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 May 2, 1999 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

    Commission file number 0-15995

                                 MICROAGE, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                               86-0321346
   (State of incorporation)                                   (I.R.S. Employer
                                                             Identification No.)


   2400 South MicroAge Way, Tempe, AZ                              85282
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code: (602) 366-2000

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 and
(2) has been subject to such filing requirements for the past 90 days.

                                 Yes [X] No [ ]

The number of shares of the registrant's Common Stock (par value $.01 per share)
outstanding at May 30, 1999 was 20,497,305.
<PAGE>
                                     INDEX

                                 MICROAGE, INC.


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

         Consolidated balance sheets -- May 2, 1999 and November 1, 1998.     2

         Consolidated  statements of operations -- Quarters ended             3
         May 2, 1999 and May 3, 1998;  26 weeks ended May 2, 1999
         and May 3, 1998.

         Consolidated  statements of cash flows -- 26 weeks ended             4
         May 2, 1999 and May 3, 1998.

         Notes to consolidated financial statements.                          5

Item 2.  Management's Discussion and Analysis of Financial Condition          7
         and Results of Operations.

PART II. OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders                  15

Item 6.  Exhibits and Reports on Form 8-K                                     16

SIGNATURES                                                                    17

                                        1
<PAGE>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

                            MICROAGE, INC.
                CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                   (in thousands, except share data)

                                ASSETS
                                                       May 2,        November 1,
                                                        1999            1998
                                                    -----------      ----------
Current assets:
   Cash and cash equivalents                        $    57,328      $   41,894
   Accounts and notes receivable, net                   288,156         529,877
   Inventory, net                                       449,245         486,150
   Other                                                 23,561          24,432
                                                    -----------      ----------
      Total current assets                              818,290       1,082,353

Property and equipment, net                              95,670          92,147
Intangible assets, net                                   10,056         126,105
Other                                                    24,557          14,538
                                                    -----------      ----------
      Total assets                                  $   948,573      $1,315,143
                                                    ===========      ==========

                 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                 $   731,204      $  967,501
   Accrued liabilities                                   21,438          24,279
   Current portion of long-term obligations               3,102           3,095
   Other                                                  7,731           8,868
                                                    -----------      ----------
      Total current liabilities                         763,475       1,003,743

Line of credit                                           12,600              --
Long-term obligations                                     4,209           5,553
Other long-term liabilities                              17,178          15,361

Stockholders' equity:
   Preferred stock, par value $1.00 per share;
     Shares authorized: 5,000,000
     Issued and outstanding:  none                           --              --
   Common stock, par value $.01 per share;
     Shares authorized: 40,000,000
     Issued: May 2, 1999      -- 20,527,554
             November 1, 1998 -- 20,284,789                 205             203
   Additional paid-in capital                           210,173         206,720
   Retained earnings (deficit)                          (58,769)         83,729
   Treasury stock, at cost;
     Shares: May 2, 1999      -- 30,249
             November 1, 1998 -- 16,378                    (498)           (166)
                                                    -----------      ----------
      Total stockholders' equity                        151,111         290,486
                                                    -----------      ----------
      Total liabilities and stockholders' equity    $   948,573      $1,315,143
                                                    ===========      ==========

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

                                  2
<PAGE>
                            MICROAGE, INC.
           CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                   Quarter ended               26 weeks ended
                                              ------------------------    ------------------------
                                                 May 2,        May 3,        May 2,        May 3,
                                                 1999          1998          1999          1998
                                              ----------    ----------    ----------    ----------
<S>                                           <C>           <C>           <C>           <C>
Revenue                                       $1,656,541    $1,326,950    $3,101,382    $2,505,961

Cost of sales                                  1,569,903     1,242,369     2,912,974     2,347,555
                                              ----------    ----------    ----------    ----------

Gross profit                                      86,638        84,581       188,408       158,406

Operating and other expenses
   Operating expenses                            106,025        79,652       195,312       152,713
   Restructuring and other one-time charges      134,159         5,600       134,159         5,600
                                              ----------    ----------    ----------    ----------

Total                                            240,184        85,252       329,471       158,313
                                              ----------    ----------    ----------    ----------

Operating income (loss)                         (153,546)         (671)     (141,063)           93

Other expenses - net                              12,260         9,171        19,508        20,112
                                              ----------    ----------    ----------    ----------

Loss before income taxes                        (165,806)       (9,842)     (160,571)      (20,019)

Income tax benefit                               (18,465)       (3,885)      (15,296)       (7,946)
                                              ----------    ----------    ----------    ----------

Net loss                                      $ (147,341)   $   (5,957)   $ (145,275)   $  (12,073)
                                              ==========    ==========    ==========    ==========
Net loss per common and
 common equivalent share:
   Basic                                      $    (7.19)   $    (0.30)   $    (7.12)   $    (0.62)
                                              ==========    ==========    ==========    ==========

