<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K/A
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
HOUGHTON MIFFLIN RETIREMENT SAVINGS PLAN
222 Berkeley Street
Boston, Massachusetts 02116-3764
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
Houghton Mifflin Company
222 Berkeley Street
Boston, Massachusetts 02116-3764
Page 1 of 32
<PAGE>
HOUGHTON MIFFLIN RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
FORM 11-K/A
ITEM 4: Page No.
Report of Independent Auditors 4
Audited Financial Statements
----------------------------
Statements of Financial Condition
as of December 31, 1994 5
Statements of Financial Condition
as of December 31, 1993 6
Statements of Changes in Participants'
Equity for the year ended December 31, 1994 7
Statements of Changes in Participants'
Equity for the year ended December 31, 1993 8
Statements of Changes in Participants'
Equity for the year ended December 31, 1992 9
Notes to Financial Statements 10 - 25
Supplemental Schedules
----------------------
Schedule of Assets Held for
Investment Purposes 26 - 27
Schedule of Reportable Transactions 28 - 30
Schedule of Party-in-Interest Transactions 31
Consent of Independent Auditors is filed as an
Exhibit to this Annual Report 32
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Committee appointed by the Board of Directors of
Houghton Mifflin Company to administer the Plan, has duly
caused this Amendment to the Annual Report on Form 11-K/A
to be signed by the undersigned, thereunto duly authorized.
Houghton Mifflin Retirement
Savings Plan
Date: June 27, 1995 By:/S/Gary L. Smith
--------------------
Gary L. Smith
Chairman, Houghton Mifflin
Company Retirement Committee
-3-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Committee and Participants
Houghton Mifflin Retirement Savings Plan
We have audited the accompanying statements of financial condition of the
Houghton Mifflin Retirement Savings Plan at December 31, 1994 and 1993, and the
related statements of changes in participants' equity for each of the three
years in the period ended December 31, 1994. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Houghton Mifflin Retirement
Savings Plan at December 31, 1994 and 1993, and its changes in participants'
equity for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of (1) assets held for investment purposes as of December 31, 1994, (2)
reportable transactions for the year ended December 31, 1994 and (3) party-in-
interest transactions for the year ended December 31, 1994 are presented for
purposes of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974 and are not a required part of the basic financial statements. The
supplemental schedules have been subjected to the auditing procedures applied in
our audit of the 1994 financial statements and, in our opinion, are fairly
stated in all material respects in relation to the 1994 basic financial
statements taken as a whole.
/S/ERNST & YOUNG LLP
_____________________
ERNST & YOUNG LLP
Boston, Massachusetts
June 27, 1995
-4-
<PAGE>
HOUGHTON MIFFLIN RETIREMENT SAVINGS PLAN
STATEMENT OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31, 1994
-----------------------------------------------------------------------
Managed Houghton Mutual
Income Stock Fund Total
Fund Fund Investments Loans Plan
-----------------------------------------------------------------------
(In thousands of dollars)
ASSETS
<S> <C> <C> <C> <C> <C>
Investments (Note 3) $ 24,216 $ 29,020 $ 14,508 $ - $ 67,744
Loans - - - 98 98
Contributions and
other receivables, net 61 256 252 - 569
------ ------ ------ ----- ------
Total assets $ 24,277 $ 29,276 $ 14,760 $ 98 $ 68,411
======= ====== ====== ===== ======
LIABILITIES AND
PARTICIPANTS'
EQUITY
Withdrawals and
distributions
payable $ 12 $ 1 $ 15 $ - $ 28
Participants'
equity 24,265 29,275 14,745 98 68,383
------ ------ ------ ----- ------
Total liabilities
and participants'
