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

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


                                    FORM 10-Q

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|X|  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended June 30, 2002, or

|_| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

    For the transition period from _______________ to _______________

                           Commission File No. 1-13727



                           FFP MARKETING COMPANY, INC.
             (Exact name of registrant as specified in its charter)



          Texas                                              75-2735779
(State or other jurisdiction of                           (I.R.S. employer
incorporation or organization)                          identification number)


                2801 Glenda Avenue; Fort Worth, Texas 76117-4391
           (Address of principal executive office, including zip code)

                                  817/838-4700
              (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 requirements for the past 90 days. Yes ___x___ No ______


                             Common Shares 3,818,747
              (Number of shares outstanding as of August 14, 2002)


<PAGE>
                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                     (In thousands, except number of shares)
                                   (Unaudited)

                                                      June 30,      December 30,
                                                        2002            2001
                                                     ---------     ------------

                         ASSETS

Current assets -
    Cash and cash equivalents                          $8,187           $8,406
    Marketable securities                               4,227            5,203
    Trade receivables                                  20,810           15,763
    Inventories                                        23,349           20,742
    Notes receivable, current portion                   2,174            2,156
    Receivables from affiliates, current portion            0              722
    Deferred income taxes                                 898              898
    Prepaid expenses and other current assets           1,376            1,147
                                                     --------         --------
        Total current assets                           61,021           55,037
Property and equipment, net                            33,924           35,906
Notes receivable, excluding current portion             4,415            4,330
Other assets, net                                       7,292            8,734
                                                     --------         --------

     Total assets                                    $106,652         $104,007
                                                     ========         ========

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities -
    Current installments of long-term debt            $11,835           $7,577
    Current installments of capital
          lease obligations                               184              299
    Accounts payable                                   17,093           14,769
    Money orders payable                               16,433           16,894
    Advances from affiliates                              103            1,527
    Accrued expenses and other current liabilities     13,564           13,655
                                                     --------         --------
        Total current liabilities                      59,212           54,721
Long-term debt, excluding current installments         26,668           27,461
Capital lease obligations, excluding
        current installments                            3,677            3,742
Deferred income taxes                                     898              898
Other liabilities                                       2,555            2,571
                                                     --------         --------
        Total liabilities                              93,010           89,393
Commitments and contingencies                              -                 -
Stockholders' equity -
    Common stock ($0.01 par value; 9,000,000
      common shares authorized; 3,818,747 common
      shares issued and outstanding)                   22,235           22,235
    Accumulated deficit                                (7,548)          (6,819)
    Accumulated other comprehensive loss               (1,045)            (802)
                                                     --------         --------
        Total stockholders' equity                     13,642           14,614
                                                     --------         --------

    Total liabilities and stockholders' equity       $106,652         $104,007
                                                     ========         ========



     See accompanying Notes to Condensed Consolidated Financial Statements.


<PAGE>
                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)


                                     Three Months Ended      Six Months Ended
                                   -----------------------  --------------------
                                    June 30,     July 1,    June 30,    July 1,
                                      2002        2001        2002       2001
                                              (As restated-        (As restated-
                                               see Note 6)           see Note 6)
                                   ---------- ------------  -------- -----------


Revenues -
    Motor fuel                     $123,568    $153,410    $225,347    $284,179
    Merchandise                      27,618      26,292      50,903      50,321
    Miscellaneous                     3,944       3,609       7,625       7,104
                                   --------    --------    --------    --------
        Total revenues              155,130     183,311     283,875     341,604

Costs and expenses -
    Cost of motor fuel              116,503     144,091     212,647     270,003
    Cost of merchandise              20,085      18,264      36,600      35,551
    Direct store expenses            10,301      11,316      20,807      23,217
    General and administrative
       expenses                       4,755       4,136       9,179       8,488
    Depreciation and amortization     1,941       1,896       3,878       3,730
                                   --------    --------    --------    --------
        Total costs and expenses    153,585     179,703     283,111     340,989
                                   --------    --------    --------    --------

Operating income                      1,545       3,608         764         615

    Interest income                     173         317         680         588
    Interest expense                    951       1,189       2,173       2,323
                                   --------    --------    --------    --------

Income (loss) before income taxes       767       2,736        (729)     (1,120)

Deferred income tax expense (benefit)     0         930           0        (381)
                                   --------    --------    --------    --------

Net income (loss)                      $767      $1,806       $(729)      $(739)
                                   ========    ========    ========    ========


Net income (loss) per share -
    Basic                             $0.20       $0.47      $(0.19)     $(0.19)
    Diluted                           $0.20       $0.47      $(0.19)     $(0.19)

Weighted average number of common
  shares outstanding -
   Basic                              3,819       3,819       3,819       3,819
   Diluted                            3,819       3,822       3,819       3,819



     See accompanying Notes to Condensed Consolidated Financial Statements.


<PAGE>
                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

                                                          Six Months Ended
                                                       -------------------------
                                                       June 30,       July 1,
                                                         2002           2001
                                                                   (As Restated
                                                                   - See Note 6)
                                                      ---------    -------------

Cash Flows from Operating Activities -
  Net loss                                               $(729)          $(739)
  Adjustments to reconcile net loss to
    net cash used by operating activities -
       Depreciation and amortization                     3,878           3,730
       Provision for doubtful accounts                     150             307
       Deferred income tax benefit                           0            (247)
       Gain on sale of properties                         (488)         (1,039)
       Change in stocks and bonds                       (1,177)           (733)
       Net change in operating assets and liabilities   (5,722)         (2,875)
                                                       --------       ---------
Net cash used in operating activities                   (4,088)         (1,596)
                                                       --------       ---------

Cash Flows from Investing Activities -
  Repayments of advances to affiliate                      700              54
  Net proceeds from sale of securities                   1,789               0
  Additions of property and equipment, net              (1,087)         (1,638)
  Increase in notes receivable                             606             477
                                                       --------       ---------
Net cash provided by (used in) investing activities      2,008          (1,107)
                                                       --------       ---------

Cash Flows from Financing Activities -
  Advances from (payments to) affiliate                 (1,424)            439
  Net borrowings (payments) on debt and
     capital leases                                      3,285            (370)
                                                       --------       ---------
Net cash provided by financing activities                1,861              69
                                                       --------       ---------
Net decrease in cash and cash equivalents                 (219)         (2,634)

Cash and cash equivalents at beginning of period         8,406          14,572
                                                       --------       ---------
Cash and cash equivalents at end of period              $8,187         $11,938
                                                       ========       =========




Supplemental Disclosure of Cash Flow Information:
------------------------------------------------

Cash paid for interest                                  $2,173          $2,323
                                                       ========       =========



     See accompanying Notes to Condensed Consolidated Financial Statements.

