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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                            -----------------------
                                   FORM 10-K

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

                     FOR THE YEAR ENDED DECEMBER 31, 1996

                                        
                        COMMISSION FILE NUMBER 1-13018
                                        
                         PETRO STOPPING CENTERS, L.P.
          (Exact name of the registrant as specified in its charter)

        DELAWARE                                             74-2628339
(State or other jurisdiction of                            (IRS Employer
 incorporation or organization)                          Identification No.)

    6080 SURETY DR.
     EL PASO, TEXAS                                             79905
(Address of principal executive offices)                      (Zip Code)

     Registrant's telephone number, including area code:   (915) 779-4711

                           __________________________

       Securities registered pursuant to Section 12(b) of the Act:  None

       Securities registered pursuant to Section 12(g) of the Act:  None

                           __________________________

          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 
                                     ---     ---

          Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT.  N/A

Documents incorporated by reference:  None
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                         PETRO STOPPING CENTERS, L.P.

                               TABLE OF CONTENTS

 
Item No.                                                          Page
-------                                                           ----
                                    PART I

1.          Business                                                1
2.          Properties                                              7
3.          Legal Proceedings                                      11
4.          Submission of Matters to a Vote of Security Holders    11

                                    PART II

5.          Market for Registrant's Common Equity and Related    
             Stockholder Matters                                   12
6.          Selected Financial Data                                12
7.          Management's Discussion and Analysis                   14
8.          Financial Statements and Supplementary Data            22
9.          Changes in and Disagreements with Accountants on     
             Accounting and Financial Disclosure                   42

                                    PART III

10.         Directors and Executive Officers of the Registrant     42
11.         Executive Compensation                                 44
12.         Security Ownership of Certain Beneficial Owners and
             Management                                            47
13.         Certain Relationships and Related Transactions         48

                                    PART IV

14.         Exhibits, Financial Statement Schedules and Reports
             on Form 8-K                                           54
 
            Signatures                                             55

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                                    PART I
ITEM 1.  BUSINESS

General
     Petro Stopping Centers, L.P. (the "Company") is a leading operator of
large, full-service truck stops with a nationwide network of 42 facilities known
as Petro Stopping Centers ("Stopping Centers"), located in 27 states.  The
Company has built its reputation by providing a high level of customer service
in a consistently clean and friendly environment. Each Stopping Center offers a
broad range of products, services and amenities, including diesel fuel,
gasoline, home-style restaurants, truck preventive maintenance centers
("Petro:Lubes") and travel and convenience stores to commercial truck drivers,
other highway motorists and local residents. Of the 42 Stopping Centers, 16 are
operated by franchisees who are required to meet the Company's high standards of
quality and service.

     The Company's primary customers are commercial and private trucking fleets
and professional truck drivers that comprise the long-haul sector of the
trucking industry. The Company sells diesel fuel to over 9,000 trucking
accounts.  By serving the needs of this customer base, the Company has continued
to grow its revenues and generate stable cash flow.

     The Company's facilities are designed to offer a number of benefits to
truck fleet operators and drivers. These advantages generally include well-lit
and fenced parking lots to enhance security for drivers, trucks and freight;
spacious parking areas and well-designed traffic flow to reduce truck stop
accidents; fewer stops and out-of-route miles through the use of the Company's
one-stop, multi-service facilities; and improved mileage and engine performance
through the use of the Company's proprietary diesel fuel additive.  As trucking
fleets consolidate and outsource their fueling as well as maintenance
requirements, the Company's facilities continue to experience sizable growth in
diesel fuel volume and preventive maintenance revenues.
 
     The Company's business was founded by Jack Cardwell, who opened the
Company's first truck stop in El Paso, Texas in 1975.  Until 1992, the Company
conducted its operations through a variety of entities owned by Mr. Cardwell and
members of his family.  Effective as of April 30, 1992, Fremont Group, Inc.
("Fremont"), an affiliate of Bechtel Group, Inc. and then named Bechtel
Investments, Inc., made an equity investment in the business through two
Delaware limited partnerships, Petro PSC Properties, L.P. ("Petro Properties")
and Petro PSC, L.P. ("Petro PSC").  In the transaction, Fremont and Roadside,
Inc. ("Roadside"), which is a wholly owned subsidiary of Fremont and was one of
the general partners of Petro Properties and Petro PSC, invested $25,000,000 in
the partnerships and Mr. Cardwell, his son and entities controlled by them, as
well as Arcadian Management Corporation ("Arcadian"), a corporation wholly owned
by a former executive officer of the Company, contributed most of the real
estate assets of the business to Petro Properties and the operating and other
assets of the business to Petro PSC.  The contributions made by the members of
the Cardwell Group (as defined) and Arcadian were valued at $45,570,000 by the
partners of Petro Properties.  The Cardwell Group's contribution to Petro
Properties was recorded at the Cardwell Group's amortized cost of the related
assets and liabilities.  Thereafter, Fremont and Roadside made additional equity
investments in the partnerships totaling $10,000,000.  Effective December 31,
1994, Petro Properties and its principal operating subsidiary, Petro PSC, were
merged and the name of the surviving partnership was changed to Petro Stopping
Centers, L.P., a Delaware limited partnership.

     In October 1996, Jack Cardwell, Jim Cardwell, JAJCO II, Inc. ("JAJCO"),
Petro Inc. (together with Jack Cardwell, Jim Cardwell, and JAJCO, collectively,
the "Cardwell Group"), Mobil Long Haul Inc. ("Mobil Long Haul"), wholly-owned by
Mobil Oil Corporation ("Mobil"),  Petro Holdings GP Corp. ("Holdings GP"), Petro
Holdings LP Corp. ("Holdings LP" and together with Holdings GP, "Chartwell,"
both of which are newly formed affiliates of Chartwell Investments Inc.
("Chartwell Investments")), and the Company, entered into the Omnibus Agreement
pursuant to which the parties thereto agreed, among other matters, that
Chartwell would invest $20.7 million and Mobil Long Haul would invest $15.0
million to acquire the general and limited partnership interests of the Company
owned by Sequoia Ventures, Inc. ("SVI") and Roadside (and together with SVI, the
"Fremont Partners") and to invest in the Company. The investment proceeds were
used to acquire the interests of the Company held by the Fremont Partners for
approximately $25.6 million and to invest approximately $10.1 million in the
Company.  In addition, Kirschner Investments, a Company franchisee ("Kirschner")
invested $1.0 million in the Company in connection with the Recapitalization (as
defined) (the "Kirschner Investment").

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     The common partnership interests of the Company are owned by Chartwell
(approximately 50.8%), the Cardwell Group (approximately 39.9%), Mobil Long Haul
(approximately 7.4%), and Kirschner (2.0%) and the preferred interests are owned
by Mobil Long Haul ($12.0 million) and the Cardwell Group ($7.6 million).
Chartwell and the Cardwell Group own both general and limited partnership
interests and Mobil Long Haul and Kirschner own only limited partnership
interests. Mobil and the Company also entered into certain supply and marketing
agreements as described herein. See "Certain Relationships and Related
Transactions".

     The Company has entered into a strategic alliance with Mobil under which an
affiliate of Mobil has invested in the Company and all of the Company-operated
diesel fuel islands will be branded with the Mobil name and image.


PETRO STOPPING CENTERS

     Of the 26 Company-operated Stopping Centers, 23 are full-size locations and
three are "Petro:2" units, which are smaller facilities with fewer amenities
than the full-service locations. Of the 16 franchised facilities, 13 are "full-
service" locations and three are "Petro:2" units. A typical full-size Stopping
Center is built on 15 to 30 acres with separate entrances and parking areas for
trucks and automobiles. Parking areas typically accommodate 200 to 300 trucks
and 100 to 175 cars or recreational vehicles, and are well lit and fenced to
maximize customer safety. Petro Stopping Centers are open 24 hours a day and
typically consist of the following:

Diesel Fuel Island

     The diesel fuel island is a self-service facility for professional drivers
which typically consists of 8 to 16 fueling lanes configured in a split crescent
formation. An equal number of fuel dispensers are located on both sides of a
central services building. This layout facilitates highway access and traffic
flow since all trucks approach the fueling lanes from the same direction.  The
fuel dispensers are computer driven, high speed units. Each fueling lane permits
simultaneous fueling of each of the truck's two tanks.  All diesel fuel sold by
the Company is currently branded "Petro".  Pursuant to its strategic alliance
with Mobil, the Company will convert to selling Mobil branded diesel fuel with
the Company's proprietary Petro Power Plus fuel additive at all of the Company-
operated diesel fuel islands. All Company-operated diesel fuel islands and
dispensers will carry signage with both the "Petro" and "Mobil" brand names.
Mobil will bear the costs associated with branding the Company's diesel fuel
islands Mobil.

     The central services building provides transaction processing through the
use of integrated, computerized cash registers and an organized data collection
system. Currently, "runners" at each fuel island collect information while
trucks are being fueled. This data, including driver and company names, license
number and mileage, is manually recorded in the computer system before the
driver walks to the cashier to pay for the fuel.

     To attract the business of drivers seeking a quick refueling stop, each
central services building includes a "mini-mart" offering an array of deli take
out food, snack foods, beverages, toiletries and a basic selection of trucker
accessories and supplies. In addition, the central services building also
provides other related services including certified scales, check cashing, money
wire services, permit services, faxing and copying. These facilities enable the
driver seeking a quick refueling stop to purchase consumables and services while
refueling.

     The diesel fuel islands generated $318.8 million, $351.1 million and $435.1
million in revenue for the fiscal years ended December 30, 1994, December 19,
1995 and December 31, 1996, respectively.

Petro:Lube Express Truck Service Center

     In 1983 the Company opened its first Petro:Lube facility to provide "while-
you-wait" preventive maintenance service for trucks. Since that time,
Petro:Lubes have been introduced at all of the Company-operated full-size
Stopping Centers and at two of its three Petro:2 locations. During 1996, the
Company opened its first stand-alone Petro:Lube.

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    Petro:Lube facilities offer oil and filter changes, lubrication and new,
used and retread tires, as well as tire repair. All Petro:Lube operations
feature highly recognized quality brands. The Company was the first truck stop
chain to offer service to truckers on an express basis.

    Petro:Lube facilities generally are located in a separate building toward
the rear of a Stopping Center and typically consist of four through-bay
entrances, with two in-ground pits. Two to four employees typically work at the
Petro:Lube operations at any particular time.

    Each Petro:Lube sells a limited number of high-quality brands such as Mobil
Delvac, Shell Rotella and Chevron Delo heavy duty motor oils and Kelly,
Bridgestone and Firestone tires. Under the marketing agreements entered into
with Mobil, Petro:Lube locations will feature Mobil's Delvac brand lubricants
and will develop marketing programs and strategies with Mobil. Each Petro:Lube
honors manufacturers' warranties as well as the Company's warranties for work
performed at any Petro:Lube throughout the country.

    Petro:Lube services are primarily utilized by owner/operators and small
fleets, but larger fleets are increasingly looking to out source their
maintenance needs. In addition to Stopping Center locations, the Company opened
a stand-alone Petro:Lube in 1996. Petro:Lube management believes that a
significant opportunity exists to develop stand-alone Petro:Lube units at
strategic locations throughout the country.

    The Petro:Lubes generated $34.2 million, $36.2 million, and $44.1 million in
revenue for the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively.

Iron Skillet Restaurants

    Each full-size Stopping Center includes the Company's trademarked "Iron
Skillet" restaurant. This home-style, sit down restaurant typically seats
approximately 180 customers, and features counter and waitress service, a soup
and salad bar and three "All-You-Can-Eat" buffets per day.  The Iron Skillet
prides itself on the "home cooked" items prepared fresh at each location.
Recipes developed at the Company's test kitchen in El Paso are accessible from
each location by computer.

    Iron Skillet restaurants are open 24 hours per day, 365 days per year and
feature certain tables and counter seats which are specially reserved for
professional drivers. Public telephones are generally available throughout the
dining area for customer convenience.

    The Iron Skillets generated $43.9 million, $47.4 million and $47.3 million
in revenue for the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively.

Travel and Convenience Stores

    Each Stopping Center includes a travel store featuring merchandise
specifically selected to cater to a professional truck driver's shopping needs
during the long periods typically spent away from home. Merchandise categories
include clothing, electronics such as televisions, mobile satellite dishes,
VCR's and CB radios as well as toiletries, gifts and truck accessories such as
cables, fuses, reflectors and antennae. The travel stores also carry a wide
array of Company branded merchandise such as coffee mugs, travel bags, hats, T-
shirts and other items designed to further increase recognition of the Petro
brand. A travel store typically carries approximately 4,500 SKUs and averages
2,400 square feet of selling space.

    Gasoline and automobile diesel fuel are sold from a separate Auto Fuel
Island at 25 of the Company's 26 locations. The Auto Fuel Islands are located
near the travel store (or in eight instances near a freestanding convenience
store) and accessed by separate "auto-only" entrances which help to separate
auto and truck traffic at the facility. The typical Auto Fuel Island is equipped
with 4 to 12 fuel dispensers for convenient and efficient fueling. The typical
stand-alone convenience store averages 570 square feet of selling space and
carries snacks, basic groceries and automobile supplies such as motor oil.

    The Travel Stores generated $54.7 million, $61.6 million and $67.1 million
in revenue for the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996 respectively.

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Additional Services for Drivers

    To meet the personal and business needs of commercial drivers and other
motorists, the Company provides numerous additional services at its Stopping
Centers. At the typical Stopping Center, customers have access to telephone, fax
and other communications services, overnight express drop boxes and ATMs.
Professional drivers have convenient on-site access to a certified truck
weighing scale and a truck wash operated by a third-party at most locations. In
addition, they can receive their paychecks and cash advances from the diesel
fuel island cashier's building. For a driver's comfort and relaxation, Stopping
Centers provide laundry facilities, game rooms, television viewing rooms and at
certain Stopping Centers, movie theaters. These common areas are designed to
provide hospitable areas separate from the restaurant and other retail spaces.

    The Company introduced nationally branded fast food concepts at several of
its locations in 1995. The Company currently operates one Wendy's, one Blimpie
Subs & Salads and two Pizza Hut Express units and plans to expand its fast food
program during the next several years.

    Each full-size Stopping Center features 12 to 18 private shower facilities.
The showers are fully tiled for easy maintenance and are professionally cleaned
after each use. Each shower room is equipped with a lock to provide privacy and
security. The Company also leases retail space at its Stopping Centers to
independent merchants who sell jewelry and other items and who also provide
haircutting, shoe shine and other services.

    Since June 1993, the Stopping Centers located in Hammond and Shreveport,
Louisiana have featured video poker operations. The primary customers for these
activities are local area residents. The video poker operations at each of these
sites feature 50 machines and are conducted in a stand-alone building, separated
from other Stopping Center facilities. A third-party operator manages the video
poker operations and incurs substantially all related expenses while paying a
portion of each machine's "winnings" to the Company. During 1996, Louisiana
enacted a statute requiring the cessation of video poker operations unless the
parish is in which the operations were conducted voted to allow the continued
operations of video poker machines. On November 5, 1996, the parish in which the
Shreveport facility is located voted to continue to allow video poker
operations, while the parish in which the Hammond facility is located voted to
disallow video poker operations.  The video poker operations at the Hammond
facility are required to be phased out by the end of June 1999.

PETRO:2 CENTERS

    Three Company-operated and three franchised facilities are Petro:2 Centers
("Petro:2") which provide the same basic fueling, restaurant, truck preventive
maintenance and retail store services as full-sized Stopping Centers, but on a
smaller scale and with fewer amenities. Unlike a full-size Stopping Center, a
Petro:2 has a relatively small single building which supports the cashier
functions for both the diesel and gasoline fuel islands. The original Petro:2
design and concept included a restaurant, known as the "Quick! Skillet,"
offering a narrower menu selection than the Iron Skillet restaurant at full-
facility Stopping Centers. Two of the Company-operated Petro:2 Centers currently
contain a "Quick! Skillet" and one now contains a Blimpie Subs & Salads. The
retail store at a Petro:2 is more comparable to a large convenience store with
some merchandise specifically targeted for truckers.

COMPETITION

    The U.S. truck stop industry is large and highly fragmented. According to
industry data, which is limited, there are approximately 2,200 truck stops
located on interstate highways. Management believes that approximately 27% are
operated by eight major national or regional truck stop chains. Long-haul trucks
can obtain diesel fuel from a wide variety of sources, including their own
fueling terminals, chains of large, high-quality truck stops, limited service
fueling facilities and some large service stations. The Company believes that,
while it competes with all truck stops, its principal competitors are
increasingly large, multi-service truck stop chains. Management believes that
eight chains accounted for approximately 40% of the 12.5 billion gallons of
over-the-road diesel fuel sold in 1994 in the United States and that the market
share of these large chains continues to increase as fleets look to do business
with fewer, more nationally represented providers to meet their needs. Trucking
fleets typically place a limited number of truck stop chains in their approved
fuel networks in an attempt to consolidate and leverage purchasing power.
Certain of the Company's competitors have substantially greater financial and
marketing resources than the Company.

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    The Company prices its diesel fuel competitively. A number of other large,
multi-service truck stop chains build somewhat smaller and less expensive
facilities, emphasizing low-priced diesel fuel and fast food restaurants. Many
of the other truck stop chains employ discount pricing of diesel fuel to
compete. At the same time, increased competition and over capacity among
trucking companies in recent years have increased truck fleet owners' focus on
reducing their operating costs. This has put increased pressure on diesel fuel
margins for the Company and its competitors. In recent years, a number of the
larger fleets have also opened proprietary terminals along their most-traveled
routes. In addition, from time to time, the Company is subject to intense price
competition in certain of its markets.

SUPPLY

    The Company purchases diesel fuel for each of its Company-operated Stopping
Centers on a daily basis. The purchase decision is made centrally in El Paso
each morning, based on the information reported by each of the Stopping Centers'
diesel fuel managers. The Company's fuel purchaser receives daily price quotes
from suppliers in each of the Company's markets through an on-line computer
system. The El Paso office then provides site managers with purchasing
instructions. Each location typically maintains a one to three day inventory of
fuel. The Company purchases diesel fuel from various integrated oil companies,
independent oil refineries and petroleum product brokers. Fuel for any single
Stopping Center is typically purchased from two to five established supply
sources.

    During 1996, the Company purchased diesel fuel from 10 key suppliers and
over 30 other suppliers. No single supplier accounted for more than
approximately 10% of the total amount of diesel purchased.

    Historically, the Company has not entered into significant long-term
contracts with fuel suppliers and engaged in only limited hedging activities. On
occasion the Company has purchased fuel in the forward contract market. In
connection with the Recapitalization (as defined), the Company has entered into
10-year supply agreements with Mobil under which Mobil will supply the Company-
operated Stopping Centers' diesel fuel requirements as well as a portion of
their lubricant and gasoline requirements. The diesel fuel sold at all Company-
operated Stopping Centers will be branded Mobil, and the Company-operated
Petro:Lubes will feature Mobil Delvac lubricants. Under the diesel fuel and
gasoline supply agreement, the Company has agreed to purchase from Mobil
specified distribution terminals a minimum number of gallons of diesel fuel and
gasoline on a monthly basis and on an annual basis, subject to product
availability and reductions by Mobil under certain described circumstances and
subject to existing gasoline supply contractual obligations. The supply
agreement allows the Company to continue to negotiate for the purchase of diesel
fuel with third-party suppliers approved by Mobil. If the Company is able to
obtain a lower diesel fuel price from a third-party supplier in a particular
market area, the Company may request that Mobil meet such lower price or allow a
portion of the Company's diesel fuel requirements to be supplied from such Mobil
approved third-party supplier, in which case Mobil would purchase the diesel
fuel from the supplier and resell the product to the Company. Any change in
supply source, however, does not affect the Company's requirement to purchase
the annual minimum number of gallons from Mobil specified distribution terminals
fixed by the supply agreement. The supply agreement also places a monthly limit
on the maximum number of gallons of diesel fuel and gasoline that the Company
may lift from Mobil specified distribution terminals.

TRADEMARKS AND TRADE NAMES

    The Company is the owner in the United States of various trademarks and
service marks. The Company grants franchisees the non-exclusive right to use the
proprietary marks at franchised locations. The Company regards its trademarks
and service marks as valuable assets and believes that they have significant
value in the marketing of its products and services.

GOVERNMENTAL REGULATION

Environmental Regulation

    The Company's operations and property are subject to extensive federal and
state legislation and regulations relating to environmental matters. The Company
uses underground and above ground storage tanks to store petroleum products and
waste oils. Statutory and regulatory requirements for underground storage tank
("UST") systems include requirements for tank construction, integrity testing,
leak detection and monitoring, overfill and spill control, and mandate
corrective action in case of a release from an UST into the environment. The
Company is also subject to regulations in certain locations relating to vapor
recovery and discharges into 

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water. Management believes that all of its USTs are currently in compliance with
applicable requirements and that it is currently in compliance with all other
applicable environmental laws and regulations. Some existing laws and
regulations relating to USTs do not become applicable immediately and have
future compliance schedules. The Company is currently in the process of
installing cathodic protection and overfill equipment or devices on its older
USTs (those installed before 1988) and plans to complete that work on or before
the dates required to achieve compliance under the current regulations. The
Company plans to spend approximately $300,000 in 1997 in connection with this
work. If additional requirements are imposed, additional expenditures may be
required. During 1994, 1995 and 1996, the Company's expenditures for
environmental matters were $151,000, $261,000 and $180,000, respectively. See
Note 2 to the Company's Consolidated Financial Statements for the year ended
December 31, 1996 for a discussion of its accounting policies relating to
environmental matters.