   Diluted                                    $    (7.19)   $    (0.30)   $    (7.12)   $    (0.62)
                                              ==========    ==========    ==========    ==========
Weighted average common and common
 equivalent shares outstanding:
   Basic                                          20,481        19,584        20,412        19,520
                                              ==========    ==========    ==========    ==========

   Diluted                                        20,481        19,584        20,412        19,520
                                              ==========    ==========    ==========    ==========
</TABLE>

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

                                       3
<PAGE>
                                 MICROAGE, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                Increase (Decrease) in Cash and Cash Equivalents
                                 (in thousands)

                                                             26 weeks ended
                                                       -------------------------
                                                          May 2,        May 3,
                                                          1999          1998
                                                       ---------     ---------
Cash flows from operating activities:
  Net loss                                             $(145,275)    $ (12,073)
  Adjustments to reconcile net loss to
   net cash provided by operating activities:
    Depreciation and amortization                         23,741        18,451
    Provision for losses on accounts and notes
     receivable                                           12,304         6,630
    Restructuring and other one-time charges             130,917            --
    Changes in assets and liabilities, net of
     business acquisitions:
      Accounts and notes receivable                      228,706       (15,466)
      Inventory                                           36,905       (29,338)
      Other current assets                                   871        (3,844)
      Other assets                                       (10,711)       (5,613)
      Accounts payable                                  (235,391)      103,414
      Accrued liabilities                                 (2,841)          630
      Other liabilities                                   (1,820)        9,193
                                                       ---------     ---------
  Net cash provided by operating activities               37,406        71,984

Cash flows from investing activities:
  Purchases of property and equipment                    (29,211)      (28,232)
  Purchases of businesses and investments in
   unconsolidated companies, net of cash acquired         (5,500)           --
                                                       ---------     ---------
  Net cash used in investing activities                  (34,711)      (28,232)

Cash flows from financing activities:
  Proceeds from issuance of stock - stock option
   and employee stock purchase plans                       2,411         2,139
  Net borrowings (payments) under line of credit          12,600       (30,650)
  Shareholder distributions - pooled companies                --          (129)
  Net change in long-term obligations                     (2,272)       (1,937)
                                                       ---------     ---------
Net cash provided by (used in) financing activities       12,739       (30,577)
                                                       ---------     ---------
Net increase in cash and cash equivalents                 15,434        13,175

Cash and cash equivalents at beginning of period          41,894        22,279
                                                       ---------     ---------
Cash and cash equivalents at end of period             $  57,328     $  35,454
                                                       =========     =========

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


                                       4
<PAGE>
                                 MICROAGE, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE A - BASIS OF PRESENTATION

The accompanying unaudited  consolidated financial statements of MicroAge,  Inc.
(the "Company") do not include all of the information and footnotes  required by
generally accepted accounting principles for complete financial  statements.  In
the opinion of  management,  all  adjustments  (consisting  of normal  recurring
accruals)  considered  necessary for a fair statement of results for the periods
have been included. Certain prior year amounts have been reclassified to conform
with current year financial statement presentation. Operating results for the 26
weeks ended May 2, 1999 are not  necessarily  indicative of the results that may
be expected for the year ending October 31, 1999. For further information, refer
to the consolidated  financial  statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended November 1, 1998.

NOTE B - OTHER EXPENSES - NET

Other expenses - net consists of the following (in thousands):


                                  Quarters ended            26 weeks ended
                                ------------------        ------------------
                                 May 2,     May 3,         May 2,     May 3,
                                  1999       1998           1999       1998
                                -------    -------        -------    -------

      Interest expense          $   992    $   988        $ 1,815    $ 3,333
      Expenses from sales of
        accounts receivable       4,140      4,993          6,823     10,570
      Amortization expense        2,842      2,068          5,209      4,180
      Other                       4,286      1,122          5,661      2,029
                                -------    -------        -------    -------

                                $12,260    $ 9,171        $19,508    $20,112
                                =======    =======        =======    =======

NOTE C - RESTRUCTURING AND OTHER ONE-TIME CHARGES

During the quarter  ended May 2, 1999,  the  Company  recorded  $134  million of
restructuring  and other  one-time  charges ($124  million,  or $6.07 per share,
after taxes).  The  restructuring  and other one-time charges  included  a  $123
million  write-down of impaired  goodwill;  $8 million for the write-down to net
realizable value of software and equipment no longer utilized by the Company due
to the  implementation of a new branch automation system; $2 million in employee
termination  benefits;  and $1 million for  one-time  contract  termination  and
business closure costs.