<PAGE>
                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (Unaudited)

1.  Basis of Presentation
    ---------------------

     The  condensed   consolidated  financial  statements  include  the  assets,
liabilities,  and results of operations of FFP Marketing Company,  Inc., and its
wholly owned subsidiaries, FFP Operating Partners, L.P., Direct Fuels, L.P., FFP
Financial Services,  L.P., Practical Tank Management,  Inc., FFP Transportation,
L.L.C.,  FFP  Money  Order  Company,  Inc.,  FFP  Operating  LLC,  Direct  Fuels
Management  Company,  Inc., and Nu-Way  Beverage  Company.  These  companies are
collectively referred to as the "Company."

     The  condensed  consolidated  balance  sheet as of June 30,  2002,  and the
condensed  consolidated  statements of operations and the condensed consolidated
statements of cash flows for the periods presented have not been audited. In the
opinion of management,  all  adjustments,  consisting  only of normal  recurring
adjustments,  necessary to fairly present the Company's financial position as of
June 30,  2002,  and the  results of  operations  and cash flows for the periods
presented  have  been  made.  Interim  operating  results  are  not  necessarily
indicative of results for the entire year.

     The  notes to the  audited  consolidated  financial  statements,  which are
included in the Company's Annual Report on Form 10-K for the year ended December
30, 2001, include accounting policies and additional information pertinent to an
understanding of these interim  financial  statements.  That information has not
changed  other than as a result of normal  transactions  in the six months ended
June 30, 2002, and as discussed below.


2.  Net Income (Loss) per Share
    ---------------------------

     Basic net  income  (loss)  per share is net  income  (loss)  divided by the
weighted average number of common shares outstanding for the period. Diluted net
income (loss) per share is net income divided by the weighted  average number of
common  shares  outstanding  for the period  plus  potentially  dilutive  common
shares.  Outstanding options to acquire 303,667 common shares were excluded from
the diluted  computation for each of the three-month and six-month periods ended
June 30, 2002,  respectively,  and  outstanding  options to acquire  253,667 and
303,667  common  shares  were  excluded  from the  diluted  computation  for the
three-month and six-month periods ended July 1, 2001, respectively,  because the
effect  would  have been  anti-dilutive.  The  following  table  reconciles  the
denominators  of the basic and diluted net income (loss) per share  calculations
for the three-month and six-month periods ended June 30, 2002 and July 1, 2001:

                                            Three Months Ended  Six Months Ended
                                            ------------------  ----------------
                                            June 30,  July 1,   June 30, July 1,
                                              2002      2001      2002    2001
                                            --------  -------  --------- -------
                                                       (In thousands)

Weighted average number
   of common shares outstanding                3,819    3,819    3,819    3,819
Effect of dilutive options                         0        3        0        0
                                               -----    -----    -----    -----
Weighted average number of
  common shares outstanding,
  assuming dilution                            3,819    3,822    3,819    3,819
                                               =====    =====    =====    =====

3.  Operating Segments
    ------------------

     The Company and its subsidiaries  are principally  engaged in two operating
segments:  (i) the retail sale of motor fuel,  merchandise  and other  ancillary
products and services at  convenience  stores,  truck stops,  and other gasoline
outlets ("Retail Operations"), and (ii) the wholesale sale of motor fuel and the
operation  of a motor fuel  terminal and  processing  facility  ("Wholesale  and
Terminal  Operations").  For the  second  quarter  and first  half of 2001,  the
Company identified its wholesale  operations in the same segment with its retail
operations,  but realigned  the  wholesale  operations in 2001 to be in the same
segment with its terminal  operations  since both of those operations sell motor
fuel to wholesale  customers.  The Company  identifies  such  segments  based on
management responsibilities.  No major distinctions exist regarding geographical
areas served by the Company or customer  types.  The following  table sets forth
certain  information about each segment's  financial  information for the second
quarter and first half of 2002 and 2001 (with the results for the second quarter
and first half of 2001 being  restated as described  in Note 6 of the  Condensed
Consolidated Financial Statements):

                                                   Wholesale
                                         Retail   and Terminal  Elimin- Consoli-
                                      Operations  Operations    ations   dated
                                      ----------  -----------   ------  --------
                                                    (In thousands)

First Half of 2002
------------------
Revenues from external sources          $183,641    $100,234      $0   $283,875
Revenues from other segment                    0      19,129 (19,129)         0
Depreciation and amortization              3,297         581       0      3,878
Income (loss) before income taxes         (2,119)      1,390       0       (729)

First Half of 2001
(as restated-see Note 6)
------------------------
Revenues from external sources          $222,153    $119,451      $0    341,604
Revenues from other segment                    0      18,515 (18,515)         0
Depreciation and amortization              3,373         357       0      3,730
Income (loss) before income taxes         (3,886)      2,766       0     (1,120)

Second Quarter of 2002
----------------------
Revenues from external sources           $98,373     $56,757      $0   $155,130
Revenues from other segment                    0      10,042 (10,042)         0
Depreciation and amortization              1,652         289       0      1,941
Income before income taxes                   413         354       0        767

Second Quarter of 2001
(as restated-see Note 6)
------------------------
Revenues from external sources          $118,055     $65,256      $0   $183,311
Revenues from other segment                    0      10,536 (10,536)        0
Depreciation and amortization              1,716         180       0     1,896
Income (loss) before income taxes           (324)      3,060       0     2,736



4.  Comprehensive Net Income (Loss)
    -------------------------------

     The  components  of  comprehensive  net income (loss) for the three and six
month periods ended June 30, 2002 and July 1, 2001 (as restated),  are set forth
below:

                                            Three Months Ended  Six Months Ended
                                            ------------------  ----------------
                                            June 30,  July 1,   June 30, July 1,
                                              2002      2001      2002    2001
                                            --------  -------  --------- -------
                                                       (In thousands)

Net income (loss)                             $767    $1,806     $(729)   $(739)
Unrealized net gains (losses)
   on available-for-sale
   securities, net of tax                     (344)      (31)     (243)     262
                                             ------   -------    ------   ------
   Comprehensive net income (loss)            $423    $1,775     $(972)   $(477)
                                             ======   =======    ======   ======

5.   Notes Payable
     -------------

     The monthly  payments and the  outstanding  principal  balances at June 30,
2002 and December 30, 2001,  under the Company's notes payable are summarized in
the following table:

                                                            Outstanding Balances
                                                           ---------------------
                                                 Monthly   June 30, December 30,
                                                Payments     2002        2001
                                                ---------  --------- -----------
                                                         (In thousands)

  Type of Loan            Purpose of Loan
----------------------  -----------------------------
Sewer financing        Truck stop improvements         $2       $20         $34
7 to 15 year financing 1998 refinancing of 44 stores  101     7,581       7,852
7 to 15-year financing 1999 purchase of 4 stores       13       804         841
15-year financing      1999 refinancing of bank debt  256    21,497      21,946
15-year financing      Purchase of 3 stores             5       484         493
Bank line of credit    Operations                       0     8,117       3,872
                                                     ----   -------    --------
Total notes payable                                  $377    38,503      35,038
   Less: current portion                             ====   (11,835)     (7,577)
                                                            -------    --------
Long-term notes payable                                     $26,668     $27,461
                                                            =======    ========

     In June  1998 the  Company  obtained  44 loans  in the  original  aggregate
principal amount of $9,420,000 secured by a lien against the Company's leasehold
improvements,  equipment, and inventory at 44 specific convenience stores, truck
stops and gas-only outlets.  The loans bear interest at 8.66% per annum, require
the Company to maintain a minimum fixed charge  coverage ratio of 1.25 to 1, and
will be fully  amortized at various  maturity dates ranging from October 2007 to
July  2013  by  making   principal  and  interest   payments  in  equal  monthly
installments  over their  respective  terms.  Although it did not  maintain  the
required  fixed  charge  coverage  ratio  under these loans at June 30, 2002 and
December 30, 2001, the Company obtained a waiver of such  non-compliance for all
44 loans.  At June 30, 2002 and December 30, 2001,  $7,581,000  and  $7,852,000,
respectively, remained outstanding on the 44 loans.

