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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004

OR

For the transition period from:              to             

COMMISSION FILE NUMBERS: 333-110720 and 333-105746

HM PUBLISHING CORP.

HOUGHTON MIFFLIN COMPANY

(Exact name of registrants as specified in their charters)

222 BERKELEY STREET

BOSTON, MASSACHUSETTS 02116

(Address of principal executive offices)

(617) 351-5000

(Registrants’ telephone number, including area code)

Indicate by check mark whether HM Publishing Corp. (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  ¨    No  x

Indicate by check mark whether Houghton Mifflin Company (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 check mark whether the registrants are accelerated filers (as defined in Rule 12b-2 of the Act): Yes  ¨    No  x

The number of shares outstanding of HM Publishing Corp.’s common stock as of May 14, 2004 was 1,000 shares.

The number of shares outstanding of Houghton Mifflin Company’s common stock as of May 14, 2004 was 1,000 shares.

This Form 10-Q is a combined quarterly report being filed separately by two registrants: HM Publishing Corp. and Houghton Mifflin Company. Unless the context indicates otherwise, any reference in this report to “Publishing” refers to HM Publishing Corp., and any reference to “Houghton Mifflin” refers to Houghton Mifflin Company, the wholly-owned operating subsidiary of Publishing. The “Company,” “we,” “us,” and “our” refer to HM Publishing Corp. together with Houghton Mifflin Company.

Houghton Mifflin Company meets the conditions set forth in general instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

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HM PUBLISHING CORP. AND HOUGHTON MIFFLIN COMPANY

INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars, except share data)

See accompanying Notes to Unaudited Consolidated Financial Statements

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UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands of dollars, except share data)

See accompanying Notes to Unaudited Consolidated Financial Statements

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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of dollars)

See accompanying Notes to Unaudited Consolidated Financial Statements

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

See accompanying Notes to Unaudited Consolidated Financial Statements

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands of dollars)

See accompanying Notes to Unaudited Consolidated Financial Statements

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HM PUBLISHING CORP. AND HOUGHTON MIFFLIN COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Tables in thousands)

(1) BASIS OF PRESENTATION

THE COMPANY

The unaudited consolidated financial statements of HM Publishing Corp. (“Publishing”) include the accounts of its wholly owned subsidiary, Houghton Mifflin Company (“Houghton Mifflin,” a separate public reporting company, together with Publishing, the “Company”). The unaudited consolidated financial statements present Publishing and Houghton Mifflin as of and for the three month period ended March 31, 2004 and for the three month period ended March 31, 2003. Unless otherwise noted, the information provided pertains to both Publishing and Houghton Mifflin.

On September 12, 2003, Publishing, a wholly owned subsidiary of Houghton Mifflin Holdings, Inc. (“Holdings”), was incorporated. Holdings contributed its 100% equity interest in Houghton Mifflin to Publishing on September 17, 2003. In October 2003, Publishing issued $265.0 million of 11.50% senior discount notes generating proceeds of $145.2 million, net of issuance costs. Publishing is the sole obligor of these notes. Other than this debt obligation, related deferred issuance costs and associated accrued liabilities, and related interest expenses, net of taxes, all other assets, liabilities, income, expenses, and cash flows presented for all periods represent those of its wholly owned subsidiary Houghton Mifflin.

The accompanying unaudited consolidated financial statements of Publishing and Houghton Mifflin have been prepared in accordance with generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2003 included in Publishing’s Registration Statement on Form S-4 (File No. 333-110720) filed on April 22, 2004, and Houghton Mifflin’s Form 10-K for the year ended December 31, 2003 filed on March 30, 2004. All adjustments (consisting of normal recurring accruals) that, in the opinion of management, are necessary for the fair presentation of this interim financial information have been included.

Results of the three month periods ended March 31, 2004 and 2003 are not necessarily indicative of results to be expected for the full year. The effect of seasonal business fluctuations and the occurrence of some costs and expenses in annual cycles require certain estimates to determine interim results.

Certain reclassifications have been made to prior period financial statements in order to conform to the presentation used in the 2004 interim financial statements.

DISPOSALS

CURRICULUM ADVANTAGE, INC.

On April 1, 2003, Houghton Mifflin sold 100% of the outstanding shares of Curriculum Advantage, Inc. (“Curriculum Advantage”) for $0.3 million in cash and receipt of secured notes and inventory of $0.5 million. The accompanying unaudited consolidated financial statements present Curriculum Advantage as discontinued operations as of and for the period ended March 31, 2003.

(2) RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation Number (“FIN”) 46, “Consolidation of Variable Interest Entities” and, in December 2003, issued a revision to that

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HM PUBLISHING CORP. AND HOUGHTON MIFFLIN COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

interpretation. FIN 46R replaces FIN 46 and addresses consolidation by business enterprises of variable interest entities that possess certain characteristics. A variable interest entity (“VIE”) is defined as (a) an ownership, contractual or monetary interest in an entity where the ability to influence financial decisions is not proportional to the investment interest, or (b) an entity lacking the invested capital sufficient to fund future activities without the support of a third party. FIN 46R establishes standards for determining under what circumstances VIEs should be consolidated with their primary beneficiary, including those to which the usual condition for consolidation does not apply. The Company adopted FIN 46 during 2003 and adopted FIN 46R in the first quarter of 2004. The adoptions of FIN 46 and FIN 46R did not have any effect on the Company’s consolidated financial statements.

In December 2003, the FASB revised the Statement of Financial Accounting Standards (“SFAS”) No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” The revised statement requires additional disclosures, including information about plan assets and the benefits expected to be paid and contributions expected to be made in future years. The additional disclosure requirements are effective for U.S. plans in 2003 financial statements and for non-U.S. plans in 2004 financial statements. The Company has provided the additional disclosures required for its pension plans for the periods ended March 31, 2004 and 2003.

At its January 7, 2004 meeting, the FASB finalized its discussions of the proposed Financial Staff Position (“FSP”) SFAS No. 106a, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” The proposed FSP was issued for comment in December 2003 to address the accounting and disclosure implications that are expected to arise as a result of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”), which was enacted on December 8, 2003. The Act introduces a prescription drug benefit under Medicare (“Medicare Part D”) as well as a federal subsidy to sponsors of retiree healthcare benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. The issue is whether an employer that provides postretirement drug coverage (a plan) should recognize the effects of the Act on its accumulated postretirement benefit obligation (“APBO”) and net postretirement benefit costs and, if so, when and how those effects should be accounted for. Specific authoritative guidance on the accounting for the federal subsidy is pending and the guidance, when issued could require the Company to change previously reported information. The proposed FSP permits a sponsor of a postretirement health care plan that provides a prescription drug benefit to make a one-time election to defer accounting for the effects of the Act. The Company has decided to postpone the election until a final FSP is issued. In accordance with this FSP, the net periodic postretirement benefit cost in Note 11 does not reflect the effects of the Act on the plan. Management is currently evaluating the impact of the Act on its consolidated financial statements.

(3) GOODWILL AND INTANGIBLE ASSETS

Components of the Company’s goodwill and identifiable intangible assets are as follows:

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HM PUBLISHING CORP. AND HOUGHTON MIFFLIN COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

The Company recorded amortization expense for its amortizable intangible assets of $33.0 million and $36.5 million for the three months ended March 31, 2004 and 2003, respectively. Estimated amortization expense related to the Company’s intangible assets, excluding the $33.0 million amortization recorded through March 31, 2004, is as follows:

The changes in the carrying amount of goodwill for each of the Company’s reporting segments for the three months ended March 31, 2004 were:

Adjustments in the three months ended March 31, 2004 were for professional fees associated with the acquisition of Edusoft in the fourth quarter of 2003.

(4) INVENTORY

Inventories, net of applicable reserves, consist of the following:

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

(5) DEBT AND BORROWING AGREEMENTS

Long term debt consists of the following:

Houghton Mifflin maintains a $325.0 million senior secured revolving credit facility (the “Revolver”) subject to borrowing base limitations. The Revolver, for which Houghton Mifflin pays annual commitment fees, expires on December 30, 2008. There were no borrowings under this facility at March 31, 2004.

On October 3, 2003 Publishing sold $265.0 million of 11.50% senior discount notes due on October 15, 2013 (the “Senior Discount Notes”), generating net proceeds of $145.2 million in a private placement. The net proceeds from this offering were ultimately distributed to Holdings’ equity holders as a return of capital. The Senior Discount Notes will not pay cash interest until after October 15, 2008, at which time the accreted value of these notes will be $265.0 million. Publishing is the sole obligor of these notes, which are structurally subordinated to the debt and liabilities of Houghton Mifflin. Publishing conducts all of its business through Houghton Mifflin, a wholly owned subsidiary, and its only operating asset. Houghton Mifflin is not obligated to make funds available to Publishing for payment on the Senior Discount Notes.

On January 30, 2003, Houghton Mifflin issued $600.0 million of 8.25% senior notes that mature on February 1, 2011 (the “Senior Notes”) and $400.0 million of 9.875% senior subordinated notes that mature on February 1, 2013 (the “Senior Subordinated Notes,” together with the Senior Notes, the “Senior and Senior Subordinated Notes”). The net proceeds from these notes were used to repay previously existing long-term debt instruments including senior secured notes due in 2004 and 2006 and the bridge and term loans used to finance the acquisition of Houghton Mifflin by Holdings in December 2002. A debt extinguishment charge of approximately $48.4 million was recognized in the first quarter of 2003 as a result of this refinancing.