The goodwill  written off during the quarter  resulted from businesses  acquired
primarily in fiscal 1997 and fiscal 1998.  Recent  competitive  increases in the
industry  as well as  operating  losses  caused  the  Company  to  reassess  the
recoverability  of  its  long-lived  assets.  The  fair  value  of  the  assets,
determined  through a  discounted  cash flow  analysis  as well as other  market
analyses,  was compared to the carrying amount of the assets. The difference was
recorded as a charge to earnings in the second quarter.

                                       5
<PAGE>
The charges associated with employee  termination  benefits consist primarily of
severance pay for 79 associates.  The  reductions  were completed by May 2, 1999
and occurred in Pinacor, the Company's  distribution business, and in an imaging
business that the Company decided to exit during the quarter.

All actions related to the restructuring were implemented as of May 2, 1999, and
the liability for restructuring accruals at May 2, 1999 was $3 million.

                                       6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

Certain statements  contained in this Item may be  "forward-looking  statements"
within the  meaning of The  Private  Securities  Litigation  Reform Act of 1995.
These  forward-looking  statements  may include  projections  of revenue and net
income and issues that may affect revenue or net income;  projections of capital
expenditures;  plans for  future  operations;  financing  needs or plans;  plans
relating to the Company's products and services; and assumptions relating to the
foregoing.  Forward-looking  statements  are  inherently  subject  to risks  and
uncertainties,  some of which cannot be predicted or  quantified.  Future events
and actual results could differ materially from those set forth in, contemplated
by, or underlying the forward-looking information. Some of the important factors
that could cause the Company's  actual results to differ  materially  from those
projected in forward-looking statements made by the Company include, but are not
limited to, the following:  intense competition;  narrow margins;  dependence on
supplier  incentive  funds;  product  supply  and  dependence  on  key  vendors;
potential  fluctuations  in  quarterly  results;  risks of declines in inventory
values;  no assurance of successful  acquisitions  or  investments;  the capital
intensive nature of the Company's business;  dependence on information  systems;
year  2000  issues;   dependence  on  independent   shipping  companies;   rapid
technological change; and possible volatility of stock price.  Reference is made
to Exhibit 99.1 of the Company's Report on Form 10-K for the year ended November
1,  1998  for  additional  discussion  of the  foregoing  factors.  The  Company
undertakes  no  obligation  to  publicly  update or revise  any  forward-looking
statements, whether as a result of new information, future events or otherwise.

The Company  operates  two  independent  businesses  - a  distribution  business
operated through a wholly-owned  subsidiary,  Pinacor,  Inc. ("Pinacor"), and an
integration  business,  MicroAge Technology  Services ("MTS").  These businesses
have  separate  management  teams,  operate  autonomously  in  their  respective
marketplaces,  and contract with  headquarters for a limited number of services,
such as payroll processing, employee benefits and information services.

RECENT DEVELOPMENTS

During the second  quarter of fiscal  1999,  the Company  experienced  increased
competitive  pressures and other economic  factors that negatively  impacted the
Company's gross margins and operating results.  In addition,  operating expenses
increased  from the first quarter of fiscal 1999 to the second quarter of fiscal
1999.  The Company  has taken  actions to increase  gross  margins and  decrease
operating  expenses.  These actions include price increases,  the elimination of
several hundred  positions at Pinacor and MTS,  closing several branch locations
and exiting several businesses that were no longer strategic.

In addition,  changes in the computer  integration and distribution  industry as
well  as  recent   operating   losses   caused  the  Company  to  reassess   the
recoverability of its goodwill during the quarter.  The Company determined that,
based on cash flow and other  market  analyses,  a  substantial  portion  of its
goodwill was impaired. See Note C to the Consolidated Financial Statements.

The Company also completed the  implementation of a new branch automation system
during the quarter.  Charges were  recognized  during the quarter related to the
conversion to the new system as well as for the  completion of the separation of
the Company into two  independent  businesses,  Pinacor and MTS.

                                       7
<PAGE>
In connection with these  developments,  the Company recorded  restructuring and
other expenses  aggregating  $152 million ($136 million or $6.64 per share after
taxes). These charges included $123 million for the write-down to net realizable
value of goodwill, $13 million for the write off of assets no longer utilized or
otherwise  impaired  after the system  conversion  and completion of the Company
split  described  above, $8 million for severance and business exit costs and $8
million related to Pinacor's Latin America  distribution  business.  The charges
for  Pinacor  Latin  America  were   primarily  the  result  of  the  continuing
deterioration  of the South  American  economy  and  consist of  receivable  and
inventory  write-downs  and the  write-down  of Pinacor's  investment in several
Latin American companies.

The total  charges of $152  million  include  $18  million of charges  that were
recorded as components of cost of sales,  operating  expenses and other expenses
in the accompanying statements of operations.