     In February 1999 the Company  acquired 23 convenience  stores and two truck
stops.  Eleven of the 25 stores are third party  leasehold  locations  where the
Company purchased the existing leasehold interest, equipment, and inventory. The
Company   financed   its   purchase   of  four  of  the  11  stores   with  four
fully-amortizing  mortgage loans in the aggregate  original  principal amount of
$1,012,000  secured by a lien  against  the  Company's  leasehold  improvements,
equipment, and inventory at those four convenience stores. The loans provide for
maturity dates ranging from 86 to 180 months,  interest  payable at a fixed rate
of 9.275% per annum,  a minimum  fixed charge  coverage  ratio of 1.25 to 1, and
aggregate monthly payments of principal and interest of $13,000. Although it did
not maintain the required fixed charge  coverage ratio under these loans at June
30,  2002  and  December  30,  2001,  the  Company  obtained  a  waiver  of such
non-compliance  for  all  but  two of the  loans.  The  Company  classified  the
remaining principal balances of $528,000 and $542,000 under those two loans as a
current  liability  on its  consolidated  balance  sheets  at June 30,  2002 and
December  30,  2001,  respectively.  At June 30,  2002 and  December  30,  2001,
$804,000 and $841,000, respectively, remained outstanding on those four loans.

     In June 1999 the Company  refinanced a prior revolving  credit facility and
term loan with the proceeds of fixed rate financing from a third party lender in
the form of 49 fully-amortizing loans in the original aggregate principal amount
of $23,800,000. These 49 loans provide for 180 equal, monthly payments, interest
payable at a fixed rate of 9.9% per annum, a minimum fixed charge coverage ratio
of 1.25 to 1, and  aggregate  monthly  payments  of  principal  and  interest of
$256,000.  The loans are  secured  by a lien  against  the  Company's  leasehold
improvements,  equipment, and inventory at 49 specific convenience stores, truck
stops and gas-only  outlets.  Although it did not  maintain  the required  fixed
charge  coverage ratio under these loans at June 30, 2002 and December 30, 2001,
the  Company  obtained a waiver of such  non-compliance  for 44 of the 49 loans.
Accordingly, the remaining principal balances of $1,705,000 and $1,722,000 under
those  five other  loans  have been  classified  as a current  liability  on the
consolidated   balance   sheets  at  June  30,  2002  and   December  30,  2001,
respectively.   At  June  30,  2002  and  December  30,  2001,  $21,497,000  and
$21,946,000, respectively, remained outstanding on those 49 loans.

     In August 2001 the Company  purchased three  convenience  store  properties
that it previously  operated  under a lease.  The Company  financed its purchase
with a  fully-amortizing  mortgage  loan in the  original  principal  amount  of
$500,000,  payable over a 15-year term,  with interest  accrued and payable at a
fixed rate of 8% for the first five years but variable  thereafter at prime plus
an index,  and aggregate  monthly  payments of principal and interest of $5,000.
The Company's  monthly loan payments equal its previous  monthly rental payments
prior to the  purchase.  At June 30, 2002 and December  30,  2001,  $484,000 and
$493,000 remained outstanding on the loan.


     In November 2001 the Company closed a new revolving  credit facility with a
third party  lender  providing  for  borrowings  up to  $20,000,000.  The amount
available at any time under the new revolver is calculated with a borrowing base
of 85% of its  eligible  trade  receivables  plus  70% of the  inventory  at its
terminal  facility.  The new revolver replaced a prior revolving credit facility
that provided for borrowings up to  $10,000,000.  The revolving  credit facility
bears interest at the lender's prime rate plus  three-fourths  of one percentage
point (5.5% at June 30, 2002),  payable  monthly,  and matures in 2005.  The new
loan is subject to a Loan and Security  Agreement dated November 5, 2001 between
the lender and two subsidiaries of the Company,  namely FFP Operating  Partners,
L.P. and Direct Fuels,  L.P. The agreement  contains  numerous,  but  customary,
covenants  including,  but not limited to, a financial covenant requiring Direct
Fuels,  L.P.  to maintain a specified  minimum  amount each  quarter of earnings
before  interest,  taxes,  depreciation and  amortization.  At June 30, 2002 and
December 30,  2001,  the Company met the required  fixed charge  coverage  ratio
under the loan agreement for the revolving  credit  facility.  In the event of a
default under the loan, liens on certain assets of FFP Operating Partners,  L.P.
also take effect. At June 30, 2002 and December 30, 2001, the Company was not in
compliance  with  the  terms  of its  new  revolver  because  it had not met the
required  fixed charge  coverage  ratio under its loan  documents with its other
lenders.  The Company's  borrowing base under its revolving  credit facility was
$10,277,000  at June 30, 2002,  compared to $5,473,000 at year end 2001. At June
30, 2002 and December 30, 2001,  $8,116,000 and $3,872,000,  respectively,  were
outstanding  under the revolving lines of credit and are classified as a current
liability on the consolidated balance sheets.


6. Restatement
   -----------

     In early 2002, the Company became aware of certain inadvertent  bookkeeping
errors made in the accounting  records of one of its subsidiaries.  A subsequent
analysis  determined a charge of $214,000 and $260,000,  net of taxes, should be
made to the net income (loss) of the Company in the first and second quarters of
2001,  respectively.  The adjustment  results from bookkeeping  errors regarding
credit card accounts  receivable and related fuel payables,  and their resulting
effect on cost of motor fuel  sold,  and then the  related  effect on income tax
expense or benefits.  For that reason,  the Company's  quarterly results for the
first  two  quarters  of  2001  have  been  restated  to  correct  those  errors
attributable to those quarters,  rather than the amounts previously reported for
the quarters.  For further  discussion of these matters,  refer to the Company's
Form 10-K for the year ended December 30, 2001.


7.  Recent Accounting Pronouncements
    --------------------------------

     Effective  January 1, 2002,  the Company  adopted  Statement  of  Financial
Accounting  Standards ("SFAS") No. 141, entitled "Business  Combinations",  SFAS
No. 142, entitled "Goodwill and Intangibles  Assets", and SFAS No. 144, entitled
"Accounting for Impairment or Disposal of Long-Lived Assets".