    In connection with its ownership of the properties and operation of its
business, the Company may also be subject to liability under various federal,
state and local environmental laws, ordinances and regulations relating to
cleanup and removal of hazardous substances (which may include petroleum or
petroleum products) on, under or in such property. Certain laws typically impose
liability whether or not the owner or operator knew of, or was responsible for,
the presence of such hazardous or toxic substances. Persons who arrange, or are
deemed to have arranged, for the disposal or treatment of hazardous or toxic
substances may also be liable for the costs of removal or remediation of such
substances at the disposal or treatment site, regardless of whether such site is
owned or operated by such person. The Company is not involved in any litigation
or other proceedings seeking to impose such liability. Where required or
believed by the Company to be warranted, the Company takes action at Company-
operated locations to correct the effects on the environment of prior disposal
practices or releases of chemical or petroleum substances by the Company or
other parties. In light of the business of the Company and the quantity of
petroleum products that it handles, there can be no assurance that hazardous
substance contamination does not exist or that material liability will not be
imposed in the future.

Other Regulation

    The Company is also subject to local licensing ordinances. The issuance of
permits for service station and lubrication operations is generally a matter of
discretion and is subject to the underlying requirement that the granting of the
permit be consistent with health, safety and moral welfare of the community.
Although the Company believes that careful planning and site selection reduces
the likelihood of significant zoning opposition, significant opposition to the
construction of a Stopping Center, if encountered, may cause the Company to
incur substantial expenses and delay.

    The Company's restaurant operations are subject to federal, state and local
regulations concerning health standards, sanitation, fire and general safety,
noncompliance with which could result in temporary or permanent curtailment or
termination of a restaurant's operations. In addition, difficulties in obtaining
the required licensing or approvals could result in delays or cancellations in
the openings of new restaurant facilities.

    In addition, the Company's video poker operations are subject to oversight
at the state and local level. During 1996, Louisiana enacted a statute requiring
the cessation of video poker operations unless the parish in which the
operations were conducted voted to allow the continued operations of video poker
machines. On November 5, 1996, the parish in which the Shreveport facility is
located voted to continue to allow video poker operations, while the parish in
which the Hammond facility is located voted to disallow video poker operations.
The phase out period for video poker at the Hammond facility is through June
1999.

    The Company as a franchisor is also subject to federal and state regulation
in the states in which it offers franchises or where franchised Stopping Centers
are currently operating. Federal regulations require that the Company provide
each perspective franchisee with a disclosure document that provides information
regarding the Company and the relevant provisions of the franchise agreement and
other ancillary contracts. In addition, certain state regulations require that
the franchisor be registered or be exempt from the applicable registration
requirements. Federal and state franchising laws prohibit certain "deceptive
trade practices" and, in some cases, impose fairness and "anti-discrimination"
standards on the Company.

    In addition to the franchise regulations outlined immediately above, the
Company's operations are subject to the Petroleum Marketing Practices Act
("PMPA"). PMPA is a federal law that prohibits a franchisor engaged in the sale,
consignment or distribution of refiner-branded motor fuels from terminating or
failing to renew a "franchise" or "franchise relationship," except on specified
grounds and only after compliance with the 

                                       6
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statute's notification provisions. PMPA expressly preempts state law concerning
the termination, nonrenewal and notice thereof with respect to motor fuel
franchises. PMPA is enforced judicially through cases interpreting the statute.

    The Company, currently a franchisee under the PMPA, will also become a
franchisor under the PMPA because it is able to distribute and sell diesel fuel
and gasoline under Mobil's trademarks to its franchisees.  Thus, the Company
will become subject, as a franchisor, to PMPA's termination, nonrenewal and
notice requirements in each of its individual, motor fuel contracts with its
franchisees. At the same time, the Company will be entitled to PMPA's
protections in its branded supply agreements with Mobil, as well as other
branded suppliers.  The Company is not party to any PMPA litigation.

    Under the Americans with Disabilities Act of 1990 (the "ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. While the Company believes its facilities
are in compliance with these requirements, a determination that the Company is
not in compliance with the ADA could result in the imposition of fines or an
award of damages, which could adversely affect the Company.

    The Company believes that all of its Stopping Centers are in compliance with
existing laws and regulations. However, new laws and regulations could require
the Company to incur significant additional costs.

EMPLOYEES

    At December 31, 1996, the Company had a total of 3,529 employees, of which
3,336 were full-time and 193 were part time.  At that date, 500 of the Company's
employees were salaried and performed executive, management or administrative
functions and the remaining 3,029 employees were hourly employees.  Almost 95%
of the Company's employees worked at the Stopping Centers and most employees at
the Stopping Centers work on an hourly basis.

    The Company has never had a work stoppage and none of its employees is
represented by a labor organization.  The Company believes that it provides
working conditions, wages and benefits that are competitive with other providers
of the kinds of products and services offered by the Company.

    Certain sections of this Form 10-K, including "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
contain various forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934 which represent the Company's expectations
or beliefs concerning future events that involve risks and uncertainties.  All
statements other than statements of historical facts included in this Form 10-K
may be considered forward-looking statements.  The Company cautions that these
statements are further qualified by important factors that could cause actual
results to differ materially from factors that cause actual results to differ
materially from those in the forward-looking statements.  The Company in the
preparation of its financial statements also makes various estimates and
assumptions that are forward-looking statements.

ITEM 2.  PROPERTIES

    The Company's corporate headquarters is located in a three-story building in
El Paso, Texas which contains approximately 30,000 square feet of space. The
Company leases the entire building from a member of the Cardwell Group and in
turn subleases approximately 2,700 square feet of space to an unrelated tenant.
The Company's lease of the building expires in December 2005 and provides for
annual rental payments of $336,000, plus taxes, maintenance and operating
expenses. See "Certain Relationships and Related Transactions."

    The Company owns 23 of its 26 Stopping Centers in their entirety, owns all
but four acres of its West Memphis Stopping Center site, owns the facility and
leases the land at its Hammond, Louisiana site and leases its Effingham,
Illinois Stopping Center site in its entirety.

    The Company also owns sites in Jonesboro, Georgia, Green River, Wyoming and
Beaverdam, Ohio which are suitable for the construction of new Stopping Centers.
The Company also has options, which expire in December 2006, to purchase vacant
land owned by the Cardwell Group that is located adjacent to four of the
existing Stopping Centers: Shreveport, Louisiana (7 acres subject to option);
Weatherford, Texas (34 acres); Beaumont, Texas (17 acres); and Oklahoma City,
Oklahoma (30 acres). See "Certain Relationships and Related Transactions."

                                       7
<PAGE>
 
    The Stopping Center located in Effingham, Illinois is leased from an entity
owned by current and former employees of the Company. The lease expires in May
2006 and provides for adjustable rental payments tied to interest rates (the
"Basic Rent"), which currently are approximately $89,000 per month, plus taxes
and operating expenses. The Company has three consecutive options to renew this
lease for terms of five years each at rental rates equal to the Basic Rent, plus
certain adjustments at the time of renewal and a right of first refusal to
purchase the Stopping Center complex at a purchase price agreed upon between the
lessor and a third party. See "Certain Relationships and Related Transactions."

    The land at the Hammond, Louisiana and a small portion (approximately
four acres) of the West Memphis, Arkansas Stopping Centers are subject to ground
leases. The Hammond ground lease expires in September 1998 and provides for
annual rental payments of $109,000, plus taxes. The Company has an option to
renew the ground lease for an additional six years at the current annual rent
increased by the percentage increase in the consumer price index from the
commencement date of the lease to the commencement of the first option, provided
that such increase shall not exceed 10%. The Company has the option, which
expires at the end of the lease term, to purchase the entire 21 acre tract of
land for $4.53 per square foot.  If the Company elects to purchase less than all
of the property, the price shall be at a price to be determined according to a
formula specified in the lease.  The Company's ground lease at the West Memphis
site expires in April 2005, and the Company has two additional options to renew
the ground lease for 10 years each, with scheduled rent increases every five
years, and a right of first refusal to purchase the land at a purchase price
agreed upon between the Company and the third party. Under the lease, the
Company makes annual rental payments of approximately, $40,000 plus taxes.

                                       8
<PAGE>
 
    The following table outlines the Company-operated Stopping Centers:
<TABLE>
<CAPTION>
 
                                                                      
                                                 APPROXIMATE                                     APPROXIMATE 
                                                 -----------                        SIZE OF      -----------
                                              STOPPING    TOTAL       DISPENSERS      MAIN      TRUCK    AUTO 
                                    DATE       CENTER   ACREAGE AT  --------------  BUILDING   PARKING  PARKING
     LOCATION                      OPENED      ACREAGE   LOCATION   DIESEL    GAS   (SQ. FT.)  SPACES   SPACES
     --------                    ----------   --------  ----------  ------  ------  ---------  -------  -------
<S>                              <C>          <C>       <C>         <C>     <C>     <C>        <C>      <C>      
COMPANY-OPERATED
FULL-SIZED
  El Paso, Texas................  Apr. 1975       31        51        12       8      20,000      350      96
  Weatherford, Texas............ Sept. 1977       25        25        12      10      21,000      300     128
  Beaumont, Texas...............   May 1981       20        20        12       8      12,300      275     196
  San Antonio, Texas............ Sept. 1982       21        21        12      10      13,200      250      85
  Eloy/Casa Grande, Arizona.....  June 1984       23        36        12      12      12,300      200      99
  Corning, California...........   May 1985       18        18        12      12      12,300      120     138
  Amarillo, Texas...............  June 1985       20        32        12      12      13,800      276     134
  Shreveport, Louisiana.........  Nov. 1985       18        21        12      12      13,800      242     118
  Hammond, Louisiana (a)........  Jan. 1986       16        21        12      12      12,300      200     120
  West Memphis, Arkansas(a).....  Aug. 1986       24        63        12      12      13,800      280     172
  Milan, New Mexico.............  Nov. 1986       23        30        12      12      13,800      200     127
  Knoxville, Tennessee..........  Mar. 1987       25        25        12      12      13,800      200     160
  Kingman, Arizona..............  Dec. 1987       38        67        12       8      14,600      180     175
  Oklahoma City, Oklahoma.......   May 1988       30        30        12       8      14,600      200     187
  Perrysburg/Toledo, Ohio.......  Aug. 1988       33        74        12       8      20,000      375     215
  Kingdom City, Missouri........  Feb. 1989       25        35        12       8      20,500      235     195
  Bucksville, Alabama...........  Feb. 1990       48        51        12       8      14,400      252     167
  Girard/Youngstown, Ohio.......   May 1990       29        98        14       8      20,000      312     170

  Effingham, Illinois(a)........  Mar. 1991       30        30        14       8      20,000      300     138
  Atlanta, Georgia..............  Mar. 1992       64        69        16    No Gas    21,500      490     129
  Laramie, Wyoming..............  Oct. 1993       35        50        12       6      15,500      180     111
  Ocala, Florida................  Jun. 1995       37       170        12       8      20,500      230     230
  Medford, Oregon...............  Jan. 1995       15        15         8       8      11,500       95     110

PETRO:2

  Vinton, Texas.................  Jan. 1991        8        19         7       8       4,800       55       8
  Kingston Springs, Tennessee... Sept. 1991        9        12         8       8       6,900       85      42
  Shorter, Alabama.............. Sept. 1991        9         9         4       4      12,700       75      39
</TABLE>
----------
(a) As discussed above, the Effingham, Illinois facility is owned by one present
and five former Company employees and leased to the Company, and the Hammond,
Louisiana and four acres of West Memphis, Arkansas units are subject to ground
leases.

                                       9
<PAGE>
 
FRANCHISES

    Since 1985, the Company has franchised others to operate Stopping Centers in
particular markets.  The following table sets forth information on the Company's
15 franchising arrangements as of February 29, 1996:
<TABLE>
<CAPTION>
 
                                         DATE CENTER       EXPIRATION OF
                   LOCATION                OPENED          FRANCHISE (1)
                   --------                ------          ------------- 
<S>                                      <C>               <C>                
        FULL-SIZED STOPPING CENTER   
           Elkton, Maryland              Sept. 1985          June 1997
           Ft. Chiswell, Virginia         Mar. 1986          June 1997
           Portage, Wisconsin            Sept. 1986          Dec. 2001
           Joplin, Missouri               Oct. 1987          Oct. 1997
           Lake Station, Indiana          Oct. 1987          Oct. 1997
           Ruther Glen, Virginia          Mar. 1988          Mar. 1998
           New Paris, Ohio                Oct. 1989          Oct. 1999
           Florence, South Carolina       Feb. 1991          Feb. 2001
           Rochelle, Illinois             Apr. 1992          Apr. 2002
           Fargo, North Dakota            Nov. 1994          Nov. 2004
           Carnesville, Georgia           Jan. 1995          Jan. 2005
           Bordentown, New Jersey(2)      May  1989          Dec. 2005
           York, Nebraska                 Dec. 1996          Dec. 2006
           Scranton, Pennsylvania         June 1997   (3)    June 2007     (4)
        PETRO:2                      
           Benton Harbor, Michigan        July 1989          July 1999
           Salina, Kansas                 Feb. 1990          Feb. 2000
           Jerome, Twin Falls, Idaho      Dec. 1990          Dec. 2000
---------
</TABLE>
(1)  All franchise agreements with the exception of one are for an initial ten
     year term and are automatically renewed for two five-year terms subject to
     the satisfaction of certain conditions, unless the franchisee gives a
     termination notice at least 12 months prior to expirations.  The franchise
     agreement for the Portage, Wisconsin location has been amended so that its
     initial term is approximately 15 years (expiring on December1, 2001) and it
     provides for only one five year renewal.  All franchise agreements are in
     their initial term including the Elkton and Ft. Chiswell agreements, whose
     initial terms have been extended from their initial termination dates of
     September 1995 and March 1996, respectively, until June 1997 by letter
     agreements.  The Company is currently in the process of attempting to
     obtain a first renewal of such agreements.
(2)  Bordentown, New Jersey was a licensee from the date of opening to December
     1995, at which time it became a franchised location.
(3)  Estimated completion date of Stopping Center.
(4)  Estimated termination date.  Initial term of Franchise Agreement will
     expire 10 years from the date the Stopping Center opens.

    One franchisee operates four locations, one operates three locations,
another operates two and six operate one location each.  All of the franchisees
are unaffiliated with the Company, except Highway Service Ventures Inc., (See
Item 13 "Certain Relationships and Related Transactions"),  which operates the
Elkton, Maryland, Ruther Glen, Virginia, Florence, South Carolina and
Carnesville, Georgia locations, and Bordentown, New Jersey of which Mr. Cardwell
Sr. was a partner until May 1995.

    Each existing franchise agreement grants to the franchisee the right and
license to operate a Stopping Center in a specified territory.  The franchise
agreements require that the franchisee build, at its own expense, and operate
the Stopping Center in accordance with certain requirements, standards and
specifications prescribed by the Company, including site approval and that the
franchisee purchase certain products from suppliers approved by the Company.
The Company, in turn, is obligated to provide the franchisee with, among other
things, advisory assistance in the operation of the franchised Stopping Center
and assistance in connection with advertising and promotional programs.

                                       10
<PAGE>
 
    The agreements require the franchisee to pay the Company (subject to certain
exceptions), in addition to certain initial fees and training fees, a monthly
royalty fee equal to between 3.5% and 4.0% of non-fuel gross sales (as defined
in the franchise agreement) and between $.0035 and $.0040 per gallon of fuel
sales (as defined); and a monthly advertising fee (administered through an
advertising fund for national and regional advertising) not to exceed  1/4 of 1%
of all gross sales of the franchised location for the preceding month.  During
1996, the Company's revenues from its franchisees totaled $3,397,000.  In
addition, franchisees contributed $292,000 to advertising programs sponsored by
the Company.

    While a majority of diesel purchases at Stopping Centers are paid for by
third-party billing companies, a portion of diesel fuel purchases are paid for
through direct billing arrangements with particular trucking companies.  As
provided in the franchise agreements, the Company purchases all of the
receivables generated by the franchisees from customers using direct billing
arrangements.  These purchases are on a non-recourse basis to the franchisee.
The Company pays the franchisees 96% of the face amount of the receivable,
retaining 4% to administer the program.  However, in cases where the customer is
given a volume discount or priced at "cost plus", the Company retains 1.6% and
 .55%, respectively, for administration.

    In addition, upon termination or expiration of the franchise agreement in
the event that the franchisee wishes to accept an offer from a third party to
purchase its facility, each franchise agreement grants the Company a right of
first refusal to purchase the facility, at the price offered by the third party.
Similarly, in nine cases, the Company has the right to purchase the franchise
for fair market value, as determined by the parties or an independent appraiser,
upon termination or expiration of the franchise agreement.  Each franchise
agreement also contains a three-year covenant by the franchisee not to compete
with the Company at any other location in the area upon termination or
expiration of the franchise agreement.

ITEM 3. LEGAL PROCEEDINGS

    The Company is from time to time involved in routine litigation incident to
its operations.  The Company believes that the litigation currently pending or
threatened against it will not have a material adverse effect on its
consolidated financial condition or results of operations.

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

    None.

                                       11
<PAGE>
 
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    All of the Company's general and limited partnership interests are owned by
the Cardwell Group, Chartwell, Mobil Long Haul and Kirschner.  See Note 17 to
the Company's Consolidated Financial Statements included elsewhere herein.
Consequently, there is no established trading market for the Company's equity.

ITEM 6.  SELECTED FINANCIAL DATA

    The selected consolidated financial data as of and for the years ended
December 31, 1996, December 29, 1995, December 30, 1994 and December 31, 1993
have been derived from the audited financial statements of the Company. The
selected consolidated balance sheet data as of December 31, 1992 have been
derived from the Company's audited balance sheet. The selected consolidated
statement of operations data for the twelve months ended December 31, 1992 have
been prepared by combining the unaudited results for the four month period ended
April 30, 1992 with the audited income statement for the eight month period
ended December 31, 1992. The unaudited financial data presented include, in the
opinion of management, all necessary adjustments required for fair presentation
of such data. In 1994, the Company adopted a 52/53 week fiscal year, which ended
on the Friday closest to December 31. Beginning in 1996, the Company adopted a
calendar year fiscal year, which ends on December 31.
<TABLE>
<CAPTION>
                                           Twelve        
                                         Months Ended   Year Ended      Year Ended      Year Ended      Year Ended
                                         December 31,   December 31,    December 30,    December 29,    December 31,
                                            1992           1993            1994            1995            1996
                                            ----           ----            ----            ----            ----
                                                dollars in thousands
                                                --------------------
Income Statement Data:
 
Net revenues:
<S>                                      <C>            <C>             <C>             <C>             <C> 
  Diesel Fuel............................ $282,781        $304,266       $318,761        $351,136        $435,071
  Restaurant.............................   40,711          41,819         43,877          47,387          47,335
  Petro:Lube.............................   29,696          30,754         34,160          36,198          44,082
  Travel and Convenience Stores..........   48,529          50,556         54,733          61,590          67,104
  Petro:2................................   23,145          26,304         26,798          27,734          33,584
  Other..................................    7,881           8,904          9,564           8,970           9,881
                                          --------        --------       --------        --------        --------
    Total................................  432,743         462,603        487,893         533,015         637,057

Costs and expenses:
  Cost of sales..........................  333,673         353,761        373,436         411,893         511,431
  Operating expenses.....................   64,007          66,706         64,968          73,052          81,522
  General and administrative.............   11,241          12,933         11,448          12,053          13,925
  Employee severance,
   benefit and placement expenses........       --              --             --                           2,534
  Depreciation and amortization (1)......    6,848           7,819          8,851          11,144          12,204
                                          --------        --------       --------        --------        --------
    Total costs..........................  415,769         441,219        458,703         508,142         621,616
                                          --------        --------       --------        --------        --------
    Operating income.....................   16,974          21,384         29,190          24,873          15,441

Recapitalization costs...................                                                                   2,938
Interest expense.........................   18,845          15,515         18,711          21,098          21,263
                                          --------        --------       --------        --------        --------
  Income (loss) before
   extraordinary item....................   (1,871)          5,869         10,479           3,775          (8,760)

Extraordinary item (2)...................        -               -          5,250               -               -
Minority interest........................        -              52            191               -               -
                                          --------        --------       --------        --------        --------
Net income (loss) (3).................... $ (1,871)       $  5,817       $  5,038        $  3,775        $ (8,760)
                                          ========        ========       ========        ========        ========

OTHER DATA:
-----------
EBITDA(4)(5)............................. $ 23,822        $ 29,203       $ 38,041        $ 36,017        $ 32,108
Capital expenditures (6).................    6,750          10,665          8,428          19,508           5,523
Ratio of earnings to fixed charges(7)....        -           1.36x          1.53x           1.17x               -

BALANCE SHEET DATA:
------------------
Total assets............................. $179,733        $190,848       $206,148        $221,699        $209,100
Total debt...............................  149,484         143,843        161,459         168,392         166,727
Total partners' capital (deficit)........   (5,343)          3,042          7,968          11,925           3,165
CASH FLOW PRESENTATION:
----------------------
Cash from operating activities...........      n/a        $ 14,792       $ 13,084        $ 12,766        $ 14,668
Cash from investing activities...........      n/a         (11,045)       (18,915)        (21,130)         (5,337)
Cash from financing activities...........      n/a             938          2,441          10,229         (11,837)
</TABLE> 

                                       12
<PAGE>
 
___________
(1)  Includes depreciation and amortization relating to the Company's Stopping
     Centers.  Amortization of deferred debt issuance costs is classified as
     interest expense.
(2)  Extraordinary item reflects write-off of debt restructuring costs
     associated with retired debt.
(3)  No provision for income taxes is reflected in the financial statements as
     the Company is a partnership for  which taxable income and tax deductions
     are passed through to the individual partners.
(4)  EBITDA represents operating income before deducting depreciation,
     amortization and interest.  EBITDA data, which are not a measure of
     financial performance under generally accepted accounting principles, are
     presented because such data are used by certain investors to determine a
     company's ability to meet historical debt service requirements.  Such data
     should not be considered as an alternative to net income, as an indicator
     of the Company's operating performance or as an alternative to cash flows
     as a measure of liquidity.
(5)  EBITDA results for fiscal 1996 excludes certain one-time charges related to
     the Recapitalization and the change in management and operations.  Included
     in the one-time charges were $2.5 million related to severance and hiring
     costs; $1.4 million in obsolete inventory reserves, included in cost of
     sales; and $.5 million in insurance related costs.
(6)  Capital expenditures primarily represent the cost of new Stopping Centers
     and renovations of existing Stopping Centers.
(7)  For purposes of determining the ratio of earnings to fixed charges,
     earnings are defined as net income plus fixed charges.  Fixed charges
     consist of interest expense (including the amortization of deferred debt
     issuance costs) and the portion of rental expense that is representative of
     the interest factor (deemed to be one-third of minimum operating lease
     rentals).

