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, 1999

                                       OR

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

    For the transition period from _________ to _________

Commission File Number 33-61534

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

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

7887 NORTH FEDERAL HIGHWAY, BOCA RATON, FL                          33487-1613
------------------------------------------                          ----------
(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, 1999, there were 1,000 shares of Common Stock, par value $0.40
outstanding.

<PAGE>

THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT
TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING STATEMENTS UNDER THE CAPTION "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS". THESE FORWARD LOOKING STATEMENTS
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY OF
SUCH MATTERS WILL BE REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE,
AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1) BANKRUPTCY COURT ACTIONS OR
PROCEEDINGS RELATED TO THE BANKRUPTCY OF LEVITZ AND ITS SUBSIDIARIES; (2)
COMPETITIVE PRESSURE IN LEVITZ's INDUSTRY; (3) GENERAL ECONOMIC CONDITIONS; (4)
CHANGES IN THE FINANCIAL MARKETS AFFECTING LEVITZ's FINANCIAL STRUCTURE AND
LEVITZ's COST OF CAPITAL AND BORROWED MONEY; (5) INVENTORY RISKS DUE TO CHANGES
IN MARKET DEMAND OR LEVITZ'S BUSINESS STRATEGIES; (6) CHANGES IN EFFECTIVE TAX
RATES; (7) UNCERTAINTIES INHERENT IN LEVITZ'S OPERATIONS; AND (8) DIFFICULTIES
ENCOUNTERED BY LEVITZ OR OTHERS DEALING WITH YEAR 2000 ISSUE. LEVITZ HAS NO DUTY
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 TO UPDATE THE FORWARD
LOOKING STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q.

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                               SEPTEMBER 30, 1999

<TABLE>
<CAPTION>

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

       Item 1.      Financial Statements

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

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

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

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

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

              Comparison of Operations.........................................................................     12

              Liquidity and Capital Resources..................................................................     14

PART II - OTHER INFORMATION

       Item 6.      Exhibits and Reports on Form 8-K...........................................................     18

       Signatures   .........................................................................................       19

       Exhibit Index.........................................................................................       20

</TABLE>
                                        2
<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  Financial Statements

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

<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,      MARCH 31,
                                                                  1999             1999
                                                               (UNAUDITED)
                                                              -------------      ---------
                                     ASSETS
CURRENT ASSETS:
<S>                                                             <C>              <C>
  Cash and cash equivalents                                     $   3,532        $   3,046
  Receivables                                                      20,684           21,861
  Inventories                                                      86,484           84,232
  Deposits and prepaid expenses                                     4,161            4,432
  Property under agreement of sale                                  3,051           95,571
                                                                ---------        ---------
    Total current assets                                          117,912          209,142
                                                                ---------        ---------
PROPERTY AND EQUIPMENT, net                                        33,717           38,867
                                                                ---------        ---------
PROPERTY UNDER CAPITAL LEASES, net                                 31,971           33,303
                                                                ---------        ---------
OTHER ASSETS:
  Intangible leasehold interests                                    5,258            5,637
  Property held for disposal                                       13,707           32,469
  Deferred income taxes                                                --            5,385
  Other                                                            14,444            9,764
                                                                ---------        ---------
                                                                   33,409           53,255
                                                                ---------        ---------
                                                                $ 217,009        $ 334,567
                                                                =========        =========
                      LIABILITIES AND STOCKHOLDER'S DEFICIT

CURRENT LIABILITIES:
  Cash overdrafts                                               $   6,947        $   8,823
  Current portion of long-term debt                                    --            6,962
  Current portion of obligations under capital leases                 671            9,846
  Accounts payable, trade                                          30,939           23,060
  Accrued expenses and other liabilities                           65,668           73,979
  Payable to parent                                                14,036           13,635
  Deferred income taxes                                             2,333           11,696
  DIP Facility                                                     65,871          144,618
                                                                ---------        ---------
    Total current liabilities                                     186,465          292,619
                                                                ---------        ---------
OBLIGATIONS UNDER CAPITAL LEASES, net of current portion           29,919           29,368
                                                                ---------        ---------
OTHER NONCURRENT LIABILITIES                                        9,215            4,290
                                                                ---------        ---------
DEFERRED INCOME TAXES                                               3,500               --
                                                                ---------        ---------
LIABILITIES SUBJECT TO COMPROMISE                                 292,790          292,609
                                                                ---------        ---------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S DEFICIT:
  Common stock, at par value                                            1                1
  Capital in excess of par                                         58,453           58,453
  Retained earnings (deficit)                                    (363,334)        (342,773)
                                                                ---------        ---------
    Total stockholder's deficit                                  (304,880)        (284,319)
                                                                ---------        ---------
                                                                $ 217,009        $ 334,567
                                                                =========        =========
</TABLE>

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

                                        3
<PAGE>

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

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                   SEPTEMBER 30,                     SEPTEMBER 30,
                                               1999            1998             1999             1998
                                            ---------        ---------        ---------        ---------
<S>                                         <C>              <C>              <C>              <C>
Net sales                                   $ 126,331        $ 169,285        $ 246,319        $ 340,561
                                            ---------        ---------        ---------        ---------
Costs and expenses:
  Cost of sales                                72,058           95,982          140,159          193,164
  Selling, general and administrative
    expenses                                   55,961           73,632          105,690          150,253
  Depreciation and amortization                 2,082            4,725            5,003            9,917
  Interest expense, net                         3,153            7,288           10,376           14,789
                                            ---------        ---------        ---------        ---------
                                              133,254          181,627          261,228          368,123
                                            ---------        ---------        ---------        ---------
Loss before reorganization items and
  income taxes                                 (6,923)         (12,342)         (14,909)         (27,562)
                                            ---------        ---------        ---------        ---------
Reorganization items:
  Loss on store closings                        3,050               --            3,050           21,135
  Professional fees                             1,538            1,695            2,602            3,307
                                            ---------        ---------        ---------        ---------
    Total                                       4,588            1,695            5,652           24,442
                                            ---------        ---------        ---------        ---------
Loss before income taxes                      (11,511)         (14,037)         (20,561)         (52,004)

Income taxes                                       --               --               --               --
                                            ---------        ---------        ---------        ---------
Net loss                                    $ (11,511)       $ (14,037)       $ (20,561)       $ (52,004)
                                            =========        =========        =========        =========
Net loss per common share                   $ (11,511)       $ (14,037)       $ (20,561)       $ (52,004)
                                            =========        =========        =========        =========
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.

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                         SIX MONTHS ENDED SEPTEMBER 30,
                                                         ------------------------------
                                                              1999             1998
                                                           ---------        ---------
<S>                                                        <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                 $ (20,561)       $ (52,004)
                                                           ---------        ---------
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation                                                 2,982            5,966
  Amortization                                                 2,021            3,951
  Gain on disposal of property and equipment                     (30)              (7)
  Amortization of deferred financing fees                         --            1,105
  Pension expense                                                (29)             202
  Other                                                           --              213
  Reorganization items, non-cash                                 465           16,133

  Changes in operating assets and liabilities:
    Decrease (increase) in:
      Receivables                                              1,177           (2,929)
      Inventories                                             (2,252)          20,655
      Deposits and prepaid expenses                              271           (1,996)
      Other, net                                              (4,719)              (9)
    Increase (decrease) in:
      Accounts payable, trade                                  7,939            1,366
      Accrued expenses and other liabilities                  (9,493)           3,715
      Payable to parent                                          (77)             188
      Other noncurrent liabilities                              (208)              64
                                                           ---------        ---------
        Total adjustments                                     (1,953)          48,617
                                                           ---------        ---------
  NET CASH USED IN OPERATING ACTIVITIES                      (22,514)          (3,387)
                                                           ---------        ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                        (2,639)          (2,994)
  Proceeds from sale of property and equipment and
    other assets                                             113,636            8,722
                                                           ---------        ---------
   NET CASH PROVIDED BY INVESTING ACTIVITIES                 110,997            5,728
                                                           ---------        ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under DIP Facility                              290,405          441,498
  Repayments under DIP Facility                             (369,152)        (438,757)
  Principal payments on long-term debt                        (6,962)             (52)
  Principal payments under capital lease obligations            (412)          (1,302)
  Decrease in cash overdrafts                                 (1,876)          (6,076)
                                                           ---------        ---------
  NET CASH USED IN FINANCING ACTIVITIES                      (87,997)          (4,689)
                                                           ---------        ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             486           (2,348)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                 3,046            5,339
                                                           ---------        ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD                   $   3,532        $   2,991
                                                           =========        =========
</TABLE>

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

                                       5
<PAGE>

                  LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                               September 30, 1999

                                   (Unaudited)

1.       CHAPTER 11 PROCEEDINGS AND BASIS OF PRESENTATION:

         Levitz Furniture Corporation (Levitz), a Florida corporation, is a
         wholly-owned subsidiary of Levitz Furniture Incorporated (LFI).

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

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

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

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

         The exclusivity period to file a plan of reorganization will expire on
         November 30, 1999. On November 2, 1999, the Debtors filed a motion with
         the Court to extend the exclusivity period to file a plan of
         reorganization to January 31, 2000. This extension would accommodate
         potential alternative options to the Plan previously submitted July 7,
         1999. This motion is scheduled for hearing by the Court on November 16,
         1999. There can be no assurances given that the Court will approve the
         motion to extend the exclusivity period. After the expiration of the
         exclusivity period, creditors will have the right to propose
         alternative plans of reorganization.