     SFAS No. 141  eliminated  the pooling  method of  accounting  for  business
combinations  initiated  after June 30, 2001.  SFAS No. 141 also  addressed  the
accounting for intangible assets and goodwill acquired in a business combination
completed after June 30, 2001. The  implementation of SFAS No. 141 had no effect
on the Company's financial statements.

     SFAS No. 142 revised the accounting for purchased  goodwill and intangibles
assets.  Under SFAS 142,  goodwill and intangibles  assets with indefinite lives
will no longer be amortized,  will be tested for impairment  annually and in the
event of an impairment  indicator,  and must be assigned to reporting  units for
purposes of impairment testing and segment reporting.

     The Company has historically amortized goodwill on the straight-line method
over 20  years.  Beginning  January  1,  2002,  quarterly  and  annual  goodwill
amortization is no longer recognized.  The Company completed a transitional fair
value based  impairment  test of goodwill as of June 30,  2002,  and no material
impairment losses were recognized.

     Net carrying values of intangible  assets at June 30, 2002 and December 30,
2001 were as follows:

                                                         June 30,   December 30,
                                                           2002        2001
                                                          ------    -----------
                                                               (in thousands)

Intangible assets subject to amortization -
  Real estate leases from affiliated companies              $267          $293
  Real estate leases from non-affiliated companies           300           310
  Deferred investment of convenience store improvements    1,466         1,587
  Capitalized research and development costs                  47            61
  Loan costs                                               1,597         1,731
                                                          ------        ------
     Total                                                 3,677         3,982
Intangible assets not subject to amortization -
 Goodwill                                                    453           453
                                                          ------        ------
     Total                                                $4,130        $4,435
                                                          ======        ======


     Amortization expense related to intangible assets was $376,000 and $340,000
for the  first  half of 2002 and 2001,  respectively.  The  aggregate  estimated
amortization  expense for intangible  assets remaining as of June 30, 2002 is as
follows (in thousands):

     Remainder of 2002                                     $260
     2003                                                   579
     2004                                                   543
     2005                                                   371
     2006                                                   317
     2007                                                   275
     Thereafter                                           1,332
                                                         ------
            Total                                        $3,677
                                                         ======

     Net income  (loss) per share for the second  quarter and first half of 2002
and 2001, adjusted to exclude goodwill amortization expense, was as follows:


                                            Three Months Ended  Six Months Ended
                                            ------------------  ----------------
                                            June 30,  July 1,   June 30, July 1,
                                              2002      2001      2002    2001
                                            --------  -------  --------- -------
                                                       (In thousands)

Reported net income (loss)                    $767    $1,806    $(729)    $(739)
Goodwill amortization                            0        18        0        36
                                             -----    ------    ------    ------
   Adjusted net income (loss)                 $767    $1,824    $(729)    $(703)
                                             =====    ======    ======    ======

Basic net income (loss) per share -
    Reported net income (loss)               $0.20     $0.47   $(0.19)   $(0.19)
    Goodwill amortization                     0.00      0.01     0.00      0.01
                                             -----    ------    ------    ------
   Adjusted net income (loss)                $0.20     $0.48   $(0.19)   $(0.18)
                                             =====    ======    ======    ======

Diluted net income (loss) per share -
    Reported net income (loss)               $0.20     $0.47   $(0.19)   $(0.19)
    Goodwill amortization                     0.00      0.01     0.00      0.01
                                             -----    ------    ------    ------
   Adjusted net income (loss)                $0.20     $0.48   $(0.19)   $(0.18)
                                             =====    ======    ======    ======

     SFAS  No.  144  addressed  financial   accounting  and  reporting  for  the
impairment or disposal of long-lived assets. The implementation of this standard
did not have an effect on the Company's financial statements.

<PAGE>


                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

General
--------

     FFP Marketing Company,  Inc. was formed as a Texas corporation  immediately
prior to the December 1997 restructuring of FFP Partners, L.P. ("FFP Partners").
In that  restructuring,  all of the assets and  businesses  of FFP Partners were
transferred to the Company,  except that FFP Partners retained the improved real
property  previously used in its retail operations.  Unless the context requires
otherwise, references herein to the "Company" for periods or activities prior to
the December 1997  restructuring  include the activities of FFP Partners and its
then subsidiaries, which are now subsidiaries of FFP Marketing Company, Inc.

     In the December  1997  restructuring  of FFP  Partners,  the holders of its
limited partnership  interests received one share of common stock of the Company
for each  limited  partnership  unit  that  they  owned on  December  28,  1997,
resulting in each such person owning the same  economic  interest in the Company
as they had held in FFP Partners.

     The Company conducts its operations through the following subsidiaries:

   Entity Name and Type            Date Formed         Principal Activity
------------------------------  ----------------    -------------------------

FFP Operating Partners, L.P.      December 1986     Operation of convenience
Delaware limited partnership                        stores and other retail
                                                    outlets and ancillary
                                                    services

Direct Fuels, L.P.                December 1988     Operation of fuel terminal
Texas limited partnership                           and wholesale fuel sales

FFP Financial Services, L.P.      September 1990    Sale of money orders and
Delaware limited partnership                        other financial services
                                                    and supplies

Practical Tank Management, Inc.   September 1993    Underground storage tank
Texas corporation                                   monitoring

FFP Transportation, L.L.C.        September 1994    Ownership of tank trailers
Texas limited liability company                     and other transportation
                                                    equipment

FFP Money Order Company, Inc.     December 1996     Sale of money orders through
Nevada corporation                                  agents

Nu-Way Beverage Company           July 1985         Sale of alcoholic beverages
Texas corporation                                   in Texas


     The Company and its subsidiaries  are principally  engaged in two operating
segments:  (i) the retail sale of motor fuel, merchandise and other products and
services at  Company-operated  convenience  stores,  truck  stops,  and gas-only
stores,  and (ii) the wholesale sale of motor fuel and operation of a motor fuel
terminal and processing facility. (See Note 3 of Notes to Condensed Consolidated
Financial Statements.)


Results of Operations
---------------------

     The  Company  earned  $767,000 in the second  quarter of 2002,  compared to
earnings of $1,806,000 in the second  quarter of 2001.  The Company's net income
in the second  quarter of 2002 showed  significant  improvement  compared to its
previously  announced net loss of  $1,496,000 in the first quarter of 2002.  The
primary  factor for the decline in the second  quarter of 2002,  compared to the
same quarter of the prior year,  was a reduction in gross margin from motor fuel
sales of  $2,254,000,  which was partially  offset by  additional  miscellaneous
revenues  of  $335,000,  reduced  direct  store  expenses of  $1,015,000,  and a
decrease of $930,000 in income tax expense.