In June 1999, the Company announced that it had retained an investment  banking
firm to help explore financial options designed to enhance shareholder value.

The  following  table  illustrates  the  recognition   within  the  consolidated
statements  of  operations  of  the  restructuring  and  other  unusual  charges
described above (in thousands):

                                                 Quarter ended May 2, 1999
                                      -----------------------------------------
                                                    Restructuring
                                                      and other
                                      As Reported  unusual charges  As Adjusted
                                      -----------  ---------------  -----------

  Cost of sales                       $1,569,903      $  6,016       $1,563,887
  Operating expenses                     106,025         9,773           96,252
  Restructuring and other
    one-time charges                     134,159       134,159               --
  Operating loss                        (153,546)      147,948           (3,598)
  Other expenses - net                    12,260         2,350            9,910
  Loss before income taxes            $ (165,806)     $152,298       $  (13,508)

In addition to the actions and charges  taken  above,  the Company  took actions
subsequent to the end of the fiscal quarter to further reduce operating expenses
and improve  profitability.  These actions  include the  elimination  of several
hundred  positions  and the closure of several  branch  operations.  The charges
related to these  actions and other actions that may be taken will be recognized
in the third fiscal  quarter ended August 1, 1999.  Excluding  these charges and
other  expense  reduction  initiatives,  the Company  expects  the third  fiscal
quarter results will be at or near breakeven.

                                       8
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth, for the indicated  periods,  data as percentages
of total revenue:
<TABLE>
<CAPTION>
                                                                   Quarter ended
                                   -----------------------------------------------------------------------
                                     May 2,         Jan. 31,        Nov. 1,        Aug. 2,        May 3,
                                      1999            1999           1998           1998           1998
                                   ----------      ----------     ----------     ----------     ----------
<S>                                <C>             <C>            <C>            <C>            <C>
Revenue (in thousands)             $1,656,541      $1,444,841     $1,572,824     $1,441,246     $1,326,950
Cost of sales(1)                         94.4%           93.0%          93.1%          94.0%          93.6%
                                   ----------      ----------     ----------     ----------     ----------
Gross profit(1)                           5.6             7.0            6.9            6.0            6.4
Operating and other expenses
  Operating expenses(1)                   5.8             6.2            5.8            5.4            6.0
  Restructuring and other
   one-time charges(2)                    9.2             0.0            0.0            0.0            0.4
                                   ----------      ----------     ----------     ----------     ----------
Operating income (loss)                  (9.4)            0.9            1.1            0.6            0.0

Other expenses - net(1)                   0.6             0.5            0.4            0.5            0.7
                                   ----------      ----------     ----------     ----------     ----------
Income (loss) before income taxes       (10.0)            0.4            0.7            0.1           (0.7)

Income tax provision (benefit)           (1.1)            0.2            0.5            0.1           (0.3)
                                   ----------      ----------     ----------     ----------     ----------
Net income (loss)                        (8.9)%           0.1%           0.2%           0.0           (0.4)%
                                   ==========      ==========     ==========     ==========     ==========
</TABLE>

     (1)  Calculations  for the quarter ended May 2, 1999 exclude the effects of
          $18.1 million of charges  discussed above.  Inclusion of such expenses
          would result in the following percentage relationship to net sales for
          the quarter:

                Cost of sales             94.8%
                Gross profit               5.2
                Operating expenses         6.4
                Other expenses - net       0.7

     (2)  Calculations  for the quarter ended May 2, 1999 include the effects of
          $18.1 million of charges  excluded  from cost of sales,  gross profit,
          operating  expenses  and other  expenses as  discussed in footnote (1)
          above.

The following  discussion of results of operations  for the quarter and 26 weeks
ended May 2, 1999  exclude  the effect of the  restructuring  and other  unusual
charges discussed above in "Recent Developments."

TOTAL REVENUE. Total revenue of $1.7 billion increased $330 million, or 25%, for
the quarter ended May 2, 1999 as compared to the quarter ended May 3, 1998. This
revenue  increase  included  a  $298  million,   or  25%,  increase  in  Pinacor
(distribution  business)  revenue  and a $17  million,  or 4%,  increase  in MTS
(integration  business) revenue.  The remaining increase in consolidated revenue
was due to a decrease in the elimination of intercompany revenue.

Total revenue increased $595 million, or 24%, for the 26 weeks ended May 2, 1999
as compared to the 26 weeks ended May 3, 1998. This revenue increase  included a
$553  million,  or 25%,  increase in Pinacor  revenue and a $28 million,  or 3%,
increase in MTS revenue.  The remaining increase in consolidated revenue was due
to a decrease in the elimination of intercompany revenue.