                                       6
<PAGE>

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

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

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

         Under the Bankruptcy Code, the Debtors may elect to assume or reject
         real estate leases, employment contracts, personal property leases,
         service contracts and other pre-petition executory contracts, subject
         to Court approval. Claims for damages resulting from the rejection of
         real estate leases and other executory contracts will be subject to
         separate bar dates. The Debtors have not reviewed all real estate
         leases for assumption or rejection. Since the Petition Date, the
         Debtors had rejected leases for twenty-five store locations. The Court
         has extended the time for which the Debtors may assume or reject
         unexpired leases of nonresidential real property to December 28, 1999.
         The liabilities subject to compromise include a reserve for an
         estimated amount that may be claimed by lessors for leases that have
         been rejected and for any executory contracts that are expected to be
         rejected through September 30, 1999. The Debtors will continue to
         analyze their real estate leases and executory contracts and may assume
         or reject additional leases and contracts. Such rejections could result
         in additional liabilities subject to compromise.

         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, 1999; the results of operations and cash
         flows for the periods then ended. The results of operations for the
         period ended September 30, 1999, are not necessarily indicative of the
         results to be expected for the full year.

                                       7
<PAGE>

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been omitted. It is suggested that these
         condensed consolidated financial statements be read in conjunction with
         the financial statements and notes thereto included in Levitz's audited
         financial statements for the year ended March 31, 1999, which is
         included in its Form 10-K.

2.       DEBT:

         LFI, Levitz and substantially all of its subsidiaries, as
         debtors-in-possession, are parties to a Postpetition Credit Agreement,
         as amended, dated as of September 5, 1997 (the "DIP Facility") with BT
         Commercial Corporation (BTCC) as agent. The DIP Facility has been
         approved by the Court and includes a total commitment comprised of
         revolving notes of $95.0 million and an overadvance term note of $10.0
         million. Letter of Credit obligations under the revolver portion of the
         DIP Facility are limited to $25.0 million. The DIP Facility is intended
         to provide Levitz with the cash and liquidity to conduct its operations
         and pay for merchandise shipments at normal levels during the course of
         the Chapter 11 proceedings.

         Loans made under the DIP Facility revolving notes bear interest, at
         Levitz's option, at a rate equal to either Bankers Trust Company's
         prime rate plus 1.5% or BTCC's LIBOR rate plus 3.75%. The overadvanced
         term notes bear interest at 16.0%. Levitz is required to pay an unused
         line fee of 0.5%, and a letter of credit fee of 2.0%.

         The maximum borrowings, excluding the term commitments, under the DIP
         Facility are limited to 85% of eligible accounts receivable, 75% of
         eligible inventory (as defined in the DIP Facility) and a fixed asset
         sublimit which is permanently reduced as the proceeds from the sale of
         fixed assets and leasehold interests are received. Qualification of
         accounts receivable and inventory items as "eligible" is subject to
         unilateral change at the discretion of the lenders. Excess availability
         under the DIP Facility at October 31, 1999 was $16.8 million.

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

         On September 16, 1999, the DIP Facility was amended to include, among
         other things, an extension of the DIP Facility expiration date until
         June 30, 2000, a reduction in the EBITDA requirements for September and
         December 1999 and an extension of the fixed asset sublimit expiration
         date to December 31, 1999.

         Since March 31, 1999 Levitz has sold twenty-one owned properties and
         leasehold interests in twenty-three properties. Since the Petition
         Date, leases have been rejected on twenty-five properties. As of
         October 31, 1999, there are ten properties held for disposal. Six of
         the ten properties held for disposal are under agreement of sale,
         letters of intent or other types of offers estimated to be $6.6 million
         of gross proceeds. No assurances can be given that a sufficient number
         of these transactions will close prior to the expiration of the fixed
         asset sublimit on December 31, 1999. Based on facts and circumstances
         at that time, Levitz may request an extension of the fixed asset
         sublimit expiration date. No assurances can be given that an extension
         of the expiration date would be granted or that additional financing
         could be obtained.

                                       8
<PAGE>

         The lenders under the DIP Facility have a super-priority administrative
         expense claim against the estate of the Debtors. The DIP Facility
         expires on June 30, 2000. Although LFI and Levitz are currently in
         compliance with the DIP Facility covenants as amended, due to the
         outcome of the Private-Label Credit Card Program dispute as described
         in Note 4 to the consolidated condensed financial statements and other
         factors, the Company may have to seek an additional amendment or waiver
         under the DIP Facility to remain in compliance in future periods. There
         can be no assurances given that such an amendment or waiver would be
         granted.


