<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 1, 1998
                                          --------------

                                     - 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 August 1, 1998 were 17,443,875 shares.



<PAGE>   2
                          PART 1. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                       BOOKS-A-MILLION, INC. & SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                             (DOLLARS IN THOUSANDS)

                                   (UNAUDITED)

<TABLE>
<CAPTION>
ASSETS                                                           August 1, 1998       January 31, 1998
                                                                 --------------       ----------------
<S>                                                              <C>                  <C>
CURRENT ASSETS:                                                                       
   Cash and temporary cash investments                                $  3,584              $  3,909
   Accounts receivable                                                   9,701                11,732
   Related party receivable                                              3,853                 7,559
   Inventories                                                         172,849               151,312
   Prepayments and other                                                 1,973                   816
   Deferred income taxes                                                 3,327                 3,098
                                                                      --------              --------
       TOTAL CURRENT ASSETS                                            195,287               178,426
                                                                      --------              --------

PROPERTY AND EQUIPMENT:
   Land                                                                    628                   628
   Buildings                                                             5,368                 5,367
   Equipment                                                            31,299                28,558
   Furniture and fixtures                                               32,814                31,894
   Leasehold improvements                                               37,952                37,552
   Construction-in-process                                               3,332                   783
                                                                      --------              --------
                                                                       111,393               104,782
   Less-accumulated depreciation and amortization                       44,952                38,968
                                                                      --------              --------
       NET PROPERTY AND EQUIPMENT                                       66,441                65,814
                                                                      --------              --------

OTHER ASSETS:
   Goodwill, net                                                         1,517                 1,538
   Other                                                                    35                    38
                                                                      --------              --------
       TOTAL OTHER ASSETS                                                1,552                 1,576
                                                                      --------              --------
       TOTAL ASSETS                                                   $263,280              $245,816
                                                                      ========              ========

LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
   Accounts payable:
     Trade                                                            $ 77,879              $ 71,439
     Related party                                                       6,651                 7,493
   Accrued expenses                                                     11,458                13,993
   Accrued income taxes                                                     --                 2,730
   Notes payable                                                        15,813                    --
                                                                      --------              --------
       TOTAL CURRENT LIABILITIES                                       111,801                95,655
                                                                      --------              --------

LONG TERM DEBT                                                          46,917                45,240
                                                                      --------              --------
DEFERRED INCOME TAXES                                                    1,503                 1,436
                                                                      --------              --------

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,
   17,443,875 and 17,427,593 shares issued and outstanding at
   August 1, 1998 and January 31, 1998, respectively                       174                   174
   Additional paid-in capital                                           63,003                62,925
   Retained earnings                                                    39,882                40,386
                                                                      --------              --------
       TOTAL STOCKHOLDERS' INVESTMENT                                  103,059               103,485
                                                                      ========              ========
       TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT                 $263,280              $245,816
                                                                      ========              ========

</TABLE>


                                       2
<PAGE>   3

                       BOOKS-A-MILLION, INC. & SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     Thirteen Weeks Ended                    Twenty-Six Weeks Ended
                                                     --------------------                    ----------------------
                                                August 1, 1998   August 2, 1997       August 1, 1998      August 2, 1997
                                                --------------  ----------------     ---------------     -----------------
<S>                                             <C>             <C>                  <C>                 <C>
NET SALES                                          $  77,955       $  71,867           $ 152,424               $ 140,104
   Cost of products sold (including warehouse
   distribution and store occupancy costs)(1)         58,542          53,181             114,016                 103,877
                                                   ---------       ---------           ---------               ---------

GROSS PROFIT                                          19,413          18,686              38,408                  36,227
   Operating, selling and administrative expenses     15,870          13,939              30,587                  27,182
   Depreciation and amortization                       3,192           2,723               6,335                   5,415
                                                   ---------       ---------           ---------               ---------

OPERATING INCOME                                         351           2,024               1,486                   3,630
   Interest expense, net                               1,179           1,173               2,298                   2,184
                                                   ---------       ---------           ---------               ---------

INCOME (LOSS) INCOME TAXES                              (828)            851                (812)                  1,446
   Provision (Benefit) for income taxes                 (314)            324                (308)                    550
                                                   ---------       ---------           ---------               ---------

