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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Form 10-K

(Mark One)

For the fiscal year ended December 31, 2003

OR

For the transition period from              to             

Commission File No. 333-105746

Houghton Mifflin Company

(Exact Name of Registrant Issuer as Specified in Its Charter)

222 Berkeley Street

Boston, Massachusetts 02116

(617) 351-5000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

The aggregate market value of the Common Stock held by non-affiliates of the registrant on June 30, 2003 was zero.

Number of shares outstanding of each of the issuer’s classes of Common Stock as of March 30, 2004:

Common Stock, Par Value $1 Per Share, 1,000 shares.

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HOUGHTON MIFFLIN COMPANY

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Form 10-K

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Houghton Mifflin’s actual results could differ materially from the expectations described in the forward-looking statements. Some of the factors that might cause such a difference are discussed in the sections entitled “‘Safe Harbor’ Statement under Private Securities Litigation Reform Act of 1995” on page 12 and “Risk Factors” beginning on page 36 of this Form 10-K, respectively.

In this Form 10-K, the term “Houghton Mifflin” refers to Houghton Mifflin Company; the term “Publishing” refers to HM Publishing Corp., Houghton Mifflin’s parent; the term “Holdings” refers to Houghton Mifflin Holdings, Inc., Publishing’s parent; and the terms “we,” “our,” “ours,” “us,” and “Company” refer to Houghton Mifflin and its subsidiaries.

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PART I

Item 1. Business

(a) General Development of Business

Houghton Mifflin Company was incorporated in 1908 in Massachusetts as the successor to a partnership formed in 1880. Antecedents of the partnership date back to 1832. We are a leading publisher in the pre-kindergarten through grade twelve (“K-12”) and college education, trade and reference, and educational, clinical, and professional testing markets in the United States. In the K-12 education market, we focus on core subjects such as reading, language arts, literature, mathematics, world languages, and social studies, which we believe represent that market’s largest and highest priority funding areas. We also provide K-12 educational and clinical assessments and related services. In the college education market, we primarily target introductory courses with the largest enrollments. In the trade and reference market, we publish an extensive line of fiction and non-fiction books for adults and children, dictionaries, and other reference materials. In the professional testing markets, we provide various testing and assessment products and services. Our diverse product offerings are classified into four reporting segments:

K-12 Publishing. Our K-12 Publishing segment develops comprehensive educational programs, comprised primarily of textbooks, workbooks, supplemental materials, teaching guides, technology-based components, and other resources. We also provide testing and assessment services.

College Publishing. Our College Publishing segment publishes textbooks, ancillary products such as workbooks and study guides, technology-based instructional materials, teacher materials, and other materials, primarily for introductory college-level courses. We also sell college products in the high school advanced placement market.

Trade and Reference Publishing. This segment publishes fiction and non-fiction books for adults and children, dictionaries, and other reference materials for the trade market worldwide.

Other. This segment includes our Promissor Division as well as unallocated corporate items. Our Promissor Division develops and provides testing services and products for professional certification and licensure, as well as employment screening, placement and evaluation to regulatory entities, professional associations and corporations.

Acquisitions and Dispositions

On December 5, 2003, we acquired Edusoft, a San Francisco, California-based assessment platform provider. On October 14, 2003, we acquired Cognitive Concepts, Inc. (“CCI”), a provider of research-based supplemental education tools.

On April 1, 2003, Houghton Mifflin sold 100% of the outstanding shares of Curriculum Advantage, Inc. (“Curriculum Advantage”).

On December 30, 2002, Houghton Mifflin was acquired by, and subsequently merged with, Versailles Acquisition Corporation (the “Acquisition”), a wholly owned subsidiary of Holdings, a company beneficially owned by Thomas H. Lee Partners, L.P. and its affiliates (“THL”), Bain Capital, LLC and its affiliates (“Bain Capital”), and The Blackstone Group and its affiliates (“Blackstone” and collectively with THL and Bain Capital, the “Sponsors”). Holdings acquired all of Houghton Mifflin’s share capital from Vivendi Communications North America, Inc. (“Vivendi Communications,” together with its parent, Vivendi Universal, S.A., “Vivendi”) and on September 17, 2003 transferred its interest in Houghton Mifflin’s share capital to Publishing, its wholly owned subsidiary.

