<PAGE>   1

                                  UNITED STATES
                       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: August 4, 2001
                                         --------------

                                     - OR -

   [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934.

              For the transaction period from__________to__________

                         COMMISSION FILE NUMBER 0-20664

                              BOOKS-A-MILLION, INC.
                              ---------------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                                    63-0798460
           --------                                    ----------
(State or other jurisdiction of            (IRS Employer Identification No.)
incorporation or organization)

     402 INDUSTRIAL LANE, BIRMINGHAM, ALABAMA            35211
     ----------------------------------------            -----
     (Address of principal executive offices)          (Zip Code)

                                 (205) 942-3737
                                 --------------
                 (Registrant's phone number including area code)

                                      NONE
                                      ----
              (Former name, former address and former fiscal year,
                         if changed since last period)

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 common stock,
as of the latest practicable date: Shares of common stock, par value $.01 per
share, outstanding as of September 14, 2001 were 18,138,122 shares.


<PAGE>   2

                     BOOKS-A-MILLION, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                     PAGE NO.

<S>                                                                                  <C>
PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

     Unaudited Condensed Consolidated Balance Sheets                                     3

     Unaudited Condensed Consolidated Statements of Operations                           4

     Unaudited Condensed Consolidated Statement of Stockholders' Investment              5

     Unaudited Condensed Consolidated Statements of Cash Flows                           6

     Notes to Unaudited Condensed Consolidated Financial Statements                      7

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                                       9

PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                               12

Item 2. Changes in Securities                                                           12

Item 3. Defaults Upon Senior Securities                                                 12

Item 4. Submission of Matters of Vote of Security-Holders                               12

Item 5. Other Information                                                               12

Item 6. Exhibits and Reports on Form 8-K                                                12
</TABLE>


                                       2
<PAGE>   3

                          PART 1. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                      BOOKS-A-MILLION, INC. & SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        AUGUST 4, 2001   FEBRUARY 3, 2001
                                                                        --------------   ----------------

<S>                                                                     <C>              <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                               $    4,124        $    5,282
   Accounts receivable, net                                                   10,566            10,775
   Inventories                                                               213,976           205,986
   Prepayments and other                                                       4,766             4,521
   Deferred income taxes                                                       4,898             3,791
                                                                          ----------        ----------
       TOTAL CURRENT ASSETS                                                  238,330           230,355
                                                                          ----------        ----------

PROPERTY AND EQUIPMENT:
   Gross property and equipment                                              138,075           134,901
   Less accumulated depreciation and amortization                             81,464            74,242
                                                                          ----------        ----------
     NET PROPERTY AND EQUIPMENT                                               56,611            60,659
                                                                          ----------        ----------

OTHER ASSETS:
   Goodwill, net                                                               1,389             1,410
   Other                                                                         628               117
                                                                          ----------        ----------
     TOTAL OTHER ASSETS                                                        2,017             1,527
                                                                          ----------        ----------
           TOTAL ASSETS                                                   $  296,958        $  292,541
                                                                          ==========        ==========

LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
   Accounts payable                                                       $   96,501        $  102,510
   Accrued expenses                                                           19,479            22,611
   Accrued income taxes                                                           --               650
   Current portion of long-term debt                                          17,409               460
                                                                          ----------        ----------
       TOTAL CURRENT LIABILITIES                                             133,389           126,231
                                                                          ----------        ----------

LONG TERM DEBT                                                                43,171            41,526
                                                                          ----------        ----------
DEFERRED INCOME TAXES                                                          1,340             1,554
                                                                          ----------        ----------

STOCKHOLDERS' INVESTMENT:
   Preferred stock, $.01 par value, 1,000,000 shares
   authorized, no shares outstanding                                              --                --
   Common stock, $.01 par value, 30,000,000 shares authorized,
   18,138,122 and 18,092,001 shares issued and outstanding at
   August 4, 2001 and February 3, 2001, respectively                             181               181
   Additional paid-in capital                                                 70,717            70,634
   Less treasury stock at cost (1,541,250 shares at August 4, 2001
   and 597,600 shares at February 3, 2001)                                    (3,821)           (1,563)
   Accumulated other comprehensive income (loss)                                (906)                0
   Retained earnings                                                          52,887            53,978
                                                                          ----------        ----------
       TOTAL STOCKHOLDERS' INVESTMENT                                        119,058           123,230
                                                                          ==========        ==========
           TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT                 $  296,958        $  292,541
                                                                          ==========        ==========
</TABLE>