NET INCOME (LOSS)                                  $    (514)      $     527           $    (504)              $     896
                                                   =========       =========           =========               =========

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC                            17,444          17,428              17,440                  17,423
                                                   =========       =========           =========               =========
NET INCOME (LOSS) PER SHARE - BASIC (2)            $   (0.03)      $    0.03           $   (0.03)              $    0.05
                                                   =========       =========           =========               =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED                          17,444          17,428              17,442                  17,424
                                                   =========       =========           =========               =========
NET INCOME (LOSS) PER SHARE - DILUTED (2)          $   (0.03)      $    0.03           $   (0.03)              $    0.05
                                                   =========       =========           =========               =========
</TABLE>



(1) Inventory purchases from related parties were $11,059, $6,703, $19,783 and
$15,799 respectively, for each of the periods presented above.

(2) Effective January 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 128, Earnings Per Share (EPS), for all periods
presented.


                                       3
<PAGE>   4


                       BOOKS-A-MILLION, INC. & SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (DOLLARS IN THOUSANDS)

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     TWENTY-SIX WEEKS ENDED
                                                              -----------------------------------
                                                              AUGUST 1, 1998       AUGUST 2, 1997
                                                              --------------       --------------
<S>                                                           <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income (Loss)                                            $   (504)             $    896
                                                                --------              --------
   Adjustments to reconcile net income to net cash used
   in operating activities:
     Depreciation and amortization                                 6,335                 5,415
     Loss on disposal of property and equipment                       65                     7
     Change in deferred income taxes                                (162)                 (106)
     (Increase) decrease in current assets:
        Accounts receivable                                        2,031                 4,971
        Related party receivable                                   3,706                (3,055)
        Inventories                                              (21,537)              (15,030)
        Prepayments and other                                     (1,155)                 (709)
     Increase (decrease) in current liabilities:
        Accounts payable                                           5,598                (7,626)
        Accrued income taxes                                      (2,730)               (1,961)
        Accrued expenses                                          (2,532)               (3,288)
                                                                --------              --------
        Total adjustments                                        (10,381)              (21,382)
                                                                --------              --------

        Net cash used in operating activities                    (10,885)              (20,486)
                                                                --------              --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                           (7,094)               (3,605)
   Proceeds from sale of equipment                                    86                    20
                                                                --------              --------
        Net cash used in investing activities                     (7,008)               (3,585)
                                                                --------              --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Borrowings under credit facilities                             78,060                81,166
   Repayments under credit facilities                            (60,570)              (57,675)
   Proceeds from sale of common stock, net                            78                    96
                                                                --------              --------

        Net cash provided by financing activities                 17,568                23,587
                                                                --------              --------

Net decrease in cash and temporary cash                             (325)                 (484)
Cash and temporary cash investments at beginning of period         3,909                 4,776
                                                                --------              --------

Cash and temporary cash investments at end of period            $  3,584              $  4,292
                                                                ========              ========
</TABLE>

                                       4
<PAGE>   5


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

                                   (Unaudited)

1.  BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements of
Books-A-Million, Inc. and its Subsidiary (the "Company") for the thirteen and
twenty-six week periods ended August 1, 1998 and August 2, 1997, have been
prepared in accordance with 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 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 January 31, 1998, included in the Company's
1998 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 1, 1998, and the results of its
operations and cash flows for the thirteen and twenty-six week periods then
ended.

         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") 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 is computed similarly to
fully diluted EPS pursuant to APB Opinion No. 15.

         The Company adopted SFAS No. 128 effective January 31, 1998 and
restated EPS for all periods presented in the consolidated statements of income.
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 1, 1998      August 2, 1997
                                       --------------------------------------
   <S>                                 <C>                    <C>

   Weighted average shares
    outstanding:
   Basic                                          17,444            17,428
   Dilutive effect of stock options
    outstanding                                        0                 0
                                       -----------------------------------
   Diluted                                        17,444            17,428
                                       -----------------------------------
<CAPTION>
                                            For the Twenty-Six Weeks Ended
                                                    (in thousands)
                                         August 1, 1998       August 2, 1997
                                       --------------------------------------
   <S>                                 <C>                    <C>
   Weighted average shares
    outstanding:
   Basic                                          17,440            17,423
   Dilutive effect of stock options
    outstanding                                        2                 1
                                       -----------------------------------
   Diluted                                        17,442            17,424
                                       -----------------------------------
</TABLE>