                                       9
<PAGE>
The increase in revenue was  attributable  to sales to resellers added since May
3, 1998,  increased  demand for the Company's  major  suppliers'  products,  the
Company's  addition of new product  offerings,  service  revenue  growth and the
growth of the microcomputer products industry.

GROSS PROFIT PERCENTAGE.  The Company's gross profit percentage was 5.6% for the
quarter ended May 2, 1999 and 6.4% for the quarter ended May 3, 1998.  The gross
profit percentage was 6.3% for the 26 weeks ended May 2, 1999 and May 3, 1998.

The decrease in the Company's gross profit  percentage during the second quarter
was due to lower margins in Pinacor,  partially offset by higher margins in MTS.
Pinacor  margins  decreased  primarily as a result of decreased  product trading
margins. This decline in trading margins was the result of increased competitive
pressures,  particularly  during  the first half of the  second  quarter, and to
decreased supplier funds during the quarter. Pinacor instituted a price increase
during the second quarter and adjusted salesperson  compensation plans to incent
higher margin  sales.  As a result,  product  trading  margins  increased in the
latter part of the quarter;  however, supplier funds remain at lower levels than
in previous quarters.

MTS margins  increased  for the second  quarter of fiscal  1999  compared to the
second  quarter of fiscal 1998,  but decreased  compared to the first quarter of
fiscal 1999.  The increase from the second  quarter of 1998 was due primarily to
an increase in service  revenue,  which has higher  gross  margins  than product
revenue  margins.  The decrease from the first quarter of fiscal 1999 was due to
increased   competitive   pressures   in  both   product  and  services  and  to
under-utilization  of service staff.  MTS has taken actions to increase  service
margins through the elimination of under-utilized service associates.

Future  gross  profit  percentages  may be  affected  by market  pressures,  the
introduction  of  new  Company  initiatives,  changes  in  revenue  mix,  future
acquisitions,  changes in supplier incentive funds,  changes in suppliers' terms
and   conditions,   the  Company's   utilization   of  early  payment   discount
opportunities,  supplier  pricing  actions,  and other  competitive and economic
pressures.   See  "Potential   Fluctuations  in  Operating  Results"  below  for
information  regarding  industry  trends  that may affect  future  gross  profit
percentages.

OPERATING EXPENSES. As a percentage of revenue,  operating expenses decreased to
5.8% for the quarter  ended May 2, 1999,  compared to 6.0% for the quarter ended
May 3, 1998. Operating expenses increased from $153 million, or 6.1% of revenue,
for the 26 weeks ended May 3, 1998 to $186 million, or 6.0% of revenue,  for the
26 weeks ended May 2, 1999, primarily as a result of increased business volume.

Although  operating  expenses have  decreased as a percentage of revenue,  total
spending  increased during the second fiscal quarter at the same time that gross
profit dollars  decreased.  As a result, the Company has taken actions to reduce
operating expenses. See "Recent Developments" for a discussion of actions taken.

                                       10
<PAGE>
OTHER  EXPENSES - NET.  Other  expenses - net  increased to $9.9 million for the
quarter  ended May 2, 1999 from $9.2  million for the quarter  ended May 3, 1998
and $7.2  million for the first  fiscal  quarter of 1999.  Other  expenses - net
decreased to $17.2 million for the 26 weeks ended May 2, 1999 from $20.1 million
for the 26 weeks ended May 3, 1998.  The increase for the second fiscal  quarter
of 1999  compared  to the first  quarter  of fiscal  1999 was  primarily  due to
increased  average  borrowings  as a result of  changes in the  Company's  major
suppliers'  policies.  During the first  quarter of fiscal  1999  certain  major
suppliers changed the terms of their credit arrangements with the Company. These
changes  include a  decrease  in the number of days the  Company  has to pay for
product  purchases and a decrease in the amount of reseller  purchases  from the
Company that the suppliers are willing to subsidize. These changes increased the
Company's working capital requirements and financing costs.

INCOME TAX PROVISION. As a percentage of loss before tax, the income tax benefit
was 20.1% for the  quarter  ended May 2, 1999  compared to 39.5% for the quarter
ended May 3, 1998.  The decrease in the  effective tax rate is due to the impact
of permanent  differences,  primarily  consisting of goodwill  amortization  and
meals and entertainment expenses, between book income and taxable income.

CHANGES IN SUPPLIER TERMS AND CONDITIONS

The key suppliers of the Company  provide  various  incentives for promoting and
marketing their product  offerings.  A large portion of the incentives is passed
on to the Company's customers.  However, a portion of the incentives  positively
impact the Company's income.

