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, 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 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.)

7887 NORTH FEDERAL HIGHWAY, 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, 1999, 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) BANKRUPTCY COURT ACTIONS OR
PROCEEDINGS RELATED TO THE BANKRUPTCY OF LEVITZ AND ITS SUBSIDIARIES; (2)
COMPETITIVE PRESSURE IN LEVITZ's INDUSTRY; (3) GENERAL ECONOMIC CONDITIONS; (4)
CHANGES IN THE FINANCIAL MARKETS AFFECTING LEVITZ's FINANCIAL STRUCTURE AND
LEVITZ's COST OF CAPITAL AND BORROWED MONEY; (5) INVENTORY RISKS DUE TO CHANGES
IN MARKET DEMAND OR LEVITZ'S BUSINESS STRATEGIES; (6) CHANGES IN EFFECTIVE TAX
RATES; (7) YEAR 2000 RISKS; AND (8) UNCERTAINTIES INHERENT IN LEVITZ'S
OPERATIONS. LEVITZ 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.

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                                  JUNE 30, 1999

TABLE OF CONTENTS                                                         PAGE
                                                                          ----
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.................................    12
              Liquidity and Capital Resources..........................    14
PART II - OTHER INFORMATION
       Item 6.      Exhibits and Reports on Form 8-K...................    17
       Signatures   ...................................................    18
       Exhibit Index...................................................    19

                                       2

<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  Financial Statements

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                June 30,         March 31,
                                                                  1999             1999
                                                              (Unaudited)
                                                              -----------        ---------
<S>                                                            <C>               <C>
              ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                    $   3,545         $   3,046
  Receivables                                                     20,116            21,861
  Inventories                                                     87,002            84,232
  Deposits and prepaid expenses                                    5,203             4,432
  Property under agreement of sale                                23,372            95,571
                                                               ---------         ---------
    Total current assets                                         139,238           209,142
                                                               ---------         ---------
PROPERTY AND EQUIPMENT, net                                       38,355            38,867
                                                               ---------         ---------
PROPERTY UNDER CAPITAL LEASES, net                                32,634            33,303
                                                               ---------         ---------
OTHER ASSETS:
  Intangible leasehold interests                                   5,445             5,637
  Property held for disposal                                      23,540            32,469
  Deferred income taxes                                             --               5,385
  Other                                                           11,066             9,764
                                                               ---------         ---------
                                                                  40,051            53,255
                                                               ---------         ---------
                                                               $ 250,278         $ 334,567
                                                               =========         =========

          LIABILITIES AND STOCKHOLDER'S DEFICIT

CURRENT LIABILITIES:
  Cash overdrafts                                              $   8,648         $   8,823
  Current portion of long-term debt                                  610             6,962
  Current portion of obligations under capital leases              1,549             9,846
  Accounts payable, trade                                         24,740            23,060
  Accrued expenses and other liabilities                          63,928            73,979
  Payable to parent                                               14,448            13,635
  Deferred income taxes                                            1,359            11,696
  DIP Facility                                                    95,777           144,618
                                                               ---------         ---------
    Total current liabilities                                    211,059           292,619
                                                               ---------         ---------
OBLIGATION UNDER CAPITAL LEASES, net of current portion           29,201            29,368
                                                               ---------         ---------
OTHER NONCURRENT LIABILITIES                                       6,572             4,290
                                                               ---------         ---------
DEFERRED INCOME TAXES                                              4,117              --
                                                               ---------         ---------
LIABILITIES SUBJECT TO COMPROMISE                                292,698           292,609
                                                               ---------         ---------
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)                                   (351,823)         (342,773)
                                                               ---------         ---------
    Total stockholder's deficit                                 (293,369)         (284,319)
                                                               ---------         ---------
                                                               $ 250,278         $ 334,567
                                                               =========         =========
</TABLE>

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

                                       3

<PAGE>

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    (Dollars in thousands except share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended June 30,
                                                               1999              1998
                                                            ---------         ---------
<S>                                                         <C>               <C>
Net sales                                                   $ 119,988         $ 171,276
                                                            ---------         ---------
Costs and expenses:
  Cost of sales                                                68,101            97,182
  Selling, general and administrative expenses                 49,729            76,621
  Depreciation and amortization                                 2,921             5,192
  Interest expense, net                                         7,223             7,501
                                                            ---------         ---------
                                                              127,974           186,496
                                                            ---------         ---------
Loss before reorganization items and income taxes              (7,986)          (15,220)
                                                            ---------         ---------
Reorganization items:
  Loss on store closings                                         --              21,135
  Professional fees                                             1,064             1,612
                                                            ---------         ---------
                                                                1,064            22,747
                                                            ---------         ---------
Loss before income taxes                                       (9,050)          (37,967)

Income tax                                                       --                --
                                                            ---------         ---------
Net loss                                                    $  (9,050)        $ (37,967)
                                                            =========         =========
Net loss per common share                                   $  (9,050)        $ (37,967)
                                                            =========         =========
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>