                             SEE ACCOMPANYING NOTES


                                       3
<PAGE>   4

                      BOOKS-A-MILLION, INC. & SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           THIRTEEN WEEKS ENDED             TWENTY-SIX WEEKS ENDED
                                                      -------------------------------   -------------------------------
                                                      AUGUST 4, 2001    JULY 29, 2000   AUGUST 4, 2001    JULY 29, 2000
                                                      --------------    -------------   --------------    -------------

<S>                                                   <C>               <C>             <C>               <C>
NET SALES                                                $ 104,011        $  93,629        $ 201,501        $ 186,728
   Cost of products sold (including warehouse
   distribution and store occupancy costs)(1)               77,169           69,285          149,173          137,684
                                                         ---------        ---------        ---------        ---------

GROSS PROFIT                                                26,842           24,344           52,328           49,044
   Operating, selling and administrative expenses           22,894           20,350           43,905           39,607
   Depreciation and amortization                             3,896            3,652            7,773            7,302
                                                         ---------        ---------        ---------        ---------

OPERATING INCOME                                                52              342              650            2,135
   Interest expense, net                                     1,142            1,258            2,409            2,292
                                                         ---------        ---------        ---------        ---------

INCOME (LOSS) BEFORE INCOME TAXES                           (1,090)            (916)          (1,759)            (157)
   Income taxes provision (benefit)                           (414)            (348)            (668)             (60)
                                                         ---------        ---------        ---------        ---------

NET INCOME (LOSS)                                        $    (676)       $    (568)       $  (1,091)       $     (97)
                                                         =========        =========        =========        =========

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC                                  16,773           18,010           17,047           18,008
                                                         =========        =========        =========        =========
NET INCOME (LOSS) PER SHARE - BASIC                      $   (0.04)       $   (0.03)       $   (0.06)       $   (0.01)
                                                         =========        =========        =========        =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED                                16,773           18,010           17,047           18,008
                                                         =========        =========        =========        =========
NET INCOME (LOSS) PER SHARE - DILUTED                    $   (0.04)       $   (0.03)       $   (0.06)       $   (0.01)
                                                         =========        =========        =========        =========
</TABLE>

(1) Inventory purchases from related parties were $4,801, $7,605, $17,197 and
$17,506, respectively, for each of the periods presented above.

                             SEE ACCOMPANYING NOTES


                                       4
<PAGE>   5

                      BOOKS-A-MILLION, INC. & SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                        ACCUMULATED
                                     COMMON STOCK       ADDITIONAL     TREASURY STOCK                      OTHER          TOTAL
                                   -----------------     PAID-IN     -------------------     RETAINED  COMPREHENSIVE  STOCKHOLDERS'
                                   SHARES     AMOUNT     CAPITAL     SHARES      AMOUNT      EARNINGS  INCOME (LOSS)   INVESTMENT
                                   ------     ------    ----------   ------     --------     --------  -------------  -------------

<S>                                <C>        <C>       <C>          <C>        <C>          <C>       <C>            <C>
BALANCE, FEBRUARY 3, 2001          18,092     $  181     $ 70,634       598     $ (1,563)    $ 53,978      $    0       $ 123,230

  Issuance of stock  for
  employee stock purchase plan         46         --           83        --           --           --          --       $      83
  Purchase of treasury stock           --         --           --       943       (2,258)          --          --       $  (2,258)
  Net income (loss)                    --         --           --        --           --       (1,091)         --       $  (1,091)
      Cumulative effect of
      accounting change (Note 3)       --         --           --        --           --           --        (465)      $    (465)
      Unrealized loss on
      derivative instruments           --         --           --        --           --           --        (441)      $    (441)
                                   ------     ------     --------    ------     --------     --------      ------       ---------

BALANCE, AUGUST 4, 2001            18,138     $  181     $ 70,717     1,541     $ (3,821)    $ 52,887      $ (906)      $ 119,058
                                   ======     ======     ========    ======     ========     ========      ======       =========
</TABLE>

                             SEE ACCOMPANYING NOTES


                                       5
<PAGE>   6

                      BOOKS-A-MILLION, INC. & SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         TWENTY-SIX WEEKS ENDED
                                                                     ------------------------------
                                                                     AUGUST 4, 2001   JULY 29, 2000
                                                                     --------------   -------------