Beginning  in May 1998,  the major  manufacturers  announced  and/or  instituted
changes in their sales  incentive  programs and inventory  management  programs.
Pursuant to these changes,  the major  manufacturers have (i) reduced the amount
of product  that the  Company is allowed to return,  (ii)  reduced the amount of
price protection coverage offered to the Company and (iii) changed incentives to
programs based on sales of the manufacturers' products, rather than on purchases
of the products from the manufacturers.

In addition,  several of the Company's major suppliers have changed the terms of
their credit arrangements with the Company.  These changes include a decrease in
the number of days the Company has to pay for product  purchases  and a decrease
in the amount of reseller  purchases  from the Company  that the  suppliers  are
willing to subsidize. These changes have increased the Company's working capital
requirements and financing  costs.  Further changes in incentives or other terms
and conditions could have a material  adverse effect on the Company's  operating
results.

During the  quarter  ended May 2, 1999,  the  Company  announced a change in the
Pinacor  product  sourcing   relationship   with  Compaq  Computer   Corporation
("Compaq"). By the end of the Company's fiscal year, Pinacor will begin sourcing
certain  Compaq  products  from other  Compaq  distributors  instead of sourcing
directly from Compaq.  Compaq has  indicated  that Pinacor will continue to be a
Compaq  Channel  partner and will be able to distribute the full range of Compaq
products.  In addition,  Pinacor will continue to order some  products  directly
from Compaq.  The Company  believes that this change will have a negative impact
on its operating results,  but the amount of the impact of this change cannot be
determined at this time.

                                       11
<PAGE>
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

The Company's  operating results may vary  significantly from quarter to quarter
depending  on certain  factors,  including,  but not limited to,  demand for the
Company's information  technology products and services,  the amount of supplier
incentive  funds  received by the Company,  the results of acquired  businesses,
product availability, competitive conditions, new product introductions, changes
in customer order patterns, changes in supplier terms and conditions and general
economic  conditions.  In  particular,   the  Company's  operating  results  are
sensitive  to  changes  in the mix of  product  and  service  revenues,  product
margins, inventory adjustments and interest rates. Although the Company attempts
to control its expense  levels,  these levels are based, in part, on anticipated
revenues. Therefore, the Company may not be able to control spending in a timely
manner  to  compensate  for  any  unexpected  revenue  shortfall.  As a  result,
quarterly  period-to-period  comparisons of the Company's  financial results are
not  necessarily  meaningful  and should not be relied upon as an  indication of
future performance.  In addition,  although the Company's financial  performance
has not  exhibited  significant  seasonality  in the past,  the  Company and the
computer industry in general tend to follow a sales pattern with peaks occurring
near the end of the calendar year, due primarily to special supplier  promotions
and year-end business purchases.

LIQUIDITY AND CAPITAL RESOURCES

The Company has  financed  its growth and cash needs to date  primarily  through
working capital financing facilities,  bank credit lines, common stock offerings
and cash generated from  operations.  The primary uses of cash have been to fund
increases in inventory and accounts  receivable  resulting from increased sales.
If the Company is successful in achieving  continued revenue growth, its working
capital  requirements are likely to increase.  In addition,  as discussed above,
changes in supplier  payment terms have increased the Company's  working capital
requirements.

Cash provided by operating activities was $37 million for the 26 weeks ended May
2, 1999 as compared  to $72  million  for the 26 weeks  ended May 3, 1998.  This
decrease was primarily  due to changes in cash provided by accounts  receivable,
inventory  and  accounts  payable.  During the 26 weeks ended May 2, 1999,  $229
million  was  provided  by changes in  accounts  receivable  as  compared to $15
million used during the 26 weeks ended May 3, 1998.  This was due to an increase
in receivables sold to a finance company.  Cash provided by inventory during the
26 weeks  ended May 2, 1999 was $37  million as  compared  to $29  million  used
during the 26 weeks ended May 3, 1998.  These increases were offset by cash used
by changes in accounts  payable of $235 million during the 26 weeks ended May 2,
1999 as compared to cash provided of $103 million  during the 26 weeks ended May
3, 1998. The change in cash resulting from accounts payable was primarily due to
changes in suppliers' terms. See "Changes in Supplier Terms and Conditions".

Cash used in investing  activities was $35 million during the 26 weeks ended May
2, 1999 as compared to $28 million  during the 26 weeks ended May 3, 1998.  This
increase was  primarily  due to  purchases  of  businesses  and  investments  in
unconsolidated subsidiaries.

                                       12
<PAGE>
Cash provided by financing  activities was $13 million during the 26 weeks ended
May 2, 1999  compared to cash used of $31 million  during the 26 weeks ended May
3, 1998.  This change was  primarily due to net  borrowings  under the Company's
line of credit of $13 million for the 26 weeks ended May 2, 1999 compared to net
payments of $31 million for the 26 weeks ended May 3, 1998.