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       Three Months Ended June 30,
                                                                       ---------------------------
                                                                          1999              1998
                                                                       ---------         ---------
<S>                                                                    <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                             $  (9,050)        $ (37,967)
                                                                       ---------         ---------
  Adjustments to reconcile net loss to net cash
    used in operating activities:
  Depreciation                                                             1,750             3,162
  Amortization                                                             1,171             2,030
  Loss (gain) on sale of property and equipment and
    other long-term assets                                                   (17)                2
  Amortization of deferred financing fees                                   --                 553
  Pension expense                                                            (13)              101
  Other                                                                     --                 106
  Reorganization items                                                      --              16,133
  Changes in operating assets and liabilities:
    Decrease (increase) in:
      Receivables                                                          1,745             2,073
      Inventories                                                         (2,770)            5,505
      Deposits and prepaid expenses                                         (771)           (1,029)
      Other, net                                                          (1,391)               14
    Increase (decrease) in:
      Accounts payable, trade                                              1,669            (9,281)
      Accrued expenses and other liabilities                             (10,206)            2,326
      Payable to parent                                                      (22)               87
      Other noncurrent liabilities                                          (272)             (221)
                                                                       ---------         ---------
        Total adjustments                                                 (9,127)           21,561
                                                                       ---------         ---------
  NET CASH USED IN OPERATING ACTIVITIES                                  (18,177)          (16,406)
                                                                       ---------         ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                    (1,276)           (1,365)
  Proceeds from sale of property and equipment and other assets           75,572             4,334
                                                                       ---------         ---------
   NET CASH PROVIDED BY INVESTING ACTIVITIES                              74,296             2,969
                                                                       ---------         ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under DIP Facility                                          174,342           220,933
  Repayments under DIP Facility                                         (223,183)         (201,748)
  Principal payments on long-term debt                                    (6,352)              (31)
  Principal payments under capital lease obligations                        (252)             (664)
  Decrease in cash overdrafts                                               (175)           (5,460)
                                                                       ---------         ---------
  NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                    (55,620)           13,030
                                                                       ---------         ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         499              (407)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                             3,046             5,339
                                                                       ---------         ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD                               $   3,545         $   4,932
                                                                       =========         =========
</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, 1999

                                   (Unaudited)

1.       CHAPTER 11 PROCEEDINGS AND BASIS OF PRESENTATION:

         On September 5, 1997 (the "Petition Date"), Levitz Furniture
         Incorporated, a Delaware corporation ("LFI"), and 11 of its
         subsidiaries (collectively, the "Debtors"), including, Levitz Furniture
         Corporation, a Florida corporation and wholly-owned subsidiary of LFI
         ("Levitz" or the "Company"), filed voluntary petitions for relief under
         Chapter 11, Title 11 of the United States Code (the "Bankruptcy Code")
         with the United States Bankruptcy Court for the District of Delaware,
         Wilmington, Delaware under Case No. 97-1842(MFW). Pursuant to Sections
         1107 and 1108 of the Bankruptcy Code, Levitz, as debtor and
         debtor-in-possession, has continued to manage and operate its assets
         and businesses pending the confirmation of a reorganization plan or
         plans and subject to the supervision and orders of the Court.

         On July 7 1999, the Debtors filed a "Disclosure Statement" and a "Joint
         Plan of Reorganization" ("Plan of Reorganization" or "Plan"), pursuant
         to Section 1125 of the Bankruptcy Code with the Court. The Disclosure
         Statement sets forth certain information regarding, among other things,
         significant events that have occurred during the Debtors' Chapter 11
         cases and the anticipated organization, operation and financing of
         "Reorganized Levitz". The Disclosure Statement describes the Plan of
         Reorganization, certain effects of Plan confirmation, certain risk
         factors associated with securities to be issued under the Plan, and the
         manner in which distribution will be made under the Plan. In addition,
         the Disclosure Statement discusses the confirmation process and the
         voting procedures that holders of claims in impaired classes must
         follow for their votes to be counted. The Plan of Reorganization sets
         forth certain information, among other things, the classification and
         treatment of claims and interests, means for implementation of the
         Plan, acceptance or rejection of the Plan and effect of rejection by
         one or more classes of claims or interests, provisions for governing
         distributions, the treatment of executory contracts and leases,
         conditions precedent to confirmation of the Plan and the occurrence of
         the effective date of the Plan.

         The Plan of Reorganization provides, among other things, that as of the
         Plan effective date stockholders and other parties holding equity
         interests in LFI will not receive any distributions and unsecured
         creditors will receive a distribution of stock in a "Reorganized
         Levitz".

         Although the Plan of Reorganization provides for the Debtors' emergence
         from bankruptcy, there can be no assurances given that the Court will
         confirm the Plan, or that such Plan will be consummated.

         The exclusivity period to prepare a plan of reorganization will expire
         on September 30, 1999. After the expiration of the exclusivity period,
         creditors will have the right to propose alternative plans of
         reorganization.

