit for the first quarter of 2009 increased 45.4% to $118.1 million compared with $81.2 million for the same period last year due largely to $34.9 million of cigarette inventory holding profits realized from manufacturers’ price increases in response to the increase in federal excise tax mandated by the SCHIP legislation. Excluding cigarette holding profits and changes in LIFO reserves, gross profit increased $3.4 million, or 4.1%, compared with the first quarter of 2008. As a percentage of sales, remaining gross profit was 6.19% for this first quarter compared with 6.15% for last year’s first quarter.

Operating expenses increased 2.6% to $82.6 million for the first quarter of 2009 compared with $80.5 million for 2008. This increase was due primarily to the addition of our New England division, higher employee healthcare costs, and an increase in bad debt reserves, partially offset by lower fuel costs. The impact of fuel

costs was significantly lower in the first quarter of 2009 compared with the first quarter of 2008 due primarily to lower average fuel costs and increases in fuel surcharges passed on to our customers. However, inflation in future fuel costs or reductions in our fuel surcharges may materially impact our financial results depending on the extent and timing of these changes.

Operating income was $35.5 million for the first quarter of 2009 compared with $0.7 million for 2008. Excluding cigarette holding profits and changes in LIFO reserves from both periods, operating income for the first quarter of 2009 increased by $1.3 million to $3.6 million as compared to $2.3 million for 2008.

Business Developments

Federal Excise Tax Liability Impact for the State Children’s Health Insurance Program

In February 2009, the State Children’s Health Insurance Program (SCHIP) was signed into law, which increased federal cigarette excise taxes (FET) levied on manufacturers of cigarettes from 39¢ to $1.01 per pack effective April 1, 2009. In March 2009, most U.S. manufacturers increased their list prices charged to distributors such as Core-Mark by approximately 28.0% which contributed to us recognizing $34.9 million of cigarette inventory holding profits in our first quarter of 2009. We believe these price increases were in response to the passage of the SCHIP legislation. As of March 31, 2009, we included in our consolidated balance sheet in inventory and accrued liabilities the impact of the federal floor stock tax liability in the amount of approximately $12.6 million, which is due and payable by July 31, 2009. We recorded in other receivables approximately $1.8 million in reimbursements from cigarette and tobacco manufacturers to offset part of the federal floor stock tax. The net floor stock tax amount of $10.8 million will be reflected in our results of operations for the second quarter of 2009 as the related inventory is sold.

Asset Acquisition of Auburn Merchandise Distributors, Inc.

In June 2008, we acquired substantially all of the assets of Auburn Merchandise Distributors, Inc., (“AMD”) located in Whitinsville, Massachusetts, a wholly-owned subsidiary of Warren Equities, Inc., for approximately $28.7 million, including transaction costs. The assets purchased include primarily accounts receivable, inventory and fixed assets. The AMD acquisition has expanded our presence and infrastructure in the Northeastern region of the United States, as its 130,000 sq. ft. facility and the majority of its customers are located there. The purchase price of approximately $28.7 million, including transaction costs, exceeded the estimated fair value of net assets acquired by approximately $0.9 million, which has been recorded as goodwill. AMD conducts operations as the “New England” division of Core-Mark. Results of operations of AMD have been included in Core-Mark’s consolidated statements of operations since June 2008.

Share Repurchase Program

In March 2008, our Board of Directors authorized a share repurchase program of up to $30 million to repurchase shares of our common stock in the open market or in privately negotiated transactions subject to market conditions. The number of shares to be repurchased and the timing of the purchases will be based on market conditions, our cash and liquidity requirements, relevant securities laws and other factors. The share repurchase program may be discontinued or amended at any time. We funded repurchases during 2008, and plan to fund any future repurchases, from available cash. Our Credit Facility was amended to allow us to execute the share repurchase program. We repurchased 396,716 shares of common stock under the share repurchase program as of December 31, 2008 at a total cost of $11.0 million. We did not repurchase any shares of our common stock during the three months ended March 31, 2009.

Expansion to Eastern Canada

In January 2008, we opened a new distribution facility near Toronto, Ontario. This facility expanded our existing market geography in Canada. We signed a long-term supply agreement with Couche-Tard, a Canadian

retailer that operates over 600 stores in the province of Ontario. The total cost of the facility was approximately $9.6 million, including $1.8 million of start-up costs.

Results of Operations

Comparison of the three months ended March 31, 2009 and 2008⁽¹⁾


	2009 Increase (Decrease) (in millions)			Three Months Ended March 31, 2009					Three Months Ended March 31, 2008
	2009 Increase (Decrease) (in millions)			Amounts (in millions)			% of Net sales	% of Net sales, less excise taxes	Amounts (in millions)			% of Net sales	% of Net sales, less excise taxes
Net sales	$	46.4		$	1,391.8		100.0	—	$	1,345.4		100.0	—
Net sales—Cigarettes		37.2			956.2		68.7	61.7		919.0		68.3	61.0
Net sales—Food/Non-food		9.2			435.6		31.3	38.3		426.4		31.7	39.0
Net sales, less excise taxes ⁽²⁾		43.4			1,063.9		76.4	100.0		1,020.5		75.9	100.0
Gross profit		36.9			118.1		8.5	11.1		81.2		6.0	8.0
Warehousing and distribution expenses ⁽³⁾		(0.9	)		45.0		3.2	4.2		45.9		3.4	4.5
Selling, general and administrative expenses		2.9			37.0		2.7	3.5		34.1		2.5	3.3
Income from operations		34.8			35.5		2.6	3.3		0.7		0.1	0.1
Interest expense		—			0.5		—	0.1		0.5		—	—
Interest income		(0.2	)		(0.1	)	—	—		(0.3	)	—	—
Foreign currency transaction losses, net		(0.2	)		0.8		0.1	0.1		1.0		0.1	0.1
Income (loss) before income taxes		34.8			34.3		2.5	3.2		(0.5	)	—	—
Net income (loss)		23.8			23.3		1.7	2.2		(0.5	)	—	—

(1)	Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.

(2)

Net sales, less excise taxes is a non-GAAP financial measure which we provide to separate the increase in sales due to actual sales growth and increases in state and provincial excise taxes which we are responsible for collecting and remitting. Federal excise taxes are levied on the manufacturers who pass the tax on to us as part of the product cost, and thus are not a component of our excise taxes. Although increases in cigarette excise taxes result in higher net sales, our overall gross profit percentage will decrease since our gross profit dollars generally remain the same. (See—Comparison of Sales and Gross Profit by Product Category).

(3)	Gross margins may not be comparable to those of other entities because warehouse and distribution expenses are not included as a component of our cost of goods sold.

Net Sales. Net sales increased by $46.4 million, or 3.5%, to $1,391.8 million for the three months ended March 31, 2009 from $1,345.4 million for the same period in 2008. On a constant currency basis, net sales increased by 6.8% during the first quarter of 2009 as compared to 2008. The increase in net sales was also impacted by one less workday in this year’s first quarter compared with the first quarter last year. This increase was attributable primarily to approximately $36.3 million in price inflation due to manufacturer price increases and sales from the New England division.

Net Sales of Cigarettes. Net sales of cigarettes for the three months ended March 31, 2009 increased by $37.2 million, or 4.1%, to $956.2 million from $919.0 million for the same period in 2008. The increase in net cigarette sales for the first quarter of 2009 was driven by an 8.3% increase in the average sales price per carton due primarily to manufacturer price increases arising late in the quarter, and sales from our New England division, offset by a decline in cigarette carton sales of 3.9%. Carton sales in the United States declined 9.5% in the first quarter of 2009, excluding the New England division, due in part to the significant price increases during the quarter and we believe in part due to retailers curtailing purchases in order to minimize the federal floor stock tax liability that would be imposed on their inventories. Carton sales in Canada increased 13.9%. The increase in carton sales in Canada was attributable to market share gains and the distribution of new products, sales from additional product lines and the addition of our Toronto division in late January 2008. Total net cigarette sales as a percentage of total net sales was 68.7% for the three months ended March 31, 2009 compared to 68.3% for the same period in 2008.

Net Sales of Food/Non-Food Products. Net sales of food and non-food products for the three months ended March 31, 2009 increased $9.2 million, or 2.2%, to $435.6 million from $426.4 million for the same period in 2008. On a constant currency basis, net sales of food and non-food products increased 5.6% during the first quarter of 2009 as compared to 2008. This increase was due primarily to sales from our New England division and increases in net sales from the food, candy and other tobacco products categories somewhat offset by declines in the health and beauty, general and beverages categories. Total net sales of food and non-food products as a percentage of total net sales were 31.3% for three months ended March 31, 2009 compared to 31.7% for the same period in 2008.

Gross Profit. Gross profit represents the portion of net sales remaining after deducting the cost of goods sold during the period. Vendor incentives, cigarette holding profits and changes in LIFO reserves are classified as elements of cost of goods sold. Gross profit for the three months ended March 31, 2009 increased by $36.9 million, or 45.4%, to $118.1 million from $81.2 million for the same period in 2008. Gross profit for the three months ended March 31, 2009 was significantly higher compared to the same period in 2008 as we realized significant cigarette inventory holding profits from increased cigarette prices by manufacturers in response to the increase in federal excise tax mandated by the SCHIP legislation.