The  Company  maintains  three  financing  agreements  (the  "Agreements")  with
financing  facilities totaling $800 million.  The Agreements include an accounts
receivable facility (the "A/R Facility") and inventory financing facilities (the
"Inventory Facilities").

Under the A/R  Facility,  the  Company  has the right to sell  certain  accounts
receivable  from time to time, on a limited  recourse  basis, up to an aggregate
amount of $350 million sold at any given time. At May 2, 1999, the net amount of
sold accounts receivable was $271 million.

The Inventory  Facilities provide for borrowings up to $450 million.  Within the
Inventory  Facilities,  the  Company  has lines of credit  for the  purchase  of
inventory from selected product  suppliers  ("Inventory  Lines of Credit") and a
line of credit for general working capital  requirements  ("Supplemental Line of
Credit").  Payments for products  purchased  under the Inventory Lines of Credit
vary depending upon the product  supplier,  but generally are due between 30 and
60 days from the date of the advance.  Amounts  borrowed under the  Supplemental
Line  of  Credit  may  remain  outstanding  until  the  expiration  date  of the
Agreements  (August  2000).  No interest  or finance  charges are payable on the
Inventory  Lines of Credit if payments  are made when due.  At May 2, 1999,  the
Company  had $290  million  outstanding  under  the  Inventory  Lines of  Credit
(included  in accounts  payable in the  accompanying  Balance  Sheets),  and $13
million outstanding under the Supplemental Line of Credit.

Of the $800 million of financing  capacity  represented by the Agreements,  $226
million  was unused as of May 2,  1999.  Utilization  of the  unused  portion is
dependent upon the Company's collateral availability at the time the funds would
be needed.  There can be no  assurance  that the Company  will be able to borrow
adequate amounts on terms acceptable to the Company.

Borrowings  under  the  Agreements  are  secured  by  substantially  all  of the
Company's  assets,  and the Agreements  contain certain  restrictive  covenants,
including  tangible  net worth  requirements  and ratios of debt to tangible net
worth and current assets to current liabilities. At May 2, 1999, the Company was
in compliance with these covenants.

In addition to the financing  facilities  discussed above, the Company maintains
an accounts  receivable  purchase  agreement (the "Purchase  Agreement")  with a
commercial  credit  corporation  (the  "Buyer")  whereby  the  Buyer  agrees  to
purchase,  from time to time at its option, on a limited recourse basis, certain
accounts  receivable of the Company.  Under the terms of the Purchase Agreement,
no finance  charges are assessed if the accounts are settled  within forty days.
At May 2, 1999,  the net amount of sold accounts  receivable  under the Purchase
Agreement was $23 million.

The Company also  maintains  trade credit  arrangements  with its  suppliers and
other creditors to finance  product  purchases.  A few major suppliers  maintain
security interests in their products sold to the Company.

                                       13
<PAGE>
As discussed  above,  several of the Company's  major suppliers have changed the
terms of their credit  arrangements  with the Company.  These changes  include a
decrease in the number of days the Company has to pay for product  purchases and
a  decrease  in the  amount of  reseller  purchases  from the  Company  that the
suppliers are willing to subsidize.  These changes have  increased the Company's
working capital requirements and financing costs. The additional borrowings that
will be required to pay suppliers on shorter  terms could exceed the  borrowings
available  under the Agreements due to collateral  constraints.

The  unavailability of a significant  portion of, or the loss of, the Agreements
or trade  credit  from  suppliers  would have a material  adverse  effect on the
Company.

Although the Company has no material capital commitments, the Company expects to
make  capital  expenditures  of  approximately  $15 to $20  million  during  the
remainder of fiscal 1999.

INFLATION

The Company  believes that inflation has generally not had a material  impact on
its operations.

                                       14
<PAGE>
PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         (a)      The Annual Meeting of Stockholders was held on March 31, 1999.

         (b)(1)   The  following  individuals  were  elected  to  the  Board  of
                  Directors as Class I Directors for  three-year  terms expiring
                  at the Company's 2002 Annual Meeting of Stockholders:  William
                  H. Mallender, Lynda M. Applegate, and Dianne C. Walker.

         (b)(2)   The following  individuals'  terms  continued after the Annual
                  Meeting as Class II Directors:  Jeffrey D. McKeever and Steven
                  G.  Mihaylo.  Their  terms will expire at the  Company's  2000
                  Annual Meeting of Stockholders.

         (b)(3)   The following  individuals'  terms  continued after the Annual
                  Meeting  as Class III  Directors:  Roy A.  Herberger,  Jr. and
                  Cyrus  F.  Freidheim,  Jr.  Their  terms  will  expire  at the
                  Company's 2001 Annual Meeting of Stockholders.