                                       6
<PAGE>

         The consolidated financial statements have been presented in accordance
         with the American Institute of Certified Public Accountants Statement
         of Position 90-7, "Financial Reporting by Entities in Reorganization
         under the Bankruptcy Code"(SOP 90-7) and have been prepared in
         accordance with generally accepted accounting principles applicable to
         a going concern, which principles, except as otherwise disclosed,
         assume that assets will be realized and liabilities will be discharged
         in the ordinary course of business. As a result of the Chapter 11 cases
         and circumstances relating to this event, including Levitz's debt
         structure, its recurring losses, and current economic conditions, such
         realization of assets and liquidation of liabilities are subject to
         significant uncertainty. While under the protection of Chapter 11, the
         Company may sell or otherwise dispose of assets, and liquidate or
         settle liabilities, for amounts other than those reflected in the
         financial statements. Additionally, the amounts reported on the
         consolidated balance sheet could materially change because of changes
         in business strategies and the effects of any proposed plan of
         reorganization.

         The appropriateness of using the going concern basis is dependent upon,
         among other things, confirmation of a plan of reorganization, future
         profitable operations, the ability to comply with the terms of the DIP
         Facility and the ability to generate sufficient cash from operations
         and financing arrangements to meet obligations.

         In the Chapter 11 cases, substantially all unsecured liabilities as of
         the Petition Date are subject to compromise or other treatment under a
         plan of reorganization which must be confirmed by the Bankruptcy Court
         after submission to any required vote by affected parties. For
         financial reporting purposes, those liabilities and obligations whose
         treatment and satisfaction is dependent on the outcome of the Chapter
         11 cases have been segregated and classified as liabilities subject to
         compromise under reorganization proceedings in the consolidated balance
         sheets. Generally, all actions to enforce or otherwise effect repayment
         of pre-Chapter 11 liabilities as well as all pending litigation against
         the Debtors are stayed while the Debtors continue their business
         operations as debtors-in-possession. Unaudited schedules have been
         filed by the Debtors with the Court setting forth the assets and
         liabilities of the Debtors as of the Petition Date as reflected in the
         Debtor's accounting records. Levitz has notified all known claimants
         subject to the August 10, 1998 bar date of their need to file a proof
         of claim with the Court. A bar date is the date by which claims against
         Levitz must be filed if the claimants wish to receive any distribution
         in the Chapter 11 cases. Differences between amounts shown by the
         Debtors and claims filed by creditors are being investigated and will
         be either amicably resolved or adjudicated before the Court. The
         ultimate amount of and settlement terms for such liabilities are
         subject to an approved plan of reorganization and accordingly are not
         presently determinable.

         Under the Bankruptcy Code, the Debtors may elect to assume or reject
         real estate leases, employment contracts, personal property leases,
         service contracts and other pre-petition executory contracts, subject
         to Court approval. Claims for damages resulting from the rejection of
         real estate leases and other executory contracts will be subject to
         separate bar dates. The Debtors have not reviewed all real estate
         leases for assumption or rejection. As of June 30, 1999, the Debtors
         had rejected leases for nineteen store locations, reached agreement
         with the landlord on one store location to terminate without liability
         and assumed and assigned leases on four store locations without
         liability. The Court has extended the time for which the Debtors may
         assume or reject unexpired leases of nonresidential real property to
         August 24, 1999. On August 6, 1999, a motion was filed with the Court
         to further extend the time within which the Debtors may assume or
         reject unexpired leases of nonresidential real property to October 29,
         1999. There can be no assurances made that this motion will be approved
         by the Court. The liabilities subject to compromise include a reserve
         for an estimated amount that may be claimed by lessors for the stores
         that have been closed through March 31, 1999. The Debtors will continue
         to analyze their real estate leases and executory contracts and may
         assume or reject additional leases and contracts. Such rejections could
         result in additional liabilities subject to compromise.

                                       7
<PAGE>

         Levitz Furniture Corporaiton, a Florida corporation, is a wholly-owned
         subsidiary of Levitz Furniture Incorporated.

         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, 1999; the results of operations and cash flows
         for the periods then ended. The results of operations for the period
         ended June 30, 1999, 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 Levitz's audited
         financial statements for the year ended March 31, 1999, which is
         included in its Form 10-K.

2.       DEBT:

         LFI, Levitz and substantially all of its subsidiaries, as
         debtors-in-possession, are parties to a Postpetition Credit Agreement,
         as amended, dated as of September 5, 1997 (the "DIP Facility") with BT
         Commercial Corporation (BTCC) as agent. The DIP Facility has been
         approved by the Court and includes a total commitment of $117.0 million
         which is comprised of revolving notes of $107.0 million and an
         overadvance term note of $10.0 million. Letter of Credit obligations
         under the revolver portion of the DIP Facility are limited to $25.0
         million. The DIP Facility is intended to provide Levitz with the cash
         and liquidity to conduct its operations and pay for merchandise
         shipments at normal levels during the course of the Chapter 11
         proceedings.

         The maximum borrowings, excluding the term commitments, under the DIP
         Facility are limited to 85% of eligible accounts receivable, 75% of
         eligible inventory (as defined in the DIP Facility) and a fixed asset
         sublimit which is permanently reduced as the proceeds from the sale of
         fixed assets and leasehold interests are received. Qualification of
         accounts receivable and inventory items as "eligible" is subject to
         unilateral change at the discretion of the lenders. Excess availability
         under the DIP Facility at August 9, 1999 was $18.5 million.