The following table provides the components comprising the change in gross profit as a percentage of net sales for the three months ended March 31, 2009 and 2008⁽¹⁾.


	Three Months Ended March 31, 2009							Three Months Ended March 31, 2008
	Amounts (in millions)			% of Net sales		% of Net sales, less excise taxes		Amounts (in millions)			% of Net sales		% of Net sales, less excise taxes
Net sales	$	1,391.8		100.0	%	—		$	1,345.4		100.0	%	—
Net sales, less excise taxes ⁽²⁾		1,063.9		76.4		100.0	%		1,020.5		75.9		100.0	%
LIFO expense		(3.0	)	(0.22	)	(0.28	)		(1.7	)	(0.13	)	(0.17	)
Cigarette inventory holding profits		34.9		2.51		3.28			0.1		0.01		0.01
Remaining gross profit		86.2		6.19		8.10			82.8		6.15		8.11

Gross profit	$	118.1		8.48	%	11.10	%	$	81.2		6.03	%	7.95	%

(1)	Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.

(2)

Our remaining cigarette gross profit increased approximately 13.7% on a cents per carton basis from 2008 due primarily to increased margins as a result of the manufacturers’ price increases. As a percentage of sales, remaining gross profit for our food/non-food category for the first quarter of 2009 was approximately 13.8% which was consistent with 2008. Remaining gross profit for the food/non-food category included lower floor gains during the first quarter of 2009 compared to the same period last year.

For the three months ended March 31, 2009, approximately 69.7% of our remaining gross profit was derived from food/non-food products compared to 71.1% for the same period in 2008.

Operating Expenses. Our operating expenses include costs related to warehousing, distribution, and selling, general and administrative activities. For the three months ended March 31, 2009, operating expenses increased $2.1 million, or 2.6%, to $82.6 million from $80.5 million for the same period in 2008. This increase in operating expenses was driven primarily by an 8.5% increase in selling, general and administrative expenses, offset by a

2.0% decrease in warehousing and distribution expenses. As a percentage of net sales, total operating expenses were 5.9% for the three months ended March 31, 2009 compared to 6.0% for the same period in 2008.

Warehousing and Distribution Expenses. Warehousing and distribution expenses decreased by $0.9 million, or 2.0%, to $45.0 million for the three months ended March 31, 2009 from $45.9 million for the same period in 2008. The decrease in warehousing and distribution expenses was due primarily to lower salaries and benefits and lower net fuel costs of $1.5 million, partially offset by the addition of the New England division. Additionally, in the first quarter of 2008, we incurred approximately $0.3 million of start-up costs related to the completion of a new Toronto distribution facility in late January 2008. As a percentage of net sales, these warehousing and distribution expenses were 3.2% for the three months ended March 31, 2009 compared to 3.4% for the same period in 2008.

Selling, General and Administrative (“SG&A”) Expenses. SG&A expenses increased $2.9 million, or 8.5%, to $37.0 million for the three months ended March 31, 2009 from $34.1 million for the same period in 2008. The increase in SG&A expenses was due primarily to the addition of the New England division, including $0.8 million related to their integration onto our information technology platform during the first quarter of this year. Additionally, healthcare benefit costs increased approximately $0.8 million due primarily to increased medical costs and higher claims experience, and we also increased our bad debt provision in the first quarter of 2009. In the first quarter of last year, we incurred approximately $0.4 million of start-up costs related to the completion of a new Toronto distribution facility in late January 2008. As a percentage of net sales, SG&A expenses were 2.7% for the three months ended March 31, 2009 compared to 2.5% for the same period in 2008.

Interest Expense. Interest expense includes both debt interest and amortization of fees related to borrowings. Interest expense was $0.5 million for the three months ended March 31, 2009 and for the same period in 2008. Average borrowings for the three months ended March 31, 2009 were $23.6 million compared to $8.4 million for the same period in 2008. During the first quarter of 2009, the weighted-average interest rate on borrowings from our revolving credit facility was 1.9% compared to 5.1% in the first quarter of 2008. The decline in interest rates is the result of general decreases in rates charged to us for both prime and LIBOR borrowings.

Interest Income. For the three months ended March 31, 2009 interest income was $0.1 million compared to $0.3 million for the same period in 2008. Our interest income was derived primarily from earnings on cash balances kept in trust, checking accounts and overnight deposits. The interest income was lower in 2009 due primarily to a reduction in prevailing rates.

Foreign Currency Transaction Losses, net. We incurred foreign currency transaction losses of $0.8 million for the three months ended March 31, 2009 compared to $1.0 million for the same period in 2008. The fluctuation was due primarily to the weakening of the Canadian dollar against the US dollar. For the three months ended March 31, 2009, the average Canadian/United States exchange rate was $1.2453 as compared to $1.0042 for the same period in 2008.

Income Taxes. Our effective tax rate was 32.1% for the three months ended March 31, 2009. Included in the provision for income taxes this quarter was a $1.8 million benefit related primarily to the expiration of the statute of limitations for uncertain tax positions and related interest of $1.0 million. For the three months ended March 31, 2008, we recognized a net income tax benefit of $0.2 million offset by $0.2 million of interest expense, net of tax, related to our uncertain tax positions.

Comparison of Sales and Gross Profit by Product Category. The following table summarizes our cigarette and other product sales, LIFO expense, gross profit and other relevant financial data for the three months ended March 31, 2009 and March 31, 2008 (dollars in millions) ⁽¹⁾:


	Three Months Ended March 31,
	2009			2008
Cigarettes
Net sales	$	956.2		$	919.0
Excise taxes in sales ⁽²⁾	$	300.2		$	296.6
Net sales, less excise taxes ⁽³⁾	$	656.0		$	622.4
LIFO expense	$	3.0		$	0.6
Gross Profit ⁽⁴⁾	$	58.0		$	23.4
Gross Profit %		6.07	%		2.55	%
Gross Profit % less excise taxes		8.84	%		3.76	%
Remaining Gross Profit ⁽⁵⁾	$	26.1		$	23.9
Remaining Gross Profit %		2.73	%		2.60	%

*Food/Non-food Products*
Net sales	$	435.6		$	426.4
Excise taxes in sales ⁽²⁾	$	27.7		$	28.3
Net sales, less excise taxes ⁽³⁾	$	407.9		$	398.1
LIFO expense	$	—		$	1.1
Gross Profit ⁽⁶⁾	$	60.1		$	57.8
Gross Profit %		13.79	%		13.55	%
Gross Profit % less excise taxes		14.73	%		14.51	%
Remaining Gross Profit ⁽⁵⁾	$	60.1		$	58.9
Remaining Gross Profit %		13.79	%		13.81	%

*Totals*
Net sales	$	1,391.8		$	1,345.4
Excise taxes in sales ⁽²⁾	$	327.9		$	324.9
Net sales, less excise taxes ⁽³⁾	$	1,063.9		$	1,020.5
LIFO expense	$	3.0		$	1.7
Gross Profit ⁽⁴⁾⁽⁶⁾	$	118.1		$	81.2
Gross Profit %		8.48	%		6.03	%
Gross Profit % less excise taxes		11.10	%		7.95	%
Remaining Gross Profit ⁽⁵⁾	$	86.2		$	82.8
Remaining Gross Profit %		6.19	%		6.15	%

(1)	Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.

(2)

Excise taxes included in our net sales consist of state and provincial excise taxes which we are responsible for collecting and remitting. Federal excise taxes are levied on the manufacturers who pass the tax on to us as part of the product cost, and thus are not a component of our excise taxes. Although increases in cigarette excise taxes result in higher net sales, our overall gross profit percentage will decrease since our gross profit dollars generally remain the same.

(3)	Net sales, less excise taxes is a non-GAAP financial measure which we provide to separate the increase in sales due to actual sales growth and increases in excise taxes.

(4)

Cigarettes gross profit includes (i) cigarette holding profits related to manufacturer price increases and increases in excise taxes and (ii) LIFO effects. Cigarette holding profits for the three months ended March 31, 2009 were $34.9 million compared to $0.1 million for the same period in 2008. The increase in cigarette inventory holding profits for three months ended March 31, 2009 is due primarily to increases in cigarette prices by manufacturers in response to the anticipated increase in federal excise taxes mandated by the SCHIP legislation.

(5)	Remaining gross profit is a non-GAAP financial measure which we provide to segregate the effects of LIFO expense, cigarette inventory holding profits and other major non-recurring items that significantly affect the comparability of gross profit.

(6)	Food/Non-Food gross profit includes (i) increases in excise taxes and (ii) LIFO effects.

Liquidity and Capital Resources

Our cash and cash equivalents as of March 31, 2009 were $12.9 million compared to $19.6 million as of March 31, 2008. Our restricted cash as of March 31, 2009 was $9.2 million as compared to $12.6 million as of March 31, 2008. Restricted cash primarily represents funds that have been set aside in trust as required by one of the Canadian provincial taxing authorities to secure amounts payable for cigarette and tobacco excise taxes.