                                       13
<PAGE>
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS

General

Recapitalization

     On January 30, 1997, the Company consummated a transaction entered into in
October 1996, in which Chartwell, Mobil Long Haul and the Cardwell Group entered
into an agreement under which Chartwell and Mobil Long Haul invested $20.7
million and $15.0 million, respectively (the "Equity Investment"), in order to
directly acquire the partnership interests of the Company owned by the Fremont
Partners for approximately $25.6 million and invested approximately $10.1
million in the Company. The Cardwell Group maintained its capital investment in
the Company. Kirschner invested $1.0 million in the Company. Following the
Equity Investment and the Kirschner Investment, the common partnership interests
of the Company are owned by Chartwell (approximately 50.8%), the Cardwell Group
(approximately 39.9%), Mobil Long Haul (approximately 7.4%), and Kirschner
(2.0%), and the preferred partnership interests are owned by Mobil Long Haul
($12.0 million) and the Cardwell Group ($7.6 million). Chartwell and the
Cardwell Group own both general and limited partnership interests and Mobil Long
Haul and Kirschner own only limited partnership interests. Mobil and the Company
also entered into certain supply and marketing agreements.

     As part of the Recapitalization, the Company issued $135 million of 10 1/2%
Senior unsecured notes due 2007, (the "New Notes") and made a tender offer (the
"Tender Offer") for, and repurchased approximately 94% of its 12 1/2% Senior
Notes due 2002 (the "Existing Notes") and approximately 99% of the outstanding
debt warrants (the "Debt Warrants").
 
     The "Recapitalization" consists of the Equity Investment, the Tender Offer,
the Kirschner Investment, the issuance of the New Notes and the entering into
the New Credit Agreement.

     The Company also replaced its senior collateralized credit facility (the
"Existing Credit Agreement") with an amended and restated senior collateralized
credit facility (the "New Credit Agreement"). The New Credit Agreement consists
of a $25.0 million revolving credit facility (the "Revolving Credit Facility"),
a $14.0 million Term Loan A, a $30.0 million Term Loan B and a $40.0 million
expansion facility (the "Expansion Facility"). The New Credit Agreement is
collateralized by substantially all of the Company's assets and the partnership
interests of Mobil Long Haul and Chartwell and guaranteed by each of the
Company's subsidiaries, which guarantees in turn are collateralized by
substantially all of such subsidiaries' assets.

     In the first quarter of 1997, the Company will recognize an extraordinary
charge of $13.5 million relating to amendment of the Existing Credit Agreement,
retirement of the Existing Notes and Debt Warrants and the write-off of deferred
financing costs.

The following table sets forth the development of the Company's Stopping Center
network since 1992.
<TABLE>
<CAPTION>
 
                                          Open at the end of
                                      ----------------------------
                                      1992  1993  1994  1995  1996
                                      ----  ----  ----  ----  ----
 
Company-operated Stopping Centers:
<S>                                   <C>   <C>   <C>   <C>   <C>
  Full-sized........................    20    21    21    23    23
  Petro:2 :.........................     3     3     3     3     3
Franchised..........................    12    12    13    15    16
Independently operated..............     1     1     1     -     -
                                      ----  ----  ----  ----  ----
  Total Stopping Centers............    36    37    38    41    42
                                      ====  ====  ====  ====  ====
</TABLE>

                                       14
<PAGE>
 
     All of the Stopping Centers opened since January 1, 1993 were newly
constructed facilities, except Medford, Oregon, where the Company purchased an
existing truck stop and converted it into a Stopping Center.  In addition to the
new full-sized facilities, the Company opened new Petro:Lubes at its San
Antonio, Beaumont and Medford locations in June 1994, January 1995 and April
1996, respectively.  At December 31, 1996, there were no new Company-operated
facilities under construction.  However a new franchisee location located in
Scranton, Pennsylvania was under construction with an anticipated opening in the
second quarter of 1997.  The approximate construction cost of a new stopping
center (exclusive of land) is between $7.0 and $9.5 million.

     The Company has never closed a Stopping Center and has no current plans to
do so.

     Revenues.  The Company's revenues at each of its full-sized Stopping
Centers are recorded through the following divisions:  diesel fuel island,
restaurant, Petro:Lube and travel and convenience store.  The Company's Petro:2
division includes all activities at its Petro:2 units except for revenues from
the Petro:Lube located at the Petro:2.  Sales at the Company's store located in
the fuel island building, as well as its revenues from the truck weighing
scales, are included in the results of the diesel fuel island division.  The
restaurant division includes the freestanding Iron Skillet restaurant in
Arlington, Texas.  The travel and convenience store division includes the
Company's revenues from other activities at the Stopping Center, including
showers, laundry, vending machines, video games and other retail activities, as
well as gasoline and auto diesel sales.  Other includes franchisee fees and
income from video poker machines, discounts on franchisee receivables, fuel
hauling, fast food restaurants, motel and RV park.

     In May 1994, the Company purchased the rights to certain revenues (the
"Coinage Arrangement") from certain specified activities (pay telephone
services, video games and rentals of retail space) at 14 Stopping Centers.

     The Company's fuel revenues and cost of sales include significant amounts
of federal and state motor fuel taxes.  Such taxes were $140,460,000,
$150,360,000 and $175,873,000 for the years ended December 30, 1994, December
29, 1995 and December 31, 1996, respectively.

     Taxes.  No provision for income taxes is reflected in the financial
statements as the Company is a partnership for which taxable income and tax
deductions are passed through to the partners.

                                       15
<PAGE>
 
<TABLE>
<CAPTION>
 
           SUPPLEMENTAL DATA
                                           Year ended     Percent      Year ended      Percent     Year ended     Percent
                                          December 30,    of net      December 29,      of net    December 31,     of net 
                                              1994       revenues         1995         revenues       1996        revenues
                                          ------------   ---------   --------------    --------   ------------    --------
                                                                        (in thousands)                            
                                                                        --------------                            
Net Revenues:                                                                                                     
<S>                                       <C>            <C>         <C>               <C>        <C>             <C> 
  Diesel fuel island....................      $318,761      65.3%       $351,136         65.9%      $435,071        68.3%
  Restaurant............................        43,877       9.0          47,387          8.8         47,335         7.4
  Petro:Lube............................        34,160       7.0          36,198          6.8         44,082         6.9
  Travel and convenience store..........        54,733      11.2          61,590         11.6         67,104        10.5
  Petro:2...............................        26,798       5.5          27,734          5.2         33,584         5.3
  Other.................................         9,564       2.0           8,970          1.7          9,881         1.6
                                              --------     -----        --------        -----       --------       -----
    Total...............................      $487,893     100.0%       $533,015        100.0%      $637,057       100.0%
                                              ========     =====        ========        =====       ========       =====
Operating Contribution:                                                                                            
  Diesel fuel island....................      $ 16,836       5.3%       $ 16,357          4.7%      $ 16,461         3.8%
  Restaurant............................         7,655      17.4           8,074         17.0          7,534        15.9
  Petro:Lube............................         7,636      22.3           7,278         20.1          7,863        17.8
  Travel and convenience store..........         4,357       8.0           5,988          9.7          4,569         6.8
  Petro:2...............................         1,385       5.2           1,150          4.1            853         2.5
  Other.................................        11,620       n/a           9,223          n/a          6,824         n/a
                                              --------     -----        --------        -----       --------       -----
    Total...............................        49,489      10.1%         48,070         9..0%        44,104         6.9%
                                              --------     =====        --------        =====       --------       =====
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
Employee severance, benefit and                                                                                          
 placement expenses                                 --                        --                       2,534            
General and administrative                                                                                              
  expenses..............................        11,448                    12,053                      13,925            
                                                                                                                        
Recapitalization costs                              --                        --                       2,938            
Depreciation and                                                                                                        
    amortization                                 8,851                    11,144                      12,204            
Interest expense                                18,711                    21,098                      21,263            
 Income before extra-                                                                                                   
ordinary item                                   10,479                     3,775                      (8,760)           
Extraordinary item                               5,250                         -                           -            
Minority interest                                  191                         -                           -            
                                              --------                  --------                    --------            
Net Income (loss)(1)                          $  5,038                  $  3,775                    $ (8,760)           
                                              ========                  ========                    ========            
</TABLE> 
---------------
(1)  Net income for 1996 is after certain one-time charges related to the
     Recapitalization and the change in management and operations.  Included in
     the one-time charges to operating income were $2.5 million related to
     severance and hiring costs; $1.4 million in obsolete inventory reserves
     (included in cost of sales), and $.5 million in insurance related costs.
     Costs incurred in connection with the Recapitalization amounted to $2.9
     million.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 29, 1995

     Overview.  The Company's net revenues increased $104,042,000 or 19.5% to
$637,057,000 for the year ended December 31, 1996.  Revenues from comparable
units contributed $94,273,000 or 90.6% of the increase.  A Stopping Center is
considered a "comparable unit" as to a particular period in the current year if
it was open during the same period of the prior year.  The increase in 1996 net
revenues was due principally to a 13.3% increase in diesel gallons sold, an
11.2% increase in fuel sales price per diesel gallon sold and a 21.8% increase
in Petro:Lube sales. Although net revenues increased in 1996, operating
contribution, which is defined as net revenues less cost of sales and operating
expenses, declined 8.3%.  This was due to a reduction in gross margin from 22.7%
of net revenues in 1995 to 19.7% of net revenues in 1996 combined with an 11.6%
increase in operating expenses.  The decline in gross margin percentage and
increase in operating expenses is explained in the following presentation of the
profit centers.

                                       16
<PAGE>
 
     Diesel Fuel Island.  Revenues increased 23.9% to $435,071,000 in 1996 from
$351,136,000 in 1995.  The increase in revenues was attributable predominately
to revenues of $6,279,000 from Ocala and Medford locations and a $77,656,000 or
22.3% increase in revenues from comparable units, due primarily to higher fuel
volume which increased 13.2% combined with a higher selling price per gallon
which increased 11.2%.  Fuel margin per gallon decreased by 3.7% in the period.
Operating contribution was flat with 1995 due to higher operating expenses,
offset by an increase in gross margin as a result of higher fuel volume.

     Restaurant.  Revenues of $47,335,000 were flat with the 1995 period.
Revenues from new locations in Ocala and Medford contributed $901,000 while
revenues from comparable units were down a similar amount.  Operating
contribution declined $540,000 to $7,534,000 in 1996.  On a comparable unit
basis, operating contribution declined $660,000 in the 1996 period.  The decline
in operating contribution was attributable to the decline in revenues partially
offset by a decline in cost of sales, while operating expense were flat.

     Petro:Lube.  Revenues increased $7,884,000 to $44,082,000 in the year ended
December 31, 1996 from $36,198,000 in 1995.  The increase was due to growth in
comparable units of $6,576,000 or 18.2% combined with a $1,308,000 increase due
to new locations in Franklin and Medford.  Operating contribution increased
$585,000 due to a $2,726,000 or 13.7% increase in gross margin offset by a
$2,141,000 increase in operating expense, primarily due to higher employee
expense associated with increased revenues.

     Travel and Convenience Stores.  Revenues increased $5,514,000 to
$67,104,000 in 1996 from $61,590,000 in the 1995 period.  The increase was due
to a $3,965,000 or 6.4% increase in revenues at comparable units combined with
revenues of $1,549,000 from the Ocala and Medford locations.   The increased
revenue at comparable units was due to increased fuel sales of $2,078,000 due to
a 8.0% increase in volume and $1,887,000 due to a higher per gallon sales price
of fuel of 7.0%.  Operating contribution declined $1,419,000. The decline was
due to decreased fuel margins combined with higher operating expenses.

     Petro:2.  Revenues increased $5,850,000 to $33,584,000 in 1996 from
$27,734,000 in 1995.  The increase was attributable to a 16.1% increase in fuel
gallons sold combined with a 10.1% increase in average price per gallon sold.
Operating contribution declined $297,000 despite the increase in revenues, due
to a 3.3% decline in fuel margins per gallon combined with an increase in
operating expenses.

     Other. Revenues increased $911,000 to $9,881,000 in 1996 from $8,970,000 in
1995. The increase was attributable primarily to increased revenues of
$1,117,000 from the fast food locations and the Medford motel and recreational
vehicle park. The increase was offset slightly by declines in coinage revenue
and video poker at the Company's two Louisiana locations. During 1996, Louisiana
enacted a statute requiring the cessation of video poker operations unless the
parish in which the operations were conducted voted to allow the continued
operation of video poker machines. On November 5, 1996, the parish in which the
Shreveport unit is located voted to continue to allow video poker operations,
while the parish in which the Hammond unit is located voted to disallow video
poker operations. The phase out period for the Hammond location is through June
1999. During the year ended December 31, 1996, the Hammond location generated
approximately $841,000 of revenue from video poker.

     Costs and Expenses: Total costs and expenses increased 22.3% from
$508,142,000 in 1995 to $621,616,000 in 1996. The increase related to higher
cost of sales due to higher fuel costs, costs associated with new locations,
increase in general and administrative expense, increase in depreciation and
amortization and employee severance, benefit and placement expenses. Increase in
cost of sales was attributable in part to adjustments related to establishment
of inventory reserves of approximately $1,400,000. General and administrative
expenses increased $1,872,000 due to increased employee expense and professional
fees associated with the management changes. Depreciation and amortization
increased due to additional 1996 capital expenditures combined with full year
depreciation of the Medford and Ocala locations. Employee severance, benefit and
placement expenses relate primarily to severance costs of existing management
and placement and relocation of new management as a result of the sale of the
partnership interest.

     During the fourth quarter of 1996, the Company recognized certain one-time
charges of $2.5 million related to severance and hiring costs, $1.4 million in
obsolete inventory and $.5 million in insurance related costs.

                                       17
<PAGE>
 
     Recapitalization Costs.  This represents costs incurred by the Company in
1996 associated with the sale of  the partnership interest.  Costs include legal
and professional fees combined with the investment banking fees paid with
respect to the sale of the partnership interest.

     Interest Expense.  Interest expense of $21,263,000 in 1996 was flat
compared to 1995, due to lower average level of debt outstanding offset by an
increase in the interest rate.

     Net Income. The Company's net income declined $12,535,000 to a reported net
loss of $8,760,000 in 1996 compared to reported net income of $3,775,000 in
1995.

YEAR ENDED DECEMBER 29, 1995 COMPARED TO YEAR ENDED DECEMBER 30, 1994

     Overview.  The Company's net revenues increased $45,122,000 or 9.2% to
$533,015,000 for the year ended December 29, 1995.  Revenues from units opened
before 1994 ("comparable units") contributed $21,097,000 or 4.3% of the
increase, coupled with revenues from new locations in Medford, Oregon and Ocala,
Florida, which contributed an additional 4.9% or $24,025,000 in revenues during
1995.  Although net revenues increased 9.2% in 1995, due principally to
increases in fuel volume and higher travel and convenience store sales,
operating contribution, which is defined as net revenues less cost of sales and
operating expenses, declined 2.9% to $48,070,000.  This was due to a reduction
in gross margin from 23.5% of net revenues in 1994 to 22.8% of net revenues in
1995 combined with a 12.4% increase in operating expenses in total and a 4.7%
increase in operating expenses on a comparable unit basis.  The decline in gross
margin percentage and increase in operating expenses is explained in the
following presentation of the profit centers.

     Diesel Fuel Island.  Revenues increased 10.2% to $351,136,000 in 1995 from
$318,761,000 in 1994.  The increase in revenues was attributable in part to
revenues from the Medford and Ocala locations which contributed 5.0% or
$16,029,000 of revenues and a 5.2% or $16,345,000 increase in revenues from
comparable units.  Operating contribution decreased by 2.9% in total and 5.4% on
a comparable unit basis.  The decline in operating contribution was due to a
6.1% reduction in fuel margin per gallon as a result of a shift in margin mix to
higher volume fleet business which is generally "cost plus" or requires higher
levels of discounts.  In addition to lower fuel margins, higher levels of
operating expense, primarily third party billing fees, contributed to the
decline.

     Restaurant. Revenues increased 8.0% to $47,387,000 in 1995 from $43,877,000
in 1994. Of the 8.0% increase, 5.9% came from the two new locations and 2.1%
came from comparable units. Operating contribution increased 5.5% but declined
as a percent of revenue. Gross margin as a percent of revenue declined slightly
due to higher produce and meat costs. Operating expenses increased 7.5% in
total, but were flat with 1994 on a comparable unit basis.

     Petro:Lube. Revenues increased 6.0% to $36,198,000 in 1995 from $34,160,000
in 1994. The increase was due to $1,354,000 of revenues from new lubes at the
Beaumont, Texas location, which opened in January 1995 and the Ocala, Florida
location, which opened June 1995, combined with a 2.0% improvement in net
revenues from comparable units. Operating contribution declined 4.7% in total
and 7.8% on a comparable unit basis. This was primarily due to an 11.0% price
increase in oil costs, which was absorbed by the Company and a reduction in tire
margins in an effort to stimulate tire sales.

     Travel and Convenience Stores.  Revenues increased 12.5% to $61,590,000 in
1995 from $54,733,000 in 1994.  The increase was due to revenues of $3,788,000
from the new locations in Medford, Oregon and Ocala, Florida combined with a
5.6% or $3,069,000 increase in revenues at comparable units.  Of the revenue
increase at comparable units, approximately $832,000 was Coinage Arrangement
revenue reported as Other in 1994.  Operating contribution increased 37.4% in
total and 34.9% on a comparable unit basis.  Excluding the revenue from the
Coinage Arrangement, operating contribution increased 18.3% due to improved fuel
margins in 1995.

                                       18
<PAGE>
 
     Petro:2.  Revenues increased 3.5% to $27,734,000 in 1995 as compared to
$26,798,000 in 1994, attributable to a 3.8% increase in fuel gallons sold.
Despite the increase in revenues, the operating contribution declined $235,000
due to lower fuel margins (as described above in the fuel island section)
combined with an increase in operating expense.

     Other.  Other revenues declined 6.3%, from $9,564,000 for the year ended
December 30, 1994 to $8,970,000 for the year ended December 29, 1995, due to a
$924,000 decline in video poker revenues and a reclassification of revenues from
the Coinage Arrangement of $832,000 for 1995.  The declines were partially
offset by revenues from the motel and recreational vehicle park at the Medford
location and revenues from the fast food establishments at three locations.  The
video poker decline was due to increased competition from other video poker
operations and riverboat gambling operations, as well as an increase in the tax
payable to the state of Louisiana.  The operating contribution decline of
$2,397,000 was due primarily to the reduction of revenues from video poker and
the Coinage Arrangement, which have no direct expense associated with them, and
are a direct reduction of operating contribution.

     Costs and Expenses:  Total costs and expenses increased 10.8% from
$458,703,000 for the year ended December 30, 1994 to $508,142,000 for the year
ended December 29, 1995 and, as a percentage of net revenues, from 94.0% in the
1994 period to 95.3% in the comparable period of 1995.  Costs of sales increased
$38,458,000 or 10.3% from 1994 to 1995 due primarily to $18,523,000 associated
with the new locations and an increase in costs in the diesel fuel island,
restaurants and Petro:lubes on a comparable unit basis.  Operating expenses
increased $8,084,000 or 12.4% to $73,052,000 in 1995.  This increase was due
primarily to $4,555,000 in operating expenses from the Medford and Ocala
locations combined with a $3,529,000 increase in comparable units, which was
primarily in the diesel fuel islands, Petro:lube, and travel and convenience
stores.  General and administrative expenses increased $605,000 or 5.3% from
$11,448,000 in 1994 to $12,053,000 in 1995.  As a result of the above, operating
income declined 14.8% from $29,190,000 in the 1994 period to $24,873,000 in the
1995 period.