3.       LIABILITIES SUBJECT TO COMPROMISE:

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

         <TABLE>
         <CAPTION>
                                                                                   SEPTEMBER 30,
                                                                                       1999
                                                                                    (DOLLARS IN
                            LIABILITIES SUBJECT TO COMPROMISE                        THOUSANDS)
                            ---------------------------------                      -------------
         <S>                                                                         <C>
         Accounts payable, trade                                                     $  38,580
         Accrued expenses                                                               15,274
         13.375% Senior Notes due 10/15/98                                              96,031 (1)
         9.625% Senior Subordinated Notes due 7/15/03                                  101,337 (1)
         Reserve for lease rejection claims                                             19,787
         Executive retirement and employment agreements                                 17,278
         General liability claims                                                          736
         Reserve for previous store closings                                             1,353
         Common area maintenance                                                           233
         Real estate taxes                                                               1,635
         Personal property taxes                                                           546
                                                                                     ----------
                                                                                     $ 292,790
                                                                                     ==========
         </TABLE>

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

         As a result of the Chapter 11 filing, no principal or interest payments
         will be made on most pre-petition debt without Court approval or until
         a plan of reorganization providing for the repayment terms has been
         confirmed by the Court and becomes effective. Interest on pre-petition
         unsecured obligations has not been accrued after the Petition Date
         except that interest expense and principal payments will continue to be
         recorded on capital lease obligations unless the Debtors reject the
         leases. If a capital lease is rejected the obligation will be limited
         to the lease rejection claim. Contractual interest expense of $10.9
         million was not recorded on certain pre-petition debt for the periods
         ended September 30, 1999 and 1998.

4.       PRIVATE-LABEL CREDIT CARD PROGRAM:

         On September 4, 1998 Levitz and its operating subsidiaries entered into
         an agreement ("Merchant Agreement") with Household Bank (SB), N.A.
         ("Household") whereby Household would provide financing to individual
         consumers purchasing merchandise from Levitz ("Private-Label Credit
         Card Program"). The Court approved the Merchant Agreement and granted a
         first priority and security interest and lien to Household on certain
         reserves ("Merchant Risk Reserve") retained or accumulated by
         Household, totaling $10.9 million at September 30, 1999, and gave
         administrative expense status to substantially all obligations of
         Levitz arising under the Merchant Agreement. Both the reserves and
         obligations are limited to a certain maximum amount under the Merchant
         Agreement. Levitz funds the Merchant Risk Reserve through a reduction
         of 3.5% on all customer accounts financed.

         At September 30, 1999, Household's portfolio balance was $478.3
         million. Levitz recorded income

                                       9
<PAGE>

         of $18.6 million and $3.0 million for the six month periods ended
         September 30, 1999 and 1998, respectively. The income recorded for the
         six month period ended September 30, 1999 was derived from the Merchant
         Agreement with Household, The income recorded for the same period of
         the prior year was primarily derived from the former agreement with
         General Electric Capital Corporation.

         Levitz is exposed to market risk under the terms of the Household
         Agreement. Levitz may pay a fee or may receive income, based upon the
         relationship among the interest earned on the portfolio, the amount of
         the servicing fee, the cost of capital, promotional discount fees and
         credit losses. A one percent increase or decrease in the finance charge
         to customers or the cost of capital or the credit loss rate would
         increase or decrease the annual income from the portfolio by $3.5
         million to $5.5 million.

         Levitz is obligated for all credit losses under the portfolio,
         including the GECC portfolio transferred to Household, up to a maximum
         of 15% of average outstanding receivables and for 50% of all credit
         losses above 15%. In October 1999 Household gave notice of its intent
         to require Levitz to significantly increase the amount of its monthly
         payment to Household for Levitz's obligations under the Merchant
         Agreement for credit losses. Levitz has disputed the propriety of such
         charges and is awaiting both a response from Household and the results
         of a  review of the first year performance under the Merchant Agreement
         as reported by Household. The outcome of the review and the response
         from Household could have a material adverse effect on Levitz's
         financial position and reported results of operations in future
         periods. In such case, Levitz may be required to seek additional
         financing to meet its obligations under the Merchant Agreement. While
         Levitz believes alternatives exist to obtain such financing, there
         can be no assurances given that such financing would be obtained.

         Levitz is also required under the Merchant Agreement to fund a merchant
         risk reserve of 3.5% of all customer accounts financed up to a
         stipulated dollar amount.

5.       REORGANIZATION ITEMS:

         Store Closings

         In September 1999 Levitz provided an additional $3.1 million store
         closing reserve based on revised estimates of when closed stores would
         be sold. Cash charges included $1.5 million for the revised estimate of
         expenses on idle space for continuing stores, $0.2 million for rental
         of equipment for closed stores and $0.9 million for additional
         continuing expenses for closed stores. Non-cash charges included an
         additional write-down of property held for disposal in the amount of
         $0.5 million.

         Professional fees

         Professional fees include accounting, legal and consulting services
         provided to LFI and the Creditors' Committee which, subject to Court
         approval, are required to be paid by Levitz while it is in Chapter 11.

6.       PROPERTY UNDER AGREEMENT OF SALE:

         On July 7, 1999, Levitz sold five owned properties and leasehold
         interests/rights in five properties, concerning previously closed store
         locations. The gross proceeds from the transaction were $19.8 million
         (the "Bulk Sale Transaction"). Net proceeds of approximately $19.4
         million, excluding closing costs, were used to pay-off existing
         mortgages and accrued interest of $0.6 million, cure costs relating to
         pre-petition liabilities of $0.3 million, proration of real estate
         taxes and other costs of $0.4 million and to pay down the revolver
         portion of the DIP Facility of approximately $18.1 million. The Bulk
         Sale Transaction relieved Levitz of all lease obligations for the
         leased properties.

