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 SEPTEMBER 30, 1996

                                       OR

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

            For the transition period from _________ to _________


Commission File Number 1-5787



                          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 October 31, 1996, 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)

                                                                        SEPTEMBER 30,             MARCH 31,
                                                                           1996                     1996
                                                                         (UNAUDITED)
                  ASSETS                                              ---------------        --------------
<S>                                                                   <C>                    <C>
CURRENT ASSETS:
  Cash and cash equivalents                                           $         9,585        $       12,755
  Receivables                                                                  37,699                34,025
  Inventories                                                                 171,417               140,918
  Deposits and prepaid expenses                                                 6,679                 3,820
                                                                      ---------------        --------------
    Total current assets                                                      225,380               191,518
                                                                      ---------------        --------------
PROPERTY AND EQUIPMENT, net                                                   216,889               225,509
                                                                      ---------------        --------------
PROPERTY UNDER CAPITAL LEASES, net                                            124,343               134,944
                                                                      ---------------        --------------

OTHER ASSETS:
  Intangible leasehold interests                                               16,300                17,053
  Deferred financing fees                                                      12,874                 6,820
  Goodwill                                                                     18,435                18,693
  Other                                                                         5,763                 5,707
                                                                      ---------------        --------------
                                                                               53,372                48,273
                                                                      ---------------        --------------
                                                                      $       619,984        $      600,244
                                                                      ===============        ==============

                  LIABILITIES AND STOCKHOLDER'S DEFICIT

CURRENT LIABILITIES:
  Cash overdrafts                                                     $        19,912        $       17,912
  Current portion of long-term debt                                             7,765                 2,441
  Current portion of obligations under capital leases                           3,880                 4,845
  Accounts payable, trade                                                      78,912                55,933
  Accrued expenses and other liabilities                                       80,880                79,640
  Payable to parent                                                            11,583                 5,904
  Deferred income taxes                                                         5,197                 4,628
  Revolver borrowings                                                          75,014                52,516
                                                                      ---------------        --------------
    Total current liabilities                                                 283,143               223,819
                                                                      ---------------        --------------
LONG-TERM DEBT, net of current portion                                        278,304               286,775
                                                                      ---------------        --------------
OBLIGATIONS UNDER CAPITAL LEASES, net of current portion                       76,942                82,922
                                                                      ---------------        --------------
OTHER NONCURRENT LIABILITIES                                                   28,169                24,423
                                                                      ---------------        --------------
DEFERRED INCOME TAXES                                                          44,318                54,041
                                                                      ---------------        --------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S DEFICIT:                                                
  Common stock, at par value                                                        1                     1
  Capital in excess of par                                                     58,453                57,853
  Minimum pension liability                                                      (654)                 (654)
  Retained earnings (deficit)                                                (148,692)             (128,936)
                                                                      ---------------        --------------

    Total stockholder's deficit                                               (90,892)              (71,736)
                                                                      ---------------        --------------
                                                                      $       619,984        $      600,244
                                                                      ===============        ==============
</TABLE>

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

                                        2

<PAGE>
<TABLE>
<CAPTION>



                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                    (Dollars in thousands except share data)

                                   (Unaudited)

                                                         THREE MONTHS ENDED                SIX MONTHS ENDED
                                                            SEPTEMBER 30,                    SEPTEMBER 30,
                                                     --------------------------      ---------------------------
                                                        1996            1995            1996             1995
                                                     ----------      ----------      ----------       ----------
<S>                                                  <C>             <C>             <C>              <C>
Net sales                                            $  237,146      $  251,263      $  465,274       $  493,125
                                                     ----------      ----------      ----------       ----------
Costs and expenses:
    Cost of sales                                       130,327         134,123         256,840          262,181
    Selling, general and administrative
       expenses                                          96,913          97,987         187,223          199,374
    Store closing charge                                 -               -                8,295           -
    Restructuring expense                                -                4,000          -                 4,000
    Depreciation and amortization                         6,789           7,370          13,688           14,745
                                                     ----------      ----------      ----------       ----------
                                                        234,029         243,480         466,046          480,300
                                                     ----------      ----------      ----------       ----------
Operating income (loss)                                   3,117           7,783            (772)          12,825