     Depreciation and Amortization. Depreciation and amortization of the Company
relates to depreciation of the physical assets of the Company and the
amortization of the Coinage Arrangement and other assets. The increase of
$2,293,000 from 1994 to 1995 relates to a full year amortization of the Coinage
Arrangement combined with an increase in depreciation expense related to the new
sites in Medford and Ocala.

     Interest Expense.  Interest expense increased $2,387,000 during 1995 as
compared to 1994, due primarily to higher levels of debt outstanding, higher
amortization of debt issuance costs related to a full year and higher interest
rates during the year.

     Extraordinary Charge.  In connection with its Refinancing completed in may
1994, the Company incurred an extraordinary charge of $5,250,000 for the write
off of (i)  the unamortized debt issuance costs associated  with the Company's
prior revolving credit facility (the "Congress Revolver"), and certain mortgage
notes payable to various lenders (the "Old Mortgage Facilities") and (ii)  the
prepayment premium paid in connection with the repayment of certain of these
facilities.

     Net Income.  Net income of the Company decreased to $3,775,000 in 1995 from
$5,038,000 in 1994 while income before extraordinary item and minority interest
declined from $10,479,000 in 1994 to $3,775,000 in 1995.  The decline was due to
higher interest expense combined with a reduction in operating income due to
higher costs of sales and operating expenses and a $2,293,000 increase in
depreciation and amortization from 1994 to 1995.

LIQUIDITY AND CAPITAL RESOURCES

     Capital expenditures totaled $5,523,000 for 1996 and $19,508,000 for 1995.
Included in capital expenditures for 1996 were funds spent on the construction
of the new lubes in Medford, Oregon and Franklin, Kentucky.  Capital
expenditures in 1995 included funds spent on the acquisition of Medford, Oregon
and the construction of the Ocala, Florida Stopping Center.

                                       19
<PAGE>
 
     At December 31, 1996, the Company had availability on its revolving line of
credit of approximately $9,711,000.

     Acquisition. In January 1995, the Company acquired an existing truck stop
in Medford, Oregon. The Medford facility is designed similarly to the Company's
Stopping Centers with a diesel fuel island, restaurant, travel store and free-
standing convenience store. In addition, this location has a motel and RV park.
The Company constructed a Petro:Lube at this location which opened early in the
second quarter of 1996. The Company utilized a portion of its revolving line of
credit under the Existing Credit Agreement to fund the construction of the
Petro:Lube.

     Expansion:  In June 1995, the Company opened its Ocala, Florida location.
The Ocala location is a typical Stopping  Center with the addition of a free
standing Wendy's (branded food restaurant) that opened in October 1995.  In June
1996, the Company opened its first stand-alone Petro:Lube operation.  The
construction costs of the Ocala, Florida unit and new stand-alone Petro:Lube
were funded by a combination of borrowing on the revolving line of credit under
the Existing Credit Agreement and internally generated funds.

     Insurance:  The Company is partially self-insured with respect to workers'
compensation and general liability.  During 1996, the Company paid claims
aggregating $1,302,000 and $331,000 relating to workers compensation and general
liability claims, respectively.  The Company believes it provides an accrual
adequate to cover both known and incurred but not reported claims.

     The Company had negative working capital of $13,863,000 at December 31,
1996, $9,607,000 at December 29, 1995 and $8,922,000 at December 30, 1994.
Negative working capital is normal in the truckstop industry. The truckstop
business is an industry that generates a large amount of cash business with
relatively low levels of inventories and receivables, as a percentage of
revenues. A substantial majority of the Company's sales are cash (or the
equivalent in the case of credit card sales or sales paid for by check on a
daily basis by third-party billing companies). Diesel fuel inventory turns every
two to three days, and store merchandise inventories normally turn every 90
days. Based upon the above, the overall inventory turns approximately every 13
days.

Recent Developments:

     In connection with the Recapitalization, the Existing Credit Agreement was
repaid with borrowings under the New Credit Agreement, the net proceeds from the
sale of the Notes, a portion of the proceeds of the Equity Investment and the
proceeds of the Kirschner Investment. The New Credit Agreement provides for a
$25.0 million Revolving Credit Facility, a $40.0 million Expansion Facility, a
$14.0 million Term Loan A and a $30.0 million Term Loan B.

     The Revolving Credit Facility permits the Company to borrow, repay and
reborrow up to $25.0 million at any time until the fifth anniversary of the
Closing Date, the proceeds of which may be used for working capital and other
corporate purposes.  Up to $5.0 million of the Revolving Credit Facility is
available for the issuance of standby and documentary letters of credit.  The
Expansion Facility permits the Company to borrow, repay and reborrow up to $40.0
million for the acquisition and development of new Stopping Centers and stand-
alone Petro:Lubes at any time until the third anniversary of the Closing.  Term
Loan A is repayable in 18 quarterly installments, commencing on September 30,
1997.  Term Loan B is repayable in 26 quarterly installments commencing on
September 30, 1997.

     Aggregate yearly term loan principal payments under the New Credit
Agreement will be as follows: (i) $2.0 million in 1997; (ii) $3.0 million in
1998; (iii) $4.5 million in 1999; (iv) $5.5 million in 2000; (v) $7.5 million in
2001; (vi) $13.5 million in 2002; and (vii) $14.0 million in 2003.

     Borrowings under the New Credit Agreement are collateralized by
substantially all of the Company's assets and the partnership interests of Mobil
Long Haul and Chartwell and guaranteed by each of the Company's subsidiaries,
which guarantees in turn are collateralized by substantially all of such
subsidiaries' assets.

     Management of the Company believes that internally generated funds,
together with amounts available under the Revolving Credit Facility, will be
sufficient to satisfy its cash requirements for operations through 1997 and the
foreseeable future thereafter. The Company also expects that expansion and
future acquisitions would be 

                                       20
<PAGE>
 
financed from funds generated from operations, borrowings under the Revolving
Credit Facility and the Expansion Facility and additional financings.

ENVIRONMENTAL

     Accruals for environmental matters are recorded in operating expenses when
it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated. The measurement of environmental
liabilities is based on an evaluation of currently available facts with respect
to each individual site and considers factors such as existing technology,
presently enacted laws and regulations and prior experience in remediation of
contaminated sites. Accrued liabilities are exclusive of claims against third
parties and are not discounted.

     The Company is subject to contingencies pursuant to environmental laws and
regulations that in the future may require the Company to take action to correct
the effects on the environment of prior disposal practices or releases of
chemical or petroleum substances by the Company or other parties.  The Company
has accrued for certain environmental remediation activities consistent with the
policy set forth in Note 2 to the consolidated financial statements.  At
December 31, 1996, such accrual amounted to approximately $217,000 and, in
management's opinion, was appropriate based on existing facts and circumstances.
Under the most adverse circumstances, however, this potential liability could be
significantly higher.  In the event that future remediation expenditures are in
excess of amounts accrued, management does not anticipate that they will have a
material adverse effect on the consolidated financial position or results of
operations of the Company.  At December 31, 1996, the Company has recognized
approximately $256,000 in the consolidated balance sheet related to recoveries
of certain remediation costs from third parties.

                                       21
<PAGE>
 
ITEM 8.  FINANCIAL  STATEMENTS AND SUPPLEMENTARY DATA


                         PETRO STOPPING CENTERS, L.P.
                          CONSOLIDATED BALANCE SHEETS
                                (in thousands)
<TABLE>
<CAPTION>
                                          December 29,   December 31,
                                              1995           1996
                                          -------------  -------------
<S>                                       <C>            <C>
                  ASSETS
Current assets:
    Cash                                      $  5,688       $  3,182
    Accounts receivable, net of
     allowance for uncollectible
     accounts of $608 in 1995
     and $321 in 1996                           11,468         10,401
    Inventories                                 16,319         15,195
    Other current assets                         1,728          1,404
    Due from affiliates                          1,520          2,091
                                              --------       --------
        Total current assets                    36,723         32,273
 
    Property and equipment, net                162,348        159,539
    Deferred debt issuance costs and
     Company organization costs, net of
     accumulated amortization of              
     $4,546 in 1995 and $6,728 in 1996          13,370         11,305
    Other assets                                 9,258          5,983
                                              --------       --------
 
        Total assets                          $221,699       $209,100
                                              ========       ========
 
        LIABILITIES AND PARTNERS' CAPITAL
 
Current liabilities:
    Current portion of long-term debt         $  4,948       $  6,928
    Trade accounts payable                      14,188         15,723
    Accrued expenses and other                  25,166         21,160
     liabilities
    Due to affiliates                            2,028          2,325
                                              --------       --------
        Total current liabilities               46,330         46,136
 
    Notes payable                               20,578         21,639
    Long-term debt, excluding current          142,866        138,160
     portion                                  --------       --------
         Total  liabilities                    209,774        205,935
                                              --------       --------
 
    Commitments and contingencies
 
    Partners' capital:
      General  partners                         (7,204)        (8,477)
      Limited partners                          19,129         11,642
                                              --------       --------
         Total partners' capital                11,925          3,165
                                              --------       --------
         Total liabilities and                $221,699       $209,100
          partners' capital                   ========       ========
</TABLE>

          See accompanying notes to consolidated financial statements

                                       22
<PAGE>
 
                          PETRO STOPPING CENTERS, L.P.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (in thousands)

<TABLE>
<CAPTION>
                                       Year Ended    Year Ended    Year Ended
                                      December 30,  December 29,  December 31,
                                          1994          1995          1996
                                      ------------  ------------  ------------
<S>                                   <C>           <C>           <C>
Net revenues (including motor fuel
 taxes):
  Diesel fuel island                    $318,761      $351,136      $435,071
  Restaurant                              43,877        47,387        47,335
  Petro:Lube                              34,160        36,198        44,082
  Travel and convenience stores           54,733        61,590        67,104
  Petro:2                                 26,798        27,734        33,584
  Other                                    9,564         8,970         9,881
                                        --------      --------      --------
    Total net revenues                   487,893       533,015       637,057
                                        --------      --------      --------
 
Costs and expenses:
  Cost of sales (including motor fuel
   taxes), exclusive of
   depreciation and amortization         373,436       411,894       511,431
  Operating expenses                      64,968        73,052        81,522
  General and administrative              11,448        12,053        13,925
  Employee severance, benefit and         
   placement expenses                        --            --          2,534
  Depreciation and amortization            8,851        11,144        12,204
                                        --------      --------      --------
 
    Total costs and expenses             458,703       508,142       621,616
                                        --------      --------      --------
 
    Operating income                      29,190        24,873        15,441
 
Recapitalization costs                       --            --          2,938
Interest expense                          18,711        21,098        21,263
                                        --------      --------      --------
 
    Income (loss) before extraordinary
     item and minority interest           10,479         3,775        (8,760)
 
Extraordinary item - write off of debt
 restructuring costs associated            
 with retired debt                         5,250           --            --
 
Minority interest                            191           --            --
                                        --------      --------      --------
 
    Net income (loss)                   $  5,038      $  3,775      $ (8,760)
                                        ========      ========      ========
</TABLE>
          See accompanying notes to consolidated financial statements

                                       23
<PAGE>
 
                          PETRO STOPPING CENTERS, L.P.
            CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
    Years ended December 30, 1994, December 29, 1995 and December 31, 1996
                                (in thousands)
<TABLE>
<CAPTION>
                                      General    Limited   Total Partners'
                                      Partners   Partners       Capital
                                      ---------  --------  ---------------
<S>                                   <C>        <C>       <C>
Balances, December 31, 1993           $(8,890)   $11,932       $ 3,042
                                                               
  Distributions                           (68)       (44)         (112)
  Net income                              718      4,320         5,038
                                      -------    -------       -------
                                                               
Balances, December 30, 1994            (8,240)    16,208         7,968
                                                               
  Conversion of minority interest         506          -           506
  Distributions                           (15)      (309)         (324)
  Net income                              545      3,230         3,775
                                      -------    -------       -------
                                                               
Balances, December 29, 1995            (7,204)    19,129        11,925
                                                               
  Net loss                             (1,273)    (7,487)       (8,760)
                                      -------    -------       -------
                                                               
Balances, December 31, 1996           $(8,477)   $11,642       $ 3,165
                                      =======    =======       =======
</TABLE>
          See accompanying notes to consolidated financial statements

                                       24
<PAGE>
 
                          PETRO STOPPING CENTERS, L.P.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>
                                           Year Ended     Year Ended     Year Ended
                                          December 30,   December 29,   December 31,
                                              1994           1995           1996
                                          ------------  -------------  -------------
<S>                                       <C>            <C>            <C>
Net income (loss)                          $   5,038       $  3,775       $ (8,760)
  Adjustments to reconcile net income      
   to net cash provided by                 
   operating activities:                  
    Depreciation and amortization              8,851         11,144         12,204
    Extraordinary item-write off of debt   
      restructuring costs associated          5,250              -              -
      with retired debt                  
    Deferred debt issuance cost                1,107          1,056          1,485
     amortization                          
    Accretion of original issue discount           -            845            978
    Provision for losses on accounts            (351)           297            215
     receivable                            
  Increase (decrease) from changes in:     
    Accounts receivable                       (1,486)        (2,361)           852
    Inventories                               (1,563)        (1,838)         1,124
    Other current assets                        (962)          (118)           324
    Due from affiliates                        1,559           (545)          (571)
    Due to affiliates                           (889)           436            297
    Trade accounts payable                    (1,760)           270          1,535
    Accrued expenses and other                (1,710)          (195)         4,985
     liabilities                           ---------       --------       --------
        Net cash provided by operating        13,084         12,766         14,668
         activities                        ---------       --------       --------
                                           
  Cash flows used in investing             
   activities:                             
    Purchase of property and equipment        (8,428)       (19,508)        (5,523)
    (Increase) decrease in other             (10,487)        (1,622)           186
      assets, net                          ---------       --------       --------
        Net cash (used in) investing         
         activities                          (18,915)       (21,130)        (5,337)                 
                                           ---------       --------       --------
                                           
  Cash flows provided by financing         
   activities:                             
    Repayments of notes payable              (18,401)       (59,422)       (25,000)
    Proceeds from notes payable               19,401         69,000         26,061
    Repayments of long-term debt            (133,843)        (3,491)        (3,704)
    Proceeds from long-term debt             150,459              -              -
    Distributions to partners                   (112)          (324)             -
    Capital contributions                          -              -              -
    Payment of debt issuance costs           (12,180)          (190)          (203)
    Increase (decrease) in cash               (3,077)         4,656         (8,991)
     overdrafts                            
    Other, net                                   194              -              -
                                           ---------       --------       --------
         Net cash provided by (used in)    
          financing activities                 2,441         10,229        (11,837) 
                                           ---------       --------       --------   
  Net increase (decrease) in cash             (3,390)         1,865         (2,506)
  Cash, beginning of period                    7,213          3,823          5,688
                                           ---------       --------       --------
  Cash, end of period                      $   3,823       $  5,688       $  3,182
                                           =========       ========       ========
----------------------------------------------------------------------------------
Supplemental cash flow information--
Interest paid during the period, net of      
 capitalized interest of  $62,             $  19,102       $ 19,785       $ 18,364
 $515 and $80 in 1994, 1995 and 1996
Non-cash transactions-
Minority interest converted to equity              -            506              -
</TABLE>
 
         See accompanying notes to consolidated financial statements  

                                       25
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

 1.   COMPANY FORMATION AND DESCRIPTION OF BUSINESS

 COMPANY FORMATION
 
       Petro PSC Properties, L.P. ("Petro Properties"), a Delaware limited
 partnership, was formed effective April 30, 1992 for the ownership, operation,
 management and development of the Petro Stopping Centers network.  The partners
 were as follows:
 
       GENERAL PARTNERS
         Petro, Inc.
         Roadside, Inc. ("Roadside"), an entity owned by Fremont Group, Inc.

       LIMITED PARTNERS
         Various individuals and entities affiliated with Petro, Inc.
         Fremont Group, Inc.
 
       Petro, Inc. and the various individuals and entities affiliated with
 Petro, Inc. are collectively referred to herein as the "Cardwell Group".
 Roadside and the Fremont Group, Inc. are jointly referred to herein as the
 "Fremont Group".
 
       Petro PSC, L.P. ("Petro PSC"), a Delaware limited partnership, was also
 formed effective April 30, 1992 to manage the day-to-day operations of the
 Petro Stopping Centers network. At formation, Roadside and Petro, Inc. each
 received a 1% general partnership interest, and Petro Properties received a 98%
 limited partner interest in exchange for certain net operating assets.
 
       Effective December 31, 1994, an Agreement of Merger and Name Change was
 executed whereby Petro PSC was merged into Petro Properties.  The merger was
 consummated pursuant to the Delaware Revised Uniform Limited Partnership Act.
 
       As part of the merger, the name of Petro Properties was changed to "Petro
 Stopping Centers, L.P." referred to herein as the "Company" or the
 "Partnership".  The following table reflects the Partnership ownership interest
 immediately following the merger:
 <TABLE>
 <CAPTION>
              PARTNER                 TYPE OF INTEREST       PERCENTAGE 
             ---------                ----------------       ----------
                                                              INTEREST
                                                              --------
            <S>                       <C>                    <C>
            Roadside, Inc.            General Partner              .92%
            Petro, Inc.               General Partner            13.53
            Fremont Group, Inc.       Limited Partner            44.25
            James A. Cardwell, Sr.    Limited Partner            35.77
            James A. Cardwell, Jr.    Limited Partner             1.92
            JAJCO II,  Inc.           Limited Partner             3.61
                                                                ------
                                                                100.00%
                                                                ======
</TABLE>

 There was no material financial statement impact resulting from the merger or
 name change.

     On January 30, 1997 the Company completed a recapitalization.  As part of
 the recapitalization, affiliates of Chartwell Investments Inc. became limited
 and general partners and an affiliate of Mobil Oil Corporation became a limited
 partner and the Fremont Group sold all their partnership interests (See Note
 17).


 DESCRIPTION OF BUSINESS

     The Company operates large, multi-service truck stops in the United States.
 The Company's facilities, which are known as "Petro Stopping Centers" (the
 "Stopping Centers"), are located along interstate highways and typically offer
 diesel fuel, gasoline, home-style restaurants, truck preventative maintenance
 centers, travel and convenience stores and a range of other products, services
 and amenities to commercial truck drivers, as well as other highway motorists
 and local residents. At December 31, 1996, the Company's network consisted of
 42 Stopping Centers located in 27 states, of which 26 were operated by the
 Company and 16 were franchised.

                                       26
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

     The accompanying consolidated financial statements of the Company include
the consolidated balance sheets, statements of operations, changes in partners'
capital and cash flows of Petro Stopping Centers, L.P. and its wholly-owned
subsidiaries, Petro Financial Corporation and Petro Distributing, Inc.  All
significant intercompany balances have been eliminated in consolidation.
Beginning in 1994, the Company adopted a 52/53 week fiscal year, which ends on
the Friday closest to December 31.  Beginning in 1996, the Company adopted a
calendar year fiscal year, which ended on December 31.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

CONCENTRATION OF CREDIT RISK

     Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and accounts
receivable. Accounts receivable are primarily due from national and regional
commercial trucking companies, and include accounts receivable purchased at a
discount from the Company's franchisees.  The receivables are not
collateralized, however the risk is limited due to the large number of entities
comprising the Company's customer base and their dispersion across geographic
regions.  At December 31, 1996, the Company had no significant concentrations of
credit risk.

CASH AND CASH EQUIVALENTS

     The Company considers as cash equivalents all highly liquid investments
with an original maturity of three months or less.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

     Accounts receivable are reviewed on a regular basis and the allowance for
doubtful accounts is established to reserve for specific accounts believed to be
uncollectible.  In addition, the allowance provides a reserve for the remaining
accounts not specifically identified.

INVENTORIES

     Inventories are stated at the lower of cost or market as determined by the
first-in, first-out method.

PROPERTY AND EQUIPMENT

     Property and equipment is stated at amortized historical cost.
Depreciation and amortization are provided generally under the straight-line
method over the estimated useful lives of the respective assets or the lease
term, whichever is less.  Repairs and maintenance are charged to expense as
incurred, and amounted to $2,898,000, $2,893,000 and $2,785,000 for the years
ended December 30, 1994, December 29, 1995 and December 31, 1996, respectively.
Renewals and betterments are capitalized.  Gains or losses on disposal of
property and equipment are credited or charged to income.


     Facilities under development are recorded at cost, and include capitalized
interest costs associated with the development of a project.  These costs are
classified as facilities under development until the project is completed, at
which time the costs are transferred to the appropriate property and equipment
accounts.

ORGANIZATION COSTS

     Costs incurred in connection with the formation of the Company, which
primarily include legal expenses, private placement fees and other due diligence
expenditures, are being amortized using the straight-line method over a ten-year
period.

                                       27
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEBT ISSUANCE COSTS

     Costs incurred in obtaining long-term financing are amortized over the life
of the related debt using a method which approximates the interest method.

SELF INSURANCE

     The Company is self-insured for general liability, workers' compensation,
and group health benefit claims, up to stop-loss amounts ranging from $75,000 to
$250,000 on a per-occurrence basis.  Provisions for these self-insurance
programs are made for both estimated losses on known claims and claims incurred
but not reported, based on claims history.