Our liquidity requirements arise primarily from the funding of our working capital, capital expenditures and debt service requirements of our credit facilities. We have historically funded our liquidity requirements through our current operations and external borrowings. For the three months ended March 31, 2009, our cash flows from operating activities provided $39.7 million and on March 31, 2009 we had $212.7 million of borrowing capacity available in our revolving credit facility.

During the current downturn in global financial markets some companies have experienced difficulties drawing on lines of credit, issuing debt and raising capital generally, which have had a material adverse impact on their liquidity. Based on our anticipated cash needs, availability under our revolving credit facility and the scheduled maturity of our debt, we expect that our current liquidity, notwithstanding these adverse market conditions, will be sufficient to meet all of our anticipated needs during the next twelve months.

Cash flows from operating activities

Net cash provided by operating activities increased by $10.6 million to $39.7 million for the three months ended March 31, 2009 compared with $29.1 million for the same period in 2008. The increase in net cash flows provided by operations was due primarily to higher net income in the first quarter of 2009, compared to a loss for the same period in 2008. This increase was driven by income from cigarette price increases coupled with a reduction in our candy and cigarette inventory offset by an increase in prepayments. The decrease in candy inventory was due primarily to a buildup of candy inventory during the fourth quarter of 2008 to take advantage of vendors’ promotions. Cigarette inventory decreased during the first quarter of 2009 to minimize the impact of the federal excise tax liability at the end of the quarter and we made prepayments at the end of March to replenish cigarette inventories to appropriate levels.

Cash flows from investing activities

Net cash used in investing activities decreased by $4.7 million to $3.0 million for the three months ended March 31, 2009 compared with $7.7 million for the same period in 2008. Restricted cash decreased by $1.9 million due primarily to the timing of payments for excise tax liabilities to Canadian provincial governments and when the taxes were collected from customers. Capital expenditures for the first quarter of 2009 were related primarily to refrigerated delivery and warehouse equipment.

We estimate that fiscal 2009 capital expenditures will be approximately $24 million.

Cash flows from financing activities

Net cash used in financing activities increased by $16.6 million to $39.4 million for the three months ended March 31, 2009 compared with $22.8 million for the same period in 2008 due primarily to higher repayments under our revolving credit facility during the first quarter of 2009 compared with 2008. The decrease in book overdrafts was due primarily to the timing of payments. Also during the first quarter of 2008 we used approximately $2.1 million of cash to repurchase our common stock based on our share repurchase program while in the first quarter of 2009 we did not repurchase any shares of common stock under the program.

Our Credit Facility

In March 2008, we entered into a Second Amendment to our Credit Facility (the “Second Amendment”). This Amendment established our basket for permitted acquisitions made after the date of the Second Amendment to $100 million and increased our basket for permitted stock repurchases to $30 million.

Net available borrowings, amounts borrowed and outstanding letters of credit under the Credit Facility were as follows (in millions):


	March 31, 2009		December 31, 2008
Net available borrowings	$	212.7	$	186.0

Amounts borrowed	$	—	$	30.0

Outstanding letters of credit	$	28.2	$	24.4

Our weighted-average interest rate was calculated based on our daily cost of borrowing which was computed on a blend of prime and LIBOR rates. The weighted-average interest rate on our revolving credit facility for the quarters ended March 31, 2009 and 2008 was 1.9% and 5.1%, respectively. We paid total unused facility fees of $0.1 million in the first quarters of 2009 and 2008.

Off-Balance Sheet Arrangements

There have been no material changes to the information provided in our Annual Report on Form 10-K for the year ended December 31, 2008 regarding off-balance sheet arrangements.

Critical Accounting Policies and Estimates

There have been no changes in this quarter to our critical accounting policies as discussed in our Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission (“SEC”) on March 13, 2009.

Forward-Looking Trends and Other Information

Cigarette Industry Trends

Cigarette Consumption

Aggregate cigarette consumption has declined since 1980. Prior to 2007, our cigarette sales had benefitted from a shift in sales to the convenience retail segment, and as a result of this shift, convenience retail cigarette sales had not declined in proportion to the decline in overall consumption. However, our cigarette carton sales have declined in 2008 and in the first quarter of 2009. We believe this trend is driven principally by an increasing decline in overall consumption due to factors such as increasingly more legislative controls which regulate

cigarette sales and where the consumer may or may not smoke, the acceleration in the frequency and amount of excise tax increases which reduces demand, manufacturer price increases and health concerns on the part of consumers. The shift in cigarette carton sales from other channels to the convenience retail segment may no longer be adequate to compensate for consumption declines.

Excise Taxes

Cigarette and tobacco products are subject to substantial excise taxes in the United States and Canada. Significant increases in cigarette-related taxes and/or fees have been levied by the taxing authorities in the past and are likely to continue to be levied in the future. We increase cigarette prices as excise tax increases are assessed on cigarette products which we sell. As a result, generally, increases in excise taxes do not increase the overall gross profit dollars in the same proportion, which will result in a decline in overall gross profit percentage. In February 2009, the State Children’s Health Insurance Program (SCHIP) was signed into law. The SCHIP will be funded by an increase in federal cigarette excise taxes from 39¢ to $1.01 per pack of cigarettes effective April 1, 2009. This increase in excise taxes will increase our working capital requirements, and we believe it will contribute to a further decline in consumer cigarette consumption which will adversely impact our cigarette carton sales and could result in a decrease of our gross profit as a percentage of sales.

Cigarette Inventory Holding Profits

Distributors such as Core-Mark, from time to time, may earn higher gross profits on cigarette inventory and excise tax stamp quantities on hand either at the time cigarette manufacturers increase their prices or when states, localities or provinces increase their excise taxes and allow us to recognize cigarette inventory holding profits. These profits are recorded as an offset to cost of goods sold as the inventory is sold. Our cigarette holding profits have averaged approximately $5.1 million per year from 2005 to 2008. For the three months ended March 31, 2009, our cigarette inventory holding profits were $34.9 million, or 29.6% of our gross profit, as compared to $0.1 million, or 0.1%, of our gross profit for the same period in 2008. The significant holding profits in the first quarter of 2009 were attributable to an average increase of approximately 28% of cigarette manufacturer list prices, one of the largest increases we have seen in recent history. We believe these price increases were in response to the passage of the SCHIP legislation. It is difficult to predict whether cigarette inventory holding profits will occur in the future since they are dependent on the actions of cigarette manufacturers and taxing authorities.

Food and Non-Food Product Trends

We focus our marketing efforts on growing our food/non-food product sales. These products typically earn higher profit margins than cigarettes and our goal is to continue to increase food/non-food product sales in the future to offset the potential decline in cigarette carton sales and the associated gross profits.

General Economic Trends

Uncertain Economic Conditions

Uncertain economic conditions, including changes in the credit and housing markets leading to the current financial and credit crisis, continuing job losses among many sectors of the economy, significant declines in the stock market, primarily during the last quarter of 2008, large losses to consumer retirement and investment accounts, and uncertainty regarding future federal tax and economic policies have resulted in reduced consumer confidence and curtailed retail spending. As a result, convenience store operators may experience a reduction in same store sales in subsequent quarters, which will adversely affect demand for our products and may result in reduced sales unless offset by other factors (such as an increase in the number or size of our customers’ stores, penetration of product offerings into existing stores serviced, or increases in our market share). These economic and market conditions, combined with continuing difficulties in the credit markets and the resulting pressures on liquidity may also place a number of our convenience store customers under financial stress, which would increase our credit risk and potential bad debt exposure. If the economic conditions in our key markets further deteriorate or do not show improvement, we may experience material adverse impacts to our business, financial condition and operating results.

FORWARD LOOKING STATEMENTS

Except for historical information, the statements made in this Quarterly Report on Form 10-Q are forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on certain assumptions or estimates, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Forward-looking statements in some cases can be identified by the use of words such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “would,” “project,” “predict,” “continue,” “plan,” “propose” or other similar words or expressions. These forward-looking statements are based on the current plans and expectations of our management and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those discussed in such forward looking statements.

Factors that might cause or contribute to such differences include, but are not limited to, our dependence on the convenience retail industry for our revenues; uncertain and recent economic conditions; competition; price increases; our dependence on relatively few suppliers; the low-margin nature of cigarette and consumable goods distribution; certain distribution centers’ dependence on a few relatively large customers; competition in the labor market and collective bargaining agreements; product liability claims and manufacturer recalls of products; fuel price increases; our dependence on our senior management and key personnel; integration of acquired businesses; currency exchange rate fluctuations; our ability to borrow additional capital; governmental regulations and changes thereto; earthquake and natural disaster damage; failure or disruptions to our information systems; a general decline in cigarette sales volume; competition from sales of deep-discount brands and illicit and other low priced sales of cigarettes. Refer to Part II, Item 1A, “Risk Factors” of this Form 10-Q. Except as provided by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk disclosures set forth in Item 7A of our Annual Report on Form 10-K, for the year ended December 31, 2008, as filed with SEC on March 13, 2009 did not change materially during the three months ended March 31, 2009.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted, under the supervision and with the participation of our management, including the chief executive officer and chief financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on our evaluation, the chief executive officer and chief financial officer concluded that, as of March 31, 2009, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

There have been no material changes to our Legal Proceedings as discussed in our Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC on March 13, 2009.

