<PAGE>
<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 September 30, 1996

                                      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 September 30, 1996.

<PAGE>
<PAGE>

                         THE SOUTHLAND CORPORATION
                                  INDEX


                                                                       PAGE
                                                                       NO.
                                                                       ----
Part I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

     Condensed Consolidated Balance Sheets -
       September 30, 1996 and December 31,1995.........................   1

     Condensed Consolidated Statements of Earnings -
       Three Months and Nine Months Ended September 30, 1996 and 1995..   2

     Condensed Consolidated Statements of Cash Flows -
       Nine Months Ended September 30, 1996 and 1995...................   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 ............................................  12

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K .............................  12

SIGNATURES ............................................................  13

Exhibit (3)   - Bylaws of The Southland Corporation
                     as Amended April 24, 1996 .......................Tab 1

Exhibit (11) - Statement re Computation of Per-Share Earnings ........Tab 2

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

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

*Submitted in electronic format only




                               (i)
<PAGE>
<PAGE>

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

                                                            SEPTEMBER 30,     DECEMBER 31,
                                                                 1996             1995
                                                            -------------    -------------
                                                            (UNAUDITED)
<S>                                                         <C>              <C>
CURRENT ASSETS:   
   Cash and cash equivalents  .  .  .  .  .  .  .  .  .  .  $     46,431     $     43,047 
   Accounts and notes receivable .  .  .  .  .  .  .  .  .        95,837          107,224
   Inventories .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       101,419          102,020
   Other current assets .  .  .  .  .  .  .  .  .  .  .  .       107,936          103,816
                                                            -------------    -------------
       TOTAL CURRENT ASSETS.  .  .  .  .  .  .  .  .  .  .       351,623          356,107
PROPERTY AND EQUIPMENT  .  .  .  .  .  .  .  .  .  .  .  .     1,339,574        1,335,783
OTHER ASSETS.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       345,738          389,227
                                                            -------------    -------------
                                                            $  2,036,935     $  2,081,117
                                                            =============    =============

                        LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
   Trade accounts payable  .  .  .  .  .  .  .  .  .  .  .  $    193,460     $    195,154
   Accrued expenses and other liabilities .  .  .  .  .  .       349,216          329,429
   Commercial paper  .  .  .  .  .  .  .  .  .  .  .  .  .        61,130           50,198
   Long-term debt due within one year  .  .  .  .  .  .  .       125,581          145,346
                                                            -------------    -------------
       TOTAL CURRENT LIABILITIES .  .  .  .  .  .  .  .  .       729,387          720,127
DEFERRED CREDITS AND OTHER LIABILITIES .  .  .  .  .  .  .       207,215          236,545
LONG-TERM DEBT .  .  .  .  .  .  .  .  .  .  .  .  .  .  .     1,605,070        1,705,237
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  .  .  .  .  .  .  .  .  .  .  .  .    (1,430,352)      (1,506,407)
                                                            -------------    -------------
       TOTAL SHAREHOLDERS' EQUITY (DEFICIT ) .  .  .  .  .      (804,737)        (880,792)
                                                            -------------    -------------
                                                            $  2,036,935     $  2,081,117
                                                            =============    =============

                        See notes to condensed consolidated financial statements.


                                                     1
</TABLE>
<PAGE>
<PAGE>

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

                                                          THREE MONTHS                   NINE MONTHS
                                                       ENDED SEPTEMBER 30,           ENDED SEPTEMBER 30,
                                                   ---------------------------   ---------------------------
                                                       1996           1995           1996           1995
                                                   ------------   ------------   ------------   ------------
<S>                                                <C>            <C>            <C>            <C>
REVENUES:
     Net sales (Including $256,833, $255,799,
         $736,027 and $743,617 in excise taxes).   $ 1,839,870    $ 1,825,887    $ 5,194,220    $ 5,120,931
     Other income.  .  .  .  .  .  .  .  .  .  .        20,178         18,250         57,684         52,903
                                                   ------------   ------------   ------------   ------------
                                                     1,860,048      1,844,137      5,251,904      5,173,834
COSTS AND EXPENSES:
     Cost of goods sold.  .  .  .  .  .  .  .  .     1,298,437      1,271,897      3,685,445      3,605,406
     Operating, selling, general and
         administrative expenses.  .  .  .  .  .       476,671        490,322      1,375,530      1,396,388
     Interest expense, net.  .  .  .  .  .  .  .        22,130         20,624         68,326         63,871
                                                   ------------   ------------   ------------   ------------
                                                     1,797,238      1,782,843      5,129,301      5,065,665
                                                   ------------   ------------   ------------   ------------
EARNINGS BEFORE INCOME TAXES .  .  .  .  .  .  .        62,810         61,294        122,603        108,169
INCOME TAXES  .  .  .  .  .  .  .  .  .  .  .  .        25,124         11,647         49,041         22,726
                                                   ------------   ------------   ------------   ------------
NET EARNINGS  .  .  .  .  .  .  .  .  .  .  .  .   $    37,686   $     49,647   $     73,562   $     85,443
                                                   ============  =============  =============  =============

