<PAGE>
                                 FORM 10-Q


                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                ----------------

(MARK ONE)

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

             For the quarterly period ended June 30,1998

                                      OR

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

                 COMMISSION FILE NUMBERS 0-676 AND 0-16626
                           -----------------

                       THE SOUTHLAND CORPORATION
          (Exact name of registrant as specified in its charter)

                      TEXAS                                  75-1085131
       (State or other jurisdiction of                    (I.R.S. Employer
         incorporation or organization)                 Identification No.)

     2711 NORTH HASKELL AVE., DALLAS, TEXAS                   75204-2906
     (Address of principal executive offices)                 (Zip code)

         Registrant's telephone number, including area code, 214/828-7011
                               --------------

     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 

                    APPLICABLE ONLY TO CORPORATE ISSUERS:

     409,922,935 shares of common stock, $.0001 par value (the issuer's only 
class of common stock), were outstanding as of June 30, 1998.




<PAGE>
                          THE SOUTHLAND CORPORATION
                                    INDEX


                                                                        Page
                                                                         No.
                                                                        ----

Part I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

     Condensed Consolidated Balance Sheets -
       June 30, 1998 and December 31, 1997............................    1

     Condensed Consolidated Statements of Earnings -
       Three Months and Six Months Ended June 30, 1998 and 1997.......    2

     Condensed Consolidated Statements of Cash Flows -
       Six Months Ended June 30, 1998 and 1997........................    3

     Notes to Condensed Consolidated Financial Statements ............    4

     Report of Independent Accountants................................    7

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...   16

Part II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS ...........................................   17

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........   18

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.............................   18

SIGNATURES............................................................   20

Exhibit 10(i)(1) - Second Amendment, dated as of April 29, 1998, to
                   Credit Agreement dated as of February 27, 1997, 
                   among The Southland Corporation, the financial
                   institutions party thereto as Senior Lenders, the
                   financial institutions party thereto as Issuing
                   Banks, Citibank, N.A., as Administrative Agent, and
                   The Sakura Bank, Limited, New York Branch, as
                   Co-Agent.* ........................................Tab 1*
                   

Exhibit 10(i)(2) - Secured Yen Loan Agreement for The Southland
                   Corporation relating to royalties from Seven-Eleven
                   (Japan) Company, Ltd. In the amount of Japanese Yen
                   12,500,000,000, dated as of April 21, 1998.*.......Tab 2*

Exhibit (15) - Letter re Unaudited Interim Financial Information......Tab 3

Exhibit (27) - Financial Data Schedule................................   **

*  Submitted with filing; not attached hereto.
** Submitted in electronic format only.



                                    (i)


<PAGE>
<TABLE>
<CAPTION>

                             THE SOUTHLAND CORPORATION AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)

                                             ASSETS

                                                                    JUNE 30,    DECEMBER 31,
                                                                      1998         1997
                                                                  -----------   -----------
                                                                  (Unaudited)

<S>                                                               <C>           <C>
CURRENT ASSETS:
   Cash and cash equivalents                                      $    59,696   $    38,605
   Accounts receivable                                                130,934       126,495
   Inventories                                                        118,667       125,396
   Other current assets                                               156,301        96,145
                                                                  -----------   -----------
     TOTAL CURRENT ASSETS                                             465,598       386,641
PROPERTY AND EQUIPMENT                                              1,523,032     1,416,687
OTHER ASSETS                                                          312,538       286,753
                                                                  -----------   -----------
                                                                  $ 2,301,168   $ 2,090,081
                                                                  ===========   ===========


                          LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
   Trade accounts payable                                         $   221,003   $   196,799
   Accrued expenses and other liabilities                             287,823       275,267
   Commercial paper                                                    47,989        48,744
   Long-term debt due within one year                                 265,073       208,839
                                                                  -----------   -----------
     TOTAL CURRENT LIABILITIES                                        821,888       729,649
DEFERRED CREDITS AND OTHER LIABILITIES                                196,213       187,414
LONG-TERM DEBT                                                      1,586,788     1,594,545
CONVERTIBLE QUARTERLY INCOME DEBT SECURITIES                          380,000       300,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
   Common stock, $.0001 par value                                          41            41
   Additional capital                                                 625,574       625,574
   Accumulated deficit                                             (1,320,455)   (1,352,058)
   Accumulated other comprehensive income                              11,119         4,916
                                                                  ------------  ------------
     TOTAL SHAREHOLDERS' EQUITY (DEFICIT )                           (683,721)     (721,527)
                                                                  ------------  ------------
                                                                  $ 2,301,168   $ 2,090,081
                                                                  ===========   ===========









                     See notes to condensed consolidated financial statements.




                                                 1

</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                               THE SOUTHLAND CORPORATION AND SUBSIDIARIES 
                              CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS 
                              (DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA) 

                                             (UNAUDITED) 
 
                                                       THREE MONTHS                  SIX MONTHS 
                                                      ENDED JUNE 30,               ENDED JUNE 30, 
                                                ---------------------------   --------------------------- 
                                                    1998           1997           1998           1997 
                                                ------------   ------------   ------------   ------------ 
<S>                                             <C>            <C>            <C>            <C> 
REVENUES: 
     Net sales (Including $257,426, $246,359, 
        $486,669 and $469,124 in excise taxes)  $ 1,844,524    $ 1,781,983    $ 3,439,482    $ 3,386,383 
     Other income                                    23,434         22,105         43,877         43,728 
                                                ------------   ------------   ------------   ------------ 
                                                  1,867,958      1,804,088      3,483,359      3,430,111 
COSTS AND EXPENSES: 
     Cost of goods sold                           1,298,806      1,259,650      2,439,345      2,414,283 
     Operating, selling, general and 
         administrative expenses                    505,594        480,130        977,310        918,418 
     Interest expense, net                           22,092         21,815         44,665         45,714 
                                                ------------   ------------   ------------   ------------ 
                                                  1,826,492      1,761,595      3,461,320      3,378,415 
                                                ------------   ------------   ------------   ------------ 
EARNINGS BEFORE INCOME TAXES AND                                                                         
     EXTRAORDINARY GAIN                              41,466         42,493         22,039         51,696 

INCOME TAXES                                         15,629         16,863          8,307         20,544 
                                                ------------   ------------   ------------   ------------ 
EARNINGS BEFORE EXTRAORDINARY GAIN              $    25,837    $    25,630    $    13,732    $    31,152 
                                                                                                          
EXTRAORDINARY GAIN ON DEBT REDEMPTION (net
     of tax effect of $11,425)                         -              -            17,871            -
                                                ------------   ------------   -------------   ------------
NET EARNINGS                                    $    25,837    $    25,630    $    31,603    $    31,152
                                                ============   ============   ============   =============




 
EARNINGS BEFORE EXTRAORDINARY GAIN PER COMMON SHARE: 
     Basic                                              $.06           $.06           $.04           $.08 
     Diluted                                             .06            .06            .03            .07 
EXTRAORDINARY GAIN ON DEBT REDEMPTION PER COMMON SHARE:
     Basic                                              $.00           $.00           $.04           $.00
     Diluted                                             .00            .00            .04            .00
NET EARNINGS PER COMMON SHARE:
     Basic                                              $.06           $.06           $.08           $.08
     Diluted                                             .06            .06            .07            .07
 
 
                        See notes to condensed consolidated financial statements. 
 