Houghton Mifflin’s Revolver and Senior and Senior Subordinated Notes include various financial covenants including certain leverage and coverage ratios. The ratios are calculated quarterly using EBITDA, which is defined as earnings before interest, taxes, depreciation, and amortization, and other adjustments allowed under the terms of the credit agreement or indentures governing such debt instruments. The agreements also contain customary covenants, including limitations on the Houghton Mifflin’s ability to incur debt or execute restricted

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

payments, including dividends, make investments, or sell assets, and definitions of events of default. The primary covenants under the Revolver are the total leverage ratio, senior leverage ratio, interest coverage ratio, and consolidated capital expenditures for 2004. For 2004, the Revolver requires the total leverage ratio to be no greater than 5.10:1; the senior leverage ratio to be no greater than 3.50:1; the interest coverage ratio to be not less than 2.10:1; and that consolidated capital expenditures not exceed $184 million. Under the indentures governing Houghton Mifflin’s Senior and Senior Subordinated Notes, the primary covenants are tied to the calculation of a fixed charge coverage ratio based on EBITDA. The fixed charge coverage ratio is required to be at least 2.0:1.

(6) DERIVATIVE FINANCIAL INSTRUMENTS

During December 2003, Houghton Mifflin entered into interest rate swap agreements in conjunction with a notional $200.0 million of the Senior Notes. The interest rate swap agreements effectively converted $200.0 million of Houghton Mifflin’s debt from a fixed rate to a floating rate in connection with its ongoing debt management strategy. These swap agreements did not qualify for hedge accounting and accordingly changes in the fair value of these swaps were recorded as interest income or expense in the consolidated statement of operations. During March 2004, Houghton Mifflin terminated these swap agreements and recorded $3.9 million of interest income in the unaudited consolidated Statement of Operations for the three months ended March 31, 2004.

In April 2004, Houghton Mifflin entered into interest rate swap agreements in conjunction with a notional $200.0 million of the Senior Notes. The interest rate swap agreement effectively converts $200.0 million of Houghton Mifflin’s 8.25% fixed rate debt to a floating rate. These swap agreements do not qualify for hedge accounting and accordingly changes in the fair value of these swaps will be recorded as interest income or expense in the consolidated statement of operations in future periods.

(7) RESTRUCTURING

The following table sets forth the activity in restructuring reserves for the three months ended March 31, 2004.

As of March 31, 2004, $10.7 million is current and $1.8 million of the restructuring reserve is considered long-term. Houghton Mifflin expects to substantially complete its restructuring activities by the end of 2004 and incur the majority of the work-force related and other expenses by December 31, 2004 with certain facilities related costs attributed to long-term lease obligations and severance costs paid over time extending beyond that date.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

(8) COMPREHENSIVE LOSS

Comprehensive loss for the Company was primarily computed as the sum of the Company’s net loss and changes in cumulative translation adjustment. The following table sets forth the calculation of the Company’s comprehensive loss for the three months ended March 31, 2004 and 2003.

(9) STOCK-BASED COMPENSATION

The Houghton Mifflin Holdings, Inc. 2003 Stock Option Plan (the “Plan”) provides for the grant of options to purchase Holding’s Class A Common Stock. The board of directors of Holdings administers the Plan and may, from time to time, grant option awards to directors and employees of the Company. The Plan is accounted for in accordance with Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees” and related interpretations. Under this method, no compensation expense is recognized as long as the exercise price equals or exceeds the market price of the underlying stock on the date of grant. Houghton Mifflin elected the disclosure-only alternative permitted under SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock Based Compensation — Transition and Disclosure,” for fixed stock-based awards to employees.

The Company used the Black-Scholes option pricing model to estimate the fair value of options granted. The Black Scholes model was developed for use in estimating the value of traded options that have no vesting restrictions and are fully transferable. The stock options of the Plan have characteristics significantly different from those of traded options; therefore, the Black-Scholes option pricing model may not provide a reliable measure of the fair value of options issued under the Plan.

The fair value of stock options granted during the period ended March 31, 2004 was $0.2 million on the date of grant using the Black Scholes option pricing model with the following assumptions: fair value of $100, expected dividend yield of 0.00%, risk-free interest rate of 2.80%, expected volatility of 35%, and an expected life of approximately 5 years.

Stock option activity during the period was as follows:

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

The following table illustrates the effect on net loss as if the Company had determined compensation cost, based on the fair value at the grant date for stock options under the provisions of SFAS No. 123.