<PAGE>




                                    Form 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)
         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                  15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.

                  For the quarterly period ended August 28, 1999.

                                       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 number 1-9637.


                           LILLIAN VERNON CORPORATION
                           --------------------------

             (Exact Name of Registrant as Specified in its Charter)

            Delaware                                     13-2529859
----------------------------------          ------------------------------------
(State or other jurisdiction                (IRS Employer Identification Number)
 of incorporation or organization)

             1 Theall Road, Rye, New York               10580
            ----------------------------------------------------
            (Address of principal executive offices)  (Zip Code)

                                  914-925-1200
            ----------------------------------------------------
            (Registrant's telephone number, including area code)

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 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 ____

Number of shares outstanding of each of the issuer's classes of common stock:
9,152,061 Shares of Common Stock, $.01 par value, as of October 8, 1999.

<PAGE>

                           LILLIAN VERNON CORPORATION
                           --------------------------

                                    Form 10-Q

                                 August 28, 1999


Part I. Financial Information                                        Page #
-----------------------------                                        ------
         Item 1.
         Condensed Consolidated Balance Sheets
         as of August 28, 1999, August 29, 1998
         and February 27, 1999  (unaudited)                            3

         Consolidated Statements of Operations
         for the quarters and six months ended
         August 28, 1999 and August 29, 1998 (unaudited)               4

         Consolidated Statements of Cash Flows
         for the six months ended August 28, 1999
         and August 29, 1998 (unaudited)                               5

         Notes to Consolidated Financial
         Statements                                                    6-7

         Item 2.
         Management's Discussion and Analysis
         of Financial Condition and Results
         of Operations                                                 8-12

         Item 3.
         Quantitative and Qualitative Disclosures
         About Market Risk                                             12

Part II. Other Information                                             13
--------------------------

Signatures                                                             14






                                  Page 2 of 14

<PAGE>





PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                   LILLIAN VERNON CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      AUGUST 28,        AUGUST 29,      FEBRUARY 27,
                                    ASSETS                                                  1999              1998              1999
                                    ------                                         --------------    --------------    -------------
       <S>                                                                         <C>               <C>               <C>
       Current assets:
           Cash and cash equivalents                                                     $14,278              $398           $31,834
           Accounts receivable                                                            11,153            12,340            21,093
           Merchandise inventories                                                        44,402            56,164            26,700
           Deferred income taxes                                                              --                --             1,355
           Prepayments and other current assets                                           16,097            27,470             9,671
                                                                                   --------------    --------------    -------------
               Total current assets                                                       85,930            96,372            90,653

       Property, plant and equipment, net (Note 1)                                        37,190            37,975            37,811
       Deferred catalog costs                                                              8,571            11,327             6,192
       Other assets                                                                        4,354             3,823             3,550
                                                                                   --------------    --------------    -------------
               Total                                                                    $136,045          $149,497          $138,206
                                                                                   --------------    --------------    -------------


                  LIABILITIES AND STOCKHOLDERS' EQUITY
                  ------------------------------------

       Current liabilities:
           Trade accounts payable and accrued expenses                                   $21,614           $19,641           $17,437
           Cash overdrafts                                                                 1,500             5,596             1,920
           Customer deposits                                                                 389               543               228
           Current portion of long-term debt and lease obligations                            --               635                --
           Revolving debt                                                                     --            10,500                --
           Income taxes payable                                                               --                --             1,072
           Deferred income taxes                                                              43               335                --
                                                                                   --------------    --------------    -------------
               Total current liabilities                                                  23,546            37,250            20,657

       Deferred compensation                                                               2,985             3,384             3,049
       Deferred income taxes                                                               1,587             2,185             1,236
                                                                                   --------------    --------------    -------------
               Total liabilities                                                          28,118            42,819            24,942
                                                                                   --------------    --------------    -------------


       Stockholders' equity:
           Preferred stock, $.01 par value; 2,000,000 shares
               authorized; no shares issued and outstanding                                   --                --                --
           Common stock, $.01 par value; 100,000,000 shares,
               20,000,000 shares, 20,000,000 shares authorized, respectively;
               issued - 10,389,674 shares                                                    104               104               104
           Additional paid-in capital                                                     31,336            31,148            31,322
           Retained earnings                                                              94,896            94,653           100,760
           Treasury stock, at cost - 1,201,007 shares, 1,240,659 shares
               and 1,231,806 shares, respectively                                        (18,409)          (19,227)         (18,922)
                                                                                   --------------    --------------    -------------
               Total stockholders' equity                                                107,927           106,678           113,264
                                                                                   --------------    --------------    -------------
               Total                                                                    $136,045          $149,497          $138,206
                                                                                   --------------    --------------    -------------