ITEM 1A.

RISK FACTORS

There have been no material changes to our Risk Factors as discussed in our Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC on March 13, 2009.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES and USE OF PROCEEDS

The Company did not repurchase any shares of its common stock during the quarter ended March 31, 2009.

ITEM 6.

EXHIBITS


Exhibit No.		Description
3.1		Certificate of Incorporation of Core-Mark Holding Company, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form 10 filed on September 6, 2005).

3.2		Second Amended and Restated Bylaws of Core-Mark Holding Company, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on August 18, 2008).

10.1		Form of Option Award Agreement for January 2009 Awards under the Core-Mark Holding Company, Inc. 2007 Long-Term Incentive Plan.

10.2		Form of Restricted Stock Unit Award Agreement for January 2009 Awards under the Core-Mark Holding Company, Inc. 2007 Long-Term Incentive Plan.

10.3		Form of Performance Share Award Agreement for January 2009 Awards under the Core-Mark Holding Company, Inc. 2007 Long-Term Incentive Plan.

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

SIGNATURES

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.


	CORE-MARK HOLDING COMPANY, INC.

Date: May 8, 2009	By:	/s/ J. MICHAEL WALSH
	Name:	J. Michael Walsh
	Title:	President and Chief Executive Officer

	CORE-MARK HOLDING COMPANY, INC.

Date: May 8, 2009	By:	/s/ STACY LORETZ-CONGDON
	Name:	Stacy Loretz-Congdon
	Title:	Chief Financial Officer

Form of Option Award Agreement

Exhibit 10.1

Non-Qualified Stock Option

Grant ID:

CORE-MARK HOLDING COMPANY, INC.

Re:	Grant of Non-Qualified Stock Option

Dear :

Core-Mark Holding Company, Inc., a Delaware corporation (the “Company”), is pleased to advise you that, pursuant to the Company’s 2007 Long-Term Incentive Plan (the “Plan”), the Board of Directors has granted to you an option (the “Option”) to acquire shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), effective as of the “Date of Grant” set forth below (as defined herein, the “Option Shares”), subject to the terms and conditions of this letter agreement (the “Grant Agreement”) set forth herein. Any capitalized terms used herein and not defined herein have the meanings set forth in the Plan.

1. Option.

(a) Option Grant. Subject to the terms and conditions set forth herein, the Company hereby grants to you (or such other persons as permitted by Section 5 below) an Option to purchase the Option Shares at the exercise price per Option Share set forth below (the “Exercise Price”), payable upon exercise as set forth in Section 1(b). The Option shall expire at the close of business on the date set below (the “Expiration Date”), which is the seventh anniversary of the Date of Grant, subject to earlier expiration as provided in Section 2 below. The Exercise Price and the number and kind of shares of Common Stock or other property for which the Option may be exercised shall be subject to adjustment as provided in the Plan. Your Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Code.


Number of Option Shares		___________

Date of Grant		,

Exercise Price per Option Share		$

Vesting Dates of Option Shares		One-third (1/3) of the Option Shares shall vest on (the “First Vesting Date”) and the remaining two-thirds (2/3) of the Option Shares shall vest in equal quarterly installments at the end of each following three-month period, on March 31, June 30, September 30 and December 31, in each of and .

Expiration Date of the Option		The seventh anniversary of the Date of Grant.

(b) Payment of Option Price. Subject to Section 2 below, the Option may be exercised in whole or in part upon payment of an amount (the “Option Price”) equal to the product of (i) the Exercise Price and (ii) the number of Option Shares to be acquired. Payment of the Option Price shall be made by one or more of the following means:

(i) in cash (including check, bank draft, money order or wire transfer of immediately available funds);

(ii) by delivery of outstanding shares of Common Stock owned by you (and not subject to any substantial risk of forfeiture) for at least six months or such longer period as determined from time to time by the Committee with an aggregate value, based on the Fair Market Value on the date of exercise, equal to the Option Price;

(iii) by means of any cashless exercise procedures approved by the Committee and as may be in effect on the date of exercise; or

(iv) by any combination of the foregoing.

2. Exercisability/Vesting and Expiration.

(a) Normal Vesting. The Option granted hereunder may be exercised only to the extent it has become vested, as indicated by the Vesting Dates of Option Shares set forth in this Agreement.

(b) Normal Expiration. In no event shall any part of the Option be exercisable after the Expiration Date.

(c) Termination of Employment. Except as provided in Section 2(d), upon your termination of employment with, or performance of service for, the Company or any Subsidiary for any reason, any Option Shares vested and exercisable on the date of such termination of employment shall remain exercisable and shall otherwise be terminated and be forfeited, at the end of the 90 day period (the one-year period in the case of termination of employment due to your death or Disability) following such date of termination and any Option Shares not vested on such date of such termination of employment will be forfeited and terminate automatically.

(d) Special Situations. Notwithstanding Section 2(c) above or any other provision hereof to the contrary:

(i) in the event you cease to be a director, officer or employee of, or to perform other services for, the Company or any Subsidiary due to your death, Disability or Retirement approved by the Committee prior to the First Vesting Date, your unvested Option Shares shall thereupon vest on a pro rata basis based on the ratio of (A) the number of complete months beginning on the Date of Grant and ending on the date of your termination of employment to (B) thirty six (36);

(ii) in the event of a Public Change in Control (as defined herein) and within one year following such Public Change in Control, your employment with the Company is terminated by the Company without Cause or you resign from your employment with the Company for Good Reason, any unvested Option Shares shall become fully vested and exercisable on such date of termination or resignation and shall remain exercisable for, and shall otherwise terminate and thereafter be forfeited at the end of, a period of 90 days following such date of termination or resignation; or

(iii) in the event of a Non-Public Change in Control (as defined herein), any unvested Option Shares shall become fully vested and exercisable as of the date of such Non-Public Change in Control and shall remain exercisable for, and shall otherwise terminate and thereafter be forfeited at the end of, a period of 90 days following such Non-Public Change in Control.

For the purposes of this Grant Agreement:

“Cause” means as defined in the Plan except that the words “that has caused demonstrable and serious injury to the Company or a Subsidiary, monetary or otherwise” shall be added to the end of clauses (iii), (iv) and (v) of such definition.

“Good Reason” means the resignation of a Participant following the occurrence of (A) a material reduction in the scope of the Participant’s authorities, duties or responsibilities; (B) a material reduction in the Participant’s salary and benefits (other than benefits under programs that apply to all similarly situated employees or employees of the Company in general); or (C) a change in the principal work location of Participant of more than 100 miles from its current location.

“Public Change in Control” means any Change in Control (as defined in the Plan) if, upon the consummation of such Change in Control, the Shares available for issuance under the Plan and the Awards issued thereunder (or other securities to be issued in lieu of Shares as a result of such Change in Control) are publicly traded on the Toronto Stock Exchange, a U.S. national securities exchange (including the NASDAQ Stock Market), the OTC Bulletin Board or the OTC Pink Sheets.

“Non-Public Change in Control” means a Change in Control (as defined in the Plan) which is not a Public Change in Control (as defined above).

3. Procedure for Exercise. You may exercise all or any portion of the Option, to the extent it has vested and is outstanding, at any time and from time to time prior to the Expiration Date, by delivering written notice to the Company in the form attached hereto as Exhibit A, together with payment of the Option Price in accordance with the provisions of Section 1(b) above. The Option may not be exercised for a fraction of an Option Share.

4. Withholding of Taxes.

(a) Participant Election. Unless otherwise determined by the Committee, you may elect to deliver shares of Common Stock (or have the Company withhold Option Shares acquired upon exercise of the Option) to satisfy, in whole or in part, the minimum statutory amount the Company is required to withhold for taxes in connection with the exercise of the Option. Such election must be made on or before the date the amount of tax to be withheld is determined. Once made, the election shall be irrevocable. The fair market value of the shares to be withheld or delivered will be the Fair Market Value as of the date the amount of tax to be withheld is determined.

(b) Company Requirement. The Company shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to you, an amount equal to the minimum statutory amount of any federal, state or local taxes of any kind required by law to be withheld with respect to the delivery of Option Shares under this Grant Agreement and/or may require you to otherwise make adequate provision for payment to the Company of such taxes.

5. Transferability of Option. You may transfer the Option granted hereunder only in accordance with the terms of the Plan.

