SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------

                                    FORM 10-Q

(MARK ONE)

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

            For the quarterly period ended JUNE 30, 1997

                                                         OR

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

            For the transition period from _________ to _________


Commission File Number 33-61534


                          LEVITZ FURNITURE CORPORATION
             ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

           FLORIDA                                              23-1657490
-------------------------------                            -------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

6111 BROKEN SOUND PARKWAY, N.W., BOCA RATON, FL                     33487-2799
-----------------------------------------------                     ----------
(Address of Principal Executive Offices)                            (Zip Code)

                                 (561) 994-6006
              ----------------------------------------------------
              (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 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

On July 31, 1997, there were 1,000 shares of Common Stock, par value $0.40,
outstanding.


<PAGE>



THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT
TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING STATEMENTS UNDER THE CAPTION "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS." THESE FORWARD LOOKING STATEMENTS
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY OF
SUCH MATTERS WILL BE REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE,
AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1) COMPETITIVE PRESSURE IN THE
COMPANY'S INDUSTRY INCREASES SIGNIFICANTLY; (2) GENERAL ECONOMIC CONDITIONS ARE
LESS FAVORABLE THAN EXPECTED; (3) CHANGES IN THE FINANCIAL MARKETS AFFECTING THE
COMPANY'S FINANCIAL STRUCTURE AND THE COMPANY'S COST OF CAPITAL AND BORROWED
MONEY; AND (4) THE UNCERTAINTIES INHERENT IN THE COMPANY'S OPERATIONS. THE
COMPANY HAS NO DUTY UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
TO UPDATE THE FORWARD LOOKING STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q
AND THE COMPANY DOES NOT INTEND TO PROVIDE SUCH UPDATES.

<TABLE>
<CAPTION>

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                                  JUNE 30, 1997

TABLE OF CONTENTS                                                                           PAGE
-----------------                                                                           ----
<S>                                                                                           <C>
PART I - FINANCIAL INFORMATION

       Item 1.      Financial Statements

              Consolidated Condensed Balance Sheets.....................................      3

              Consolidated Condensed Statements of Operations...........................      4

              Consolidated Condensed Statements of Cash Flows...........................      5

              Notes to Consolidated Condensed Financial Statements......................      6

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

              Comparison of Operations..................................................      9

              Liquidity and Capital Resources...........................................     10

PART II - OTHER INFORMATION

       Item 6.      Exhibits and Reports on Form 8-K....................................     13

       Signatures   ....................................................................     14

       Exhibit Index....................................................................     15


</TABLE>




                                       2
<PAGE>
<TABLE>
<CAPTION>
PART I.  FINANCIAL INFORMATION
ITEM 1.  Financial Statements

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                             (Dollars in thousands)
                                                                   JUNE 30,       MARCH 31,
                                                                     1997            1997
                                                                 ------------    -----------
                                                                  (Unaudited)
                                     ASSETS
<S>                                                              <C>             <C>        
CURRENT ASSETS:
  Cash and cash equivalents                                      $     10,051    $     9,261
  Receivables                                                          31,059         37,358
  Inventories                                                         150,663        169,488
  Deposits and prepaid expenses                                         4,579          3,514
  Deferred income taxes                                                     -            933
                                                                 ------------    -----------
    Total current assets                                              196,352        220,560
                                                                 ------------    -----------

PROPERTY AND EQUIPMENT, net                                           211,782        214,626
                                                                 ------------    -----------

PROPERTY UNDER CAPITAL LEASES, net                                    116,825        119,077
                                                                 ------------    -----------
OTHER ASSETS:
  Receivable under account purchase agreement                         381,000        327,000
  Intangible leasehold interests                                       15,294         15,613
  Deferred financial fees                                              11,245         11,975
  Goodwill                                                             18,048         18,177
  Other                                                                 4,917          4,947
                                                                 ------------    -----------
                                                                      430,504        377,712
                                                                 ------------    -----------
                                                                 $    955,463    $   931,975
                                                                 ============    ===========
                      LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
  Cash overdrafts                                                $     18,403    $    19,524
  Current portion of long-term debt                                     5,202         11,193
  Current portion of obligations under capital leases                   3,228          3,398
  Accounts payable, trade                                              55,550         73,044
  Accrued expenses and other liabilities                               88,317         88,897
  Payable to parent                                                    13,239         10,304
  Deferred income taxes                                                 1,546              -
  Revolver borrowings                                                  83,390         75,220
                                                                 ------------    -----------

    Total current liabilities                                         268,875        281,580
                                                                 ------------    -----------

LONG-TERM DEBT, net of current portion                                275,126        273,976
                                                                 ------------    -----------

OBLIGATIONS UNDER CAPITAL LEASES, net of current portion               73,668         74,466
                                                                 ------------    -----------

OBLIGATION UNDER ACCOUNT PURCHASE AGREEMENT                           381,000        327,000
                                                                 ------------    -----------

OTHER NONCURRENT LIABILITIES                                           24,241         24,424
                                                                 ------------    -----------

DEFERRED INCOME TAXES                                                  40,176         48,101
                                                                 ------------    -----------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S DEFICIT
  Common stock, at par value                                                1              1
  Capital in excess of par                                             58,453         58,453
  Retained earnings (deficit)                                        (165,440)      (155,389)
  Minimum pension liability                                              (637)          (637)
                                                                 ------------    -----------
    Total stockholder's deficit                                      (107,623)       (97,572)
                                                                 ------------    -----------
                                                                 $    955,463    $   931,975
                                                                 ============    ===========
</TABLE>
                 The accompanying notes are an integral part of
                     these condensed financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                    (Dollars in thousands except share data)

                                   (Unaudited)

                                                              THREE MONTHS ENDED JUNE 30,
                                                                 1997            1996
                                                              -----------     -----------

<S>                                                           <C>             <C>        
Net sales                                                     $   211,367     $   228,128
                                                              -----------     -----------

Costs and expenses:
  Cost of sales                                                   115,767         126,513
  Selling, general and administrative expenses                     86,985          90,310
  Unusual operating expenses (Note 6)                               3,817               -
  Store closing charge (Note 6)                                         -           8,295
  Depreciation and amortization                                     6,513           6,899
                                                              -----------     -----------

                                                                  213,082         232,017
                                                              -----------     -----------

Operating loss                                                     (1,715)         (3,889)

Interest expense, net                                              13,794          12,795
                                                              -----------     -----------

Loss before income taxes                                          (15,509)        (16,684)

Income tax benefit                                                  5,465           5,879
                                                              -----------     -----------

Loss before extraordinary items                                  (10,044)         (10,805)
                                                              -----------     -----------

Extraordinary item, net of tax benefit of
  $1,090 (Note 6)                                                       -          (2,002)
                                                              -----------     -----------

Net loss                                                      $   (10,044)    $   (12,807)
                                                              ===========     ===========

Earnings (loss) per common share (Note 5 and 6):
  Loss before extraordinary item                              $    10,044     $   (10,805)
  Extraordinary item                                                    -     $    (2,002)
                                                              -----------     -----------

Net loss per common share                                     $    10,044     $   (12,807)
                                                              ===========     ===========

Weighted average number of common shares outstanding                1,000           1,000
                                                              ===========     ===========

</TABLE>

                 The accompanying notes are an integral part of
                     these condensed financial statements.


                                       4
<PAGE>

<TABLE>
<CAPTION>

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                             (Dollars in thousands)

                                   (Unaudited)


                                                               THREE MONTHS ENDED JUNE 30,
                                                              -----------------------------
                                                                  1997              1996
                                                              -----------       -----------

<S>                                                           <C>               <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                    $   (10,044)      $   (12,807)
                                                              -----------       -----------
Adjustments to reconcile net loss to net cash provided by
  (used in) operating activities:
  Depreciation                                                      3,822             3,970
  Amortization                                                      2,691             2,929
  Amortization of deferred financing fees                             730               392
  Other                                                               606               144
  Benefit for deferred taxes                                       (5,466)           (5,655)
  Extraordinary loss related to early redemption of
    debt, before tax benefit                                            -             3,092
  Changes in operating assets and liabilities:
    Decrease (increase) in:
      Receivables                                                   6,299            (5,079)
      Inventories                                                  18,825           (20,845)
      Deposits and prepaid expenses                                (1,065)           (1,110)
      Other, net                                                       (8)               (3)
    Increase (decrease) in:
      Accounts payable, trade                                     (17,494)           18,486
      Accrued expenses and other liabilities                         (927)            3,304
      Payable to parent                                             2,947             5,835
      Other noncurrent liabilities                                   (247)            5,281
                                                              -----------       -----------

        Total adjustments                                          10,713            10,741
                                                              -----------       -----------

  NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                 669            (2,066)
                                                              -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                             (3,349)             (967)
  Proceeds from sale of property and equipment and
    other assets                                                    2,327               152
                                                              -----------       -----------

   NET CASH USED IN INVESTING ACTIVITIES                           (1,022)             (815)
                                                              -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under Senior Secured Facilities                      250,035           103,400
  Repayments under Senior Secured Facilities                     (240,508)         (105,011)
  Principal payments on long-term debt                             (6,301)             (324)
  Principal payments under capital lease obligations                 (968)           (1,260)
  Increase (decrease) in cash overdrafts                           (1,121)            2,967
  Payment of deferred financing fees                                    -            (1,019)
                                                              -----------       -----------

  NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES               1,137            (1,247)
                                                              -----------       -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  784            (4,128)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                      9,267            12,755
                                                              -----------       -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                      $    10,051       $     8,627
                                                              -----------       -----------
</TABLE>

                 The accompanying notes are an integral part of
                      these condensed financial statements.


                                       5
<PAGE>


                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                  June 30, 1997

                                   (Unaudited)


1.       BASIS OF PRESENTATION:

         Levitz Furniture Corporation (which together with its subsidiaries are
         collectively referred to as "Levitz"), a Florida corporation, is a
         wholly-owned subsidiary of Levitz Furniture Incorporated (LFI).

         In the opinion of Management, the accompanying unaudited consolidated
         condensed financial statements contain all adjustments consisting of
         normal recurring accruals necessary to present fairly the financial
         position as of June 30, 1997, the results of operations and cash flows
         for the periods then ended. The results of operations for the period
         ended June 30, 1996, are not necessarily indicative of the results to
         be expected for the full year.

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been omitted. It is suggested that these
         condensed consolidated financial statements be read in conjunction with
         the financial statements and notes thereto included in LFI's audited
         financial statements for the year ended March 31, 1997, which is
         included in its Form 10K filed in July 1997.

2.       CONSOLIDATED STATEMENTS OF CASH FLOWS:

         Supplemental disclosures of cash flow information (dollars in
         thousands):

                                               THREE MONTHS ENDED
                                                    JUNE 30,
                                          ----------------------------
                                              1997              1996
                                          -----------       ----------

         Interest paid, net               $    13,179       $   10,979
                                          ===========       ==========

         Income tax refunds, net          $    (2,470)      $   (6,991)
                                          ===========       ==========

         In June 1997, Levitz exercised its option to issue additional term
         notes under the Senior Secured Facilities as defined below, of
         approximately $1.4 million in lieu of paying interest in cash.

3.       LONG-TERM DEBT AND REVOLVER BORROWINGS:

         Levitz has a senior secured facilities agreement providing for up to
         $190.0 million of availability (collectively, the "Senior Secured
         Facilities"). The Senior Secured Facilities are comprised of $115.0
         million of revolving notes, $35.0 million of term notes and $40.0
         million of other notes.

         The Senior Secured Facilities are secured by substantially all of the
         assets of Levitz and its subsidiaries and a perfected pledge of stock
         of all Levitz's subsidiaries. LFI and Levitz are subject to certain
         covenants and restrictions and cross-default provisions as described in
         the Senior Secured Facilities or debt indentures of Levitz, including
         among other restrictions the following: provisions which require
         certain financial tests be met, restrictions with respect to the sale
         of assets, annual capital expenditures, ability to enter into
         sale-leaseback transactions or mortgage loans, ability to redeem
         certain indebtedness, and limitations on the ability to incur
         additional indebtedness, requirements to 

                                       6
<PAGE>



         repurchase certain indebtedness if a change in control occurs and
         limitations on the ability to pay dividends or make certain other
         restricted payments by Levitz or LFI.

         The maximum borrowings, excluding the term notes, under the Senior
         Secured Facilities are calculated based upon inventory and receivable
         levels and a fixed asset sublimit. The maximum borrowings were $155.0
         million which are permanently reduced each year effective July 1997 by
         an amount equal to the lesser of $5.0 million or 100% of excess cash
         flow, and the amount of additional term notes issued to pay interest.
         On June 30, 1997, Levitz exercised its option to issue additional term
         notes of approximately $1.4 million in lieu of paying interest in cash.
         Availability under the Senior Secured Facilities at June 30, 1997 was
         $4.0 million. During the quarter ended June 30, 1996, Levitz incurred a
         before-tax extraordinary loss of $3.1 million on the write-off of
         deferred financing fees related to the termination of Levitz's previous
         credit agreement. The after-tax loss was $2.0 million or $2,002 per
         share.

         In order to comply with the Emerging Issues Task Force EITF 95-22
         regarding classification of certain debt instruments, $83.4 million of
         the revolving notes are classified as Revolver Borrowings in current
         liabilities.

         On December 6, 1996, June 13, 1997 and June 30, 1997, Levitz obtained
         amendments under the Senior Secured Facilities to lower the interest
         coverage ratio requirements thereunder through July 1, 2001 allowing
         Levitz to remain in compliance with the Senior Secured Facilities
         covenants. The June 30, 1997 amendment, among other things, further
         decreased the interest coverage ratio for the quarter ended June 30,
         1997. Levitz obtained an amendment to the Senior Secured Facilities on
         July 25, 1997 which provided $9.0 million of funding payable on the
         earlier of October 31, 1997 or upon the sale of Levitz's North Avenue,
         Chicago, Illinois property. The sale is anticipated to close in the
         third quarter of Fiscal 1998. Management has a reasonable basis to
         believe Levitz will be in compliance with the Senior Secured Facilities
         covenants as amended, which assumes achieving improved comparable store
         sales for the next twelve months. Management has also been seeking
         equity investments, the sale of assets, reorganizing its marketing
         function, refining its operating structure and negotiating a new
         agreement with GECC, as discussed in Note 4, so that Levitz can meet
         its obligations and sustain operations. There can be no assurance,
         however, that Management's efforts will ultimately be successful or
         achieve compliance with the covenants.

         Levitz has incurred $48.7 million of losses during the past two fiscal
         years, while cash provided by operating activities has decreased from
         $34.0 million during the fiscal year ended March 31, 1995 to $1.2
         million during the fiscal year ended March 31, 1997. Levitz experienced
         a comparable store sale decline of 6.4% and a net loss of $10.0 million
         in the quarter ended June 30, 1997. These factors may seriously
         jeopardize Levitz's ability to continue as a going concern.

         Levitz's ability to continue as a going concern is dependent upon its
         ability to generate sufficient cash flows to meet its obligations on a
         timely basis, to comply with the terms and covenants of its financing
         agreements, to obtain equity investments, additional financing or
         increased availability, as may be required and ultimately to achieve
         increased sales and operating profit. No assurances can be given that
         Levitz will be able to meet these objectives in the short-term.