7.       LOSS PER SHARE:

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

                                       10
<PAGE>

8.       CONSOLIDATED STATEMENTS OF CASH FLOWS:

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

         <TABLE>
         <CAPTION>
                                                               SIX MONTHS ENDED
                                                                 SEPTEMBER 30,
                                                  -------------------------------------------
                                                       1999                        1998
                                                  ---------------            ----------------
         <S>                                      <C>                        <C>
         Interest paid                            $        12,005            $         13,407
                                                  ===============            ================
         Income tax paid (refunded), net          $            64            $             47
                                                  ===============            ================
         </TABLE>

9.       RECLASSIFICATIONS:

         Effective March 31, 1999, Levitz elected to reclassify certain revenues
         in its consolidated condensed statements of operations. As a result,
         net sales and selling, general and administrative ("SG&A") expenses
         have been restated for the six month periods ended September 30, 1999
         and 1998. Levitz now reflects delivery income and miscellaneous revenue
         in SG&A expenses. Previously, these revenues were included in net
         sales. The effect of this reclassification was to reduce net sales and
         SG&A expenses by $8.0 million and $10.4 million for the six month
         periods ended September 30, 1999 and 1998, respectively.

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

                                       11
<PAGE>

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

GENERAL

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

COMPARISON OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                     PERCENTAGE OF NET SALES
                                           --------------------------------------------
                                           THREE MONTHS ENDED        SIX MONTHS ENDED
                                              SEPTEMBER 30,             SEPTEMBER 30,
                                           ------------------        ------------------
                                            1999        1998         1999         1998
                                           -----        -----        -----        -----
<S>                                        <C>          <C>          <C>          <C>
Net sales                                  100.0 %      100.0 %      100.0 %      100.0 %

Cost of sales                               57.0         56.7         56.9         56.7
                                           -----        -----        -----        -----
Gross profit                                43.0         43.3         43.1         43.3

Selling, general and administrative
  expenses                                  44.3         43.5         42.9         44.2

Depreciation and amortization                1.6          2.8          2.0          2.9

Interest expense                             2.5          4.3          4.2          4.3
                                           -----        -----        -----        -----
Loss before reorganization items
  and income taxes                          (5.4)        (7.3)        (6.0)        (8.1)

Reorganization items                        (3.6)        (1.0)        (2.3)        (7.2)
                                           -----        -----        -----        -----
Net loss                                    (9.0)%       (8.3)%       (8.3)%      (15.3)%
                                           =====        =====        =====        =====
Comparable store sales increase/
  (decrease)                                (2.9)%        8.7 %       (1.3)%        2.8 %
                                           =====        =====        =====        =====
</TABLE>

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

Net sales of $126.3 million for the three month period ended September 30, 1999
decreased $43.0 million or 25.4% from net sales of $169.3 million in the same
period for the prior year. Approximately $40.3 million of the net sales decrease
was due to the closing of forty-two stores during the last six months of Fiscal
1999. Sales on a comparable store basis decreased 2.9%. The comparable store
sales decline was offset by the increase in

                                       12
<PAGE>

net sales from the addition of one new store in Valencia, California in May
1999. Comparable store sales for July and August 1999 decreased 3.9% and 6.1%,
respectively from the same months of the prior year. September 1999 comparable
store sales increased 1.3% from the comparable period of the prior year.

Gross profit as a percentage of net sales decreased to 43.0% for the three month
period ended September 30, 1999 compared to 43.3% in the same period of the
prior year. The gross margin decrease was due to increases in clearance
promotions and special bedding promotions.

Selling, general and administrative (SG&A) expenses of $56.0 million for the
period ended September 30, 1999 decreased $17.6 million or 23.9% from SG&A
expenses of $73.6 million in the same period for the prior year. The reduction
in SG&A expenses included $16.7 million due to the closing of forty-two stores
during the last six months of Fiscal 1999 and $1.4 million in comparable store
expense reductions. These reductions were offset by an increase in SG&A Expenses
of $0.5 million with the opening of one new store in May 1999. The reduction in
SG&A Expenses for comparable stores was due to the increase in service fee
income under the Company's Private-Label Credit Card Program of $6.9 million.
The increase in service fee income was offset by increases in advertising
expense of $1.9 million; an increase in salaries and benefits of $0.6 million
and delivery and other expenses of $0.9 million primarily due to inefficiencies
in the implementation of the warehouse rationalization program; and an increase
in occupancy costs of $2.1 million due to the sale and leaseback of owned
properties and the sale of leasehold interests which increased rent on leased
properties.

Depreciation and amortization for the three month period ended September 30,
1999 decreased to $2.1 million from $4.7 million or 55.3% from the same period
of the prior year. The decrease was primarily due to the closing of forty-two
stores and the disposal of owned and leased properties.