<S>                                                                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                    $ (1,091)        $    (97)
                                                                        --------         --------
   Adjustments to reconcile net income to net cash used in
   operating activities:
     Depreciation and amortization                                         7,773            7,302
     Loss on disposal of property and equipment                               41              704
     Change in deferred income taxes                                        (733)             (95)
     Changes in assets and liabilities:
        Accounts receivable                                                  209            3,210
        Inventories                                                       (2,076)         (15,236)
        Prepayments and other                                               (278)            (741)
        Accounts payable                                                  (6,009)         (11,968)
        Accrued income taxes                                                (650)          (2,092)
        Accrued expenses                                                  (4,626)          (2,483)
                                                                        --------         --------
        Total adjustments                                                 (6,349)         (21,399)
                                                                        --------         --------

        Net cash used in operating activities                             (7,440)         (21,496)
                                                                        --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                   (3,617)          (4,622)
   Acquisition of certain assets (Note 4)                                 (6,532)               0
   Proceeds from sale of equipment                                            12               42
                                                                        --------         --------
        Net cash used in investing activities                            (10,137)          (4,580)
                                                                        --------         --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Borrowings under credit facilities                                     96,706           90,970
   Repayments under credit facilities                                    (78,112)         (64,783)
   Proceeds from sale of common stock, net                                    83               70

   Purchase of treasury stock                                             (2,258)              --
                                                                        --------         --------
        Net cash provided by financing activities                         16,419           26,257
                                                                        --------         --------

Net increase (decrease) in cash and temporary cash investments            (1,158)             181
Cash and temporary cash investments at beginning of period                 5,282            4,920
                                                                        --------         --------

Cash and temporary cash investments at end of period                    $  4,124         $  5,101
                                                                        --------         --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the period for:
      Interest                                                          $  1,909         $  2,197
                                                                        --------         --------
      Income taxes, net of refunds                                      $  1,069         $  3,068
                                                                        --------         --------
        Non-cash transactions:
             Cumulative effect of hedging activities, net of tax
             benefit of $588                                            $    906         $      0
                                                                        --------         --------
</TABLE>

                             SEE ACCOMPANYING NOTES


                                       6
<PAGE>   7

                     BOOKS-A-MILLION, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

1. BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
of Books-A-Million, Inc. and its Subsidiaries (the "Company") for the thirteen
and twenty-six week periods ended August 4, 2001 and July 29, 2000, have been
prepared in accordance with U.S. generally accepted accounting principles for
interim financial information and are presented in accordance with the
requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by U.S. generally
accepted accounting principles for complete financial statements. These
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto for the fiscal year ended February 3,
2001, included in the Company's 2001 Annual Report on Form 10-K. In the opinion
of management, the consolidated financial statements included herein contain all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation of the Company's financial position as of
August 4, 2001, and the results of its operations and cash flows for the
thirteen and twenty-six week periods then ended. Certain prior year amounts have
been reclassified to conform to current year presentation.

         The Company has experienced, and expects to continue to experience,
significant variability in sales and net income from quarter to quarter.
Therefore, the results of the interim periods presented herein are not
necessarily indicative of the results to be expected for any other interim
period or the full year.

2. NET INCOME PER SHARE

         Basic net income per share ("EPS") excludes dilution and is computed by
dividing income available to common shareholders by the weighted average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
are exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company. Diluted EPS has
been computed based on the average number of shares outstanding including the
effect of outstanding stock options, if dilutive, in each respective thirteen
and twenty-six week period. A reconciliation of the weighted average shares for
basic and diluted EPS is as follows:

<TABLE>
<CAPTION>
                                                 For the Thirteen Weeks Ended
                                                        (in thousands)
                                                August 4, 2001   July 29, 2000
                                                --------------   -------------

<S>                                             <C>              <C>
Weighted average shares outstanding:
Basic                                               16,773           18,010
Dilutive effect of stock options outstanding             0                0
                                                    ------           ------
Diluted                                             16,773           18,010
                                                    ------           ------

<CAPTION>
                                                 For the Twenty-Six Weeks Ended
                                                         (in thousands)
                                                August 4, 2001      July 29, 2000
                                                --------------      -------------

<S>                                             <C>                 <C>
Weighted average shares outstanding:
Basic                                               17,047              18,008
Dilutive effect of stock options outstanding             0                   0
                                                    ------              ------
Diluted                                             17,047              18,008
                                                    ------              ------
</TABLE>


                                       7
<PAGE>   8

Options outstanding of 1,445,000 and 1,460,000 for the thirteen weeks and
twenty-six weeks ended August 4, 2001 and outstanding options of 1,522,435 and
1,537,152 for the thirteen and twenty-six weeks ended July 29, 2000 were not
included in the table above as they were anti-dilutive.

3. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
amended by SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133, and SFAS
No. 138, Accounting for Certain Derivatives and Certain Hedging Activities. SFAS
No. 133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting.

         The Company adopted these statements effective February 4, 2001. The
adoption of these statements resulted in a cumulative after-tax increase to
other comprehensive loss of $465,000 and a reduction to income of $40,000 for
the thirteen weeks ended May 5, 2001. The $1.5 million liability related to the
derivatives is reflected in Accrued Expenses, and the relative tax benefit of
$588,000 is reflected in Current Deferred Tax Assets in the accompanying
condensed consolidated balance sheet at August 4, 2001. The adoption of these
statements may increase volatility in earnings.

4. ACQUISITION OF ASSETS

         During March 2001, the Company acquired inventory and lease-rights of
eighteen retail stores from Crown Books Corporation for $6.5 million. The stores
are located in the Chicago and Washington, D.C. metropolitan areas. The results
of operations for these stores are reflected in the consolidated financial
statements beginning in the first quarter of fiscal 2002.

5. CONTINGENCIES

         The Company is a party to various legal proceedings incidental to its
business. In the opinion of management, after consultation with legal counsel,
the ultimate liability, if any, with respect to those proceedings is not
presently expected to materially affect the financial position or results of
operations of the Company.


                                       8
<PAGE>   9

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         This document contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that involve a
number of risks and uncertainties. A number of factors could cause actual
results, performance, achievements of the Company, or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These factors include,
but are not limited to, the competitive environment in the book retail industry
in general and in the Company's specific market areas; inflation; economic
conditions in general and in the Company's specific market areas; the number of
store openings and closings; the profitability of certain product lines, capital
expenditures and future liquidity; liability and other claims asserted against
the Company; uncertainties related to the Internet and the Company's Internet
initiatives; and other factors referenced herein. In addition, such
forward-looking statements are necessarily dependent upon the assumptions,
estimates and dates that may be incorrect or imprecise and involve known and
unknown risks, uncertainties and other factors. Accordingly, any forward-looking
statements included herein do not purport to be predictions of future events or
circumstances and may not be realized. Given these uncertainties, shareholders
and prospective investors are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligations to update any
such factors or to publicly announce the results of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments.

RESULTS OF OPERATIONS

         Net sales increased 11.1% to $104.0 million in the thirteen weeks ended
August 4, 2001, from $93.6 million in the thirteen weeks ended July 29, 2000.
Net sales increased 7.9% to $201.5 million in the twenty-six weeks ended August
4, 2001, from $186.7 million in the twenty-six weeks ended July 29, 2000. The
increase in net sales resulted from 18 new stores acquired this year. Comparable
store sales in the second quarter decreased 1.5% versus last year. Excluding
collector sales, comparable store sales increased 1.6% over the same period last
year. During the thirteen weeks ended August 4, 2001, two newsstands were opened
and one Bookland store was closed.

         Gross profit increased $2.5 million or 10.3% to $26.8 million in the
thirteen weeks ended August 4, 2001 from $24.3 million in the thirteen weeks
ended July 29, 2000, and in the twenty-six weeks ended August 4, 2001, gross
profit increased 6.7% to $52.3 million from $49.0 million in the same period
last year. Gross profit as a percentage of net sales for the thirteen weeks
ended August 4, 2001 was 25.8% versus 26.0% in the same period last year. Gross
profit as a percentage of net sales for the twenty-six weeks ended August 4,
2001 was 26.0% versus 26.3% in the same period last year. The decrease as a
percentage of net sales for the thirteen and twenty-six week periods was
primarily due to higher occupancy costs as a percentage of sales.

         Operating, selling and administrative expenses increased $2.5 million
or 12.5% to $22.9 million in the thirteen weeks ended August 4, 2001, from $20.4
million in the thirteen weeks ended July 29, 2000, and in the twenty-six weeks
ended August 4, 2001, operating, selling and administrative expenses increased
10.9% to $43.9 million from $39.6 million in the same period last year.
Operating, selling and administrative expenses as a percentage of net sales for
the thirteen weeks ended August 4, 2001, increased to 22.0% from 21.7% in the
same period last year. For the twenty-six week period operating, selling and
administrative expenses as a percentage of net sales increased to 21.8% from
21.2% in the same period last year. The increase in this percentage for the
thirteen and twenty-six week periods was due to lower comparable store sales and
higher store selling costs as a percent to sales.

