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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended April 3, 2004

OR

For the transition period from              to             .

Commission file number 1-3246

ProQuest Company

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (734) 761-4700

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 by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    x

The number of shares of the Registrant’s Common Stock, $.001 par value, outstanding as of May 10, 2004 was 28,478,877.

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ProQuest Company and Subsidiaries

Consolidated Statements of Operations

For the Thirteen Week Periods Ended April 3, 2004 and March 29, 2003

(In thousands, except per share data)

(Unaudited)

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

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ProQuest Company and Subsidiaries

Consolidated Balance Sheets

As of April 3, 2004, January 3, 2004 and March 29, 2003

(In thousands)

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

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ProQuest Company and Subsidiaries

Consolidated Statements of Cash Flows

For the Thirteen Week Periods Ended April 3, 2004 and March 29, 2003

(In thousands)

(Unaudited)

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

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ProQuest Company and Subsidiaries

Notes to the Consolidated Financial Statements

(Dollars and shares in thousands, except per share amounts)

(Unaudited)

Note 1 - Basis of Presentation

The Consolidated Financial Statements include the accounts of ProQuest Company and its subsidiaries, including ProQuest Information and Learning (“PQIL”) and ProQuest Business Solutions (“PQBS”), and are unaudited.

As permitted under the Securities and Exchange Commission (“SEC”) requirements for interim reporting, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. Certain reclassifications to the 2003 Consolidated Financial Statements have been made to conform to the 2004 presentation. We believe that these financial statements include all necessary and recurring adjustments for the fair presentation of the interim period results. These financial statements should be read in conjunction with the Consolidated Financial Statements and related notes included in our annual report for the fiscal year ended January 3, 2004.

Note 2 - Significant Accounting Policies

Accounts Receivable. Accounts receivable are stated net of the allowance for doubtful accounts that was $1,703, $1,702 and $1,470 at April 3, 2004, January 3, 2004 and March 29, 2003, respectively.

Inventory. Inventory costs include material, labor and overhead. Inventories are stated at the lower of cost (determined using the first-in, first-out (“FIFO”) method) or market, net of reserves.

The components of inventory are shown in the table below as of the dates indicated:

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Property, Plant, Equipment, and Product Masters. Property, plant, equipment and product masters are recorded at cost. The straight-line method of depreciation is primarily used, except for PQIL product masters (which represent the cost to create electronic and microform master document copies which are subsequently used in the production process to fulfill customers’ information requirements), which are depreciated on the double declining balance method. Estimated lives range from 10 to 40 years for buildings and building improvements, 3 to 15 years for machinery and equipment, and 10 years for product masters. The carrying value of the product masters is $161,950 (net of $154,462 of accumulated depreciation), $154,518 (net of $142,465 of accumulated depreciation), and $138,653 (net of $234,193 of accumulated depreciation) at April 3, 2004, January 3, 2004, and March 29, 2003, respectively.

Stock Option Plan. As permitted by Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock Based Compensation”, we account for our stock option plan using the intrinsic method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. Accordingly, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. Pro forma net earnings and earnings per share disclosures for employee stock option grants based on the fair value-based method (defined in SFAS No. 123), whereby the fair value of stock-based awards at the date of grant would be subsequently expensed over the related vesting periods, are indicated below:

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The fair value of option grant is estimated on the date of grant using the Black-Scholes option-pricing model or a binomial model. The following assumptions for the Black-Scholes option-pricing model are as follows:

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Derivative Financial Instruments and Hedging Activities. All outstanding derivative instruments are recognized as assets or liabilities in the balance sheet at fair value.

Net Earnings per Common Share. Basic net earnings per common share is computed by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted net earnings per common share is computed by dividing net earnings by the weighted average number of common shares outstanding during the period, and reflects the potential dilution that could occur if all of our outstanding stock options that are in-the-money were exercised, using the treasury stock method. Under the treasury stock method, the tax-effected proceeds that would be received from the exercise of all in-the-money options are assumed to be used to repurchase shares. A reconciliation of the weighted average number of common shares and equivalents outstanding in the calculation of basic and diluted net earnings per common share is shown in the table below for the periods indicated:

Options to purchase 2,022 shares and 2,668 shares were outstanding at April 3, 2004 and March 29, 2003, respectively, but were not included in the computation of diluted net earnings per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, would be antidilutive. The 2,022 shares of options outstanding at April 3, 2004 does not include the 2,329.5 shares conditionally granted on February 4, 2004 due to the fact that these options are being submitted for shareholder approval at our Annual Shareholder Meeting.

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Note 3 – Comprehensive Income

Comprehensive income or loss includes net earnings, net unrealized loss on derivative instruments related to interest rate hedging, foreign currency translation adjustments and minimum pension liability.

Comprehensive income is shown in the table below for the periods indicated:

The net unrealized loss on derivative instruments, foreign currency translation adjustments and minimum pension liability do not impact our current income tax expense.

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Note 4 – Segment Reporting

Information concerning our reportable business segments is shown in the tables below for the periods indicated:

Note 5 – Investments in Affiliates

On December 4, 2000, we entered into a Limited Liability Company Agreement with DaimlerChrysler Corporation, Ford Motor Company, and General Motors Corporation to form OEConnection (“OEC”).

The Limited Liability Company Agreement provides that our three partners will divide any losses equally up to the first $21.0 million and we will share in any income/losses after that point. To date, OEC’s losses have not exceeded this $21.0 million threshold. For reporting purposes, OEC’s balance sheet and statement of operations are not consolidated with our results. Beginning January 1, 2003 until January 31, 2007, we earn a royalty on OEC’s net revenues, which will be recorded in “Net sales” in our Consolidated Statement of Operations. The royalty recognized was $302 and $258 for the thirteen weeks ended April 3, 2004 and March 29, 2003, respectively.

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Note 6 – Goodwill, Software and Other Intangible Assets

In the first quarter of fiscal 2002, we adopted SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment on an annual basis. We will perform our annual goodwill impairment test during the second quarter.

The changes in the carrying amount of goodwill by segment for the thirteen weeks ended April 3, 2004 are as follows:

For the first thirteen weeks of fiscal 2004, we capitalized approximately $128 of costs related to external-use software. Additionally, we amortized $203 related to external-use software in the 13 week period ended April 3, 2004.

As of April 3, 2004, our intangible assets and related accumulated amortization consisted of the following:

We recorded $559 and $284 of amortization expense during the thirteen weeks ended April 3, 2004 and March 29, 2003, respectively. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the succeeding 5 years is as follows: remainder of 2004-$2,052; 2005-$2,569; 2006-$2,392; 2007-$2,023, 2008-$673 and 2009 thereafter-$45. These amounts may vary as acquisitions or dispositions occur in the future and as purchase price allocations are finalized.

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During the thirteen weeks ended April 3, 2004, we acquired the following intangible assets:

Note 7 – Other Current Assets

Other current assets at April 3, 2004, January 3, 2004 and March 29, 2003 consisted of the following:

Note 8 – Other Assets

Other assets at April 3, 2004, January 3, 2004 and March 29, 2003 consisted of the following:

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Note 9 – Accrued Expenses

Accrued expenses at April 3, 2004, January 3, 2004 and March 29, 2003 consisted of the following:

Note 10 – Other Liabilities

Other liabilities at April 3, 2004, January 3, 2004 and March 29, 2003 consisted of the following:

Note 11 – Pension, and Other Postretirement Benefit Plans

Components of net periodic benefit costs are: