<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, 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 June 30, 1997.



<PAGE>

			  THE SOUTHLAND CORPORATION
				    INDEX


									Page
									 No.
									----

Part I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

     Condensed Consolidated Balance Sheets -
       June 30, 1997 and December 31, 1996...........................     1

     Condensed Consolidated Statements of Earnings -
       Three Months and Six Months Ended June 30, 1997 and 1996......     2

     Condensed Consolidated Statements of Cash Flows -
       Six Months Ended June 30, 1997 and 1996.......................     3

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

     Report of Independent Accountants...............................     6


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
	  AND RESULTS OF OPERATIONS..................................     7

Part II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS ..........................................    13

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........    15

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K............................    16

SIGNATURES...........................................................    17

Exhibit 10(ii)(D)- Master Leasing Agreement dated as of April 15,1997,
		   among the financial institutions party thereto as 
		   Lessor Parties, CBL Capital Corporation, as Agent
		   for the Lessor Parties and The Southland
		   Corporation,as Lessee............................. 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>
<TABLE>
<CAPTION>

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

					     ASSETS

								    JUNE 30,    DECEMBER 31,
								      1997         1996
								  -----------   -----------
								  (UNAUDITED)

<S>                                                               <C>           <C>
CURRENT ASSETS:
   Cash and cash equivalents.  .  .  .  .  .  .  .  .  .  .  .  . $    47,023   $    36,494
   Accounts and notes receivable  .  .  .  .  .  .  .  .  .  .  .     104,452       109,413
   Inventories  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .     107,745       109,050
   Other current assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .     107,258        95,943
								  -----------   -----------
     TOTAL CURRENT ASSETS.  .  .  .  .  .  .  .  .  .  .  .  .  .     366,478       350,900
PROPERTY AND EQUIPMENT.  .  .  .  .  .  .  .  .  .  .  .  .  .  .   1,352,922     1,349,839
OTHER ASSETS .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .     296,297       338,409
								  -----------   -----------
								  $ 2,015,697   $ 2,039,148
								  ===========   ===========


			  LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
   Trade accounts payable.  .  .  .  .  .  .  .  .  .  .  .  .  . $   209,369   $   211,060
   Accrued expenses and other liabilities  .  .  .  .  .  .  .  .     269,352       297,246
   Commercial paper.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .      48,693        98,055
   Long-term debt due within one year.  .  .  .  .  .  .  .  .  .     130,026        68,571
								  -----------   -----------
     TOTAL CURRENT LIABILITIES .  .  .  .  .  .  .  .  .  .  .  .     657,440       674,932
DEFERRED CREDITS AND OTHER LIABILITIES  .  .  .  .  .  .  .  .  .     190,365       214,343
LONG-TERM DEBT  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   1,627,381     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.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  (1,385,104)   (1,414,570)
								  ------------  ------------
     TOTAL SHAREHOLDERS' EQUITY (DEFICIT ) .  .  .  .  .  .  .  .    (759,489)     (788,955)
								  ------------  ------------
								  $ 2,015,697   $ 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                  SIX MONTHS 
						      ENDED JUNE 30,               ENDED JUNE 30, 
						---------------------------   --------------------------- 
						    1997           1996           1997           1996 
						------------   ------------   ------------   ------------ 
<S>                                             <C>            <C>            <C>            <C> 
REVENUES: 
     Net sales (Including $246,359, $242,640, 
	$469,124 and $472,064 in excise taxes)  $ 1,781,983    $ 1,791,736    $ 3,386,383    $ 3,354,350 
     Other income .  .  .  .  .  .  .  .  .  .       22,105         22,182         43,728         41,219 
						------------   ------------   ------------   ------------ 
						  1,804,088      1,813,918      3,430,111      3,395,569 
COSTS AND EXPENSES: 
     Cost of goods sold .  .  .  .  .  .  .  .    1,259,650      1,266,440      2,414,283      2,387,008 
     Operating, selling, general and 
	 administrative expenses .  .  .  .  .      480,130        473,705        918,418        902,572 
     Interest expense, net .  .  .  .  .  .  .       21,815         23,128         45,714         46,196 
						------------   ------------   ------------   ------------ 
						  1,761,595      1,763,273      3,378,415      3,335,776 
						------------   ------------   ------------   ------------ 
EARNINGS BEFORE INCOME TAXES  .  .  .  .  .  .       42,493         50,645         51,696         59,793 
INCOME TAXES.  .  .  .  .  .  .  .  .  .  .  .       16,863         20,258         20,544         23,917 
						------------   ------------   ------------   ------------ 
NET EARNINGS.  .  .  .  .  .  .  .  .  .  .  .  $    25,630    $    30,387    $    31,152    $    35,876 
						============   ============   ============   ============ 
 