         Depreciation and amortization increased $0.2 million or 6.7% to $3.9
million in the thirteen weeks ended August 4, 2001, from $3.7 million in the
thirteen weeks ended July 29, 2000, and in the twenty-six week period
depreciation and amortization increased $0.5 million or 6.5% to $7.8 million
from $7.3 million in the same period last year. The increase in depreciation and
amortization for the thirteen and twenty-six week periods was primarily the
result of the increased number of superstores operated by the Company.

         Interest expense was $1.1 million in the thirteen weeks ended August 4,
2001 versus $1.3 million in the thirteen weeks ended July 29, 2000, and $2.4
million in the twenty-six weeks ended August 4, 2001 versus $2.3 million in the
same period last year. The decrease in interest expense for the second quarter
is due to lower interest rates versus last year. Year to date, the increase in
interest expense is due to higher average (net) debt balances at the beginning
of the period that continued throughout the first quarter and most of the second
quarter.


                                       9
<PAGE>   10


LIQUIDITY AND CAPITAL RESOURCES

         During the first twenty-six weeks of fiscal 2002, the Company's cash
requirements have been funded with net cash from operations and with borrowings
under the Company's credit facilities. Similar to many retailers, the Company's
business is seasonal, with its highest retail sales, gross profits and net
income traditionally occurring during the fourth fiscal quarter, reflecting the
increased demand for books and gifts during the year-end, holiday selling
season. Working capital requirements are generally highest during the third
fiscal quarter and the early part of the fourth fiscal quarter due to the
seasonality of the Company's business.

         The Company has a revolving credit facility that allows borrowings up
to $90 million for which no principal repayments are due until the facility
expires on June 18, 2003, and an unsecured working capital line of credit for
$15 million, which is subject to annual renewal. As of August 4, 2001, $52.2
million was outstanding under these facilities combined. Both credit facilities
have certain financial and non-financial covenants with which the Company is in
compliance. Additionally, as of August 4, 2001, the Company has outstanding
borrowings associated with the issuance of an industrial development revenue
bond totaling $7.5 million.

         The Company's capital expenditures totaled $3.6 million during the
first twenty-six weeks of fiscal 2002. These expenditures were primarily used
for new store expenditures and warehouse distribution purposes. Management
estimates that capital expenditures for the remainder of fiscal 2002 will be
approximately $8.0 million, and that such amounts will be used primarily for new
stores, renovation and improvements to existing stores and investments in
management information systems. Management believes that existing cash balances
and net cash from operating activities, together with borrowings under the
Company's credit facilities, will be adequate to finance the Company's planned
capital expenditures and to meet the Company's working capital requirements for
the remainder of fiscal 2002.

         When necessary, the Company establishes certain reserves for the
closing of under-performing stores. Management feels that this year's activity
will not significantly vary from the number of closings in the prior year.

RELATED PARTY ACTIVITIES

         Certain principal stockholders of the Company have controlling
ownership interests in other entities with which the Company conducts business.
Significant transactions between the Company and these various other entities
("related parties") are summarized in the following paragraph.

         The Company purchases a portion of its inventories for resale from
related parties; such purchases were $17.2 million in the twenty-six weeks ended
August 4, 2001, versus $17.5 million in the twenty-six weeks ended July 29,
2000. The decrease in related party purchases is primarily due to decreased
purchases of music merchandise. The Company sells a portion of its inventories
to related parties; such sales amounted to $1.6 million and $1.7 million in the
twenty-six weeks ended August 4, 2001 and July 29, 2000, respectively. This
decrease in related party sales is primarily due to lower sales of bargain
books. Management believes the terms of these related


                                       10
<PAGE>   11

party transactions are substantially equivalent to those available from
unrelated parties and, therefore, have no significant impact on gross profit.

FINANCIAL POSITION

         During the twenty-six weeks ended August 4, 2001, the Company acquired
18 stores from Crown Books Corporation, located in the Chicago and Washington
D.C. metropolitan areas. In addition, the Company opened two newsstands, closed
one superstore and closed two Bookland stores. Inventory and debt balances at
August 4, 2001 increased as compared to February 3, 2001 due to seasonal
fluctuations in inventory levels and the acquisition of inventory and
lease-rights from Crown Books Corporation.