Interest expense, net                                    13,846          11,978          26,641           25,211
                                                     ----------      ----------      ----------       ----------
Loss before income taxes                                (10,729)         (4,195)        (27,413)         (12,386)

Income tax benefit                                        3,780           1,453           9,659            4,459
                                                     ----------      ----------      ----------       ----------
Loss before extraordinary items                          (6,949)         (2,742)        (17,754)          (7,927)

Extraordinary items, net of tax
    benefit of $1,090                                    -               -               (2,002)          -
                                                     ----------      ----------      ----------       ----------
Net loss                                             $   (6,949)     $   (2,742)     $  (19,756)      $   (7,927)
                                                     ==========      ==========      ==========       ==========
Loss per common share:
    Loss before extraordinary
       items                                         $   (6,949)     $   (2,742)     $  (17,754)      $   (7,927)
    Extraordinary items                                  -               -               (2,002)          -
                                                     ----------      ----------      ----------       ----------- 
    Net loss per common share                        $   (6,949)     $   (2,742)     $  (19,756)       $  (7,927)
                                                     ==========      ==========      ==========       ===========
Weighted average number of common
    shares outstanding                                    1,000           1,000           1,000             1,000
                                                     ==========      ==========      ==========       ===========
</TABLE>

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

                                        3

<PAGE>
<TABLE>
<CAPTION>


                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)
                                                                       SIX MONTHS ENDED SEPTEMBER 30,
                                                                            1996                1995
                                                                    ---------------       --------------
<S>                                                                 <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                        $      (19,756)       $      (7,927)
                                                                    ---------------       --------------

Adjustments to reconcile net loss to net cash 
provided by (used in) operating activities:
       Depreciation                                                          7,911                8,368
       Amortization                                                          5,777                6,377
       Provision for deferred taxes                                         (9,154)              (5,615)
       Gain on disposal of property and equipment                             (150)                 (14)
       Amortization of deferred financing fees                               1,126                  993
       Pension expense                                                         782                2,482
       Other                                                                   177                 -
       Extraordinary losses related to early redemption
         of debt before tax benefit                                          3,092                 -

    Changes in operating assets and liabilities:
       Decrease (increase) in:
         Receivables                                                        (3,668)              (7,578)
         Inventories                                                       (30,499)               7,508
         Deposits and prepaid expenses                                      (2,859)                (537)
         Income taxes receivable                                              -                   3,054
         Other, net                                                             56                   89
       Increase (decrease) in:
         Accounts payable, trade                                            22,979               10,687
         Accrued expenses and other liabilities                              4,870               (1,510)
         Payable to parent                                                   5,679               (1,199)
         Other noncurrent liabilities                                        4,552               (2,005)
                                                                    ---------------       --------------

           Total adjustments                                                10,671               21,100
                                                                    ---------------       -------------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:                        (9,085)              13,173
                                                                    ---------------       -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                    (3,349)              (6,838)
    Proceeds from sale of property and equipment and
       other assets                                                            174                  191
    Proceeds from sale-leaseback agreement                                    -                  22,209
                                                                    ---------------       -------------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:                        (3,175)              15,562
                                                                    ---------------       -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings under Credit Agreement                                      518,178               148,100
    Repayments under Credit Agreement                                     (495,679)             (173,211)
    Principal payments on long-term debt                                    (2,725)                (889)
    Principal payments under capital lease obligations                      (2,412)              (2,584)
    Payment of deferred financing fees                                     (10,272)                -
    Increase in cash overdrafts                                              2,000                1,832
                                                                    ---------------       -------------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                          9,090              (26,752)
                                                                    ---------------       ---------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        (3,170)               1,983

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                              12,755                6,301
                                                                    ---------------       -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                            $        9,585        $       8,284
                                                                    ===============       =============
</TABLE>

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

                                        4

<PAGE>

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                               September 30, 1996

                                   (Unaudited)


1.       BASIS OF PRESENTATION:

         Levitz Furniture Corporation (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 September 30, 1996, the results of operations and cash
         flows for the periods then ended. The results of operations for the
         period ended September 30, 1996, are not necessarily indicative of the
         results to be expected for the full year.