     In the first half of 2002,  the  Company  incurred a net loss of  $729,000,
compared to a net loss of $739,000  in the first half of 2001.  Primary  factors
for the slight  improvement were reduced direct store expenses of $2,410,000 and
additional miscellaneous revenues of $521,000, which offset a reduction in gross
margin from motor fuel sales of  $1,476,000.  In  addition,  the Company did not
record an income tax  benefit in the first half of 2002,  compared  to an income
tax benefit of $381,000 in the first half of 2001.

     As previously announced,  the Company in early 2002 became aware of certain
inadvertent  bookkeeping  errors  made in the  accounting  records of one of its
subsidiaries.  A  subsequent  analysis  was  completed  in late  April  2002 and
determined  that a charge of $214,000  and  $260,000,  net of income tax effect,
should be made to the net income or loss of the  Company in the first and second
quarters of 2001, respectively. The adjustments resulted from bookkeeping errors
regarding credit card accounts  receivable and related fuel payables,  and their
resulting  effect on cost of motor fuel  sold,  and then the  related  effect on
income tax expense or benefits.  For that reason,  the Company's results for the
three and six months ended July 1, 2001 have been  restated to  correctly  state
the results for those periods,  rather than the amounts previously  reported for
those periods.

     The  Company  continues  to  review  its  administrative,   accounting  and
operational  policies,  procedures  and personnel  relating to its recording and
reconciliation  of credit card receivables,  fuel receivables and payables,  and
compliance with those policies and procedures, to identify potential areas where
improvements  and increased  efficiencies  may be  implemented.  Improvements to
previous policies, procedures and personnel have been made, and will continue to
be implemented, as quickly as practicable.


     Fuel Sales and Margins
     ----------------------

                            Second Quarter                   Year-to-Date
             --------------------------------- ---------------------------------
                                    Change                           Change
                               ---------------                   ---------------
                2002     2001   Amount     %     2002     2001    Amount    %
             -------- -------- -------- ------ -------- -------- -------- ------
                      (In thousands, except average prices and per gallon data)

Fuel sales   $123,568 $153,410 $(29,842) (19%) $225,347 $284,179 $(58,832) (21%)
Fuel margin    $7,065   $9,319  $(2,254) (24%)  $12,700  $14,176  $(1,476) (10%)
Gallons sold -
 Retail        50,940   59,380   (8,440) (14%)  103,359  115,923  (12,564) (11%)
 Wholesale     33,112   26,228    6,884   26%    58,644   47,731   10,913   23%
 Terminal      19,705   25,604   (5,899) (23%)   43,011   52,291   (9,280) (18%)
  Total       103,757  111,212   (7,455)  (7%)  205,014  215,945  (10,931)  (5%)
Average per
 gallon sales
 price          $1.19    $1.38   $(0.19) (14%)    $1.10    $1.32   $(0.22) (17%)
Margin per
 gallon (cents)   6.8      8.4     (1.6) (19%)      6.2      6.6     (0.4)  (6%)


     The Company sold less motor fuel, in dollars and in gallons,  in the second
quarter  and first half of 2002 than in the  corresponding  periods of the prior
year.  Motor fuel sales decreased by $29,842,000  (19%) in the second quarter of
2002  and by  $58,832,000  (21%) in the  first  half of  2002,  compared  to the
corresponding  periods of 2001. Motor fuel sales decreased  principally  because
motor  fuel  prices  declined  for such  periods  by 14% and 17%,  respectively,
compared to the corresponding periods of the prior year. Retail motor fuel sales
decreased by $21,335,000  (24%) and by  $39,572,000  (24%) in the second quarter
and first half of 2002, respectively, compared to corresponding periods of 2001.
Retail  motor fuel sales  decreased  principally  because of lower fuel  prices,
increased retail competition and revised fuel-pricing strategies of the Company.
Wholesale motor fuel sales increased by $3,452,000  (10%) and by $1,188,000 (2%)
in the  second  quarter  and  first  half of  2002,  respectively,  compared  to
corresponding  periods of 2001. Wholesale motor fuel sales increased in spite of
lower fuel prices  principally  as a result of fuel sales to locations  owned by
third parties and managed by the Company  under  management  contracts  with the
third parties.  Motor fuel sales at the terminal  declined by $11,959,000  (39%)
and   $20,448,000   (35%)  in  the  second  quarter  and  first  half  of  2002,
respectively,  compared to  corresponding  periods of 2001.  Terminal fuel sales
decreased primarily as a result of reduced fuel prices and revised  fuel-pricing
strategies.

     In gallons,  total motor fuel sales decreased by 7,455,000  gallons (7%) in
the second quarter of 2002, and by 10,931,000  gallons (5%) in the first half of
2002, compared to gallons sold in the corresponding  periods of 2001.  Wholesale
sales increased by 6,884,000  gallons (26%) and 10,913,000  gallons (23%) in the
three and sixth-month periods of 2002, compared to the corresponding  periods of
2001.  Wholesale  motor fuel  sales  increased  principally  because of sales to
locations  managed by the  Company  under  management  contracts  with the third
parties.  Offsetting those increases were decreases in retail sales of 8,440,000
gallons (14%) and 12,564,000 gallons (11%) in the three and six-month periods of
2002, respectively,  and terminal sales of 5,899,000 gallons (23%) and 9,280,000
gallons (18%) in the three and six-month periods of 2002, respectively, compared
to  comparable  periods  in 2001.  Retail  and  terminal  fuel  sales  decreased
primarily as a result of revised fuel-pricing strategies.

     The Company's  overall gross profit margin on all types of motor fuel sales
decreased by $2,254,000  (24%) and $1,476,000 (10%) in the in the second quarter
and first half of 2002,  respectively,  compared to the corresponding periods of
2001.  Fuel margins,  in total  dollars,  decreased  principally  as a result of
decreasing sales prices, fewer gallons sold and a lower average gross margin per
gallon.  Average  fuel  sales  prices  declined  by 14% and 17% in the three and
sixth-month  periods of 2002,  compared to the comparable  periods of 2001. Fuel
margin per gallon on all types of fuel sales  decreased  by 1.6 cents per gallon
(19%) and by 0.4 cents per gallon  (6%) in the second  quarter and first half of
2002,  respectively,  compared to corresponding  periods of 2001.  Average gross
profit margin per gallon  resulted  because an improved retail margin per gallon
was offset by a lower margin per gallon on wholesale and terminal sales, in both
the second quarter and the first half of 2002, compared to comparable periods of
2001.