NET EARNINGS PER COMMON SHARE 
    (Primary and Fully Diluted)  .  .  .  .  .         $.06           $.07           $.07           $.08 
						       =====          =====          =====          ===== 
 
 
 
 
			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,
									     ------------------------------
-
										  1997              1996
									     -------------    -------------
-
<S>                                                                          <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  $     31,152     $     35,876
    Adjustments to reconcile net earnings to net cash provided
	by operating activities:
	Depreciation and amortization of property and equipment  .  .  .  .        88,648           80,807
	Other amortization.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .         9,513            9,513
	Deferred income taxes.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .        22,025            7,941
	Noncash interest expense.  .  .  .  .  .  .  .  .  .  .  .  .  .  .         1,964              904
	Other noncash (income) expense.  .  .  .  .  .  .  .  .  .  .  .  .          (299)             474
	Net (gain) loss on property and equipment .  .  .  .  .  .  .  .  .          (433)             569
	Decrease in accounts and notes receivable .  .  .  .  .  .  .  .  .        16,319            8,476
	Decrease (increase) in inventories  .  .  .  .  .  .  .  .  .  .  .         1,305           (4,221)
	Increase in other assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .       (11,732)          (1,973)
	(Decrease) increase in trade accounts payable and other liabilities       (58,036)          13,091
									     -------------    -------------
		  NET CASH PROVIDED BY OPERATING ACTIVITIES.  .  .  .  .  .       100,426          151,457
									     -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Payments for purchase of property and equipment  .  .  .  .  .  .  .  .       (94,518)         (94,687)
    Proceeds from sale of property and equipment  .  .  .  .  .  .  .  .  .        10,728            7,433
    Other  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .         2,220              376
									     -------------    -------------
		  NET CASH USED IN INVESTING ACTIVITIES .  .  .  .  .  .  .       (81,570)         (86,878)
									     -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from commercial paper and revolving credit facilities  .  .  .     2,856,548        1,762,600
    Payments under commercial paper and revolving credit facilities .  .  .    (2,829,800)      (1,712,949)
    Principal payments under long-term debt agreements  .  .  .  .  .  .  .       (34,555)         (87,820)
    Other  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .          (520)            -
									     -------------    -------------
		  NET CASH USED IN FINANCING ACTIVITIES .  .  .  .  .  .  .        (8,327)         (38,169)
									     -------------    -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS.  .  .  .  .  .  .  .  .  .  .  .        10,529           26,410
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR .  .  .  .  .  .  .  .  .  .        36,494           43,047
									     -------------    -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD  .  .  .  .  .  .  .  .  .  .  .  $     47,023     $     69,457
									     =============    =============

RELATED DISCLOSURES FOR CASH FLOW REPORTING:

    Interest paid, excluding SFAS No.15 Interest  .  .  .  .  .  .  .  .  .  $    (48,122)    $    (51,692)
									     =============    =============
    Net income taxes paid .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  $     (3,042)    $     (5,881)
									     =============    =============


			     See notes to condensed consolidated financial statements.