NEW AND PENDING ACCOUNTING PRONOUNCEMENTS

         On July 20, 2001, the Financial Accounting Standards Board ("FASB")
issued Statements of Financial Accounting Standards No. 141, "Business
Combinations" ("FAS 141") and No. 142, "Goodwill and Other Intangible Assets"
("FAS 142"). Business combinations initiated after June 30, 2001, must be
accounted for under the provisions of these two statements. The Company must
also apply these provisions to previously recorded business combinations as of
January 1, 2002. The principal provisions of FAS 141 and FAS 142 are as follows:

         All business combinations initiated after June 30, 2001 will be
         accounted for using the "purchase" method, under which the identifiable
         assets and liabilities of the acquired business are recorded at their
         respective fair market values with the residual amount being recorded
         as goodwill. The "pooling-of-interests" method, under which the
         financial statements of the acquirer and the acquiree were combined as
         if the two businesses had always been one, will no longer be used.

         Goodwill and identifiable intangible assets will no longer be amortized
         over a maximum period of forty years. Goodwill will not be amortized
         but will instead be tested for impairment annually or upon the
         occurrence of certain "triggering events". Identifiable intangible
         assets will be amortized over their expected useful lives; those with
         indefinite expected useful lives will not be amortized. Identifiable
         intangible assets will continue to be tested for impairment under
         previously existing accounting standards.

         The Company will adopt FAS 141 and FAS 142 on February 3, 2002, and
expects the adoption of these standards to have no material impact on its
financial condition, results of operations or cash flows.

MARKET RISK

         The Company is subject to interest rate fluctuations involving its
credit facilities. The average amount of debt outstanding under the Company's
credit facilities was $64.1 million during fiscal 2001. However, the Company
utilizes both fixed and variable debt to manage this exposure. On February 9,
1998, the Company entered into an interest rate swap agreement, with a five-year
term, which carries a notional principal amount of $30.0 million. The swap
effectively fixes the interest rate on $30.0 million of variable rate debt at
6.78%. The swap agreement expires on February 11, 2003. Also, on May 14, 1996,
the Company entered into an interest rate swap agreement, with a ten-year term,
which carries a notional principal amount of $7.5 million. The swap effectively
fixes the interest rate on $7.5 million of variable rate debt at 7.98%. The swap
agreement expires on June 7, 2006. The counter party to the interest rate swaps
is one of the Company's primary banks. The Company believes the credit and
liquidity risk of the counter party failing to meet its obligation is remote as
the Company settles its interest position with the bank on a quarterly basis.


                                       11
<PAGE>   12

                             II - OTHER INFORMATION

ITEM 1:  Legal Proceedings

                  The Company is a party to various legal proceedings incidental
                  to its business. In the opinion of management, after
                  consultation with legal counsel, the ultimate liability, if
                  any, with respect to those proceedings is not presently
                  expected to materially affect the financial position or
                  results of operations of the Company.

ITEM 2:  Changes in Securities

                  None

ITEM 3:  Defaults Upon Senior Securities

                  None

ITEM 4:  Submission of Matters of Vote of Security-Holders

                  None

ITEM 5:  Other Information

                  None

ITEM 6:  Exhibits and Reports on Form 8-K

         (A) Exhibits

                  Exhibit 3i Certificate of Incorporation of Books-A-Million,
                  Inc. (incorporated herein by reference to Exhibit 3.1 in the
                  Company's Registration Statement on Form S-1 (Capital
                  Registration No. 33-52256))

                  Exhibit 3ii By-Laws of Books-A-Million, Inc. (incorporated
                  herein by reference to Exhibit 3.2 in the Company's
                  Registration Statement on Form S-1 (Capital Registration No.
                  33-52256))

         (B) Reports on Form 8-K

                  There were no reports filed on Form 8-K during the thirteen
                  week period ended August 4, 2001


                                       12
<PAGE>   13

                                   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 duly authorized.

                                    BOOKS-A-MILLION, INC.


Date: September 17, 2001            by:/s/ Clyde B. Anderson
                                       ---------------------
                                       Clyde B. Anderson
                                       Chief Executive Officer


Date: September 17, 2001            by:/s/ Richard S. Wallington
                                       -------------------------
                                       Richard S. Wallington
                                       Chief Financial Officer