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On December 30, 2002, Houghton Mifflin acquired Kingfisher Publishing plc (“Kingfisher”), a UK-based publisher of reference material and fiction and non-fiction books for children.

On July 7, 2001, an indirect wholly owned subsidiary of Vivendi acquired 100% of Houghton Mifflin’s common stock (the “Vivendi Purchase”). Prior to the Vivendi Purchase, we were a public company.

(b) Financial Information About Segments;

Financial information about Houghton Mifflin’s reporting segments is in Part II, Item 8, Notes to Consolidated Financial Statements in Note 16 under the heading “Segment Information” beginning on page F-48, and Part II, Item 6, Selected Financial Data beginning on page 10.

(c) Narrative Description of Business

As a publisher, Houghton Mifflin shapes ideas, information, and instructional methods into various media that satisfy the lifelong need of people to learn, gain proficiency, and be entertained. We seek out, select, and generate worthwhile concepts and then enhance their value and accessibility through creative development, design, production (performed by outside suppliers), marketing, sales, and distribution. While Houghton Mifflin’s works have been published principally in printed form, we publish programs or works in other formats including computer software, laser discs, CD-ROM, and Internet-based platforms.

Business Segments

K-12 Publishing

Overview

Our K-12 Publishing segment develops and markets comprehensive educational programs and assessments targeted to the more than 53 million students in over 115,000 elementary and secondary schools in the United States, principally in the core academic subjects. Our products and services include textbooks, workbooks, supplemental materials, technology-based products, teaching guides and other resources, and provide teacher training, as part of a full-service offering to schools, educators, and students. With an in-house editorial staff supplemented by external specialists, the Company develops programs that can be aligned to state standards and customized for specific state requests. In addition, through Riverside and Edusoft, our K-12 Publishing segment offers a wide range of educational, cognitive, and developmental standardized testing products in print, CD-ROM, and online formats, targeting the educational and clinical assessment markets.

In the educational publishing industry, materials are often described as “basal” or “supplemental.” Basal materials are comprehensive programs intended to provide a complete course of study in a subject, either at a single grade level or across grade levels, and are the primary source of classroom instruction. They typically include a student textbook and a variety of ancillary materials such as teacher’s editions, charts, classroom displays, classroom handouts, workbooks, tests, CD-ROMs, and online materials. Supplemental materials provide focused information about a topic or practice in a particular skill, but not the comprehensive system of materials offered in a basal program. These materials are used both as alternatives and as supplements to core basal textbooks, enabling local educators to tailor standard programs to the specific needs of their students cost-effectively. Unlike K-12 basal programs, supplementals are purchased irrespective of adoption schedules, creating net sales and earnings that do not vary greatly with the adoption cycle. In addition, the development of supplemental materials tends to require significantly less capital investment than the development of a basal program.

Adoption Process

Adoption is the process by which public elementary and secondary schools select and purchase new instructional materials. The terms “adopt” and “adoption” are often used to describe the overall process of a state

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governing body’s official approval of basal programs for selection and purchase by that state’s school districts, or an individual school or school district’s selection and purchase of basal programs.

Twenty states approve basal programs on a statewide basis for a particular subject (“adoption states”). These states represent approximately one-half of the U.S. elementary and secondary school-age population. The selections typically occur every five to seven years according to a schedule publicized many years in advance. Historically, deviations from announced adoptions have been minimal. The funding for the purchase of the materials in an adoption state is approved at the state level and is appropriated by subject. Typically, a school or school district within an adoption state may use state funding to purchase instructional materials only from the list of programs that have been adopted by the particular state’s governing body. After the state entities have approved instructional materials, individual schools later decide the quantity and timing of their purchases.

In the other states, referred to as “open states” or “open territories,” each individual school or school district can purchase materials without restrictions. Schools and school districts in open territories often consider decisions made in large adoption states when making their own purchasing decisions.