6. Conformity with Plan. The Option is intended to conform in all respects with, and is subject to all applicable provisions of, the Plan (which is incorporated herein by reference). Inconsistencies between this Grant Agreement and the Plan shall be resolved in accordance with the terms of the Plan. By executing and returning the enclosed copy of this Grant Agreement, you acknowledge your receipt of this Grant Agreement and the Plan and agree to be bound by all of the terms of this Grant Agreement and the Plan.

7. Rights of Participants; No Additional Rights. Nothing in this Grant Agreement shall interfere with or limit in any way the right of the Company to terminate your employment or other performance of services at any time (with or without Cause), nor confer upon you any right to continue in the employ or as a director, officer or employee of, or in the performance of other services for, the Company or a Subsidiary for any period of time, or to continue your present (or any other) rate of compensation or level of responsibility. Nothing in this Grant Agreement shall confer upon you any right to be selected again as a Plan Participant, and nothing in the Plan or this Grant Agreement shall provide for any adjustment to the number of Option Shares subject to the Option upon the occurrence of subsequent events except as provided in the Plan.

8. Amendment. The terms of the Option may be amended from time to time by the Committee in its discretion in any manner that it deems appropriate (including, but not limited to, acceleration of the date of exercise of the Option); provided that, except as otherwise provided in Sections 14, 15 and 16 of the Plan, no such amendment shall adversely affect in a material manner any of your rights under this Grant Agreement without your written consent.

9. Relation to Other Benefits. Any economic or other benefit to you under this Grant Agreement or the Plan shall not be taken into account in determining any benefits to which you may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary.

10. Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Grant Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.

11. Severability. Whenever possible, each provision of this Grant Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Grant Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Grant Agreement.

12. Counterparts. This Grant Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same Grant Agreement.

13. Descriptive Headings. The descriptive headings of this Grant Agreement are inserted for convenience only and do not constitute a part of this Grant Agreement.

14. Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION, ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS RULES AND REGULATIONS, AND RIGHTS RELATING TO THE PLAN AND TO THIS GRANT AGREEMENT, SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF THE STATE OF DELAWARE.

15. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Grant Agreement shall be in writing and shall be deemed to have been given when (i) delivered personally, (ii) mailed by certified or registered mail, return receipt requested and postage prepaid, (iii) sent by facsimile (with confirmation) or (iv) sent by reputable overnight courier, to the recipient. Such notices, demands and other communications shall be sent to you at the address specified in this Grant Agreement and to the Company at 395 Oyster Point Blvd., Suite 415, South San Francisco, CA 94080, Attn: Employee and Corporate Services, or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

16. Entire Agreement. This Grant Agreement and the terms of the Plan constitute the entire understanding between you and the Company, and supersede all other agreements, whether written or oral, with respect to your acquisition of the Option Shares.

* * * * *

Grant ID:

Signature Page to Stock Option Agreement

Please execute the extra copy of this Grant Agreement dated «Letter_Date» in the space below and return it to the Company to confirm your understanding and acceptance of the agreements contained in this Grant Agreement.


Very truly yours,

CORE-MARK HOLDING COMPANY, INC.

By:
Name:
Title:


Enclosures:	1.	Extra copy of this Grant Agreement
	2.	Copy of the 2007 Long-Term Incentive Plan attached hereto as Exhibit B

The undersigned hereby acknowledges having read this Grant Agreement and the Plan and hereby agrees to be bound by all provisions set forth herein and in the Plan.


Dated:				OPTIONEE


				Name:

EXHIBIT A

Form of Letter to be Used to Exercise Stock Option

, 20

Date

Attention: Vice President – Human Resources

I wish to exercise the stock option granted on «Grant_Date» and evidenced by a Grant Agreement dated as of , , to acquire shares of Common Stock of Core-Mark Holding Company, Inc., at an option price of $ per share. In accordance with the provisions of Section 1 of the Grant Agreement, I wish to make payment of the exercise price (please check all that apply):


¨		in cash;
¨		by delivery of shares of Common Stock held by me; or
¨		by means of any cashless exercise procedures approved by the Committee and as may be in effect on the date hereof.

Please issue a certificate for these shares in the following name:


Name:
Address:

Very truly yours,

Signature

Typed or Printed Name

Social Security Number

EXHIBIT B

See attached for a copy of the 2007 Long-Term Incentive Plan

Form of Restricted Stock Unit Award Agreement

Exhibit 10.2

Restricted Stock Units

Grant ID:

CORE-MARK HOLDING COMPANY, INC.

Re:

Grant of Restricted Stock Units

Dear :

Core-Mark Holding Company, Inc., a Delaware corporation (the “Company”), is pleased to advise you that, pursuant to the Company’s 2007 Long-Term Incentive Plan (the “Plan”), the Board has granted to you an award of ( ) restricted stock units (the “Restricted Units”), effective as of , (the “Date of Grant”), subject to the terms and conditions set forth in this letter agreement (the “Grant Agreement”). Any capitalized terms used herein and not defined herein have the meanings set forth in the Plan.

1. Issuance of Restricted Units. The Restricted Units shall be awarded to you as of the Date of Grant. Each Restricted Unit shall be equivalent in value to one share of Common Stock and shall entitle you to receive on the Vesting Date (as defined herein), one share of Common Stock for each such Restricted Unit then vested, unless you elect in a timely fashion to defer delivery of the shares of Common Stock, in accordance with Section 6 below, that would otherwise be due by virtue of the lapse or waiver of the vesting requirements for such Restricted Units as set forth in Section 2 below.

2. Vesting of Restricted Units.

(a) One-third (1/3) of the Restricted Units shall become fully vested and nonforfeitable on , (the “First Vesting Date”). The remaining two-thirds (2/3) of the Restricted Units shall vest in equal quarterly installments at the end of each following three-month period, on March 31, June 30, September 30 and December 31, in each of and (each date on which one or more of such units vest collectively with the First Vesting Date, a “Vesting Date”). Except as otherwise provided in Section 2(b) below, in the event your employment with, or performance of service for, the Company or any Subsidiary terminates prior to all of your Restricted Units becoming fully vested and/or prior to the Vesting Date with respect to any particular Restricted Unit, any unvested Restricted Units will be forfeited and terminate automatically upon such date of termination of employment.

(b) Notwithstanding Section 2(a) above or any other provision hereof to the contrary:

(i) in the event that you cease to be a director, officer or employee of, or to perform other services for, the Company or any Subsidiary due to your death or Disability before the First Vesting Date is reached, the Restricted Units shall thereupon vest on a pro-rata basis based on the ratio of (A) the number of complete months beginning on Date of Grant and ending on the date of your termination of employment to (B) thirty six (36);

(ii) in the event that you cease to be a director, officer or employee of, or to perform other services for, the Company or any Subsidiary due to your Retirement approved by the Committee on or after the First Vesting Date is reached, all of your unvested Restricted Units shall become fully vested and nonforfeitable on the date of such termination of service;

(iii) in the event that there is a Public Change in Control (as defined herein) and within one year following such Public Change in Control, your employment is terminated by the Company without Cause or you resign from your employment with the Company for Good Reason, all of your unvested Restricted Units shall become fully vested and nonforfeitable on the date of such termination of employment or resignation; or

(iv) in the event that there is a Non-Public Change in Control (as defined herein), all of your unvested Restricted Units shall become fully vested and nonforfeitable on the date of such Non-Public Change in Control.

For purposes of this Grant Agreement:

“Good Reason” means the resignation of a Participant following the occurrence of (A) a material reduction in the scope of the Participant’s authorities, duties or responsibilities, (B) a material reduction in the Participant’s salary and benefits (other than benefits under programs that apply to all similarly situated employees or employees of the Company in general), or (C) a change in the principal work location of Participant of more than 100 miles from its current location.

“Non-Public Change in Control” means a Change in Control (as defined in the Plan) which is not a Public Change in Control (as defined above).

3. Dividend Equivalents. You shall have the right to receive accumulated cash dividends and other distributions paid with respect to a corresponding number of shares of Common Stock underlying each Restricted Unit on the date of its full vesting and thereafter until the underlying shares are issued, including after any such Restricted Units are converted into deferred stock units.

4. Rights as Stockholder. Except as provided in Section 3 above, you shall not have voting or any other rights as a stockholder of the Company with respect to the Restricted Units (or any deferred stock units as set forth in Section 6 below). Upon the conversion of the Restricted Units into shares of Common Stock, you shall obtain full voting and other rights as a stockholder of the Company.

5. Stock Certificates. On the date the Restricted Units become vested and nonforfeitable in accordance with Section 2 above (the “Delivery Date”), you shall be entitled to receive, upon payment by you to the Company of the aggregate par value of the shares of Common Stock underlying each fully vested Restricted Unit, stock certificates (the “Certificates”) evidencing the conversion of Restricted Units into shares of Common Stock. The Certificates shall be issued to you as of the Delivery Date and registered in your name. Certificates representing the unrestricted shares of Common Stock will be delivered to you as soon as practicable after the Delivery Date. If, however, you elect to defer payment of the shares of Common Stock as provided in Section 6 below, the shares of Common Stock shall be issued as set forth in the Deferral Election Agreement attached hereto as Exhibit A entered into between the Company and you (the “Deferral Election Agreement”).