NET EARNINGS PER COMMON SHARE
    (Primary and Fully Diluted) .  .  .  .  .  .          $.08           $.12           $.17           $.21
                                                          =====          =====          =====          =====


                                   See notes to condensed consolidated financial statements.


                                                             2
</TABLE>
<PAGE>
<PAGE>

<TABLE>
                             THE SOUTHLAND CORPORATION AND SUBSIDIARIES
                          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       (DOLLARS IN THOUSANDS)
                                             (UNAUDITED)
<CAPTION>
                                                                                 NINE MONTHS
                                                                             ENDED SEPTEMBER 30,
                                                                       ------------------------------
                                                                            1996             1995
                                                                       -------------    -------------
<S>                                                                    <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   $     73,562     $     85,443
    Adjustments to reconcile net earnings to net cash provided
        by operating activities:
        Depreciation and amortization of property and equipment .  .        122,870          107,974
        Other amortization  .  .  .  .  .  .  .  .  .  .  .  .  .  .         14,270           14,270
        Deferred income taxes  .  .  .  .  .  .  .  .  .  .  .  .  .         19,748              272
        Noncash interest expense  .  .  .  .  .  .  .  .  .  .  .  .          1,332            1,522
        Other noncash expense (income)  .  .  .  .  .  .  .  .  .  .            144           (1,854)
        Net loss (gain) on property and equipment.  .  .  .  .  .  .             54             (259)
        Decrease in accounts and notes receivable.  .  .  .  .  .  .         18,263           13,216
        Decrease (increase) in inventories .  .  .  .  .  .  .  .  .            601           (2,402)
        Increase in other assets  .  .  .  .  .  .  .  .  .  .  .  .         (3,166)          (1,256)
        Decrease in trade accounts payable and other liabilities.  .        (12,353)         (19,421)
                                                                       -------------    -------------
                  NET CASH PROVIDED BY OPERATING ACTIVITIES  .  .  .        235,325          197,505
                                                                       -------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Payments for purchase of property and equipment .  .  .  .  .  .       (137,371)        (144,827)
    Proceeds from sale of property and equipment .  .  .  .  .  .  .         12,214           11,800
    Other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .          2,938            1,255
                                                                       -------------    -------------
                  NET CASH USED IN INVESTING ACTIVITIES.  .  .  .  .       (122,219)        (131,772)
                                                                       -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from commercial paper and revolving credit facilities .      3,012,509        2,981,083
    Payments under commercial paper and revolving credit facilities.     (3,004,127)      (3,039,459)
    Principal payments under long-term debt agreements .  .  .  .  .       (118,104)         (45,679)
    Other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .           -                (787)
                                                                       -------------    -------------
                  NET CASH USED IN FINANCING ACTIVITIES.  .  .  .  .       (109,722)        (104,842)
                                                                       -------------    -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.  .  .  .  .  .          3,384          (39,109)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.  .  .  .  .  .  .  .         43,047           59,288
                                                                       -------------    -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .  .  .  .  .  .  .  .  .   $     46,431     $     20,179
                                                                       =============    =============

RELATED DISCLOSURES FOR CASH FLOW REPORTING:
    Interest paid, excluding SFAS No.15 Interest .  .  .  .  .  .  .   $    (77,622)    $    (72,689)
                                                                       =============    =============
    Net income taxes paid.  .  .  .  .  .  .  .  .  .  .  .  .  .  .   $    (15,485)    $    (23,235)
                                                                       =============    =============


                             See notes to condensed consolidated financial statements.


                                                      3
</TABLE>
<PAGE>
<PAGE>


              THE SOUTHLAND CORPORATION AND SUBSIDIARIES

         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 NINE MONTHS ENDED SEPTEMBER 30, 1996

                           (UNAUDITED)

1. BASIS OF PRESENTATION:

     The condensed consolidated balance sheet as of September 30, 1996, and 
the condensed consolidated statements of earnings for the three-month and 
nine-month periods ended September 30, 1996 and 1995, and the condensed 
consolidated statements of cash flows for the nine-month periods ended 
September 30, 1996 and 1995, 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 September 30, 1996, 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, 1995, 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, 1995, include 
accounting policies and additional information pertinent to an 
understanding of both the December 31, 1995, balance sheet and the interim 
financial statements.  The information has not changed except as a result 
of normal transactions in the nine months ended September 30, 1996.

2. IMPAIRMENT OF LONG-LIVED ASSETS:

     As of January 1996, the Company adopted Statement of Financial 
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of 
Long-Lived Assets."  SFAS No. 121 establishes accounting standards for the 
impairment of long-lived assets to be held and used and for long-lived 
assets to be disposed of.  The adoption of SFAS No. 121 did not have a 
material effect on the Company's earnings.



                               4
<PAGE>
<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 September 30, 1996, the 
related condensed consolidated statements of earnings for the three-month 
and nine-month periods ended September 30, 1996 and 1995, and the condensed 
consolidated statements of cash flows for the nine-month periods ended 
September 30, 1996 and 1995.  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, 1995, 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 14, 1996, which included an explanatory 
paragraph describing the change in method of accounting for postemployment 
benefits and for income taxes in 1993, 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, 1995, 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
October 24, 1996

                               5
<PAGE>
<PAGE>

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


RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996

SUMMARY OF RESULTS OF OPERATIONS

     The Company's net earnings for the third quarter and first nine months 
of 1996 were $37.7 million ($.08 per share) and $73.6 million ($.17 per 
share), respectively, compared to net earnings of $49.6 million ($.12 per 
share) and $85.4 million ($.21 per share) for the same periods in 1995.  
Pre-tax earnings of $62.8 million for the third quarter of 1996 were $1.5 
million higher than the same period in 1995.

FINANCIAL STATEMENT CHANGES

     Certain expense reclassifications were noted in the Company's December 
31, 1995 annual report and 10-K filing, resulting in the restatement of 
comparative results.  Subsequent quarterly filings on Form 10-Q during 1996 
have restated prior period results to maintain consistency.  The most 
significant change related to reclassifying buying and occupancy costs 
(i.e., store rent, depreciation and other store-related occupancy expenses) 
out of Cost of Goods Sold and into Operating, Selling, General & 
Administrative expenses.

MANAGEMENT STRATEGIES

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

        Continued upgrades to the Company's store base by remodeling 
        existing stores, closing underperforming stores and developing new 
        sites.

        A customer-driven approach to merchandising which focuses on 
        providing the customer an expanded selection of quality products at 
        a good value.

        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 providing fresher products, improved in-stock 
        conditions and lower product costs.

        Implementation of a retail information system which has initially 
        automated accounting and other store-level tasks.  When fully 
        complete, the system will provide each store, as well as suppliers 
        and distributors, with on-line information to make improved 
        ordering decisions.

     The Company made considerable progress toward implementation of these 
strategies during the third quarter, accelerating the development of its 
retail information system, making the transition to three new combined 

                               6
<PAGE>
<PAGE>

distribution centers and two new commissaries, and locating new store 
opportunities.  The Company believes that these strategies have contributed 
to its improved results over the past two years, although in the short term 
they have resulted in additional costs, and that continuing to implement 
these strategies will lead to sustainable, profitable growth over the long-
term.

(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 third quarter 
and $5.19 billion in the first nine months of 1996, compared to net sales 
of $1.83 billion and $5.12 billion during the same periods last year.  
Growth in total sales was achieved during the third quarter primarily as a 
result of gasoline prices, which overcame the decline from store closings 
(see Management Strategies) and the slight same-store merchandise sales 
decrease.  During the third quarter, the Company operated an average of 114 
fewer stores than the same period in 1995.

     The Company's ongoing challenge to balance short-term performance with 
its long-term objectives, along with the unseasonably cool and wet weather 
in some of its largest markets (primarily the East Coast), contributed to 
the less than desired merchandise sales results during the third quarter.  
Merchandise sales growth per store was as follows:

<TABLE>
<CAPTION>
                                                          PERIODS ENDING SEPTEMBER 30, 1996
                                                          ---------------------------------
<S>                                                       <C>                   <C>
INCREASE(DECREASE) FROM PRIOR YEAR                        THREE MONTHS          NINE MONTHS
----------------------------------                        ------------          -----------
U.S. same-store sales                                         (0.3)%                 1.5%
U.S. same-store real growth; excluding inflation              (2.8)%                (0.7)%
7-Eleven inflation                                             2.5%                  2.3%
</TABLE>

     Gasoline sales dollars per store increased 7.9% for the third quarter 
and 6.4% for the first nine months of 1996 in comparison to the same 
periods in 1995, due to an average increase in sales price of 8.7 and 7.3 
cents per gallon for the quarter and the nine months, respectively.  Sales 
in gallons per store increased 0.6% during the third quarter and 0.3% for 
the first nine months.

GROSS PROFITS
<TABLE>
<CAPTION>
                                                              PERIODS ENDING SEPTEMBER 30, 1996
                                                              ---------------------------------
                                                      THREE MONTHS                NINE MONTHS
                                                      ------------                -----------
                                                  MERCHANDISE   GASOLINE     MERCHANDISE   GASOLINE
                                                  -----------   --------     -----------   --------
<S>                                               <C>           <C>          <C>           <C>
Gross Profit - DOLLARS IN MILLIONS                   $488.0       $53.4        $1,361.9     $146.9

INCREASE/(DECREASE) FROM PRIOR YEAR
-----------------------------------
Average per-store gross profit dollar change            0.0%       (3.4)%           2.1%       0.8%
Margin point change (gasoline in cents per gallon)      (.33)       (.62)           (.24)       .06
Average per-store sales (gasoline in gallons)           1.0%        0.6%            2.8%       0.3%
</TABLE>

     Merchandise gross profit decreased by $10.1 million in the third 
quarter and $5.9 million for the nine months, when compared to the same 
periods in 1995.  These decreases are attributable to the Company operating 
fewer stores and the decrease in merchandise margin. 

                               7
<PAGE>
<PAGE>

     The lower merchandise margin during the third quarter was the result 
of several factors. Rising product costs and more aggressive retail pricing 
continue to present a challenge in today's increasingly more competitive 
environment.  Initial costs associated with new, fresh-food products from 
the further roll-out of the Company's fresh-food program have affected 
margin as well.  In addition, margin was impacted negatively from the cool 
and wet weather experienced in some of its largest markets that suppressed 
sales of higher-margin products such as non-alcoholic beverages and related 
categories.

     During the third quarter and first nine months of 1996, gasoline gross 
profits decreased $2.5 million and $0.9 million, respectively, versus the 
same periods in 1995.  Margin in the third quarter also declined compared 
to last year due to high wholesale costs.

<TABLE>
<CAPTION>
OPERATING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("OSG&A") 
-----------------------------------------------------------------

                                                      PERIODS ENDING SEPTEMBER 30, 1996
                                                      ---------------------------------
                                                      THREE MONTHS             NINE MONTHS
                                                      ------------             -----------
                                                     1996     1995          1996         1995
                                                     ----     ----          ----         ----
<S>                                                  <C>      <C>           <C>          <C>
Total OSG&A expenses                                 $476.7   $490.3        $1,375.5     $1,396.4
Ratio of OSG&A to sales                               25.9%    26.9%           26.5%       27.3%
</TABLE>

     The Company will continue to eliminate unnecessary costs, while 
devoting resources to the implementation of its retail information system 
and other strategic initiatives (see Management Strategies).  Despite the 
incremental costs of these initiatives, which exceeded $5 million, OSG&A 
expenses during the third quarter declined $13.7 million, compared to the 
same period in 1995.  The decrease in OSG&A expenses during the third 
quarter was primarily due to fewer stores, higher store closing costs in 
1995, and lower insurance costs from adjustment to the Company's self-
insurance reserves as a result of favorable claims experience.  For the 
nine-month comparison, OSG&A expenses declined $20.9 million due to 
reductions in force, lower insurance and benefit costs, reduced advertising 
and environmental remediation expenses, and the effect of having fewer 
stores.