							3
</TABLE>


<PAGE>

		  THE SOUTHLAND CORPORATION AND SUBSIDIARIES

	       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
		      SIX MONTHS ENDED JUNE 30, 1997

			      (UNAUDITED)

1. BASIS OF PRESENTATION:

     The condensed consolidated balance sheet as of June 30, 1997, and the 
condensed consolidated statements of earnings for the three-month and six-
month periods ended June 30, 1997 and 1996, and the condensed consolidated 
statements of cash flows for the six-month periods ended June  30, 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 June 30, 
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 
six months ended June 30, 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       Six Months  
				      Ended June 30,    Ended June 30, 
				     ---------------    -------------- 
				      1997     1996      1997    1996
				     ------   ------    ------   -----

Per Statement of Earnings:       
   Primary and Fully Diluted          $.06    $.07       $.07    $.08 

Pro Forma:       
   Basic                              $.06    $.07       $.08    $.09 
   Diluted                            $.06    $.07       $.07    $.08 




						      


<PAGE>

3. COMPREHENSIVE INCOME:

     The Company is currently reviewing Statement of Financial Accounting 
Standards ("SFAS") No. 130, "Reporting Comprehensive Income," but has not yet 
determined when it will adopt the provisions of this statement.  SFAS No. 130 
establishes standards for reporting comprehensive income and its components 
in a full set of general-purpose financial statements.





						      5



<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, 1997, the related 
condensed consolidated statements of earnings for the three-month and six-
month periods ended June 30, 1997 and 1996, and the condensed consolidated 
statements of cash flows for the six-month periods ended June 30, 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
August 4, 1997


				      6


<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 for the second quarter and first six months 
of 1997 were $25.6 million ($.06 per share) and $31.2 million ($.07 per 
share), respectively, compared to net earnings of $30.4 million ($.07 per 
share) and $35.9 million ($.08 per share) for the same periods in 1996. The 
results for the second quarter of 1997 declined, when compared to the prior 
year, due to favorable gasoline market conditions in 1996, combined with the 
incremental costs associated with the further implementation of several 
strategic initiatives in 1997.

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 for the first time in ten years.  During the first six months of 1997, 
16 new stores opened, with a much greater number of stores expected to be 
opened in the third and fourth quarters.
*    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.  Since June, 1996, the Company has 
expanded into six new areas in support of this initiative, with additional 
areas planned for the remainder of 1997 and 1998.
*    The development of a retail information system that has helped to 
automate accounting and other store-level tasks. The current phase, with 
implementation beginning this year,  involves the installation of point-of-
sale registers with scanning and a proprietary ordering system.

				       7


<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 $1.78 billion for the second quarter 
and $3.39 billion in the first six months of 1997, compared to net sales of 
$1.79 billion and $3.35 billion during the same periods last year.  The 
decrease in sales for the second quarter of 1997, when compared to the same 
period in 1996, is due to a decrease in gasoline sales resulting from lower 
retail prices in 1997.  Merchandise sales growth per store was as follows:


					       Periods Ending June 30, 1997
					       ----------------------------
INCREASE (DECREASE) FROM PRIOR YEAR           Three Months       Six Months
-----------------------------------           ------------       ----------
U.S. same-store sales                              0.4%             0.4%  *
U.S. same-store real growth; excluding inflation  (0.5)%           (0.9)% *
7-Eleven inflation                                 0.9%             1.3%
     *  THE FACT THAT 1996 WAS A LEAP YEAR NEGATIVELY IMPACTS THE CURRENT
	YEAR-TO-DATE GROWTH RESULTS BY APPROXIMATELY 50 BASIS POINTS.  THE
	YEAR-TO-DATE INCREASE IN U.S. SAME-STORES SALES, EXCLUDING THE LEAP
	YEAR IMPACT WOULD BE 0.9%, WITH THE U.S. SAME-STORE REAL GROWTH
	BEING -0.4%.

     Gasoline sales dollars per store decreased 5.1% for the second quarter 
due to a 7.0 cents per gallon decline in average retail sales price, as per-
store gasoline gallons sold increased only slightly during the second 
quarter.
<TABLE>
<CAPTION>

GROSS PROFITS
							  Periods Ending June 30, 1997
							  ----------------------------
							Three Months          Six Months
							------------          ----------
						    Merchandise Gasoline  Merchandise Gasoline
						    ----------- --------  ----------- --------
<S>                                                 <C>         <C>       <C>         <C>
Gross Profit - dollars in millions                  $  475.9    $  46.4   $  886.8    $  85.3
INCREASE/(DECREASE) FROM PRIOR YEAR - ALL STORES    
------------------------------------------------
Average per-store gross profit dollar change            1.1%     (13.2)%     1.6%      (9.7)%
Margin point change (gasoline in cents per gallon)     (.01)      (2.01)      .19      (1.07)
Average per-store sales (gasoline in gallons)           1.1%       0.1%      1.0%      (1.9)%
</TABLE>

     Total merchandise gross profit dollars were $3.6 million higher in the 
second quarter and $13.0 million for the six months, when compared to the 
same periods in 1996.  The increase was due to modest average per-store sales 
growth for both the second quarter and first six months, combined with 
favorable merchandise margins for year-to-date 1997.  The flat  merchandise 
margin during the second quarter, compared to last year, was due to 
improvements in product costs from contract negotiations late in 1996 being 
offset by introductory costs associated with the expansion of the fresh food 
initiatives (see Management Strategies).

     During the second quarter and first six months of 1997, gasoline gross 
profits decreased $6.6 million and $8.2 million, respectively, over the same 
periods in 1996.  The second quarter decline was due to lower margin, as last 
year's margin was aided by higher retail prices during a cycle in which 
wholesale costs were dropping.

				      8


<PAGE>

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

					Periods Ending June 30, 1997
					----------------------------
				  Three Months                Six Months
				  ------------                ----------
				1997        1996            1997      1996
				----        ----            ----      ----
Total OSG&A expenses           $480.1      $473.7          $918.4    $902.6
Ratio of OSG&A to sales         26.9%       26.4%           27.1%     26.9%

     Operating, selling, general and administrative expenses increased $6.4 
million during the second quarter of 1997, compared to the same period in 
1996 and $15.8 million for the first six months of 1997 compared to 1996.  A 
portion of the increase in OSG&A expenses resulted from costs associated with 
the Company's implementation of its retail information system (approximately 
$5 million more in the first six months of 1997) and other strategic 
initiatives (see Management Strategies).  The incremental cost of these 
initiatives, combined with lower gasoline prices in the second quarter of 
this year, pushed up the ratio of OSG&A expenses to sales for both the 
quarter and the year.  While this ratio will vary on a quarterly basis, 
management believes it will continue to be 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 decreased $1.3 million and $0.5 million from 1996 
during the second quarter and first six months of 1997, respectively.  The 
decrease was primarily due to lower levels of borrowing.  Approximately 36% 
of the Company's debt contains floating rates that would be unfavorably 
impacted by rising interest rates.  The weighted average interest rate for 
such debt was 5.7% for the second quarter and 5.8% for the first six months 
of 1997 versus 5.7% and 5.9% for the same time periods in 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.

				      


<PAGE>

     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% for drawn amounts. The 
new agreement requires letter of credit fees to be paid quarterly at .325% on 
the outstanding amount. In addition, a facility fee of .15%  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%, respectively, from the prior secured senior bank debt credit agreement.  
All rates and fees quoted are on a per annum basis.

     In April 1997, the Company entered into a Master Lease Facility ("MLF") 
of $115 million, which will be the primary financing for 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 June 30, 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 *   2.15 to 1.0    2.00 to 1.0
     Fixed charge coverage          1.19 to 1.0    0.65 to 1.0
     Senior indebtedness to EBITDA  3.12 to 1.0                  3.40 to 1.0

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

  
     During the first six months of 1997, the Company repaid $34.6 million of 
debt, which included $15.6 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 June 30 1997, for the commercial paper, the Term Loan and the 
Revolver, were $398.7 million, $225.0 million and $25.5 million,

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<PAGE>

respectively.  As of June 30, 1997, outstanding letters of credit issued 
pursuant to the New Credit Agreement totaled $68.3 million.