</TABLE>



                 See Notes to Consolidated Financial Statements

                                  Page 3 of 14

<PAGE>



                   LILLIAN VERNON CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>



                                                       Second Quarter Ended       Six Months Ended
                                                      ----------------------   -----------------------
                                                      August 28,  August 29,   August 28,   August 29,
                                                         1999        1998        1999         1998
                                                      ----------  ----------   ----------   ----------
<S>                                                   <C>         <C>          <C>         <C>
Revenues ...........................................   $ 35,499    $ 39,510    $ 64,616    $ 71,551

Costs and expenses:
        Product and delivery costs .................     19,221      20,602      33,841      36,144
        Selling, general and administrative expenses     19,252      21,885      38,180      42,797
                                                       --------    --------    --------    --------
                                                         38,473      42,487      72,021      78,941
                                                       --------    --------    --------    --------
                Operating loss .....................     (2,974)     (2,977)     (7,405)     (7,390)
Net interest income (expense) ......................        262          (5)        639         278
                                                       --------    --------    --------    --------
                Loss before income taxes ...........     (2,712)     (2,982)     (6,766)     (7,112)

Provision for (benefit from) income taxes:
        Current ....................................     (2,299)     (3,870)     (4,252)     (5,833)
        Deferred ...................................      1,295       2,856       1,749       3,415
                                                       --------    --------    --------    --------
                                                         (1,004)     (1,014)     (2,503)     (2,418)
                                                       --------    --------    --------    --------
                Net loss ...........................   ($ 1,708)   ($ 1,968)   ($ 4,263)   ($ 4,694)
                                                       --------    --------    --------    --------

Net loss per common share - Basic ..................   ($   .19)   ($   .21)   ($   .46)   ($   .50)
                                                       --------    --------    --------    --------

Net loss per common share - Diluted ................   ($   .19)   ($   .21)   ($   .46)   ($   .50)
                                                       --------    --------    --------    --------

Weighted average number of common shares -
        Basic and Diluted ..........................      9,195       9,285       9,188       9,325
                                                       --------    --------    --------    --------


</TABLE>


                 See Notes to Consolidated Financial Statements

                                  Page 4 of 14


<PAGE>

                   LILLIAN VERNON CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          SIX  MONTHS  ENDED
                                                                                   --------------------------------
                                                                                      AUGUST 28,        AUGUST 29,
                                                                                            1999              1998
                                                                                   --------------    --------------
<S>                                                                                <C>               <C>
    Cash flows from operating activities:
       Net loss                                                                          ($4,263)          ($4,694)
       Adjustments to reconcile net loss to net cash provided by
           (used in) operating activities:
           Depreciation                                                                    1,221             1,401
           Amortization                                                                       81                96
           (Increase) decrease in accounts receivable                                      9,940            10,292
           (Increase) decrease in merchandise inventories                                (17,702)          (19,229)
           (Increase) decrease in prepayments and other current assets                    (6,426)          (17,297)
           (Increase) decrease in deferred catalog costs                                  (2,379)           (5,405)
           (Increase) decrease in other assets                                              (885)             (707)
           Increase (decrease) in trade accounts payable and accrued expenses              4,177             3,310
           Increase (decrease) in customer deposits                                          161               396
           Increase (decrease) in income taxes payable                                    (1,072)           (4,581)
           Increase (decrease) in deferred compensation                                      (64)              (42)
           Increase (decrease) in deferred income taxes                                    1,749             3,415
                                                                                   --------------    --------------
               Net cash used in operating activities                                     (15,462)          (33,045)
                                                                                   --------------    --------------

    Cash flows from investing activities:
       Purchases of property, plant and equipment                                           (600)           (1,553)
                                                                                   --------------    --------------
               Net cash used in investing activities                                        (600)           (1,553)
                                                                                   --------------    --------------

