SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-K/A-1


                   ANNUAL REPORT UNDER SECTION 13 or 15(d) of
                       THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996




Commission file number 0-16720
Commission file number 0-16721


                   PARTICIPATING INCOME PROPERTIES 1986, L.P.
                                       AND
                     FFCA INVESTOR SERVICES CORPORATION 86-B
                     ---------------------------------------
               (Exact Name of Co-Registrants as Specified in Their
                            Organizational Documents)



              Delaware                                       86-0570015
  -----------------------------------                 -------------------------
  (Partnership State of Organization)                 (Partnership IRS Employer
                                                         Identification No.)

              Delaware                                       86-0557949
  ------------------------------------                -------------------------
  (Corporation State of Incorporation)                (Corporation IRS Employer
                                                         Identification No.)

          The Perimeter Center                                 85255
      17207 North Perimeter Drive                            ----------
          Scottsdale, Arizona                                (Zip Code)
---------------------------------------- 
(Address of Principal Executive Offices) 


Co-Registrants' telephone number, including area code:        (602) 585-4500
<PAGE>
                                     PART I

Item 1.  Business.

         Participating   Income   Properties  1986,  L.P.,  a  Delaware  limited
partnership  (the  "Partnership"),  was  organized  on June 23,  1986  under the
Delaware Revised Uniform Limited  Partnership  Act. The Partnership  serves as a
co-general  partner of  FFCA/PIP  1986  Property  Company,  a  Delaware  general
partnership  (the  "Company"),  which was  organized to acquire new and existing
travel plazas, including land, buildings and equipment, to be leased to Flying J
Inc. and to franchisees of Flying J Franchise Inc. The other co-general  partner
of the Company is Perimeter Center Management Company ("PCMC").  The Partnership
invests in the travel  plazas  through  the  Company to avoid  burdensome  state
filing requirements. The Partnership is entitled to 99.9% of all of the profits,
losses  and  disbursable  cash of the  Company.  Under  the  terms of the  First
Restated  Agreement  of  Partnership  of the  Company,  PCMC is  entitled to the
remaining 0.1% of the profits,  losses and disbursable cash of the Company.  The
general  partner  of  the   Partnership  is  FFCA  Management   Company  Limited
Partnership, a Delaware limited partnership (the "General Partner").

         FFCA Investor  Services  Corporation  86-B, a Delaware  corporation and
wholly-owned  subsidiary of PCMC, which is the corporate  general partner of the
General Partner, was incorporated on June 23, 1986, to serve as the assignor and
initial  limited  partner  of the  Partnership  and the  owner of  record of the
limited  partnership  interests  in the  Partnership.  The  limited  partnership
interests are assigned by FFCA Investor  Services  Corporation 86-B to investors
in the Partnership.  FFCA Investor  Services  Corporation 86-B conducts no other
business activity.  The Partnership and FFCA Investor Services  Corporation 86-B
are referred to collectively as the "Co-Registrants."

         The  statements  contained  in  this  report,  if not  historical,  are
forward-looking  statements and involve risks and uncertainties that could cause
actual results to differ materially from the results, financial or otherwise, or
other  expectations   described  in  such  forward-looking   statements.   These
statements are identified with the words "anticipated" or "expected". Therefore,
forward-looking  statements  should not be relied upon as a prediction of actual
future results or occurrences.

         On October 10, 1986, the Co-Registrants  commenced a public offering of
$75,000,000  in  limited  partnership  depository  units  (the  "Units")  in the
Partnership  pursuant  to a  Registration  Statement  on  Form  S-11  under  the
Securities Act of 1933, as amended.  The  Co-Registrants  sold a total of 51,687
Units to investors at $1,000 per Unit for a total of $51,687,000.  Purchasers of
the Units  (the  "Holders")  acquired  the  following  number of Units from FFCA
Investor Services  Corporation 86-B on each of the following dates: 19,865 Units
on January 15,  1987;  and 31,822 Units on April 16,  1987.  Subsequent  to that
date, no Holder has made any additional capital contribution.  The Holders share
in the benefits of ownership of the Partnership's assets, 
<PAGE>
including its interest in the Company's real and personal property  investments,
according  to the number of Units  held,  in  substantially  the same  manner as
limited partners of the Partnership.

         After deducting  organizational and offering expenses,  including sales
commissions,  the net proceeds of the offering of the Units,  $45,613,778,  were
fully invested by the Partnership,  through its investment in the Company, as of
September  1988,  in eleven  "Flying J Travel  Plazas"  located in nine  states.
"Flying J Travel Plaza"  facilities  offer a full-service  operation,  generally
including fuel facilities,  a restaurant,  convenience store and other amenities
for use by the trucking  industry and traveling public in general.  As of August
25, 1997, eight of the travel plazas owned by the Partnership were leased to CFJ
Properties,  a general  partnership  formed  pursuant to a joint venture between
Flying J Inc.,  through its subsidiary,  Big West Oil Company ("Big West"),  and
Douglas Oil Company of California,  a subsidiary of Conoco Inc. ("Douglas Oil"),
one of the travel  plazas was leased to Flying J Inc. and the remaining two were
leased to  franchisees  of Flying J Franchise  Inc.  ("FJFI"),  a subsidiary  of
Flying J Inc. and the franchisor of Flying J Travel Plazas.  The Partnership and
the Company are not affiliated with CFJ Properties, Flying J Inc. or FJFI.

         The Partnership's  principal  objectives  through its investment in the
Company  are to (i)  preserve,  protect and enhance  Partnership  capital,  (ii)
provide partially  tax-sheltered cash distributions to investors,  (iii) provide
the potential for increased  income and  protection  against  inflation  through
participation in the gross revenues of Flying J Travel Plaza facilities and (iv)
obtain long-term appreciation in the value of its properties through real estate
ownership.

         Real estate owned by the Company is  generally  leased for a term of 20
years.  Equipment  is  generally  leased for a term of eight  years.  Of the two
equipment leases remaining at December 31, 1996, one will expire and the related
equipment is  anticipated to be sold to the lessee in January 1998 and the other
lease is not  subject to a  purchase  option.  Lessees  must  generally  pay the
Company  annual rental  payments (in monthly  installments)  equal to 10% of the
Company's total investment in properties.  As additional rent under the terms of
the lease,  the  Company  is  entitled  to  receive a portion  of the  operating
revenues of the lessees  equal to (i) 4% of annual gross  receipts  derived from
the travel plaza facility, excluding fuel sales, (ii) 3/10 of $.01 per gallon of
fuel sold and (iii) 4% of all amounts  received by the lessee for any lease year
pursuant  to any  sublease  by the  lessee of any part of its  leased  premises.
Reference  is made to Note (3) of the Notes to Financial  Statements  filed with
this Report for a schedule of the minimum  future lease  payments to be received
by the Company on its properties.