ADVERTISING AND PROMOTION

     Costs incurred in connection with advertising and promotion are expensed as
incurred, net of reimbursements from franchisees.  Net advertising and promotion
expenses of $1,786,000, $1,688,000 and $2,156,000 were incurred for the years
ended December 30, 1994, December 29, 1995 and December 31, 1996 respectively,
and are included in operating expenses in the accompanying consolidated
statements of operations.

MOTOR FUEL TAXES

     Certain motor fuel taxes are collected from consumers and remitted to
governmental agencies by the Company.  Such taxes were $140,460,000,
$150,360,000 and $175,873,000 for the years ended December 30, 1994, December
29, 1995 and December 31, 1996, respectively, and are included in net revenues
and cost of sales in the accompanying consolidated statements of operations.

ENVIRONMENTAL LIABILITIES AND EXPENDITURES

     Accruals for environmental matters are recorded in operating expenses when
it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated.  The measurement of environmental
liabilities is based on an evaluation of currently available facts with respect
to each individual site and considers factors such as existing technology,
presently enacted laws and regulations and prior experience in remediation of
contaminated sites.  Accrued liabilities are exclusive of claims against third
parties and are not discounted.

FRANCHISE REVENUES

     The Company recognizes net revenue from individual franchises and initial
training fees when substantially all significant services to be provided by the
Company have been performed.  Continuing franchise fees, which are based
generally upon a percentage of the franchisees' sales, are recognized monthly as
earned.  Fees earned from franchises aggregated $2,340,000, $2,926,000 and
$3,397,000 during the years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

     The Company occasionally utilizes futures and option contracts with the
objective of minimizing fuel cost risk due to market fluctuations.  Gains and
losses resulting from changes in the market value of these contracts are
recognized when the related inventory is sold.  The Company also enters into
futures and options contracts that are not specific hedges and gains or losses
resulting from changes in market value of these types of futures contracts are
recognized in income currently.

     Interest rate swap agreements are utilized from time to time to manage
interest rate exposures.  The amount to be paid or received on these agreements
is accrued as interest rates change and is recognized over the lives of the
respective agreements.

INCOME TAXES

     The Company is not subject to federal and state income taxes.  Results of
operations are allocated to the partners in accordance with the provisions of
the Company's Partnership Agreement and reported by each partner on their
respective federal and state income tax returns.  The taxable income or loss
allocated to the partners in any one year generally varies substantially from
income or loss for financial reporting purposes due to differences between the
periods in which such items are reported for financial reporting and income tax
purposes.

                                       28
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEVELOPMENT COSTS/PREOPENING COSTS

     The Company incurs costs associated with the development and opening of new
sites which are separately identifiable and incremental to normal operating
expenses.  The costs are capitalized as incurred and are amortized against
income over a 12 month period following the opening of the location.

(3)  INVENTORIES

     The following is a summary of inventories at December 29, 1995 and December
31, 1996:
<TABLE>
<CAPTION>
                                    1995      1996
                                   -------  --------
                                    (IN THOUSANDS)
<S>                                <C>      <C>
Motor fuels and lubricants         $ 3,623  $ 5,074
Tires and tubes                      3,568    2,993
Merchandise and accessories          7,783    7,531
Restaurant and other                 1,345      726
  Less reserve for obsolescence          -   (1,129)
                                   -------  -------
    Total inventories              $16,319  $15,195
                                   =======  =======
</TABLE>

     In connection with new systems implemented in 1996, the Company identified
items that were excess or obsolete inventory.  The criteria established is
merchandise in excess of a one year supply.  The Company has established a
reserve for obsolete and excess inventory amounting to approximately $1.1
million.  The related charge is included  in cost of sales in the accompanying
1996 statement of operations.

(4)  PROPERTY AND EQUIPMENT

     Property and equipment is summarized at December 29, 1995 and December 31,
1996 as follows:
<TABLE>
<CAPTION>
                                          ESTIMATED
                                            USEFUL
                                            LIVES
                                           (YEARS)      1995      1996
                                          ----------  --------  --------
                                                        (IN THOUSANDS)
 
<S>                                       <C>         <C>       <C>
Land                                             --   $ 34,872  $ 34,970
Buildings and improvements                       30     91,644    94,244
Furniture and equipment                        3-10     37,887    40,396
Leasehold improvements                         7-30     20,066    20,238
Facilities under development                     --        157       141
                                                      --------  --------
                                                       184,626   189,989
Less accumulated depreciation and                       22,278    30,450
 amortization                                         --------  --------
   Net property and equipment                         $162,348  $159,539
                                                      ========  ========
</TABLE>

     Facilities under development include costs associated with new facilities
and major renovations of existing facilities.  There were no future construction
commitments at December 31, 1996.

(5)  OPERATING LEASES

     The Company is party to various operating leases.  The operating leases are
for the lease of a Stopping Center location, office building, truck leases and
various equipment leases.  The leases contain renewal options varying from
automatic annual renewals to three five-year options.

     A summary of future minimum rental payments on operating leases which have
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1996, follows:

                                       29
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(5)  OPERATING LEASES (CONTINUED)
<TABLE>
<CAPTION>
                                         RELATED
FISCAL YEAR ENDING                        PARTY    OTHER   TOTAL
------------------                       --------  -----  --------
<S>                                      <C>       <C>    <C>
                                              (IN THOUSANDS)
                                              --------------
1997                                      $ 1,494   $392   $ 1,886
1998                                        1,494    261     1,755
1999                                        1,422     41     1,463
2000                                        1,422     --     1,422
2001                                        1,422     --     1,422
Later years                                 4,663     --     4,663
                                          -------   ----   -------
Total minimum lease payments              $11,917   $694   $12,611
                                          =======   ====   =======
</TABLE>

     Rent expense under all operating leases was $2,368,000, $2,004,000 and
$2,201,000 for the years ended December 30, 1994, December 29, 1995 and December
31, 1996, respectively. Of these rentals, $1,633,000 for 1994, $1,488,000 for
1995 and $1,487,000 for 1996, were paid to related parties of the Company.

(6)  NOTES PAYABLE

     Notes payable at December 29, 1995 and December 31, 1996 consisted of a
five-year revolving credit facility (the "Credit Facility") under which up to
$35,000,000 is available.  The Credit Facility matures in June 1999. Interest is
paid monthly at 1.5% over the bank's prime rate or 2.75% over the Eurodollar
rate (the rate is determined at time of borrowing at the borrower option).  The
Credit Facility is collateralized by substantially all of the Company's assets.
The balance outstanding on the Credit Facility was $20,578,000 and $21,639,000
as of December 29, 1995 and December 31, 1996, respectively, at an average
interest rate of 8.65% for 1995 and 8.8% for 1996.  The rate was 8.8% at
December 31, 1996 (See Note 7).
 
     The notes payable were refinanced subsequent to December 31, 1996 (See Note
17).

     In addition, also outstanding at December 29, 1995 and December 31, 1996
under the Credit Facility were standby letters of credit principally related to
unfunded insurance claims in the amounts of $2,900,000 and $3,150,000
respectively, and various other standby letters of credit of approximately
$500,000.

                                       30
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(7)  LONG-TERM DEBT

     Long-term debt at December 29, 1995  and December 31, 1996 is presented
below.
<TABLE>
<CAPTION>
                                                             1995      1996
                                                           --------  --------
                                                             (IN THOUSANDS)
                                                             --------------
<S>                                                        <C>       <C>
 Five-year term note to a bank in an      
 original amount of $25,000,000                     
 maturing June 30, 1999. The note is     
 payable in 16 consecutive quarterly                
 installments varying from  $600,000 to  
 $3,500,000 commencing June 30, 1995,    
 which aggregated $2,966,000 during                                 
 1996.  Interest at either the bank's    
 prime rate plus 1.5% or the Eurodollar                    
 rate plus 2.75% is payable monthly.     
 The rate was 8.68% at December 31,      
 1996. The note is collateralized by     
 substantially all of the Company's      
 assets. The notes were refinanced       
 subsequent to December 31, 1996 (See    
 Note 17).                                                 $ 22,760  $ 19,794 
                                         
 Seven-year term note to a bank in an     
 original amount of $25,000,000          
 maturing June 30, 2001. The note is     
 payable in 24 consecutive quarterly     
 installments varying from $400,000 to   
 $3,000,000 commencing June 30, 1995     
 which aggregated $739,000 during 1996.  
 Interest at either the bank's prime     
 rate plus 2% or the Eurodollar rate                         
 plus 3.25% is payable monthly.  The     
 effective rate was 9.1172% at December  
 31, 1996 as a result of an interest     
 swap agreement (the "Swap") with the    
 lender as required under the loan       
 agreement.  The Swap expires on June    
 30, 1999.  The note is collateralized   
 by substantially all of the Company's   
 assets.  The notes were refinanced and  
 the swap extinguished subsequent to     
 December 31, 1996 (See Note 17).                            23,749    23,010 
                                         
 12 1/2% Senior Notes due 2002 (the       
 "Notes") in an original aggregate       
 principal amount of $100,000,000, net   
 of original issue discount.  Based on   
 the issue price of the Notes and        
 assuming the Warrants will be           
 exchanged for additional Notes, the                         
 yield to maturity, determined by        
 semi-annual compounding of interest,    
 is approximately 13.25% per year.       
 Interest on the Notes is payable on     
 June 1 and December 1 of each year      
 beginning December 1, 1994.  The notes  
 are not collateralized. Approximately   
 94% of the  notes were repurchased      
 subsequent to December 31, 1996 (See    
 Note 17).                                                   96,832    97,173 

 100,000 Exchangeable Debt Warrants, net 
 of original issue discount.  The        
 Warrants will become exchangeable       
 during a 30-business day exchange       
 period following the first to occur of  
 (an "Exchange Event") (i) the           
 completion of an initial public         
 offering of common stock of a           
 corporation that succeeds to and        
 continues the business of the Company   
 (the "Successor Corporation"); (ii) a   
 Change of Control (as defined in the                      
 Indenture for the Notes) or (iii) June                    
 1, 1997.  If the Exchange Event is a    
 Change of Control or June 1, 1997, the  
 Warrants will be exchangeable by the    
 holders thereof, for no additional      
 consideration, for $5,538,000           
 aggregate principle amount of           
 additional Notes.  If the Exchange      
 Event is an initial public offering,    
 each Warrant will be exchangeable into  
 Notes as described above or into 3% of  
 the fully diluted shares of common      
 stock of the Successor Corporation.     
 Approximately 99% of the warrants were  
 redeemed subsequent to December 31,     
 1996 (See Note 17).                                          4,473     5,111
                                                           --------  -------- 

Total long-term debt                                        147,814   145,088
Less current portion                                          4,948     6,928
                                                           --------  --------
Long-term debt, excluding current                          
 portion                                                   $142,866  $138,160
                                                           ========  ======== 
</TABLE>

                                       31
<PAGE>
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(7)  LONG-TERM DEBT (CONTINUED)

     The Indenture for the Notes and the Credit Facility agreement each contain
certain covenants, including without limitation, covenants with respect to the
following matters: (i) limitation on indebtedness; (ii) limitation on restricted
payments; (iii)  limitation on sales of restricted subsidiary stock; (iv)
limitation on transactions with affiliates; (v)  limitation on liens; (vi)
limitation on disposition of proceeds of asset sales; (vii)  limitation on
distributions and other payment restrictions affecting restricted subsidiaries;
(viii)  restrictions on mergers and certain transfers of assets and (ix) in the
case of the Credit Facility financial covenants covering leverage, cash flows,
capital expenditures, fixed charge coverage, ratio of loans to appraised value
of the Company's travel plaza facilities and cumulative net income.

     Estimated principal payment requirements on long-term debt prior to the
Recapitalization were as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING                              (IN THOUSANDS)
                                                --------------
<S>                                             <C>
1997                                                 $  6,928
1998                                                    7,000
1999                                                    7,917
2000                                                    8,908
2001                                                   10,809
Thereafter                                            103,526
                                                     --------
   Total                                             $145,088
                                                     ========
</TABLE>
      In 1994, the Company incurred an extraordinary charge of $5,250,000 for
the write off of (i) the unamortized debt issuance costs associated with the
Company's prior revolving credit facility and certain mortgage notes payable to
various lenders and (ii) the prepayment premium paid in connection with the
repayment of certain of these facilities.

(8)  ACCRUED EXPENSES AND OTHER LIABILITIES

      The following is a summary of accrued expenses and other liabilities at
December 29, 1995 and December 31, 1996:
<TABLE>
<CAPTION>
                                           1995           1996 
                                          -------        -------
                                              (IN THOUSANDS)
                                              --------------
<S>                                       <C>            <C>
Accrued expenses
  Employee related expenses               $ 5,174        $ 7,748
  Taxes payable-sales, fuel and property    5,224          5,088
  Other                                     2,306          4,497
Cash overdrafts                             8,991            --                
Due to franchisees                          3,471          3,827       
                                          -------        -------
                                          $25,166        $21,160
                                          =======        =======
</TABLE> 
(9)  RELATED PARTY TRANSACTIONS                          
                                                         
     Amounts due to and from affiliates as of December 29, 1995 and December 31,
1996 consist of the following:
<TABLE> 
<CAPTION>  
                                           1995           1996
                                           ----           ----
                                             (IN THOUSANDS)
                                             --------------
<S>                                       <C>            <C> 
Due from affiliates:
   C&R Distributing, Inc.                 $   719        $ 1,370
   Bordentown Junction Truck Stop              87             51
   El Paso Tire Center                          -             10
   Petro Truckstops, Inc.                     378            336
   Highway Service Ventures, Inc.               -             35
   Other                                      336            289
                                          -------        -------
                                          $ 1,520        $ 2,091
                                          =======        =======
Due to affiliates:
   Bordentown Junction Truck Stop         $   365        $   394
   El Paso Amusement Company                  128            194
   Highway Service Ventures, Inc.           1,309          1,524
   C&R Distributing, Inc.                     226            213
                                          -------        -------
                                          $ 2,028        $ 2,325
                                          =======        =======
</TABLE>
                                       32
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(9)  RELATED PARTY TRANSACTIONS (CONTINUED)

     Fuel and credit card receivable sales aggregating $4,301,000, $4,022,000
and $4,567,000 for the years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively, were made to C&R Distributing, Inc. ("C&R") at
the Company's cost. C&R sales of fuel and lubricants and truck hauling fees,
aggregating  $5,547,000,  $7,857,000 and $11,432,000 for the years ended
December 30, 1994, December 29, 1995 and December 31, 1996, respectively, were
charged to the Company.

     As part of the organization of the Company in 1992, the Cardwell Group
negotiated rights to receive revenues (the "Coinage Arrangement") from certain
specified activities at 14 Stopping Centers (such as video games, pay telephone
services and rental of retail space).  In 1994, the Coinage Arrangement was
terminated pursuant to the terms of the contracts establishing such arrangements
by payment of approximately $9,440,000 to the Cardwell Group; subsequent
revenues belong to the Company.  The Cardwell Group received approximately
$988,000 for the year ended December 30, 1994 under the Coinage Arrangement.

     Since June 1993, the two Stopping Centers located in Louisiana have
featured video poker games housed in a separate on-site facility and operated by
a third party, Petro Truckstops, Inc., an affiliate who, under terms of a
contract, turns over a specified portion of the revenue generated from the
machines.  Petro Truckstops, Inc. pays 95% of revenue collected to the Company
and retains 5% for operating expenses in accordance with a lease agreement.
Payments to the Company under this arrangement aggregated $3,218,000 during
1994, $2,383,000 during 1995 and $1,979,000 during 1996.  During 1996, Louisiana
enacted a statute requiring the cessation of video poker operations unless the
parish in which the operations were conducted voted to allow the continued
operation of video poker machines.  On November 5, 1996, the parish in which the
Shreveport unit is located voted to continue to allow video poker operations,
while the parish in which the Hammond unit is located voted to disallow video
poker operations.  The phase out period for the Hammond location is through June
1999.  During the year ended December 31, 1996, the Hammond location generated
approximately $841,000 of revenue from video poker.

     Management fees of $250,000 were earned by the Fremont Group for each of
the years ended December 30, 1994, December 29, 1995 and December 31, 1996, in
accordance with terms of the Company's Partnership Agreement.

     Each of the affiliates identified in the table above, is owned or
controlled to some degree by a member or members of the Cardwell Group.  Related
party transactions, other than those specifically discussed above, generally
arise in the ordinary course of business as a result of the Company's purchase
of trade accounts receivable or receipt of franchisee fees from certain related
parties who own properties which are part of the Company's network.  All
significant related party transactions have been appropriately reflected in the
footnotes and accompanying consolidated financial statements.

(10)  PARTNERS' CAPITAL

     Under the terms of the Company's Partnership Agreement, the Company is
required to distribute to the partners, on a pro rata basis in accordance with
ownership percentage interests, an amount calculated based upon allocated
taxable income using certain state and federal tax rates.  The payments are to
be made on or before the estimated tax payment dates, which are April 15, June
15, September 15 and December 15.  Debt agreements restrict distributions upon
certain debt covenant violations.

     As of December 31, 1996, the historical net book value of assets and
liabilities was approximately $32,000,000 greater than the associated net tax
basis of those assets and liabilities.

(11)  EMPLOYEE BENEFITS

     The Company sponsors a defined contribution retirement plan under Internal
Revenue Code Section 401(k) covering substantially all of its employees.
Company contributions equal 50% of the participants' contributions up to 2% of
the participants' annual salary and aggregated  $115,484, $132,593

                                       33
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(11)  EMPLOYEE BENEFITS (CONTINUED)

and $138,000 for the years ended December 30, 1994,  December 29, 1995 and
December 31, 1996, respectively.

(12)  EMPLOYEE EQUITY PLAN

     The company will establish an equity incentive plan to attract and retain
key personnel, including senior management, and to enhance their interest in the
Company's continued success.  The Company anticipates that the aggregate equity
issued pursuant to such plans and any future plans will be between 5% and 10% of
the fully diluted equity of the Company.

(13) CONTINGENCIES

     The Company is involved in various litigation incidental to the business
for which estimates of losses have been accrued, when appropriate.  In the
opinion of management, such proceedings will not have a material adverse effect
on the consolidated financial position or results of operations.

(14)  FINANCIAL INSTRUMENTS

     The following disclosure of the estimated fair value of financial
instruments is presented in accordance with the requirements of SFAS No. 107.
The estimated fair value amounts have been determined by the Company using
available market information and valuation methodologies.

     As of December 29, 1995 and December 31, 1996, the carrying amounts of
certain financial instruments employed by the Company, including cash, accounts
receivable, trade accounts payable and amounts due from/to affiliates are
representative of fair value because of the short-term maturity of these
instruments.  The carrying amount of notes payable approximate fair value due to
the floating nature of the interest rate.  The fair value of the long-term debt
has been estimated based on quoted market prices for the same or similar issues
or by discounting the future cash flows using rates currently available for debt
of similar terms and maturity.  The fair value of all derivative financial
instruments is the amount at which they could be settled, based on quoted market
prices or estimates obtained from dealers.  The following table reflects the
carrying amount and estimated fair value of the Company's financial instruments:
<TABLE>
<CAPTION>
                                                    YEAR ENDED,
                                            1995                   1996
                                    CARRYING               CARRYING
                                     AMOUNT   FAIR VALUE    AMOUNT   FAIR VALUE
                                    --------  -----------  --------  ----------
Balance sheet financial instruments                (in thousands)
<S>                                 <C>       <C>          <C>       <C>
  Long-term debt                    $147,814    $145,509   $145,088    $142,825
Other financial instruments         
  Interest rate swap agreements            -      (1,220)         -        (535)
</TABLE>

Derivative Financial Instruments

     The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes.  The Company uses
derivatives to manage well-defined interest rate and commodity price risks.

                                       34
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(14)  FINANCIAL INSTRUMENTS (CONTINUED)

          1.  Interest Rate Swap Agreements

                At December 31, 1996, the Company was party to an interest rate
          swap agreement with an aggregate notional principal amount of
          $25,000,000. Under the agreement, the Company pays a fixed rate of
          7.07% and receives a floating rate based on LIBOR on the aggregate
          principal amount as determined in three month intervals. The
          transaction effectively changes a portion of the Company's interest
          rate exposure from a floating rate to a fixed rate basis. The effect
          of the swap was to increase the rate by 1.07% which resulted in
          additional interest expense of approximately $249,000. The swap was
          extinguished subsequent to December 31, 1996.

                The primary risks associated with swaps are the exposure to
          movements in interest rates and the ability of the counterparties to
          meet the terms of the contracts. Based on review and assessment of
          counterparty risk, the Company does not anticipate non-performance by
          the other party. The Company does not obtain collateral or other
          security to support financial instruments subject to credit risk, but
          monitors the credit standing of counterparties.

          2.  Futures Contracts

                The Company occasionally utilizes futures and option contracts
          with the objective of minimizing fuel cost risk due to market
          fluctuations.. During 1994, the Company realized gains of
          approximately $94,000 pertaining to futures contracts. There were no
          contracts outstanding at December 29, 1995 and December 31, 1996.

(15)  ENVIRONMENTAL MATTERS

      The Company is subject to contingencies pursuant to environmental laws
and regulations that in the future may require the Company to take action to
correct the effects on the environment of prior disposal practices or releases
of chemical or petroleum substances by the Company or other parties.  The
Company has accrued for certain environmental remediation activities consistent
with the policy set forth in Note 2.  At December 31, 1996, such accrual
amounted to approximately $217,000 and, in management's opinion, was appropriate
based on existing facts and circumstances.  Under the most adverse
circumstances, however, this potential liability could be significantly higher.
In the event that future remediation expenditures are in excess of amounts
accrued, management does not anticipate that they will have a material adverse
effect on the consolidated financial position or results of operations of the
Company.  At December 31, 1996 the Company has recognized approximately $256,000
in the consolidated balance sheet related to recoveries of certain remediation
costs from third parties.

