UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K/A-1

             |X|Annual report pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                 For the fiscal year ended December 29, 1996, or

           |_|Transition report pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934

        For the transition period from _______________ to _______________

                           Commission File No. 1-9510

                               FFP PARTNERS, L.P.
             (Exact name of registrant as specified in its charter)

                Delaware                               75-2147570
    (State or other jurisdiction of                 (I.R.S. employer
     incorporation or organization)              identification number)

                2801 Glenda Avenue; Fort Worth, Texas 76117-4391
           (Address of principal executive office, including zip code)

                                  817/838-4700
              (Registrant's telephone number, including area code)


 Securities registered pursuant to Section 12(b) of the Act
            Title of Each Class       Name of Each Exchange on Which Registered
         Units Representing Class A             American Stock Exchange
       Limited Partnership Interests
            Unit Purchase Rights                American Stock Exchange
                    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. [ ]

     The aggregate market value of Class A Units held by  non-affiliates  of the
registrant at March 28, 1997, was $9,457,000.  For purposes of this computation,
all officers,  directors,  and  beneficial  owners of 10% or more of the Class A
Units of the registrant are deemed to be affiliates.  Such determination  should
not be deemed an admission that such officers,  directors, and beneficial owners
are affiliates.



                             Class A Units 3,529,205
                              Class B Units 175,000
               (Number of units outstanding as of March 28, 1997)


                                 


                                     PART IV


Item 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.

        (a) The  following  documents are filed as part of this Annual Report on
            Form 10-K:

          (1) Financial Statements.

                      See Index to Financial  Statements and Financial Statement
                  Schedules on page F-1 hereof.

          (2) Financial Statement Schedules.

                      See Index to Financial  Statements and Financial Statement
                  Schedules on page F-1 hereof.

                      Schedules  other  than  those  listed on the  accompanying
                  Index  to  Financial   Statements   and  Financial   Statement
                  Schedules  are omitted  because they are either not  required,
                  not applicable, or the required information is included in the
                  consolidated financial statements or notes thereto.

          (3) Exhibits.

             3.1  Amended and Restated  Certificate of Limited  Partnership
                  of FFP Partners, L.P. [3.7]  {1}
             3.2  Amended and Restated  Certificate of Limited  Partnership
                  of FFP Operating Partners, L.P. [3.8] {1}
             4.1  Amended and Restated Agreement of Limited  Partnership of
                  FFP Partners,  L.P., dated May 21, 1987, as amended by
                  the First Amendment to Amended and Restated  Agreement
                  of Limited  Partnership  dated August 14, 1989, and by
                  the  Second   Amendment   to  Amended   and   Restated
                  Agreement  of  Limited   Partnership  dated  July  12,
                  1991.  {5}
             4.2  Amended and Restated Agreement of Limited  Partnership of
                  FFP Operating Partners, L.P. dated May 21, 1987.  {2}
             4.3  Rights  Agreement  dated as of August 14,  1989,  between
                  the Company and NCNB Texas  National  Bank,  as Rights
                  Agent. [1]  {3}
            10.1  Nonqualified  Unit  Option  Plan  of FFP  Partners,  L.P.
                           [10.2]  {1}
            10.2  Form of Ground Lease with Affiliated  Companies.  [10.3]
                  {1}
            10.3  Form  of  Building  Lease  with   Affiliated   Companies.
                  [10.4]  {1}
            10.4  Form of Agreement  with  Product  Supply  Services,  Inc.
                  [10.5]  {1}
            10.5  Agreement of Limited  Partnership  of Direct Fuels,  L.P.
                  [10.6]  {4}
            10.6  Form  of  Employment   Agreement   between  FFP  Partners
                  Management   Company,   Inc.,  and  certain  executive
                  officers  dated April 23,  1989,  as amended  July 22,
                  1992. [10.9]  {5}
            10.7  Amended and  Restated  Credit  Agreement  between Bank of
                  America  Texas,  N.A.,  and  FFP  Operating  Partners,
                  L.P., dated November 27, 1996. {6}
            21.1  Subsidiaries of the Registrant.  {6}
            23.1  Consent of KPMG Peat Marwick LLP. {6}
            23.2  Consent of KPMG Peat Marwick LLP. {7}
            27    Financial data schedule. {6}
            99.1  Financial  statements of FFP Operating Partners,  L.P., a
                  99%-owned   subsidiary  of  the   Registrant.   {These
                  financial  statements are being filed as an exhibit to
                  facilitate     compliance     with    certain    state
                  environmental regulatory requirements.}  {7}
-----------------------
                   {1}  Included as the indicated exhibit in the Partnership's
                        Registration Statement on Form S-1 (Registration No.
                        33-12882) dated May 14, 1987, and incorporated herein by
                        reference.
                   {2}  Included as the indicated  exhibit in the  Partnership's
                        Annual  Report on Form 10-K for the  fiscal  year  ended
                        December 27, 1987, and incorporated herein by reference.
                   {3}  Included as the indicated  exhibit in the  Partnership's
                        registration  statement  on Form 8-A  dated as of August
                        29, 1989, and incorporated herein by reference.
                   {4}  Included as the indicated  exhibit in the  Partnership's
                        Current Report on Form 8-K, dated February 10, 1989, and
                        incorporated herein by reference)
                   {5}  Included as the indicated  exhibit in the  Partnership's
                        Annual  Report on Form 10-K for the  fiscal  year  ended
                        December 27, 1992, and incorporated herein by reference.
                   {6}  Included as the indicated  exhibit in the  Partnership's
                        Annual  Report on Form 10-K for the  fiscal  year  ended
                        December 29, 1996, and incorporated herein by reference.
                   {7}  Included herewith.
        (b) No  reports on Form 8-K were  filed  during the last  quarter of the
        period covered by this Annual Report on Form 10-K.



