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>
<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    $   9,267
  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      214,826
                                                         ---------    ---------

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    $ 932,175
                                                         =========    =========

                    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>
                        See Notes to Financial Statement


<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
  Non-recurring charges (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>
                        See Notes to Financial Statement
<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
  Loss (gain) on disposal of property and equipment             16         (279)
  Amortization of deferred financing fees                      730          392
  Pension expense                                              486          350
  Other                                                         74           73
  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                                            6,294       (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                                   10,678       10,741
                                                          ---------    ---------

  NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES          634       (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>
                       See Notes to Financial Statements

<PAGE>

                 LEVITZ FURNITURE INCORPORATED 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, 1996, 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)
                                                          ========    ========

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 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.


<PAGE>


         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, sale of assets as they occur and by an additional amount when
         additional term notes are 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 thereon for the
         quarter ended June 30, 1997. Availability under the Senior Secured
         Facilities at June 30, 1997 was $4.0 million.

         As a result of the refinancing, 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 advanced funding by
         assigning the proceeds of the sale agreement on its North Avenue,
         Chicago, Illinois property to the bank. 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 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, in the short-term,
         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 purchased $748.5 million of customer credit obligations.
         Pursuant to generally accepted accounting principles, prior to January
         1, 1997, these transactions were recorded as a sale in accordance with
         SFAS No. 77.

         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.       NON-RECURRING AND CLOSED STORE CHARGES:

         In July 1997, the former President-Merchandising/Marketing resigned.
         LFI accrued a charge for future payroll and employee benefit costs of
         $1.3 million in connection with the Officer's employment agreement.
         Also, LFI incurred a $2.5 million charge 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.



<PAGE>
<TABLE>
<CAPTION>
Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
         Results 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
                                                -----------       -----------
<S>                                               <C>                <C>

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

Non-recurring charges                                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%)
                                                    ======             ======

</TABLE>

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 7.3% 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 and the decrease in
inventory levels during May 1997. Decreased net sales and comparable store sales
have reduced operating performance significantly during the past two years.

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 non-recurring charges
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 $5.9  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.

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.

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 a loss of $2.0 million in the quarter  ended June 30,
1996. Such amounts  primarily  represent net income (loss) plus depreciation and
amortization  expenses of  approximately  $6151 million and $6.9 million for the
periods ended June 30 1997 and 1996, respectively.

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 an
increase in funds  available of  approximately  $4.9 million for the  comparable
period ended June 30, 1996.

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  capital  expenditures  (other than for  capitalized  leases)  totalled
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  (excluding its Obligation  Under Account  Purchase
Agreement)  had an aggregate  of $363.7  million of total debt  outstanding  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
purchased $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 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 advanced
funding by  assigning  the proceeds of the sale  agreement on its North  Avenue,
Chicago,  Illinois property to the bank. 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, in the short-term,  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.



<PAGE>


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.



<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 11, 1997                  /S/     PATRICK J. NOLAN
                                            ------------------------
                                                    Patrick J. Nolan
                                              Senior Vice President/Chief
                                            Financial Officer and Treasurer


<PAGE>





                                  EXHIBIT INDEX

                              Exhibits to Form 10-Q

     Number
 EXHIBIT TABLE                         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.

       27     Financial Data Schedule.