                                                        2
</TABLE> 


<Page
<TABLE>
<CAPTION>
                                     THE SOUTHLAND CORPORATION AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (DOLLARS IN THOUSANDS)

                                                    (UNAUDITED)
                                                                                         SIX MONTHS
                                                                                        ENDED JUNE 30,
                                                                                -------------------------------
                                                                                     1998              1997
                                                                                -------------    --------------
<S>                                                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings                                                                $     31,603     $     31,152
    Adjustments to reconcile net earnings to net cash provided
        by operating activities:
        Extraordinary gain on debt redemption                                        (17,871)             -  
        Depreciation and amortization of property and equipment                       85,744           88,648
        Other amortization                                                             9,535            9,513
        Deferred income taxes                                                          5,110           22,025
        Noncash interest expense                                                         454            1,964
        Other noncash expense (income)                                                   591             (299)
        Net loss (gain) on property and equipment                                         89             (433)
        Decrease in accounts and notes receivable                                      2,089           16,319
        Decrease in inventories                                                       17,719            1,305
        Increase in other assets                                                      (9,441)         (11,732)
        Increase (decrease) in trade accounts payable and other liabilities              461          (58,036)
                                                                                -------------    -------------
                  NET CASH PROVIDED BY OPERATING ACTIVITIES                          126,083          100,426
                                                                                -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Payments for purchase of property and equipment                                 (159,855)         (94,518)
    Proceeds from sale of property and equipment                                       5,275           10,728
    Increase in restricted cash                                                      (43,213)             -  
    Acquisition of businesses, net of cash acquired                                  (31,146)             -  
    Other                                                                              2,118            2,220 
                                                                                -------------    -------------
                  NET CASH USED IN INVESTING ACTIVITIES                             (226,821)         (81,570)
                                                                                -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from commercial paper and revolving credit facilities                 3,078,640        2,856,548
    Payments under commercial paper and revolving credit facilities               (3,026,211)      (2,829,800)
    Proceeds from issuance of long-term debt                                          96,503          225,000
    Principal payments under long-term debt agreements                              (102,627)        (259,555)
   Proceeds from issuance of Convertible Quarterly Income Debt Securities            80,000              -   
    Other                                                                             (4,476)            (520)
                                                                                -------------    -------------
                  NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                121,829           (8,327)
                                                                                -------------    -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                             21,091           10,529
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                        38,605           36,494
                                                                                -------------    -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $     59,696     $     47,023
                                                                                =============    =============

RELATED DISCLOSURES FOR CASH FLOW REPORTING:
    Interest paid, excluding SFAS No.15 Interest                                $    (48,291)    $    (48,122)
                                                                                =============    =============
    Net income taxes paid                                                       $     (2,927)    $     (3,042)
                                                                                =============    =============
    Assets obtained by entering into capital leases                             $     16,985     $       8,340
                                                                                =============    =============


                                  See notes to condensed consolidated financial statements.

</TABLE>
                                                                3

<PAGE>

THE SOUTHLAND CORPORATION AND SUBSIDIARIES

           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                   SIX MONTHS ENDED JUNE 30, 1998
              (DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)

                             (UNAUDITED)

1.   BASIS OF PRESENTATION:

     The condensed consolidated balance sheet as of June 30, 1998, and the 
condensed consolidated statements of earnings for the three-month and six-
month periods ended June 30, 1998 and 1997,and the condensed consolidated 
statements of cash flows for the six-month periods ended June 30, 1998 and 
1997, have been prepared by the Company without audit.  In the opinion of 
management, all adjustments (which included only normal, recurring 
adjustments) necessary to present fairly the financial position at June 30, 
1998, and the results of operations and cash flows for all periods 
presented have been made.  The results of operations for the interim 
periods are not necessarily indicative of the operating results for the 
full year.

     The condensed consolidated balance sheet as of December 31, 1997, is 
derived from the audited financial statements but does not include all 
disclosures required by generally accepted accounting principles. The notes 
accompanying the consolidated financial statements in the Company's Annual 
Report on Form 10-K for the year ended December 31, 1997, include 
accounting policies and additional information pertinent to an 
understanding of both the December 31, 1997, balance sheet and the interim 
financial statements.  The information has not changed except as a result 
of normal transactions in the six months ended June 30, 1998, and as 
discussed in the following notes.

2.   COMPREHENSIVE INCOME:

     In January 1998, the Company adopted the provisions of Statement of 
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive 
Income," which is required for fiscal years beginning after December 15, 
1997.  SFAS No. 130 establishes standards for reporting comprehensive 
income and its components in a full set of general-purpose financial 
statements.  The components of accumulated other comprehensive income, net 
of tax, of the Company are as follows:
<TABLE>
<CAPTION>
                                                            June 30,    December 31,
                                                              1998          1997
                                                          -----------   ------------
<S>                                                       <C>           <C>
Unrealized gain on equity securities                      $   16,119    $    9,192
Foreign currency translation adjustments                      (5,000)       (4,276)
                                                          -----------   ------------
Accumulated other comprehensive income                    $   11,119    $    4,916
                                                          ===========   ============
</TABLE>

The components of comprehensive income of the Company for the three-month 
and six-month periods ended June 30, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
                                                          Three Months             Six Months
                                                         Ended June 30,           Ended June 30,
                                                        -----------------       ----------------
                                                          1998      1997         1998     1997
                                                        ------    --------      -------   ------
<S>                                                     <C>       <C>          <C>       <C>
Net earnings                                            $ 25,837  $ 25,630     $ 31,603   $ 31,152
Other comprehensive income (expense), net of tax:
   Unrealized gains on equity securities                     776       915        6,927     (1,572)
   Foreign currency translation adjustments                 (695)      281         (724)      (113)
                                                         --------  --------     --------   --------
         Other comprehensive income (expense)                 81     1,196        6,203     (1,685)
                                                         --------  --------     --------   --------
Comprehensive income                                    $ 25,918  $ 26,826     $ 37,806    $ 29,467
                                                        ========= =========     ========   ========
</TABLE>     
                                        4