                                   SIGNATURES

               Pursuant  to the  requirements  of  Section  13 or  15(d)  of the
Securities  and Exchange Act of 1934, the Registrant has duly caused this Annual
Report on Form 10-K to be signed  on its  behalf by the  undersigned,  thereunto
duly authorized.

Dated:  May 19, 1997                FFP PARTNERS, L.P.
                                    (Registrant)

                                     By: FFP Partners Management Company, Inc.,
                                         General Partner

                                     By: /s/ Steven B. Hawkins
                                         Steven B. Hawkins
                                         Vice President-Finance & Administration




                                                                   Exhibit 23.2






                          Independent Auditors' Consent



The Partners
FFP Partners, L.P.:

     We consent to incorporation by reference in the Registration Statement (No.
33-73170) on Form S-8 of FFP Partners,  L.P. of our report dated March 14, 1997,
relating to the balance  sheets of FFP Operating  Partners,  L.P. as of December
29, 1996 and  December  31,  1995,  and the related  statements  of  operations,
partners' capital, and cash flows for each of the years in the three-year period
ended  December 29, 1996,  which  report  appears in the first  amendment to the
December 29, 1996 annual report on Form 10-K of FFP Partners, L.P.







                                         KPMG Peat Marwick LLP



Fort Worth, Texas
May 16, 1997






                                                                   Exhibit 99.1









                             Financial Statements of
                          FFP Operating Partners, L.P.
                    a 99%-owned subsidiary of the Registrant

            {These financial statements are being filed as an exhibit
                   to facilitate compliance with certain state
                     environmental regulatory requirements.}









                          INDEPENDENT AUDITORS' REPORT



The Partners
FFP Operating Partners, L.P.:

     We have audited the accompanying  balance sheets of FFP Operating Partners,
L.P. (a Delaware Limited  Partnership) as of December 29, 1996, and December 31,
1995, and the related  statements of  operations,  partners'  capital,  and cash
flows for each of the years in the  three-year  period ended  December 31, 1996.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material respects, the financial position of FFP Operating Partners, L.P.
as of December 29, 1996 and December 31, 1995, and the results of its operations
and its cash flows for each of the years in the three-year period ended December
29, 1996, in conformity with generally accepted accounting principles.






                                           KPMG Peat Marwick LLP


Fort Worth, Texas
March 14, 1997




                          FFP OPERATING PARTNERS, L.P.
                                 BALANCE SHEETS
                    DECEMBER 29, 1996, AND DECEMBER 31, 1995
                                 (In thousands)
                                                                 1996      1995
                             ASSETS
Current Assets
   Cash and cash equivalents                                   $7,257    $7,147
   Trade receivables, less allowance for doubtful accounts
      of $834 and $996 in 1996 and 1995, respectively           8,623     7,828
   Notes receivable                                               778       453
   Receivables from affiliated company                            420       436
   Inventories                                                 11,752    10,827
   Prepaid expenses and other current assets                      618       615
      Total current assets                                     29,448    27,306

Property and equipment, net                                    34,713    31,806
Noncurrent notes receivable, excluding current portion          2,069     1,156
Receivables from affiliated companies                          12,660     6,839
Claims for reimbursement of environmental remediation cost      1,038     1,255
Other assets, net                                               4,142     4,421
      Total Assets                                            $84,070   $72,783

               LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
   Amount due under revolving credit line                      $6,823    $4,003
   Current installments of long-term debt                       1,587     1,028
   Current installments of obligations under capital lease      1,122       884
   Accounts payable                                            13,424    12,484
   Money orders payable                                         7,809     5,912
   Accrued expenses                                             8,391     9,502
   Payable to affiliates                                          834       516
      Total current liabilities                                39,990    34,329
Long-term debt, excluding current installments                  7,765     6,157
Obligations under capital leases, excluding current
   installments                                                 1,653       943
Other liabilities                                                 643       322
      Total Liabilities                                        50,051    41,751

Commitments and contingencies

Partners' Capital
    Limited partners' equity                                   33,944    30,987
    General partner's equity                                      344       314
    Treasury units                                               (269)     (269)
      Total Partners' Capital                                  34,019    31,032

      Total Liabilities and Partners' Capital                 $84,070   $72,783



                       See accompanying notes to financial statements.




                          FFP OPERATING PARTNERS, L.P.
                            STATEMENTS OF OPERATIONS
     YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995, AND DECEMBER 25, 1994
                                 (In thousands)



                                                 1996        1995        1994
Revenues
   Motor fuel                                  $308,205    $282,785    $268,310
   Merchandise                                   60,089      64,561      72,827
   Miscellaneous                                  7,790       6,470       6,192
      Total Revenues                            376,084     353,816     347,329

Costs and Expenses

   Cost of motor fuel                           288,065     260,800     246,370
   Cost of merchandise                           42,503      45,542      52,658
   Direct store expenses                         26,710      27,703      28,844
   General and administrative expenses           10,712      11,029      10,266
   Depreciation and amortization                  3,781       3,680       4,235
      Total Costs and Expenses                  371,771     348,754     342,373



Operating Income                                  4,313       5,062       4,956
   Interest Expense                               1,326       1,176       1,173


Income before extraordinary item                  2,987       3,886       3,783
   Extraordinary item - gain on
      extinguishment of debt                          0           0         200
Net Income                                       $2,987      $3,886      $3,983

Net income allocated to
   Limited partners                              $2,957      $3,847      $3,943
   General partner                                   30          39          40



                 See accompanying notes to financial statements.



                          FFP OPERATING PARTNERS, L.P.
                         STATEMENTS OF PARTNERS' CAPITAL
     YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995, AND DECEMBER 25, 1994
                     (In thousands, except unit information)



                                      Limited   General  Treasury
                                      Partner   Partner   Units
                                                                    Total

Balance, December 26, 1993              $23,197     $235   $(269)   $23,163

Net income                                3,943       40        0     3,983


Balance, December 25, 1994               27,140      275    (269)    27,146

Net income                                3,847       39        0     3,886


Balance, December 31, 1995               30,987      314    (269)    31,032

Net income                                2,957       30        0     2,987


Balance, December 29, 1996              $33,944     $344   $(269)   $34,019




                 See accompanying notes to financial statements.