INTEREST EXPENSE, NET

     In November 1995, the Company consummated a $216.7 million tender 
offer to purchase a portion ($263.3 million face value) of its public debt 
securities (see Liquidity and Capital Resources).  The purchase was 
financed by the issuance of $300 million 4.5% Convertible Quarterly Income 
Debt Securities due 2010 ("Convertible Debt").  The annual interest expense 
of $13.7 million from issuing the Convertible Debt has not been offset by a 
corresponding reduction in interest expense for the retired debentures, 
because the retired debentures were accounted for pursuant to Statement of 
Financial Accounting Standards No. 15 ("SFAS No. 15").  SFAS No. 15 
provides that future interest payments on the Company's currently 
outstanding public debt securities be recorded as debt on the balance sheet 
and charged against such balances when paid rather than being recorded as 
interest expense in the income statement. 

     Net interest expense increased $1.5 million and $4.5 million over 
1995, during the third quarter and first nine months of 1996, respectively.  
Several factors caused the change in net interest expense during the third 
quarter including increases from the Convertible Debt interest (explained 

                               8
<PAGE>
<PAGE>

in the paragraph above) and lower interest income, offset by declines from 
lower principal balances and lower rates on floating rate debt.  The lower 
interest income was primarily the result of a new money order agreement.  
The new agreement eliminates interest income from the funding arrangement; 
however, it provides lower cost of goods and operating costs, which will 
more than offset the impact of the lost interest.  While the Company 
expects interest expense to remain relatively flat for 1996, interest 
income is expected to decline approximately $6 million.

     Approximately 33% of the Company's debt contains floating rates, which 
had a weighted average interest rate of 5.75% for the third quarter and 
5.86% for the first nine months of 1996 versus 6.53% and 6.71% for the same 
time periods in 1995.  In early 1996, the Company reduced its exposure to 
short-term fluctuations in rates on a substantial portion of its floating 
rate bank debt by selecting six-month and one-year LIBOR maturities at 
favorable rates rather than the shorter terms it has selected in the past.


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 $150 million 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.

     On November 22, 1995, the Company completed a tender offer for 40% of 
the face value of both its 5% First Priority Senior Subordinated Debentures 
due December 15, 2003 ($180.6 million) and 4 1/2% Second Priority Senior 
Subordinated Debentures - Series A ($82.7 million) due June 15, 2004 
(collectively, the "Debentures").  Under the terms of the offer, the final 
clearing prices were $840 and $786 for the 5% and 4 1/2% Debentures, 
respectively, per $1,000 face amount, resulting in a cash outlay by the 
Company of $216.7 million.

     To finance the purchase of the Debentures, the Company issued $300 
million in Convertible Debt 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.  The remaining proceeds of $83.3 million were made 
available for general corporate purposes.  The Convertible Debt is 
subordinated to all existing debt, has a 15-year term with no amortization 
and is convertible into the Company's common shares at $4.16 per share.

     The Credit Agreement contains certain financial and operating 
covenants requiring, among other things, the maintenance of certain 
financial ratios, including interest coverage, fixed-charge coverage and 
senior indebtedness to earnings before interest, taxes, depreciation and 
amortization ("EBITDA").  The covenant levels established by the Credit 
Agreement generally require continuing improvement in the Company's 
financial condition.

     For the period ended September 30, 1996, the Company was in compliance 
with all of the covenants required under the Credit Agreement, including 
compliance with the principal financial and operating covenants (calculated 
over the latest 12-month period) as follows:

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<PAGE>
<PAGE>


<TABLE>
<CAPTION>
                                                                     REQUIREMENTS:
                                                              ----------------------------
COVENANTS                                       ACTUALS         MINIMUM          MAXIMUM
---------                                     -----------     -----------      -----------
<S>                                           <C>             <C>              <C>
Interest coverage*                            3.22 to 1.0     2.70 to 1.0
Fixed-charge coverage                         1.11 to 1.0     1.00 to 1.0
Senior indebtedness to EBITDA                 3.03 to 1.0                      4.10 to 1.0
     *INCLUDES EFFECTS OF THE SFAS NO. 15 INTEREST PAYMENTS.
</TABLE>

     During the first nine months of 1996, the Company has repaid $118.1 
million of debt, which included $75.0 million representing all of the 
quarterly installments due in 1996 under the Credit Agreement, $20.6 
million for principal payments on the Company's yen-denominated loan 
(secured by the royalty income stream from its area licensee in Japan) and 
$11.2 million for SFAS No. 15 interest.  Outstanding balances at September 
30, 1996, for the commercial paper, the Term Loan and the Revolver, were 
$361.1 million, $225.0 million and zero, respectively.  As of September 30, 
1996, outstanding letters of credit issued pursuant to the Credit Agreement 
totaled $79.4 million.