     Merchandise Sales and Margins
     -----------------------------


                            Second Quarter                   Year-to-Date
             --------------------------------- ---------------------------------
                                    Change                           Change
                               ---------------                   ---------------
                2002     2001    Amount     %    2002     2001    Amount    %
             -------- -------- -------- ------ -------- -------- -------- ------
                           (In thousands, except average weekly sales data)

Mdse sales      $27,618  $26,292  $1,326    5%  $50,903  $50,321    $582     1%
Mdse margin       7,533    8,028    (495)  (6%)  14,303   14,770    (467)   (3%)
Mdse margin %,
 conven. stores
 and truck stops  28.0%    28.4%   (0.4%)  (1%)   27.8%    27.7%     0.1%    0%
Average weekly
mdse sales per store -
 Conven. stores $11,409  $12,069   $(660)  (5%) $11,302  $11,226     $76     1%
 Truck stops     16,510   16,702    (192)  (1%)  16,077   16,081     (4)     0%


     Merchandise  sales  increased by $1,326,000  (5%) in the second  quarter of
2002,  and by  $582,000  (1%)  for the  first  half  of  2002,  compared  to the
comparable  periods of the prior year.  A principal  factor for the  increase in
merchandise  sales  was  increased  cigarette  pricing,  resulting  from  higher
cigarette  costs,  offsetting  the  effects  of a  decrease  of 8% and 9% in the
average  number of  convenience  stores in the second  quarter and first half of
2002,   compared  to  the  corresponding   periods  of  2001.  The  decrease  in
Company-operated stores resulted from implementation of the Company's previously
announced strategy of converting Company-operated stores to gas-only outlets.

     Merchandise  gross profit margin,  in total dollars,  decreased by $495,000
(6%)  and by  $467,000  (3%)  for the  three  and six  month  periods  of  2002,
respectively,  when  compared  to the  corresponding  periods of the prior year.
Total  merchandise  margins declined for these comparative  periods  principally
because of a decrease  in margin on  cigarette  sales and  because  the  Company
operated  fewer  convenience  stores in the  applicable  periods of 2002 than in
2001, as described above.

     Other Income and Expenses
     -------------------------

     Miscellaneous  revenues  include  management  fees,  lottery  ticket  sales
income,  money  order sales  income,  commissions  received on alcohol  beverage
sales, check cashing fees, state excise tax handling fees, gains on asset sales,
realized  gains or  losses  on  investments  in  available-for-sale  securities,
exchange and motor fuel  trading  gains and losses,  and various  other types of
income.  Miscellaneous  revenues were  $3,944,000  and  $7,625,000 in the second
quarter and first half of 2002, respectively,  constituting improvements in both
comparative  periods (9% and 7%,  respectively) over  miscellaneous  revenues of
$3,609,000 and $7,104,000 in the corresponding periods of 2001.

     Miscellaneous  revenues increased in the second quarter in 2002 principally
as a result of  additional  management  fees and the proceeds of an  arbitration
award.  The  increases in  miscellaneous  revenues were achieved in spite of the
Company operating 14 and 15 fewer convenience  stores, on average, in the second
quarter and first half of 2002, respectively,  than in the same periods of 2001.
The overall improvement in miscellaneous  revenues was also achieved in spite of
lesser gains being recorded in 2002 from the sale/conversion of Company-operated
convenience  stores to  gas-only  stores than in 2001.  These  sales/conversions
continued in  considerable  numbers (10 sales and 13 sales in the second quarter
and first half of 2002,  respectively,  compared to 13 sales and 19 sales in the
second quarter and the first half of 2001, respectively), but lesser total gains
were  recorded  in  2002.  Specifically,   gains  from  the  sale/conversion  of
Company-operated  convenience  stores to  gas-only  outlets  were  $298,000  and
$488,000 in the second quarter and first half of 2002, respectively, compared to
gains of $763,000 and  $1,231,000 in the second  quarter and first six months of
2001, respectively.

     Direct store expenses decreased by $1,015,000 (9%) in the second quarter of
2002,  compared to the second  quarter of 2001.  Direct  store  expenses for the
applicable  six-month  period also decreased by $2,410,000  (10%).  Direct store
expenses   decreased  in  both   instances  as  a  result  of  operating   fewer
Company-operated stores in 2002 than in 2001.

     General  and  administrative  expenses  increased  by  $619,000  (15%)  and
$691,000  (8%)  in  the  three  and  six-month  periods  ended  June  30,  2002,
respectively,  compared to the  corresponding  periods of 2001.  These increases
resulted  largely  from  additional  legal,   accounting  and  consulting  fees,
increased  personnel costs associated with  supervising  stores under management
contracts,  additional costs for permits and licenses,  and increased  insurance
costs.

     Depreciation  and  amortization  increased  by  $45,000  (2%) in the second
quarter of 2002,  compared to the  corresponding  quarter of 2001. For the first
half of 2002,  compared to the  corresponding  period in 2001,  depreciation and
amortization  increased by $148,000 (4%). These increases  resulted  principally
from  additional  amortization  of loan costs and  depreciation  of property and
equipment additions made during recent years.

     Interest  income  declined by $144,000 (45%) and increased by $92,000 (16%)
in the  second  quarter  and  first  half of  2002,  respectively,  compared  to
corresponding   periods  in  2001.  The  second  quarter  decrease  was  largely
attributable  to a decline  in  interest  rates on  Company  investments,  while
interest  income  in  the  first  half  increased  as  a  result  of  additional
interest-earning investments.

     Interest  expense  decreased by $238,000  (20%) and by $150,000 (6%) during
the  second  quarter  and first half of 2002,  respectively,  when  compared  to
corresponding  periods of 2001.  Interest expense  decreased for in both periods
because  of  a  $3,321,000  (9%)  reduction  in  interest-bearing  indebtedness,
declining interest rates, and a lesser interest rate charged under the Company's
new revolving line of credit facility than its prior facility.

     The  Company  did not record any  federal  income tax expense in the second
quarter or first half of 2002,  compared  to federal  tax expense of $930,000 in
the second quarter of 2001 and a federal income benefit of $381,000 in the first
half of 2001.  Federal income tax expense was not recorded in the second quarter
of 2002, even though the Company had positive earnings, because the expected tax
expense  for the year is zero.  However,  this  expectation  will be  reassessed
during the remainder of the year.


Liquidity and Capital Resources
-------------------------------

     The Company's  working  capital is provided by several  sources,  including
short-term   investments,   cash  flows  generated  from  operating  activities,
borrowings under a revolving line of credit facility,  short-term vendor credit,
and the  availability of funds provided by the sale of money orders prior to the
payment of those money order  obligations.  The Company believes,  but cannot be
certain, that its future sources of capital will provide sufficient liquidity to
fund  its  future  operating  costs,  debt  service  requirements,  and  capital
expenditures. Risk factors involved in determining the adequacy of liquidity and
capital  resources  include,  but are not limited to, the  insufficiency of cash
flows from operations for any reason, such as, for example, in the event of poor
retail fuel margins, such as that incurred in the fourth quarter of 2001 and the
first two months of 2002 (although the Company has  experienced  improved retail
fuel  margins  since  then);  the  inability of the Company to meet its goals of
increasing  store revenues and  decreasing  direct store expense and general and
administrative expense; bad debts or uncollectible accounts; possible actions of
the Company's long-term lenders and revolving credit lender in accelerating such
indebtedness  and  charging   additional   interest  and  loan  fees;   possible
restrictions on the availability of credit from vendors;  and a possible loss of
the Company's money order sales license. The Company believes it will be able to
adjust its actual capital expenditures based on the level of cash flow generated
from operating activities and funds available from financings.