                          FFP OPERATING PARTNERS, L.P.
                            STATEMENTS OF CASH FLOWS
     YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995, AND DECEMBER 25, 1994
                (In thousands, except supplemental information)



                                                       1996      1995      1994
Cash Flows from Operating Activities
   Net income                                         2,987    $3,886    $3,983
   Adjustments to reconcile net income to net
   cash provided by operating activities
      Depreciation and amortization                   3,781     3,680     4,235
      Provision for doubtful accounts                   326       451       731
      (Gain)/loss on sales of property and equipment     19      (110)      (62)
      (Gain) on extinguishment of debt                    0         0      (200)
      (Gain) on sales of convenience store 
         operations                                  (1,778)     (791)     (829)
   Changes in operating assets and liabilities
      (Increase) in trade receivables                (1,121)   (1,629)   (1,081)
      Decrease in notes receivable                      540       733        80
      Decrease in receivables from affiliated 
        companies                                        16        15        92 
      (Increase)/decrease in inventories              (925)       183     2,521
      (Increase)/decrease in prepaid expenses and
          other current assets                          (3)        52        96
      Decrease in claims for reimbursement
          of environmental remediation costs            217       314       192
      Increase/(decrease) in accounts payable           940       (44)      618
      Increase in money orders payable                1,897     1,658       859
      (Decrease) in accrued expenses and
          other liabilities                            (790)   (2,302)      (86)
Net cash provided by operating activities             6,106     6,096    11,149

Cash Flows from Investing Activities
   Purchases of property and equipment               (6,205)   (4,759)   (3,752)
   Proceeds from sales of property and equipment         50       169        44
   (Increase)in receivables from affiliated          
     companies                                       (5,821)   (3,478)   (1,693)
   Investments in joint ventures and other entities       0    (1,350)        0
   (Increase) in other assets                           (73)     (490)     (713)
Net cash (used in) investing activities             (12,049)   (9,908)   (6,114)

                                                                         
Cash Flows from Financing Activities
   Borrowings/(payments) on revolving
        credit line, net                              2,820     4,003    (7,116)
   Proceeds from long-term debt                       4,000         0    12,161
   Payments on long-term debt                        (2,033)   (4,178)  (13,576)
   Borrowings under capital lease obligations         1,923     1,076     1,560
   Payments on capital lease obligations               (975)     (694)     (115)
   Advances from affiliates, net                        318       339        74
Net cash provided by/(used in) financing activities   6,053       546    (7,012)

Net increase/(decrease) in cash and cash equivalents    110    (3,266)   (1,977)
Cash and cash equivalents at beginning of year        7,147    10,413    12,390
Cash and cash equivalents at end of year             $7,257    $7,147   $10,413

Supplemental Disclosure of Cash Flow Information

     Cash  paid for  interest  during  1996,  1995,  and  1994  was  $1,097,000,
$1,394,000, and $1,283,000, respectively.

Supplemental Schedule of Noncash Investing and Financing Activities

     During 1996 and 1995,  the Company  acquired  fixed  assets of $200,000 and
$598,000, respectively, in exchange for notes payable.

     During 1994, the Company  acquired  property  valued at $215,000 and a note
receivable of $120,000 through settlement of a lawsuit.





                 See accompanying notes to financial statements.





                          FFP OPERATING PARTNERS, L.P.
                NOTES TO FINANCIAL STATEMENTS DECEMBER 29, 1996,
                    DECEMBER 31, 1995, AND DECEMBER 25, 1994


1.  Basis of Presentation

(a) Organization of Company

     FFP Operating  Partners,  L.P.  ("FFPOP" or the "Company"),  is a 99%-owned
subsidiary  of  FFP  Partners,   L.P.  ("FFPLP"),   a  publicly-traded   limited
partnership.   FFPOP  was  formed  in  December  1986  in  connection  with  the
acquisition of the  convenience  store,  truck stop, and other retail motor fuel
businesses of certain companies affiliated with FFP Partners Management Company,
Inc. ("FFPMC" or the "General  Partner"),  the general partner of both FFPOP and
FFPLP.

(b) Reclassifications

     Certain  amounts  previously  reported  in  the  1995  and  1994  financial
statements have been reclassified to conform to the 1996 presentation.


2.  Significant Accounting Policies

(a) Fiscal Years

     The Company  prepares its financial  statements  and reports its results of
operations  on the  basis of a fiscal  year  which  ends on the last  Sunday  of
December.  Accordingly,  the fiscal years ended  December 29, 1996, and December
25,  1994,  consisted  of 52 weeks,  while the year  ended  December  31,  1995,
consisted  of 53  weeks.  Year end data in these  notes is as of the  respective
dates above.

(b) Cash Equivalents

     The Company considers all highly liquid investments with maturities at date
of purchase of three months or less to be cash equivalents.

(c)  Notes Receivable

     Notes receivable are recorded at the amount owed, less a related  allowance
for  impairment.  The provisions of Statement of Financial  Accounting  Standard
("SFAS") No. 114,  "Accounting by Creditors for Impairment of a Loan," have been
applied in the evaluation of the collectibility of notes receivable. At year end
1996 and 1995, no notes receivable were determined to be impaired.

(d) Inventories

     Inventories  consist of retail convenience store merchandise and motor fuel
products.  Merchandise  inventories are stated at the lower of cost or market as
determined by the retail method.  Motor fuel inventories are stated at the lower
of cost or market using the first-in, first-out ("FIFO") inventory method.

     The  Company  has  selected a single  company as the  primary  grocery  and
merchandise  supplier to its convenience stores and truck stops although certain
items,  such as bakery  goods,  dairy  products,  soft drinks,  beer,  and other
perishable products, are generally purchased from local vendors and/or wholesale
route salespeople.  The Company believes it could replace any of its merchandise
suppliers,  including  its primary  grocery and  merchandise  supplier,  with no
significant adverse effect on its operations.