Interest expense for the three month period ended September 30, 1999 decreased
to $3.2 million from $7.3 million for the same period of the prior year. The
decrease was primarily due to reduced borrowings under the DIP Facility as a
result of sales of real estate properties and leasehold interests, the net
proceeds from which were used to pay down the DIP Facility as required. Interest
on pre-petition unsecured obligations has not been accrued after the Petition
Date except that interest expense continues to be recorded on capital lease
obligations. Contractual interest expense of $5.5 million was not recorded on
certain pre-petition unsecured debt for the three month periods ended September
30, 1999 and 1998.

Reorganization items for the three month period ended September 30, 1999
included a charge of $3.1 million for revised estimates of continuing expenses
on closed stores and idle space in continuing stores as well as an additional
write-down on property held for disposal. Professional fees and other expenses
related to bankruptcy services rendered during the three month periods ended
September 30, 1999 and 1998 were $1.5 million and $1.7 million, respectively.

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

As a result of the aforementioned factors, net loss for the period ended
September 30, 1999 amounted to $11.5 million or 9.0% of net sales as compared to
net loss of $14.0 million or 8.3% of net sales for the same period of the prior
year.

SIX MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
1998

Net sales of $246.3 million for the six month period ended September 30, 1999
decreased $94.3 million or 27.7% over net sales of $340.6 million in the same
period for the prior year. Approximately $91.5 million of the net sales decrease
was due to the closing of forty-two stores during the last six months of Fiscal
1999. Sales on a comparable store basis decreased 1.3%, the comparable store
sale decline was offset by the increase in net sales from the addition of one
new store in Valencia, California in May 1999.

                                       13
<PAGE>

Gross profit as a percentage of net sales decreased to 43.1% for the six month
period ended September 30, 1999 compared to 43.3% in the same period of the
prior year. The gross margin decrease was due to increases in clearance
promotions and special bedding promotions.

Selling, general and administrative ("SG&A") expenses decreased $44.6 million
for the six month period ended September 30, 1999 as compared to the same period
for the prior year. The reduction in SG&A expenses included $38.0 million due to
the closing of forty-two stores during the last six months of Fiscal 1999, $1.9
million in the reduction of corporate expenses and $5.6 million reduction in
SG&A expenses for comparable stores. SG&A expenses increased $0.9 million for
the addition of one new store. SG&A expenses decreased in comparable stores
primarily due to the increase in service fee income of $15.9 million from the
Private-Label Credit Card Program. This was offset by an increase in advertising
expense of $4.1 million, salaries and benefits of $1.2 million, occupancy of
$2.8 million and other costs of $2.2 million. Advertising expense increased due
to the increase in media promotions of $2.9 million and the increase in
"interest free" promotions offered under the Company's private-label credit card
program of $1.2 million. Salaries and benefits and other expenses increased due
to the inefficiencies in the implementation of the warehouse rationalization
program and a realignment of store positions. Occupancy costs increased due to
the sale and leaseback of owned properties and the sale of leasehold interests
which increased rents on leased properties.

Interest expense for the six month period ended September 30, 1999 decreased to
$10.4 million from $14.8 million for the same period of the prior year. The
decrease was primarily due to reduced borrowings under the DIP Facility as a
result of sales of real estate properties and leasehold interests, the net
proceeds from which were used to pay down the DIP Facility as required. Interest
on pre-petition unsecured obligations has not been accrued after the Petition
Date except that interest expense continues to be recorded on capital lease
obligations. Contractual interest expense of $10.9 million was not recorded on
certain pre-petition unsecured debt for the six month periods ended September
30, 1999 and 1998.

Reorganization items for the six month period ended September 30, 1999 included
a charge of $3.1 million for revised estimates of continuing expenses on closed
stores and idle space in continuing stores as well as an additional write-down
on property held for disposal. Reorganization items for the six month period
ended September 30, 1998 included a charge of $21.1 million for the closing of
fifteen stores in under-performing markets and the elimination of certain
support functions and the closing of warehouses in certain locations. Also
included as reorganizational items are professional fees of $2.6 million and
$3.3 million for accounting, legal and consulting services provided to Levitz
and the Creditors' Committee while Levitz is in Chapter 11 for the six month
periods ended September 30, 1999 and 1998, respectively.

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

Net loss for the six month period ended September 30, 1999 was $20.6 million or
8.3% of net sales as compared to a net loss of $52.0 million or 15.3% of net
sales for the same period of the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Levitz's primary sources of liquidity are cash flow from operations (including
the proceeds from customer credit obligations under the Private-Label Credit
Card Program by Household), trade credit and borrowings under the DIP Facility.
During the six month period ended September 30, 1999, Levitz used approximately
$15.2 million of net cash flow in operations before changes in operating assets
and liabilities. Changes in operating assets and liabilities further reduced net
cash flow from operations by $7.4 million. Increases in inventory of $2.3
million, other assets (largely the Household Merchant Risk Reserve under the
Private-Label Credit Card Program) of $4.7 million and the reduction of accrued
expenses and other liabilities of $9.5 million had an unfavorable impact on cash

                                       14
<PAGE>

flow. Cash flow was favorably impacted by an increase in trade payables of $7.9
million due to negotiations of better payment terms with trade vendors and a
decrease in customer receivables of $1.2 million. The decrease in accrued
expenses was primarily due to the reduction in accrued interest of $1.9 million
on the DIP Facility due to reduced borrowings, reduction in accrued real estate
taxes and other taxes of $3.3 million due to the closing of stores and required
pre-payment of real estate taxes under the sale- leaseback agreement, reduction
of closed store reserves of $2.8 million and the reduction of other accrued
operating costs of $1.5 million due to store closings.