         The DIP Facility is secured by substantially all of the assets of
         Levitz and its subsidiaries and a perfected pledge of stock of all
         Levitz's subsidiaries. The DIP Facility contains restrictive covenants
         including, among other things, the maintenance of minimum earnings
         before interest, taxes, depreciation and amortization as defined
         (EBITDA), limitations on the incurrence of additional indebtedness,
         liens, contingent obligations, sales of assets, capital expenditures
         and a prohibition on paying dividends. LFI and Levitz are currently in
         compliance with the DIP Facility covenants as amended.

         On July 23, 1999, the DIP Facility was amended to include, among other
         things, a reduction in the EBITDA requirements for June and September
         1999 and an extension of the fixed asset sublimit expiration date to
         September 30, 1999. The Company may be required to seek a further
         reduction of the September 30, 1999 EBITDA requirement. There can be no
         assurances given that such a reduction will be granted.

         Levitz is aggressively marketing additional properties for sale. Since
         March 31, 1999 Levitz has sold twenty-one owned properties and
         leasehold interests in nineteen properties. Leases were rejected on
         three additional properties. As of August 10, 1999, there are four
         properties under agreement of sale, letters of intent or other types of
         offers estimated to be $12.0 million of gross proceeds. No assurances
         can be given that a sufficient number of these transactions will close
         prior to the expiration of the fixed asset sublimit on September 30,
         1999. Based on facts and circumstances at that time, Levitz may have to
         request an extension of the fixed asset sublimit expiration date or
         obtain additional financing. No assurances can be given that an
         extension of the expiration date would be granted or that additional
         financing could be obtained.

                                       8
<PAGE>

         The lenders under the DIP Facility have a super-priority administrative
         expense claim against the estate of the Debtors. The DIP Facility
         expires on December 31, 1999.

3.       LIABILITIES SUBJECT TO COMPROMISE:

         The principal categories of obligations classified as liabilities
         subject to compromise under reorganization proceedings are identified
         below. The amounts below in total may vary significantly from the
         stated amount of proofs of claim that will be filed with the Court and
         may be subject to future adjustment depending on Court action, further
         developments with respect to potential disputed claims, determination
         as to the value of any collateral securing claims, or other events.
         Additional claims may arise from the rejection of additional real
         estate leases and executory contracts by the Debtors.

                                                               June 30,
                                                                 1999
                                                              (Dollars in
                LIABILITIES SUBJECT TO COMPROMISE              thousands)
                ---------------------------------             ------------
         Accounts payable, trade                               $ 38,509
         Accrued expenses                                        15,219
         13.375% Senior Notes due 10/15/98                       96,031 (1)
         9.625% Senior Subordinated Notes due 7/15/03           101,337 (1)
         Reserve for lease rejection claims                      19,812
         Executive retirement and employment agreements          16,658
         General liability claims                                   736
         Reserve for previous store closings                      1,353
         Common area maintenance                                    262
         Real estate taxes                                        2,216
         Personal property taxes                                    565
                                                               --------
                                                               $292,698
                                                               ========

         (1)     Includes accrued interest at September 4, 1997.

         As a result of the Chapter 11 filing, no principal or interest payments
         will be made on most pre-petition debt without Court approval or until
         a plan of reorganization providing for the repayment terms has been
         confirmed by the Court and becomes effective. Interest on pre-petition
         unsecured obligations has not been accrued after the Petition Date
         except that interest expense and principal payments will continue to be
         recorded on capital lease obligations unless the Debtors reject the
         leases. If a capital lease is rejected the obligation will be limited
         to the lease rejection claim. Contractual interest expense of $5.5
         million was not recorded on certain pre-petition debt for the periods
         ended June 30, 1999 and 1998.

4.       PRIVATE-LABEL CREDIT CARD PROGRAM:

         On September 4, 1998 Levitz and its operating subsidiaries entered into
         an agreement ("Merchant Agreement") with Household Bank (SB), N.A.
         ("Household") whereby Household would provide financing to individual
         consumers purchasing merchandise from Levitz ("Private-Label Credit
         Card Program"). The Court approved the Merchant Agreement and granted a
         first priority and security interest and lien to Household on certain
         reserves retained or accumulated by Household, totaling $7.7 million at
         June 30, 1999, and gave administrative expense status to substantially
         all obligations of Levitz arising under the Merchant Agreement.

                                       9
<PAGE>

         At June 30, 1999, Household's portfolio balance was $499.5 million.
         Levitz recorded income from both the Merchant Agreement and the former
         agreement with General Electric Capital Corporation of $10.2 million
         and $1.4 million for the three month periods ended June 30, 1999 and
         1998, respectively.

         Levitz is exposed to market risk under the terms of the Household
         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 cost of capital, promotional discount fees and
         credit losses. Levitz is obligated for all credit losses under the
         portfolio, including the GECC portfolio transferred to Household, up to
         a maximum of 15% of average outstanding receivables and for 50% of all
         credit losses above 15%. Levitz is also required under the Merchant
         Agreement to fund a merchant risk reserve of 2.5% for the first year
         and 3.5% thereafter of all amounts financed up to a stipulated dollar
         amount. A one percent increase or decrease in the finance charge to
         customers or the cost of capital or the credit loss rate would increase
         or decrease the annual income from the portfolio by $3.5 million to
         $5.5 million.

