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, as amended, that involve a number of risks and uncertainties. A number of factors could cause our actual results, performance, achievements 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 our specific market areas; inflation or deflation; economic conditions in general and in our specific market areas, including the length of time that the U.S. economy remains in the current recession; the number of store openings and closings; the profitability of certain product lines and capital expenditures; future liquidity; liability and other claims asserted against us; uncertainties related to the Internet and our Internet operations; and other factors referenced herein and in Part I, Item 1A, RISK FACTORS, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2009. In addition, such forward-looking statements are necessarily dependent upon 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, stockholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements. We disclaim 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.

General

We were founded in 1917 and currently operate 221 retail bookstores, including 201 superstores, concentrated in the southeastern United States. Our growth strategy is focused on opening superstores in new and existing market areas, particularly in the Southeast. In addition to opening new stores, management intends to continue its practice of reviewing the profitability trends and prospects of existing stores and closing or relocating under-performing stores or converting stores to different formats.

Comparable store sales are determined each fiscal quarter during the year based on all stores that have been open at least 12 full months as of the first day of the fiscal quarter. Any stores closed during a fiscal quarter are excluded from comparable store sales as of the first day of the quarter in which they close. Remodeled and relocated stores are also included as comparable stores. The factors affecting the future trend of comparable store sales include, among others, overall demand for products the Company sells, the Company's marketing programs, pricing strategies, store operations and competition.

Results of Operations



The following table sets forth statement of operations data expressed as a
percentage of net sales for the periods presented.



                                                 Thirteen Weeks Ended
                                                May 2, 2009 May 3, 2008
          Net sales                               100.0%      100.0%
          Gross profit                             29.9%       29.6%
          Operating, selling and administrative    23.8%       24.9%
          expenses
          Depreciation and amortization            3.0%        3.0%
          Operating income                         3.0%        1.7%
          Interest expense, net                    0.1%        0.4%
          Income before income taxes               2.8%        1.3%
          Income tax provision                     1.1%        0.5%
          Net income                               1.7%        0.8%

The following table sets forth net sales data by segment for the periods presented:

     Segment Information (dollars in thousands)

     Net Sales                                 Thirteen Weeks Ended

                                    May 2, 2009 May 3, 2008 $ Change  % Change
     Retail Trade                      $117,236    $114,984    $2,252      2.0%
     Electronic Commerce Trade            5,518       6,326     (808)   (12.8)%
     Intersegment Sales Elimination     (4,585)     (5,429)      844      15.5%
     Net Sales                         $118,169    $115,881    $2,288      2.0%

The increase in net sales for the retail trade segment for the thirteen weeks ended May 2, 2009 compared to the thirteen weeks ended May 3, 2008 was due to an increase in our total number of stores from 207 at May 3, 2008 to 221 on May 2, 2009. Comparable store sales for the thirteen weeks ended May 2, 2009 decreased $1.2 million, or 1.1%, to $104.6 million when compared with the same thirteen week period for the prior year. The decrease in comparable store sales for the thirteen week period ended May 2, 2009 was due to difficult macroeconomic conditions which had a negative impact on consumer spending. During the thirteen weeks ended May 2, 2009, we opened one superstore. The12.8% decrease in net sales for the electronic commerce segment was also due to difficult macroeconomic conditions.

Gross profit increased $1.0 million, or 0.3%, to $35.3 million in the thirteen weeks ended May 2, 2009, when compared with $34.3 million in the same thirteen week period for the prior year. Gross profit as a percentage of net sales for the thirteen weeks ended May 2, 2009 and May 3, 2008 was 29.9% and 29.6%, respectively. The increase in gross profit as a percentage of net sales for the first quarter ended May 2, 2009 was the result of lower discounts and increased sales of higher margin bargain books and general merchandise.

Operating, selling and administrative expenses were $28.2 million in the thirteen weeks ended May 2, 2009, compared to $28.9 million in the same period last year. Operating, selling and administrative expenses as a percentage of net sales for the thirteen weeks ended May 2, 2009 decreased to 23.8% from 24.9% in the same period last year. The decrease in operating, selling and administrative expenses as a percentage of net sales for the thirteen-week period ended May 2, 2009 was due to a non-recurring expense reduction of $764,000 for forfeitures of stock grants and other compensation for an employee who resigned in the first quarter of fiscal 2010 and a net reduction in severance costs of $228,000 for employees that were terminated in the thirteen week period ended May 2, 2009 from the severance costs for the thirteen week period ended May 3, 2008. The total impact of these items was a non-recurring reduction in operating, selling and administrative expenses of $992,000 ($610,000 net of taxes) compared with the prior-year first quarter.