(16)  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
                                          (in thousands)
                                          --------------
                       First          Second        Third          Fourth
                      Quarter        Quarter        Quarter        Quarter
                      --------       --------       --------       --------
<S>                   <C>            <C>            <C>            <C>
1995                                                    
  Net revenues        $125,948       $131,562       $137,384       $138,121
                                                        
  Operating income       6,711          6,817          7,184          4,161
                                                        
  Net income             1,554          1,446          1,908         (1,133)
 
</TABLE>

                                       35
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(16)  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
                       First          Second        Third          Fourth
                      Quarter        Quarter        Quarter        Quarter(a)
                      --------       --------       --------       --------
<S>                   <C>            <C>            <C>            <C>
1996
  Net revenues        $147,925       $156,077       $160,530       $172,525
 
  Operating income       4,655          5,924          6,216         (1,354)
 
  Net income (loss)       (675)           626            969         (9,680)
</TABLE>
---------------
(a)  Fourth quarter of 1996 decline in operating income and net income is due
     principally to the following items: (1) Earnings reflect the impact due to
     lack of management direction and focus on the business during the change in
     management structure that was in process as a result of the
     Recapitalization and sale of the partnership interest. (2) In addition to
     the decline in performance in the fourth quarter, the quarter also reflects
     adjustments relating to establishment of inventory reserves, insurance
     reserves, employee severance, benefit and placement expenses as well as
     recapitalization costs amounting to approximately $1,400,000, $500,000,
     $2,534,000, and $2,938,000 respectively. (See further discussion at Note
     17).

(17) RECAPITALIZATION

     On January 30, 1997, the Company consummated a transaction entered into in
October 1996, in which Chartwell, Mobil Long Haul and the Cardwell Group entered
into an agreement under which Chartwell and Mobil Long Haul invested $20.7
million and $15.0 million, respectively (the "Equity Investment"), in order to
directly acquire the partnership interests of the Company owned by the Fremont
Partners for approximately $25.6 million  and invested approximately $10.1
million in the Company.  The Cardwell Group maintained its capital investment in
the Company.  Kirschner Investments ("Kirschner"), a Company franchisee,
invested $1.0 million in the Company (the "Kirschner Investment").  Following
the Equity Investment and the Kirschner Investment, the common partnership
interests of the Company are owned by Chartwell (approximately 50.8%), the
Cardwell Group (approximately 39.9%), Mobil Long Haul (approximately 7.4%), and
Kirschner (2.0%), and the preferred partnership interests are owned by Mobil
Long Haul ($12.0 million) and the Cardwell Group ($7.6 million). Chartwell and
the Cardwell Group own both general and limited partnership interests and Mobil
Long Haul and Kirschner own only limited partnership interests. Mobil Oil
Company and the Company also entered into certain supply and marketing
agreements.

     As part of the Recapitalization, the Company issued $135 million of 10 1/2%
Senior unsecured notes due 2007, (the "New Notes") and repurchased approximately
94% of the Existing 12 1/2% Senior Notes due 2002 and approximately 99% of
outstanding Debt Warrants.

     The Company also replaced its senior collateralized credit facility (the
"Existing Credit Agreement") with a new senior collateralized credit facility
(the "New Credit Agreement").  The New Credit Agreement consists of a $25.0
million revolving credit facility (the "Revolving Credit Facility"), a $14.0
million Term Loan A, a $30.0 million Term Loan B and a $40.0 million expansion
facility (the "Expansion Facility").  The New Credit Agreement is collateralized
by substantially all of the Company's assets and the partnership interests of
Mobil Long Haul and Chartwell and guaranteed by each of the Company's
subsidiaries, which guarantees in turn are collateralized by substantially all
of such subsidiaries' assets.

     In the first quarter of 1997, the Company will recognize an extraordinary
charge of $13.5 million relating to amendment of the Existing Credit Agreement,
retirement of the Existing Notes and Debt Warrants and the write-off of deferred
financing costs.

                                       36
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(17) RECAPITALIZATION (CONTINUED)

     Aggregate yearly term loan principal payments under the New Credit
Agreement will be as follows: (i) $2.0 million in 1997; (ii) $3.0 million in
1998; (iii) $4.5 million in 1999; (iv) $5.5 million in 2000; (v) $7.5 million in
2001; (vi) $13.5 million in 2002; and (vii) $14.0 million in 2003.

     During 1996, the Company recognized recapitalization costs of approximately
$2.9 million relating to professional fees associated with the Recapitalization.

     The following Unaudited Condensed Pro Forma Consolidated Balance Sheet of
the Company as of December 31, 1996 is prepared to present the capitalization of
the Company as if the Recapitalization had occurred on that date (in thousands).
<TABLE>
<CAPTION>
                                          December 31,                           December 31,
                                              1996                Proforma          1996
                                           Historical           Adjustments      Proforma(a)
                                          ------------          -----------     -------------
                 Assets                                                          (unaudited)
                 ------                           
<S>                                       <C>                   <C>              <C>
Current assets:                                                      
  Cash                                         3,182              15,592(e)         18,774
  Other                                       29,091                  --            29,091
                                            --------            --------          --------
    Total current assets                      32,273              15,592            47,865
                                                                     
  Property and equipment, net                159,539                  --           159,539
  Deferred debt issuance                                             
    and Company organization costs, net       11,305               5,373(c)         16,678
                                                                     
  Other assets                                 5,983                   -             5,983
                                            --------            --------          --------
    Total assets                             209,100              20,965           230,065
                                            ========            ========          ========
                                                             
      Liabilities and Partners' Capital                            
      ---------------------------------                     
Total current liabilities                     46,136              (5,934)(b)        40,202
                                                                     
Notes payable                                 21,639             (21,639)(b)             -
                                                                     
Long-term debt, excluding current            138,160              50,879 (b)       189,039
 portion                                    --------            --------          --------
                                                                     
    Total liabilities                        205,935              23,306           229,241
                                                                     
Preferred partnership interest                    --              19,600 (d)        19,600
Partners' Capital                              3,165             (21,941)          (18,776)
                                            --------            --------          --------
                                                                     
    Total liabilities and partners'         $209,100            $ 20,965          $230,065
     capital                                ========            ========          ========
</TABLE>

                                       37
<PAGE>
 
                         Petro Stopping Centers, L.P.

                  Notes to Consolidated Financial Statements

(17) RECAPITALIZATION (CONTINUED)

Notes to Unaudited Condensed Pro Forma Consolidated Balance Sheet:

a)  Pro forma as if the Recapitalization had occurred on December 31, 1996.
b)  To reflect (i) the sale of the New Notes, net of repurchase of the Existing
    Notes and Debt Warrants, including accretion to face amounts and premiums
    and payment of accrued interest; (ii) replacement of the Existing Credit
    Agreement with the New Credit Agreement and (iii) termination of the
    existing interest rate swap agreement.
c)  To reflect payment of new debt issuance costs reduced by write-off of
    existing debt issuance costs.
d)  To reflect assignment of mandatorily redeemable preferred partnership
    interests of $19.6 million.
e)  To reflect (in millions):
<TABLE>
<CAPTION>
 
 
        <S>                                       <C>
        Sale of New Notes                        $ 135.0
        Repurchase of Existing Notes and Debt
         Warrants, Swap termination costs and
          accrued interest                        (117.9)
        Payment of debt issuance costs            ( 12.6)
        Capital contribution                        11.1
                                                 -------
                                                 $  15.6
                                                 =======
 
</TABLE>

                                       38
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
                       ---------------------------------


The Board of Control and Partners
Petro Stopping Centers, L.P.



We have audited the accompanying consolidated balance sheets of Petro Stopping
Centers, L.P. as of December 29, 1995 and December 31, 1996 and the related
consolidated statements of operations, changes in partners' capital and cash
flows for each of the three years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Petro
Stopping Centers, L.P. as of December 29, 1995 and December 31, 1996 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.



COOPERS & LYBRAND L.L.P.


El Paso, Texas
March 28, 1997

                                       39
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
                       ---------------------------------

                                        

The Board of Control and Partners
Petro Stopping Centers, L.P.


Our report on the consolidated financial statements of Petro Stopping Centers,
L.P. is included on page 39 of this Form 10-K.  In connection with our audit of
such consolidated financial statements, we have also audited the related
financial statement schedule listed in the index on page 54 of this Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.



COOPERS & LYBRAND L.L.P.


El Paso, Texas
March 28, 1997

                                       40
<PAGE>
 
                         PETRO STOPPING CENTERS, L.P.
                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
 
                                     Balance at      Additions      Amount
                                     beginning   charged to costs   charged   Balance at
                                     of period     and expenses       off    end of period
                                     ----------  ----------------   -------  -------------
                                                           (in thousands)
                                                           --------------
<S>                                  <C>         <C>                <C>      <C>
                                                             
Year ended December 30, 1994
  Allowance for doubtful accounts      $1,020         $(351)         $216         $453
                                       ======         =====          ====         ====
                                                                                
Year ended December 29, 1995                                                    
  Allowance for doubtful accounts      $  453         $ 297          $142         $608
                                       ======         =====          ====         ====
                                                                                
Year ended December 31, 1996                                                    
  Allowance for doubtful accounts      $  608         $ 215          $502         $321
                                       ======         =====          ====         ====
</TABLE>

                                       41
<PAGE>
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None
                                     PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following sets forth certain information with respect to the persons who are
members of the Company's Board of Directors, Executive Committee, Operating
Committee and senior management team.

 
      NAME                   AGE         POSITION
      ----                   ---         --------
James A. Cardwell, Sr.        65  Chairman, Chief Executive Officer, President,
                                  Member of the Executive Committee, Operating
                                  Committee and Director
Larry Zine                    42  Executive Vice President, Chief Financial
                                  Officer and Member of Operating Committee
Evan Brudahl                  41  Senior Vice President of Strategic Planning
                                  and Development, of Operating Committee and
                                  Director Member
James A. Cardwell, Jr.        37  Senior Vice President of Operations, Member of
                                  Operating and Director Committee
Travis R. Roberts             61  Vice President of Real Estate Services and
                                  Member of Operating Committee
David Latimer                 38  Vice President of Petro:Lube
David A. Haug                 36  Vice President of Finance and Treasurer
Todd R. Berman                39  Member of the Executive Committee and Director
Mark A. Skolnik               43  Member of the Executive Committee and Director
Michael S. Shein              33  Member of Operating Committee and Director


     James A. (Jack) Cardwell, Sr. -- Jack Cardwell founded the Company in 1975
and has been serving as the Chief Executive Officer since May 1992 and has been
a member of the Board of Control since its formation in 1992. He is the Chairman
and President with responsibility for the Company's overall performance, while
defining Petro's image in the marketplace and identifying growth opportunities
and overseeing employee and customer retention. He served as the Chairman of the
National Association of Truck Stop Operators ("NATSO") in 1983 and 1984 and has
worked on various committees of NATSO since that time. He currently serves as a
trustee for Security Capital Pacific Trust (a New York Stock Exchange Company)
and is on the Board of Directors for The El Paso Electric Company. Jack Cardwell
is the father of Jim Cardwell.

     Larry Zine -- Larry Zine was hired in December 1996 as Executive Vice
President and Chief Financial Officer and is responsible for all financial,
accounting, management information and insurance and benefit services for the
Company. Mr. Zine was the Executive Vice President and Chief Financial Officer
for The Circle K Corporation, the second largest chain of convenience stores in
the United States, from 1988 to 1996. Mr. Zine was an integral part of The
Circle K Corporation's reorganization from bankruptcy in July 1993, its initial
public offering in March 1995 and subsequent sale in June 1996. Mr. Zine had
worked for The Circle K Corporation for 15 years in various capacities including
the last eight years as Chief Financial Officer. Mr. Zine was educated at the
University of North Dakota and holds an M.S. degree in Accounting and a B.S.B.A.
in marketing.

     Evan Brudahl -- Evan Brudahl, a Mobil Oil employee, is the Senior Vice
President of Strategic Planning and Development and a director. Mr. Brudahl is
responsible for strategic planning and development functions of the Company.
This includes overseeing field support services, advertising, human resources,
corporate planning and franchise operations. Mr. Brudahl was most recently the
Manager of U.S. Diesel Retail Marketing and Travel Center Business at Mobil Oil
and has worked for Mobil Oil for 19 years. He has held the positions of District
Manager, Manager of U.S. company-operated Gasoline Stations Operations,
Franchise Manager, and various other positions in U.S. Marketing and Accounting
areas. He received a B.B.A. in Marketing from the University of Wisconsin at
Whitewater.

                                       42
<PAGE>
 
     James A. (Jim) Cardwell, Jr. -- Jim Cardwell is Senior Vice President of
Operations and Marketing with responsibility for the Company's operations and
fuel purchasing.  Mr. Cardwell has been involved with the Company full time for
14 years and has held various positions including profit center management and
was Vice President of Operations from 1986 to 1992.  Prior to his current
position, he served as Vice President of National Sales and Promotions from June
1993 to January 1997.   Mr. Cardwell studied Management and Finance at the
University of North Texas. Currently he serves on the board of NATSO, and is
Chairman of the Board of the NATSO Foundation. He is also a member of the Young
Presidents Organization. Jim Cardwell is the son of Jack Cardwell.

     Travis Roberts -- Travis Roberts is Vice President of Real Estate Services.
Mr. Roberts manages support services related to maintenance at existing sites,
capital projects at existing sites, new site acquisition and construction,
franchisee support, and new site selection. Mr. Roberts served as Vice President
of Maintenance and Development. Mr. Roberts joined the Company at its inception
in 1975. He was Vice President of Development from 1985 to 1992.

     David Latimer -- David Latimer has been serving as Vice President of
Petro:Lube since April 1995, prior to which he served as Vice President of
Operations from 1993 to 1995. Mr. Latimer joined the Company in 1983 and was
instrumental in the introduction and development of the Petro:Lube Express Truck
Service Center business. Mr. Latimer served for 4 years on the
Bridgestone/Firestone Dealer Board and is a current member of the Kelly
Springfield Advisory Council. Mr. Latimer also serves as the Company
representative to the National Tire Dealers and Retreaders Association and The
Maintenance Council.

     David A. Haug -- David A. Haug is Vice President of Finance of the Company.
Prior to his current position he served as the Controller for the Company, a
position he held since April 1990. Prior to joining the Company he was an audit
manager with Lauterbach, Borschow and Company, Certified Public Accountants from
1982 to 1990. He received a B.A. in accounting from New Mexico State University
and is a Certified Public Accountant in the state of Texas.

     Todd R. Berman -- Todd Berman is a director.  Mr. Berman is the founder and
President of Chartwell Investments. Mr. Berman has served as Chairman of the
Board of Griffith Consumers Company, one of the nation's largest independent
distributors of heating oil and other petroleum products, since 1994; as
Chairman of SunPark, Inc., a major owner and operator of off-site airport
parking lots, since November 1995; and as Chairman of Carl King, Inc., the
leading operator of gas stations and convenience stores in the Delmarva
peninsula (Delaware, Maryland, Virginia), since 1994. Mr. Berman has been with
Chartwell or its predecessor since 1992. Mr. Berman received an A.B. from Brown
University and an M.B.A. from Columbia University Graduate School of Business.

     Mark A. Skolnik -- Mark Skolnik is a director. Mr. Skolnik has served as
Manager of Mobil Oil's Domestic Heating Oil and Diesel Fuel business since 1994.
Prior to this role, Mr. Skolnik spent six years working for Mobil Oil in its
European operations, starting and developing product trading operations in
Germany, managing Mobil Oil's supply and product operations in the United
Kingdom, and finally managing Mobil Oil's European product and supply
operations. Mr. Skolnik obtained his B.S. from Union College in Electrical
Engineering in 1976 and his M.B.A. from The Wharton School at The University of
Pennsylvania in 1981.

     Michael S. Shein -- Mr. Shein is a director. Mr. Shein, a managing director
and co-founder of Chartwell Investments, has been with Chartwell Investments or
its predecessor since 1992. Mr. Shein has been a director of Griffith Consumers
Company, one of the nation's largest independent distributors of heating oil and
other petroleum products, since December 1994; a director of SunPark, Inc., a
major owner and operator of off-site airport parking lots, since November 1995;
and a director of Carl King, Inc., the leading operator of gas stations and
convenience stores in the Delmarva Peninsula (Delaware, Maryland, Virginia),
since December 1994. He received a B.S. summa cum laude, from The Wharton School
at the University of Pennsylvania.

                                       43
<PAGE>
 
ITEM 11.  EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

     The following table presents information concerning compensation paid for
services to the Company during 1994, 1995 and 1996 to the Chief Executive
Officer of the Company and  the four other most highly paid executive officers
employed by the Company at the end of 1996, collectively, the "Named Executive
Officers".

                          SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
 
                                                   Annual                      Long-Term
                                                Compensation                  Compensation
                                                ------------                ----------------
 
                                                                                 Awards
 
         Name and                                             Other Annual      Options          All Other
    Principal Position        Year     Salary      Bonus      Compensation  (% Interest)(1)    Compensation
---------------------------  -------  --------  ------------  ------------  ----------------  ---------------
<S>                          <C>      <C>       <C>           <C>           <C>               <C>
James A. Cardwell-           1996     $363,686      $    -0-                                      $186,152(2)
  Chief Executive            1995      363,685                                                     259,850
  Officer                    1994      385,563       193,895                                       439,466

Joseph R. Schillaci-         1996(7)   274,189             -                                        10,586(3)
  President & Chief          1995      272,602        30,000                        2.90%           11,325
  Operating Officer          1994      247,771       134,235                                        11,658

Walter A. Fitzgerald, Jr.    1996(7)   145,514             -                                           960
  Vice President-            1995      128,133        20,000                         .70            24,176(4)
  Operations                 1994(5)    36,923        15,000
 
James A. Cardwell, Jr.-      1996      107,882             -                                         1,179(6)
  Vice President -           1995      101,642        10,000                                         1,500
  National Sales and         1994      100,059        40,712                                         1,615
  Promotions

David Latimer-               1996      123,296             -                                         2,767(6)
  Vice President-            1995      117,491        20,000                         .40             3,498
  Lube Operations            1994      112,067        57,410                                         2,641
</TABLE>
__________________
(1)  Options held by the Named Executive Officers in the Company, expressed as a
     percent of the partnership equity.  All of such options were terminated
     upon consummation of the Transactions at no cost to the Company.
(2)  Represents employer contributions to the Company's 401(k) Plan of $3,497,
     $3,295 and $4,362 in 1996, 1995 and 1994, respectively, and life insurance
     premiums paid by the Company for the benefit of Mr. Cardwell in the amounts
     of $182,655, $256,555 and $434,804 in 1996, 1995 and 1994, respectively.
(3)  Represents insurance premiums of $7,653, $7,653 and $7,388 paid by the
     Company for the benefit of Mr. Schillaci in 1996, 1995 and 1994,
     respectively, and $2,933, $3,672 and $4,270 of employer contributions to
     the Company's 401(k) Plan for 1996, 1995 and 1994, respectively.
(4)  Represents $23,663 of payments in connection with relocation expenses
     incurred by Mr. Fitzgerald and $960 and $513 of employer contributions to
     the Company's 401(k) Plan in 1996 and 1995 respectively.
(5)  Employment with the Company commenced in 1994.
(6)  Represents employer contributions to the Company's 401(k) Plan.
(7)  Mr. Schillaci's and Mr. Fitzgerald's employment was terminated in 1997.

                                       44
<PAGE>
 
INCENTIVE EQUITY PLANS

     The Company will establish an equity incentive plan to attract and retain
key personnel, including senior management, and to enhance their interest in the
Company's continued success. The Company anticipates that the aggregate equity
issued pursuant to such plans and any future plans will be between 5% and 10% of
the fully diluted equity of the Company.

COMPENSATION OF MEMBERS OF THE BOARD OF DIRECTORS
 
     Members of the Board of Directors do not receive a salary or an annual
retainer from the Company for their services.

COMPENSATION COMMITTEE

     The Company does not maintain a formal Compensation Committee.  The Vice
President of Administration of the Company administers the compensation program
in conjunction with the Chief Executive Officer, the President and the Board of
Directors

EMPLOYMENT AGREEMENTS

     The Company entered into employment agreements with Jack Cardwell and Jim
Cardwell on the Closing Date and, effective December 16, 1996, entered into an
employment agreement with Mr. Zine. The employment agreements commenced on the
date of execution and expire on December 31, 1999. Under the employment
agreements, the annual base salaries of Jack Cardwell, Jim Cardwell and Mr. Zine
(the "Executives") are $362,700, $135,000 and $290,000, respectively, and are
subject to review and may be increased by the Company's Board of Directors (or
compensation committee, if one is elected). Jack Cardwell and Jim Cardwell are
also entitled to participate in any bonus plan approved by the Board of
Directors of the Company. Mr. Zine is eligible to receive an annual cash bonus,
based on parameters to be established by Jack Cardwell and Mr. Zine and approved
by the Board of Directors; provided, that Mr. Zine's bonus will not be less than
40% of his base salary for the calendar year ended December 31, 1997.