     The  Company  does not have  long-term  contracts  with  any  suppliers  of
petroleum   products   covering   more  than  10%  of  its  motor  fuel  supply.
Unanticipated  national or international events could result in a curtailment of
motor fuel  supplies to the  Company,  thereby  adversely  affecting  motor fuel
sales. In addition, management believes a significant portion of its merchandise
sales are to  customers  who also  purchase  motor  fuel.  Accordingly,  reduced
availability of motor fuel could negatively impact other facets of the Company's
operations.

(e) Property and Equipment

     Property and equipment are stated at cost. Equipment acquired under capital
leases is stated at the present  value of the initial  minimum  lease  payments,
which is not in  excess of the fair  value of the  equipment.  Depreciation  and
amortization of property and equipment are provided on the straight-line  method
over the estimated useful lives of the respective assets. Leasehold improvements
are amortized on the straight-line  method over the shorter of the lease term or
the estimated useful lives of the respective assets.

(f)  Investments

     Investments in joint ventures and other entities that are 50% or less owned
are accounted for by the equity method and are included in other assets, net, in
the accompanying balance sheets.

(g) Intangible Assets

     In  connection  with the  allocation  of the  purchase  price of the assets
acquired in 1987 upon the commencement of the Company's  operations,  $6,192,000
was  allocated  to  contracts  under  which the Company  supplies  motor fuel to
various  retail  outlets and  $1,093,000  was allocated as the future benefit of
real estate leased from  affiliates of the General  Partner.  The fuel contracts
were amortized using the  straight-line  method over 6.3 years, the average life
of such  contracts at the time they were  acquired.  The value assigned to these
contracts  became fully amortized  during 1993. The future benefit of the leases
is being amortized  using the  straight-line  method over 20 years,  the initial
term and option periods, of such leases.

     Goodwill of $2,020,000 is being  amortized using the  straight-line  method
over  20  years.  The  Company  assesses  the   recoverability  of  goodwill  by
determining   whether  the  amortization  of  the  balance  over  the  remaining
amortization period can be recovered through  undiscounted future operating cash
flows of the acquired operations.  The amount of goodwill impairment, if any, is
measured  based on  projected  discounted  future  operating  cash flows using a
discount rate reflecting the Company's  average cost of funds. The assessment of
the recoverability of goodwill would be impacted if anticipated future operating
cash flows are not achieved.

(h) Sales of Convenience Store Operations

     The Company sold the  merchandise  operations  and related  inventories  of
certain  convenience  store  locations to various  third parties in exchange for
cash and notes receivable.  The notes receivable generally are for terms of five
years, require monthly payments of principal and interest,  and bear interest at
rates  ranging  from 8% to 10%.  Summary  information  about  these  sales is as
follows:

                                                     
             Number            Notes        Total    Gains           Deferred
              Sold    Cash     Receivable  Proceeds  Recognized   (at year-end)
                       (In thousands, except number sold)

 1996          18       $816     $1,561     $2,377     $1,778         $250
 1995          10        357        543        900        791          200
 1994          15        778      1,056      1,834        829          400

     Gains on sales  which  meet  specified  criteria,  including  receipt  of a
significant  cash down  payment and  projected  cash flow from store  operations
sufficient to adequately  service the debt, are  recognized  upon closing of the
sale.  Gains on sales which do not meet the  specified  criteria are  recognized
under  the  installment  method  as cash  payments  are  received.  Gains  being
recognized under the installment method are evaluated  periodically to determine
if full recognition of the gain is appropriate.

     Under  these  sales,  the  Company  retains  the real  estate or  leasehold
interests,  and leases or subleases the store  facilities  (including  the store
equipment)  to  the  purchaser   under  five-year   renewable   operating  lease
agreements.  The Company retains ownership of the motor fuel operations and pays
the purchaser of the store  commissions  based on motor fuel sales. In addition,
the new store operators may purchase merchandise under the Company's established
buying arrangements.

(i) Environmental Costs

     Environmental   remediation  costs  are  expensed;   related  environmental
expenditures that extend the life, increase the capacity,  or improve the safety
or efficiency of existing assets are capitalized.  Liabilities for environmental
remediation costs are recorded when environmental  assessment and/or remediation
is  probable  and  the  amounts  can  be  reasonably  estimated.   Environmental
liabilities  are evaluated  independently  from  potential  claims for recovery.
Accordingly,   the  gross  estimated   liabilities  and  estimated   claims  for
reimbursement have been presented  separately in the accompanying balance sheets
(see Note 11b).

     In October 1996,  the American  Institute of Certified  Public  Accountants
issued   Statement  of  Position   ("SOP")   96-1,   Environmental   Remediation
Liabilities.  SOP 96-1, which will be adopted by the Company at the beginning of
its 1997 fiscal year, requires,  among other things,  environmental  remediation
liabilities  to be accrued  when the  criteria  of SFAS No. 5,  "Accounting  for
Contingencies,"  have been met. The SOP also  provides  guidance with respect to
the measurement of remediation  liabilities.  Such accounting is consistent with
the Company's current method of accounting for environmental  remediation costs,
and  therefore,  adoption of SOP 96-1 in 1997 is not expected to have a material
impact on the Company's financial position, results of operations, or liquidity.

(j) Motor Fuel Taxes

     Motor fuel  revenues  and related  cost of motor fuel  include  federal and
state excise taxes of $100,771,000,  $98,519,000,  and  $100,554,000,  for 1996,
1995, and 1994, respectively.

(k) Exchanges

     The  exchange  method of  accounting  is utilized  for motor fuel  exchange
transactions.  Under this method,  such transactions are considered as exchanges
of assets with deliveries being offset against receipts, or vice versa. Exchange
balances  due from  others  are valued at current  replacement  costs.  Exchange
balances due to others are valued at the cost of forward  contracts  (Note 9) to
the extent they have been entered  into,  with any remaining  balance  valued at
current  replacement cost.  Exchange balances due to others at year end 1996 and
1995 were $4,000 and $-0-, respectively.