Depreciation and amortization expense increased slightly to $3.6 million in the thirteen week period ended May 2, 2009, compared to $3.5 million in the same period last year. This increase is due to the stores opened in fiscal year 2009. Depreciation and amortization expense as a percentage of net sales for the thirteen weeks ended May 2, 2009 was 3.0%, which is flat compared to the same period last year.

The following table sets forth operating income data by segment for the periods presented:

     Segment Information (dollars in thousands)

     Operating Income                        Thirteen Weeks Ended

                                 May 2, 2009 May 3, 2008  $ Change   % Change
     Retail Trade                    $3,565      $2,224      $1,341      60.3%
     Electronic Commerce Trade          204          4          200     5,000%
     Intersegment Elimination of
       Certain Costs                   (243)       (211)       (32)    (15.2)%
     Total Operating Income          $3,526       $2,017     $1,509      74.8%

The increase in operating income for the retail segment for the thirteen week period ended May 2, 2009 was due to higher retail sales as discussed above, as well as lower store selling expenses as a percentage of sales versus the same thirteen week period in the prior year. The decrease in operating, selling and administrative expenses for the thirteen-week period ended May 2, 2009 was due to a non-recurring expense reduction for forfeitures of restricted stock grants and other compensation for an employee who resigned in the first quarter of fiscal 2010 and a net reduction in severance costs for employees that were terminated in the thirteen-week period ended May 2, 2009 from the severance costs for the thirteen-week period ended May 3, 2008.

Net interest expense was $0.2 million, or 0.1% as a percentage of net sales, for the thirteen weeks ended May 2, 2009, compared to $0.5 million, or 0.4% of net sales, in the same period last year. The decrease in net interest expense was due to a lesser amount of debt and lower interest rates.

The Company did not close any stores during the thirteen weeks ended May 2, 2009 or the thirteen weeks ended May 3, 2008 in a market where the Company does not expect to retain the closed stores' customers at another store in the same market.

Liquidity and Capital Resources

Our primary sources of liquidity are cash flows from operations, including credit terms from vendors, and borrowings under our credit facility. We have an unsecured revolving credit facility that allows borrowings of up to $100 million, for which no principal repayments are due until the facility expires in July 2011. Availability under the credit facility is reduced by outstanding letters of credit issued thereunder. The credit facility has certain financial and non-financial covenants, the most restrictive of which is the maintenance of a minimum fixed charge coverage ratio. We were in compliance with all of the covenants, including the minimum fixed charge coverage ratio, as of May 2, 2009. As of May 2, 2009 and January 31, 2009 there were outstanding borrowings under this credit facility of $12.7 million and $15.8, respectively, and the face amount of letters of credit issued under the credit facility were $2.2 million and $2.2 million, respectively. The maximum and average outstanding balances (including letters of credit issued thereunder) during the thirteen weeks ended May 2, 2009 were $29.6 million and $20.3 million, respectively, compared to $48.8 million and $42.8 million, respectively, for the same period in the prior year. The decrease in the maximum and average outstanding balances from the prior year was due to improved profitability, a decrease in inventory and improved accounts payable leverage.

During fiscal 1996 and fiscal 1995, the Company acquired and constructed certain warehouse and distribution facilities with the proceeds of loans made pursuant to an industrial development revenue bond (the "Bond"), which was secured by a mortgage interest in these facilities. As of May 2, 2009 and January 31, 2009, there was $6.7 million of borrowings outstanding under the Bond, which bears interest at variable rates (1.50% as of May 2, 2009). The Bond has a maturity date of December 1, 2019, but also has a purchase provision obligating the Company to repurchase the Bond at an earlier date. In fiscal 2007, the current bondholder extended the date of the Company's purchase obligation of the Bond until July 1, 2011 and did not require a mortgage interest to secure the Bond. Such an extension may be renewed annually by the bondholder, at the Company's request, to a date no more than five years from the renewal date.

Financial Position

Inventory balances were $196.8 million as of May 2, 2009, compared to $204.3 million as of January 31, 2009. The reduction in inventory was due to continued inventory management in anticipation of lower sales. Trade accounts payable balances and related party accounts payable were $90.2 million in the aggregate as of May 2, 2009, compared to $96.7 million as of January 31, 2009. The decrease in accounts payable was due to a reduction in inventory purchases in anticipation of lower sales, timing of payment for seasonal products and timing of merchandise returns during the thirteen weeks ended May 2, 2009. Accrued expenses were $33.8 million as of May 2, 2009, compared to $35.5 million as of January 31, 2009. The decrease in accrued expenses was due to redemption of gift cards, reduction of annual restricted stock and bonus accruals for employees who resigned or were terminated and the timing of other payments.