6. Deferral Election. You may elect no later than , to defer delivery of the shares of Common Stock that would otherwise be due by virtue of the lapse or waiver of the vesting requirements set forth in Section 2 above by delivering the Deferral Election Agreement. If such deferral election is made, the Restricted Units shall be converted into deferred stock units, and the Committee shall, in its sole discretion, establish the rules and procedures for such payment deferrals in accordance with the Plan and the Deferral Election Agreement.

7. Withholding of Taxes.

(a) Participant Election. Unless otherwise determined by the Committee, you may elect to deliver shares of Common Stock (or have the Company withhold shares of Common Stock deliverable upon vesting of the Restricted Units) to satisfy, in whole or in part, the amount the Company is required to withhold for taxes in connection with the award, deferral or settlement of the Restricted Units or other securities pursuant to this Grant Agreement. Such election must be made on or before the date the amount of tax to be withheld is determined. Once made, the election shall be irrevocable. The fair market value of the shares to be withheld or delivered will be the Fair Market Value as of the date the amount of tax to be withheld is determined.

(b) Company Requirement. The Company, to the extent permitted or required by law, shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to you, an amount equal to any federal, state or local taxes of any kind required by law to be withheld in connection with the award, deferral or settlement of the Restricted Units or other securities pursuant to this Grant Agreement and/or may require you to otherwise make adequate provision for payment to the Company of such taxes.

8. Transferability of Restricted Unit. You may transfer the Restricted Units granted hereunder only in accordance with the terms of the Plan.

9. Conformity with Plan. The Restricted Units are intended to conform in all respects with, and are subject to all applicable provisions of, the Plan (which is incorporated herein by reference). Inconsistencies between this Grant Agreement and the Plan shall be resolved in accordance with the terms of the Plan. By executing and returning the enclosed copy of this Grant Agreement, you acknowledge your receipt of this Grant Agreement and the Plan and agree to be bound by all of the terms of this Grant Agreement and the Plan.

10. Rights of Participants. Nothing in this Grant Agreement shall interfere with or limit in any way the right of the Company to terminate your employment or other performance of services at any time (with or without Cause), nor confer upon you any right to continue in the employ or as a director or officer of, or in the performance of other services for, the Company or a Subsidiary for any period of time, or to continue your present (or any other) rate of compensation or level of responsibility. Nothing in this Grant Agreement shall confer upon you any right to be selected again as a Plan Participant, and nothing in the Plan or this Grant Agreement shall provide for any adjustment to the number of Restricted Units upon the occurrence of subsequent events except as provided in the Plan.

11. Amendment. The terms of the Restricted Units may be amended from time to time by the Committee in its discretion in any manner that it deems appropriate; provided that, except as otherwise provided in Sections 14, 15 and 16 of the Plan, no such amendment shall adversely affect in a material manner any of your rights under this Grant Agreement without your written consent.

12. Relation to Other Benefits. Any economic or other benefit to you under this Grant Agreement or the Plan shall not be taken into account in determining any benefits to which you may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary.

13. Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Grant Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.

14. Severability. Whenever possible, each provision of this Grant Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Grant Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Grant Agreement.

15. Counterparts. This Grant Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same Grant Agreement.

16. Descriptive Headings. The descriptive headings of this Grant Agreement are inserted for convenience only and do not constitute a part of this Grant Agreement.

17. Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION, ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS RULES AND REGULATIONS, AND RIGHTS RELATING TO THE PLAN AND TO THIS GRANT AGREEMENT, SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF THE STATE OF DELAWARE.

18. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Grant Agreement shall be in writing and shall be deemed to have been given when (i) delivered personally, (ii) mailed by certified or registered mail, return receipt requested and postage prepaid, (iii) sent by facsimile (with confirmation) or (iv) sent by reputable overnight courier, to the recipient. Such notices, demands and other communications shall be sent to you at the address specified in this Grant Agreement and to the Company at 395 Oyster Point Blvd., Suite 415, South San Francisco, CA 94080, Attn: Employee and Corporate Services, or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

19. Entire Agreement. This Grant Agreement and the terms of the Plan constitute the entire understanding between you and the Company, and supersede all other agreements, whether written or oral, with respect to your grant of the Restricted Units.

* * * * *

Grant ID:

Signature Page to Restricted Stock Units Grant Agreement


Very truly yours,

CORE-MARK HOLDING COMPANY, INC.

By:
Name:
Title:


Enclosures:	1.	Extra copy of this Grant Agreement
	2.	Copy of the 2007 Long-Term Incentive Plan attached hereto as Exhibit B

The undersigned hereby acknowledges having read this Grant Agreement and the Plan and hereby agrees to be bound by all provisions set forth herein and in the Plan.


Dated:				GRANTEE


				Name:

EXHIBIT A

Core-Mark Holding Company, Inc.

Restricted Stock Units

Deferral Election Agreement

Please complete this Deferral Election Agreement (this “Agreement”) and return a signed copy to Core-Mark Holding Company, Inc. (the “Company”) by , . If the Company does not receive this Agreement by such date, you shall be deemed to have foregone your right to make a deferral election.


Name:		SS#:

q	I do not wish to make a voluntary deferral related to my outstanding restricted stock units. (If you check this box, do not complete the remainder of this Agreement–skip ahead to the bottom of this Agreement, date and sign, and return the Agreement as indicated above.)

I hereby irrevocably elect to defer receipt of the shares of Common Stock related to my restricted stock units granted on , until the earlier of: (i) the Settlement Dates specified below; (ii) my Retirement approved by the Committee; (iii) my termination of employment. This deferral shall be in accordance with the terms and provisions outlined in this Agreement in the manner and amount set forth below. (If you check this box, please complete all sections of this Agreement, date and sign at the bottom of this Agreement, and return the Agreement as indicated above.)

Amount of the Voluntary Deferral

I hereby elect to defer settlement of 100% of my restricted stock units that are scheduled to vest on or after , .

Settlement Date

In making this election, the following rules apply:

•

You must select a date (the “Settlement Date”) as of which you will receive shares of Common Stock associated with the restricted stock units that you elected to defer above.

•

You may elect as many Settlement Dates as you wish related to the restricted stock units that are scheduled to vest on or after , . You must, however, defer the restricted stock units in increments of 100; provided that, the total number of units you elect to defer on the last Settlement Date may be less than 100 for rounding purposes. For example, if you have 500 restricted stock units you may elect five different Settlement Dates; i.e. one Settlement Date related to each increment of 100.

I hereby irrevocably elect to defer receipt of the Shares associated with the above-referenced restricted stock units until the following date(s) and in the following increment(s).


(i)
	Number	Month	Day	Year

(ii)
	Number	Month	Day	Year

(iii)
	Number	Month	Day	Year

(iv)
	Number	Month	Day	Year

(v)
	Number	Upon termination of employment

If no Settlement Date is specified, then the transfer will occur upon your termination of employment.

Manner of Transfer

All deferrals to a particular Settlement Date will be paid out in shares of Common Stock. All of the shares of Common Stock you are entitled to receive on the Settlement Date specified in this Agreement will be transferred to you on such Settlement Date. Any capitalized terms used herein and not defined herein shall have the meanings set forth in the Plan and the Grant Agreement.

Terms and Conditions

By signing this form, you hereby acknowledge your understanding and acceptance of the following:

Company Right to Early Transfer. Notwithstanding any election made herein, the Company reserves the right to transfer to you all of the shares of Common Stock associated with the deferred stock units subject to this Agreement at any time following the termination of your employment with the Company or any Subsidiary.

2.	Withholding. The Company shall have the right to deduct from all deferrals or payments hereunder, the minimum statutory amount of any federal, state, local or foreign tax required by law to be withheld.

3.	Not Assignable. Your rights and interests under this Agreement may not be assigned, pledged or transferred other than as provided in the Plan.

4.	Termination of this Agreement. The Company reserves the right to terminate this Agreement at any time. In such case, deferred stock units which are subject to the Agreement may be converted into shares of Common Stock and such shares of Common Stock may be transferred to you immediately.

5.	Bookkeeping Account. The Company will establish a bookkeeping account to reflect the number of deferred stock units and the Fair Market Value of the deferred stock units that are subject to this Agreement.

Stock Certificates. Stock certificates (the “Certificates”) evidencing the payment of deferred stock units in shares of Common Stock, shall be issued as of the applicable Settlement Dates (or such earlier date payment is to be made pursuant to this Agreement) and registered in your name. Subject to the withholding requirements outlined above, Certificates representing shares of Common Stock will be delivered to you as soon as practicable after the Settlement Date.

7.	Dividend Equivalents. You shall not have any rights as a stockholder of the Company; provided that, you shall have the right to receive accumulated dividends or distributions subject to the terms and conditions set forth in Section 3 of the Grant Agreement.

Representation. You hereby represent that any shares of Common Stock acquired by you in connection with the deferred stock unit are acquired for investment for your own account (or a trust account), not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that you have no present intention of granting any participation in or otherwise distributing the shares of Common Stock to be delivered pursuant to the deferred stock unit. By signing this Grant Agreement, you further represent that you do not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to the shares of Common Stock to be delivered pursuant to the deferred stock unit.