equity $ 24,277 $ 29,276 $ 14,760 $ 98 $ 68,411
====== ====== ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
HOUGHTON MIFFLIN RETIREMENT SAVINGS PLAN
STATEMENT OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31, 1993
----------------------------------------------------
Fixed Houghton
Income Stock Equity Total
Fund Fund Fund Plan
----------------------------------------------------
(In thousands of dollars)
ASSETS
<S> <C> <C> <C> <C>
Investments (Note 3) $ 24,206 $ 31,992 $ 9,086 $ 65,284
Fund transfers
outstanding 14 (77) 63 -
Contributions and other
receivables, net 103 2 - 105
------ ------ ----- ------
Total assets $ 24,323 $ 31,917 $ 9,149 $ 65,389
====== ====== ===== ======
LIABILITIES AND
PARTICIPANTS'
EQUITY
Withdrawals and
distributions
payable $ 420 $ 458 $ 65 $ 943
Participants'
equity 23,903 31,459 9,084 64,446
------ ------ ----- ------
Total liabilities
and participants'
equity $ 24,323 $ 31,917 $ 9,149 $ 65,389
====== ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE>
HOUGHTON MIFFLIN RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
<TABLE>
<CAPTION>
Year Ended December 31, 1994
------------------------------------------------------------------
Managed Houghton Mutual
Income Stock Fund Total
Fund Fund Investments Loans Plan
------------------------------------------------------------------
(In thousands of dollars)
<S> <C> <C> <C> <C> <C>
Investment income:
Interest income $ 1,146 $ 5 $ 1 $ - $ 1,152
Dividend income 393 562 406 - 1,361
------ ------ ------ ---- ------
Net investment
income 1,539 567 407 - 2,513
Realized gains (losses) (20) 871 33 - 884
Unrealized decrease in
fair value of investments
(Note 3) (29) (3,578) (333) - (3,940)
------ ------ ------ ----- -------
1,490 (2,140) 107 - (543)
Contributions:
Employees 1,245 1,650 1,866 - 4,761
Transfer of plan
assets from
McDougal, Littell 707 - 3,286 98 4,091
Houghton Mifflin
Company - 1,966 - - 1,966
------ ------ ------ ----- ------
Total contributions 1,952 3,616 5,152 98 10,818
------ ------ ------ ----- ------
3,442 1,476 5,259 98 10,275
Fund transfers (337) (1,079) 1,416 - -
Withdrawals and
distributions
(Note 1) (2,716) (2,562) (1,009) - (6,287)
Administrative
expenses (27) (19) (5) - (51)
------ ------ ------ ----- ------
Net increase (decrease)
in participants'
equity 362 (2,184) 5,661 98 3,937
Participants' equity
at beginning of
year 23,903 31,459 9,084 - 64,446
------ ------ ------ ----- ------
Participants' equity
at end of year $ 24,265 $29,275 $ 14,745 $ 98 $ 68,383
====== ====== ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
-7-
<PAGE>
HOUGHTON MIFFLIN RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
<TABLE>
<CAPTION>
Year Ended December 31, 1993
-----------------------------------------------------
Fixed Houghton
Income Stock Equity Total
Fund Fund Fund Plan
-----------------------------------------------------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Investment income:
Interest income $ 1,370 $ 3 $ - $ 1,373
Dividend income 300 594 475 1,369
------ ------ ------ ------
Net investment
income 1,670 597 475 2,742
Realized gains 26 3,371 24 3,421
Unrealized increase
in fair value of
investments
(Note 3) 9 2,898 208 3,115
------ ------ ------ ------
1,705 6,866 707 9,278
Contributions:
Employees 1,552 1,747 1,527 4,826
Houghton Mifflin
Company - 1,896 - 1,896
------ ------ ------ ------
Total contributions 1,552 3,643 1,527 6,722
------ ------ ------ ------
3,257 10,509 2,234 16,000
Fund transfers 1,273 (5,087) 3,814 -
Withdrawals and
distributions
(Note 1) (2,727) (3,715) (660) (7,102)
------ ------ ------ ------
Net increase in
participants'
equity 1,803 1,707 5,388 8,898
Participants' equity
at beginning of
year 22,100 29,752 3,696 55,548
------ ------- ------ ------
Participants' equity
at end of year $23,903 $31,459 $ 9,084 $ 64,446
====== ====== ====== ======
</TABLE>
See accompanying notes to financial statements.