CASH FROM OPERATING ACTIVITIES

     Net cash provided by operating activities was $83.9 million for the 
third quarter and $235.3 million for the first nine months of 1996, a 
decrease of $32.1 million and increase of $37.8 million over the same 
periods, respectively, in 1995.  The decreased operating cash flow for the 
third quarter resulted primarily from the timing of payments of trade 
payables and other liabilities.  The year-to-date increase in operating 
cash flow was mostly due to improved operating performance (previously 
discussed in the Results of Operations section).

CAPITAL EXPENDITURES

     In the first nine months, net cash used in investing activities 
consisted primarily of payments of $137.4 million for property and 
equipment, the majority of which was used for remodeling stores, upgrading 
retail gasoline facilities, replacing equipment and complying with 
environmental regulations.

     The Company expects to spend approximately $195 million on capital 
improvements in 1996, excluding lease commitments.  The current capital 
expenditure funding will depend upon the level of EBITDA generated relative 
to fixed-charge coverage requirements.  Capital expenditures are being used 
to complete remodels started in 1995; to remodel about 1,050 additional 
stores; to further implement a retail information system; for development 
or acquisition of new stores; to replace equipment; to upgrade gasoline 
facilities and to comply with environmental regulations.  While the Company 
will look at the economics of each new site, it anticipates that it will 
finance new store construction primarily through leases containing 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 $11 million in 1996 on capital improvements required to 

                               10
<PAGE>
<PAGE>

comply with environmental regulations relating to USTs, as well as above-
ground vapor recovery equipment at store locations, and approximately an 
additional $28 million on such capital improvements from 1997 through 1999.

ENVIRONMENTAL COMPLIANCE - STORES

     The Company accrues for the anticipated future costs of environmental 
clean-up activities (consisting of environmental assessment and 
remediation) relating to detected releases of regulated substances at its 
existing and previously owned or operated sites at which gasoline has been 
sold (including store sites and other facilities that have been sold by the 
Company).  At September 30, 1996, the Company has an accrued liability of 
$54.0 million for such activities and anticipates that substantially all 
such expenditures will be incurred within the next five years.  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 remedial work.

     Under state reimbursement programs, the Company is eligible to receive 
reimbursement for a portion of future costs, as well as a portion of costs 
previously paid.  At September 30, 1996, the Company has recorded a gross 
receivable of $63.1 million (a net receivable of $51.3 million after an 
allowance of $11.8 million) for the estimated probable state 
reimbursements.  There is no assurance of the timing of the receipt of 
state reimbursement funds; however, based on its experience, the Company 
expects to receive the majority of state reimbursement funds within one to 
four years after payment of eligible assessment and remediation expenses, 
assuming that the state administrative procedures for processing such 
reimbursements have been fully developed.

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

ENVIRONMENTAL COMPLIANCE - CHEMICAL PLANT

     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 accrued a liability for 
this purpose.  As required, the Company 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.  While the Company has received initial comments from the 
State, the clean-up plan has not been finalized.  The Company has recorded 
liabilities representing its best estimates of the clean-up costs of $36.9 
million at September 30, 1996.  Of this amount, $30.1 million was included 
in deferred credits and other liabilities and the remainder in accrued 
expenses and other liabilities.  In 1991, the Company entered into a 
settlement agreement with a large chemical company that formerly owned the 
facility.  Under the settlement agreement, the former owner agreed to pay a 
substantial portion of the clean-up costs described above.  The Company has 
recorded a receivable of $21.5 million at September 30, 1996, representing 
the former owner's portion of the clean-up costs.

     None of the amounts related to environmental liabilities have been 
discounted.

                               11
<PAGE>
<PAGE>

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 (3)   -- Bylaws of The Southland Corporation as 
                                  Amended April 24, 1996.

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

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

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

     (b)     8-K Reports:

During the third quarter of 1996, the Company filed no reports on Form 8-K.

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<PAGE>
<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:  October 31, 1996              /s/     Clark J. Matthews, II
                                     -----------------------------
                                     (Officer)
                                     Clark J. Matthews, II
                                     President and Chief Executive Officer


Date:  October 31, 1996              /s/     Don Thomas
                                     -----------------------------
                                     (Principal Accounting Officer)
                                     Donald E. Thomas
                                     Controller









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