     The Company's  notes payable at June 30, 2002,  and December 30, 2001,  are
summarized in the notes to the condensed  financial  statements.  (See Note 5 of
Notes to Condensed  Consolidated  Financial  Statements.)  In November  2001 the
Company  closed  a new  revolving  credit  facility  with a third  party  lender
providing for  borrowings up to  $20,000,000.  The amount  available at any time
under the revolver is  calculated  with a borrowing  base of 85% of its eligible
trade  receivables plus 70% of the inventory at its terminal  facility.  At June
30, 2002 and  December  31,  2001,  the  borrowing  base under the  revolver was
$10,277,000 and $5,473,000,  respectively,  and the principal  balance under the
revolver was $8,116,000 and $3,872,000, respectively.

     Management  is actively  involved in a focused  effort  designed to improve
bottom-line results and liquidity of the Company, although no assurance is given
that its  strategies  will  prove to  increase  profitability.  Several of these
strategies are summarized below:

          1. Strengthen Core Businesses. The Company is attempting to strengthen
     its core businesses in order to increase its revenues and decrease its cost
     and expenses.  This  analysis and resulting  action may include the sale of
     assets or components of its businesses,  the closing of certain stores,  or
     other actions considered necessary to increase net profitability. Like many
     other  convenience  store  operators  in  the  industry,  the  Company  has
     experienced  decreasing retail motor fuel margins per gallon at its stores,
     especially   from   September  2001  until  mid  March  2002.  The  Company
     implemented  a pricing  structure  in 2002  designed to increase its retail
     motor fuel margins and  merchandise  margins.  The  Company's  fuel margins
     began to improve  during the month of March 2002,  but no assurance  can be
     given that those margins will be at acceptable levels. For that reason, the
     Company is in the process of aggressively reassessing its store operations,
     not only to cut store  operating and  inventory  costs but also to find new
     sources of  additional  store  income.  Many of those  possible new revenue
     sources are  described  below.  Although  the Company  has  experienced  an
     increase  its  general  and   administrative   expenses  in  recent  years,
     management  believes  that its efforts to cut those costs,  if  successful,
     will be an important  factor in increasing  future  profitability.  In that
     regard,  management  continues  to  analyze  a  reorganization  of  certain
     departments  in  order to  streamline  their  function  and  improve  their
     performance.

          2. Seek  Additional Fee Income.  The Company has also been involved in
     efforts to generate other sources of revenue to obtain additional profit in
     2002 from its own retail stores, as well as from third party locations that
     sell its money  orders  across the country.  In so doing,  the Company will
     attempt to capitalize on its network of retail locations  serving customers
     in small towns and larger cities in several  states.  Multiple  sources for
     expanded  fee income  involved in this effort  include  selling  additional
     financial products and services,  selling additional telephone products and
     services,  collecting  utility  payments at the Company's stores for a fee,
     expanding the Company's check cashing services, and expanding the Company's
     ATM network.

          3. Convert  Company-Operated  Stores to Gas-Only Stores. In situations
     where management believes that profitability will be improved,  the Company
     intends to continue implementing its strategy of selling/converting certain
     of its  Company-operated  convenience  stores to  independent  third  party
     operators  and  continuing  such  outlets as Gas-Only  Stores.  The Company
     converted  13 stores in the  first  half of 2002,  26 stores in 2001 and 34
     stores  in  2000  in  that  manner  and  has  targeted  an   additional  50
     Company-operated  stores as suitable  candidates for future conversions and
     will continue to search for qualified purchasers for these locations.

          4.  Growth  of  Wholesale  Business.  Utilizing  its new  $20  million
     revolving  credit facility  obtained in November 2001, the Company believes
     it will be able to expand its  Wholesale  and Terminal  Operations in 2002.
     The Company believes that its wholesale  business in the last few years was
     curtailed  by its lack of a larger  line of  credit,  and the  increase  in
     availability  from its new line of credit is  expected  to  facilitate  the
     profitable expansion of this growing segment.

          5. Manage Convenience  Stores for Third Parties.  The Company obtained
     management  and fuel  supply  contracts  in early 2002 for 114  convenience
     stores from two different  lenders that had acquired  those stores  through
     foreclosures  from  other  convenience  store  operators.  In  addition  to
     receiving monthly management fees, the Company may sell motor fuel to those
     locations and has contracted to sell its money orders at those stores under
     money order agency agreements.  In May 2002, one of those owners sold 40 of
     the stores  under its  management  contract,  at which time the  management
     contract for those stores ended. Although the other management contract for
     57 stores was  terminated in July 2002,  the Company  continues to sell its
     money orders at such stores.

          6.  Possible  Expansion  at the  Terminal.  The Company  continues  to
     investigate potential new sources of profits at its terminal located in the
     growing  Dallas/Fort Worth Metroplex.  The Company's current  operations at
     the terminal only utilize 13 acres of land,  and its remaining 20 acres are
     available for expansion.

     The Company is party to commodity  futures  contracts and forward contracts
to buy and sell fuel,  both of which are used  principally  to satisfy  balances
owed on exchange  agreements.  Both of these types of contracts involve the risk
of dealing with others and their  ability to meet the terms of the contracts and
the risk associated with unmatched positions and market  fluctuations.  The open
positions  under these  contracts  were  insignificant  at the end of the second
quarter of 2002.

     The  Company  sells  money  orders in several  states at its own stores and
through agents at other locations. Money order payables represent those sales of
money  orders  for  which the  payee of the  money  order has not yet  requested
payment.  Although the Company collects money order receipts on a daily basis on
sales of money  orders made by its own stores,  the Company  relies on receiving
timely  payment  (usually twice per week) from its third party money order sales
agents.

     The Company had positive working capital of $1,809,000 at the end of second
quarter 2002, compared to a negative working capital of $1,352,000 at the end of
the first quarter of 2002 and a positive working capital of $316,000 at year end
2001. In past years,  the Company has operated its business with minimal or even
negative working capital,  principally  because most of its sales are cash sales
and it  has  received  payment  terms  from  vendors.  Consequently,  management
currently  believes,  but can give no  assurance,  that its  current  liquidity,
internally  generated funds,  use of trade credit,  and available line of credit
will allow its operations to be conducted in a customary manner.

Critical Accounting Policies
----------------------------

     Many significant  accounting policies affecting the financial statements of
the Company are summarized in the Notes to the Consolidated Financial Statements
included in Form 10-K of the Company for December 30, 2001.  Management believes
that three critical  accounting policies adopted by the Company are its policies
relating to the accounting  treatment of the following:  marketable  securities,
gain on sale/conversion of merchandise operations at convenience stores to third
parties who then operate the location as a Gas-Only  Stores,  and investments in
operating and capital leases.