4.       TRANSFER AND SERVICING OF FINANCIAL ASSETS:

         Levitz and General Electric Capital Corporation (GECC) are parties to
         an Account Purchase and Credit Card Agreement (the "GECC Agreement"),
         whereby GECC is required to purchase Levitz's customer credit
         obligations, subject to certain restrictions, without recourse up to a
         maximum investment of $900.0 million. The termination provision
         includes a payment of a $3.5 million termination fee. At June 30, 1997
         GECC had $748.5 million of customer credit obligations outstanding.
         Pursuant to generally accepted accounting principles, prior to January
         1, 1997, these transactions were recorded as a sale in accordance with
         SFAS No. 77.

                                       7
<PAGE>



         On August 21, 1996 Levitz gave GECC notice of Levitz's intent to
         renegotiate the GECC Agreement. On July 8, 1997 Levitz and GECC entered
         into an amendment to the GECC Agreement which extended the
         renegotiation period to August 16, 1997, extended the GECC Agreement
         until October 1999, removed Levitz's obligations to repurchase at
         GECC's direction those receivables transferred prior to January 1, 1997
         and extended until October 1999 GECC's ability to direct Levitz to
         repurchase those receivables transferred subsequent to December 31,
         1996 at a price equal to their outstanding balance less a loss reserve.

         Effective January 1, 1997, Levitz was required to account for the
         transactions under the GECC Agreement in accordance with SFAS No. 125.
         SFAS No. 125 requires the transferred assets to be "beyond the reach of
         the transferor and its creditors, even in bankruptcy or other
         receivership." Due to this requirement and not finalizing a new
         agreement with GECC which met the sale criteria of SFAS No. 125, Levitz
         was now required to account for these transactions as a secured
         borrowing with a pledge of collateral rather than as a sale for
         financial reporting purposes. Consequently, Levitz recorded $381.0
         million as a Receivable Under Account Purchase Agreement and an
         offsetting Obligation Under Account Purchase Agreement in its June 30,
         1997 financial statements.

         Levitz is exposed to market risk under the terms of the GECC Agreement.
         Levitz may pay a fee or may receive income, based upon the relationship
         among the interest earned on the portfolio, the amount of the servicing
         fee, the prime rate, promotional discount fees and to a limited extent,
         credit losses. Levitz recorded income of $1.9 million and $3.8 million,
         respectively for the quarters ended June 30, 1997 and 1996. These
         amounts are included in selling, general and administrative expenses.
         See Note 6.

5.       EARNINGS PER COMMON SHARE:

         Earnings per common share are based on the weighted average number of
         common shares outstanding during each year of 1,000 shares.

6.       UNUSUAL OPERATING EXPENSES AND STORE CLOSING CHARGE:

         In July 1997, the former President-Merchandising/Marketing resigned.
         Levitz accrued a charge for future payroll and employee benefit costs
         of $1.3 million in connection with the Officer's employment agreement.
         Also, Levitz incurred a $2.5 million reduction for the partial
         write-off of future service revenue receivable under the GECC
         Agreement. The write-off occurred since Levitz is required to account
         for the transfer of assets under the GECC Agreement as a secured
         borrowing with a pledge of collateral rather than as a sale for
         financial reporting purposes.

         During the quarter ended June 30, 1996, Management developed a plan to
         close five satellite stores effective October 31, 1996. The plan
         resulted in a pre-tax charge for store closings of $8.3 million. The
         charge includes the reduction of the carrying value of the store assets
         to their estimated fair value net of selling expenses as well as
         reserves for future rental payments under operating lease agreements.
         Included in the store closing charge is a $2.4 million charge from the
         adoption of SFAS No. 121 effective April 1, 1996 for one of the closed
         stores.