2.       CONSOLIDATED STATEMENTS OF CASH FLOWS:

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

                                                  SIX MONTHS ENDED
                                                    SEPTEMBER 30,
                                                 ------------------
                                                   1996       1995
                                                 -------    -------
           Interest paid                         $25,460    $24,484
                                                 =======    =======

           Income taxes refunded                 $(6,980)   $(1,180)
                                                 =======    =======

3.       LONG-TERM DEBT AND REVOLVER BORROWINGS:

         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 secured by
         substantially all of the assets of Levitz and its subsidiaries and are
         comprised of the Tranche A Facility (the "Tranche A Facility")
         providing for up to $150.0 million and the Tranche B Facility (the
         "Tranche B Facility") providing up to $40.0 million. The proceeds of
         the Senior Secured Facilities were used to refinance indebtedness
         incurred under the previous bank credit agreement, to provide liquidity
         for working capital needs and for other general corporate purposes. The
         Senior Secured Facilities will expire on July 1, 2001. Levitz paid
         financing fees of $10.3 million for the Senior Secured Facilities.

         The Tranche A Facility consists of $115.0 million of revolving debt
         (the "Tranche A Revolver") which is provided by BT Commercial
         Corporation ("BTCC") and $35 million of term debt (the "Tranche A Term
         Facility") provided by Apollo Investment Fund III, L.P., Apollo
         Overseas Partners III, L.P. and Apollo U.K. Partners III, L.P.
         (collectively "Apollo"). The maximum borrowings under the Tranche A
         Revolver are calculated based upon inventory and receivable levels.
         Tranche B consists of $40.0 million of revolving debt based on a fixed
         asset sublimit. This fixed asset sublimit will be permanently reduced
         each year effective July 1997 by an amount equal to the lesser of $5.0
         million or 100% of Excess Cash Flow (as defined in the Senior Secured
         Facilities). Asset sales and the reduction of inventory and receivables
         (as defined in the Senior Secured Facilities) below $115.0 million will
         also trigger permanent reductions to the fixed asset sublimit.


                                        5

<PAGE>

         Loans made under the Tranche A Revolver and the Tranche B Facility 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 Tranche A Term Facility bears 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
         Tranche A Term Notes, having a principal amount equal to the amount of
         interest accrued and maturing on July 1, 2001. To the extent additional
         Tranche A Term Notes are issued for interest, the amount available
         under the Tranche A Revolver will be permanently decreased. If LFI
         achieves a prescribed Fixed Charge Coverage Ratio, as defined, the
         interest rate on the Tranche A Term Facility will be reset from 15.5%
         to 11.0%.

         In addition, LFI issued warrants to Apollo to purchase up to 5,000,000
         shares of Common Stock of LFI at an initial exercise price of $4.125
         per share, subject to downward adjustments if certain targeted stock
         prices of LFI are not achieved in the future and other antidilution
         provisions.

         As a result of the July 1996 refinancing, in the quarter ended June 30,
         1996, Levitz incurred a before-tax extraordinary loss of $3.1 million
         on the write-off of deferred financing fees related to the termination
         of the previous bank credit agreement. The after-tax loss was $2.0
         million or $2,002 per share.

         In order to comply with a consensus issued in November 1995 set forth
         by the Emerging Issues Task Force in EITF 95-22 regarding
         classification of certain debt instruments that include both a
         requirement for a lock box arrangement and a subjective acceleration
         clause, $75.0 million of the borrowings under the Tranche A Revolver
         have been classified as Revolver Borrowings in current liabilities.
         Under the terms of the Tranche A Revolver, however, Levitz will not be
         required to repay this amount in the next year. Payment will only be
         required at the expiration of the Tranche A Facility on July 1, 2001 or
         if the borrowing base is reduced below the amount outstanding. Based on
         anticipated borrowing base levels, Levitz believes the amount
         outstanding under the Senior Secured Facilities will be due and payable
         in July 2001.