    Cash flows from financing activities:
       Principal payments on long-term debt and capital lease obligations                     --              (759)
       Proceeds from short-term borrowings                                                    --            10,500
       Increase (decrease) in cash overdrafts                                               (420)            4,592
       Dividends paid                                                                     (1,471)           (1,536)
       Payments to acquire treasury stock                                                   (258)           (5,280)
       Reissuance of treasury stock                                                          641             1,355
       Other                                                                                  14               (12)
                                                                                   --------------    --------------
               Net cash provided by (used in) financing activities                        (1,494)            8,860
                                                                                   --------------    --------------

               Net decrease in cash and cash equivalents                                 (17,556)          (25,738)
                                                                                   --------------    --------------

    Cash and cash equivalents at beginning of period                                      31,834            26,136
                                                                                   --------------    --------------
    Cash and cash equivalents at end of period                                           $14,278              $398
                                                                                   --------------    --------------


    Supplemental disclosures of cash flow information: Cash paid during the
       period for:
           Interest                                                                       $   --              $125
           Income taxes                                                                    1,376             4,642


</TABLE>



                 See Notes to Consolidated Financial Statements
                                  Page 5 of 14




<PAGE>

                   LILLIAN VERNON CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The consolidated financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. The year-end condensed balance sheet data was derived
from audited financial statements, but does not include all disclosures required
by generally accepted accounting principles. The interim financial statements
furnished with this report reflect all adjustments, consisting only of items of
a normal recurring nature, which are, in the opinion of management, necessary
for the fair statement of the consolidated financial condition and consolidated
results of operations for the interim periods presented. It is suggested that
these financial statements be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended February 27, 1999.


1.   PROPERTY, PLANT AND EQUIPMENT
     -----------------------------

     Property, plant and equipment are summarized as follows (in thousands):

<TABLE>
<CAPTION>

                                                     August 28,        August 29,       February 27,
                                                        1999              1998              1999
                                                     ----------        ----------       ------------
         <S>                                         <C>               <C>              <C>
         Land and buildings                            $32,527           $31,897          $32,507
         Machinery and equipment                        32,825            30,341           32,577
         Furniture and fixtures                          3,837             3,602            3,670
         Leasehold improvements                          1,061               996              896
                                                     ----------        ----------       ------------
           Total property, plant &
             equipment, at cost                         70,250            66,836           69,650

           Less,  accumulated depreciation
                  and amortization                      33,060            28,861           31,839
                                                     ----------        ----------       ------------

         Property, plant and equipment-net             $37,190           $37,975          $37,811
                                                     ----------        ----------       ------------

</TABLE>





                                  Page 6 of 14

<PAGE>



2.   EARNINGS (LOSS) PER SHARE
     -------------------------

     Basic and diluted earnings (loss) per share were calculated in accordance
     with Statement of Financial Accounting Standards No. 128 as follows
     (amounts in thousands):

<TABLE>
<CAPTION>

                                           Second Quarter Ended              Six Months Ended
                                        ----------------------------     ------------------------
                                        August 28,        August 29,     August 28,    August 29,
                                           1999              1998           1999          1998
                                        ----------        ----------     ----------    ----------
     <S>                                <C>               <C>            <C>           <C>
     Weighted average shares for
     Basic EPS                             9,195             9,285          9,188        9,325

     Add: incremental shares from
     stock option exercises                    -                 -              -            -
                                        --------          --------      ---------     --------
     Weighted average shares for
     Diluted EPS                           9,195             9,285          9,188        9,325
                                        --------          --------      ---------     --------
</TABLE>

     As of August 28, 1999 and August 29, 1998, options on 1,192,000 and
     1,064,000 shares of common stock, respectively, were not included in the
     calculation of weighted average shares for Diluted EPS because their
     effects were antidilutive.


3.   Reclassifications
     -----------------

     Certain reclassifications have been made in the prior year financial
     statements to conform with the fiscal 2000 presentation.













                                  Page 7 of 14

<PAGE>


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

Results of Operations
---------------------
Quarter Ended August 28, 1999
-----------------------------

Revenues for the quarter ended August 28, 1999 were $35.5 million, compared to
$39.5 million last year. Reduced volume was the result of a strategic decision
to reduce circulation. Circulation in the quarter was 17% lower than last year,
contributing to an increase in revenue per catalog of 8.1%. The increased
revenue per catalog was due in large part to a significant increase in the
number of new products offered, more targeted circulation and an emphasis on
value pricing. Increased revenue from rental of the Company's mailing lists also
contributed to the higher revenue in the current quarter.