<PAGE>

3.   EARNINGS PER SHARE:

     In December 1997, the Company adopted the provisions of SFAS No. 128, 
"Earnings per Share," which requires the following reconciliation of the 
numerators and the denominators of the basic and diluted per-share 
computations for net earnings for the periods presented:
<TABLE>
<CAPTION>
                                                                                Three Months          Six Months
                                                                               Ended June 30,        Ended June 30,
                                                                            --------------------    ---------------
                                                                               1998       1997       1998     1997
                                                                            --------    --------    ------    ------
<S>                                                                         <C>           <C>       <C>       <C>      
BASIC EPS COMPUTATION:
  Earnings (Numerator):
   Earnings before extraordinary gain available to common shareholders     $   25,837   $ 25,630    $ 13,732  $ 31,152
   Earnings on extraordinary gain available to common shareholders                -          -        17,871       -
                                                                           -----------   --------   --------  ---------
   Net earnings available to common shareholders                           $   25,837    $ 25,630   $ 31,603  $ 31,152
                                                                           ==========   =========   ========  =========
 Shares (Denominator):
   Weighted average number of common shares outstanding                       409,923     409,923    409,923    409,923
                                                                           ==========   =========   ========  =========
BASIC EPS:
  Earnings per common share before extraordinary gain                       $    .06     $   .06    $   .04   $   .08
  Earnings per common share on extraordinary gain                                  -          -         .04        -
                                                                            ----------   ---------   -------  --------
  Net earnings per common share                                             $    .06     $   .06    $   .08   $   .08
                                                                            ==========   =========  ========  ========

DILUTED EPS COMPUTATION:
  Earnings (Numerator):
   Earnings before extraordinary gain available to common shareholders     $   25,837    $ 25,630   $ 13,732  $ 31,152
   Add interest on Convertible Quarterly Income Debt Securities,
         net of tax                                                             2,706       2,071      5,053     4,138
                                                                           ----------     --------  --------  ---------
   Earnings before extraordinary gain available to common shareholders
         plus assumed conversions                                              28,543       27,701    18,785    35,290

   Earnings on extraordinary gain available to common shareholders                -           -       17,871       -
                                                                             ---------     --------  --------   -------
   Net earnings available to common shareholders plus assumed
         conversions                                                       $   28,543    $ 27,701   $ 36,656  $ 35,290
                                                                            ==========    ========  ========  =========
  Shares (Denominator):
   Weighted average number of common shares outstanding                       409,923      409,923   409,923   409,923
   Add effects of assumed conversions:
         Conversion of Convertible Quarterly Income Debt Securities           104,620       72,112    94,558    72,112
         Exercise of stock options                                                113          682        56       341
                                                                            ---------    ---------   --------   --------
   Weighted average number of common shares outstanding plus shares
         from assumed conversions                                             514,656     482,717    504,537   482,376
                                                                             =========    ========   ========  ========
DILUTED EPS :
   Earnings per common share before extraordinary gain                     $    .06      $  .06     $   .03   $   .07
   Earnings per common share on extraordinary gain                               -           -          .04        -
                                                                             ---------   ---------   -------   --------
   Net earnings per common share                                           $    .06      $  .06     $   .07   $   .07
                                                                             =========   =========   =======  =========

</TABLE>

                                      5

<PAGE>

4.   ACQUISITIONS:

     On May 4, 1998, the Company purchased 100% of the common stock of 
Christy's Market, Inc., a Massachusetts company that operates 132 
convenience stores in the New England area.  On May 12, 1998, the Company 
purchased the assets of 20 'red D mart' convenience stores in the South 
Bend, Indiana, area from MDK Corporation of Goshen, Indiana.  

     These acquisitions were accounted for under the purchase method of 
accounting and, accordingly, the results of operations of the acquired 
businesses have been included in the accompanying consolidated financial 
statements from their dates of acquisition.  Pro forma information is not 
provided as the impact of the acquisitions does not have a material effect 
on the Company's results of operations, cash flows or financial position.

     The following preliminary information is provided as supplemental cash 
flow disclosure for the acquisitions of businesses as reported in the 
Condensed Consolidated Statements of Cash Flows for the six months ended 
June 30, 1998:

               Fair value of assets acquired              $  67,773
               Fair value of liabilities assumed             35,271
                                                          ---------
               Cash paid                                     32,502
               Less cash acquired                             1,356
                                                          ---------
               Net cash paid for acquisitions             $  31,146
                                                          =========

5.   FINANCIAL INSTRUMENTS:

     On April 30, 1998, funding occurred on a yen-denominated loan for 12.5 
billion yen or $96.5 million of proceeds.  The loan has an interest rate of 
2.325% and will be repaid from the Seven-Eleven Japan area license royalty 
income beginning in 2001, after the existing yen loan has been retired.  
Both principal and interest of the loan are nonrecourse to the Company.  
The proceeds included exercising a put option at the strike price of 129.53 
yen per dollar.  The purchase of this put option was financed by the 
Company by selling a call option at a strike price of 125.08 yen per dollar 
with the same yen amount and maturity as the put option, thereby committing 
the Company to exchange at a rate of 125.08.  The call option was marked to 
market and, as a result, income of $1,510 was recognized during the first 
quarter of 1998. The call option expired unexercised on April 28, 1998.  
Proceeds of the loan will be used for general corporate purposes.

     On June 26, 1998, the Company entered into an interest rate swap 
agreement that fixes the interest rate on $250 million notional principal 
amount of floating rate debt until June 26, 2003.  A major financial 
institution, as counterparty to the agreement, will pay the Company a 
floating interest rate based on three-month LIBOR during the term of the 
agreement in exchange for the Company paying a fixed interest rate.  
Interest payments by both parties will be made quarterly commencing 
September 28, 1998.  The Company is at risk of loss from this swap 
agreement in the event of nonperformance by the counterparty.  

     The Company is currently reviewing SFAS No. 133, "Accounting for 
Derivative and Similar Financial Instruments and for Hedging Activities."  
The statement establishes accounting and reporting standards for derivative 
instruments, including certain derivative instruments embedded in other 
contracts, and for hedging activities.  SFAS No. 133 becomes effective for 
all fiscal quarters of fiscal years beginning after June 15, 1999, and 
earlier application is permitted as of the beginning of any fiscal quarter 
subsequent to June 15, 1998.  The Company has not yet determined when it 
will adopt the provisions of this statement.  The impact of the adoption of 
SFAS No. 133 is not reasonably estimable at this time due to the Company's 
continuing investigation of its financial instruments and the applicability 
of SFAS No. 133 to them.