         As of September 30, 1996, Levitz had approximately $27.4 million of
         availability under the Senior Secured Facilities. The Senior Secured
         Facilities require LFI to achieve an interest coverage ratio beginning
         December 31, 1996 and quarterly thereafter. It also contains
         limitations on capital expenditures, additional indebtedness,
         incurrence of liens, sale of assets, payment of dividends, investments
         and other restrictions.

         The retail furniture industry historically has been highly cyclical and
         directly affected by, among other things, housing starts, existing home
         sales, consumer confidence, the level of personal discretionary
         spending, consumer credit availability and general economic conditions.
         Furniture purchases are generally discretionary, and in view of the
         fact that they represent a significant expenditure to the average
         consumer, they are often deferred during times of economic uncertainty.
         Decreased comparable store sales and gross profit over the past two
         years which have continued during Fiscal 1997, have significantly
         reduced operating income and the resulting cash flow resulting in debt
         compliance and liquidity concerns.

         Management has undertaken a number of steps including the offer for
         sale of under-utilized properties to address the liquidity needs of LFI
         and Levitz as well as compliance with the Senior Secured Facilities.
         Based upon anticipated cash flow from operations and existing borrowing
         capacity under the Senior Secured Facilities, Management believes
         Levitz will be able to meet the covenants contained in the Senior
         Secured Facilities during the foreseeable future, and has sufficient
         cash flow to meet current cash needs. However, compliance with such
         covenants will be dependent on the successful accomplishment of
         Management's strategies and Levitz achieving improved comparable store
         sales. Actual results could differ from the estimates used to set these
         covenants resulting in Levitz's failure to be in compliance with the
         Senior Secured Facilities.

         The Senior Secured Facilities and mortgages are secured by
         substantially all assets of Levitz and its subsidiaries and a perfected
         pledge of stock of all Levitz's subsidiaries.


                                        6

<PAGE>

         LFI and Levitz are subject to certain covenants and restrictions and
         cross-default provisions as described in the Senior Secured Facilities
         and/or indentures, 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.

         LFI and Levitz are currently in compliance with all such covenants
         under the Senior Secured Facilities and all applicable debt indentures.

4.       SALE OF RECEIVABLES:

         Levitz and General Electric Capital Corporation (GECC) are parties to
         an Account Purchase Agreement (the Agreement), whereby GECC has agreed
         to purchase Levitz's customer credit obligations without recourse.
         Levitz accounts for the above transactions as a sale. Under the terms
         of the Agreement, Levitz may pay GECC a fee or may receive income,
         based upon the relationship among the interest earned on the portfolio
         sold thereunder, the amount of the servicing fee, the prime rate and to
         a limited extent, credit losses. The Agreement expires October 31,
         1998, with automatic five-year renewals, unless canceled by either
         party with twenty-six months' notice prior to scheduled termination.
         Notice of Levitz intent to renegotiate the Agreement with GECC has been
         given and negotiations are currently being conducted to reach a new
         agreement. For the six month periods ended September 30, 1996 and 1995,
         Levitz recorded income under the Agreement of $7.0 million and $5.9
         million, respectively. These amounts are included in selling, general
         and administrative expenses as they represent an adjustment to the
         estimated sales price of the receivables.

5.       EARNINGS PER COMMON SHARE:

         Earnings per common share are based on the weighted average number of
         common shares outstanding during each period.

6.       CLOSED STORES:

         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.

                                        7

<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                   SIX MONTHS ENDED
                                                        SEPTEMBER 30,                        SEPTEMBER 30,
                                                ----------------------------        ------------------------------
                                                    1996            1995                 1996             1995
                                                -----------      -----------        -----------        -----------
<S>                                             <C>              <C>                  <C>              <C> 
Net sales                                          100.0 %         100.0 %            100.0 %             100.0 %

Cost of sales                                       55.0            53.4               55.2                53.2
                                                -----------      -----------          -----------      ----------- 

Gross profit                                        45.0            46.6               44.8                46.8

Selling, general and administrative
  expenses                                          40.9            39.0               40.3                40.4

Store closing charge                                 -               -                  1.8                 -

Restructuring expense                                -               1.6                -                   0.8

Depreciation and amortization                        2.8             2.9                2.9                 3.0
                                                -----------      -----------          -----------      ----------- 