Product and delivery costs in the quarter ended August 28, 1999 of $19.2 million
decreased by $1.4 million, or 6.7% as compared to the second quarter of the
prior year. These costs represented a higher percentage of revenues (54.1%) in
the current quarter than the same period last year (52.1%). Product and delivery
costs include the cost of merchandise sold, and the cost of receiving, filling
and shipping the Company's orders, reduced by shipping and handling fees. The
decrease in costs was primarily due to a decrease in the number of orders
received, while the increase as a percentage of revenue was principally due to
operating fixed costs at the Company's distribution center being absorbed by
lower sales volume. This was partially offset by a higher gross margin.

Selling, general and administrative (SG&A) expenses of $19.3 million, the
largest component of which is the cost of producing, printing and mailing the
Company's catalogs, decreased $2.6 million, or 12.0% during the quarter,
principally because of 17% lower circulation. As a percentage of revenues, SG&A
costs decreased to 54.2% in the quarter, compared to 55.4% last year. The
improvement in SG&A expenses as a percentage of revenues is largely attributable
to better catalog response rates; demand per circulated page rose 16% in the
second quarter this year compared to last year. A Company-wide initiative for
cost cutting also contributed to lower SG&A. In support of the Company's
strategy to expand its online sales and customer base, higher expenses related
to its Internet site were incurred in the second quarter.

Net interest income for the quarter ended August 28, 1999 was $.3 million higher
than the second quarter of the prior year as a result of greater interest earned
on substantially higher cash investments, and lower interest expense in the
current quarter. This was principally due to the repayment of all long term debt
in the third quarter of the prior year, and no short term borrowings being
incurred during the current quarter.

The effective income tax rate was 37% for the current quarter, compared to 34%
in the second quarter of the prior year. The higher rate more closely reflects
the fiscal 1999 annual rate incurred.



                                  Page 8 of 14
<PAGE>

Results of Operations
---------------------
Six Months Ended August 28, 1999
--------------------------------

Revenues for the six months ended August 28, 1999 were $64.6 million, compared
to $71.6 million last year. Revenue per catalog rose 11.5% in the first half as
compared to the same period last year. The reduced volume was the result of a
strategic decision to reduce circulation, which was 19.3% lower in the first
half, compared to the same period last year. The increased revenue per catalog
was due in large part to a significant increase in the number of new products
offered, more targeted circulation and an emphasis on value pricing.

Product and delivery costs of $33.8 million decreased by $2.3 million, or 6.4%
for the six months ended August 28, 1999 as compared to the prior year. These
costs represented a higher percentage of revenues (52.4%) in the current period,
than the same period last year (50.5%). The decrease in costs was primarily due
to a decrease in the number of orders received, while the increase as a
percentage of revenue was primarily due to operating fixed costs at the
Company's distribution center being absorbed by lower sales volume.

Selling, general and administrative (SG&A) expenses of $38.2 million decreased
$4.6 million, or 10.8%, during the current six month period, as compared to last
year, principally because of 19.3% lower circulation. As a percentage of
revenues, SG&A costs decreased to 59.1% in the current period, compared to 59.8%
last year. The improvement in SG&A expenses as a percentage of revenues is
largely attributable to better catalog response rates; demand per circulated
page rose 16% in the current six month period compared to last year. The Company
incurred higher expenses related to its improved Internet site.

Net interest income for the six months ended August 28, 1999 was $.4 million
higher than the same period of the prior year, as a result of greater interest
earned on substantially higher cash investments, and lower interest expense in
the current period. This was principally due to the repayment of all long term
debt in the third quarter of the prior year, and no short term borrowings being
incurred during the current six month period.

The effective income tax rate was 37% for the six months ended August 28, 1999,
compared to 34% in the same period of the prior year. The higher rate more
closely reflects the fiscal 1999 annual rate incurred.