-8-
<PAGE>
HOUGHTON MIFFLIN RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
<TABLE>
<CAPTION>
Year Ended December 31, 1992
----------------------------------------------------
Fixed Houghton
Income Stock Equity Total
Fund Fund Fund Plan
----------------------------------------------------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Investment income:
Interest income $ 1,459 $ 6 $ - $ 1,465
Dividend income 229 605 94 928
------ ------ ----- ------
Net investment
income 1,688 611 94 2,393
Realized gains 12 417 - 429
Unrealized increase
in fair value of
investments
(Note 3) 20 7,812 13 7,845
------ ------ ----- ------
1,720 8,840 107 10,667
Contributions:
Employees 2,122 1,940 519 4,581
Houghton Mifflin
Company - 1,794 - 1,794
------ ------ ----- ------
Total contributions 2,122 3,734 519 6,375
------ ------ ----- ------
3,842 12,574 626 17,042
Fund transfers (369) (2,713) 3,082 -
Withdrawals and
distributions
(Note 1) (2,020) (1,501) (12) (3,533)
------ ------ ----- ------
Net increase in
participants'
equity 1,453 8,360 3,696 13,509
Participants' equity
at beginning of
year 20,647 21,392 - 42,039
------ ------ ----- ------
Participants' equity
at end of year $22,100 $ 29,752 $3,696 $55,548
====== ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
-9-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
1. Plan Description
The following brief description of the Houghton Mifflin Retirement Savings Plan
("the Plan") provides only general information. Participants should refer to the
Plan document for a more complete description of the Plan's provisions.
General
- -------
The Houghton Mifflin Retirement Savings Plan, formerly known as the Houghton
Mifflin Company Employees' Saving and Thrift Plan, is a defined contribution
plan adopted as of January 1, 1981, and amended December 1, 1994. It is a long-
term savings and investment program to which Houghton Mifflin Company ("the
Company") and its employees contribute. The Plan was designed to comply with the
provisions of Sections 401(a) and 401(k) of the Internal Revenue Code and is
subject to the applicable provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
In connection with the acquisition of McDougal, Littell & Company by Houghton
Mifflin Company on March 1, 1994, the plan assets and participants' equity
balances of the McDougal, Littell & Company Employee Savings and Stock Ownership
Plan, which qualify under Internal Revenue Code Section 401(k) were transferred
to the Plan effective December 1, 1994.
Participation
- -------------
All regular employees of Houghton Mifflin Company and its participating
subsidiaries are eligible. Part-time, non-temporary employees who provide 1,000
or more hours of service in the first twelve months after hire are also
eligible. As of April 1, 1992, union employees became eligible. Employees are
not eligible for Company matching contributions until
-10-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
1. Plan Description (continued)
Participation - continued
- -------------------------
successful completion of one year of eligible service. There was no
significant impact on the net assets of the Plan from this amendment.
Vesting
- -------
Each participant is immediately vested in his or her voluntary salary
contributions plus the earnings thereon. A participant becomes fully vested in
the Company's matching contributions once the contribution has been made.
Contributions
- -------------
Eligible employees can elect to contribute in total 1% to 15% of their
compensation, excluding compensation in excess of $150,000 for 1994, $235,840
for 1993, and $228,860 for 1992, subject to an annual deferral limit for plans
operating under Section 401(k) of the Internal Revenue Code ($9,240 in 1994), to
any of the ten investment options offered by the Plan.
Employee contributions are made from participants' wages through payroll
deductions. Employee's contributions, including rollover contributions, amounted
to approximately $303,000 and $362,000 in 1994 and 1993, respectively.
The Company may elect to match an employee's contribution equal to 1%, 2%, or 3%
of the employee's compensation. Except for union employees, the Company's
contribution is currently 3% of the employee's compensation. Commencing in March
1994, union employees became eligible for a 1% Company matching
-11-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
1. Plan Description (continued)
Contributions - continued
- -------------------------
contribution. The matching contribution excludes compensation in excess of
$150,000 in 1994, $235,840 in 1993, and $228,860 in 1992. Subject to the above
limitations, the Company will match participant contributions to the Houghton
Stock Fund on a 100% basis, the Managed Income Fund, and the Mutual Fund
Investments on a 50% basis. Company contributions are invested solely in the
Houghton Stock Fund. Federal, and in most states, state and local income taxes
on these contributions are deferred until the monies are withdrawn from the
Plan.