Operating income                                     1.3             3.1               (0.2)                2.6

Interest expense                                     5.8             4.8                5.7                 5.1
                                                -----------      -----------          -----------      ----------- 

Loss before income taxes                            (4.5)           (1.7)              (5.9)               (2.5)

Income tax benefit                                   1.6             0.6                2.1                 1.0
                                                -----------      -----------          -----------      ----------- 

Loss before extraordinary items                     (2.9)           (1.1)              (3.8)               (1.5)

Extraordinary items, net of tax
  benefit                                            -                  -              (0.4)                  -
                                                -----------      -----------          -----------      ----------- 

Net loss                                            (2.9)%          (1.1)%             (4.2)%              (1.5)%  
                                               ============      ===========          ===========      =========== 

Comparable store sales                              (5.6)%          (9.7)%             (5.7)%              (9.5)% 
                                               ============      ===========          ===========      =========== 

</TABLE>

THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1995

Net sales of $237.1 million for the three month period ended September 30, 1996
decreased $14.2 million or 5.6% over net sales of $251.3 million in the same
period for the prior year. Sales on a comparable store basis decreased 5.6%.

Gross profit as a percentage of net sales decreased to 45.0% for the three month
period ended September 30, 1996 compared to 46.6% in the same period for the
prior year. The decrease, in part, reflects the move to more competitive pricing
and increased value for the customer. Gross profit is expected to be maintained
at approximately 45.0% which increased from 44.5% during the three month period
ended June 30, 1996.

Selling, general and administrative (SG&A) expenses decreased $1.1 million for
the three month period ended September 30, 1996 as compared to the same period
for the prior year. As a percentage of net sales, SG&A expenses increased to
40.9% from 39.0%, respectively. Salaries, payroll taxes and employee benefit
expenses decreased $7.8 million which is attributable to the reduction in the
number of employees by approximately 1,100 from the comparable period last year.
This was offset by an increase in advertising expense of $3.5 million and a
reduction of GECC service fee income of $1.0 million. The percentage increase in
SG&A was caused by the decline in net sales as previously noted.

                                        8

<PAGE>

The restructuring expense for the three month period ended September 30, 1995
was a result of the consolidation of six regional offices into two divisional
offices and the elimination of certain support positions at the corporate,
division and store levels. The restructuring charge included $3.1 million of
severance pay and related employee benefits and $0.9 million of lease
commitments on closed regional office facilities. The restructuring was
completed in November 1995.

Depreciation and amortization expenses decreased $0.6 million or 7.9% for the
three month period ended September 30, 1996 as compared to the same period of
the prior year. As a percentage of net sales, depreciation and amortization
expenses for such periods decreased to 2.8% from 2.9%, respectively.

Operating income for the three month period ended September 30, 1996 decreased
$4.7 million or 60.0% from the same period for the prior year. As a percentage
of net sales, operating income decreased to 1.3% from 3.1%, respectively. The
percentage and dollar decreases are primarily attributable to the decrease in
net sales.

Interest expense for the three month period ended September 30, 1996 increased
$1.9 million or 15.6% from the same period for the prior year. As a percentage
of net sales, interest expense increased to 5.8% from 4.8%, respectively. The
dollar increase is due to higher effective interest rates and increased average
borrowing levels. The percentage of net sales increase is also due to the
decline in net sales as well as the increase in interest rates and average
borrowing levels.

As a result of the aforementioned factors, loss before income taxes for the
three month period ended September 30, 1996 amounted to $10.7 million or 4.5% of
net sales as compared to a loss of $4.2 million or 1.7% of net sales for the
same period of the prior year.

Income tax benefit for the three month period ended September 30, 1996 was $3.8
million or 1.6% of net sales as compared to an income tax benefit of $1.5
million or 0.6% of net sales for the same period of the prior year. The
effective tax rate was 35.2% in the three month period ended September 30, 1996
as compared to 34.6% for the same period of the prior year.

Net loss for the three month period ended September 30, 1996 was $6.9 million or
2.9% of net sales as compared to a net loss of $2.7 million or 1.1% of net sales
for the same period of the prior year.