                                       8
<PAGE>


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

COMPARISON OF OPERATIONS

The following table sets forth Levitz's results of operations expressed as a
percentage of net sales for the periods indicated:

                                                     PERCENTAGE OF NET SALES
                                                   --------------------------
                                                        THREE MONTHS ENDED
                                                              JUNE 30,
                                                   --------------------------
                                                      1997              1996
                                                   --------          --------

Net sales                                             100.0 %           100.0 %

Cost of sales                                          54.8              55.5
                                                   --------          --------

Gross profit                                           45.2              44.5

Selling, general and administrative expenses           41.1              39.6

Unusual operating expenses                              1.8                 -

Store closing charge                                      -               3.6

Depreciation and amortization                           3.1               3.0
                                                   --------          --------

Operating loss                                         (0.8)             (1.7)

Interest expense                                        6.5               5.6
                                                   --------          --------

Loss before income taxes                               (7.3)             (7.3)

Income tax benefit                                      2.6               2.6
                                                   --------          --------

Loss before extraordinary items                        (4.7)             (4.7)

Extraordinary items, net of tax                           -              (0.9)
                                                   --------          --------

Net loss                                               (4.7)%            (5.6)%
                                                   --------          --------

Comparable store sales decrease                        (6.4)%            (5.7)%
                                                   --------          --------


THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996

Net sales of $211.4 million for the period ended June 30, 1997 decreased $16.7
million or 7.3% from net sales of $228.1 million in the same period for the
prior year. Sales on a comparable store basis decreased 6.4%. Comparable store
sales for April and May 1997 decreased 0.1% from the comparable period for the
prior year. June 1997 comparable store sales declined 17.3% for the same month
of the prior year. The decrease in comparable store sales for June 1997 was
primarily due to the termination of an advertising agency, the decrease in
inventory levels during the quarter and a change in date of credit promotions in
June 1997. Decreased net sales and comparable store sales have reduced operating
performance significantly during the past two years.

                                       9
<PAGE>



Gross profit as a percentage of net sales increased to 45.2% from 44.5% for the
periods ended June 30, 1997 and 1996. The increase in gross profit as a
percentage of net sales is attributable to a change in merchandise mix and
pricing policy.

Selling, general and administrative (SG&A) expenses of $87.0 million for the
period ended June 30, 1997 decreased $3.3 million from SG&A expenses of $90.3
million as compared to the same period for the prior year. As a percentage of
net sales, SG&A expenses increased to 41.1% from 39.6% for the periods ended
June 30, 1997 and 1996, respectively. The percent of net sales increase is due
to the decline in net sales.

During the quarter ended June 30, 1997, Levitz incurred unusual operating
expenses for one officer's termination in the amount of $1.3 million and $2.5
million on the partial write-off of a receivable due to the loss of sale
accounting treatment under the GECC Agreement.

During the quarter ended June 30, 1996, Management developed a plan to close
five satellite stores effective October 31, 1996. The store closing charge of
$8.3 million, pre-tax, includes the reduction of the carrying value of the store
assets to the estimated fair value net of selling expenses as well as reserves
for future rental payments under operating lease agreements.

Depreciation and amortization expenses decreased to $6.5 million for the period
ended June 30, 1997 from $6.9 million for the comparable period of the prior
year.

Operating loss was $1.7 million for the period ended June 30, 1997 as compared
to an operating loss of $3.9 million for the same period of the prior year.

Interest expense for the period ended June 30, 1997 increased to $13.8 million
from $12.8 million for the same period of the prior year due to increased
average borrowings.

As a result of the aforementioned factors, loss before income taxes for the
period ended June 30, 1997 amounted to $15.5 million or 7.3% of net sales as
compared to loss of $16.7 million or 7.3% of net sales for the same period of
the prior year.

The income tax benefit was $5.5 million for the period ended June 30, 1997 as
compared to an income tax benefit of $5.9 million for the same period of the
prior year. The effective tax rate was 35.2% for the three month periods ended
June 30, 1997 and 1996, respectively.

Loss before extraordinary items for the period ended June 30, 1997 amounted to
$10.0 million or 4.7% of net sales as compared to a loss of $10.8 million or
4.7% of net sales for the same period of the prior year. The results for the
three month period ended June 30, 1997 are not necessarily indicative of the
results that may be achieved for the full fiscal year.