                                     6

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
    The Southland Corporation

We have reviewed the accompanying condensed consolidated balance sheet of 
The Southland Corporation and Subsidiaries as of June 30, 1998, and the 
related condensed consolidated statements of earnings for the three-month 
and six-month periods ended June 30, 1998 and 1997, and the condensed 
consolidated statements of cash flows for the six-month periods ended June 
30, 1998 and 1997.  These financial statements are the responsibility of 
the company's management.

We conducted our review in accordance with standards established by the 
American Institute of Certified Public Accountants.  A review of interim 
financial information consists principally of applying analytical 
procedures to financial data and making inquiries of persons responsible 
for financial and accounting matters.  It is substantially less in scope 
than an audit conducted in accordance with generally accepted auditing 
standards, the objective of which is the expression of an opinion regarding 
the financial statements taken as a whole.  Accordingly, we do not express 
such an opinion.

Based on our review, we are not aware of any material modifications that 
should be made to the accompanying financial statements of The Southland 
Corporation and Subsidiaries for them to be in conformity with generally 
accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing 
standards, the consolidated balance sheet as of December 31, 1997, and the 
related consolidated statements of earnings, shareholders' equity 
(deficit), and cash flows for the year then ended (not presented herein); 
and in our report dated February 5, 1998 (except as to items 2 and 3 in 
Note 17, for which the date is March 12, 1998), we expressed an unqualified 
opinion on those consolidated financial statements.  In our opinion, the 
information set forth in the accompanying condensed consolidated balance 
sheet as of December 31, 1997, is fairly stated, in all material respects, 
in relation to the consolidated balance sheet from which it has been 
derived.



PRICEWATERHOUSECOOPERS LLP


Dallas, Texas
July 30, 1998


                                      7

<PAGE>


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

     Some of the matters discussed in this quarterly report contain 
forward-looking statements regarding the Company's future business which 
are subject to certain risks and uncertainties, including competitive 
pressures, adverse economic conditions and government regulations. These 
issues, and other factors, which may be identified from time to time in the 
Company's reports filed with the SEC, could cause actual results to differ 
materially from those indicated in the forward-looking statements.


RESULTS OF OPERATIONS

SUMMARY OF RESULTS OF OPERATIONS

     The Company's reported net earnings for the second quarter and first 
six months were $25.8 million and $31.6 million, respectively, compared to 
net earnings of $25.6 million and $31.2 million for the same periods in 
1997.  The increase in second quarter earnings resulted from growth in 
merchandise gross profit, partially offset by higher store labor and 
incremental costs associated with the further implementation of several 
strategic initiatives.  The year-to-date results included a $17.9 million 
(after tax) extraordinary gain from the redemption of the Company's 12% 
Senior Subordinated Debentures ("12% Debentures"), which was substantially 
offset by the cumulative costs associated with a lease termination, 
severance and a write-off of slow-moving inventory.


MANAGEMENT STRATEGIES

     Since 1992, the Company has been committed to several key strategies 
that it believes, over the long term, will provide further differentiation 
from competitors and allow 7-Eleven to maintain its position as the premier 
convenience retailer.  These strategies include:

*     Upgrading the Company's store base through developing or acquiring 
new stores, continuing the upgrading of existing stores and closing 
underachieving stores. In 1998, new store openings are expected to 
significantly outpace closings, with the expansion occurring in existing 
markets to support the Company's fresh food and combined-distribution 
initiatives.
*     A customer-driven approach to merchandising, which focuses on 
providing the customer an expanded selection of quality products at a good 
value.
*     An everyday-fair-pricing strategy which provides consistent, 
reasonable prices on all items.
*     Daily delivery of time-sensitive or perishable items, along with 
high-quality, ready-to-eat foods, through the use of combined distribution 
centers, fresh-food commissaries and bakery facilities.  These facilities, 
which are generally third party operated, are designed to provide fresher 
products, improve in-stock conditions and lower product costs.
*     The development of a retail information system which initially has 
automated accounting and other store-level tasks. The current phase 
involves the installation of point-of-sale registers with scanning and 
ordering capabilities.

                                        8


<PAGE>

(EXCEPT WHERE NOTED, ALL PER-STORE NUMBERS REFER TO AN AVERAGE OF ALL 
STORES RATHER THAN ONLY STORES OPEN MORE THAN ONE YEAR.)

SALES

     The Company recorded net sales of $1.84 billion for the second quarter 
and $3.44 billion in the first six months of 1998, compared to net sales of 
$1.78 billion and $3.39 billion during the same periods last year.  While 
the Company's acquisition of 152 stores added to the overall sales 
increase, the largest contributor was growth in per-store merchandise sales 
(see Capital Expenditures - Acquisitions).  Significantly lower retail 
gasoline prices caused a decline in gasoline sales.  Merchandise sales 
growth per store was as follows:

                                               PERIODS ENDING JUNE 30, 1998
                                               ----------------------------
INCREASE (DECREASE) FROM PRIOR YEAR           THREE MONTHS       SIX MONTHS
-----------------------------------           ------------       ----------
U.S. same-store sales                              5.1%             4.0%  
U.S. same-store real growth; excluding inflation   3.1%             2.4% 
7-Eleven inflation                                 2.0%             1.6%


The same-store merchandise sales increase of 5.1% was the largest such 
increase this decade and continues a trend of strong same-store growth over 
the last four quarters.  Regionally, per-store merchandise sales were 
favorable in all parts of North America, with stores in Florida, Texas and 
Colorado leading the way recording second quarter double-digit growth.  

     Highlights of changes in category results for the first six months of 
1998 compared to 1997 are as follows:  CAFE COOLER, which was introduced 
this spring, provided more than 1% of the second quarter's per-store sales 
growth; COFFEE/SLURPEE SALES are up substantially, partially due to the 
introduction of new products/flavors; CIGARETTE SALES have increased, but 
primarily due to  price increases in response to manufacturer-led cost 
increases, which have had an unfavorable impact on margin and gross profit.
 
     Gasoline sales dollars per store declined 9.1% for the second quarter 
and 10.3% for the first six months, compared to last year.  The decline in 
gasoline sales dollars resulted from lower crude oil prices, which was the 
primary factor causing the average retail price of gasoline to drop 16 
cents per gallon during the first six months of 1998, compared to the same 
period in 1997.  Although sales dollars decreased, average per-store gallon 
sales increased 3.4% during the second quarter.  The gallonage increase was 
primarily due to newly developed stores, which have considerably higher 
volumes. 

OTHER INCOME
     
     Other Income of $43.9 million for year-to-date June and $23.4 million 
for the second quarter was $0.1 million and $1.3 million favorable to the 
same periods in 1997, respectively.  Approximately 80% of other income is 
derived from royalty income from licensed operations, some of which could 
be unfavorably impacted by fluctuating exchange rates.  Nearly 70% of the 
royalties are from area license agreements with Seven-Eleven Japan Co., Ltd 
("SEJ"). Though the dollar equivalent of the SEJ royalty income will 
fluctuate with exchange rate movements, the Company has effectively hedged 
this exposure by using the royalty income to make principal and interest 
payments on its yen-denominated loans.  

                                     9




<PAGE>

<TABLE>
<CAPTION>

GROSS PROFITS
                                                          PERIODS ENDING JUNE 30, 1998
                                                          ----------------------------
                                                        THREE MONTHS          SIX MONTHS
                                                        ------------          ----------
                                                    MERCHANDISE GASOLINE MERCHANDISE GASOLINE
                                                    ----------- --------  ----------- --------
<S>                                                 <C>         <C>       <C>         <C>
Gross Profit - dollars in millions                  $  502.0    $  43.7   $  912.9    $  87.2
INCREASE/(DECREASE) FROM PRIOR YEAR - ALL STORES    
------------------------------------------------
Average per-store gross profit dollar change            4.1%      (9.6)%     2.2%      (0.6)%
Margin point change (gasoline in cents per gallon)     (.32)      (1.66)     (.64)      (.42)
Average per-store sales (gasoline in gallons)           5.1%       3.4%      4.1%       2.9%

</TABLE>

     Total merchandise gross profit dollars were $26.1 million higher in 
both the second quarter and the six months, when compared to the same 
periods in 1997.  Higher average per-store merchandise sales were partially 
offset by a lower merchandise margin.  Merchandise margin was impacted by 
introductory costs associated with new product offerings, combined with the 
further roll-out of our fresh food initiatives into four new markets.  In 
addition, merchandise margin has been narrowed somewhat as a result of cost 
increases and continuing refinement of the everyday-fair-pricing policy to 
better reflect market conditions.  As a result of the items discussed 
above, merchandise margin is projected to be slightly lower in 1998, when 
compared to 1997.

     During the first six months of 1998, gasoline gross profits increased 
$1.9 million over last year, however during the second quarter they were 
lower by $2.7 million, when compared to the same period in 1997.  Favorable 
per-store gallon sales and more gasoline outlets created the six month 
improvement in gasoline gross profits, as margin was down .42 cents per 
gallon.  The second quarter decrease resulted from gasoline margin being 
down 1.66 cents per gallon in part due to competitive retail conditions.  
Downward pressure on gasoline margin began to ease towards the end of the 
second quarter, providing some optimism for improvement.

OPERATING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("OSG&A") 

                                        PERIODS ENDING JUNE 30, 1998
                                        ----------------------------
                                  THREE MONTHS                SIX MONTHS
                                  ------------                ----------
                                1998        1997            1998      1997
                                ----        ----            ----      ----
Total OSG&A expenses           $505.6      $480.1          $977.3    $918.4
Ratio of OSG&A to sales         27.4%       26.9%           28.4%     27.1%


     Operating, selling, general and administrative expenses increased 
$25.5 million during the second quarter of 1998, compared to the same 
period in 1997 and $58.9 million for the first six months of 1998, compared 
to 1997.  The ratio of OSG&A expenses increased 1.3 percentage points 
during the first six months of 1998, over the same period in 1997.  First 
quarter expenses resulting from the cumulative effects of a computer 
equipment lease termination, combined with severance costs, unfavorably 
impacted 1998 OSG&A by nearly $19 million.  The retail price of gasoline, 
which dropped nearly 13% in 1998 compared to 1997's first six months, also 
impacted the ratio of OSG&A expenses to sales.  Excluding the items 
discussed above, the ratio of OSG&A to sales was slightly favorable, when 
comparing the first six months of 1998 and 1997.  

     In addition to the items discussed above, a portion of the increase in 
OSG&A expenses resulted from costs associated with the Company's 
implementation of its retail information system and other strategic 
initiatives, as well as from higher store labor costs, all of which were 
partially offset by lower insurance costs.  Incremental costs of 
approximately $5 million associated with the Company's retail information 


                                    10


<PAGE>


system were expensed in the first six months of 1998.  While the ratio of 
OSG&A expenses to sales will vary on a quarterly basis, management believes 
this ratio will not improve dramatically during the roll-out phase of the 
retail information system.

     The Company continues to review the functions necessary to enable its 
stores to respond faster and more cost efficiently to rapidly changing 
customer needs and preferences. In conjunction with this review, management 
continues to realign and reduce personnel in order to eliminate non-
essential costs, while devoting resources to the implementation of its 
retail information system and other strategic initiatives (see Management 
Strategies).  In the first quarter of 1998, an accrual of $7.1 million was 
made representing severance benefits for more than 150 management and 
administrative employees to be terminated. The benefit from these 
reductions on an annualized basis approximates the first quarter charge, 
with the majority of the benefit carrying forward to future years.

     The Company is a defendant in two legal actions, which are referred to 
as the 7-Eleven OFFF and Valente cases, filed by franchisees in 1993 and 
1996, respectively, asserting various claims against the Company.  A 
nationwide settlement was negotiated and, in connection with the 
settlement, these two cases have been combined on behalf of a class of all 
persons who operated 7-Eleven convenience stores in the United States at 
any time between January 1, 1987 and July 31, 1997, under franchise 
agreements with the Company.  Class members have overwhelmingly approved 
the settlement, and the court presiding over the settlement process gave 
its final approval of the settlement on April 24, 1998.  The settlement 
provides that former franchisees will share in a settlement fund and that 
certain changes will be made to the franchise agreements with current 
franchisees.

     Three separate notices of appeal of the order approving the settlement 
have been filed.  Therefore, the settlement agreement will not become 
effective until the appeals are resolved, which could be more than two 
years.  However, the settlement agreement provides that while the appeals 
are pending the Company will pay certain maintenance and supply expenses 
relating to the cash registers and retail information system equipment of 
current franchisees that are members of the settlement class.  If the 
settlement is overturned on appeal, the company has the right to require 
franchisees to repay the amounts that the company paid during the appeal 
for these expenses.   The Company's payment of these expenses will have no 
material impact on 1998 earnings, and the Company's accruals are sufficient 
to cover the total settlement costs, including the payment due to former 
franchisees when the settlement becomes effective.

INTEREST EXPENSE, NET

     Net interest expense increased $0.3 million during the second quarter 
of 1998, compared to the same period in 1997, but decreased $1.0 million 
from 1997 during the six months.  The decrease from the first six months of 
1997 was primarily due to the write-off of deferred costs associated with 
the Company's refinancing of its credit agreement in February 1997.
 
     Approximately 38% of the Company's debt contains floating rates that 
will be unfavorably impacted by rising interest rates.  The weighted-
average interest rate for such debt was 5.8% for both the second quarter 
and first six months of 1998 as well as the first six months of 1997.  The 
Company expects net interest expense in 1998 to remain relatively flat, 
based upon anticipated levels of debt and interest rate projections.  
Factors increasing 1998 interest expense include higher 
borrowings/obligations to finance new store development and the redemption 
of the Company's 12% Debentures for which no interest expense was recorded 

                                  11


<PAGE>

in the Consolidated Statements of Earnings in accordance with SFAS No. 15, 
"Accounting by Debtors and Creditors for Troubled Debt Restructuring" (see 
Liquidity and Capital Resources).  Items that will decrease 1998 interest 
expense include a lower interest rate on the existing yen-denominated loan 
(see Liquidity and Capital Resources) and the new 2.325% yen-denominated 
loan (which will reduce short-term borrowings).  The interest rate on the 
existing yen-denominated loan was reset in March of 1998, resulting in a 
rate reduction of 315 basis points.

     In June, 1998, the Company entered into an interest rate swap 
agreement that fixes the interest rate on $250 million of existing floating 
rate notional principal, through June, 2003.  A major financial 
institution, as counterparty to the agreement, will pay the Company a 
floating interest rate based on three-month LIBOR during the term of the 
agreement in exchange for the Company paying a fixed interest rate.  
Interest payments by both parties will be made quarterly commencing 
September 28, 1998.

     In accordance with SFAS No. 15, no interest expense is recognized on 
the Company's public debt securities. These securities were recorded at an 
amount equal to the future undiscounted cash payments, both principal and 
interest, and accordingly, the cash interest payments are charged against 
the recorded amount of such securities and are not treated as interest 
expense.

EXTRAORDINARY GAIN

     In March 1998, redemption of the Company's 12% Debentures resulted in 
a $17.9 million after-tax gain from the retirement of future undiscounted 
interest payments as recorded under SFAS No. 15.  The cash outlay to the 
Company was $22.5 million, which was financed through the issuance of $80 
million of 4-1/2% Convertible Quarterly Income Debt Securities ("1998 
Convertible Debt") due 2013, to Ito-Yokado Co., Ltd., and Seven-Eleven 
Japan Co., Ltd., the joint owners of IYG Holding Company, which is the 
Company's majority shareholder.


LIQUIDITY AND CAPITAL RESOURCES

     The majority of the Company's working capital is provided from three 
sources: i) cash flows generated from its operating activities; ii) a $400 
million commercial paper facility (guaranteed by Ito-Yokado Co., Ltd.); and 
iii) short-term seasonal borrowings of up to $400 million (reduced by 
outstanding letters of credit) under its revolving credit facility.  The 
Company believes that operating activities, coupled with available short-
term working capital facilities, will provide sufficient liquidity to fund 
current operating and capital expenditure programs, as well as to service 
debt requirements.

     In April 1998, the Company entered into a financing agreement for 12.5 
billion yen, or $96.5 million, monetizing its future yen royalty stream.  
The financing, which bears interest at 2.325%, is secured by a pledge 
(secondary to the existing yen loan) of the future royalty payments from 
Seven-Eleven Japan associated with the Company's Japanese 7-Eleven 
trademarks.  Payment of principal and interest on the debt is non recourse 
to the Company and will commence when the existing yen denominated loan is 
paid in full, which is currently estimated to be in 2001.  It is 
anticipated that this loan will be fully repaid in 2006.


     In February 1998, the Company issued $80 million of 1998 Convertible 
Debt, which is subordinated to all existing debt except the 1995 
Convertible Quarterly Income Debt Securities due 2010, which have the same 
priority ranking. The debt has a 15-year life, no amortization and an

                           12


<PAGE>

interest rate of 4.5%.  The instrument gives the Company the right to defer 
interest payments thereon for up to 20 consecutive quarters.  The debt 
mandatorily converts into 32,508,432 shares of the Company's common stock 
if the Company's stock achieves certain levels after the third anniversary 
of issuance.  A portion of the proceeds from the 1998 Convertible Debt was 
used to redeem the Company's 12% Debentures at par.
 
     The credit agreement contains certain financial and operating 
covenants requiring, among other things, the maintenance of certain 
financial ratios, including interest and rent coverage, fixed-charge 
coverage and senior indebtedness to net earnings before extraordinary items 
and interest, taxes, depreciation and amortization ("EBITDA").  The 
covenant levels established by the credit agreement generally require 
continuing improvement in the Company's financial condition.  In May 1998, 
the financial covenant levels required by these instruments were amended 
prospectively in order to allow the Company flexibility to continue its 
store growth strategy.  In addition, a maximum amount of annual capital 
expenditures was established, which does permit the levels of capital 
spending within the Company's strategic plans.      

     For the period ended June 30, 1998, the Company was in compliance with 
all of the covenants required under the credit agreement, including 
compliance with the principal financial and operating covenants under the 
credit agreement (calculated over the latest 12-month period) as follows:.

                                                      REQUIREMENTS:
                                                   --------------------
   COVENANTS                        ACTUALS        MINIMUM      MAXIMUM
   ---------                        -------        -------      -------
   Interest and rent coverage *   2.08 to 1.0    1.80 to 1.0
   Fixed charge coverage          1.93 to 1.0    1.50 to 1.0
   Senior indebtedness to EBITDA  3.56 to 1.0                  4.10 to 1.0
   Capital expenditure limit 
         (tested annually)                                     $425 million

*   INCLUDES EFFECTS OF THE SFAS NO. 15 INTEREST PAYMENTS
       NOT RECORDED IN INTEREST EXPENSE.

     During the first six months of 1998, the Company repaid $102.6 million 
of debt of which $22.5 million related to the redemption of the Company's 
12% Debentures and $10.9 million was for debt assumed in the Christy's 
acquisition (see Capital Expenditures - Acquisitions).  The remaining 
principal reduction of $69.2 million included $28.1 million for quarterly 
installments due on the Term Loan, $18.8 million for principal payments on 
the Company's yen-denominated loan (secured by the royalty income stream 
from SEJ) and $9.9 million for SFAS No. 15 interest.  Outstanding balances 
at June 30, 1998, for commercial paper, Term Loan and Revolver, were $398.0 
million, $196.9 million and $119.5 million, respectively.  As of June 30, 
1998, outstanding letters of credit issued pursuant to the credit agreement 
totaled $75.0 million.

CASH FROM OPERATING ACTIVITIES

     Net cash provided by operating activities was $126.1 million for the 
six months of 1998, an increase of $25.7 million from the same period of 
1997 (see Results of Operations section).

CAPITAL EXPENDITURES

     In the first six months, net cash used in investing activities 
consisted primarily of payments of $159.9 million for property and 
equipment and $31.1 million for acquisitions (see Capital Expenditures - 
Acquisitions).  The majority of the property and equipment capital was used


                               13

<PAGE>

for new store development, continued implementation of the Company's retail 
information system, remodeling stores, new equipment to support 
merchandising initiatives, upgrading retail gasoline facilities, replacing 
equipment and complying with environmental regulations.

     The Company expects 1998 capital expenditures, excluding lease 
commitments, to exceed $350 million. Capital expenditures are being used to 
develop or acquire new stores, upgrade store facilities, further implement 
a retail information system, replace equipment, upgrade gasoline facilities 
and comply with environmental regulations.  The amount of expenditures 
during the year will be materially impacted by the proportion of new store 
development funded through working capital versus leases and the speed at 
which new sites/acquisitions can be located, negotiated, permitted and 
constructed.

CAPITAL EXPENDITURES - ACQUISITIONS

     In May 1998, the Company purchased all of the capital stock of 
Christy's Market, Inc., of Brockton, Mass, thereby acquiring 132 Christy's 
Market convenience stores, located in the New England area. Also in May 
1998, the Company purchased the assets of 20 'red D mart' convenience 
stores in the South Bend, Indiana, area from MDK Corporation of Goshen, 
Indiana.

CAPITAL EXPENDITURES - GASOLINE EQUIPMENT

     The Company incurs ongoing costs to comply with federal, state and 
local environmental laws and regulations primarily relating to underground 
storage tank ("UST") systems.  The Company anticipates it will spend 
approximately $10 million in 1998 on capital improvements required to 
comply with environmental regulations relating to USTs, as well as above-
ground vapor recovery equipment at store locations, and approximately an 
additional $25 million on such capital improvements from 1999 through 2001.

ENVIRONMENTAL

     In December 1988, the Company closed its chemical manufacturing 
facility in New Jersey.  As a result, the Company is required to conduct 
environmental remediation at the facility and has submitted a clean-up plan 
to the New Jersey Department of Environmental Protection (the "State"), 
which provides for active remediation of the site for approximately a 
three-to-five-year period, as well as continued groundwater monitoring and 
treatment for a projected 15-year planning period.  The projected 15-year 
clean-up period represents a reduction from the previously reported 20-year 
period and is a result of revised estimates as determined by an independent 
environmental management company in the first quarter of 1997. These 
revised estimates, which generally resulted from the conditional approval 
of the Company's plan, reduced both the estimated time and the estimated 
costs to complete the project.  While conditional approval was received on 
its clean-up plan, the Company must supply additional information to the 
State before the plan can be finalized. The Company has recorded 
undiscounted liabilities representing its best estimates of the clean-up 
costs of $9.5 million at June 30, 1998.  In 1991, the Company and the 
former owner of the facility executed a final settlement pursuant to which 
the former owner agreed to pay a substantial portion of the clean-up costs.  
Based on the terms of the settlement agreement and the financial resources 
of the former owner, the Company has a receivable recorded of $5.6 million 
at June 30, 1998.

     Additionally, the Company accrues for the anticipated future costs and 
the related probable state reimbursement amounts for remediation activities


                                   14


<PAGE>

at its existing and previously operated gasoline sites where releases of 
regulated substances have been detected. At June 30, 1998, the Company's 
estimated undiscounted liability for these sites was $34.6 million.  This 
estimate is based on the Company's prior experience with gasoline sites and 
its consideration of such factors as the age of the tanks, location of tank 
sites and experience with contractors who perform environmental assessment 
and remediation work.  The Company anticipates that substantially all of 
the future remediation costs for detected releases at these sites as of 
June 30, 1998 will be incurred within the next five years.

     Under state reimbursement programs, the Company is eligible to receive 
reimbursement for a portion of future remediation costs, as well as a 
portion of remediation costs previously paid.  Accordingly, at June 30, 
1998, the Company has recorded a net receivable of $40.9 million for the 
estimated probable state reimbursements.  In assessing the probability of 
state reimbursements, the Company takes into consideration each state's 
fund balance, revenue sources, existing claim backlog, status of clean-up 
activity and claim ranking systems.  As a result of these assessments, the 
recorded receivable amount is net of an allowance of $8.6 million.  While 
there is no assurance of the timing of the receipt of state reimbursement 
funds, based on its experience, the Company expects to receive the majority 
of state reimbursement funds, except from California, within one to three 
years after payment of eligible remediation expenses, assuming that the 
state administrative procedures for processing such reimbursements have 
been fully developed.  The Company estimates that it may take one to seven 
years to receive reimbursement funds from California.  Therefore, the 
portion of the recorded receivable amounts that relate to sites where 
remediation activities have been conducted have been discounted at 5.5% to 
reflect their present value. Thus, the recorded receivable amount is also 
net of a discount of $5.9 million. 

     The estimated future assessment and remediation expenditures and 
related state reimbursement amounts could change within the near future as 
governmental requirements and state reimbursement programs continue to be 
implemented or revised.

ENVIRONMENTAL - ACQUISITIONS

     Both the 'red D mart' and Christy's Market acquisitions include retail 
gasoline outlets that are subject to certain environmental regulations.  
Under the terms of the acquisition agreements, the sellers are responsible 
for ensuring compliance with all applicable environmental regulations 
existing as of the closing date.  In addition, the acquisition agreements 
provide that the sellers will remain responsible for the expense of any 
future environmental cleanup resulting from existing conditions at the 
sites, which is required under applicable legal requirements  (see Capital 
Expenditures - Acquisitions).

YEAR 2000

     The year 2000 issue is the result of computer programs being written 
using two digits rather than four to define the applicable year. Some of 
the Company's older computer programs that have date-sensitive coding may 
recognize a date using "00" as the year 1900 rather than the year 2000. 
This could result in a system failure or miscalculations causing 
disruptions of operations.

     The Company has replaced, over the last couple of years, or has plans 
to replace significant portions of its existing systems with third-party-
provided software, which properly interpret dates beyond December 31, 1999.  
In addition, the Company has contracted resources to modify the remainder 
of its existing software to make it year 2000 compliant. 


                                 15

<PAGE>

Based on a recent assessment, the Company believes all system modifications 
and related testing should be completed by the middle of 1999.