SIX MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
1995

Net sales of $465.3 million for the six months ended September 30, 1996
decreased $27.9 million or 5.6% from net sales of $493.1 million in the same
period of the prior year. Sales on a comparable store basis decreased 5.7%.

Gross profit as a percentage of net sales decreased to 44.8% for the six month
period ended September 30, 1996 compared to 46.8% in the same period for the
prior year. The decrease is attributable to a change in pricing policy toward
more competitive pricing and increased value for the customer.

SG&A expenses decreased $12.2 million or 6.1% for the six month period ended
September 30, 1996 as compared to the same period of the prior year. As a
percentage of net sales, SG&A expenses decreased to 40.3% from 40.4%,
respectively. The dollar decrease in SG&A expenses is primarily due to the
reduction in the number of employees of approximately 1,100 from the comparable
period last year. Salaries, payroll taxes and employee benefit expense decreased
$15.8 million. GECC service fee income increased $1.1 million and advertising
expense increased $3.7 million.

The store closing charge of $8.3 million for the six month period ended
September 30, 1996 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. Five satellite
stores were closed on October 31, 1996.

The restructuring expense for the six month period ended September 30, 1995, was
a result of the consolidation of six regional offices into two divisional
offices and the elimination of certain support positions at the corporate,
division and store levels. The restructuring charge included $3.1 million of
severance pay and related employee benefits and $0.9 million of lease
commitments on closed regional office facilities. The restructuring was
completed in November 1995.


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<PAGE>

Depreciation and amortization expenses decreased $1.1 million or 7.2% for the
six month period ended September 30, 1996 as compared to the same period of the
prior year. As a percentage of net sales, depreciation and amortization expenses
for such periods decreased to 2.9% from 3.0%, respectively.

Operating loss for the six month period ended September 30, 1996 was $0.8
million as compared to operating income of $12.8 million for the same period of
the prior year. The decrease in operating income is primarily attributable to
the decrease in net sales and the store closing charge.

Interest expense increased $1.4 million or 5.7% for the six month period ended
September 30, 1996 as compared to the same period of the prior year. As a
percentage of net sales interest expense increased to 5.7% from 5.1%,
respectively. The increase in interest expense was primarily due to increased
average borrowing levels and to higher interest rates. The increase in
percentage of net sales is due to the dollar increase as noted above and the
decline in net sales.

As a result of the aforementioned factors, loss before income taxes for the six
month period ended September 30, 1996 amounted to $27.4 million or 5.9% of net
sales as compared to a loss of $12.4 million or 2.5% of net sales for the same
period of the prior year.

Income tax benefit was $9.7 million or 2.1% of net sales for the six month
period ended September 30, 1996 as compared to income tax benefit of $4.5
million or 1.0% of net sales for the same period of the prior year. The
effective tax rate decreased to 35.2% from 36.0%.

Loss before extraordinary items for the six month period ended September 30,
1996 amounted to $17.8 million or 3.8% of net sales as compared to a net loss of
$7.9 million or 1.5% of net sales for the same period of the prior year.

Extraordinary loss net of tax benefit was $2.0 million or 0.4% of net sales for
the period ended September 30, 1996. The extraordinary loss included the
write-off of deferred financing fees relating to the previous credit agreement.

Net loss for the six month period ended September 30, 1996 was $19.8 million or
4.2% of net sales as compared to a net loss of $7.9 million or 1.5% of net sales
for the same period of the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Levitz's primary sources of liquidity are cash flows from operations (including
the proceeds from the sale of customer credit obligations) and borrowings under
the Senior Secured Facilities.

Net cash used in operating activities for the six month period ended September
30, 1996 includes the add-back of depreciation and amortization expense of $13.7
million, plus other non-cash items of $2.1 million, extraordinary loss on the
early redemption of debt of $3.1 million and a decrease in working capital of
$9.2 million. The decrease in working capital excluding income taxes primarily
includes an increase in inventory of $30.5 million and an increase in trade
accounts payable of $23.0 million. The increase in inventory is due to the
decrease in net sales and the change in merchandise assortment. The increase in
trade payables is due to the increase in inventory and longer payment terms with
vendors.