In adoption states, the state school board’s decision to approve a certain program developed by an educational publisher depends on recommendations from textbook committees, which are often comprised of educators and curriculum specialists. To ensure the approval and subsequent successful marketing of a new textbook program, we conduct extensive market research, including: (i) discussions of the planned curriculum with the state level curriculum advisors to secure their support; (ii) development of prototype textbooks that are focus-tested with educators, often against competing programs, to gather feedback on the program’s content and design; and (iii) incorporation of qualitative input from existing customers in terms of classroom needs. Historically, it has been rare that any of the major educational publishers has failed to have a program listed in a state for which it has invested significantly in development. However, a publisher’s ultimate market share in a given state will generally depend on the quality of its program and materials, the magnitude of its marketing and sales efforts and the strength and nature of its relationships with key decision makers at the district level.

We generally develop a national edition for sale in open territories and smaller adoption states, while customizing the program for states that represent large purchasing opportunities. The sales organization presents to school boards and textbook selection committees, which in turn make recommendations to departments of education in adoption states and to district level school boards in open territories. We believe that documented success in adoption states, especially California, Texas, and Florida, which in the aggregate comprised almost 25% of the market in recent years, can often positively influence a publisher’s sales efforts in open territories.

Once an adoption schedule is set, we analyze upcoming opportunities and begin to develop content for our basal programs. The preparation for any new program includes an upfront investment in research and editorial costs, which generally begins up to three years before a major new adoption. Additional investment is required to tailor content to specific adoption states, with the amount of the investment depending upon the potential size of the opportunity but generally being less than the initial investment. Because the adoption cycle is staggered by subject, positive cash flows from existing programs are used to finance spending for new program development.

Supplementary materials and assessments are not adopted through this process. Supplementary materials are sold as off-the-shelf materials to schools and districts. Assessment programs are either bought as custom programs for state-wide assessment, following a request for proposal process, or as off-the-shelf products in schools and districts.

Operations

Our K-12 Publishing segment operates through five primary divisions: School, McDougal Littell, Great Source (including CCI), Riverside, and Edusoft. Each division benefits from strong relationships with its customers, most of which have been developed over many years through a service-based approach to designing, marketing, and implementing its programs.

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School. Our School Division develops and markets leading basal programs for the kindergarten through grade eight market utilizing the Houghton Mifflin brand. The division focuses its publishing portfolio on the subjects that have consistently received the highest priority from educators and politicians, namely reading, language arts (including spelling and English), mathematics, and social studies. In each subject, we design comprehensive learning programs and then market a variety of proprietary products to maximize teaching effectiveness, including textbooks, workbooks, teachers’ guides and resources, audio/visual aids, and technology-based products.

McDougal Littell. Our McDougal Littell Division develops and markets basal programs for the grades six through twelve market utilizing the McDougal Littell brand. The division publishes products and provides services in five of the six major educational subjects: literature/language arts, mathematics, social studies, world languages, and science. Vocational studies is the only subject in which McDougal Littell does not compete. The editorial process, like that of the School Division, involves significant market research. McDougal Littell designs broad programs for middle school grades and course-specific products for high school.

Great Source. Our Great Source Division develops and markets instructional, curriculum-based educational supplements for pre-kindergarten through grade twelve utilizing various brands, including the Write Source brand. The division offers such products as handbooks, instructional kits, summer school and after-school curricula, consumable student practice books, and test review books, as well as other resources. These materials supplement the core curriculum, allowing local educators to tailor standard programs for the specific needs of their students cost-effectively. Many of Great Source’s product lines sell well outside the adoption cycle, creating a recurring revenue stream that does not vary greatly with the adoption schedule.

Riverside. Our Riverside Division develops and markets testing and assessment products for the grades K-12 and clinical markets. The division’s tests include: (i) norm-referenced tests, or NRTs, which compare students to national performance levels; (ii) criterion-referenced tests, or CRTs, which are standards-based educational assessments, frequently customized for state educational entities; and (iii) clinical tests, which assess intellectual, cognitive and behavioral development.

Edusoft. Our Edusoft Division develops and sells testing technology to the K-12 market. The Edusoft product is a web-based assessment platform that helps school districts, administrators, teachers, and parents track student performance on state standards through three kinds of tests: state exams, district benchmarks, and in-class teacher tests. The division’s testing and reporting solution gives districts the information they need to help improve instruction and student performance.

Sales and Marketing

Our major regional sales offices for the K-12 Publishing segment are in California, Georgia, and Texas. Each division in the K-12 Publishing segment has its own dedicated sales force, comprised largely of former educators. The School and McDougal Littell Divisions each employ a sales force in excess of 200 people. The Great Source, Riverside, and Edusoft sales forces are smaller. The Great Source sales force works with the School and McDougal Littell Divisions to maximize customer relationships. McDougal Littell also markets our College Division’s texts for high school advanced placement courses.

We focus on maintaining strong relationships with decision-makers in the adoption states, including teachers, district administrators, and state policymakers. Our sales forces canvass the open territory states, strengthening relationships with decision-makers. Marketing efforts begin at the conception of the development of a new program. In the case of states where our programs are already established, marketing efforts are continuous. Formal market research efforts include educator focus groups, prototypes of student and ancillary materials, and comparisons against competing products. Additional informal market research includes ongoing feedback from the sales force in identifying teachers’ and students’ requirements. Our marketing and editorial staffs work together closely to incorporate the results of research into product development and to develop the

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most updated, research- and needs-based curricula. Once product development is complete, our sales campaign involves product presentations and sampling along with presentations by key authors. Sending free sample copies is an essential part of marketing instructional materials. In addition, once a program is purchased, we may provide a variety of free materials to purchasers. These free materials, usually called “implementation” materials, are a cost of doing business. We also conduct training sessions within a school district that has purchased our materials to help teachers learn to use our products effectively and provide professional development services for which we can charge fees.

College Publishing

Overview

Our College Publishing segment publishes textbooks, ancillary products such as workbooks and study guides, technology-based instructional materials, teacher materials, and other materials, primarily for introductory college-level courses. We target the more than 15 million students in over 4,000 institutions in the post-secondary higher education market. We concentrate on the largest introductory college courses in core disciplines such as mathematics, chemistry, history, psychology, modern languages, accounting, business, and remedial studies, although some recent growth has come from new publications for upper-level courses. Our library of titles for introductory college courses enables us to generate significant sales in the high school advanced placement market.

In the post-secondary market, the faculty generally selects the textbooks and other materials to be used in class, acting either as a committee or individually. Affiliated college bookstores and large retail chains order post-secondary educational materials based on professors’ selections for purchase by college students. Historically, approximately 30% of all student purchases in the college market are used books. In the private career school market, the institution generally purchases products directly from the publisher and requires students to purchase those products from the institution as part of the tuition. For high school advanced placement courses, which generate a significant portion of the College Division’s net sales, the selection of college-level materials is made through the adoption or open-territory selection processes described above.

College textbooks generally are updated every three to four years by authors and publishers. Textbooks with a current-year copyright date are referred to in the industry as “frontlist,” textbooks with a subsequent year copyright date are referred to as “early in-stock,” and textbooks with an older copyright date are referred to as “backlist.” The success of each year’s frontlist and early in-stock titles significantly influences sales of backlist titles in subsequent years. Consequently, most of the selling and marketing activities of college publishers focus on promoting frontlist and early in-stock titles.

Operations

The College Division’s products are offered primarily to the post-secondary higher education market in traditional print, electronic, and Internet-based formats; virtually all major print textbooks now have an integrated technology component such as a website or multimedia CD-ROM. The College Division also sells many of its products to high school advanced placement courses through a dedicated advanced placement sales force within McDougal Littell and to certificate-granting, for-profit institutions that offer skill-based training and job placement.

We have a portfolio of titles by highly regarded authors who are experts in their respective disciplines. Our authors, as is common industry practice, agree to certain non-compete provisions that prevent them from authoring for other publishers’ books and technology-based products that directly compete with the products that they create for us. Authors who are experts in their field write the majority of a book while the in-house editorial staff focuses on pedagogical development, layout, graphics, and refinement.