         (c)      The matters  submitted for vote at the Annual  Meeting were as
                  follows:

         (c)(1)   Election of Class I Directors for three-year terms expiring at
                  the Company's  2002 Annual Meeting of  Stockholders.  See Item
                  4(b)(1) above. The shares were voted as follows:

                  NOMINEE                      NUMBER OF SHARES
                  -------                      ----------------

         William H. Mallender        For                       16,228,309
                                     Against                            0
                                     Withheld                     581,122
                                     Abstentions                        0
                                     Broker Non-votes                   0

         Lynda M. Applegate          For                       16,231,462
                                     Against                            0
                                     Withheld                     577,969
                                     Abstentions                        0
                                     Broker Non-votes                   0

         Dianne C. Walker            For                       16,183,795
                                     Against                            0
                                     Withheld                     625,636
                                     Abstentions                        0
                                     Broker Non-votes                   0

                                       15
<PAGE>
         (c)(2)   Approval of Increase in Authorized  Shares under the MicroAge,
                  Inc. 1995 Associate Stock Purchase Plan. The shares were voted
                  as follows:

                                     For                       16,117,323
                                     Against                      588,258
                                     Withheld                           0
                                     Abstentions                   32,866
                                     Broker Non-votes                   0

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

         10.1     Form of MicroAge,  Inc. 1999  Management  Equity Program Award
                  Agreement*

         10.2     MicroAge,  Inc. 1999 Management Equity Program Award Agreement
                  between MicroAge, Inc. and Jeffrey D. McKeever*

         10.3     MicroAge,  Inc. 1999 Management Equity Program Award Agreement
                  between MicroAge, Inc. and James R. Daniel*

         10.4     MicroAge,  Inc. 1999 Management Equity Program Award Agreement
                  between MicroAge, Inc. and Christopher J. Koziol*

         10.5     MicroAge,  Inc. 1999 Management Equity Program Award Agreement
                  between MicroAge, Inc. and Robert G. O'Malley*

         10.6     MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and William H. Mallender*

         10.7     MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Lynda M. Applegate*

         10.8     MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Cyrus F. Freidheim*

         10.9     MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Roy A. Herberger*

         10.10    MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Dianne C. Walker*

         10.11    MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Steven G. Mihaylo*

         11       EPS Detail Calculation (Statement re: Computation of Per Share
                  Earnings)

         27       Financial Data Schedule

----------
* Management contract for compensatory plan or arrangement.

         (b)      During the quarter ended May 2, 1999, MicroAge, Inc. filed one
                  report on Form 8-K,  dated January 28, 1999 and filed February
                  13,  1999,  pursuant  to Item 5 to disclose  an  extension  of
                  MicroAge,  Inc.'s Amended and Restated  Rights  Agreement from
                  February 23, 1999 through the end of the current  fiscal year,
                  October 31, 1999.
                                       16
<PAGE>
                                   SIGNATURES

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


                                        MICROAGE, INC.
                                        (Registrant)



Date: June 21, 1999                 By: /s/ Jeffrey D. McKeever
                                        -------------------------------------
                                        Jeffrey D. McKeever
                                        Chairman of the Board and
                                        Chief Executive Officer



Date: June 21, 1999                 By: /s/ James R. Daniel
                                        -------------------------------------
                                        James R. Daniel
                                        Executive Vice President Services,
                                        Chief Financial Officer and Treasurer

                                       17
<PAGE>
                                  EXHIBIT INDEX

         10.1     Form of MicroAge,  Inc. 1999  Management  Equity Program Award
                  Agreement*

         10.2     MicroAge,  Inc. 1999 Management Equity Program Award Agreement
                  between MicroAge, Inc. and Jeffrey D. McKeever*

         10.3     MicroAge,  Inc. 1999 Management Equity Program Award Agreement
                  between MicroAge, Inc. and James R. Daniel*

         10.4     MicroAge,  Inc. 1999 Management Equity Program Award Agreement
                  between MicroAge, Inc. and Christopher J. Koziol*

         10.5     MicroAge,  Inc. 1999 Management Equity Program Award Agreement
                  between MicroAge, Inc. and Robert G. O'Malley*

         10.6     MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and William H. Mallender*

         10.7     MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Lynda M. Applegate*

         10.8     MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Cyrus F. Freidheim*

         10.9     MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Roy A. Herberger*

         10.10    MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Dianne C. Walker*

         10.11    MicroAge,  Inc.  1995  Director  Incentive  Plan Stock  Option
                  Agreement between MicroAge, Inc. and Steven G. Mihaylo*

         11       EPS Detail Calculation (Statement re: Computation of Per Share
                  Earnings)

         27       Financial Data Schedule

----------
* Management contract for compensatory plan or arrangement.