Capital expenditures of $3.3 million during the period ended September 30, 1996
were for maintenance and alterations of existing stores. 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 in the current
fiscal year.

The cash provided by investing activities for the six month period ended
September 30, 1995 was primarily due to the sale-leaseback of three
warehouse-showrooms and one satellite store for approximately $22.2 million.

The net cash provided by financing activities for the period ended September 30,
1996 included increased borrowings under the Senior Secured Facilities of $22.5
million reduced by payment of financing fees of $10.3 million and principal
payments under other long-term debt and capital leases of $5.1 million.


                                       10

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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 secured by substantially all of the assets of Levitz and its
subsidiaries and are comprised of the Tranche A Facility (the "Tranche A
Facility") providing for up to $150.0 million and the Tranche B Facility (the
"Tranche B Facility") providing up to $40.0 million. The proceeds of the Senior
Secured Facilities were used to refinance indebtedness incurred under the Levitz
prior credit agreement, to provide liquidity for working capital needs and for
other general corporate purposes. The Senior Secured Facilities expire on July
1, 2001. Levitz paid financing fees of $10.3 million for the Senior Secured
Facilities.

In addition, LFI issued warrants to Apollo to purchase up to 5,000,000 shares of
Common Stock of LFI at an initial exercise price of $4.125, subject to downward
adjustments if certain targeted stock prices of LFI are not achieved in the
future and other antidilution provisions.

In order to comply with a consensus issued in November 1995 set forth by the
Emerging Issues Task Force in EITF 95-22 regarding classification of certain
debt instruments that include both a requirement for a lock box arrangement and
a subjective acceleration clause, $75.0 million of the borrowings under the
Tranche A Facility have been classified as a current liability. Under the terms
of the Tranche A Facility, however, Levitz will not be required to repay this
amount in the next year. Payment will only be required at the expiration of the
Tranche A Facility on July 1, 2001 or if the borrowing base is reduced below the
amount outstanding. Based on anticipated borrowing base levels, Levitz believes
the amount outstanding will be due and payable in July 2001. See Note 3 of the
consolidated condensed financial statements.

Management has undertaken a number of steps to address the liquidity needs of
LFI and Levitz as well as compliance with the Senior Secured Facilities. Based
upon anticipated cash flow from operations and existing borrowing capacity under
the Senior Secured Facilities, Management believes LFI and Levitz will be able
to meet the covenants contained in the Senior Secured Facilities during the
foreseeable future and has sufficient cash flow to meet current cash needs.
However, compliance with such covenants will be dependent on the successful
accomplishment of management's strategies and Levitz achieving improved
comparable store sales. Actual results could differ from the estimates used to
set these covenants resulting in Levitz's failure to be in compliance with the
Senior Secured Facilities. As of September 30, 1996, Levitz had approximately
$27.4 million of availability under the Senior Secured Facilities.

                                       11

<PAGE>

PART II  OTHER INFORMATION:

ITEM 5.  On September 11, 1996 Levitz Furniture Corporation entered into
         an Employment Agreement (the "Agreement") with Brian Levy pursuant to
         which Mr. Levy was named President-Store Operations of Levitz. A copy
         of the Agreement is attached to this report as Exhibit 10. Mr. Levy was
         also named President-Store Operations of LFI. Also, on September 11,
         1996 Ronald A. Kaplan resigned as President-Chief Operating Officer of
         Levitz and LFI.

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

              (a)   Exhibit 10:  Employment Agreement by and among Levitz
                                 Furniture Corporation and Brian Levy, dated as
                                 of September 11, 1996.

                    Exhibit 27:  Financial Data Schedule.

              (b)   Reports on Form 8-K:  NONE.


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<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:  November 8, 1996                      /s/  PATRICK J. NOLAN
                                             ---------------------
                                                  Patrick J. Nolan
                                              Senior Vice President and
                                               Chief Financial Officer


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                                  EXHIBIT INDEX

                              EXHIBITS TO FORM 10-Q


   NUMBER
EXHIBIT TABLE                 EXHIBIT
-------------                 -------

     10            Employment Agreement by and among
                   Levitz Furniture Corporation and
                   Brian Levy dated as of September 11,
                   1996.

     27            Financial Data Schedule.