A significant portion of our college content is digitally stored and indexed, which enables the efficient development of new electronic and print products, optimizes the customization process, and allows publication in

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concurrent multi-media formats. Additionally, with nearly all college students utilizing the Internet, the College Division supports more than 600 textbook-related websites for students and professors.

Sales and Marketing

The College Division employs a sales and marketing force in excess of 180 people that promotes products to college faculty through a combination of on-campus visits, shipments of sample products, and direct marketing. As professors have embraced e-mail and the Internet to a greater extent in recent years, the role of direct marketing, especially e-mail correspondence, has increased significantly. Our sales force continually canvasses college faculty with our products. In addition, a dedicated McDougall Littell sales force sells advanced placement products in the high school market.

Trade and Reference Publishing

Overview

The Trade and Reference Publishing segment consists of the Trade and Reference Division, a publisher of quality fiction and non-fiction books for adults and children, dictionaries, and other reference materials, and Kingfisher, a U.K.-based publisher of childrens’ fiction and non-fiction titles and reference materials for the trade market worldwide.

We are a niche publisher specializing in high-quality adult and children’s books that generate strong backlist sales. Among our publications, our adult list includes fiction, non-fiction, field guides, and cookbooks. Our children’s list includes board books, picture books, and young adult novels. The market for reference materials, including dictionaries and thesauruses, is characterized by stable spending patterns and significant concentration among a small number of well-recognized brands. Despite the growing accessibility and desirability of the Internet as an information source, we believe the Internet has not significantly affected the usage levels of print dictionaries and thesauruses, which offer relative convenience and ease of use. Nevertheless, we believe web-based and other electronic resources will continue to develop and drive industry growth by addressing changing consumer behavior. Moreover, certain reference publishers, including us, have taken steps to digitize existing content in order to exploit online opportunities. Typically, these publishers will license their content to online providers.

Operations

The Trade and Reference Publishing segment publishes quality fiction and non-fiction books for adults and children, dictionaries, and other reference works under brands such as Houghton Mifflin, Mariner Books, Clarion Books, American Heritage dictionaries, and Kingfisher. Our Trade and Reference Publishing segment generates a majority of its sales from its backlist of more than 3,000 titles, thereby reducing its dependence on introducing bestsellers each year.

Sales and Marketing

The Trade and Reference Publishing segment’s marketing and publicity strategies focus on both booksellers and end consumers and contribute significantly to the success of an author and/or title. The Trade and Reference Publishing segment employs a sales force that principally covers the reseller marketplace, including retail chains, independent bookstores, online booksellers, wholesalers, and a variety of non-traditional book outlets. We also use our other divisions’ sales forces to sell trade and reference products into the K-12 and college markets. Reference materials, in particular, are sold to K-12 schools and colleges, as well as to office supply distributors and businesses. Our Trade and Reference Publishing segment also licenses book rights and content to paperback publishers, book clubs, websites, and other publishers as well as electronic businesses in the United States and abroad.

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Other

Overview

Promissor is a developer and provider of testing services and products for professional certification and licensure. Generally, the professional assessment market has a highly fragmented customer base with numerous niche participants competing in various segments. Regulatory and professional associations typically select vendors based on detailed responses to extensive requests for proposals. We believe the test-vendor selection process is generally based on a combination of variables that represent “best value” to the agency or organization, including the vendor’s reputation as a quality service provider and is primarily based on the quality of the service provided and the nature of the relationship developed with the key decision-maker. Services are contracted for multiple years and are characterized by high renewal rates. In addition, this segment includes unallocated corporate items.

Operations

Promissor provides testing services and products for professional certification and licensure as well as employment screening, placement, evaluation, and fingerprinting in the United States and internationally. Promissor and its predecessors have operated in the assessment industry for more than twenty years. This division has approximately 140 proprietary testing centers nationwide. In addition, it offers information technology and other certification testing services at over 500 locations internationally. It works with clients to design assessment solutions, provide content management software tools, and deliver tests or support services. On behalf of its regulatory and professional association clients, Promissor provides the tests required to license or certify insurance brokers, nurse aides, real estate agents, and many other occupations and professions.