An extraordinary loss, net of tax benefits of $2.0 million for the period ended
June 30, 1996 was due to the write-off of deferred financing fees related to the
termination of the previous bank credit agreement.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

Levitz's primary sources of liquidity are cash flow from operations (including
the proceeds from the transfer of customer credit obligations to GECC) and
borrowings under the Senior Secured Facilities. During the quarter ended June
30, 1997, Levitz generated approximately $0.7 million of net cash flow from
operations as compared to $2.0 million used in operating activities in the
quarter ended June 30, 1996. Such amounts primarily represent net loss plus
depreciation and amortization expenses of approximately $6.5 million and $6.9
million for the periods ended June 30 1997 and 1996, respectively.


                                       10
<PAGE>


Working capital changes impact cash flow from operations. Such changes,
excluding income taxes, resulted in an increase in funds available of
approximately $5.6 million for the period ended June 30, 1997 as compared to a
decrease in funds available of approximately $5.2 million for the comparable
period ended June 30, 1996. The increase in working capital for the period ended
June 30, 1997 was primarily due to the decrease in receivables of $6.3 million
and the decrease in inventory of $18.8 million as offset by the decrease in
trade payables of $17.5 million.

Net cash provided by financing activities amounted to $1.1 million in the period
ended June 30, 1997 and includes increased borrowings under the Senior Secured
Facilities of $9.5 million less principal payments under long-term obligations
of $7.3 million.

Levitz's total capital expenditures (other than for capitalized leases) were
approximately $3.3 million during the period ended June 30, 1997. Capital
expenditures were for existing store improvements and equipment. Management
estimates that approximately $6.0 million to $10.0 million is required annually
to adequately maintain and/or improve its existing warehouse-showrooms and
satellite stores. Levitz does not expect to open any new stores during the
fiscal year ending March 31, 1998.

LONG-TERM DEBT

In March 1996, LFI and Levitz consummated an exchange offer pursuant to which
Levitz issued $91.6 million principal amount of 13.375% Senior Notes due October
15, 1998 and LFI issued warrants to purchase 283,972 shares of LFI Common Stock
at an exercise price equal to $3.89 per share in exchange for $91.6 million
principal amount of 12.375% Senior Notes due April 15, 1997. The untendered
Subordinated Notes, in the aggregate principal amount of $6.0 million, were paid
in full in April 1997.

On July 1, 1996, Levitz and certain of its wholly owned subsidiaries entered
into new senior secured credit facilities providing for up to $190.0 million of
availability (collectively, the "Senior Secured Facilities"). The Senior Secured
Facilities are comprised of $115.0 million of revolving notes, $35.0 million of
term notes and $40.0 million of other notes. The Senior Secured Facilities
expire on July 1, 2001. The Senior Secured Facilities require LFI to achieve an
interest coverage ratio quarterly. It also contains limitations on capital
expenditures, additional indebtedness, incurrence of liens, sale of assets,
payment of dividends, investments and other restrictions.

Loans made under the Senior Secured Facilities bear interest, at Levitz's
option, at a rate equal to either Bankers Trust Company's ("BTC's") prime
lending rate plus 1.5% or BTC's LIBOR rate plus 3.25%. The term notes bear
interest at a rate of 15.5%, payable in cash or, at Levitz's option, at any time
prior to July 1, 1999, by the issuance of up to $10.0 million of additional term
notes, having a principal amount equal to the amount of interest accrued and
maturing on July 1, 2001. To the extent additional term notes are issued for
interest the amount available under the revolving notes will be permanently
decreased. On June 30, 1997, Levitz exercised its option under the term notes to
pay interest due at that date of $1.4 million by issuing additional term notes.

As of June 30, 1997, Levitz had an aggregate of $363.7 million of total debt
outstanding (excluding its Obligation Under Account Purchase Agreement) and
$76.9 million of capitalized lease obligations.