                                       5

<PAGE>   6



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

3.  PENDING ACCOUNTING PRONOUNCEMENTS

         The FASB has issued Statement No. 131, Disclosures about Segments of an
Enterprise and Related Information. This statement requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. Generally, financial information is required to
be reported on the basis that it is used by the chief operating decision maker
in deciding how to allocate resources and in assessing performance. This
statement also establishes standards for related disclosures about products and
services, geographic areas, and major customers. The Company is currently
evaluating the impact on financial reporting and will adopt the new rules for
fiscal 1999 annual reporting.

         The AICPA has issued Statement of Position 98-1, Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use. This
statement requires capitalization of external direct costs of materials and
services; payroll and payroll related costs for employees directly associated;
and interest cost during development of computer software for internal use
(planning and preliminary costs should be amortized on a straight-line basis
unless another systematic and rational basis is more representative of the
software's use). This statement is not expected to have a material effect on the
consolidated financial statements.

         The AICPA has issued Statement of Position 98-5, Reporting on the Costs
of Start-up Activities. This statement provides guidance on the financial
reporting of start-up costs and organization costs, and requires these costs to
be expensed as incurred. The new rules are not expected to have a significant
impact on the Company's financial reporting upon adoption in fiscal 2000.

4.  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.



                                       6



<PAGE>   7



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

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

         Certain of the statements set forth herein with respect to store
openings and closings, the profitability of certain product lines, capital
expenditures and future liquidity are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current intentions, assumptions and projections and
are subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward-looking statements. Factors that
could cause actual results to differ materially from those in the
forward-looking statements include, among other things, unanticipated increases
in merchandise, salary and distribution costs and the effects of increased
competition on specific stores and the Company generally.

RESULTS OF OPERATIONS

         Net sales increased 8.5% to $78.0 million in the thirteen weeks ended
August 1, 1998, from $71.9 million in the thirteen weeks ended August 2, 1997.
Net sales increased 8.8% to $152.4 million in the twenty-six weeks ended August
1, 1998, from $140.1 million in the twenty-six weeks ended August 2, 1997. For
the thirteen and twenty-six weeks ended August 1, 1998, the increase in net
sales resulted primarily from net sales from new stores. Comparable store sales
decreased 3.9% for the twenty-six weeks ended August 1, 1998, and they decreased
3.6% for the thirteen weeks ended August 1, 1998. During the thirteen weeks
ended August 1, 1998, four superstores were opened.

         Gross profit increased $0.7 million or 3.9% to $19.4 million in the
thirteen weeks ended August 1, 1998 from $18.7 million in the thirteen weeks
ended August 2, 1997, and in the twenty-six weeks ended August 1, 1998, gross
profit increased 6.0% to $38.4 million from $36.2 million in the same period
last year. Gross profit as a percentage of net sales for the thirteen weeks
ended August 1, 1998 was 24.9% versus 26.0% in the same period last year. Gross
profit as a percentage of net sales for the twenty-six weeks ended August 1,
1998 was 25.2% versus 25.9% in the same period last year. The decrease as a
percentage of net sales for both the thirteen and twenty-six week periods was
due to increased merchandise costs, warehouse distribution costs and occupancy
costs as a percentage of net sales.

         Operating, selling and administrative expenses increased $2.0 million
or 13.8% to $15.9 million in the thirteen weeks ended August 1, 1998 from $13.9
million in the thirteen weeks ended August 2, 1997, and in the twenty-six weeks
ended August 1, 1998, operating, selling and administrative expenses increased
12.5% to $30.6 million from $27.2 million in the same period last year.
Operating, selling and administrative expenses as a percentage of net sales for
the thirteen weeks ended August 1, 1998 increased to 20.4% from 19.4% 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 20.1% from
19.4% in the same period last year. The increase in this percentage for the
thirteen and twenty-six week periods was primarily due to higher store selling
expenses as a percentage of net sales.