Change in Control. Upon a Change in Control, all of your deferred stock units shall be converted into shares of Common Stock of the Company and such shares of Common Stock shall be distributed to you as soon as practicable following the Change in Control, or as determined by the Committee, the Company shall distribute to you such consideration as such shares of Common Stock are entitled pursuant to such Change in Control. For purposes of this Deferral Agreement, the definition of Change in Control shall not include Section 2(e)(iv) of the Plan (Change in Control – stockholder approval of a plan of liquidation or dissolution); Section 2(e)(v) of the Plan (Change in Control – stockholder approval of sale or liquidation of substantially all of the Company’s assets) and Section 2(e)(vi) of the Plan (Change in Control – stockholder approval of a going private transaction) until the Company actually completes the transactions approved by the stockholders (i.e., consummates a plan of liquidation, consummates a sale of all or substantially all of the Company’s assets or consummates the going private transaction).

10.	Governing Law. This Agreement shall be construed and administered according to the laws of the State of Delaware.

11.	Defined Terms. All capitalized terms not defined in this Agreement are defined in the Core-Mark Holding Company, Inc. 2007 Long-Term Incentive Plan.

By executing this Agreement, I hereby acknowledge my understanding of and agreement with all the terms and provisions set forth in this Agreement.


Executive						Core-Mark Holding Company, Inc.

By:						By:

Name:						Name:

Title:						Title:

Date:						Date:

EXHIBIT B

See attached for a copy of the 2007 Long-Term Incentive Plan

Form of Performance Share Award Agreement

Exhibit 10.3

Performance Share Awards

Grant ID:

CORE-MARK HOLDING COMPANY, INC.

Re:	Grant of Performance Shares

Dear :

Core-Mark Holding Company, Inc., a Delaware corporation (the “Company”), is pleased to advise you that, pursuant to the Company’s 2007 Long-Term Incentive Plan (the “Plan”), the Board has granted to you an award (the “Maximum Award”) of ( ) performance share units (the “Performance Shares”), effective as of , (the “Date of Grant”), subject to the terms and conditions set forth in this letter agreement (the “Grant Agreement”). Any capitalized terms used herein and not defined herein have the meanings set forth in the Plan.

1. Vesting Criteria; Determining the Number of Performance Shares Earned.

(a) The Performance Shares are unearned and unvested as of the Date of Grant. You may earn and be entitled to a percentage (up to 100%) of your Maximum Award based on the Company’s achievement of performance goals, as determined by the Committee, for the twelve month period commencing on January 1, and ending on December 31, (the “Performance Period”). The number of Performance Shares eligible to vest shall be equal to (i) your Maximum Award multiplied by (ii) the corresponding percentage listed under each of the highest performance goals achieved for the factors listed and defined in Exhibit A attached hereto (“Eligible Shares”).

(b) Eligible Shares shall vest, if at all, according to the following schedule and subject to your continued employment with the Company on each vesting date: (i) one-third (1/3) of the Eligible Shares shall vest on the later of (x) the date on which the Committee determines that the performance goals set forth on Exhibit A and any other material terms applicable to the Performance Period have been satisfied and (y) , (the “First Vesting Date”); and (ii) the remaining two-thirds (2/3) of the Eligible Shares shall vest in equal quarterly installments at the end of each following three-month period, on March 31, June 30, September 30 and December 31, in each of and .

(c) If none of the performance goals set forth on Exhibit A are achieved during the Performance Period, no Performance Shares shall vest. Notwithstanding the above and except as otherwise provided in Section 1(d) below, in the event your employment with, or performance of service to, the Company or any Subsidiary terminates prior to the First Vesting Date, all of your Performance Shares will be forfeited and terminate automatically as of your date of termination of employment. In the event your employment with, or performance of service to, the Company or any Subsidiary terminates following the end of the Performance Period, all unvested Performance Shares will be forfeited and terminate automatically as of your date of termination of employment.

(d) Notwithstanding Section 1(c) above or any other provision hereof to the contrary:

(i) in the event that you cease to be a director, officer or employee of, or to perform other services for, the Company or any Subsidiary due to your death or Disability before the First Vesting Date, the Performance Shares shall thereupon vest at the Outstanding/Target level as described on Exhibit A on a pro-rata basis based on the ratio of (A) the number of complete months beginning on Date of Grant and ending on the date of your termination of employment to (B) thirty-six (36);

(ii) in the event that there is a Public Change in Control (as defined herein) prior to the end of the Performance Period, and within one (1) year of such Public Change in Control, your employment with the Company is terminated by the Company without Cause or you resign from your employment with the Company for Good Reason prior to the Delivery Date, your Performance Shares (if outstanding) shall become fully vested and nonforfeitable at the Outstanding/Target level as described on Exhibit A on the date of such termination of employment or resignation;

(iii) in the event that there is a Non-Public Change in Control (as defined herein) prior to the end of the Performance Period, your Performance Shares shall become fully vested and nonforfeitable at the Outstanding/Target level as described on Exhibit A on the date of such Non-Public Change in Control;

(iv) in the event that there is a Public Change in Control (as defined herein) on or following the end of the Performance Period, and within one (1) year of such Public Change in Control, your employment with the Company is terminated by the Company without Cause or you resign from your employment with the Company for Good Reason prior to the Delivery Date, your Eligible Shares (if outstanding) shall become fully vested and nonforfeitable on the date of such termination of employment or resignation; or

(v) in the event that there is a Non-Public Change in Control (as defined herein) on or following the end of the Performance Period, your Eligible Shares shall become fully vested and nonforfeitable on the date of such Non-Public Change in Control.

For purposes of this Grant Agreement:

“Good Reason” means the resignation of a Participant following the occurrence of (A) a material reduction in the scope of the Participant’s authorities, duties or responsibilities, (B) a material reduction in the Participant’s salary and benefits (other than benefits under programs that apply to all similarly situated employees or employees of the Company in general) or (C) a change in the principal work location of Participant of more than 100 miles from its current location.

“Non-Public Change in Control” means a Change in Control (as defined in the Plan) which is not a Public Change in Control (as defined above).

2. Dividend Equivalents. You shall have the right to receive accumulated cash dividends and other distributions paid during the Performance Period and any applicable vesting period thereafter with respect to a corresponding number of shares of Common Stock underlying each vested Performance Share that is earned during a Performance Period on the date the underlying shares are issued, including after any such Performance Shares are converted into deferred stock units.

3. Rights as Stockholder. Except as provided in Section 2 above, you shall not have voting or any other rights as a stockholder of the Company with respect to the Performance Shares (or any deferred stock units as set forth in Section 18 below). Upon the conversion of the vested Performance Shares into shares of Common Stock, you shall obtain full voting and other rights as a stockholder of the Company.

4. Stock Certificates. On each vesting date described in Section 1 above (the “Delivery Date”), you shall be entitled to receive, upon payment by you to the Company of the aggregate par value of the shares of Common Stock underlying each vested Performance Share, stock certificates (the “Certificates”) evidencing the conversion of each vested Performance Shares into one share of Common Stock. The Certificates shall be issued to you as of the Delivery Date and registered in your name. Certificates representing the unrestricted shares of Common Stock will be delivered to you as soon as practicable after the Delivery Date. If, however, you elect to defer payment of the shares of Common Stock as provided in Section 18 below, the shares of Common Stock shall be issued as set forth in the Deferral Election Agreement, attached hereto as Exhibit B, entered into between the Company and you (the “Deferral Election Agreement”).

5. Withholding of Taxes.

(a) Participant Election. Unless otherwise determined by the Committee, you may elect to deliver shares of Common Stock (or have the Company withhold shares of Common Stock deliverable in connection with the vested Performance Shares) to satisfy, in whole or in part, the minimum statutory amount the Company is required to withhold for taxes in connection with the settlement of the vested Performance Shares pursuant to this Grant Agreement. Such election must be made on or before the date the amount of tax to be withheld is determined. Once made, the election shall be irrevocable. The fair market value of the shares to be withheld or delivered will be the Fair Market Value as of the date the amount of tax to be withheld is determined.

(b) Company Requirement. The Company shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to you, an amount equal to the minimum statutory amount of any federal, state or local taxes of any kind required by law to be withheld in connection with the settlement of the vested Performance Shares pursuant to this Grant Agreement and/or may require you to otherwise make adequate provision for payment to the Company of such taxes.

6. Transferability of Performance Shares. You may transfer the Performance Shares granted hereunder only in accordance with the terms of the Plan.

7. Conformity with Plan. The Performance Shares are intended to conform in all respects with, and are subject to all applicable provisions of, the Plan (which is incorporated herein by reference). Inconsistencies between this Grant Agreement and the Plan shall be resolved in accordance with the terms of the Plan. By executing and returning the enclosed copy of this Grant Agreement, you acknowledge your receipt of this Grant Agreement and the Plan and agree to be bound by all of the terms of this Grant Agreement and the Plan.