5. SALE-LEASEBACK TRANSACTION:

         On June 8, 1999, Levitz sold 11 owned properties and leasehold
         interests and/or rights in 11 leased properties for gross proceeds of
         $67.3 million ("Contract of Sale"). Net proceeds, which excludes
         closing costs, of $67.1 million were used to pay-off existing mortgages
         and related accrued interest, default interest and other fees of $7.6
         million; the term notes under the DIP Facility including accrued
         interest, extension fees and other fees of $59.2 million and cure costs
         relating to pre-petition liabilities of $0.3 million.

         The gain on the sale of owned property and leasehold interests of
         approximately $2.2 million, subject to further adjustment, is being
         amortized over the initial term of the "Unitary Lease Agreement" as
         described below. As part of the Contract of Sale, the purchaser
         escrowed an additional $1.0 million to be paid to Levitz on January 1,
         2000 subject to Levitz's emergence from bankruptcy by December 31,
         1999. In addition, the Contract of Sale places certain limitations on
         Levitz incurring new unsecured debt following the approval of a plan of
         reorganization.

         At the same time, Levitz entered into a Unitary Lease Agreement to
         lease back all of the owned property as well as the property where the
         leasehold interest was sold ("Sale-Leaseback Transaction"). The Unitary
         Lease Agreement is for an initial term of twenty years with three
         additional option periods of five years each. Rent is payable monthly
         in advance and is calculated at 10.75% of the gross proceeds for the
         first five years of the initial term with incremental increases of 5%
         after each five year period of the initial term and all option periods.

         The Unitary Lease requires Levitz to assume all obligations for
         payments and lease terms under the original leases (the "Overleases").
         The Unitary Lease allows Levitz to exercise a right to vacate or
         surrender all or a portion of the lease space of the properties by
         giving notice on or before the two year anniversary of the Unitary
         Lease Agreement and vacating the property within three years. In some
         instances, there is also a requirement that Levitz must vacate the
         warehouse portion and/or the showroom portion of some of the properties
         by specific dates. Levitz would receive a pro rata reduction in the
         Unitary Lease rent at the time it vacates the entire property and would
         be released of all payment obligations for the Overlease in the
         instances described above.

                                       10
<PAGE>

         The cash effect of the Sale-Leaseback Transaction for the first twelve
         month period is approximately (dollars in thousands):

         Decrease in interest on term notes                            $ 9,337
         Decrease in mortgage payments                                   1,196
         Increase in rent payments                                      (7,235)
                                                                       =======
         Total cash effect                                             $ 3,298
                                                                       =======

6.       CONSOLIDATED STATEMENTS OF CASH FLOWS:

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

                                 Three Months Ended
                                      June 30,
                                --------------------
                                 1999         1998
                                ------        ------
         Interest paid          $8,569        $6,713
                                ======        ======
         Income tax, net        $   17        $   34
                                ======        ======


7.       LOSS PER COMMON SHARE:

         Loss per common share is based on the weighted average number of common
         shares outstanding during each period of 1,000 shares.

8.       RECLASSIFICATIONS:

         Effective March 31, 1999, Levitz elected to reclassify certain revenues
         in its consolidated condensed statements of operations. As a result,
         net sales and selling, general and administrative ("SG&A") expenses
         have been restated for the three month periods ended June 30, 1999 and
         1998. Levitz now reflects delivery income and miscellaneous revenue in
         SG&A expenses. Previously, these revenues were included in net sales.
         The effect of this reclassification was to reduce net sales and SG&A
         expenses by $3.9 million and $5.2 million for the three month periods
         ended June 30, 1999 and 1998, respectively.

         Certain other amounts in prior year's consolidated condensed financial
         statements have been reclassified to conform to the current year's
         presentation.

9.       SUBSEQUENT EVENTS:

         On July 7, 1999, Levitz sold five owned properties and leasehold
         interests/rights in five properties, all of which locations had
         previously been closed. The gross proceeds from the transaction were
         $19.8 million (the "Bulk Sale Transaction"). Net proceeds of
         approximately $19.4 million, excluding closing costs, were used to
         pay-off existing mortgages and accrued interest of $0.6 million, cure
         costs relating to pre-petition liabilities of $0.3 million, proration
         of real estate taxes and other costs of $0.4 million and to pay down
         the revolver portion of the DIP Facility of approximately $18.1
         million. The Bulk Sale Transaction relieved Levitz of all lease
         obligations for the leased properties. The aggregate carrying value of
         these properties of $20.3 million was classified as property under
         agreement of sale at June 30, 1999.

                                       11
<PAGE>

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

COMPARISON OF OPERATIONS

GENERAL

On September 5, 1997 (the "Petition Date"), Levitz Furniture Incorporated, a
Delaware corporation ("LFI"), and 11 of its subsidiaries (collectively, the
"Debtors"), including, Levitz Furniture Corporation, a Florida corporation and
wholly-owned subsidiary of LFI ("Levitz"), filed voluntary petitions for relief
under Chapter 11, Title 11 of the United States Code (the "Bankruptcy Code")
with the United States Bankruptcy Court for the District of Delaware,
Wilmington, Delaware under Case No. 97-1842(MFW). Pursuant to Sections 1107 and
1108 of the Bankruptcy Code, Levitz, as debtor and debtor-in-possession, has
continued to manage and operate its assets and businesses pending the
confirmation of a reorganization plan or plans and subject to the supervision
and orders of the Court.