     The Company  classified  all of its  investments  in marketable  securities
through  September 30, 2000, as "trading  securities".  Trading  securities  are
securities  that are bought and held  principally for the purpose of a resale in
the near term. On October 1, 2000, the Company  changed its intention in holding
its marketable securities to a longer term outlook.  Accordingly,  since October
1,  2000,  the  Company  has  classified  all of its  marketable  securities  as
"available-for-sale"  securities.  Under SFAS No. 115,  "Accounting  for Certain
Investments  in Debt and Equity  Securities",  net unrealized and realized gains
and  losses  from  trading  securities  are  included  in  earnings,  while  net
unrealized gains and losses from  available-for-sale  securities are included in
the  calculation  of  "comprehensive  net  income" in the equity  accounts  of a
company,  instead of in  earnings.  Had the Company  classified  its  marketable
securities  as  trading   securities  since  October  1,  2000,  instead  of  as
available-for-sale  securities,  the Company  would have  recorded an additional
loss of $344,000 and $243,000, both net of tax, in second quarter and first half
of 2002,  respectively,  and an additional loss of $31,000 and additional income
of  $262,000,  both  net of tax,  in  second  quarter  and  first  half of 2001,
respectively.  Dividend and interest  income,  including the amortization of any
premium and discount  arising at acquisition,  are included in earnings for both
trading securities and available-for-sale securities.

     In 2001 and in past years the Company has sold the  merchandise  operations
and related  inventories of certain convenience store locations to various third
parties  in  exchange  for cash  and  notes  receivable.  The  notes  receivable
generally are for terms of five years, require monthly payments of principal and
interest,  and bear  interest at rates  ranging  from 8% to 15%.  Gains on sales
which meet  specified  criteria,  including  receipt of a significant  cash down
payment  (usually  20% or more) and  projected  cash flow from store  operations
sufficient to adequately  service the debt, are  recognized  upon closing of the
sale.  Gains from sales that do not meet the specified  criteria are  recognized
under the  installment  method as cash  payments are  received.  Had the Company
recorded  all  gains  on  this  type  of  sale  under  the  installment  method,
miscellaneous  income  would have been  reduced by $108,000  and $298,000 in the
second half and first half of 2002, and by $763,000 and $1,231,000 in the second
quarter and first half of 2001,  respectively.  Gains being recognized under the
installment  method are  evaluated  in years  subsequent  to the year of sale to
determine  if full  recognition  of the gain is then  appropriate.  Under  these
sales, the Company generally retains the real estate or leasehold  interests and
leases or subleases the store facilities  (including the store equipment) to the
purchaser under five-year  renewable  operating  lease  agreements.  The Company
usually retains ownership of the motor fuel operations and pays the purchaser of
the store  commissions  based on motor fuel sales.  In  addition,  the new store
operators  may  purchase  merchandise  under the  Company's  established  buying
arrangements.  All of the  Company's  leases are  treated as  operating  leases,
except for the  building  portion of l4 leases  executed in 1999.  In 1999,  FFP
Partners  purchased  14 improved  real  properties  and  immediately  leased the
properties  to the Company  under 15-year  leases.  The  Company's  total rental
payments  to FFP  Partners  under those  leases are  $99,000 per month.  Of that
amount,  $28,000 per month is  allocated to the land portion of those leases and
classified as rent expense under  operating  leases,  while $71,000 per month is
allocated to the building  portion of those  leases and  classified  as payments
made in retirement of its capital lease obligation.  Had those 14 leases instead
been classified as operating leases, the entire $71,000 in rent payments for the
buildings would be reported as rent expense, instead of being reported partially
as interest expense and partially as principal payments on the Company's capital
lease  obligation  and the Company  would not report  depreciation  expense from
those building. In addition,  the balance sheets of the Company would not report
the building  portion of those 14 real  properties as an asset and capital lease
obligation, as it presently does.


Forward-Looking Statements
--------------------------

     Certain  of the  statements  made  in  this  report  are  "forward-looking"
statements that involve inherent risks and uncertainties. As defined by the U.S.
Private Securities Litigation Reform Act of 1995,  "forward-looking"  statements
include information about the Company that is based on the beliefs of management
and the assumptions made by, and information currently available to, management.
In making  such  forward-looking  statements,  the  Company is relying  upon the
"statutory  safe harbors"  contained in the  applicable  statutes and the rules,
regulations and releases of the Securities and Exchange  Commission.  Statements
that should generally be considered forward-looking include, but are not limited
to, those that contain the words  "estimate,"  "anticipate,"  "in the opinion of
management,"  "expects," "believes," and similar phrases. Among the factors that
could cause actual results to differ materially from the statements made are the
following:  general  business  conditions  in the  local  markets  served by the
Company's  convenience  stores,  truck stops, and other retail outlets,  and its
wholesale fuel markets;  the weather in the local markets served by the Company;
competitive  factors  such as changes  in the  locations,  merchandise  offered,
pricing, and other aspects of competitors' operations; increases in cost of fuel
and merchandise sold or reductions in the gross profit realized from such sales;
available  product for processing and processing  efficiencies  at the Company's
fuel terminal;  expense pressures relating to operating costs,  including labor,
repair and maintenance, and supplies; unexpected outcome of litigation;  adverse
liquidity  situations;   unanticipated  general  and  administrative   expenses,
including  employee,  taxes,  insurance,  expansion  and  financing  costs;  and
unexpected liabilities.

     Should one or more of these risks or uncertainties  materialize,  or should
any underlying assumptions prove incorrect,  actual results or outcomes may vary
materially from those  described  herein as  anticipated,  believed,  estimated,
expected, or intended.


           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     The Company is subject to market risks related to variable  interest  rates
and commodity  prices.  The interest rate calculated under the Company's line of
credit  facility  is based on the prime  rate of  interest,  which is subject to
change and exposes the Company to the  possibility of increasing  interest rates
on borrowing under the facility. Accordingly, 21% of the Company's notes payable
at the end of the second quarter of 2002 was subject to variable interest rates.
The remainder of the Company's  long-term  debt is fixed rate  financing and not
subject to interest rate risk.

     The Company is also  subject to market  risks  related to  increasing  fuel
prices  and  sometimes  attempts  to reduce  that risk by  purchasing  commodity
futures and forward  contracts.  Such attempts to reduce commodity risk are also
subject to risk  because  the  commodities  under the  financial  contracts  are
normally  not of the same grade or location of fuel as that owned by the Company
in its business.  Open positions under these futures and forward  contracts were
not significant at June 30, 2002.


               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                        EXHIBITS AND REPORTS ON FORM 8-K


Exhibits
--------

Ex. 99.1      Certifications  pursuant to Section 906 of the  Sarbanes-Oxley Act
              of 2002.

Reports on Form 8-K
-------------------

         The Company did not file any reports on Form 8-K for the quarter
covered by this report.



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                  FFP MARKETING COMPANY, INC.
                                  Registrant

Date:  August 14, 2002            By:    /s/ John H. Harvison
                                     ------------------------------
                                     John H. Harvison
                                     Chairman and
                                     Chief Executive Officer

Date:  August 14, 2002            By:    /s/ Craig T. Scott
                                     -------------------------------
                                     Craig T. Scott
                                     Vice President - Finance and
                                     Chief Financial Officer