Cash provided by investing activities for the six month period ended September
30, 1999 includes $39.7 million of proceeds from leasehold interests or asset
sales of closed facilities and $73.9 million in proceeds from sale-leaseback
transactions on continuing stores. The net proceeds from which were applied as
repayments to the DIP Facility as required by the agreement.

Levitz's total capital expenditures were approximately $2.6 million during the
six month period ended September 30, 1999. Levitz spent $0.3 million on
renovations and equipment for one new store in Valencia, CA and $2.3 million for
existing store improvements and equipment. Management plans to spend
approximately $6.0 million for capital expenditures in the current fiscal year
of which approximately $2.9 million is for maintenance of existing facilities.

Net cash used in financing activities amounted to $88.0 million during the six
month period ended September 30, 1999. Repayments under the DIP Facility were
$78.7 million. Principal payments under long-term obligations, to include the
pay off of mortgages on the sale of owned property, were $7.4 million and
outstanding checks and cash overdrafts decreased $1.9 million.

Debt

LFI, Levitz and substantially all of its subsidiaries, as debtors-in-possession,
are parties to a Postpetition Credit Agreement, as amended, dated as of
September 5, 1997 (the "DIP Facility") with BT Commercial Corporation (BTCC) as
agent. The DIP Facility has been approved by the Court and includes a total
commitment comprised of revolving notes of $95.0 million and an overadvance term
note of $10.0 million. Letter of Credit obligations under the revolver portion
of the DIP Facility are limited to $25.0 million. The DIP Facility is intended
to provide Levitz with the cash and liquidity to conduct its operations and pay
for merchandise shipments at normal levels during the course of the Chapter 11
proceedings.

Loans made under the DIP Facility revolving notes bear interest, at Levitz's
option, at a rate equal to either Bankers Trust Company's prime rate plus 1.5%
or BTCC's LIBOR rate plus 3.75%. The overadvanced term notes bear interest at
16.0%. Levitz is required to pay an unused line fee of 0.5%, and a letter of
credit fee of 2.0%.

The maximum borrowings, excluding the term commitments, under the DIP Facility
are limited to 85% of eligible accounts receivable, 75% of eligible inventory
(as defined in the DIP Facility) and a fixed asset sublimit which is permanently
reduced as the proceeds from the sale of fixed assets and leasehold interests
are received. Qualification of accounts receivable and inventory items as
"eligible" is subject to unilateral change at the discretion of the lenders.
Excess availability under the DIP Facility at October 31, 1999 was $16.8
million.

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

                                       15
<PAGE>

On September 16, 1999, the DIP Facility was amended to include, among other
things, an extension of the DIP Facility expiration date until June 30, 2000, a
reduction in the EBITDA requirements for September and December 1999 and an
extension of the fixed asset sublimit expiration date to December 31, 1999.

Since March 31, 1999 Levitz has sold twenty-one owned properties and leasehold
interests in twenty-three properties. Since the Petition Date, leases have been
rejected on twenty-five properties. As of October 31, 1999, there are ten
properties held for disposal. Six of the ten properties held for disposal are
under agreement of sale, letters of intent or other types of offers estimated to
be $6.6 million of gross proceeds. No assurances can be given that a sufficient
number of these transactions will close prior to the expiration of the fixed
asset sublimit on December 31, 1999. Based on facts and circumstances at that
time, Levitz may request an extension of the fixed asset sublimit expiration
date. No assurances can be given that an extension of the expiration date would
be granted or that additional financing could be obtained.

The lenders under the DIP Facility have a super-priority administrative expense
claim against the estate of the Debtors. The DIP Facility expires on June 30,
2000. Although LFI and Levitz are currently in compliance with the DIP Facility
covenants as amended, due to the outcome of the Private-Label Credit Card
Program dispute as described in Note 4 to the consolidated condensed financial
statements and other factors, the Company may have to seek an additional
amendment or waiver under the DIP Facility to remain in compliance in future
periods. There can be no assurances given that such an amendment or waiver would
be granted.