                                  Page 9 of 14


<PAGE>



Financial Condition
-------------------

The Company's balance sheet and liquidity are strong. Cash and cash equivalents
(including cash overdraft positions) increased $18.0 million as of August 28,
1999, as compared to August 29, 1998; the current ratio improved from 2.59:1 at
August 29, 1998 to 3.65:1 at August 28, 1999. There was neither long term debt
nor short term borrowings outstanding during the current quarter. The Company's
working capital needs have been met with funds generated from operations.

The Company utilized $17.6 million less funds for operating activities in the
current six month period compared to the same period last year, due to lower
catalog costs, lower inventory purchases, and lower income tax payments.
Inventory levels are $11.8 million (21%) lower this year, as compared to last
year. Capital spending was also lower as compared to last year's level, and
there are no significant capital commitments for fiscal 2000. The Company
utilized $5 million less funds for its share repurchase program in the current
six month period, compared to the same period last year. The Company paid
dividends totaling $1.5 million ($.16 per share) during the first six months of
the current year, the same as in the first six months of the prior year.

During the six months ended August 28, 1999, the Company acquired 19,400 shares
of its common stock at a total cost of $.3 million under its current open
market stock repurchase program which was authorized by the Board of Directors
on October 7, 1998, bringing the total shares repurchased since inception of the
new program to 94,400 shares at a total cost of approximately $1.2 million.

Subsequent to the end of the second quarter, (a) at its September 28, 1999
meeting, the Company's Board of Directors authorized the repurchase of an
additional 500,000 shares of the Company's common stock, and (b) through October
7, 1999, the Company repurchased 54,400 shares; the remaining number of shares
available to repurchase at October 7, 1999 was 1,351,200.

Paper Hedge Contract
--------------------

In prior years, the Company's earnings have been negatively impacted by
significant increases in paper prices. In order to mitigate this risk, the
Company implemented a price protection program beginning in September 1999 by
signing a collar hedge contract with Enron Capital and Trade Resources
Corporation during the second quarter. This four year contract covers the
purchase of 56,000 short tons of paper which the Company uses to produce its
catalogs, and represents approximately 55% - 65% of the Company's projected
catalog production requirements. There is a floor and ceiling to paper prices
within the contract, which expires in August 2003. If paper prices remain within
the range of the contract, there will be no payment to either party to the
contract. If paper prices exceed the established ceiling, the Company will be
reimbursed by the counterparty for the excess. Conversely, if paper prices fall
below the established floor, the Company would pay the counterparty.

                                  Page 10 of 14

<PAGE>


Year 2000 Compliance Program
----------------------------

The Company's Year 2000 compliance program is directed primarily towards
ensuring that the Company will be able to continue to perform its critical
functions: (1) process sales orders from and ship merchandise to customers, (2)
order and receive merchandise from vendors, and 3) process payments to vendors,
employees and shareholders. The Company has completed the modification of its
internal computer software applications and systems to function properly with
respect to dates in the Year 2000 and thereafter. The Company utilized both its
in-house staff as well as outside resources to modify its systems. In addition
to internal systems, the Company established procedures to determine that
outside computer software vendors are either already Year 2000 compliant or have
timely dates when they intend to be compliant. The Company also reviewed all
computer hardware such as mid-range, mainframe and personal computers, networks,
telephone switches, voice mail systems, and time clocks, as well as its
distribution and warehouse equipment, and made the necessary modifications to
ensure that it is substantially Year 2000 compliant. The Company also contacted
its various merchandise vendors to inquire as to their Year 2000 readiness, and
is continuing to follow up with those vendors who have not responded to date.

Costs
-----

The Company's total cost of modifying its computer software applications and
systems to be Year 2000 compliant is approximately $1.5 million. These amounts
have been funded from operating cash flow.

Risks
-----

The variety and complexity of the Year 2000 issues identified and the proposed
solutions, the Company's dependence on the technical skills of employees and
independent contractors, and especially the representations and readiness of
third parties are among the factors that could cause the Company's efforts to be
less than fully effective. In addition, Year 2000 issues present a number of
risks that are beyond the Company's reasonable control, such as continued
service from outside parties such as utility companies, financial institutions,
and transportation and delivery companies (such as the U.S.
Postal Service and United Parcel Service).