Future Commitments

The following table lists the aggregate maturities of various classes of obligations and expiration amounts of various classes of commitments related to Books-A-Million, Inc. at May 2, 2009 (in thousands):

Payments Due Under Contractual

Obligations
                  Total    FY 2010    FY 2011   FY 2012   FY 2013   FY 2014  Thereafter
Short-term
borrowings        $12,670    $12,670      $ --      $ --      $ --      $ --       $ --
Long-term debt
-
industrial
revenue bond        6,720         --     6,720        --        --        --         --
Subtotal of        19,390     12,670     6,720        --        --        --         --
debt
Interest              591        161       200       230
Operating         193,252     40,152    34,221    27,224    22,024    18,157     51,474
leases
Total of         $213,233    $52,983   $41,141   $27,454   $22,024   $18,157    $51,474
obligations

(1) Short term borrowings represent borrowings under the $100 million credit facility that the Company anticipates repaying within the next 12 months.

(2) This table excludes any amounts related to the payment of the $2.1 million of income tax uncertainties, as the Company cannot make a reasonably reliable estimate of the periods of cash settlements with the respective taxing authorities.

Guarantees

From time to time, we enter into certain types of agreements that require us to indemnify parties against third-party claims. Generally, these agreements relate to: (a) agreements with vendors and suppliers, under which we may provide customary indemnification to our vendors and suppliers in respect of actions they take at our request or otherwise on our behalf, (b) agreements with vendors who publish books or manufacture merchandise specifically for us to indemnify the vendors against trademark and copyright infringement claims concerning the books published or merchandise manufactured on our behalf, (c) real estate leases, under which we may agree to indemnify the lessors for claims arising from our use of the property, and (d) agreements with our directors, officers and employees, under which we may agree to indemnify such persons for liabilities arising out of their relationship with us. We maintain Directors and Officers Liability Insurance, which, subject to the policy's conditions, provides coverage for indemnification amounts payable by us with respect to our directors and officers up to specified limits and subject to certain deductibles.

The nature and terms of these types of indemnities vary. The events or circumstances that would require the Company to perform under these indemnities are transaction and circumstance specific. The overall maximum amount of obligations cannot be reasonably estimated. Historically, the Company has not incurred significant costs related to performance under these types of indemnities. No liabilities have been recorded for these obligations on the Company's balance sheet at each of May 2, 2009 and January 31, 2009, as such liabilities are considered de minimis.

Cash Flows

Operating activities provided cash of $5.2 million in the thirteen week period ended May 2, 2009 and used cash of $10.0 million in the thirteen week period ended May 3, 2008, and included the following effects:

• Cash provided by inventories in the thirteen week period ended May 2, 2009 was $7.5 million and cash used for inventories in the thirteen week period ended May 3, 2008 was $5.6 million. The change versus the prior year was primarily due to lower purchases of inventory and higher sales.

• Cash used for accounts payable was $6.5 million and $7.1 million in the thirteen week periods ended May 2, 2009 and May 3, 2008, respectively.

• Cash used for accrued expenses was $1.4 million and $6.7 million in the thirteen week periods ended May 2, 2009 and May 3, 2008, respectively.

• Depreciation and amortization expenses were consistent at $3.6 million and $3.5 million in the thirteen week periods ended May 2, 2009 and May 3, 2008, respectively.

Cash used in investing activities reflected a $1.8 million and $4.8 million net use of cash for the thirteen week periods ended May 2, 2009 and May 3, 2008, respectively. Cash was used primarily to fund capital expenditures for the new store, store relocations, renovation and improvements to existing stores, and investments in management information systems.

Financing activities used cash of $3.9 million in the thirteen week period ended May 2, 2009 and provided cash of $14.9 million in the thirteen week period ended May 3, 2008. Financing activities used cash in the thirteen week period ended May 2, 2009 primarily for repayments under our credit facility ($3.1 million) and dividend payments ($0.8 million).

Related Party Activities

See Note 3, Related Party Transactions, to the Condensed Consolidated Financial Statements for information regarding related party activities.

Critical Accounting Policies

A summary of our critical accounting policies is included in the Management Discussion and Analysis section of our Form 10-K for the year ended January 31, 2009 filed with the Securities and Exchange Commission. No changes to these policies have occurred during the thirteen weeks ended May 2, 2009.

New Accounting Pronouncements

See Note 8, Recent Accounting Pronouncements, to the Condensed Consolidated Financial Statements for information regarding new accounting pronouncements.