         The Partnership is dependent upon CFJ Properties, its principal lessee,
since an adverse change in its financial  condition could materially  affect its
ability to make lease  payments.  During 1996,  CFJ Properties and Flying J Inc.
together  contributed  approximately  88%  of the  Company's  total  rental  and
participating  rental  revenue  for the year and are  expected to  contribute  a
similar percentage of revenue in 1997.
                                       2
<PAGE>
         On February 1, 1991,  Flying J Inc.,  through its  subsidiary Big West,
entered into a joint venture with Douglas Oil to form CFJ  Properties.  Flying J
Inc.  (and  subsidiaries)  is a fully  integrated  oil and gas  company  that is
engaged in the  production,  refining,  transportation,  wholesaling  and retail
marketing of petroleum products and other services through its travel plazas and
gasoline stations. CFJ Properties is the franchisor and operator of the Flying J
Inc.  network of interstate  travel  plazas,  which included 72 properties as of
January 31, 1997. The Company owns eight of these properties. Under the terms of
the joint venture,  Big West sold to Douglas Oil certain Flying J Travel Plazas,
which  Douglas  Oil  contributed  back to CFJ  Properties.  In  addition to this
initial  contribution,  Douglas Oil also made  additional  contributions  to CFJ
Properties. As its initial contribution,  Big West transferred to CFJ Properties
certain  leasehold  interests  and  Flying J  Travel  Plazas,  and  subsequently
contributed  to  CFJ  Properties   various  assets  including  working  capital,
inventories  and future  development  sites.  With the  exception  of the Butte,
Montana  travel plaza,  Flying J Inc.  assigned its  leasehold  interests in the
travel  plazas  owned by the Company to CFJ  Properties  and was released by the
Company with respect to its obligations under those leases.

         The Partnership's  leases with CFJ Properties are with full recourse to
the assets of CFJ Properties, but without recourse to Big West or Douglas Oil. A
default  on one  lease  constitutes  a default  on all other  leases to the same
lessee by the Partnership and two other partnerships  sponsored by affiliates of
the General  Partner,  all of whose travel plazas are leased to CFJ  Properties,
Flying J Inc. or franchisees of FJFI.

         For the fiscal year ended January 31, 1997, CFJ Properties reported net
income of $1.8  million on  revenues  of $1.2  billion.  Revenues  rose 25% from
$937.4 million the prior year. The higher revenues  resulted from the opening of
six new units and  increases in fuel  prices.  Net income  decreased  from $17.2
million in the prior year due to higher interest  expense and lower gross profit
margins.

         During the fiscal year ended January 31, 1997, CFJ Properties  reported
$22.3 million in net cash  provided by operating  activities.  This cash,  along
with  the cash  provided  by  financing  activities,  was  used to make  capital
expenditures.  As of January 31, 1997, CFJ Properties  reported cash balances of
approximately  $2.1 million,  with  liquidity  supported by net cash provided by
operating activities and a $150 million revolving line of credit with a bank. As
of January 31, 1997, CFJ Properties reported partners' capital of $139.5 million
and total assets of $412.9 million.

         CFJ Properties leases travel plazas and equipment under  non-cancelable
operating  leases,  which expire at various  dates over the next 10 to 16 years.
Payments  under  these  leases were $17.3  million in 1997 and $17.6  million in
1996,   including   percentage  lease  payments.   Future  minimum  annual  rent
obligations  under  non-cancelable  leases,  as projected  through 2002,  remain
comparable to 1997 expense amounts.
                                       3
<PAGE>
         The  nine  properties  operated  by CFJ  Properties  and  Flying J Inc.
generated a combined fuel and non-fuel gross profit  (including other income) of
approximately  $24.4  million  during the fiscal year ended  January 31, 1997 as
compared to $26.8  million in 1996.  Total  travel plaza  unit-level  income for
these nine properties  (before  depreciation and allocated  corporate  overhead)
totaled  approximately  $700,000  in 1997  with  three  of the  nine  properties
reporting positive  unit-level income. The remaining six properties reported net
losses  primarily due to lower total gross profits.  The combined  result of the
travel plaza  unit-level  income before  depreciation  and  allocated  corporate
overhead  was down from $2.8  million  in the prior  year due  largely  to CFJ's
curtailment of its relationship with Comdata on June 1, 1996.  Comdata,  a large
third party billing company for the trucking industry,  requested changes to its
contract which were  unacceptable  to CFJ's  management  due to the  significant
long-term  ramifications of Comdata's  proposed change on CFJ's future business.
CFJ's  management  believes that CFJ's  profitability  will stabilize within the
next few months.  For CFJ  Properties'  fiscal year ended January 31, 1997,  the
average  unit-level  base  and  participating  rents  approximated  14.1% of the
original cost of these properties.

         Those  properties  that each  represent  over 10% of the  Partnership's
total assets are located in Amarillo, Texas; Clive, Iowa and Cheyenne, Wyoming.

         The travel  plaza/truckstop  industry,  although highly fragmented,  is
highly competitive.  The Partnership's lessees are competing with, among others,
National  Auto/Truckstops,  Petro  and  Pilot  Corporation,  as  well  as  other
national,  regional  and  local  truckstop  operators,  some of  which  may have
substantially  greater financial  resources than the lessees.  The Partnership's
lessees also compete with other  entities  which provide  hospitality  goods and
services to the trucking  industry and  traveling  public in general.  The major
competitive  factors  include,  among others,  location,  ease of access,  brand
identification, pricing, product and service selections, customer service, store
appearance,  cleanliness and safety.  The Flying J Travel Plaza facilities owned
by  the  Company  offer  a  full-service  operation,  generally  including  fuel
facilities, a restaurant, a convenience store and other amenities for use by the
trucking  industry and traveling  public in general.  Flying J Inc. reports that
the Flying J Travel Plaza network  consists of more than 100  facilities  across
the U.S.  interstate  highway system.  The travel plaza sites have been selected
based on traffic patterns and volumes, and access to interstate highways,  among
other criteria.

         According to the American Trucking  Association,  the trucking industry
grosses  more than  $340  billion  annually,  representing  78% of the  nation's
freight bill. The 20 million  commercial  trucks registered in the United States
consume  approximately  39 billion  gallons of fuel  annually.  The  Partnership
believes  that the  trucking  industry is  sensitive  to certain  aspects of the
general economic  environment,  such as retail sales;  the level,  direction and
rate of change in inventories; international trade; vendor performance; the cost
and availability of fuel; labor issues; and technology. The trucking industry is
also affected by various government  policies,  including economic  regulations;
vehicle  size and weight  regulations;  and  health,  safety  and  
                                       4
<PAGE>
environmental  protection  regulations.  These  factors also may  influence  the
competitive posture of one mode of transportation  compared to others;  however,
the  trucking  industry  has  presented  itself  as  an  affordable  and  timely
alternative  to other  methods of  transportation  such as air freight and rail,
particularly for short hauls.