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,
                                                      --------------------
                                                       1999          1998
                                                      ------        ------

Net sales                                             100.0 %        100.0 %

Cost of sales                                          56.8           56.7
                                                      -----         -------
Gross profit                                           43.2           43.3

Selling, general and administrative expenses           41.4           44.7

Depreciation and amortization                           2.4            3.0

Interest expense                                        6.0            4.4
                                                      -----         -------
Loss before reorganization items and income taxes      (6.6)          (8.8)

Reorganization items                                    0.9           13.3
                                                      -----         -------
Loss before income taxes                               (7.5)%        (22.1)%
                                                      =====         =======
Comparable store sales decrease                        (0.6)%         (2.5)%
                                                      =====         =======

                                       12
<PAGE>

THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998

Net sales of $120.0 million for the period ended June 30, 1999 decreased $51.3
million or 29.9% from net sales of $171.3 million in the same period for the
prior year. Approximately $51.3 million of the net sales decrease was due to the
closing of forty-two stores during the last six months of fiscal 1998. Sales on
a comparable store basis decreased 0.6%. The comparable store sales decline was
offset by the increase in net sales from the addition of one new store in
Valencia, California in May 1999. Comparable store sales for April 1999
increased 1.9% for the same month of the prior year. May and June 1999
comparable store sales decreased 1.6% from the comparable period for the prior
year

Selling, general and administrative (SG&A) expenses of $49.7 million for the
period ended June 30, 1999 decreased $26.9 million or 35.1% from SG&A expenses
of $76.6 million in the same period for the prior year. The reduction in SG&A
expenses included $21.3 million due to the closing of forty-two stores at the
end of June 1998 and January 1999, $1.9 million due to the elimination of
corporate support functions and expenses and $4.1 million in comparable store
expenses. These reductions were offset by an increase in SG&A Expenses of $0.4
million with the opening of one new store in May 1999. The reduction in SG&A
Expenses for comparable stores was due to the increase in service fee income
under the Company's private-label credit card program of $9.0 million. The
increase in service fee income was offset by increases in advertising expense of
$2.2 million primarily due to the increase in "interest free" promotions offered
under the Company's private-label credit card program of $1.2 million and an
increase in media advertising of $1.0 million; an increase in salaries and
benefits of $0.7 million and delivery and other expenses of $1.4 million
primarily due to inefficiencies in the implementation of the warehouse
rationalization program; and an increase in occupancy costs of $0.6 million due
to the Sale-Leaseback Transaction as described in Note 5.

Depreciation and amortization for the three month period ended June 30, 1999
decreased to $2.9 million from $5.2 million or 44.2% from the same period of the
prior year. The decrease was primarily due to the closing of forty-two stores
and the Sale-Leaseback Transaction.

Interest expense for the period ended June 30, 1999 decreased to $7.2 million
from $7.5 million for the same period of the prior year. Interest expense as a
percentage of net sales increased to 6.0% from 4.4% primarily due to increased
bank fees charged for amendments to the Credit Agreement and other fees incurred
with the Sale-Leaseback Transaction. Interest expense will decrease in future
periods due to the Sale-Leaseback and Bulk Sale Transactions assuming other
variables as the prime interest rate remain constant. Interest on pre-petition
unsecured obligations has not been accrued after the Petition Date except that
interest expense continues to be recorded on capital lease obligations.
Contractual interest expense of $5.5 million was not recorded on certain
pre-petition unsecured debt for the periods ended June 30, 1999 and 1998.

Reorganization items for the three month period ended June 30, 1998 included a
charge of $21.1 million for the closing of fifteen stores in under-performing
markets and the elimination of certain support functions and the closing of
warehouses in certain locations. Professional fees and other expenses related to
bankruptcy services rendered during the three month periods ended June 30, 1999
and 1998 were $1.1 million and $1.6 million, respectively.

Levitz has not recorded any tax benefits for the losses incurred during the
periods ended June 30, 1999 and 1998. Levitz does not anticipate recording any
tax provision for the remainder of Fiscal 2000, subject to changes in operating
performance.

As a result of the aforementioned factors, net loss for the period ended June
30, 1999 amounted to $9.1 million or 7.5% of net sales as compared to net loss
of $38.0 million or 22.1% of net sales for the same period of the prior year.

                                       13
<PAGE>

Liquidity and Capital Resources

Cash Flows

Levitz's primary sources of liquidity are cash flow from operations (including
the proceeds from customer credit obligations under the private-label credit
card program by Household), trade credit and borrowings under the DIP Facility.
During the quarter ended June 30, 1999, Levitz used approximately $6.2 million
of net cash flow in operations before changes in operating assets and
liabilities. Changes in operating assets and liabilities further reduced net
cash flow from operations by $12.0 million primarily due to the reduction of
accrued expenses and other liabilities of $10.2 million. The reduction of
accrued expenses consisted of a decrease in accrued interest of $1.4 million due
to reduced borrowings, payments applied against closed store reserves of $3.5
million and reduction of other items of $5.3 million due to the timing of
payments.