The GECC Agreement provides for the purchase of Levitz's customer credit
obligations by GECC up to a maximum of $900.0 million, of which GECC had
outstanding $748.5 million at June 30, 1997. Levitz and GECC are in the process
of renegotiating this agreement for the purpose of extending the termination
date, changing the fee arrangement and to meet the requirements for sale
accounting under SFAS No. 125. The GECC Agreement as amended on July 8, 1997
currently expires in October, 1999. Upon the expiration date Levitz will be
required to repurchase all of the outstanding credit obligations purchased by
GECC after December 31, 1996 at a price equal to their outstanding balance less
a loss reserve. Levitz is exposed to market risk under the terms of the GECC
Agreement, and pays a fee or receives cash payments, based upon the relationship
among the interest earned on the portfolio, the amount of the servicing fee, the
prime rate, promotional advertising fees and to a limited extent, credit losses.
As a result of the timing of payments under its promotional advertising program,
LFI anticipates a reduction in cash flow resulting from 

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<PAGE>



the GECC Agreement during Fiscal 1998 in the amount of approximately $23.0
million. A one-percent change in the prime rate (when prime is greater than 7%)
would increase or decrease the income from GECC by approximately $6.0 to $7.5
million per year.

GOING CONCERN

On December 6, 1996, June 13, 1997 and June 30, 1997, Levitz obtained amendments
under the Senior Secured Facilities to lower the interest coverage ratio
requirements thereunder through July 1, 2001 allowing Levitz to remain in
compliance with the Senior Secured Facilities covenants. The June 30, 1997
amendment, among other things, further decreased the interest coverage ratio for
the quarter ended June 30, 1997. Levitz obtained an amendment to the Senior
Secured Facilities on July 25, 1997 which provided $9.0 million of funding
payable on the earlier of October 31, 1997 or upon the sale of Levitz's North
Avenue, Chicago, Illinois property. The sale is anticipated to close in the
third quarter of Fiscal 1998. Management has a reasonable basis to believe
Levitz will be in compliance with the Senior Secured Facilities covenants as
amended in Fiscal 1998, which assumes achieving improved comparable store sales
for the next twelve months. Management has also been seeking equity investments,
the sale of assets, reorganizing its marketing function, refining its operating
structure and negotiating a new agreement with GECC so that Levitz can meet its
obligations and sustain operations. There can be no assurance, however, that
Management's efforts will ultimately be successful or achieve compliance with
the covenants.

Levitz has incurred $48.7 million of losses during the past two fiscal years,
while cash provided by operating activities has decreased from $34.0 million
during the fiscal year ended March 31, 1995 to $1.2 million during the fiscal
year ended March 31, 1997. In addition, availability under the Senior Secured
Facilities was $4.0 million at June 30, 1997. Levitz experienced a comparable
store sale decline of 6.4% and a net loss of $10.0 million in the quarter that
ended June 30, 1997. These factors may seriously jeopardize Levitz's ability to
continue as a going concern.

Levitz's ability to continue as a going concern is dependent upon its ability to
generate sufficient cash flows to meet its obligations on a timely basis, to
comply with the terms and covenants of its financing agreements, to obtain
equity investments, additional financing or increased availability, as may be
required and ultimately to achieve increased sales and operating profit. No
assurances can be given that Levitz will be able to meet these objectives in the
short-term.


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PART II OTHER INFORMATION:

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibit 10.44: Amendment No. 5 dated as of July 25,
                  1997 to the Credit Agreements among Levitz Furniture
                  Corporation, et al. and BT Commercial Corporation, as
                  Agent.

                  Exhibit 27:  Financial Data Schedule

         (b)      Report on Form 8-K:  None.















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                                   SIGNATURES


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



                                             LEVITZ FURNITURE CORPORATION
                                                     (Registrant)




Date:  August 11, 1997                      /s/    PATRICK J. NOLAN
                                            -------------------------------
                                                   Patrick J. Nolan
                                              Senior Vice President/Chief
                                            Financial Officer and Treasurer






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                                  EXHIBIT INDEX


                              EXHIBITS TO FORM 10-Q

EXHIBIT
NUMBER                        DESCRIPTION
-------                       -----------

10.44          Amendment No. 5 dated as of July 25, 1997 to the Credit
               Agreements among Levitz Furniture Corporation, et al. and BT
               Commercial Corporation, as agent.

27             Financial Data Schedule.












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