THE COMPANY'S PEAK SELLING SEASON RUNS FROM SEPTEMBER THROUGH MID-DECEMBER;
THEREFORE, DISRUPTION OF ITS BUSINESS AT THE BEGINNING OF CALENDAR YEAR 2000
WOULD BE LESS SIGNIFICANT THAN IF IT HAPPENED DURING ITS PEAK SEASON. The
Company expects to have adequate inventory on hand to service its customers, and
the Company expects to be able to shift its customer delivery operations to
alternative carriers, if necessary. The Company does not rely on any single
supplier for a significant portion of its products, and many of its vendors do
not rely on computerized manufacturing systems. The Company has computerized
telephone systems which process customer phone orders; any interruption in
service by major telephone carriers could have a detrimental impact on the
Company's ability to receive orders and service its customers.

                                  Page 11 of 14
<PAGE>

An assessment of the readiness of Year 2000 compliance of third party entities
with which the Company has relationships is ongoing. The Company has inquired of
significant third party entities as to their readiness with respect to Year 2000
compliance and to date has received indications that many of them are either
compliant or in the process of remediation. The Company will continue to monitor
these third party entities to determine the impact on the business of the
Company and the actions the Company must take, if any, in the event of
non-compliance by any of these third parties. Based upon the Company's
assessment of compliance by third parties, there appears to be no material
business risk posed by any such noncompliance and, therefore, the Company has
not developed a contingency plan.

Although the Company believes that its Year 2000 compliance program is designed
to appropriately identify and address those Year 2000 issues that are subject to
the Company's reasonable control, there can be no assurance that the Company's
efforts in this regard will be fully effective or that Year 2000 issues will not
have a material adverse effect on the Company's business, financial condition or
results of operations.


Forward Looking Statements
--------------------------

Except for historical information contained herein, this Report on Form 10-Q
contains forward looking statements which are based on the Company's current
expectations and assumptions. Various factors could cause actual results to
differ materially from those set forth in such statements. These factors
include, but are not limited to, the strength of the economy and overall level
of consumer spending, the performance of the Company's products within the
prevailing retail environment, increasing competition in the direct mail
industry, changes in government regulations, dependence on foreign suppliers,
and possible future increases in operating costs, including postage and paper
costs, as well as issues relating to Year 2000 compliance by the Company's
suppliers. For further information, see Part I of Form 10-K for the fiscal year
ended February 27, 1999.



Item 3.
-------
Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------

Not Applicable.





                                  Page 12 of 14

<PAGE>


PART II.
                                OTHER INFORMATION
                                -----------------

Items 1, 2, 3, and 5 are not applicable and have been omitted.

Item 4. Submission of Matters to a Vote of Security Holders.
-------

          On July 21, 1999, the Company held its Annual Meeting of Stockholders.
          The matters voted upon at the meeting and the results with respect to
          each such matter are summarized below:

          1.   Election of two Directors for a three year term expiring at the
               2002 Annual Meeting of Stockholders.

                                          For               Withheld
                                          ---               --------
               Lillian Vernon          8,201,127            737,513
               Joel Salon              8,202,195            736,445

          2.   Approval of the appointment of PricewaterhouseCoopers LLP as the
               independent auditors of the Company for the year ending February
               26, 2000.

               For                       Against            Abstained
               ---                       -------            ---------
               8,848,156                  1,091              89,393

          3.   Approval to amend the Certificate of Incorporation to increase
               the number of authorized shares of Common Stock $.01 par value to
               100 million shares.

               For                       Against            Abstained
               ---                       -------            ---------
               7,926,781                1,006,840             5,019

          4.   Approval to amend the 1997 Performance Unit, Restricted Stock,
               Non-Qualified Option and Incentive Stock Option Plan to increase
               the number of shares reserved thereunder by an additional 750,000
               shares of Common Stock, $.01 par value.

               For            Against            Abstained        Not Voted
               ---            -------            ---------        ---------
               5,258,877     2,147,485             6,677          1,525,601

Item 6. Exhibits and Reports on Form 8-K.
-------

        Exhibit 10.32 - Master Agreement between Registrant and Enron Capital
                        and Trade Resources Corporation.

        Reports on Form 8-K: None.


                                 Page 13 of 14


<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                          Lillian Vernon Corporation


Date: October 12, 1999                    By: /s/ Richard P. Randall
                                          -------------------------------------
                                          Richard P. Randall
                                          Senior Vice President,
                                          Chief Financial Officer






















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