     The Executives are also entitled to any other benefits generally available
to the senior management of the Company. In addition, as described under the
"Incentive Equity Plan," the Company intends to establish an incentive equity
plan for senior management of the Company. Pursuant to their employment
agreements, Jim Cardwell and Mr. Zine are entitled to participate in the equity
incentive plan. On the Closing Date, Mr. Zine received, under the incentive
equity plan, options to purchase (at an exercise price per share of
approximately $400,000 per 1%) 2.75% of the Company's common partnership
interests, on a fully diluted basis, or a stock appreciation instrument
equivalent.

     If the Company terminates any of the employment agreements without cause or
because the officer has been incapacitated for three consecutive months, or the
Executive terminates his employment agreement for "good reason" (as defined in
each Employment Agreement), then the terminated officer will be entitled to
continue to receive his salary, plus certain benefits, for twelve months from
the date of the notice of termination. The employment agreements contain certain
customary nonsolicitation provisions upon termination of such agreements.

     The Company and Joseph R. Schillaci, the Company's former President and
Chief Operating Officer, entered into and employment agreement dated as of
January 1, 1993 (the "Employment Agreement"). The Company terminated the
Employment Agreement at the Closing of the Transactions. Pursuant to the terms
of the Employment Agreement, at the Closing, the Company: (i) paid Mr. Schillaci
a lump sum of $300,000; and (ii) paid Mr. Schillaci for reasonable expenses in
connection with his relocation; and out-placement assistance.

                                       45
<PAGE>
 
SECONDMENT LETTER AGREEMENT

     The Company entered into an agreement with Mobil Oil providing for the
temporary secondment (or loan) of one of Mobil Oil's employees, Evan C. Brudahl,
to the Company. The period of secondment commenced upon the Closing Date and is
contemplated to continue until July 1, 2000, subject to certain termination
rights, including the right of Mobil Oil or the employee to terminate the
agreement in their discretion. Under the agreement, the Company has the right,
if the employee is performing at an unacceptable level, to terminate the
secondment period on 120 days' notice. During the secondment period, the loaned
employee will continue as an employee of Mobil Oil but will be under the day-to-
day supervision of the Company. The Company will be responsible for all
compensation, benefit and other expenses relating to the secondment of the
employee to the Company.

MANAGEMENT RETENTION PLAN

     The Company entered into agreements with certain members of management
(including Walter Fitzgerald and David Latimer.) to secure promises from such
key executives to remain in the employ of the Company in the event of the
occurrence of a transaction after which the former partners held less than 50%
of the total ownership interest in the Company (a "Change in Ownership").  Under
the agreements, if an executive, if an executive (i) promises to remain in the
employ of the Company for 60 days after a Change in Ownership and is not offered
continuing employment with the Company after such 60-day period or (ii) is
terminated within six months of a Change of Ownership, such executive will be
eligible to receive a predetermined amount up to $150,000 in six equal monthly
installments and in some cases, up to $25,000 in relocation expenses.

EMPLOYEE BENEFITS PLANS

     The Company  sponsors a defined contribution retirement plan under Internal
Revenue Code Section 401(k) covering substantially all of its employees.
Company contributions equal 50% of the participants' contributions up to 2% of
the participants' annual salary and aggregated $115,484, $132,593 and $138,000
for the years ended December 30, 1994, December 29, 1995 and December 31, 1996,
respectively.

     On December 19, 1996, the Company filed with the Internal Revenue Service
("IRS"), pursuant to IRS Rev. Proc. 94-62, a request for a compliance statement
with respect to the Petro Stopping Centers, L.P. 401(k) Plan (the "Plan").  The
compliance statement request relates to the Plan's failure (i) to allocate
participant forfeitures pursuant to the terms of the Plan and (ii) to correctly
apply the actual deferral percentage test and the actual contribution percentage
test (items (i) and (ii) hereafter collectively referred to as the "Operational
Defects").  The Operational Defects relate to Plan years 1990 through 1995.  The
Company does not believe that the existence or resolution of the Operational
Defects are material to its business.
 

                                       46
<PAGE>
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding beneficial
ownership of the Company's common partnership interests by each general partner,
each limited partner who owns more than 5% of the Company's common partnership
interests, each director who beneficially owns partnership interests, each
executive officer who beneficially owns partnership interests and all directors
and executive officers of the Company as a group. Except as set forth in the
footnotes to the table, each partner listed below has informed the Company that
such partner will have (i) sole voting and investment power with respect to such
partner's partnership interests, except to the extent that authority is shared
by spouses under applicable law and (ii) record and beneficial ownership with
respect to such partner's partnership interests.
<TABLE>
<CAPTION>
 
 
                                   TYPE OF      CLASS OF      CAPITAL        PERCENTAGE
            NAMES                 INTEREST      INTEREST   CONTRIBUTION       OF CLASS
-----------------------------  ---------------  --------  ---------------  --------------
<S>                            <C>              <C>       <C>              <C>
James A. Cardwell, Sr.         General Partner   Common    $   485,560(1)      1.1896%(2)
  6080 Surety Drive            Limited Partner   Common     14,143,493(1)     34.6515(3)
  El Paso, Texas 79905
 
Chartwell L.P.(4)              General Partner   Common        400,000         0.9800
  c/o Maples & Calder          Limited Partner   Common     20,330,000        49.8085
  Ugland House
  P.O. Box 309
  George Town, Grand Cayman
  Cayman Islands (B.W.I.)
 
James A. Cardwell, Jr.         Limited Partner   Common      1,640,947(1)      4.0203(5)
  6080 Surety Drive
  El Paso, Texas 79905
 
Mobil Long Haul Inc.           Limited Partner   Common      3,000,000         7.3500
  3225 Gallows Road
  Fairfax, Virginia 22037
                                                                              98.0000%

All directors and officers
as a group (10 persons)                                                       39.8614%
</TABLE> 
______________

(1)  Represents the implied carryover value of the Cardwell Group in the Company
     after the consummation of the Recapitalization.  The Cardwell Group did not
     receive or invest any cash in the Recapitalization.  For purposes of the
     Recapitalization, its partnership interests were given an implied value of
     approximately $23.9 million, of which $7.6 million was the face value of
     preferred partnership interests and approximately $16.3 million was the
     implied value of common partnership interests.  The value of the Cardwell
     Group's partnership interests has been implied based on the partnership
     interest purchase price paid and capital contributions to the Company made
     by Chartwell and Mobil Long Haul in the Recapitalization.
(2)  Represents partnership interests owned of record by Petro, Inc. Petro, Inc.
     is a wholly owned subsidiary of Nevada Trio, Inc., a Nevada corporation,
     which is a wholly owned subsidiary of Card Partners, L.P., a Texas limited
     partnership of which Jack Cardwell and Mrs. Jack Cardwell are limited
     partners and of which Texas Mec, Inc., a Texas corporation, is the general
     partner. Jack Cardwell is the sole shareholder of Texas Mec, Inc.
     Accordingly, Jack Cardwell may be deemed to have beneficial ownership of
     the partnership interests owned by Petro, Inc.

                                       47
<PAGE>
 
(3)  Includes partnership interests owned of record by Petro, Inc. Petro, Inc.
     is a wholly owned subsidiary of Nevada Trio, Inc., a Nevada corporation,
     which is a wholly owned subsidiary of Card Partners, L.P., a Texas limited
     partnership of which Jack Cardwell and Mrs. Jack Cardwell are limited
     partners and of which Texas Mec, Inc., a Texas corporation, is the general
     partner. Jack Cardwell is the sole shareholder of Texas Mec, Inc.
     Accordingly, Jack Cardwell may be deemed to have beneficial ownership of
     the partnership interests owned by Petro, Inc.
(4)  Represents partnership interests owned of record by Petro Holdings GP Corp.
     and Petro Holdings LP Corp. Petro Holdings GP Corp., a Delaware
     corporation, is a wholly owned subsidiary of Petro Holdings LP Corp., which
     is a wholly-owned subsidiary of Petro Holdings L.L.C., a Delaware limited
     liability company. Chartwell L.P., a Cayman Islands limited partnership, is
     the majority shareholder of Petro Holdings L.L.C. Todd R. Berman, who is a
     Director and a member of the Executive Committee of the Company, is a
     limited partner of Chartwell L.P. Michael S. Shein, who is a Director and a
     member of the Operating Committee of the Company, is also a limited partner
     of Chartwell L.P. Mr. Berman and Mr. Shein are the Managers of Petro
     Holdings L.L.C. Concurrent with the Closing, an affiliate of CIBC Wood
     Gundy Securities Corp., an Initial Purchaser in the Offering, and The First
     National Bank of Boston, the Agent and a Lender under the New Credit
     Agreement, became minority shareholders of Petro Holdings L.L.C.
(5)  Includes partnership interests owned of record by JAJCO II, Inc. Jim
     Cardwell is the sole shareholder of JAJCO II, Inc. and may be deemed to
     have beneficial ownership of the partnership interest owned by JAJCO II,
     Inc.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TAX REIMBURSEMENTS

     The Restated Partnership Agreement requires the Company to make
distributions to each of its partners in an amount sufficient to allow each
partner to pay federal, state and local income taxes with respect to allocations
of taxable income to such partner by the Company. Historically, aggregate tax
distributions to the Company's partners were based on the Company's taxable
income. For the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996, tax distributions made to the Company's partners were
$526,562, $326,236 and $0, respectively. Because tax distributions will in the
future be based on separate allocations of taxable income of the Company's
partners rather than the taxable income of the Company, the aggregate tax
distribution likely will increase by up to approximately $1.2 million per year.
Under certain circumstances, the Company's partners receiving tax distributions
with respect to allocations of taxable income under the Restated Partnership
Agreement will be obligated to repay the portion of such tax distribution that
exceeds the amount of a tax distribution that would have been made had tax
distributions been based on the Company's taxable income.

PRINCIPAL EXECUTIVE OFFICES

     The office building in which the Company's principal executive offices are
located is owned by Jack Cardwell, the Chief Executive Officer and a Director of
the Company. The Company leases the entire building under a lease expiring on
December 31, 2005. Under the lease, the Company pays monthly rent totaling
$336,000 per year, as well as taxes, maintenance and other operating expenses.
For each of the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996, the Company made annual rental payments of $336,000.

EFFINGHAM, ILLINOIS STOPPING CENTER

     The Stopping Center located in Effingham, Illinois is owned by Truck Stop
Property Owners, Inc. ("Truck Stop"), which is owned by Travis Roberts, who is a
current officer of the Company, and five former employees of the Company. Mr.
Roberts owns 22% of the stock of Truck Stop. The Company leases the Effingham
Center under a lease expiring in May 2006, which provides for adjustable rental
payments tied to interest rates (the "Basic Rent"), plus taxes and operating
expenses. The Company has three consecutive options to renew the lease for terms
of five years each at rental rates equal to the Basic Rent, plus certain
adjustments at the time of renewal. The Company also has a right of first
refusal to purchase the Stopping Center at a purchase price agreed upon between
Truck Stop and a third party. For the fiscal years ended 

                                       48
<PAGE>
 
December 30, 1994, December 29, 1995 and December 31, 1996, the Company made
rental payments to Truck Stop of $1,086,000, $1,086,000 and $1,080,000,
respectively.

BORDENTOWN STOPPING CENTER

     The Stopping Center located in Bordentown, New Jersey is owned by an entity
(the "Bordentown Venture") in which Jack Cardwell held a 50% interest in 1994.
In May 1995, Jack Cardwell sold his interest in the Bordentown Venture to his
partner. The Bordentown location became a franchisee effective December 1995.

HIGHWAY SERVICE VENTURES, INC.

     Highway Service Ventures, Inc. ("HSV"), a corporation in which Jack
Cardwell owns a 32.5% interest, operates four franchised Stopping Centers
located in Elkton, Maryland; Ruther Glen, Virginia; Florence, South Carolina;
and Carnesville, Georgia pursuant to franchise agreements with the Company. The
initial term of each of these franchise agreements is ten years and they are
automatically renewed for two five-year terms unless terminated by the
franchisee. The initial term of the Elkton, Maryland franchise agreement expired
in September 1995, but such term has been extended through June 1997. The
initial terms of the remaining three franchise agreements will expire in March
1998, February 2001 and January 2005, respectively. None of these franchise
agreements contain terms that are any more favorable to the franchisee than the
terms in any of the Company's other franchise agreements.

PETRO:TREAD

     In May 1992, the Company leased a facility in El Paso, Texas from a trust,
in which Jack Cardwell is a 50% beneficiary, to operate the Company's retread
plant, which produces retread tires for sale at Stopping Centers (including
franchisees) and to others. The lease, which expired in October 1995, provided
for two consecutive renewal options for terms of five years each. The Company
exercised its first renewal option in October 1995 to renew the lease for five
years commencing November 1, 1995. The Company made lease payments of $66,000,
$67,000 and $72,000, respectively, for the fiscal years ended December 30, 1994,
December 29, 1995 and December 31, 1996. In addition, the Company sells retread
tires to El Paso Tire Center, Inc., a corporation in which Jack Cardwell owns
100%. Such sales amounted to $531,000, $288,000 and $153,000 in 1994, 1995 and
1996, respectively.

PRODUCT SERVICES AGREEMENT AND FUEL SALES AGREEMENT

     The Company currently purchases Chevron branded gasoline and motor oils at
cost for five of its Auto Fuel Islands pursuant to a sales agreement with C&R
Distributing, Inc. ("C&R"), a corporation in which Jack Cardwell is the sole
shareholder. In addition, in May 1992, C&R and the Company entered into a
product services agreement terminating in 1999, under which C&R provides the
Company with fuel hauling and fuel pump maintenance and services within the El
Paso, Texas metropolitan area, if requested by the Company. The agreement
provides that C&R will charge the Company for these services at the lowest rates
charged by C&R for similar services and, in any event, at rates that will not
exceed rates available from unrelated parties providing similar services. During
fiscal years 1994, 1995 and 1996, the Company made payments to C&R under these
two agreements aggregating $5,547,000, $7,857,000 and $10,771,000, respectively.
Furthermore, the Company and C&R agreed to notify the other if either party had
petroleum products for sale with no obligation on either party to purchase any
portion of such products. During fiscal years 1994, 1995 and 1996, the Company
made sales to C&R under this agreement aggregating $4,301,000, $4,022,000 and
$3,950,000, respectively. The term of the agreements with C&R have been extended
through December 31, 2004. Notwithstanding the extension, the Company has the
option of not purchasing products or services from C&R if the Company can
purchase such products or services more economically from third parties.

                                       49
<PAGE>
 
TRUCK LEASING AGREEMENTS

     In May 1992, the Company leased seven trucks under agreements from C&R for
use in the Company's business. These agreements expired in December 1993 and
provided aggregate monthly rental payments of $11,930. In January 1994, the
Company replaced these agreements with two new agreements which expired in
January 1995. The new agreements provide for two consecutive one-year renewal
options but leave the monthly rental payments unchanged. The Company exercised
the first renewal option in January 1995. In this connection, the Company made
payments of $72,000 for the year ended December 29, 1995. In June 1995 the
Company terminated the lease agreement and purchased trucks from C&R to use at
the locations for an aggregate purchase price of $212,000.

OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT

     In connection with the formation of the Company in May 1992 under an Option
and Right of First Refusal Agreement, Jack Cardwell and Jim Cardwell, officers
and members of the Board of Control of the Company, granted to the Company and
Roadside options, which expire in December 2006, to purchase certain properties
owned by the Cardwells that are located near or adjacent to the Company's
Stopping Centers located in Shreveport, Louisiana (7 acres subject to option),
Weatherford, Texas (34 acres), Beaumont, Texas (17 acres) and Oklahoma City,
Oklahoma (30 acres) (the "Option Properties"), and a right of first refusal on
each of the Option Properties. At the Closing of the Transactions, Roadside
assigned all of its rights under the Option and Right of First Refusal Agreement
to Mobil Long Haul, Holdings GP and Holdings LP. The price at which an Option
Property may be purchased will be equal to the fair market value of the property
when the option is exercised as determined by an appraisal.

ALCOHOL SALES AND SERVICING AGREEMENTS

     In order to continue engaging in retail sales of beer, wine or wine coolers
at a limited number of its facilities after the formation of the Company in May
1992, the Company entered into agreements with CYMA Development Corporation
("CYMA"), C and PPR, Inc. ("C&PPR"), Petro Truckstops, Inc. ("Petro Truckstops")
and Petro Beverage, Inc., which collectively hold permits or licenses to sell
alcoholic beverages in the states of Louisiana, Texas and Oregon. Jack Cardwell,
Jim Cardwell and Mrs. Jack Cardwell own 60%, 30% and 10%, respectively, of the
stock of C&PPR. Jack Cardwell is the sole shareholder of CYMA and Jim Cardwell
is the sole shareholder of Petro Truckstops and Petro Beverage, Inc. The
agreements continue in effect until terminated by either party. Under the
agreements with CYMA and C&PPR, the Company agreed to operate the alcohol sales
business at these locations in exchange for 10% of the gross receipts generated
from alcoholic beverage sales, plus reimbursement of all operating expenses.
Under a similar agreement with Petro Truckstops, dated April 8, 1994, and Petro
Beverage, Inc., dated February 10, 1995, each of which has a one year initial
term and continues in effect until terminated by either party, the Company
receives 15% of gross receipts generated from alcoholic beverage sales. In each
of the agreements the net payments to the Company are approximately equal to the
gross profit received by the above entities.

MOTOR MEDIA ARRANGEMENTS

     In connection with the formation of the Company in May 1992, Motor Media,
Inc., a company owned 100% by Jim Cardwell ("Motor Media"), entered into a five-
year agreement with the Company (the "Motor Media Agreement"), under which
Motor Media leases floor and wall space at all Stopping Centers operated by the
Company and sells space for in-store advertising to third parties. Under the
agreement, the Company and Motor Media are entitled to 25% and 75%,
respectively, of the gross revenues generated. Motor Media received $192,000,
$170,000 and $214,000, respectively before its selling, maintenance and
administrative expenses for the fiscal years ended December 30, 1994, December
29, 1995, and December 31, 1996, representing its share of the gross receipts
generated. Motor Media has entered into similar floor and wall space leases with
other truck stops nationwide. The Company and Motor Media have extended the term
of the Motor Media Agreement through April 2002.

                                       50
<PAGE>
 
AMUSEMENT AND VIDEO POKER GAMES AGREEMENTS

     Under an existing agreement (the "Amusement Agreement") between El Paso
Vending and Amusement Company ("EPAC"), of which Jack Cardwell and Jim Cardwell
own 99% and 1%, respectively, and the Company, EPAC furnishes video and other
games to four of the Company's Stopping Centers and services these games.
Pursuant to the Amusement Agreement, which expires in May 2002 or until earlier
terminated by either party, the Company paid 60% of the revenues generated by
the games to EPAC and retained the remaining 40%. Beginning November 1994, the
arrangement was modified to 50% to EPAC and 50% to the Company. Upon the
termination of the Coinage Arrangements discussed below, the Company amended the
Amusement Agreement to cause EPAC to contract directly with the Company to
furnish and service video and other games at an additional 12 Stopping Centers
that were covered by the Coinage Arrangements. Subsequent thereto, EPAC began
furnishing and servicing games at an additional five Stopping Centers under the
terms of the Amusement Agreement. EPAC received $1,680,000, $1,880,000 and
$2,021,000 in revenues, respectively, generated from the furnishing and
servicing games located at the Stopping Centers for the fiscal years ended
December 30, 1994, December 29, 1995 and December 31, 1996. Since June 1993, the
two Company-operated Stopping Centers located in Louisiana have featured video
poker games operated by a third party. Under the terms of agreements relating to
the operation of, and distribution of revenues derived from, the video poker
operations, the Company is entitled to a specified portion of the revenues of
each machine. Under these arrangements, the operator turns over a share of the
revenues to Petro Truckstops, a corporation in which Jim Cardwell is the sole
shareholder, which in turn forwards 95% of these revenues to the Company. The
Amusement Agreement has been amended to extend its term through May 2002.

FREMONT PARTNERS' ANNUAL FEE

     Pursuant to the Company's former partnership agreement, the Fremont
Partners provided various services to the Company, including tax and legal
services, and paid the directors' fees for the outside members of the Company's
Board of Control. In consideration for these services, the partnership agreement
provided that the Fremont Partners were entitled to an annual management fee of
$250,000 per year. Upon Closing of the Transactions, the partnership agreement
was restated. Such services are no longer rendered by the Fremont Partners and
no further fees will be paid to the Fremont Partners.

INDEMNITY AGREEMENTS

     In order to comply with applicable Internal Revenue Code and Treasury
Regulation provisions dealing with recourse debt, Jack Cardwell, Jim Cardwell,
Texas JIMCO, Inc., JAJCO, Inc., JAJCO II, Inc. and Arcadian Management
Corporation each entered into an indemnity agreement under which each has agreed
to indemnify the Company, the general partners and certain limited partners in
the event that the indemnified party is required to pay certain of the Company's
indebtedness after a default, acceleration by the creditor and exhaustion of any
collateral securing the credit facility. In May 1994, Jack Cardwell, Jim
Cardwell, Texas JIMCO, Inc., JAJCO, Inc., JAJCO II, Inc., and Arcadian
Management Corporation amended their original indemnity agreements in connection
with the May 1994 financing. No payments have been made under these agreements.