(l) Income Taxes

     Taxable income or loss of the Company is includable in the income
tax returns of its partners;  therefore,  no provision for income taxes has been
made in the accompanying financial statements.

     The Company's parent is a  publicly-traded  limited  partnership that under
the Revenue Act of 1987 ("Revenue  Act"),  will be treated as a corporation  for
tax  purposes at the earlier of (i) its tax years  beginning  after 1997 or (ii)
its addition of a  "substantial  new line of business" as defined by the Revenue
Act. Legislation has been introduced into Congress which would extend the parent
company's partnership tax status;  however, no action has yet been taken on this
legislation.  The General  Partner  continues to evaluate  the parent  company's
alternatives with respect to its tax status.  The effect on the Company of these
alternatives has not been determined.

     The  Company's  parent  accounts  for  income  taxes  under  the  asset and
liability method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences  attributable to existing  differences between
financial  statement  carrying  amounts  of  assets  and  liabilities  and their
respective  tax bases that are  expected  to reverse  after 1997.  Deferred  tax
liabilities  and assets are measured  using enacted tax rates  expected to be in
effect when such amounts are realized or settled.  The effect of a change in tax
rates is recognized  in income in the period that  includes the enactment  date.
The  Company's  parent has not  currently  allocated  the effect of applying the
asset and liability method among its subsidiaries; however, it could elect to do
so in the future.

(m)  Fair Value of Financial Instruments

     The  carrying  amounts of cash,  receivables,  amounts due under  revolving
credit line,  and money orders  payable  approximate  fair value  because of the
short maturity of those  instruments.  The carrying  amount of notes  receivable
approximates fair value which is determined by discounting  expected future cash
flows at current rates.

     The carrying  amount of long-term debt  approximates  fair value due to the
variable interest rate on substantially all such obligations.

(n)  Allocation of Net Income or Loss

     The Partnership  Agreement of the Company  provides that net income or loss
and cash  distributions are to be allocated 99% to the limited partner and 1% to
the General  Partner.  Cash  distributions  represent a return of capital to the
partners.

(o) Employee Benefit Plan

     The Company has a 401(k)  profit  sharing plan  covering all  employees who
meet age and tenure  requirements.  Participants  may  contribute  to the plan a
portion, within specified limits, of their compensation under a salary reduction
arrangement.   The  Company  may  make  discretionary   matching  or  additional
contributions  to the plan.  The Company did not make any  contributions  to the
plan in 1996, 1995, or 1994.

(p)  Use of Estimates

     The use of  estimates  is  required  to  prepare  the  Company's  financial
statements in conformity with generally accepted accounting principles. Although
management  believes that such  estimates are  reasonable,  actual results could
differ from the estimates.

(q)  Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

     The Company  adopted the  provisions of SFAS No. 121,  "Accounting  for the
Impairment of  Long-Lived  Assets and  Long-Lived  Assets to Be Disposed Of," on
January 1, 1996.  This  statement  requires that  long-lived  assets and certain
identifiable  intangibles  to be  reviewed  for  impairment  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be  recoverable.  Recoverability  of assets to be held and used is measured by a
comparison  of the  carrying  amount of such  assets to  future  net cash  flows
expected to be  generated  by the assets.  If such assets are  considered  to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying  amount or fair value less
costs to sell.  The initial  adoption of this  statement did not have a material
impact on the Company's financial position, results of operations, or liquidity.



3.  Property and Equipment

     Property and equipment consists of the following:

                                                  1996      1995
                                                  (In  thousands)

Land                                              $4,175    $4,319
Land improvements                                  2,698     2,627
Buildings and improvements                        26,151    24,263
Machinery and equipment                           35,527    31,195
                                                  68,551    62,404

Accumulated depreciation and amortization        (33,838)  (30,598)
                                                 $34,713   $31,806

4.  Other Assets

     Other assets consist of the following:
                                                  1996      1995
                                                  (In thousands)
Intangible Assets (Note 2g)
   Ground leases                                  $1,093    $1,093
   Goodwill                                        2,040     2,020
   Other                                           1,604     1,409
                                                   4,737     4,522

   Accumulated amortization                       (2,151)   (1,795)
                                                   2,586     2,727

Investments in joint ventures and other     
   entities                                        1,293     1,350
Other                                                263       344
                                                  $4,142    $4,421

     In  December  1995,  the Company  advanced  $1,200,000  to a company  which
granted  the Company a security  interest  in certain  loans that are secured by
convenience  stores located in areas where the Company currently has operations.
These loans will be liquidated  through collection or through the acquisition of
the stores by the Company through foreclosure proceedings.



5.  Notes Payable and Long-Term Debt

     The Company has a Credit  Agreement with a bank that provides a $10,000,000
revolving  credit line for working capital  purposes.  The revolving credit line
bears  interest at the bank's prime rate (8.25% at year end 1996) and matures on
April 30,  1998.  The Credit  Agreement  requires  that the balance  outstanding
(excluding  letters  of  credit)  under the  revolving  credit  line not  exceed
$1,500,000 for three consecutive calendar days in each quarter. At year end 1996
and  1995,  there  was  $6,823,000  and  $4,003,000,  respectively,  due  on the
revolving  credit  line and there were  outstanding  letters of credit  totaling
$625,000 at each year end.

     The Credit  Agreement  also  provides  two term loans.  One such loan had a
balance at year end 1996 of $5,625,000,  bears interest at the London  Interbank
Offered  Rate  ("LIBOR")  plus 1.75  percent,  requires  quarterly  payments  of
interest plus  principal of $312,500,  and matures on March 31, 2001.  The other
term loan had a balance of $3,000,000 at year end 1996,  bears interest at LIBOR
plus 1.75 percent,  requires  quarterly  payments of interest plus  principal of
$75,000 in June,  September,  and December  1997,  and March 1998,  principal of
$125,000  in each of the next 16  quarters,  and  principal  of  $175,000 in the
subsequent four quarters,  and matures on March 31, 2003.  (Through December 31,
1996, both of these loans bore interest at the bank's prime rate.)