Sales and Marketing

Promissor markets its services to regulatory, licensing and certification entities, trade associations, and corporations worldwide.

Printing and Binding; Raw Materials

We outsource the printing and binding of our products, with approximately 80% of our printing currently handled by Quebecor Publishing, R.R. Donnelly & Sons, Banta Corporation, Von Hoffman Press, Webcrafters, and Lehigh Press. We have a procurement agreement with each printer that provides volume and scheduling flexibility and price predictability. We have a longstanding relationship with each printer.

Paper is one of the principal raw materials we use. We purchase our paper directly from four suppliers and one paper merchant with whom we have various agreements that protect against price increases. We have not experienced and do not anticipate experiencing difficulty in obtaining adequate supplies of paper for our operations, as we have contracts with numerous reliable suppliers that assure us 100% availability on all main paper grades that we procure. While local prices fluctuate depending upon local market conditions, average market paper prices remained relatively flat in 2003.

Seasonality; Customers

In the K-12 market, we sell primarily to state education departments and individual school districts and schools. We market our College products to faculty at colleges; once our textbooks are selected, they are ordered by affiliated college bookstores and large retail chains for purchase by students. We market our Trade and Reference products to various retail chains, wholesalers, and bookstores, and our Promissor services to regulatory and trade associations and corporations.

In the K-12 market, we typically receive payment for our products and services from individual school districts, and to a lesser extent individual schools and states. In the college and trade and reference markets, we receive payment for our products and services from book distributors and retail booksellers. In the case of our testing and assessment products and services, we receive payment from the individually contracted parties.

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We derive approximately 85% of our revenues from educational publishing in the K-12 and College Publishing segments, which are markedly seasonal businesses. Schools and colleges make most of their purchases in the second and third quarters of the calendar year, in preparation for the beginning of the school year in September. Thus, we realize approximately 75% of consolidated net sales in these quarters.

Sales of K-12 instructional materials and customized testing products are also cyclical, with some years offering more sales opportunities than others. The amount of funding available at the state level for educational materials also has a significant effect on our year-to-year revenues. No single customer accounts for more than 10% of our consolidated net sales. Our largest single customer is Barnes & Noble, which purchases both Trade and Reference and College products. Although the loss of a single customer (including Barnes & Noble) or a few customers would not have a material adverse effect on our business, schedules of school adoptions and market acceptance of our products can materially affect year-to-year revenue performance.

Distribution

We operate five distribution facilities from which we coordinate our own distribution process: two in Indianapolis, Indiana and one in each of Geneva, Illinois; Kennesaw, Georgia; and Dallas, Texas. Additionally, some adoption states require us to use in-state textbook depositories for educational materials sold in that particular state. Riverside ships its products directly from vendor site locations. We utilize delivery firms including United Parcel Service, Inc., FedEx Corporation, and DHL Worldwide Express Inc. to facilitate the principally ground transportation of products.

Competition

We sell our products in highly competitive markets. In these markets, product quality and customer service are major factors in generating sales growth. Other factors affecting sales growth in the K-12 market include the level of student enrollment in subjects that are up for adoption and the level of spending per student in each state and/or school district. Profitability is affected by industry developments including: (i) increasingly competitive selling, sampling, and implementation costs; (ii) rising development costs due to customers’ requirements for more customized instructional materials and assessment programs; and (iii) higher technology costs due to the increased number of textbook program components developed in digital formats.

We compete with large publishers such as Reed Elsevier plc, Pearson plc, and The McGraw-Hill Companies, Inc. We have three primary competitors in the K-12 market, seven in the college market, six in the trade and reference market and two in the corporate certification and testing market.

Employees

As of February 29, 2004, we employed approximately 3,459 regular employees. Approximately 1,381 of our employees are located in Boston, Massachusetts; 1,103 in Chicago, Illinois; 422 in Philadelphia, Pennsylvania; and 232 in Indianapolis, Indiana. Our sales force makes up approximately 22% of our employees. None of our employees are subject to collective bargaining agreements. We believe that our relations with our employees are generally good.