CASH FROM OPERATING ACTIVITIES

     Net cash provided by operating activities was $73.3 million for the 
second quarter and $100.4 million for the first six months of 1997, a 
decrease of $22.0 million and $51.0 million compared to the same periods in 
1996.  The majority of the decrease was due to the timing of payments related 
to trade payables.  (See Results of Operations section)

CAPITAL EXPENDITURES

     In the first six months of 1997, net cash used in investing activities 
consisted primarily of payments of $94.5 million for property and equipment.  
The majority of this capital 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 $265 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 its growth strategy and the 
portion of new store development that is funded through working capital 
versus leases.  Most leases for  newly constructed stores will 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.  The 
Company has recorded undiscounted liabilities representing its best estimates 
of the clean-up costs of $13.9 million at June 30, 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 $8.1 million at June 30, 1997.

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<PAGE>

     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 June 30, 1997, the Company's 
estimated undiscounted liability for these sites was $36.1 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 
future remediation costs for detected releases at these sites as of June 30, 
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 June 30, 1997, the 
Company has a net receivable of $45.3 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 6.2% to reflect their present 
value.  Thus, the recorded receivable amount is also net of a discount of 
$6.6 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.

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<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, in 1993  a purported class action lawsuit 
entitled 7-ELEVEN OWNERS FOR FAIR FRANCHISING, ET AL. V. THE SOUTHLAND 
CORPORATION, ET AL., Case No. 722272-6, was filed against Southland in the 
Superior Court for Alameda County, California ("7-Eleven OFFF").  The 
Company's majority owners and approximately 18 of its vendors were also named 
as defendants in this litigation.

     The Company's majority owners have been dismissed from the case, along 
with most of the vendor defendants, including Coca Cola, Pepsi Cola, Hansen's 
Juices and Oscar Mayer.  The only defendants remaining in the case are 
Southland, Citgo Petroleum Corporation and McLane Company, Inc.

     The Complaint filed by the plaintiffs alleged a variety of violations of 
California state antitrust laws, the California Business and Professions 
Code, breaches of the 7-Eleven Franchise Agreement and other claims relating 
to the business relationship between the Company and its 7-Eleven 
franchisees.

     On June 13, 1997, the Court heard argument on the plaintiffs' motion to 
certify a class in the case.  On July 23, 1997, the Court entered an Order on 
the plaintiff's motion that contained the following rulings:

     (a) the motion to certify a class on the following claims was denied, 
and plaintiffs have now elected to abandon these claims: (1) the claim 
relating to automated teller machines; (2) the claim relating to proprietary 
cups; (3) the claim relating to Southland's accelerated inventory management 
program; and (4) the claim that Southland required franchisees to incur 
certain expenses as a condition of having their stores remodeled;

     (b) the motion to certify a class on the following claims was denied, 
but without prejudice to plaintiffs' right to renew their motion: (1) the 
claim against Southland and Citgo relating to the manner in which franchisees 
are compensated for the sale of gasoline; and (2) the claim that Southland 
conspired with certain vendors to fix wholesale prices of 7-Eleven 
proprietary items that were purchased by the franchisees;

     (c) the motion to certify a class on the following claims was granted: 
(1) the claim asserting that Southland should have credited the franchisees' 
cost of goods sold with the value of equipment furnished by merchandise 
suppliers; (2) the claim asserting that Southland wrongfully failed to credit 
the franchisees' cost of goods sold with certain rebates, discounts, and 
allowances; (3) the claim relating to advertising allowances that Southland 
received from merchandise suppliers; (4) the claim that Southland wrongfully 
profited from its sale of goods to the franchisees; (5) the claim requesting 
that Southland be enjoined from requiring franchisees to operate 24 hours per 
day pursuant to the provisions of their franchise agreements; and (6) the 
claim that Southland and McLane conspired to divide wholesale markets and/or 
customers within California in violation of California's antitrust statute;


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<PAGE>

     (d) only the individual franchisees who are named plaintiffs in the case 
will be permitted to serve as class representatives, and the association 
known as 7-Eleven Owners for Fair Franchising will not be permitted to serve 
as a class representative; and

     (e) the time period for which the plaintiffs may seek damages on the 
claims certified for class action treatment shall not extend back more than 
four years from the filing of the Complaint in the case (i.e., to August 20, 
1989).

     Finally, during the June 13 hearing, the Court ruled that the claim 
against Southland and McLane regarding the alleged division of wholesale 
markets should be tried separately from the other remaining claims in the 
case.  The separate trial on this antitrust claim is scheduled to begin on 
January 12, 1998.  The trial on all other remaining claims is now scheduled 
to commence on April 6, 1998.  It is anticipated that the notice to potential 
class members will be mailed in September or October.

     The Company continues to believe that it has meritorious defenses to all 
of the claims asserted by the plaintiffs in this case and intends to defend 
vigorously against all such claims.  The ultimate outcome of a complicated 
case of this nature cannot be predicted, because such litigation is 
inherently uncertain.


VALENTE, ET AL. V. THE SOUTHLAND CORPORATION, ET AL.

     VALENTE I:  As previously reported, on March 15, 1996, the same lawyers 
representing the plaintiffs in the 7-Eleven OFFF case filed another purported 
class action lawsuit against the Company and most of the other defendants in 
the 7-Eleven OFFF case, in the U.S. District Court for the Northern District 
of California, entitled VALENTE, ET AL. V. THE SOUTHLAND CORPORATION, ET AL., 
Case No. 3:96-CV-1786-P ("Valente I").  Valente I alleged essentially the 
same claims as the 7-Eleven OFFF case, and was filed on behalf of all persons 
who signed a franchise agreement with Southland on or after March 15, 1990, 
relating to a 7-Eleven store in any state, except California.

     The Company filed a motion to transfer the case to federal court in 
Dallas and on June 24, 1996, that motion was granted.  After the transfer of 
the case to federal court in Dallas, the plaintiffs moved to dismiss the 
case, and on May 27, 1997, that motion was granted and this litigation is now 
terminated.

     VALENTE II:  On November 14, 1996, a third purported class action 
lawsuit was filed in the state court in Dallas, Texas (VALENTE, ET AL. V. THE 
SOUTHLAND CORPORATION, 14th Judicial District, Case No. 96-11972-A) ("Valente 
II").  Southland is the only defendant named in this case, which alleges 
breach of contract relating to the manner in which the Company accounted for 
discounts and allowances from merchandise vendors.  The plaintiffs purport to 
represent all persons who signed a franchise agreement with Southland on or 
after January 1, 1967, with respect to a 7-Eleven store in any state, except 
California.

     On June 20, 1997, the Court granted Southland's motion for partial 
summary judgment denying the Plaintiffs allegation that a Texas statute 
entitled them to seek damages for a period in excess of the four years 
allowed by the statute of limitations for breach of contract. The plaintiffs 
have attempted to replead their claims in order to avoid the four year 
statute of limitations.  The Company will continue to resist the plaintiffs' 
efforts to avoid the four year statute of limitations.

     The hearing on plaintiffs' motion for class certification is scheduled 
for November 20, 1997.  The Company intends to contest the certification of a 
class in this case and to defend 

				      1


<PAGE>

vigorously against all of the plaintiffs' allegations.  The Company continues 
to believe it has meritorious defenses to all of the claims asserted by the 
plaintiffs in this case.  The ultimate outcome of a complicated case of this 
nature cannot be predicted, because such litigation is inherently uncertain.


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, its majority 
owners and seven of its current and former officers in the United States 
District Court for the Northern District of Illinois, in April 1994.  
Plaintiffs are several franchisees of 7-Eleven stores in Illinois, 
Pennsylvania, New Jersey and Nevada, who purport to represent a nationwide 
class of all persons who have owned 7-Eleven franchises anywhere in the 
United States at any time since 1987.  During 1996, as the result of several 
rulings in the Company's favor, the only defendants remaining in the case are 
the Company, John Thompson, Jere Thompson and Clark Matthews.  In addition, 
of the 11 original causes of action, only one claim has been certified to 
proceed as a class action against the remaining defendants.  This claim 
alleges that 7-Eleven franchisees were injured as a result of allegedly 
fraudulent statements about the Company's financial condition that were made 
during and after the Company's LBO and Chapter 11 bankruptcy proceedings.