     All loans are secured by the Company's  accounts  receivable and inventory.
In addition the Company has  provided a negative  pledge of all its fixed assets
and real  property  and the bank has the right to require a  positive  pledge of
such assets at any time. The loans are also guaranteed by the Company's  parent,
other  subsidiaries of the parent  (including a negative pledge of the assets of
the  other  subsidiaries),  the  General  Partner,  and  the  General  Partner's
subsidiary.   The  Credit  Agreement  contains  various  restrictive   covenants
including  restrictions  on borrowing  from persons other than the bank,  making
investments in,  advances to, or guaranteeing  the obligations of other persons,
maintaining  specified  levels  of  equity,  restrictions  on  distributions  to
unitholders  and on the amount of capital  expenditures,  and the maintenance of
certain  financial  ratios.  At year end 1996, the Company was not in compliance
with certain  financial ratios and covenants in the Credit  Agreement.  The bank
has waived  compliance  with these ratios or amended the Credit  Agreement  with
respect to these items.

     The Company has other notes  payable  which bear  interest at 6% to 10% and
are due in monthly or annual installments through 2012. Such notes are unsecured
or secured by  receivables  or land and had  aggregate  balances of $603,000 and
$622,000 at year end 1996 and 1995, respectively.

     The aggregate fixed maturities of long-term debt for each of the five years
subsequent to 1996 are as follows:

                                     (In thousands)
         1997                           $1,587
         1998                            1,764
         1999                            1,929
         2000                            1,810
         2001                            1,180
         Thereafter                      1,082
                                        $9,352

     In February  1994,  the Company  refinanced its then existing bank debt. In
connection with this  refinancing,  the Company  received a discount of $200,000
for the early  retirement of the existing debt. This discount is reflected as an
extraordinary   item  in  the   accompanying   1994   statement  of  operations.
     
 
6.  Capital Leases

     The Company is obligated under  noncancelable  capital leases  beginning to
expire in 1997.  The gross amount of the assets  covered by these capital leases
that are included in property and  equipment  in the  accompanying  consolidated
balance sheets is as follows:

                                               1996      1995
                                               (In thousands)
   Machinery and equipment                    $2,412    $2,636
   Accumulated amortization                     (798)     (425)
                                              $1,614    $2,211

     The  amortization  of assets  held  under  capital  leases is  included  in
depreciation  and  amortization  expense  in  the  accompanying   statements  of
operations. Future minimum lease payments under the noncancelable capital leases
for years subsequent to 1996 are:

                                                  (In thousands)
    1997                                                 $1,332
    1998                                                    561
    1999                                                    440
    2000                                                    395
    2001                                                    527
    Thereafter                                               80
    Total minimum lease payments                          3,335

       Amount representing interest                        (560)
    Present value of future minimum lease payment         2,775

      Current installments                               (1,122)
    Obligations under capital leases,excluding current  
      installments                                       $1,653
   


7.  Operating Leases


     The  Company  has  noncancelable,  long-term  operating  leases on  certain
locations,  a significant portion of which are with related parties.  Certain of
the leases have contingent rentals based on sales levels of the locations and/or
have escalation clauses tied to the consumer price index.  Minimum future rental
payments  (including  bargain renewal  periods) and sublease  receipts for years
after 1996 are as follows:

                                                    
                              
                           Future Rental Payments     Future
                      Related                        Sublease
                      Parties      Others   Total    Receipts
                                (In thousands)
 1997                     $712      $597    $1,309   $1,031
 1998                      657       541     1,198      952
 1999                      657       499     1,156      841
 2000                      657       453     1,110      549
 2001                      657       369     1,026      200
 Thereafter              1,977     1,116     3,093       41
                        $5,317    $3,575    $8,892   $3,614

     Total rental expense and sublease income were as follows:

                                Rent Expense
                      Related                       Sublease
                      Parties     Others   Total     Income
                               (In thousands)
 1996                    $727      $742    $1,469    $1,154
 1995                     849       658     1,507       843
 1994                     842       832     1,674       592

8.  Accrued Expenses

               Accrued expenses consist of the following:

                                                         1996      1995
                                                         (In thousands)
Motor fuel taxes payable                                 $5,453    $6,376
Accrued payroll and related expenses                        806     1,283
Accrued environmental remediation costs (Note 11b)            0       322
Other                                                     2,132     1,521
                                                         $8,391    $9,502


9.  Futures and Forward Contracts

     The Company is party to commodity  futures contracts with off-balance sheet
risk.  Changes in the market value of open futures  contracts are  recognized as
gains or losses in the period of change.  These investments  involve the risk of
dealing with others and their ability to meet the terms of the contracts and the
risk  associated  with  unmatched  positions and market  fluctuations.  Contract
amounts  are often used to express  the  volume of these  transactions,  but the
amounts potentially subject to risk are much smaller.

     From time-to-time the Company enters into forward contracts to buy and sell
fuel,  principally to satisfy  balances owed on exchange  agreements  (Note 2k).
These  transactions,  which  together with futures  contracts are  classified as
operating  activities for purposes of the statements of cash flows, are included
in motor  fuel  sales and  related  cost of sales and  resulted  in net gains as
follows:

                                      (In thousands)
                 1996                      $243
                 1995                        87
                 1994                     1,069

     Open positions under futures and forward  contracts were not significant at
year end 1996 and 1995.


10.  Related Party Transactions

     The Company  reimburses the General Partner and its affiliates for salaries
and related costs of executive  officers and others and for expenses incurred by
them in  connection  with the  management  of the Company.  These  expenses were
$745,000, $727,000, and $733,000 for 1996, 1995, and 1994, respectively.