Private-Label Credit Card Program

On September 4, 1998 Levitz and its operating subsidiaries entered into an
agreement ("Merchant Agreement") with Household Bank (SB), N.A. ("Household")
whereby Household would provide financing to individual consumers purchasing
merchandise from Levitz ("Private-Label Credit Card Program"). The Court
approved the Merchant Agreement and granted a first priority and security
interest and lien to Household on certain reserves ("Merchant Risk Reserve")
retained or accumulated by Household, totaling $10.9 million at September 30,
1999, and gave administrative expense status to substantially all obligations of
Levitz arising under the Merchant Agreement. Both the reserves and obligations
are limited to a certain maximum amount under the Merchant Agreement. Levitz
funds the Merchant Risk Reserve through a reduction of 3.5% on all customer
accounts financed.

At September 30, 1999, Household's portfolio balance was $478.3 million. Levitz
recorded income of $18.6 million and $3.0 million for the six month periods
ended September 30, 1999 and 1998, respectively. The income recorded for the six
month period ended September 30, 1999 was derived from the Merchant Agreement
with Household. The income recorded for the same period of the prior year was
primarily derived from the former agreement with GeneraL Electric Capital
Corporation.

Levitz is exposed to market risk under the terms of the Household Agreement.
Levitz may pay a fee or may receive income, based upon the relationship among
the interest earned on the portfolio, the amount of the servicing fee, the cost
of capital, promotional discount fees and credit losses. A one percent increase
or decrease in the finance charge to customers or the cost of capital or the
credit loss rate would increase or decrease the annual income from the portfolio
by $3.5 million to $5.5 million.

Levitz is obligated for all credit losses under the portfolio, including the
GECC portfolio transferred to Household, up to a maximum of 15% of average
outstanding receivables and for 50% of all credit losses above 15%. In October
1999 Household gave notice of its intent to require Levitz to significantly
increase the amount of its monthly payment to Household for Levitz's obligations
under the Merchant Agreement for credit losses. Levitz has disputed the
propriety of such charges and is awaiting both a response from Household and the
results of a review of the first year performance under the Merchant Agreement
as reported by Household. The outcome of the review and the response from
Household could have a material adverse effect on Levitz's financial position
and reported results of operations in future periods. In such case, Levitz may
be required to seek additional financing to meet its obligations under the
Merchant Agreement. While Levitz believes alternatives exist to obtain such
financing, there can be no assurances given that such financing would be
obtained.

Going Concern

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

                                       16
<PAGE>

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

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

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

The exclusivity period to file a plan of reorganization will expire on November
30, 1999. On November 2, 1999, the Debtors filed a motion with the Court to
extend the exclusivity period to file a plan of reorganization to January 31,
2000. This extension would accommodate potential alternative options to the Plan
previously submitted July 7, 1999. This motion is scheduled for hearing by the
Court on November 16, 1999. There can be no assurances given that the Court will
approve the motion to extend the exclusivity period. After the expiration of the
exclusivity period, creditors will have the right to propose alternative plans
of reorganization.

Year 2000

Management believes that the Company's Year 2000 project has essentially been
completed. All remediation has taken place and the Company will continue to do
compliance testing through December 1999 as well as perform a continuing review
of systems and hardware performance into the year 2000. The estimated cost,
excluding in-house salaries, wages and benefits, for the continued testing and
review is expected to be approximately $0.2 million for testing and continued
review of software, warehouse and other operational systems.

Management's current beliefs and estimates are derived from numerous assumptions
including, but not limited to, the continued availability of certain resources
and the readiness of third-parties through their own remediation plans. Although
the Company is communicating with vendors and others with which it does business
to coordinate Year 2000 conversions, there can be no assurance, however, that
the systems of these other companies will be converted in a timely manner, or
that any such failure to convert by another company would not have an adverse
effect on the Company's systems and operations.

                                       17
<PAGE>

PART II OTHER INFORMATION:

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibit 10.66: Amendment No. 12 dated as of August 4, 1998 to
                  the Postpetition Credit Agreement among Levitz Furniture
                  Incorporated, et al. and BT Commercial Corporation, as agent.

                  Exhibit  10.67: Amendment No. 13 dated as of September 16,
                  1999 to the Postpetition Credit Agreement among Levitz
                  Furniture Incorporated, et al. and BT Commercial

                  Corporation, as agent.

                  Exhibit  27: Financial Data Schedule

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

                                       18
<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 15, 1999                      /s/ MICHAEL MCCREERY
                                              ---------------------------------
                                                  Michael McCreery
                                                  Senior Vice President and
                                                  Chief Financial Officer

                                       19
<PAGE>

                                  EXHIBIT INDEX

                              Exhibits to Form 10-Q

    NUMBER
EXHIBIT TABLE                         EXHIBIT
-------------                         -------
    10.66               Amendment No. 12 dated as of August 4, 1998 to the
                        Postpetition Credit Agreement among Levitz Furniture
                        Incorporated, et al. and BT Commercial Corporation, as
                        agent.

    10.67               Amendment No. 13 dated as of September 16, 1999 to the
                        Postpetition Credit Agreement among Levitz Furniture
                        Incorporated, et al. and BT Commercial Corporation, as
                        agent.

     27                 Financial Data Schedule.

                                       20