Cash provided by investing activities for the period ended June 30, 1999
includes $8.9 million of proceeds from asset sales of closed facilities and
$66.7 million in proceeds from the Sale-Leaseback Transaction. All of these
proceeds were applied as repayments to the DIP Facility as required by the
agreement.

Levitz's total capital expenditures were approximately $1.3 million during the
period ended June 30, 1999. Levitz spent $0.3 million on renovations and
equipment for one new store in Valencia, CA and $1.0 million for existing store
improvements and equipment. Management plans to spend approximately $7.0 million
for capital expenditures in the current fiscal year of which approximately $2.9
million is for maintenance of existing facilities.

Net cash used in financing activities amounted to $55.6 million in the period
ended June 30, 1999 and includes repayment of borrowings under the DIP Facility
of $48.8 million, principal payments under long-term obligations of $6.6 million
and a decrease in outstanding checks and cash overdrafts of $0.2 million.

Debt

LFI, Levitz and substantially all of its subsidiaries, as debtors-in-possession,
are parties to a Postpetition Credit Agreement, as amended, dated as of
September 5, 1997 (the "DIP Facility") with BT Commercial Corporation (BTCC) as
agent. The DIP Facility has been approved by the Court and includes a total
commitment of $117.0 million which is comprised of revolving notes of $107.0
million and an overadvance term note of $10.0 million. Letter of Credit
obligations under the revolver portion of the DIP Facility are limited to $25.0
million. The DIP Facility is intended to provide Levitz with the cash and
liquidity to conduct its operations and pay for merchandise shipments at normal
levels during the course of the Chapter 11 proceedings.

The maximum borrowings, excluding the term commitments, under the DIP Facility
are limited to 85% of eligible accounts receivable, 75% of eligible inventory
(as defined in the DIP Facility) and a fixed asset sublimit which is permanently
reduced as the proceeds from the sale of fixed assets and leasehold interests
are received. Qualification of accounts receivable and inventory items as
"eligible" is subject to unilateral change at the discretion of the lenders.
Excess availability under the DIP Facility at August 9, 1999 was $18.5 million.

The DIP Facility is secured by substantially all of the assets of Levitz and its
subsidiaries and a perfected pledge of stock of all Levitz's subsidiaries. The
DIP Facility contains restrictive covenants including, among other things, the
maintenance of minimum earnings before interest, taxes, depreciation and
amortization as defined (EBITDA), limitations on the incurrence of additional
indebtedness, liens, contingent obligations, sales of assets, capital
expenditures and a prohibition on paying dividends. LFI and Levitz are currently
in compliance with the DIP Facility covenants as amended.

                                       14
<PAGE>

On July 23, 1999, the DIP Facility was amended to include, among other things, a
reduction in the EBITDA requirements for June and September 1999 and an
extension of the fixed asset sublimit expiration date to September 30, 1999. The
Company may be required to seek a further reduction of the September 30, 1999
EBITDA requirement. There can be no assurances given that such a reduction will
be granted.

Levitz is aggressively marketing additional properties for sale. Since March 31,
1999 Levitz has sold twenty-one owned properties and leasehold interests in
nineteen properties. Leases were rejected on three additional properties. As of
August 10, 1999, there are four properties under agreement of sale, letters of
intent or other types of offers estimated to be $12.0 million of gross proceeds.
No assurances can be given that a sufficient number of these transactions will
close prior to the expiration of the fixed asset sublimit on September 30, 1999.
Based on facts and circumstances at that time, Levitz may have to request an
extension of the fixed asset sublimit expiration date or obtain additional
financing. No assurances can be given that an extension of the expiration date
would be granted or that additional financing could be obtained.

The lenders under the DIP Facility have a super-priority administrative expense
claim against the estate of the Debtors. The DIP Facility expires on December
31, 1999.

Private-Label Credit Card Program

On September 4, 1998 Levitz and its operating subsidiaries entered into an
agreement ("Merchant Agreement") with Household Bank (SB), N.A. ("Household")
whereby Household would provide financing to individual consumers purchasing
merchandise from Levitz ("Private-Label Credit Card Program"). The Court
approved the Merchant Agreement and granted a first priority and security
interest and lien to Household on certain reserves retained or accumulated by
Household, totaling $7.7 million at June 30, 1999, and gave administrative
expense status to substantially all obligations of Levitz arising under the
Merchant Agreement.

At June 30, 1999, Household's portfolio balance was $499.5 million. Levitz
recorded income from both the Merchant Agreement and the former agreement with
General Electric Capital Corporation of $10.2 million and $1.4 million for the
three month periods ended June 30, 1999 and 1998, respectively.

Levitz is exposed to market risk under the terms of the Household 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 cost
of capital, promotional discount fees and credit losses. Levitz is obligated for
all credit losses under the portfolio, including the GECC portfolio transferred
to Household, up to a maximum of 15% of average outstanding receivables and for
50% of all credit losses above 15%. Levitz is also required under the Merchant
Agreement to fund a merchant risk reserve of 2.5% for the first year and 3.5%
thereafter of all amounts financed up to a stipulated dollar amount. A one
percent increase or decrease in the finance charge to customers or the cost of
capital or the credit loss rate would increase or decrease the annual income
from the portfolio by $3.5 million to $5.5 million.