Intellectual Property

Our principal intellectual property assets consist of our trademarks and copyrights in our content, as well as other rights in our brand names. Substantially all of our publications are protected by copyright, whether registered or unregistered, either in our name or in the name of the author of the work. Such copyrights protect our exclusive right to publish the work in the United States and in many countries abroad for specified periods: in most cases for the author’s life plus 70 years, but in any event a minimum of 28 years for works published prior to 1978 and 35 years for works published thereafter.

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We do not own any material patents, franchises or concessions, but we have registered certain trademarks and service marks in connection with our publishing businesses. We believe we have taken, and take in the ordinary course of business, all appropriate available legal steps to protect our intellectual property in all relevant jurisdictions.

Environmental Matters

We generally contract with independent printers and binders for their services, and our operations are generally not otherwise affected by environmental laws and regulations. However, as the owner and lessee of real property, regardless of fault, it is possible that we could face liability if contamination were to be discovered on the properties we own or lease. We are currently unaware of any material environmental liabilities or other material environmental issues relating to our properties or operations and anticipate no material expenditures for compliance with environmental laws or regulations.

(d) Financial Information About Geographic Areas.

Export sales are not significant to Houghton Mifflin’s four reporting segments.

Item 2. Properties

Our principal executive office is located at 222 Berkeley Street, Boston, Massachusetts.

The following table describes the approximate building areas, principal uses and the years of expiration on leased premises of our significant operating properties as of January 15, 2004. We believe that these properties are suitable and adequate for our present and anticipated business needs, satisfactory for the uses to which each is put, and, in general, fully utilized.

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In addition, we lease approximately 10 smaller sales offices. Promissor leases approximately 140 additional smaller facilities for use as testing centers.

Item 3. Legal Proceedings

We are from time to time involved in litigation incidental to the conduct of our business. We believe that no litigation currently pending against us, if adversely determined, would have a material adverse effect on our consolidated financial position or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

By written consent in lieu of a meeting of the sole stockholder of Houghton Mifflin, dated October 8, 2003, the size of the board of directors was increased from ten to eleven and Anthony Lucki was elected as a director.

The following directors continued their terms in office following the date of the consent: David Blitzer, Charles Brizius, Robert Friedman, Jonathan Goodman, Seth Lawry, James Levy, Mark Nunnelly, Michael Perik, Scott Sperling, and Michael Ward.

By written consent in lieu of a meeting of the sole stockholder of Houghton Mifflin, dated December 3, 2003, the size of the board of directors was increased from eleven to twelve and Steve Gandy was elected as a director.

The following directors continued their terms in office following the date of the consent: David Blitzer, Charles Brizius, Robert Friedman, Jonathan Goodman, Seth Lawry, James Levy, Anthony Lucki, Mark Nunnelly, Michael Perik, Scott Sperling, and Michael Ward.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of equity Securities

Houghton Mifflin has no publicly traded common stock.

Item 6. Selected Financial Data

We derived the selected historical consolidated statement of operations data and consolidated statement of cash flow data for the years December 31, 2003 and 2002 and the periods July 7, 2001 through December 31, 2001 and January 1, 2001 through July 6, 2001 and the selected historical consolidated balance sheet data as of December 31, 2003 and December 31, 2002 from the historical financial statements of Houghton Mifflin appearing elsewhere in this annual report on Form 10-K, which have been audited by PricewaterhouseCoopers LLP, independent accountants for the years ended December 31, 2003 and 2002, and Ernst & Young LLP for the periods July 7, 2001 through December 31, 2001 and January 1, 2001 through July 6, 2001. We derived the selected historical consolidated statement of operations data and consolidated statement of cash flow data for the years ended December 31, 2000 and 1999 and the selected historical consolidated balance sheet data as of December 31, 2001, 2000 and 1999 from the historical financial statements of Houghton Mifflin, which are not included in this Form 10-K, and which have been audited by Ernst & Young LLP, independent accountants.

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You should read the selected historical consolidated financial data set forth below in conjunction with, and the data is qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and accompanying notes thereto included elsewhere in this Form 10-K.