     In July 1991,  the Company  entered  into an agreement  with an  affiliated
company  whereby  the  affiliated  company  sells  alcoholic  beverages  at  the
Company's stores in Texas. Under Texas law, the Company is not permitted to hold
licenses to sell alcoholic  beverages in Texas. The agreement  provides that the
Company will receive rent and a management  fee based on the gross receipts from
sales of alcoholic  beverages at its stores.  In July 1992,  the  agreement  was
amended to be for a term of five years commencing on the date of amendment.  The
sales recorded by the affiliated  company under this agreement were  $8,240,000,
$9,116,000,  and $9,180,000 in 1996, 1995, and 1994,  respectively.  The Company
received  $1,265,000,  $1,217,000,  and  $1,226,000  in 1996,  1995,  and  1994,
respectively,  in rent,  management  fees,  and interest,  which are included in
miscellaneous revenues in the statements of operations.  After deducting cost of
sales and other expenses  related to these sales,  including the amounts paid to
the  Company,  the  affiliated  company had  earnings of $82,000,  $91,000,  and
$119,000 in 1996,  1995,  and 1994,  respectively,  as a result of holding these
alcoholic  beverage permits.  Under a revolving note executed in connection with
this agreement,  the Company advances funds to the affiliated company to pay for
the purchases of alcoholic beverages.  Receipts from the sales of such beverages
are credited against the note balance.  The revolving note provides for interest
at 1/2% above the prime rate charged by a major financial institution.

     From time to time,  the General  Partner may advance  funds to the Company.
Under the  Partnership  Agreement,  the General  Partner is  permitted to charge
interest on such advances provided the interest rate does not exceed rates which
would be charged by unrelated third parties. There were no advances owing to the
General Partner during or at the year ends of 1996, 1995, and 1994.

     From time to time, the Company makes advances to and receives advances from
its parent and other subsidiaries of its parent.  Such advances are reflected in
receivables   from  affiliated   companies  or  payable  to  affiliates  in  the
accompanying  balance  sheets.  Prior to 1996, the Company did not charge or pay
interest on these advances.  However, in 1996, interest,  at a rate equal to the
interest rate on the Company's  bank debt,  was charged or paid on such amounts.
Included in 1996  miscellaneous  income was  $655,000  of  interest  income from
affiliates.

     The General Partner is entitled to  noncumulative,  incentive  compensation
each  year in an  amount  equal to 10% of the  consolidated  net  income  of the
Company's  parent  for such year  (prior  to the  calculation  of the  incentive
compensation),   but  only  if  such  consolidated  net  income  (prior  to  the
calculation of the incentive  compensation)  equals or exceeds $1.08 per unit of
limited  partnership  interest of the  Company's  parent and if the total of the
quarterly cash distributions by the parent to its limited partners for such year
are at least $1.50 per unit. The incentive  compensation  requirements  were not
met in 1996, 1995, or 1994.

     The  Company  purchases  certain  goods  and  services   (including  office
supplies,  computer software and consulting services, and fuel supply consulting
and procurement services) from related entities. Purchases of these products and
services from other  subsidiaries  of the parent were  $614,000,  $197,000,  and
$161,000, and from other related entities were $359,000, $421,000, and $147,000,
in 1996, 1995, and 1994, respectively.

     As a part of its merchandise  sales  activities,  the Company  supplies its
private  label  cigarettes  on a wholesale  basis to other  retailers who do not
operate  outlets in its trade areas and pays them rebates based on the volume of
cigarettes purchased.  In 1996 and 1995, the Company paid $14,000 and $51,000 of
such rebates to a company on whose Board one of the Company's executive officers
serves.  The amount of rebates paid to this company was  calculated  in the same
manner as the rebates paid to non-related companies.

     In 1980 and 1982,  certain  companies  from which the Company  acquired its
initial base of retail outlets  granted to a third party the right to sell motor
fuel at retail for a period of 10 years at self-serve gasoline stations owned or
leased  by  the  affiliated  companies  or  their  affiliates.   All  rights  to
commissions under these agreements and the right to sell motor fuel at wholesale
to the third party at such locations were assigned to the Company in May 1987 in
connection  with the  acquisition of its initial base of retail  operations.  In
December  1990,  in  connection  with  the  expiration  or  termination  of  the
agreements  with the third party,  the Company  entered into  agreements  with a
company owned and controlled by the Chairman of the General  Partner and members
of his immediate family,  which grant to the Company the exclusive right to sell
motor  fuel at retail at these  locations.  The  terms of these  agreements  are
comparable to agreements that the Company has with other unrelated parties.  The
Company paid this affiliated  company  commissions  related to the sale of motor
fuel at these locations of $277,000,  $261,000,  and $222,000 in 1996, 1995, and
1994, respectively.

     During 1995, the Company purchased four parcels of land, including building
and petroleum  storage tanks and related  dispensing  equipment,  from a company
controlled  by the Chairman of the General  Partner and members of his immediate
family.  The Company  paid a total of  $116,000  for the real estate and related
improvements.  The Company is operating one of these  locations as a convenience
store and one as a  self-service  motor fuel  outlet and  intends to operate the
other two as either convenience  stores or self-service motor fuel outlets.  The
purchase price was determined by reference to similar properties acquired by the
Company from unrelated parties.

     During 1996, the Company charged to expense  $611,000 to reimburse  various
related companies for legal fees that benefited the Company. Of this amount, the
Company paid $225,000  during 1996;  the remaining  $386,000 owed at year end is
included in accrued liabilities in the accompanying balance sheets.


11.  Commitments and Contingencies

(a) Uninsured Liabilities

     The  Company  maintains   general  liability   insurance  with  limits  and
deductibles  management believes prudent in light of the exposure of the Company
to loss and the cost of the insurance.