         Through ownership of the travel plazas, the Partnership and the Company
are subject to the risks  associated with the  underground  storage of petroleum
products such as gasoline. In this regard, the Partnership's lessees are subject
to various federal,  state and local regulations and  environmental  laws. These
laws and regulations  affect the storing,  dispensing and discharge of petroleum
and other  wastes and affect the  lessees  both in the  securing  of permits for
fueling operations and in the ongoing conduct of such operations.

         Federal,  state and local regulatory  agencies have adopted regulations
governing  underground  storage tanks  ("UST's") that require the  Partnership's
lessees to make certain  expenditures  for  compliance.  In  particular,  at the
federal  level,  the  Resource   Conservation  and  Recovery  Act  requires  the
Environmental  Protection Agency ("EPA") to establish a comprehensive regulatory
program for the detection,  prevention and cleanup of leaking UST's. Regulations
enacted  by the EPA in 1988  established  requirements  for (i)  installing  UST
systems; (ii) upgrading UST systems;  (iii) taking corrective action in response
to releases; (iv) closing UST systems; (v) keeping appropriate records; and (vi)
maintaining  evidence of financial  responsibility  for taking corrective action
and  compensating  third parties for bodily injury and property damage resulting
from  releases.  These  regulations  permit  states to develop,  administer  and
enforce their own regulatory programs,  incorporating  requirements which are at
least as  stringent  as the  federal  standards.  By  1998,  all  UST's  must be
corrosion  protected,  overfill/spill  protected and have leak detection.  These
environmental  laws impose  strict  liability for owners and operators of faulty
and  leaking  storage  tanks  resulting  in damage to the  environment  or third
parties.

         The  General  Partner  has taken  steps to (i) ensure  that the lessees
comply with  applicable  rules and  regulations;  (ii)  mitigate  any  potential
liabilities,  including the establishment of storage tank monitoring procedures;
and  (iii)  require  that  lessees   indemnify  the  Partnership  for  all  such
liabilities and obtain liability insurance, if reasonably available. The General
Partner requires each lessee to obtain an annual environmental audit,  performed
by  an  environmental  consulting  and  engineering  firm,  which  includes  the
following procedures, among others: month-end cumulative fuel inventory variance
analysis; tank tightness tests; automatic tank gauging and leak detection system
operation and calibration  tests;  UST excavation zone  groundwater  and/or soil
vapor monitoring well analysis; piping system tightness tests; piping excavation
zone ground water and/or soil vapor monitoring well analysis; pipe leak detector
inspection and calibration  tests;  corrosion  protection system tests;  on-site
sanitary  sewer  treatment  plant  effluent  analysis;  and oil/water  separator
inspections. The consulting and engineering firm hired by the General Partner to
conduct such audits also reviews on-site environmental correspondence;  visually
inspects the UST system, tank and piping excavation zone monitoring wells, areas
adjacent to all 
                                       5
<PAGE>
petroleum above-ground tanks, the stormwater and wastewater control systems, and
the travel plaza facility;  and discusses employee training  procedures,  recent
significant  environmental  events (if any), repair and maintenance  activities,
and regulatory compliance with travel plaza personnel.

         The  Partnership  believes that its lessees are in compliance  with all
applicable  regulatory  requirements  and that its lessees have all governmental
licenses and permits required for their business operations. Management knows of
no pending or threatened  proceedings or  investigations  under federal or state
environmental  laws;  however,  management  cannot  predict  the  impact  on the
Partnership's lessees of new governmental regulations and requirements. Although
the General  Partner has taken necessary  steps,  as discussed  above, to ensure
lessee compliance with environmental regulations, there can be no assurance that
significant cleanup or compliance costs may not be incurred which may affect the
lessees' ability to make their scheduled lease payments to the Partnership.

         The Partnership, through its investment in the Company, has invested in
real estate  located in nine  states in the western and central  portions of the
United States,  and no real estate investments are located outside of the United
States.  A  presentation  of  revenues  or  assets by  geographic  region is not
applicable and would not be material to an  understanding  of the  Partnership's
business taken as a whole.

         The  Partnership  does not believe  that any aspect of its  business is
significantly seasonal in nature.

         No portion of the Partnership's business is subject to renegotiation of
profits or  termination  of  contracts  or  subcontracts  at the election of the
United States Government.  The Partnership does not manufacture any products and
therefore does not require any raw materials in order to conduct its business.

         The  Partnership is managed by the General Partner and therefore has no
employees of its own. FFCA Investor  Services  Corporation 86-B has no employees
because it does not conduct any business operations.
                                       6
<PAGE>
                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

         (a)      The following documents are filed as part of this Report:

         1.       Financial Statements.

                  The Partnership and the Company

                  Report of independent public accountants
                  Consolidated Balance Sheets as of December 31, 1996
                    and 1995
                  Consolidated Statements of Income for the years
                    ended December 31, 1996, 1995 and 1994
                  Consolidated Statements of Changes in Partners'
                    Capital for the years ended December 31, 1996,
                    1995 and 1994
                  Consolidated Statements of Cash Flows for the years
                    ended December 31, 1996, 1995 and 1994
                  Notes to Consolidated Financial Statements

                  FFCA Investor Services Corporation 86-B

                  Report of independent public accountants  
                  Balance Sheet as of December 31, 1996 
                  Notes to Balance Sheet

                  CFJ Properties
                  (A General Partnership)

                  Independent  Auditors' Report 
                  Balance Sheets as of January 31, 1997 and 1996  
                  Statements of Income and Partners' Capital for the
                    years ended  January 31, 1997,  1996 and 1995  
                  Statements of Cash Flows for the years ended January 31, 1997,
                    1996 and 1995
                  Notes to Financial Statements

                  Clive Travel Plaza

                  Independent Auditors' Report
                  Statements of Revenues and Direct Operating Costs and Expenses
                    for the years ended January 31, 1997, 1996 and 1995
                                       7
<PAGE>
                  Statements of Cash Flows for the years ended January 31, 1997,
                    1996 and 1995
                  Note to Financial Statements

                  Amarillo Travel Plaza

                  Independent Auditors' Report
                  Statements of Revenues and Direct Operating Costs and Expenses
                    for the years ended January 31, 1997, 1996 and 1995
                  Statements of Cash Flows for the years ended January 31, 1997,
                    1996 and 1995
                  Note to Financial Statements

                  Cheyenne Travel Plaza

                  Independent Auditors' Report
                  Statements of Revenues and Direct Operating Costs and Expenses
                    for the years ended January 31, 1997, 1996 and 1995
                  Statements of Cash Flows for the years ended January 31, 1997,
                    1996 and 1995
                  Note to Financial Statements

         2.       Financial Statement Schedules.

                  Schedule III-Schedule of Real Estate and Accumulated
                    Depreciation as of December 31, 1996

                  All other schedules are omitted since they are not 
                    required, are inapplicable, or the required 
                    information is included in the financial 
                    statements or notes thereto.

         3.       Exhibits.

                  99.      Annual Portfolio  Valuation of Cushman & Wakefield as
                           of December 31, 1996.

                           Pursuant to Rule 12b-32 under the Securities Exchange
                  Act of 1934, as amended,  the following  document,  filed with
                  the  Securities  and Exchange  Commission  as Exhibit 4 to the
                  Co-Registrants'  Form 10-K for the fiscal year ended  December
                  31, 1989, is incorporated herein by this reference.
                                       8
<PAGE>
                           Second Amended and Restated Certificate and Agreement
                           of Limited Partnership which governs the Partnership,
                           as filed with the  Secretary  of State of Delaware on
                           April 16, 1987.

                           Pursuant to Rule 12b-32 under the Securities Exchange
                  Act of 1934, as amended, the following  documents,  filed with
                  the  Securities  and  Exchange  Commission  as exhibits to the
                  Co-Registrants'  Form 10-K for the fiscal year ended  December
                  31, 1986, are incorporated herein by this reference.

<TABLE>
<CAPTION>
                                                                                        1986 Form 10-K
                                                                                          Exhibit No.
                                                                                          -----------

<S>                        <C>                                                             <C>
                           Depository Agreement of the Partnership.                          3-C

                           The Certificate of  Incorporation  which governs FFCA
                           Investor Services Corporation 86-B, as filed with the             3-D 
                           Secretary of State of Delaware on June 23, 1986.

                           Bylaws of FFCA Investor Services Corporation 86-B.                3-E
</TABLE>
                           Pursuant to Rule 12b-32 under the Securities Exchange
                  Act of 1934, as amended,  the following  document,  filed with
                  the Securities  and Exchange  Commission on October 8, 1986 as
                  Exhibit 10(e) to the Co-Registrants'  Pre-Effective  Amendment
                  No. 1 to the Registration Statement, is incorporated herein by
                  this reference.

                           Operating  Agreement,  dated  October 7, 1986, by and
                           among FFCA Management  Company,  L.P.,  FFCA/PIP 1986
                           Property   Company,   Flying  J  Inc.  and  Flying  J
                           Franchise Inc.

         (b)      Reports on Form 8-K.

                           No   reports   on  Form   8-K   were   filed  by  the
                           Co-Registrants  during the last quarter of the fiscal
                           year ended December 31, 1996.
                                       9
<PAGE>
                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the co-registrants  have duly caused this amendment to be signed on their behalf
by the undersigned, thereunto duly authorized.

                                      PARTICIPATING INCOME PROPERTIES 1986, L.P.

                                      By: FFCA MANAGEMENT COMPANY LIMITED
                                          PARTNERSHIP, General Partner

Date:  September 17, 1997             By: /s/ Morton H. Fleischer
                                          --------------------------------------
                                          Morton H. Fleischer, General Partner


                                      By: PERIMETER CENTER MANAGEMENT
                                          COMPANY, Corporate General Partner


Date:  September 17, 1997             By: /s/ Morton H. Fleischer
                                          --------------------------------------
                                          Morton H. Fleischer, President and 
                                          Chief Executive Officer

                                 FFCA INVESTOR SERVICES CORPORATION 86-B


Date:  September 17, 1997             By: /s/ John Barravecchia
                                          --------------------------------------
                                          John Barravecchia, President, 
                                          Secretary, Treasurer, Principal 
                                          Financial Officer and Principal 
                                          Accounting Officer
<PAGE>
Independent Auditors' Report

================================================================================

The Board of Directors
CFJ Properties:

We have audited the  accompanying  balance  sheets of CFJ  Properties (a general
partnership)  as of January 31, 1997 and 1996,  and the  related  statements  of
income  and  partners'  capital  and cash  flows  for  each of the  years in the
three-year  period ended January 31, 1997.  These  financial  statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial  statements  based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit  also  includes  examining,  on a test  basis,  evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of CFJ Properties as of January
31, 1997 and 1996, and the results of its operations and its cash flows for each
of the years in the three-year period ended January 31, 1997, in conformity with
generally accepted accounting principles.

/s/ KPMG Peat Marwick LLP

Salt Lake City, Utah
March 31, 1997
                                        1
<PAGE>
Balance Sheets

CFJ PROPERTIES
(A General Partnership)
January 31, 1997 and 1996
(In thousands)

<TABLE>
<CAPTION>
               Assets                                                   1997           1996
                                                                                  
Current assets:                                                                   
<S>                                                                  <C>            <C>     
  Cash and cash equivalents                                          $  2,138       $  2,314
  Trade receivables, net of allowance for doubtful accounts of                    
    of $129 in 1997 and $165 in 1996 (note 8)                          11,400         11,836
  Inventories (note 2)                                                 20,308         15,832
  Prepaid expenses                                                      2,141          2,229
                                                                     --------       --------
               Total current assets                                    35,987         32,211
                                                                     --------       --------
Land, buildings, and equipment:                                                   
  Land and improvements                                               129,270        111,053
  Buildings                                                           145,875        119,632
  Equipment                                                           105,561         86,939
  Leasehold improvements                                               24,317         24,494
  Construction-in-progress                                             29,454         33,687
                                                                     --------       --------
                                                                      434,477        375,805
  Less accumulated depreciation and amortization                       58,932         40,095
                                                                     --------       --------
               Net land, buildings, and equipment                     375,545        335,710
                                                                     
Long-term notes receivable                                                395            535
Other assets (note 3)                                                     957            930
                                                                     --------       --------
                                                                     $412,884       $369,386
                                                                     ========       ========
               Liabilities and Partners' Capital                                  
                                                                                  
Current liabilities:                                                              
  Accounts payable (note 8)                                          $ 58,395       $ 48,313
  Accrued liabilities (notes 4 and 8)                                  20,995         23,466
                                                                     --------       --------
               Total current liabilities                               79,390         71,779
Long-term debt (note 5)                                               190,000        156,500
Other liabilities                                                       4,016          3,409
                                                                     --------       --------
               Total liabilities                                      273,406        231,688
                                                                     --------       -------- 
Partners' capital                                                     139,478        137,698
Commitments and contingencies (notes 5, 6 and 10)                    
                                                                     --------       --------
                                                                     $412,884       $369,386
                                                                     ========       ========
</TABLE>                                                                  
See accompanying notes to financial statements.
                                            2
<PAGE>
Statements of Income and Partners' Capital

CFJ PROPERTIES
(A  General  Partnership)  
Years ended January 31, 1997, 1996 and 1995 
(In thousands)

<TABLE>
<CAPTION>
                                                       1997              1996              1995
                                                                                   
<S>                                               <C>               <C>               <C>        
Sales (note 1(f))                                 $ 1,171,813       $   937,370       $   703,430
Cost of sales                                         985,377           755,852           563,519
                                                  -----------       -----------       ----------- 
               Gross profit                           186,436           181,518           139,911
                                                  -----------       -----------       -----------
Operating, general, and administrative expense:                                    
  Operating                                           162,236           145,959           112,882
  General and administrative                           11,732            11,753             9,533
                                                  -----------       -----------       -----------
                                                      173,968           157,712           122,415
                                                  -----------       -----------       -----------
               Income from operations                  12,468            23,806            17,496
                                                  -----------       -----------       -----------
Other income (expense):                                                            
  Interest income                                         134                93               147
  Interest expense, net                               (10,659)           (6,642)           (1,483)
  Loss on sale of fixed assets, net                      (163)              (52)              (19)
                                                  -----------       -----------       -----------
                                                      (10,688)           (6,601)           (1,355)
                                                  -----------       -----------       -----------
               Net income                               1,780            17,205            16,141
Partners' capital, beginning of year                  137,698           120,493           104,352
                                                  -----------       -----------       -----------
Partners' capital, end of year                    $   139,478       $   137,698       $   120,493
                                                  ===========       ===========       ===========
</TABLE>                                                                       
See accompanying notes to financial statements.
                                       3
<PAGE>
Statements of Cash Flows

CFJ PROPERTIES
(A General Partnership)
Years ended January 31, 1997, 1996 and 1995
(In thousands)

<TABLE>
<CAPTION>
                                                                        1997            1996            1995
Cash flows from operating activities:
<S>                                                                 <C>             <C>             <C>    
  Net income                                                        $   1,780       $  17,205       $  16,141
  Adjustments to reconcile  net income to net cash provided by
   operating activities:
     Depreciation and amortization                                     19,080          14,933           9,827
     Provision for losses on accounts receivable                            0               0              51
     Loss on sale of fixed assets                                         163              52              19
     Change in assets and liabilities:
       Receivables                                                        436          (3,803)         (1,302)
       Inventories                                                     (4,476)         (3,034)         (4,065)
       Prepaid expenses                                                    88          (1,025)           (164)
       Other assets                                                      (106)           (128)          1,636
       Accounts payable and accrued liabilities                         4,723           8,817          16,713
       Other liabilities                                                  607           2,739             268
                                                                    ---------       ---------       ---------
           Net cash provided by operating activities                   22,295          35,756          39,124
                                                                    ---------       ---------       ---------
Cash flows from investing activities:
  Capital expenditures (note 8)                                       (56,111)       (104,107)        (90,258)
  Note receivable funded                                                  140            (535)              0
                                                                    ---------       ---------       ---------
           Net cash used in investing activities                      (55,971)       (104,642)        (90,258)
                                                                    ---------       ---------       ---------
Cash flows from financing activities:
  Proceeds from issuance of notes payable                                   0          25,000          75,000
  Net proceeds (payments) under line of credit agreements              33,500          44,500         (29,000)
                                                                    ---------       ---------       ---------
           Net cash provided by financing activities                   33,500          69,500          46,000
                                                                    ---------       ---------       ---------
Increase (decrease) in cash and cash equivalents                         (176)            614          (5,134)
Cash and cash  equivalents,  beginning  of  year                        2,314           1,700           6,834
                                                                    ---------       ---------       ---------
Cash  and cash equivalents, end of year                             $   2,138       $   2,314       $   1,700
                                                                    =========       =========       =========

Supplemental Disclosure of Cash Flow Information
  Cash paid for interest, net of capitalized amounts                $  10,854       $   6,387       $     916

Supplemental Disclosure of Noncash Investing Activities 
  The capital expenditures noted above are net of accounts 
  payable increases  (decreases)  related to the acquisiton of 
  building and equipment of $2,888,  ($4,403), and $2,477 in 
  1997, 1996, and 1995, respectively.
</TABLE>
See accompanying notes to financial statements.
                                       4
<PAGE>
Notes to Financial Statements

================================================================================

CFJ PROPERTIES
(A General Partnership)
January 31, 1997,  1996 and 1995

(1)  Summary of Significant Accounting Policies

The following  significant  accounting  policies are followed by CFJ  Properties
(the Partnership) in preparing and presenting its financial statements:

(a)  Organization  and Line of  Business  - The  Partnership  is a Utah  general
partnership with its principal business being the development and operation of a
national network of interstate travel plazas in North America.  A typical travel
plaza offers a 24-hour  service  operation  which  includes fuel  facilities,  a
restaurant or deli,  convenience store, and other amenities designed to meet the
needs of the trucking industry and traveling public.  Some travel plazas include
lodging and truck service centers. The Partnership operated 72, 66 and 54 travel
plazas, as of January 31, 1997, 1996 and 1995, respectively.

(b) Cash  Equivalents  - For  purposes  of the  statements  of cash  flows,  the
Partnership  considers all investments with original  maturities of three months
or less to be cash equivalents.

(c) Inventories - Inventories include gasoline, diesel,  ready-to-use additives,
related petroleum products, food and miscellaneous merchandise.  Inventories are
stated at the  lower of cost or  market  value as  determined  by the  first-in,
first-out (FIFO) method.

(d) Land, Buildings, and Equipment - Land, buildings and equipment are stated at
cost for  constructed  and  purchased  assets and fair market  value at the date
contributed  for  contributions  from  the  general  partners.  Depreciation  is
provided using the  straight-line  method over the estimated useful lives of the
assets. Leasehold improvements are amortized using the straight-line method over
the lesser of the lease term or the estimated useful life of the related assets.

Interest is capitalized in connection  with the  construction  of travel plazas.
The  interest  capitalized  is recorded as part of the asset to which it relates
and is amortized  over the lesser of its useful life or lease term.  Interest of
$1,634,000,  $2,925,000, and $2,993,000 was capitalized for 1997, 1996, and 1995
respectively.

(e) Income Taxes - The Partnership is not directly subject to income taxes. Each
partner is  responsible  for any income tax related to their  portion of taxable
income.

(f) Retail  Fuel Sales - The  Partnership  does not include  related  federal or
state  excise  taxes in petroleum  product  retail sales or cost of sales.  Such
taxes amounted to approximately $516,381,000,  $475,900,000 and $361,243,000 for
1997, 1996 and 1995, respectively.

(g) New Plaza  Opening Costs - Opening  costs are expensed  when  incurred.  The
costs associated with new travel plaza openings were  approximately  $2,100,000,
$4,000,000 and $4,100,000 in 1997, 1996 and 1995, respectively.

(h)  Concentration  of Credit Risk -  Financial  instruments  which  potentially
subject the Partnership to concentrations of credit risk consist  principally of
cash and cash equivalents,  and trade  receivables.  The Partnership  places its
cash  and  cash  equivalent  investments  with  high  quality  credit  financial
institutions  and  limits  the amount of credit  exposure  to any one  financial
institution. Concentrations of credit risk with respect to trade receivables are
limited  due to the  large  number of  customers  comprising  the  Partnership's
customer base, and their dispersion across many different  geographical regions.
The  Partnership  routinely  performs  credit  evaluations  of its customers and
maintains allowances for potential credit losses.

(i) Use of  Estimates  - The  Partnership  has made a number  of  estimates  and
assumptions  relating  to the  reporting  of  assets  and  liabilities  and  the
disclosure  of contingent  assets and  liabilities  to prepare  these  financial
statements in conformity with generally accepted accounting  principles.  Actual
results could differ from those estimates.

(2)  Inventories

Inventories are summarized as follows (in thousands):

                                             1997        1996
                                             ----        ----
Store merchandise and restaurant food      $16,368     $13,002
Petroleum products                           3,940       2,830
                                           -------     -------
                                           $20,308     $15,832
                                           =======     =======
                                       5
<PAGE>
(3)  Other Assets

Other assets consist of the following (in thousands):

                                    1997           1996
                                    ----           ----
Land deposits                       $630           $590
Lease deposits                       232            232
Loan origination fees, net            95            108
                                    ----           ----
                                    $957           $930
                                    ====           ====

(4)  Accrued Liabilities

Accrued liabilities are summarized as follows (in thousands):

                                   1997           1996
                                   ----           ----
Fuel taxes                       $14,285        $15,078
Expense incurred by           
    Operator (note 8)              4,222          5,677
Other                              2,488          2,711
                                 -------        -------
                                 $20,995        $23,466
                                 =======        =======
                            
(5)      Long-term Debt

Subsequent to year-end,  the Partnership replaced its line-of-credit  agreement.
Under  the new  revolving  line of  credit  the  Partnership  may  borrow  up to
$150,000,000.  Interest is computed at the  Partnership's  option,  at the Libor
rate plus plus .5 to 1 percent,  or the higher of the federal funds rate plus .5
percent and the administrative agent bank's prime rate. The agreement requires a
commitment  fee. The  Partnership had $90,000,000 and $56,500,000 in outstanding
borrowings  under a  revolving  line of credit as of January  31, 1997 and 1996,
respectively.  Interest rates on outstanding  borrowings range from 6.04 to 8.25
percent. In addition to the borrowings under the line of credit, the Partnership
had letters of credit totaling $5,177,000 outstanding as of January 31, 1997.

Under a fiscal 1995 Master Shelf Agreement,  the Partnership issued $100,000,000
in long-term notes payable to an insurance company. The notes bear interest from
7.37 to 9.45 percent and require quarterly interest  payments.  Annual principal
payments are  required  beginning  March 1998 with the final  payment in January
2005. In addition to the $100,000,000, the Partnership has an option to issue an
additional  $25,000,000 in long-term notes payable to the same insurance company
contingent upon meeting certain conditions.

Aggregate maturities of long-term debt are summarized as follows (in thousands):

1998                              $      0
1999                                10,000
2000                                15,000
2001                                17,000
2002                                16,000
Thereafter                         132,000
                                  --------
          Total                   $190,000
                                  ========

(6)  Lease Commitments

The Partnership leases travel plazas and equipment under noncancelable operating
leases,  which expire at various dates over the next 10 to 16 years.  The leases
are obligations of the Partnership without recourse to the general partners. The
operating  leases include  minimum and percentage  (contingent)  lease payments.
Contingent rents are based upon gallons sold,  restaurant and merchandise sales,
and other revenues.

Minimum lease payments under  noncancelable  operating leases were  $13,173,000,
$13,266,000 and $13,277,000 for the years ended January 31, 1997, 1996 and 1995,
respectively.  Percentage  lease payments under  noncancelable  operating leases
were $4,105,000, $4,348,000 and $4,213,000 for the years ended January 31, 1997,
1996 and 1995, respectively.

Future minimum payments under  noncancelable  operating leases as of January 31,
1997 are as follows (in thousands):

1998                             $  12,696
1999                                12,432
2000                                12,250
2001                                12,156
2002                                12,142
Thereafter                          92,608
                                   -------
          Total                  $ 154,284
                                   =======

(7)  Pension and Profit Sharing Plans

Currently, the Partnership has chosen to have all eligible employees participate
in the noncontributory  defined contribution pension and profit sharing plans of
Flying J Inc.  (Flying J), the parent  company of one of the  general  partners.
Contributions  to these plans,  which are made at the  discretion  of Flying J's
Board of Directors,  may be in cash or qualifying  common stock of Flying J. The
Partnership's expenses related to these plans amounted to $1,591,000, $1,212,000
and $998,000 for the years ended January 31, 1997, 1996 and 1995, respectively.
                                       6
<PAGE>
(8)  Related Party Transactions

Flying J operates all travel plazas and related  facilities for the Partnership.
Under the terms of the operations agreement, the Partnership reimburses Flying J
for the cost of  operations  plus a  monthly  amount  for  overhead  costs.  The
overhead  cost  reimbursements  amounted to $960,000,  $916,000 and $801,000 for
1997,  1996 and  1995,  respectively.  Flying J paid the  Partnership  $686,000,
$668,000 and $651,000  during 1997,  1996 and 1995,  respectively,  for services
performed by the Partnership for certain franchisees of Flying J.

During  its normal  course of  business,  the  Partnership  purchases  petroleum
products from the general  partners under supply  agreements.  It is the general
partners'  opinion that such  agreements  are under terms similar to those which
could be received  under  arms-length  contracts.  Purchases  from the partners'
amounted to approximately $882,884,000,  $662,900,000 and $494,800,000 for 1997,
1996 and 1995, respectively.

Included in accounts  receivable at January 31, 1997 and 1996 is $1,827,000  and
$1,317,000, respectively, due from affiliates.

Included  in  accounts  payable  and  accrued  liabilities  is  $38,256,000  and
$31,250,000  as of January  31,  1997 and 1996,  respectively,  due the  general
partners and their  affiliates  resulting from petroleum  product  purchases and
management services.

The  Partnership  periodically  contracts with Flying J for the  development and
construction of travel plazas.  Capitalized  expenditures under these agreements
were  $45,326,000  and  $70,326,000  in 1997 and 1996,  respectively.  It is the
general  partners'  opinion that such purchases are under terms similar to those
which could be received under arms-length contracts.

(9)  Disclosure About the Fair Value of Financial Instruments

The carrying value for certain short-term  financial  instruments that mature or
reprice frequently at market rate, approximates their fair value. Such financial
instruments  include:  cash and cash equivalents,  trade receivables,  revolving
line of credit, accounts payable, and accrued liabilities. The carrying value of
the long-term notes payable also approximates fair market value.

(10) Commitments and Contingencies

(a) Environmental Laws and Regulations - In connection with the operation of its
network of fuel  facilities,  the Partnership has become subject to increasingly
demanding   environmental   standards  imposed  by  federal,  state,  and  local
environmental  laws and  regulations.  It is the  policy of the  Partnership  to
comply with applicable environmental laws and regulations.

An estimated amount related to the remediation of environmental  issues has been
accrued  as  management's  best  estimate  of the  cost.  However,  governmental
regulations covering  environmental issues are highly complex and are subject to
change. Accordingly, changes in the regulations or interpretations thereof could
result in future costs to the Partnership in excess of the amounts accrued.

Management  believes that preventative  measures in addition to proper attention
to  these  regulations  will  minimize  costs  related  to  compliance  to  such
regulations.  Furthermore,  the Partnership  routinely  succeeds in recovering a
significant  portion of the cost of remediation from the states which administer
environmental clean up funds for in-state fuel retailers.

(b) Litigation - The Partnership is involved in legal actions resulting from the
ordinary  course of  business.  Such  actions  relate to  routine  travel  plaza
operations and other general matters.  Management  believes that the Partnership
has adequate legal defenses or insurance coverage and reserves and, accordingly,
the ultimate  outcome of such actions will not have a material adverse effect on
the Partnership's financial position.
                                       7
<PAGE>
Independent Auditors' Report



================================================================================





To the General Partners
CFJ Properties:


We have audited the  accompanying  statements  of revenues and direct  operating
costs and expenses  and the  statements  of cash flows from direct  travel plaza
operations  for each of the years in the  three-year  period  ended  January 31,
1997,  of the Clive Travel Plaza  operated by CFJ  Properties  (see note 1). The
land and related plaza facilities are owned by Participating  Income  Properties
1986,  L.P.  These  statements  are  the   responsibility  of  management.   Our
responsibility is to express an opinion on these statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable   assurance  about  whether  the  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management,  as
well as  evaluating  the overall  statement  presentation.  We believe  that our
audits provide a reasonable basis for our opinion.

The statements referred to above were prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange  Commission and are not
intended to be a complete  representation of the Clive Travel Plaza's statements
of operations and cash flows.

In our opinion, the statements referred to above present fairly, in all material
respects,  the  revenues  and direct  operating  costs and expenses and the cash
flows from direct travel plaza  operations of the Clive Travel Plaza for each of
the years in the  three-year  period ended January 31, 1997, in conformity  with
generally accepted accounting principles.


                                        /s/ KPMG Peat Marwick LLP


Salt Lake City, Utah
March 20, 1997
                                        1
<PAGE>
Statements of Revenues and Direct Operating Costs and Expenses


================================================================================
CLIVE TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
                                                                                        1997        1996        1995
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>         <C>         <C>     
Revenues                                                                              $ 18,076    $ 17,336    $ 17,471
----------------------------------------------------------------------------------------------------------------------
Direct operating costs and expenses:
  Cost of sales                                                                         15,234      14,167      13,730
  Labor costs                                                                            1,288       1,217       1,290
  Controllable operating expenses                                                          675         716         762
  Occupancy expenses                                                                     1,241       1,260       1,228
----------------------------------------------------------------------------------------------------------------------
              Travel Plaza revenues in excess (deficient) of direct operating costs
                 and expenses                                                         $   (362)   $    (24)   $    461
======================================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       2
<PAGE>
Statements of Cash Flows



================================================================================
CLIVE TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
                                                                           1997     1996     1995
-------------------------------------------------------------------------------------------------
<S>                                                                       <C>      <C>      <C>  
Cash flows from operating activities:
  Travel Plaza revenues in excess (deficient) of direct operating costs
     and expenses                                                         $(362)   $ (24)   $ 461
  Add amortization of leasehold improvements                                145      139      124
-------------------------------------------------------------------------------------------------
              Cash provided by (used in) direct Travel Plaza operations   $(217)   $ 115    $ 585
=================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       3
<PAGE>
Note to Financial Statements




================================================================================
CLIVE TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995


(1)   Summary of Significant Accounting Policies

(a)  Organization  and  Business - The Clive Travel  Plaza  (Travel  Plaza) is a
24-hour service operation and includes fuel facilities,  restaurant, convenience
store and other  amenities  designed to meet the needs of the trucking  industry
and  traveling  public in general.  The Travel  Plaza,  located in Clive,  Iowa,
commenced  operations in March 1989 and is operated by CFJ Properties (CFJ). The
land and related plaza  facilities are leased by CFJ from  Participating  Income
Properties 1986, L.P. (PIP 86).

The accompanying statements have been prepared to facilitate PIP 86's compliance
with the rules and  regulations of the Securities and Exchange  Commission.  The
statements  include  only  revenues  and direct  operating  costs and  expenses.
Certain  overhead  costs  such  as  corporate  administrative   allocations  are
excluded.

(b) Controllable Operating Expenses - Controllable operating expenses consist of
supplies,  repairs  and  maintenance,   cleaning,   advertising  and  promotion,
telephone and utilities,  insurance,  credit card charges and travel incurred at
the Travel Plaza level.

(c) Occupancy Expenses - Occupancy expenses consist of taxes, insurance and rent
paid to PIP 86.

(d) Leasehold  Improvements  Amortization - Leasehold improvements are amortized
using  the  straight-line  method  over  the  lesser  of the  lease  term or the
estimated useful lives of the related assets.

(e) Federal and State  Income  Taxes - Federal and state  income  taxes have not
been allocated to the Travel Plaza.
                                       4
<PAGE>
Independent Auditors' Report

================================================================================






To the General Partners
CFJ Properties:


We have audited the  accompanying  statements  of revenues and direct  operating
costs and expenses  and the  statements  of cash flows from direct  travel plaza
operations  for each of the years in the  three-year  period  ended  January 31,
1997, of the Amarillo  Travel Plaza operated by CFJ Properties (see note 1). The
land and related plaza facilities are owned by Participating  Income  Properties
1986,  L.P.  These  statements  are  the   responsibility  of  management.   Our
responsibility is to express an opinion on these statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable   assurance  about  whether  the  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management,  as
well as  evaluating  the overall  statement  presentation.  We believe  that our
audits provide a reasonable basis for our opinion.

The statements referred to above were prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange  Commission and are not
intended  to  be a  complete  representation  of  the  Amarillo  Travel  Plaza's
statements of income and cash flows.

In our opinion, the statements referred to above present fairly, in all material
respects,  the  revenues  and direct  operating  costs and expenses and the cash
flows from direct travel plaza  operations of the Amarillo Travel Plaza for each
of the years in the three-year period ended January 31, 1997, in conformity with
generally accepted accounting principles.


                                        /s/ KPMG Peat Marwick LLP


Salt Lake City, Utah
March 20, 1997
                                        1
<PAGE>
Statements of Revenues and Direct Operating Costs and Expenses


================================================================================
AMARILLO TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
                                                                                          1997        1996       1995
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>         <C>        <C>     
Revenues                                                                                 $ 21,706    $ 22,525   $ 23,449
------------------------------------------------------------------------------------------------------------------------
Direct operating costs and expenses:
  Cost of sales                                                                            19,188      19,152     19,973
  Labor costs                                                                               1,069       1,095      1,062
  Controllable operating expenses                                                             638         583        567
  Occupancy expenses                                                                          962         974        971
------------------------------------------------------------------------------------------------------------------------
    Travel Plaza revenues in excess (deficient) of direct operating costs and expenses   $   (151)   $    721   $    876
========================================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       2
<PAGE>
Statements of Cash Flows


================================================================================
AMARILLO TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
                                                                                        1997     1996    1995
-------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>      <C>     <C>  
Cash flows from operating activities:
  Travel Plaza revenues in excess (deficient) of direct operating costs and expenses   $(151)   $ 721   $ 876
  Add amortization of leasehold improvements                                             159      133     123
-------------------------------------------------------------------------------------------------------------
              Cash provided by direct Travel Plaza operations                          $   8    $ 854   $ 999
=============================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       3
<PAGE>
Note to Financial Statements



================================================================================
AMARILLO TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995


(1)   Summary of Significant Accounting Policies

(a)  Organization  and Business - The Amarillo  Travel Plaza (Travel Plaza) is a
24-hour service operation and includes fuel facilities,  restaurant, convenience
store and other  amenities  designed to meet the needs of the trucking  industry
and traveling public in general. The Travel Plaza,  located in Amarillo,  Texas,
commenced  operations in May 1989 and is operated by CFJ Properties  (CFJ).  The
land and related plaza  facilities are leased by CFJ from  Participating  Income
Properties 1986, L.P. (PIP 86).

The accompanying statements have been prepared to facilitate PIP 86's compliance
with the rules and  regulations of the Securities and Exchange  Commission.  The
statements include only revenues and direct operating costs and expenses.
Certain  overhead  costs  such  as  corporate  administrative   allocations  are
excluded.

(b) Controllable Operating Expenses - Controllable operating expenses consist of
supplies,  repairs  and  maintenance,   cleaning,   advertising  and  promotion,
telephone and utilities,  insurance,  credit card charges and travel incurred at
the Travel Plaza level.

(c) Occupancy Expenses - Occupancy expenses consist of taxes, insurance and rent
paid to PIP 86.

(d) Leasehold  Improvements  Amortization - Leasehold improvements are amortized
using  the  straight-line  method  over  the  lesser  of the  lease  term or the
estimated useful lives of the related assets.

(e) Federal and State  Income  Taxes - Federal and state  income  taxes have not
been allocated to the Travel Plaza.
                                       4
<PAGE>
Independent Auditors' Report



================================================================================







To the General Partners
CFJ Properties:


We have audited the  accompanying  statements  of revenues and direct  operating
costs and expenses  and the  statements  of cash flows from direct  travel plaza
operations  for each of the years in the  three-year  period  ended  January 31,
1997, of the Cheyenne  Travel Plaza operated by CFJ Properties (see note 1). The
land and related plaza facilities are owned by Participating  Income  Properties
1986,  L.P.  These  statements  are  the   responsibility  of  management.   Our
responsibility is to express an opinion on these statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable   assurance  about  whether  the  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management,  as
well as  evaluating  the overall  statement  presentation.  We believe  that our
audits provide a reasonable basis for our opinion.

The statements referred to above were prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange  Commission and are not
intended  to  be a  complete  representation  of  the  Cheyenne  Travel  Plaza's
statements of income and cash flows.

In our opinion, the statements referred to above present fairly, in all material
respects,  the  revenues  and direct  operating  costs and expenses and the cash
flows from direct travel plaza  operations of the Cheyenne Travel Plaza for each
of the years in the three-year period ended January 31, 1997, in conformity with
generally accepted accounting principles.


                                        /s/ KPMG Peat Marwick LLP


Salt Lake City, Utah
March 20, 1997
                                        1
<PAGE>
Statements of Revenues and Direct Operating Costs and Expenses


================================================================================
CHEYENNE TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
                                                                                        1997      1996      1995
------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>       <C>       <C>    
Revenues                                                                               $28,793   $24,733   $23,676
------------------------------------------------------------------------------------------------------------------
Direct operating costs and expenses:
  Cost of sales                                                                         23,216    19,214    18,583
  Labor costs                                                                            1,478     1,326     1,334
  Controllable operating expenses                                                          950       872       871
  Occupancy expenses                                                                     1,206     1,176     1,154
------------------------------------------------------------------------------------------------------------------
              Travel Plaza revenues in excess of direct operating costs and expenses   $ 1,943   $ 2,145   $ 1,734
==================================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       2
<PAGE>
Statements of Cash Flows


================================================================================
CHEYENNE TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
                                                                            1997     1996     1995
---------------------------------------------------------------------------------------------------
<S>                                                                        <C>      <C>      <C>   
Cash flows from operating activities:
  Travel Plaza revenues in excess of direct operating costs and expenses   $1,943   $2,145   $1,734
  Add amortization of leasehold improvements                                  321      290      276
---------------------------------------------------------------------------------------------------
              Cash provided by direct Travel Plaza operations              $2,264   $2,435   $2,010
===================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       3
<PAGE>
Note to Financial Statements



================================================================================
CHEYENNE TRAVEL PLAZA
Years ended January 31, 1997, 1996 and 1995


(1)   Summary of Significant Accounting Policies

(a)  Organization  and Business - The Cheyenne  Travel Plaza (Travel Plaza) is a
24-hour service operation and includes fuel facilities,  restaurant, convenience
store,  motel and other  amenities  designed  to meet the needs of the  trucking
industry and traveling public in general. The Travel Plaza, located in Cheyenne,
Wyoming,  commenced  operations  in July 1988 and is operated by CFJ  Properties
(CFJ).   The  land  and  related  plaza   facilities  are  leased  by  CFJ  from
Participating Income Properties 1986, L.P. (PIP 86).

The accompanying statements have been prepared to facilitate PIP 86's compliance
with the rules and  regulations of the Securities and Exchange  Commission.  The
statements  include  only  revenues  and direct  operating  costs and  expenses.
Certain  overhead  costs  such  as  corporate  administrative   allocations  are
excluded.

(b) Controllable Operating Expenses - Controllable operating expenses consist of
supplies,  repairs  and  maintenance,   cleaning,   advertising  and  promotion,
telephone and utilities,  insurance,  credit card charges and travel incurred at
the Travel Plaza level.

(c) Occupancy Expenses - Occupancy expenses consist of taxes, insurance and rent
paid to PIP 86.

(d) Leasehold  Improvements  Amortization - Leasehold improvements are amortized
using  the  straight-line  method  over  the  lesser  of the  lease  term or the
estimated useful lives of the related assets.

(e) Federal and State  Income  Taxes - Federal and state  income  taxes have not
been allocated to the Travel Plaza.
                                       4