         Depreciation and amortization increased $.5 million or 17.3% to $3.2
million in the thirteen weeks ended August 1, 1998 from $2.7 million in the
thirteen weeks ended August 2, 1997, and in the twenty-six week period
depreciation and amortization increased $.9 million, or 17.0% to $6.3 million
from $5.4 million in the same period last year. The increase in depreciation and
amortization is primarily the result of the increased number of superstores
operated by the Company.

         Interest expense was constant at $1.2 million for the thirteen weeks
ended August 1, 1998 and August 2, 1997. Interest expense for the twenty-six
week periods was relatively constant at $2.3 million for the twenty-six week
period ended August 1, 1998 versus $2.2 million in the year earlier period.



                                        7



<PAGE>   8

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

LIQUIDITY AND CAPITAL RESOURCES

         During the first twenty-six weeks of fiscal 1999, 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 3, 2002, and an unsecured working capital line of credit for $10
million, which is subject to annual renewal. As of August 1, 1998, $55.2 million
was outstanding under these facilities combined. Additionally, as of August 1,
1998, the Company has outstanding borrowings associated with the issuance of an
industrial revenue bond totaling $7.5 million.

         The Company's capital expenditures totaled $7.1 million during the
first twenty-six weeks of fiscal 1999. These expenditures were primarily used to
open new stores, perform renovations and improvements to existing stores, invest
in management information systems and general corporate purposes. Management
estimates that capital expenditures for the remainder of fiscal 1999 will be
approximately $15.0 million, and that such amounts will be used primarily for
new stores, renovations and remodeling of certain existing stores and
investments in management information systems. Management believes that existing
cash reserves 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 1999.

STOCK REPURCHASE

         On September 1, 1998, Books-A-Million, Inc. announced that its Board of
Directors has authorized the repurchase of up to 1,500,000 shares of its
outstanding common stock in the open market, subject to availability at prices
the Company deems appropriate.

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
(described as "related parties") are summarized in the following paragraph.

         The Company purchases a portion of its inventories for resale from
related parties; such purchases were $19.8 million in the twenty-six weeks
ended August 1, 1998, versus $15.8 million in the twenty-six weeks ended August
2, 1997. The increase in related party purchases is primarily due to the sales
growth the Company experienced. The Company sells a portion of its inventories
to related parties; such sales amounted to $1.7 million and $4.3 million in the
twenty-six weeks ended August 1, 1998 and August 2, 1997, respectively. This
decrease in related party sales is primarily due to decreased sales of bargain
books to related parties. Management believes these related party purchases and
sales do not have a significant impact on gross profit.



                                        8



<PAGE>   9



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

FINANCIAL POSITION

         During the twenty-six weeks ended August 1, 1998, the Company opened
five superstores. Inventory and debt balances at August 1, 1998 increased as
compared to January 31, 1998 due to seasonal fluctuations in inventory levels
and the five new superstores opened during the first half of fiscal 1999. The
store openings also resulted in increased property and equipment balances at
August 1, 1998, as compared to January 31, 1998.

YEAR 2000 COMPLIANCE

         The Company is in the process of evaluating its management and
information systems to identify and address the Year 2000 issues. Based on
present information, management does not believe that its related costs of Year
2000 compliance will be material to its financial position or results of
operations.



                                       9



<PAGE>   10



                             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 27.1 Financial Data Schedule (for SEC use only)

              Exhibit 27.2 Financial Data Schedule - Restated for fiscal
              1998 quarterly information (for SEC use only)

              Exhibit 27.3 Financial Data Schedule - Restated for fiscal 1997
              quarterly information (for SEC use only)

         (B) Reports on Form 8-K
             There were no reports filed on Form 8-K during the thirteen
             week period ended August 1, 1998



                                       10



<PAGE>   11



                                   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 15, 1998

                                   by:/s/ Clyde B. Anderson
                                   ------------------------
                                   Clyde B. Anderson
                                   President and
                                   Chief Executive Officer

Date: September 15, 1998

                                   by:/s/ Sandra B. Cochran
                                   ------------------------
                                   Sandra B. Cochran
                                   Executive Vice President,
                                   Chief Financial Officer
                                   and Assistant Secretary