8. Rights of Participants. Nothing in this Grant Agreement shall interfere with or limit in any way the right of the Company to terminate your employment or other performance of services at any time (with or without Cause), nor confer upon you any right to continue in the employ or as a director or officer of, or in the performance of other services for, the Company or a Subsidiary for any period of time, or to continue your present (or any other) rate of compensation or level of responsibility. Nothing in this Grant Agreement shall confer upon you any right to be selected again as a Plan Participant, and nothing in the Plan or this Grant Agreement shall provide for any adjustment to the number of Performance Shares upon the occurrence of subsequent events except as provided in the Plan.

9. Amendment. The terms of the Performance Shares may be amended from time to time by the Committee in its discretion in any manner that it deems appropriate; provided that, except as otherwise provided in Sections 14, 15 and 16 of the Plan, no such amendment shall adversely affect in a material manner any of your rights under this Grant Agreement without your written consent.

10. Relation to Other Benefits. Any economic or other benefit to you under this Grant Agreement or the Plan shall not be taken into account in determining any benefits to which you may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary.

11. Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Grant Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.

12. Severability. Whenever possible, each provision of this Grant Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Grant Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Grant Agreement.

13. Counterparts. This Grant Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same Grant Agreement.

14. Descriptive Headings. The descriptive headings of this Grant Agreement are inserted for convenience only and do not constitute a part of this Grant Agreement.

15. Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION, ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS RULES AND REGULATIONS, AND RIGHTS RELATING TO THE PLAN AND TO THIS GRANT AGREEMENT, SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF THE STATE OF DELAWARE.

16. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Grant Agreement shall be in writing and shall be deemed to have been given when (i) delivered personally, (ii) mailed by certified or registered mail, return receipt requested and postage prepaid, (iii) sent by facsimile (with confirmation) or (iv) sent by reputable overnight courier, to the recipient. Such notices, demands and other communications shall be sent to you at the address specified in this Grant Agreement and to the Company at 395 Oyster Point Blvd., Suite 415, South San Francisco, CA 94080, Attn: Employee and Corporate Services, or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

17. Entire Agreement. This Grant Agreement and the terms of the Plan constitute the entire understanding between you and the Company, and supersede all other agreements, whether written or oral, with respect to your grant of the Performance Shares.

18. Deferral Election. You may elect no later than , to defer delivery of the shares of Common Stock that would otherwise be due by virtue of the lapse or waiver of the vesting requirement set forth in Section 1 above by delivering the Deferral Election Agreement. If such deferral election is made, the Performance Shares shall be converted into deferred stock units, and the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals in accordance with the Plan and the Deferral Election Agreement.

Grant ID:

Signature Page to Performance Share Grant Agreement


Very truly yours,

CORE-MARK HOLDING COMPANY, INC.

By:
Name:
Title:


Enclosures:	1.	Extra copy of this Grant Agreement
	2.	Copy of the 2007 Long-Term Incentive Plan attached hereto as Exhibit C

The undersigned hereby acknowledges having read this Grant Agreement and the Plan and hereby agrees to be bound by all provisions set forth herein and in the Plan.


Dated:				GRANTEE


				Name:

EXHIBIT B

Core-Mark Holding Company, Inc.

Performance Shares

Deferral Election Agreement


Name:		SS#:

q	I do not wish to make a voluntary deferral related to my outstanding Performance Shares. (If you check this box, do not complete the remainder of this Agreement–skip ahead to the bottom of this Agreement, date and sign, and return the Agreement as indicated above.)

I hereby irrevocably elect to defer receipt of the shares of Common Stock related to my Performance Shares granted on , until the earlier of: (i) the Settlement Dates specified below; (ii) my Retirement approved by the Committee; (iii) my termination of employment. This deferral shall be in accordance with the terms and provisions outlined in this Agreement in the manner and amount set forth below. (If you check this box, please complete all sections of this Agreement, date and sign at the bottom of this Agreement, and return the Agreement as indicated above.)

Amount of the Voluntary Deferral

I hereby elect to defer settlement of 100% of my Performance Shares that are scheduled to vest on or after , .

Settlement Date

In making this election, the following rules apply:

•

You must select a date (the “Settlement Date”) as of which you will receive shares of Common Stock associated with the Performance Shares that you elected to defer above.

•

You may elect as many Settlement Dates as you wish related to the Performance Shares that are scheduled to vest on or after , . You must, however, defer the Performance Shares in increments of 100; provided that, the total number of units you elect to defer on the last Settlement Date may be less than 100 for rounding purposes. For example, if you have 500 restricted stock units you may elect five different Settlement Dates; i.e. one Settlement Date related to each increment of 100.

I hereby irrevocably elect to defer receipt of the Shares associated with the above-referenced Performance Shares until the following date(s) and in the following increment(s).


(i)
	Number	Month	Day	Year

(ii)
	Number	Month	Day	Year

(iii)
	Number	Month	Day	Year

(iv)
	Number	Month	Day	Year

(v)
	Number	Upon termination of employment

If no Settlement Date is specified, then the transfer will occur upon your termination of employment.

Manner of Transfer

Terms and Conditions

By signing this form, you hereby acknowledge your understanding and acceptance of the following:

2.	Withholding. The Company shall have the right to deduct from all deferrals or payments hereunder, the minimum statutory amount of any federal, state, local or foreign tax required by law to be withheld.

3.	Not Assignable. Your rights and interests under this Agreement may not be assigned, pledged or transferred other than as provided in the Plan.

4.	Termination of this Agreement. The Company reserves the right to terminate this Agreement at any time. In such case, deferred stock units which are subject to the Agreement may be converted into shares of Common Stock and such shares of Common Stock may be transferred to you immediately.

5.	Bookkeeping Account. The Company will establish a bookkeeping account to reflect the number of deferred stock units and the Fair Market Value of the deferred stock units that are subject to this Agreement.

7.	Dividend Equivalents. You shall not have any rights as a stockholder of the Company; provided that, you shall have the right to receive accumulated dividends or distributions subject to the terms and conditions set forth in Section 2 of the Grant Agreement.

Change in Control. Upon a Change in Control, all of your deferred stock units shall be converted into shares of Common Stock of the Company and such shares of Common Stock shall be distributed to you as soon as practicable following the Change in Control, or as determined by the Committee, the Company shall distribute to you such consideration as such shares of Common Stock are entitled pursuant to such Change in Control. For purposes of this Deferral Agreement, the definition of Change in Control shall not include Section 2(e)(iv) (Change in Control – stockholder approval of a plan of liquidation or dissolution); Section 2(e)(v) of the Plan (Change in Control – stockholder approval of sale or liquidation of substantially all of the Company’s assets) and Section 2(e)(vi) Change in Control – stockholder approval of a going private transaction) until the Company actually completes the transactions approved by the stockholders (i.e., consummates a plan of liquidation, consummates a sale of all or substantially all of the Company’s assets or consummates the going private transaction).

10.	Governing Law. This Agreement shall be construed and administered according to the laws of the State of Delaware.

11.	Defined Terms. All capitalized terms not defined in this Agreement are defined in the Core-Mark Holding Company, Inc. 2007 Long-Term Incentive Plan.

By executing this Agreement, I hereby acknowledge my understanding of and agreement with all the terms and provisions set forth in this Agreement.


Executive						Core-Mark Holding Company, Inc.

By:						By:

Name:						Name:

Title:						Title:

Date:						Date:

EXHIBIT C

See attached for a copy of the 2007 Long-Term Incentive Plan

Certification of Chief Executive Officer Pursuant to Section 302

Exhibit 31.1

CERTIFICATION

I, J. Michael Walsh, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Core-Mark Holding Company, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 8, 2009	By:	/s/ J. MICHAEL WALSH
		J. Michael Walsh
		President and Chief Executive Officer

Certification of Chief Financial Officer Pursuant to Section 302

Exhibit 31.2

CERTIFICATION

I, Stacy Loretz-Congdon, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Core-Mark Holding Company, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 8, 2009	By:	/s/ STACY LORETZ-CONGDON
		Stacy Loretz-Congdon
		Chief Financial Officer

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350

Exhibit 32.1

CORE-MARK HOLDING COMPANY, INC.

CERTIFICATION

In connection with the quarterly report of Core-Mark Holding Company, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2009 as filed with the Securities and Exchange Commission (the “Report”), I, J. Michael Walsh, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification shall not be deemed “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section.


Date: May 8, 2009	By:	/s/ J. MICHAEL WALSH
		J. Michael Walsh
		President and Chief Executive Officer

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

Exhibit 32.2

CORE-MARK HOLDING COMPANY, INC.

CERTIFICATION

In connection with the quarterly report of Core-Mark Holding Company, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2009 as filed with the Securities and Exchange Commission (the “Report”), I, Stacy Loretz-Congdon, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.


Date: May 8, 2009	By:	/s/ STACY LORETZ-CONGDON
		Stacy Loretz-Congdon
		Chief Financial Officer

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents