<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 March 31, 1997

                                      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 ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the registrant has filed all documents 
and reports required to be filed by Sections 12, 13 or 15(d) of the 
Securities Exchange Act of 1934 subsequent to the distribution of 
securities under a plan confirmed by a court.  Yes   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 March 31, 1997.



<PAGE>
                          THE SOUTHLAND CORPORATION
                                    INDEX


                                                                        Page
                                                                         No.
                                                                        ----

Part I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

     Condensed Consolidated Balance Sheets -
       March 31, 1997 and December 31, 1996...........................     1

     Condensed Consolidated Statements of Earnings -
       Three Months Ended March 31, 1997 and 1996.....................     2

     Condensed Consolidated Statements of Cash Flows -
       Three Months Ended March 31, 1997 and 1996.....................     3

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

     Report of Independent Accountants................................     5


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS...................................     6

Part II.  OTHER INFORMATION

     ITEM 1.  LEGAL PROCEEDINGS ......................................    11

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K........................    11

SIGNATURES............................................................    12

Exhibit (11) - Statement re Computation of Per-Share Earnings......... Tab 1

Exhibit (15) - Letter re Unaudited Interim Financial Information...... Tab 2

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

*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 

                                                           MARCH 31,      DECEMBER 31, 
                                                             1997             1996
                                                        -------------    ------------- 
                                                        (UNAUDITED) 
<S>                                                     <C>              <C> 
CURRENT ASSETS: 
   Cash and cash equivalents    .  .  .  .  .  .  .  .  $     50,571     $     36,494 
   Accounts and notes receivable.  .  .  .  .  .  .  .       102,987          109,413 
   Inventories.  .  .  .  .  .  .  .  .  .  .  .  .  .       101,684          109,050 
   Other current assets.  .  .  .  .  .  .  .  .  .  .       100,120           95,943
                                                        -------------    ------------- 
       TOTAL CURRENT ASSETS  .  .  .  .  .  .  .  .  .       355,362          350,900 
PROPERTY AND EQUIPMENT .  .  .  .  .  .  .  .  .  .  .     1,344,414        1,349,839 
OTHER ASSETS  .  .  .  .  .  .  .  .  .  .  .  .  .  .       318,710          338,409
                                                        -------------    ------------- 
                                                        $  2,018,486     $  2,039,148
                                                        =============    ============= 

                    LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES: 
   Trade accounts payable .  .  .  .  .  .  .  .  .  .  $    198,334     $    211,060 
   Accrued expenses and other liabilities   .  .  .  .       280,857          297,246 
   Commercial paper .  .  .  .  .  .  .  .  .  .  .  .        48,211           98,055 
   Long-term debt due within one year .  .  .  .  .  .       120,079           68,571
                                                        -------------    ------------- 
       TOTAL CURRENT LIABILITIES.  .  .  .  .  .  .  .       647,481          674,932 
DEFERRED CREDITS AND OTHER LIABILITIES.  .  .  .  .  .       194,168          214,343 
LONG-TERM DEBT.  .  .  .  .  .  .  .  .  .  .  .  .  .     1,663,152        1,638,828 
CONVERTIBLE QUARTERLY INCOME DEBT SECURITIES.  .  .  .       300,000          300,000 
COMMITMENTS AND CONTINGENCIES 
SHAREHOLDERS' EQUITY (DEFICIT): 
   Common stock, $.0001 par value  .  .  .  .  .  .  .            41               41 
   Additional capital  .  .  .  .  .  .  .  .  .  .  .       625,574          625,574 
   Accumulated deficit .  .  .  .  .  .  .  .  .  .  .    (1,411,930)      (1,414,570)
                                                        -------------    ------------- 
       TOTAL SHAREHOLDERS' EQUITY (DEFICIT ).  .  .  .      (786,315)        (788,955)
                                                        -------------    ------------- 
                                                        $  2,018,486     $  2,039,148 
                                                        =============    ============= 


              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
                                                                            ENDED MARCH 31,
                                                                   ------------------------------
                                                                        1997             1996
                                                                   -------------    -------------
<S>                                                                <C>              <C>
REVENUES:
     Net sales (Including $222,765 and $229,425 in excise taxes).  $  1,604,400     $  1,562,614
     Other income  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .        21,623           19,037
                                                                   -------------    -------------
                                                                      1,626,023        1,581,651

COSTS AND EXPENSES:
     Cost of goods sold  .  .  .  .  .  .  .  .  .  .  .  .  .  .     1,154,633        1,120,568
     Operating, selling, general and administrative expenses .  .       438,288          428,867
     Interest expense, net  .  .  .  .  .  .  .  .  .  .  .  .  .        23,899           23,068
                                                                   -------------    -------------
                                                                      1,616,820        1,572,503
                                                                   -------------    -------------

EARNINGS BEFORE INCOME TAXES.  .  .  .  .  .  .  .  .  .  .  .  .         9,203            9,148
INCOME TAXES .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .         3,681            3,659
                                                                   -------------    -------------
NET EARNINGS .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  $      5,522     $      5,489
                                                                   =============    =============

NET EARNINGS PER COMMON SHARE (Primary and Fully Diluted) .  .  .          $.01             $.01
                                                                           =====            =====




                   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)
                                                                                         THREE MONTHS
                                                                                        ENDED MARCH 31,
                                                                                -------------------------------
                                                                                     1997              1996
                                                                                -------------    --------------
<S>                                                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  $      5,522     $      5,489
    Adjustments to reconcile net earnings to net cash provided
        by operating activities:
        Depreciation and amortization of property and equipment  .  .  .  .  .        43,593           39,746
        Other amortization.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .         4,757            4,757
        Deferred income taxes.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .           744           (1,209)
        Noncash interest expense.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .         1,723              459
        Other noncash income .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .          (119)             (88)
        Net loss on property and equipment  .  .  .  .  .  .  .  .  .  .  .  .           312              756
        Decrease in accounts and notes receivable .  .  .  .  .  .  .  .  .  .        15,601            5,952
        Decrease (increase) in inventories  .  .  .  .  .  .  .  .  .  .  .  .         7,366           (3,259)
        Increase in other assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .        (3,365)            (449)
        (Decrease) increase in trade accounts payable and other liabilities  .       (49,027)           4,024
                                                                                -------------    -------------
                  NET CASH PROVIDED BY OPERATING ACTIVITIES.  .  .  .  .  .  .        27,107           56,178
                                                                                -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Payments for purchase of property and equipment  .  .  .  .  .  .  .  .  .       (41,149)         (45,246)
    Proceeds from sale of property and equipment  .  .  .  .  .  .  .  .  .  .         4,502            2,448
    Other  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .           478             (904)
                                                                                -------------    -------------
                  NET CASH USED IN INVESTING ACTIVITIES .  .  .  .  .  .  .  .       (36,169)         (43,702)
                                                                                -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from commercial paper and revolving credit facilities  .  .  .  .     1,460,167          823,488
    Payments under commercial paper and revolving credit facilities .  .  .  .    (1,425,198)        (765,987)
    Principal payments under long-term debt agreements  .  .  .  .  .  .  .  .       (11,380)         (28,693)
    Other  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .          (450)            -
                                                                                -------------    -------------
                  NET CASH PROVIDED BY FINANCING ACTIVITIES.  .  .  .  .  .  .        23,139           28,808
                                                                                -------------    -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS.  .  .  .  .  .  .  .  .  .  .  .  .        14,077           41,284
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR .  .  .  .  .  .  .  .  .  .  .        36,494           43,047
                                                                                -------------    -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD  .  .  .  .  .  .  .  .  .  .  .  .  $     50,571     $     84,331
                                                                                =============    =============

RELATED DISCLOSURES FOR CASH FLOW REPORTING:

    Interest paid, excluding SFAS No.15 Interest  .  .  .  .  .  .  .  .  .  .  $    (25,009)    $    (25,455)
                                                                                =============    =============
    Net income taxes refunded.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  $      1,522     $      1,181
                                                                                =============    =============


                                  See notes to condensed consolidated financial statements.


                                                                3
</TABLE>


<PAGE>
                  THE SOUTHLAND CORPORATION AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                      THREE MONTHS ENDED MARCH 31, 1997

                                 (UNAUDITED)

1. BASIS OF PRESENTATION:

     The condensed consolidated balance sheet as of March 31, 1997, and the 
condensed  consolidated  statements  of  earnings  and  cash flows  for  the 
three-month periods ended March 31, 1997 and 1996, 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 March 31, 1997, 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, 1996, 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, 1996, include accounting 
policies and additional information pertinent to an understanding of both the 
December 31, 1996, balance sheet and the interim financial statements.  The 
information has not changed except as a result of normal transactions in the 
three months ended March 31, 1997.

2. EARNINGS PER SHARE:

     The Company will adopt Statement of Financial Accounting Standards 
("SFAS") No. 128, "Earnings per Share," in December 1997.  SFAS No. 128 
establishes simplified accounting standards for computing earnings per share 
and makes them comparable to international earnings per share standards.  The 
table below reflects both the current earnings per share amount and the pro 
forma earnings per share amount assuming adoption of SFAS No. 128.


                                               Three Months
                                              Ended March 31
                                             ---------------
                                              1997      1996
                                             -----     -----
      Per Statement of Earnings:
          Primary and Fully Diluted (a)      $ .01     $ .01

      Pro Forma:
          Basic and Diluted                  $ .01     $ .01


(a)   The Convertible Quarterly Income Debt Securities are common stock 
      equivalents but are not included in the first quarter earnings per 
      share calculations because they have an antidilutive effect.  While 
      the first quarter 1996 earnings per share calculations ($.02 as 
      previously reported) have been restated, this issue only affects the 
      first quarter calculation and no other 1996 earnings per share 
      calculations will require restatement.


                                      4


<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 March 31, 1997, and the related 
condensed consolidated statements of earnings and cash flows for the three-
month periods ended March 31, 1997 and 1996.  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, 1996, 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 18, 1997, 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, 
1996, is fairly stated, in all material respects, in relation to the 
consolidated balance sheet from which it has been derived.

COOPERS & LYBRAND L.L.P.



Dallas, Texas
April 21, 1997


                                      5


<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 net earnings of $5.5 million ($.01 per share) for the 
first quarter of 1997, increased slightly when compared to the first quarter 
of 1996.  The results for the first quarter of both 1997 and 1996 include 
several special or unusual items, the most significant of which, for 1997, is 
a reduction in an estimated environmental liability.  The net effect of these 
items on the quarter, for each year, was a pretax increase of approximately 
$3 million.  (See Liquidity and Capital Resources -  Environmental)

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.  During 1997, the Company expects to have net 
     store growth in the U.S. and Canada for the first time in ten years.

*    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 fresh perishable items and 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 only 
     automated accounting and other store-level tasks. The current phase 
     involves the installation of point-of-sale registers with scanning and 
     ordering capabilities.

(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 $1.60 billion for the three months 
ended March 31, 1997, compared to sales of $1.56 billion during the same 
period in 1996.  The increase in sales is due to higher average per store 
merchandise sales and gasoline prices.  The first quarter of 1997 produced a 

                                      6


<PAGE>
U.S. same-store (stores open more than one year) merchandise sales increase 
of 0.4% (1.5% excluding the additional day in 1996 for leap year).  After 
adjusting for first quarter inflation of 1.7%, same-store merchandise sales 
real growth was -1.3% ( -0.2% excluding the day for leap year).

     Gasoline sales dollars per store increased 5.9% for the first quarter, 
due to higher retail prices.  Average per-store gallonage decreased 3.8% when 
compared to 1996.

OTHER INCOME

     Other income of $21.6 million for the first quarter of 1997 was $2.6 
million higher than the same period in 1996.  The improvement is primarily 
the result of increased royalty income from licensed operations.

<TABLE>
<CAPTION>
GROSS PROFITS                                                    THREE MONTHS ENDED
                                                                   MARCH 31, 1997
                                                              ----------------------
                                                              MERCHANDISE   GASOLINE
                                                              -----------   --------
<S>                                                             <C>         <C>
Gross Profit - dollars in millions                              $  410.9    $   38.9

INCREASE/(DECREASE) FROM PRIOR YEAR - ALL STORES
------------------------------------------------
Average per-store gross profit dollar change                       2.3%        (5.1)%
Margin percentage point change (gasoline in cents per gallon)       .42       (  .16)
Average per-store sales (gasoline in gallons)                      1.0%        (3.8)%
</TABLE>

     Total merchandise gross profit dollars were $9.3 million higher in the 
first quarter of 1997 than the comparable period in 1996.  The increase was 
primarily due to favorable margins, combined with the modest average per 
store sales growth.  Merchandise margin improvement was primarily due to 
lower product costs resulting from negotiations of new contracts with 
vendors.  In addition, margin benefited from increases in sales of higher 
margin items.  While most of the benefits from these new contracts should 
continue, margins are expected to return to last year's range as the Company 
continues to utilize cost reductions to further its ongoing strategy to 
achieve everyday-fair prices.

     During the first three months of 1997, gasoline gross profits declined 
$1.6 million versus the comparable period in 1996 due to lower per-store 
gallon sales and margins.  During the first quarter, the industry's product 
supply problems on the west coast caused competitive conditions to intensify, 
creating the situation where, in some cases, the Company's cost exceeded 
other operators' retail price of gasoline.  As a result, the Company's west 
coast operations (24% of the Company's total gas stores) experienced a 35% 
decline in gross profits in the first quarter of 1997 compared to the first 
quarter of 1996.  Average per-store gross profit for the first quarter of 
1997, excluding the west coast stores, increased 2.3% over the comparable 
period of 1996.

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

     Operating, selling, general and administrative expenses increased $9.4 
million in the first quarter of 1997 compared to the same period in 1996.  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.  The incremental costs of these initiatives is 

                                      7


<PAGE>
approximately $2 million more in the first quarter 1997, when compared to 
1996.  The ratio of OSG&A expenses to sales was 27.3% in the first three 
months of 1997, a decrease of 0.1 percentage points from the same period in 
1996.  While the ratio will vary on a quarterly basis, management believes 
this ratio will become slightly less favorable 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 and office facilities, 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).

INTEREST EXPENSE, NET

     Net interest expense increased $0.8 million in 1997 over the first 
quarter of 1996.  The increase was due to two factors:  the write-off of 
deferred costs associated with the Company's refinancing of its credit 
agreement and lower interest income, partially offset by lower borrowing 
levels and more favorable rates (see Liquidity and Capital Resources).

     Approximately 36% 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% through March of 1997 versus 6.1% for 
the first quarter of 1996.  The Company expects net interest expense in 1997 
to remain relatively flat due to higher borrowings to finance new store 
development, offset by increased capitalized interest and a .6% reduction in 
the cost of borrowing that the Company negotiated with the lenders in its 
new, unsecured bank debt credit agreement ("New Credit Agreement") (see 
Liquidity and Capital Resources).


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 February 1997, the Company entered into a New Credit Agreement, 
refinancing its old term loan ($225 million), revolving credit facility and 
letters of credit ($150 million each), all of which were scheduled to mature 
on December 31, 1999, with a new term loan facility ("Term Loan") and 
revolving credit facility. The Term Loan ($225 million) has scheduled 
quarterly repayments of $14.1 million commencing March 31, 1998 through 
December 31, 2001. The new revolving credit facility ($400 million) expires 
February 2002 and allows for revolving borrowings ("Revolver"), and for 
issuance of letters of credit not to exceed $150 million. Interest on the 
Term Loan and Revolver is based on a variable rate equal to the 
administrative agent bank's base rate or, at the Company's option, a rate 
equal to a reserve-adjusted Eurodollar rate plus .225% per year for drawn 
amounts. The new agreement requires letter of credit fees to be paid 

                                      8


<PAGE>
quarterly at .325% per year on the outstanding amount. In addition, a 
facility fee of .15% per year is payable quarterly on the total amount 
available under the New Credit Agreement, as such amount is reduced from time 
to time. The cost of borrowings and letters of credit under the New Credit 
Agreement represents a decrease of .6% and .45% per year, respectively, from 
the secured senior bank debt credit agreement.

     In April of 1997, the Company entered into a Master Lease Facility 
("MLF") of $115 million, which will be used to finance a complete integrated 
point-of-sale system that is scheduled to be rolled out over the subsequent 
six quarters (see Management Strategies).  The lease payment on the MLF will 
be based on a variable rate equal to the Eurodollar rate plus a blended all-
inclusive spread of .46% per year.  The MLF has a three-year noncancellable 
term with semiannual options to renew for up to an additional two years.  
Based upon current roll-out schedules, it is anticipated that the commitment 
under the MLF will be fully utilized by the end of 1998. 

     The New Credit Agreement and the MLF contain 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 earnings before interest, taxes, depreciation and 
amortization ("EBITDA").  The covenant levels established by the New Credit 
Agreement and the MLF generally require continuing improvement in the 
Company's financial condition.

     For the period ended March 31, 1997, the Company was in compliance with 
all of the covenants required under the New Credit Agreement, including 
compliance with the principal financial and operating covenants (calculated 
over the latest 12-month period) as follows:

                                                        Requirements:
                                                     --------------------
     Covenants                        Actuals        Minimum      Maximum
     ---------                        -------        -------      -------
     Interest and rent coverage *   2.17 to 1.0    2.00 to 1.0
     Fixed charge coverage          1.04 to 1.0    0.65 to 1.0
     Senior indebtedness to EBITDA  3.11 to 1.0                  3.40 to 1.0

     * INCLUDES EFFECTS OF THE SFAS NO. 15 INTEREST PAYMENTS.

     During the first three months of 1997, the Company repaid $11.4 million 
of debt, which included $7.6   million for principal payments on the 
Company's yen-denominated loan (secured by the royalty income stream from its 
area licensee in Japan).  Outstanding balances at March 31, 1997, for the 
commercial paper, the Term Loan and the Revolver, were $398.2 million, $225.0 
million and $35.0 million, respectively.  As of March 31, 1997, outstanding 
letters of credit issued pursuant to the New Credit Agreement totaled $68.6   
million.

CASH FROM OPERATING ACTIVITIES

     Net cash provided by operating activities was $27.1 million for the 
first quarter of 1997, a decrease of $29.1 million from the same period in 
1996.  The majority of the decrease was due to the timing of payments related 
to trade payables (see Results of Operations section).

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<PAGE>
CAPITAL EXPENDITURES

     In the first three months, net cash used in investing activities 
consisted primarily of payments of $41.1 million for property and equipment, 
the majority of which was used for implementation of the Company's retail 
information system, new store development, remodeling stores, upgrading 
retail gasoline facilities, replacing equipment and complying with 
environmental regulations.

     The Company expects 1997 capital expenditures, excluding lease 
commitments, to be approximately $325 million.  Capital expenditures are 
being used to develop or acquire new stores, upgrade store facilities, 
further implement the 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 Company's 
ability to find and acquire new stores that fit with its growth strategy and 
the proportion of new store development funded through working capital versus 
leases.  Most leases related to new store construction would contain initial 
terms of 15-20 years with typical option renewal periods. 

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 $15 
million in 1997 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 $20 million on 
such capital improvements from 1998 through 2000.

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 remediation of the site for approximately a three-to-five-year period, as 
well as continued groundwater treatment for a projected 20-year period. The 
Company has recently received conditional approval of its clean-up plan. 
Based on revised cost projections associated with the current clean-up plan, 
the company reduced the undiscounted liability and related receivable 
balances by $16.3 million and $9.7 million, respectively, during the first 
quarter of 1997.  The Company has recorded undiscounted liabilities 
representing its best estimates of the clean-up costs of $14.1 million at 
March 31, 1997.  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 recorded a receivable of $8.2   million at March 31, 1997.

     Additionally, the Company accrues for the anticipated future costs and 
the related probable state reimbursement amounts for remediation activities 
at its existing and previously operated gasoline sites where releases of 
regulated substances have been detected.  At March 31, 1997, the Company's 
estimated undiscounted liability for these sites was $42.1 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 

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<PAGE>
future remediation costs for detected releases at these sites as of March 31, 
1997, 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, as of March 31, 1997, the 
Company has a net receivable of $48.6 million recorded 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 $8.5 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 eight years to 
receive reimbursement funds from California.  Therefore, the portion of the 
recorded receivable amounts that relate to sites where remediation activities 
have been completed have been discounted at 6.6% to reflect their present 
value.  Thus, the recorded receivable amount is also net of a discount of 
$6.0 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.


PART II.
OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     There are no reportable suits or proceedings pending or threatened 
against the Company other than as previously reported.


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

  (a)  Exhibits:

       1.  Exhibit (11) - Statement re Computation of Per-Share Earnings.

       2.  Exhibit (15) - Letter re Unaudited Interim Financial Information.
                Letter of Coopers & Lybrand L.L.P., Independent Accountants.

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

  (b)  8-K Reports:

During the first quarter of 1997, the Company filed no reports on Form 8-K.

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                            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:  April 29, 1997                /s/     Clark J. Matthews, II
                                     -----------------------------
                                     (Officer)
                                     Clark J. Matthews, II
                                     President and Chief Executive Officer


Date:  April 29, 1997                /s/     Donald E. Thomas
                                     ------------------------
                                     (Principal Accounting Officer)
                                     Donald E. Thomas
                                     Controller






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