     The Company has initiated formal communications with its significant 
suppliers to determine the extent to which the Company is vulnerable to 
those third parties' failure to remediate their own year 2000 issue.  At 
this time, based on presently available information, the Company does not 
foresee any material effects related to outside company compliance.

     YEAR 2000 DISCLAIMER:  The Company does not believe the costs related 
to the year 2000 compliance project will be material to its financial 
position or results of operations. However, the costs of the project and 
the date on which the Company plans to complete the year 2000 modifications 
are based on management's best estimates, which were derived utilizing 
numerous assumptions of future events including the continued availability 
of certain resources, third party modification plans and other factors.  As 
a result, there can be no assurance that these forward looking estimates 
will be achieved and the actual costs and vendor compliance could differ 
materially from those plans, resulting in a material financial risk.









ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
       Not Required









                                      16


<PAGE>

PART II.

                           OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.


7-ELEVEN OWNERS FOR FAIR FRANCHISING, ET AL. V. THE SOUTHLAND CORPORATION, 
ET AL.

     As previously reported, the Company is a defendant in two legal 
actions, which are referred to as the 7-Eleven OFFF and Valente cases, 
filed by franchisees in 1993 and 1996, respectively, asserting various 
claims against the Company.  A nationwide settlement was negotiated and, in 
connection with the settlement, these two cases have been combined on 
behalf of a class of all persons who operated 7-Eleven convenience stores 
in the United States at any time between January 1, 1987 and July 31, 1997, 
under franchise agreements with the Company.  Class members have 
overwhelmingly approved the settlement, and the court presiding over the 
settlement process gave its final approval of the settlement on April 24, 
1998.  The settlement provides that former franchisees will share in a 
settlement fund and that certain changes will be made to the franchise 
agreements with current franchisees.

     Three separate notices of appeal of the order approving the settlement 
have been filed.  Therefore, the settlement agreement will not become 
effective until the appeals are resolved, which could be more than two 
years.  However, the settlement agreement provides that while the appeals 
are pending the company will pay certain maintenance and supply expenses 
relating to the cash registers and retail information system equipment of 
current franchisees who are members of the settlement class.  If the 
settlement is overturned on appeal, the Company has the right to require 
franchisees to repay the amounts that the Company paid during the appeal 
for these expenses.  The Company's payment of these expenses will have no 
material impact on 1998 earnings, and the Company's accruals are sufficient 
to cover the total settlement costs, including the payment due to former 
franchisees when the settlement becomes effective.

EMIL V. SPARANO, ET AL. V. THE SOUTHLAND CORPORATION, ET AL.

     As previously reported, a lawsuit entitled EMIL V. SPARANO, ET AL. V. 
THE SOUTHLAND CORPORATION, ET AL., was filed against the Company in the 
United States District Court for the Northern District of Illinois, in 
March, 1994.  Of the eleven original causes of action, only one claim was 
certified to proceed as a class action.  The class has now been defined to 
include those persons who owned 7-ELEVEN franchises at any time from 
December 1, 1987 to March 4, 1991.  Notices have been sent to all class 
members, and pretrial discovery will continue until the discovery cut-off 
date of October 15, 1998.

     The Company has aggressively attacked the merits of this suit from its 
inception and has successfully disposed of ten of the original eleven 
claims prior to a trial.  The Company believes it has meritorious defenses 
to the one remaining claim and will continue its defense vigorously.  At 
this time, however, the litigation is still at an early stage and the 
ultimate outcome cannot be predicted.

     There are no other reportable suits or proceedings pending or, to the 
knowledge of the Company, threatened against or affecting the Company, 
other than as previously reported.

                                  17

<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.


     On April 22, 1998, the Company held its annual meeting of 
shareholders.  Each of the thirteen nominated directors were elected 
without contest.  In addition, the shareholders  ratified the approval of 
Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers LLP) to be the 
Company's independent auditors for 1998.

     (a)   The votes for and the votes withheld for each of the nominees 
for director were as follows:

        NOMINEE                     FOR               WITHHELD
     
        Masatoshi Ito               339,275,586       853,119
        Toshifumi Suzuki            339,274,895       853,810
        Clark J. Matthews, II       339,241,334       887,371
        Yoshitami Arai              339,281,570       847,135
        Masaaki Asakura             339,277,723       850,982
        Timothy N. Ashida           339,282,115       846,590
        Jay W. Chai                 339,197,938       930,767
        Gary J. Fernandes           339,204,642       924,063
        Masaaki Kamata              339,281,102       847,603
        James W. Keyes              339,279,446       849,259
        Kazuo Otsuka                339,277,115       851,590
        Asher O. Pacholder          339,275,031       853,674
        Nobutake Sato               339,277,015       851,690

     (b)   The votes for, against, abstaining and broker non-votes in 
connection with the ratification of the appointment of Coopers & Lybrand 
L.L.P. (now PricewaterhouseCoopers LLP) to be the independent auditors of 
the Company for 1998 were as follows:

     339,974,946 shares were voted for; 82,313 shares were voted against; 
71,446 shares abstained from voting; and no broker non-votes were received.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.


     (a)   Exhibits:

Exhibit 10(i)(1) -  Second Amendment, dated as of April 29, 1998, to Credit 
Agreement dated as of February 27, 1997, among The 
Southland Corporation, the financial institutions party 
thereto as Senior Lenders, the financial institutions 
party thereto as Issuing Banks, Citibank, N.A.,  as 
Administrative Agent, and The Sakura Bank, Limited, New 
York Branch, as
                    Co-Agent.*....................................   Tab 1*

Exhibit 10(i)(2) -  Secured Yen Loan Agreement for The Southland 
Corporation relating to royalties from Seven-Eleven 
(Japan) Company, Ltd. in the amount of Japanese Yen 
12,500,000,000, dated as of April 21, 1998.*     Tab 2*

Exhibit (15) -   Letter re Unaudited Interim Financial Information   Tab 3


                                       18

<PAGE>


Exhibit (27) -   Financial Data Schedule
                           Submitted in electronic format only.

* Submitted with filing; not attached to conformed copies.

     (b)   8-K Reports:

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

                                    19

<PAGE>

                                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.

                                              THE SOUTHLAND CORPORATION
                                                   (Registrant)



Date:   8/5/98                        /s/  Clark J. Matthews II
     -------------                    -------------------------
                                     (Officer)
                                      Clark J. Matthews, II
                                      President and Chief Executive Officer


Date:   8/5/98                       /s/  Donald E. Thomas
     ------------                    --------------------------
                                    (Principal Accounting Officer)
                                     Donald E. Thomas
                                     Vice President and Controller










                                      20