     The Company  self-insures claims up to $45,000 per year for each individual
covered by its employee medical benefit plan for supervisory and  administrative
employees; claims above $45,000 are covered by a stop-loss insurance policy. The
Company  also  self-insures  medical  claims for its eligible  store  employees.
However,  claims under the plan for store  employees are subject to a $1,000,000
lifetime limit per employee and the Company does not maintain stop-loss coverage
for these claims.  The Company and its covered  employees  contribute to pay the
self-insured  claims  and  stop-loss  insurance  premiums.  Accrued  liabilities
include  amounts  management  believes  adequate to cover the  estimated  claims
arising prior to a year-end, including claims incurred but not yet reported. The
Company  recorded  expense  related to these plans of  $271,000,  $353,000,  and
$288,000 in 1996, 1995, and 1994, respectively.

     The  Company is covered for  worker's  compensation  in all states  through
incurred loss retrospective  policies.  Accruals for estimated claims (including
claims  incurred but not reported) have been recorded at year end 1996 and 1995,
including the effects of any retroactive premium adjustments.

(b) Environmental Matters

     The  operations  of the Company are subject to a number of federal,  state,
and local environmental laws and regulations,  which govern the storage and sale
of motor  fuels,  including  those  regulating  underground  storage  tanks.  In
September 1988, the Environmental  Protection Agency ("EPA") issued  regulations
that require all newly  installed  underground  storage tanks be protected  from
corrosion, be equipped with devices to prevent spills and overfills,  and have a
leak detection  method that meets certain  minimum  requirements.  The effective
commencement  date for newly installed tanks was December 22, 1988.  Underground
storage  tanks in place  prior to December  22,  1988,  must  conform to the new
standards by December 1998.  The Company has  implemented a plan to bring all of
its existing  underground  storage tanks and related  equipment into  compliance
with these laws and regulations and currently  estimates the costs to do so will
range  from  $1,837,000  to  $2,245,000  over the next two  years.  The  Company
anticipates that  substantially  all these  expenditures  will be capitalized as
additions  to property  and  equipment.  Such  estimates  are based upon current
regulations,  prior  experience,  assumptions  as to the  number of  underground
storage tanks to be upgraded,  and certain other  matters.  At year end 1996 and
1995,  the  Company  recorded  liabilities  for future  estimated  environmental
remediation  costs  related  to  known  leaking  underground  storage  tanks  of
$643,000.  Of such amounts,  $-0- and $322,000,  respectively,  were recorded in
accrued   expenses  and  the  remainder  was  recorded  in  other   liabilities.
Corresponding  claims for  reimbursement of environmental  remediation  costs of
$643,000 were recorded in 1996 and 1995, as the Company  expects that such costs
will be  reimbursed  by various  environmental  agencies.  In 1995,  the Company
contracted  with a third  party to  perform  site  assessments  and  remediation
activities  on 35 sites  located  in Texas  that are  known or  thought  to have
leaking  underground  storage  tanks.  Under the contract,  the third party will
coordinate with the state regulatory authority the work to be performed and bill
the state  directly  for such work.  The  Company is liable for the  $10,000 per
occurrence  deductible  and for any  costs in  excess  of the  $1,000,000  limit
provided for by the state  environmental trust fund. The Company does not expect
that  the  costs  of  remediation  of any of these  35  sites  will  exceed  the
$1,000,000 limit. The assumptions on which the foregoing estimates are based may
change and unanticipated  events and circumstances may occur which may cause the
actual cost of complying with the above  requirements to vary significantly from
these estimates.

     During 1996, 1995, and 1994,  environmental  expenditures  were $2,019,000,
$1,003,000,  and  $934,000,  respectively  (including  capital  expenditures  of
$1,456,000,  $644,000,  and $820,000),  in complying with environmental laws and
regulations.

     The Company does not maintain  insurance  covering  losses  associated with
environmental  contamination.  However, all the states in which the Company owns
or operates  underground storage tanks have state operated funds which reimburse
the Company for certain  cleanup costs and  liabilities  incurred as a result of
leaks in  underground  storage tanks.  These funds,  which  essentially  provide
insurance coverage for certain environmental liabilities, are funded by taxes on
underground  storage tanks or on motor fuels  purchased  within each  respective
state.  The coverages  afforded by each state vary but  generally  provide up to
$1,000,000  for the  cleanup of  environmental  contamination  and most  provide
coverage for third-party liability as well. The funds require the Company to pay
deductibles  ranging from $5,000 to $25,000 per occurrence.  The majority of the
Company's  environmental  contamination cleanup activities relate to underground
storage  tanks  located in Texas.  Due to an increase in claims  throughout  the
state,  the Texas  state  environmental  trust  fund has  significantly  delayed
reimbursement  payments for certain  cleanup costs after  September 30, 1992. In
1993,  the  Texas  state  fund  issued  guidelines  that,  among  other  things,
prioritize  the timing of future  reimbursements  based upon the total number of
tanks operated by and the financial net worth of each applicant. The Company has
been classified in the category with the lowest priority.  Because the state and
federal  governments  have the right,  by law, to levy  additional  fees on fuel
purchases,  the  Company  believes  these  clean up  costs  will  ultimately  be
reimbursed.  However, due to the uncertainty of the timing of the receipt of the
reimbursements, the claims for reimbursement of environmental remediation costs,
totaling $1,038,000 and $1,255,000 at year end 1996 and 1995, respectively, have
been classified as long-term receivables in the accompanying balance sheets.

(c) Other

     The  Company is subject to  various  claims and  litigation  arising in the
ordinary course of business, particularly personal injury and employment related
claims. In the opinion of management,  the outcome of such matters will not have
a material  effect on the  financial  position or results of  operations  of the
Company.


12.  Treasury Units of Parent

     During 1990, the Company  purchased 13,300 Class A Units and 51,478 Class B
Units of limited  partnership  interest of its parent at a total cost of $69,000
and $200,000,  respectively.  These units are  classified  as Treasury  Units in
partners' capital in the accompanying balance sheets.