COINAGE ARRANGEMENTS

     In connection with the formation of the Company in May 1992, Jack Cardwell
retained rights to receive revenues generated from the Coinage Arrangements at
14 Stopping Centers, including the right to 100% of the revenues generated from
leases to third parties of certain retail space (such as barber shops, shoeshine
and repair stands and jewelry stores), coin-operated devices such as pinball,
video and other games and the provision of pay telephone services through
arrangements with AT&T and other carriers. In connection with the 1994
Refinancing, the Company paid approximately $9,440,000 to Jack Cardwell for the
rights to receive revenues under the Coinage Agreements beginning May 1, 1994.
The amount of this payment was based on the formula contained in the original
contract.

                                       51
<PAGE>
 
     In connection with the Coinage Arrangements, Jack Cardwell had entered into
a joint venture agreement (the "Venture") with EPAC under which EPAC furnished
video and other games at 12 of the 14 Company-operated Stopping Centers that
were covered by the Coinage Arrangements and serviced these games. EPAC received
60% of the revenues from these games, while Jack Cardwell received 40% of the
revenues from the games. The Venture was terminated in connection with the 1994
Refinancing.

MOTOR FUELS FRANCHISE AGREEMENT

     The Company and Mobil Oil have entered into a 10-year Motor Fuels Franchise
Agreement whereby the Company has agreed to purchase Mobil branded diesel fuel
and gasoline for sale and distribution under Mobil Oil's trademarks at the
Company-operated truckstops. The agreement requires the Company to purchase from
Mobil Oil certain minimum monthly and annual quantities of diesel fuel and
gasoline available at Mobil Oil's specified delivery terminals subject to
product availability and reductions by Mobil Oil under certain described
circumstances and subject to existing gasoline supply contractual obligations.
The agreement allows the Company to continue to negotiate for the purchase of
diesel fuel with third-party suppliers approved by Mobil Oil. If the Company is
able to obtain a lower diesel fuel price from a third-party supplier approved by
Mobil in a particular market area, the Company may request that Mobil Oil meet
such lower price or a portion of the diesel fuel requirements would be supplied
from such Mobil Oil approved third-party supplier, in which case Mobil Oil would
purchase the diesel fuel from the supplier and resell the product to the
Company. Any change in supply source, however, does not affect the Company's
requirement to purchase the annual minimum number of gallons from Mobil Oil
specified delivery terminals fixed by the agreement. The Company is also limited
to certain monthly maximum purchase quantities from each Mobil Oil specified
delivery terminal. Prices to be charged for Mobil Oil fuel to be sold to the
Company during the term are based on certain referenced prices plus or minus
discounts or premiums. Subject to certain adjustments based upon fuel
availability at specified Mobil Oil supply terminals, beginning with the
calendar year January 1, 1997, and each succeeding calendar year thereafter, to
the extent the Company purchases from Mobil Oil quantities of diesel fuel below
the minimum amount required by the agreement, the Company is required to pay
Mobil Oil a fee based on the shortfall.

MASTER SUPPLY CONTRACT FOR RESALE OF OILS AND GREASES

     Mobil Oil and the Company have also entered into a 10-year supply agreement
whereby the Company will purchase and feature certain Mobil Delvac branded oils
and lubricants at the truckstop locations operated by the Company.

MARKETING SERVICES AGREEMENT

     At the Closing of the Transactions, Mobil Oil and the Company entered into
a ten-year Marketing Services Agreement whereby Mobil Oil provides advice and
assistance to the Company on matters concerning the distribution and marketing
of fuels and petroleum products, including certain personnel support. In
connection therewith, the Company will pay to Mobil Oil an annual marketing
services fee of $300,000, payable in two semi-annual installments, and
additionally will pay or directly reimburse Mobil Oil for all costs of certain
personnel support, including salary compensation, benefits, travel and other 
out-of-pocket expenses incurred by certain Mobil Oil employees in connection
with the Company's business.

JOINT PROJECT DEVELOPMENT AGREEMENT

     Mobil Oil and the Company have entered into a letter of intent that
contemplates definitive agreements with respect to certain projects related to
the Company or negotiations in good faith with respect to items which do not by
their terms contemplate the execution of a definitive agreement, including: the
joint development of a truck stop payment card; an on-and-off site fleet billing
system for the Company's customers; and establishment of a joint products supply
company.

                                       52
<PAGE>
 
SECONDMENT LETTER AGREEMENT

     The Company have entered into an agreement with Mobil Oil providing for the
temporary secondment (or loan) of one of Mobil Oil's employees, Evan C. Brudahl,
to the Company. The period of secondment commenced upon the Closing of the
Transactions and is contemplated to continue until July 1, 2000 subject to
certain termination rights, including the right of Mobil Oil or the employee to
terminate the agreement in their discretion. Under the agreement, the Company
has the right, if the employee is performing at an unacceptable level, to
terminate the secondment period on 120 days' notice. During the secondment
period, the loaned employee will continue as an employee of Mobil Oil but will
be under the day-to-day supervision of the Company. The Company is responsible
for all compensation, benefit and other expenses relating to the secondment of
the employee to the Company.

CHARTWELL FINANCIAL ADVISORY AGREEMENT

     The Company entered into an agreement with Chartwell Investments, providing
for the payment of fees and reimbursement of certain expenses to Chartwell
Investments for acting as financial advisor with respect to the Transactions,
including soliciting, structuring and arranging the financing of the
Transactions. The fees, totaling $2.9 million, equal to 1% of the total
capitalization of the Company plus 1/2 of 1% of the Expansion Facility and the
reimbursement of certain expenses, were paid at the Closing. Mr. Berman and Mr.
Shein are directors of the Company and are officers and directors of Chartwell
Investments.

CHARTWELL MANAGEMENT CONSULTING AGREEMENT

     The Company has entered into a management consulting agreement with
Chartwell Investments pursuant to which Chartwell Investments will provide the
Company with certain management, advisory and consulting services for a fee of
$600,000 for each fiscal year of the Company during the term of the agreement,
with up to an additional $100,000 payable for each fiscal year, provided that
EBITDA is at least $45 million, plus reimbursement of certain expenses. The term
of the management consulting agreement is ten years commencing on the Closing
Date and is renewable for additional one year periods unless the Board of
Directors of the Company gives prior written notice of non-renewal to Chartwell
Investments. Mr. Berman and Mr. Shein are directors of the Company and are
officers and directors of Chartwell Investments.

                                       53
<PAGE>
 
PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

       (a)  THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
       1.   Financial statements
The following consolidated financial statements of the Company are included in
Part II, Item 8 of this report:

                                                                       Page
                                                                       ----
            Consolidated Balance Sheets                                  22
            Consolidated Statements of Operations                        23
            Consolidated Statements of Changes in Partners' Capital      24
            Consolidated Statements of Cash Flows                        25
            Accounting Policies and Notes to Consolidated Financial 
              Statements                                                 26
            Report of Independent Accountants                            39

       2.   Financial statement schedule and supplementary information
              required to be submitted.
            Report of Independent Accountants                            40
            Schedule II-Valuation and Qualifying Accounts                41

       All other schedules are omitted because they are not applicable, or not
       required, or because the required information is included in the audited
       consolidated financial statements or notes thereto.

       3.  Exhibits
 
       Incorporated herein by reference is a list of Exhibits contained in the
       Exhibit Index on pages 56 through 60 of this Annual Report.

       (b) REPORTS ON FORM 8-K:

       A Current Report on Form 8-K was filed by the Company on October 23,
       1996, with respect to the proposed purchase of certain partnership
       interests of the Company.

                                       54
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Petro Stopping Centers, L.P. has duly caused this report
to be signed on its behalf by undersigned, thereunto duly authorized.

                                PETRO STOPPING CENTERS, L.P.
                                         Registrant


                                        By  /s/  James A. Cardwell, Sr.
                                        -------------------------------
                                         James A. Cardwell, Sr.
                                 Chairman of the Board of Directors and
                                         Chief Executive Officer

April 10, 1997

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Petro
Stopping Centers, L.P. and in the capacities on the date indicated:

<TABLE>
<CAPTION>
 
       Signature                         Title                                             Date
       ---------                         -----                                             ---- 
<S>                             <C>                                                    <C>
 
/s/  James A. Cardwell, Sr.     Chairman of the Board of Directors , President and     April 10, 1997
---------------------------     Chief Executive Officer (Principal Executive Officer)
   (James A. Cardwell, Sr.)     
 
/s/  Larry  J. Zine             Executive Vice President, and                          April 10, 1997
---------------------------     Chief Financial Officer (Principal Financial Officer)
   (Larry J. Zine)              
 
/s/  James A. Cardwell, Jr.     Member of the Board of Directors and                   April 10, 1997
---------------------------     Sr. Vice President of Operations
   (James A. Cardwell, Jr.)     
 
/s/  David A. Haug              Vice President of Finance                              April 10, 1997
---------------------------     and Chief Accounting Officer
   (David A. Haug)              
 
/s/  Evan Brudahl               Member of  the Board of Directors and                  April 10, 1997
---------------------------     Sr. Vice President of Planning and Administration
   (Evan Brudahl)               
 
/s/  Todd R. Berman             Member of  the Board of Directors                      April 10, 1997
---------------------------     
   (Todd R. Berman)
 
/s/  Mark A. Skolnik            Member of  the Board of Directors                      April 10, 1997
--------------------------- 
   (Mark A. Skolnik)
 
/s/  Michael S. Shein           Member of  the Board of Directors                      April 10, 1997
--------------------------- 
   (Michael S. Shein)

</TABLE>

                                       55
<PAGE>
 
                         PETRO STOPPING CENTERS, L.P.
                                 EXHIBIT INDEX

     3.1*   Amended and Restated Certificate of Limited Partnership of the
            Company dated as of January 30, 1997.

     3.2*   Third Amended and Restated Limited Partnership Agreement of the
            Company, dated as of January 30, 1997, by and among the Petro, Inc.,
            James A. Cardwell, Sr., James A. Cardwell, Jr., JAJCO II, Inc.,
            Petro Holdings GP Corp, Petro Holdings LP Corp., Mobil Long Haul
            Inc. and Kirschner Investments.

     3.3+   Certificate of Incorporation of Petro Financial Corporation.

     3.4+   Bylaws of Petro Financial Corporation.

     4.1++  Indenture, dated as of May 24, 1994, among the Company, Petro
            Financial Corporation and First Trust National Association, as
            trustee, for the Company's $100,000,000 principal amount 12 1/2%
            Senior Notes due 2002.

     4.2++  Form of 12 1/2% Senior Note due 2002.

     4.3++  Guarantee Agreement, dated as of May 24, 1994, between the Company
            and First Trust National Association.

     4.4++  Warrant Agreement, dated as of May 24, 1994, among the Company,
            Petro Financial Corporation and First Trust National Association.

     4.5++  Specimen of Exchangeable Debt Warrant

     4.6*   Indenture dated as of January 30, 1997 among the Company, Petro
            Financial Corporation and State Street Bank and Trust Company, as
            trustee, relating to the Company's $135,000,000 principal amount 10
            1/2% Senior Notes due 2007.

     4.7*   Form of 10 1/2% Senior Note due 2007.

     4.8*   Note Registration Rights Agreement, dated as of January 30, 1997, by
            and among the Company, Petro Financial Corporation and CIBC Wood
            Gundy Securities Corp. and Morgan Stanley Incorporated.

     4.9*   Amended and Restated Revolving Credit and Term Loan Agreement, dated
            as of January 30, 1997, among the Company, the Lenders party
            thereto, and The First National Bank of Boston, as Agent.

     4.10*  First Amendment to Amended and Restated Revolving Credit and Term
            Loan Agreement and Limited Waiver, dated as of February 12, 1997,
            among the Company, the Lenders party thereto, and The First National
            Bank of Boston, as Agent.

     10.1+  Form of the Company's Franchise Agreement.

     10.2*  Schedule of Existing Franchise Agreements (including franchises in
            which James A. Cardwell has an interest:  Florence, SC; Elkton, MD;
            Ruther Glen, VA; and Carnesville, GA).

     10.3+  Surety Drive Lease Agreement, dated April 30, 1992, between James A.
            Cardwell and the Company.

                                       56
<PAGE>
 
     10.4+    Agreement relating to trademark license for Bordentown, New
              Jersey, dated April 30, 1992, between the Company and Petro, Inc.

     10.5+    Petro:Tread Lease Agreement, dated April 30, 1992, between James
              Arthur Lyle and the Company.

     10.6+    Lease Agreement relating to Louisiana liquor sales, dated April
              30, 1992, between the Company and Petro, Inc.

     10.7+    Servicing Agreement relating to Louisiana liquor sales, dated
              April 30, 1992, between the Company and Petro, Inc.

     10.8+    Lease Agreement relating to Arlington, Texas liquor sales, dated
              April 30, 1992, between the Company and CYMA Development 
              Corporation.

     10.9+    Servicing Agreement relating to Arlington, Texas liquor sales,
              dated April 30, 1992, between the Company and CYMA Development
              Corporation.

     10.10+   Lease Agreement relating to Texas convenience store liquor sales,
              dated April 30, 1992, between the Company and C and PPR, Inc.

     10.11+   Servicing Agreement relating to Texas convenience store liquor
              sales, dated April 30, 1992, between the Company and C and PPR,
              Inc.

     10.12##  Sublease and Services Agreement relating to Shreveport, Louisiana
              liquor sales, dated April 8, 1994, between the Company and Petro
              Truckstops, Inc.

     10.13##  Sublease and Services Agreement relating to Shorter, Alabama
              liquor sales, dated April 13, 1994, between the Company and Petro,
              Inc.

     10.14+   Lease relating to the Effingham, Illinois Stopping Center, dated
              May 23, 1990, between Truck Stop Property Owners, Inc. and Petro,
              Inc.

     10.15+   Lease with Option to Purchase, dated September 9, 1983, among
              Vaughn O. Seale, Francine S. Dodson, Hazel S. Darouse and Metro
              Hammond, Inc.

     10.16+   Profit Participation Agreement, dated March 1, 1993, between
              Pelican Gaming, Inc. and Petro Truckstops, Inc.

     10.17##  Amended and Restated Sublease and Services Agreement dated to be
              effective as of February 26, 1993, between the Company and Petro
              Truckstops, Inc.

     10.18+   Agreement and General Release, dated February 22, 1993, among the
              Company, Petro PSC Properties, L.P., Petro, Inc., Arcadian
              Management Corporation and William J. La Croix.

     10.19#   Agreement relating to the purchase of Chevron brand and other
              petroleum products of Chevron U.S.A. Products Company for the
              Shorter, Alabama convenience store (facility no. 13929), between
              the Company and C&R Distributing, Inc.

     10.20#   Agreement relating to the purchase of Chevron brand and other
              petroleum products of Chevron U.S.A. Products Company for the
              Bucksville, Alabama convenience store (facility no.13817), between
              the Company and C&R Distributing, Inc.

                                       57
<PAGE>
 
     10.21# Agreement relating to the purchase of Chevron brand and other
            petroleum products of Chevron U.S.A. Products Company for the
            Kingston springs, Tennessee convenience store (facility no. 13928),
            between the Company and C&R Distributing, Inc.

     10.22# Agreement relating to the purchase of Chevron brand and other
            petroleum products of Chevron U.S.A. Products Company for the
            Vinton, Texas convenience store (facility no. 7-5661), between the
            Company and C&R Distributing, Inc.

     10.23# Agreement relating to the purchase of Chevron brand and other
            petroleum products of Chevron U.S.A. Products Company for the El
            Paso, Texas convenience store (facility no. 20-1602), between the
            Company and C&R Distributing, Inc.

     10.24* Distributor Sales Agreement (Branded) Renewal Offer dated November
            1, 1996, between Exxon Company, U.S.A. and the Company.

     10.25+ Split Dollar Life Insurance Agreement, dated May 7, 1993, among the
            Company and James A. Cardwell, Jr. and Ellis O. Mayfield, Co-
            Trustees of the Jack and Evonne Cardwell Trust Number Two dated
            March 16, 1987.

     10.26* Amended Split Dollar Life Insurance Agreement, dated as of May 1,
            1995, among the Company, James A. Cardwell, Jr., Trustee of the
            James A. and Evonne Cardwell Trust Number Two and James A. Cardwell,
            Jr., Trustee of the James A. Cardwell Trust No. Three.

     10.27. Lease and Services Agreement, dated January 26, 1995, between the
            Company and Petro Truckstops, Inc.

     10.28. Lease and Services Agreement, dated February 10, 1995, between the
            Company and Petro Beverage, Inc.

     10.29* Omnibus Agreement by and among the James A. Cardwell, Sr., James A.
            Cardwell, Jr. JAJCO II, Petro Inc., Mobil Long Haul Inc., Petro
            Holdings GP Corp., Petro Holdings LP Corp., the Company and
            Kirschner Investments Company dated as of October 18, 1996 (the
            "Omnibus Agreement").

     10.30* Amendment No. 1 to the Omnibus Agreement, dated as of January 30,
            1997.

     10.31  Intentionally Deleted

     10.32* Employment Agreement, dated January 30, 1997, by and between James
            A. Cardwell, Sr. and the Company.**

     10.33* Employment Agreement, dated January 30, 1997, by and between James
            A. Cardwell, Jr. and the Company.**

     10.34* Employment Agreement, dated December 16, 1996, by and between Larry
            Zine and the Company.**

     10.35* PMPA Distributor Motor Fuels Franchise Agreement, dated January 30,
            1997, by and between Mobil Oil and the Company.

     10.36* Marketing Services Agreement, dated January 30, 1997, by and between
            Mobil Oil and the Company.

     10.37* Memorandum of Understanding - Joint Project Development, dated
            January 30, 1997, by and between Mobil Oil and the Company.

                                       58
<PAGE>
 
     10.38*   Secondment Agreement, dated January 30, 1997, by and between Mobil
              Oil and the Company

     10.39*   Master Supply Contract for Resale of Oils and Greases, dated
              January 30, 1997, by and between Mobil Oil and the Company.

     10.40*   Financial Advisory Agreement, dated January 30, 1997, by and
              between Chartwell Investment and the Company.

     10.41*   Management Consulting Agreement, dated January 30, 1997, by and
              between Chartwell Investment and the Company.

     10.42*   Product Services Agreement, dated January 30, 1997, by and between
              C&R Distributing, Inc., a Texas corporation,and the Company.

     10.43*   Petro/El Paso Amusement Services Agreement, dated January 30,
              1997, by and between El Paso Vending and Amusement Company, a
              Texas general partnership, and the Company.

     10.44*   Display Space Agreement, dated January 30, 1997, by and between
              Motor Media, Inc., a Texas corporation, and the Company.

     10.45*   Second Amended and Restated Indemnity and Hold Harmless Agreement,
              dated January 30, 1997, by James A. Cardwell, Sr. for the benefit
              of Petro Holdings GP Corp., Petro, Inc., the Company and Petro
              Financial Corporation.

     10.46*   Second Amended and Restated Indemnity and Hold Harmless Agreement,
              dated January 30, 1997, by James A. Cardwell, Jr. and for the
              benefit of Petro Holdings GP Corp., Petro, Inc., the Company and
              Petro Financial Corporation.

     10.47*   Second Amended and Restated Indemnity and Hold Harmless Agreement,
              dated January 30, 1997, by JAJCO II for the benefit of Petro
              Holdings GP Corp., Petro, Inc., the Company and Petro Financial
              Corporation.

     10.48*   Indemnity and Hold Harmless Agreement, dated January 30, 1997, by
              Petro, Inc. for the benefit of Petro Holdings GP Corp., Petro,
              Inc., the Company and Petro Financial Corporation.

     10.49*   Second Amended and Restated Indemnity and Hold Harmless Agreement,
              dated January 30, 1997, by Arcadian Management Corporation, a
              Colorado corporation, for the benefit of Petro Holdings GP Corp.,
              Petro, Inc., the Company and Petro Financial Corporation.

     10.50*   Interest Purchase Agreement among Sequoia Ventures Inc., Roadside,
              Inc., Chartwell, Mobil Long Haul and the Company dated as of
              October 18, 1997.

     10.51+   Southwestern Bell Telephone Company Multi-State License Agreement
              for placement of Public Telephone Equipment, dated April 1, 1993,
              between the Company and Southwestern Bell Telephone Company.

     10.52+   Southwestern Bell Telephone Company Public Telephone License
              Agreement, dated May 16, 1990, between Southwestern Bell Telephone
              Company and Petro, Inc.

     10.53..  Form of Key Employee Incentive Compensation Plan.**

     10.54*   1996 Management Incentive Plan**

                                       59
<PAGE>
 
     12..   Statement of Computation of Financial Ratios.

     21.*   Subsidiaries of the Company.

     27.*   Financial Data Schedule

-------------------------
*    Filed herewith.
**   Management contracts and compensatory plans, contracts or arrangements.
+    Incorporated by reference to the Company's Registration Statement on Form
     S-1 (Registration No. 33-76154).
#    Incorporated by reference to the Company's Amendment No. 1 to the
     Registration Statement on Form S-1 (Registration No. 33-76514).
##   Incorporated by reference to the Company's Amendment No. 2 to the
     Registration Statement on Form S-1 (Registration No. 33-76154).
++   Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended March 30, 1994.
:    Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 30, 1994.
 .    Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended March 31, 1995.
 ..   Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 29, 1995.

                                       60