Going Concern

The Company believes that cash on hand, amounts available under the DIP
Facility, as amended, and funds from operations will enable the Company to meet
its current liquidity and capital expenditures requirements.

On July 7 1999, the Debtors filed a "Disclosure Statement" and a "Joint Plan of
Reorganization" ("Plan of Reorganization" or "Plan"), pursuant to Section 1125
of the Bankruptcy Code with the Court. The Disclosure Statement sets forth
certain information regarding, among other things, significant events that have
occurred during the Debtors' Chapter 11 cases and the anticipated organization,
operation and financings of "Reorganized Levitz". The Disclosure Statement
describes the Plan of Reorganization, certain effects of Plan confirmation,
certain risk factors associated with securities to be issued under the Plan, and
the manner in which distribution will be made under the Plan. In addition, the
Disclosure Statement discusses the confirmation process and the voting
procedures that holders of claims in impaired classes must follow for their
votes to be counted. The Plan of Reorganization sets forth certain information,
among other things, the classification and treatment of

                                       15
<PAGE>

claims and interests, means for implementation of the Plan, acceptance or
rejection of the Plan and effect of rejection by one or more classes of claims
or interests, provisions for governing distributions, the treatment of executory
contracts and leases, conditions precedent to confirmation of the Plan and the
occurrence of the effective date of the Plan.

The Plan of Reorganization provides, among other things, that as of the Plan
effective date stockholders and other parties holding equity interests in LFI
will not receive any distributions and unsecured creditors will receive a
distribution of stock in a "Reorganized Levitz".

In connection with the Plan of Reorganization, Levitz expects to obtain a
post-confirmation financing commitment before December 31, 1999, which would be
an asset based revolving credit facility having substantially the same advance
rate as the DIP Facility. Levitz will seek a commitment in an amount sufficient
to execute the Plan of Reorganization. There can be no assurances given that
such a commitment will be obtained.

Although the Plan of Reorganization provides for the Debtors' emergence from
bankruptcy, there can be no assurances given that the Plan will be confirmed by
the Court, or that such Plan will be consummated.

Year 2000

There have been no significant changes to the Company's Year 2000 project as
reported in its Form 10-K for the fiscal year ended March 31, 1999. The majority
of the financial and operating systems have been completed through remediation
and are in the compliance testing stage. The Company has and is continuing to
communicate with vendors, financial institutions and others with which it does
business to coordinate year 2000 conversion. The remaining estimated cost of
achieving Year 2000 compliance, excluding in-house salaries, wages and benefits,
is expected to be approximately $0.6 million for software maintenance and
development and other operational systems.

The remaining cost of the Company's Year 2000 project and the dates on which the
Company plans to complete the Year 2000 compliance program are based on
management's current estimates, which are derived utilizing numerous
assumptions. Such assumptions include, but are not limited to, the continued
availability of certain resources and the readiness of third-parties through
their own remediation plans. These assumptions are inherently uncertain and
actual events could differ significantly from those anticipated.

Although the Company is communicating with vendors and others with which it does
business to coordinate Year 2000 conversion, there can be no assurance, however,
that the systems of these other companies will be converted in a timely manner,
or that any such failure to convert by another company would not have an adverse
effect on the Company's systems and operations. Management believes the Year
2000 compliance issue is being addressed properly by the Company to prevent any
material adverse operational or financial impacts. However, if such enhancements
are not completed in a timely manner, the Year 2000 issue may have a material
adverse impact on the operations of the Company. The Company is currently
assessing the consequences of its Year 2000 project not being completed on
schedule or its remediation efforts not being successful. Management is
developing contingency plans to mitigate the effects of problems experienced by
the Company, key vendors or service providers related to the Year 2000.
Contingency plans may include the purchase of additional levels of inventory as
a precaution based on the Company's expected needs. Management expects to
complete its Year 2000 contingency planning during the second quarter of Fiscal
2000.

                                       16
<PAGE>

PART II OTHER INFORMATION:

Item 6.  Exhibits and Reports on Form 8-K

                  (a)      Exhibit 10.65: Amendment No. 11 dated as of July 23,
                           1999 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:

                           On July 7, 1999 the registrant filed a Report on Form
                           8-K reporting under Item 5. Other Events disclosing
                           the filing of a Disclosure Statement and Plan of
                           Reorganization (the "Plan") by the registrant and
                           each of its debtor subsidiaries with the United
                           States Bankruptcy Court for the District of Delaware.
                           As part of the Plan, stockholders of LFI will not
                           receive distributions and unsecured creditors will
                           receive stock in the reorganized Company.

                                       17
<PAGE>

                                   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 13, 1999                         /s/ MICHAEL MCCREERY
                                               ------------------------------
                                                   Michael McCreery
                                                   Senior Vice President and
                                                   Chief Financial Officer

                                       18
<PAGE>

                                  EXHIBIT INDEX

                              Exhibits to Form 10-Q

           NUMBER
        EXHIBIT TABLE                              EXHIBIT

            10.65              Amendment No. 11 dated as of July 23, 1999 to the
                               Credit Agreements among Levitz Furniture
                               Corporation, et al. and BT Commercial
                               Corporation, as agent.

             27                Financial Data Schedule.

                                       19