     The class has now been defined to consist of all persons who operated a 
7-Eleven convenience store franchise at any time between December 1, 1987 and 
March 4, 1991.  The Class Notice was mailed on or about April 24, 1997.  No 
trial date has been set for this matter and no motions are currently pending.

     The Company has aggressively attacked the merits of this suit from its 
inception and believes that it has meritorious defenses to the remaining 
claim.  At this time, however, the litigation is still at an early stage of 
development and the ultimate outcome of a complicated case of this nature 
cannot be predicted because such litigation is inherently uncertain.

TONKAWA SPRINGS HOMEOWNERS ASSOCIATION, ET AL. V. THE SOUTHLAND CORPORATION

     As previously reported a lawsuit was filed in Georgetown, Texas on 
behalf of a purported class of property owners in a subdivision near Round 
Rock, Texas who claimed their properties had been damaged as the result of a 
release of petroleum products from the 7-Eleven store in Round Rock (TONKAWA 
SPRINGS HOMEOWNERS ASSOCIATION VS. THE SOUTHLAND CORPORATION, 97-021-C277, in 
the 277th Judicial District Court for Williamson County, Texas).  On May 8, 
1997, this case was dismissed pursuant to a Notice of Nonsuit filed by the 
plaintiffs.  The Company paid no damages to plaintiffs in connection with the 
dismissal.

     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.

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

     On April 23, 1997, the Company held its annual meeting of shareholders.  
Each of the fourteen nominated directors were elected without contest.  In 
addition, the shareholders approved the adoption of the Company's 1997 
Performance Plan, and ratified the approval of Coopers & Lybrand L.L.P. to be 
the Company's independent auditors for 1997.

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

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<PAGE>

	  NOMINEE                     FOR                      WITHHELD

	  Masatoshi Ito               317,098,101              128,783
	  Toshifumi Suzuki            317,098,101              128,783
	  Clark J. Matthews, II       317,068,551              158,333
	  Yoshitami Arai              317,099,111              127,773
	  Masaaki Asakura             317,099,196              127,688
	  Timothy N. Ashida           317,099,196              127,688
	  Jay W. Chai                 317,097,702              129,182
	  Gary J. Fernandes           317,097,927              128,957
	  Masaaki Kamata              317,099,111              127,773
	  James W. Keyes              317,091,193              135,691
	  Stephen B. Krumholz         317,099,195              127,689
	  Kazuo Otsuka                317,099,196              127,688
	  Asher O. Pacholder          317,099,195              127,689
	  Nobutake Sato               317,099,111              127,773

     (b)  The votes for, against, abstaining and broker non-votes in 
connection with the approval of the Company's 1997 Performance Plan were as 
follows:

     303,512,176 shares were voted for; 581,487 shares were voted against; 
74,086 shares abstained from voting; and 13,059,135 broker non-votes were 
received.

     (c)  The votes for, against, abstaining and broker non-votes in 
connection with the ratification of the appointment of Coopers & Lybrand 
L.L.P. to be the independent auditors of the Company for 1997 were as 
follows:

     317,013,985 shares were voted for; 77,356 shares were voted against; 
45,010 shares abstained from voting; and 90,533 broker non-votes were 
received.

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

     (a)  Exhibits:

	  1.  Exhibit 10(ii)(D) -- Material Contracts
		Master Leasing Agreement dated as of April 15, 1997, among
		the financial institutions party thereto as Lessor Parties,
		CBL Capital Corporation, as Agent for the Lessor Parties
		and The Southland Corporation, as Lessee.

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

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<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:    8/5/97                             /s/  Clark J. Matthews II
     -------------                          ----------------------------
					   (Officer)
					   Clark J. Matthews, II
					   President and Chief Executive
					     Officer


Date:    8/5/97                             /s/  Donald E. Thomas
     -------------                          -----------------------------
					    (Principal Accounting Officer)
					    Donald E. Thomas
					    Vice President and Controller





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