Loans
- -----
Subject to the approval of the Retirement Committee ("the Committee"), a
participants may obtain a loan against their account balances up to 50% of the
total aggregate value. Only one loan may be outstanding at a time. The minimum
amount is established at $500. The maximum outstanding loan balance, including
accrued interest, is $50,000. Participant loans are secured by the participant's
account balance. The interest rate on the loan is fixed at the prime rate on the
date the loan is taken. The rate is set on the first business day of each fiscal
quarter. Loans are amortized on a straight-line basis over the term of the loan
and must be repaid by installments, at a minimum quarterly, and must be repaid
within five years. The payments can be made by after-tax payroll deductions.
-12-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
1. Plan Description (continued)
Trustee
- -------
Effective December 1, 1994, the Plan is administered under the terms of a Trust
Agreement with Fidelity Management Trust Company. The Plan's Trust Agreement
conforms to guidelines for salary reduction plans under Section 401(k) of the
Internal Revenue Code. Prior to December 1, 1994, the Plan was administered
under a trust agreement with State Street Bank and Trust.
Under the Trust Agreement, the Company remits contributions directly to the
Trustee. The Trustee has discretionary authority, subject to certain limitations
as specified in the agreement, for the purchase and sale of investments. The
Trustee holds temporary cash reserves in short-term funds until permanent
investment can be made.
Benefit payments
- ----------------
Upon retirement or termination, distribution of account balances may be made as
follows: (1) a lump-sum payment of shares of Company stock and/or cash, (2)
extended cash payments over a period not to exceed 20 years, (3) periodic
payment of any amount until age 70 1/2, at which time another option must be
elected. Retiring or terminating members under the age of 65 who have over
$3,500 in the Plan may elect to defer payment of their account balance until a
later date. Members may make early withdrawals under certain limited conditions
as set forth in the Plan.
-13-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
1. Plan Description (continued)
Plan amendment or termination
- -----------------------------
While the Company currently intends to continue the Plan, it reserves the right
to amend, change or terminate the Plan at any time. In the event of termination,
all interests will be distributed to the participants or continue to be
administered by the Plan committee and later distributed in a manner approved by
the Internal Revenue Service.
Income Tax Status
- -----------------
Determination letters from the U.S. Treasury Department indicate that the
Houghton Mifflin Company Employees' Savings and Thrift Plan (the Plan) is
qualified under section 401(a) of the Internal Revenue Code and is therefore
exempt from federal income taxes under provisions of Section 501(a) of the Code.
An application was made to the Internal Revenue Service for a determination
- ---------------------------------------------------------------------------
letter ruling on the qualified status of the Plan amendment and restatement as
- ------------------------------------------------------------------------------
of December 1, 1994. No ruling has been received. The Retirement Committee is
- ------------------------------------------------ ---------------------------
not aware of any course of action or series of events that have occurred that
- -----------------------------------------------------------------------------
might adversely affect the Plan's qualified status.
- --------------------------------------------------
Participant withdrawals and distributions are subject to federal income tax to
the extent such withdrawals exceed the participant's contribution to the Plan
made during the years 1981, 1982, and 1983. Participant and Company
contributions to the Plan made after January 1, 1984, are subject to federal
income tax at the time of withdrawal or distribution.
-14-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
1. Plan Description (continued)
Income Tax Status - continued
- -----------------------------
The timing of the recognition of taxable income by the participants is governed
by applicable provisions of the Internal Revenue Code.
Other
- -----
For the period January 1, 1994 through November 30, 1994, recordkeeping fees and
guaranteed group annuity contract insurer fees were borne by the Plan. Effective
December 1, 1994, all Plan administrative expenses are borne by the Plan. Prior
to January 1, 1994, administrative expenses of the Plan were borne by the
Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
- ---------------------
The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with generally accepted accounting principles. The
supplemental schedules have been prepared to satisfy the reporting and
disclosure requirements of ERISA.
-15-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
Participants' Accounts
- ----------------------
Each participant's account is credited with the participant's salary
contributions, employer contributions, and an allocation of Plan earnings. Net
investment income is allocated to participants based upon the ratio each
participant's share bears to the respective fund. The approximate number of
participants in each of the investment programs is as follows:
<TABLE>
December 31,
1994 1993
-------------------
<S> <C> <C>
Managed Income Fund 1,310 630
Houghton Stock Fund 1,700 890
Mutual Fund Investments 1,530 -
Equity Fund - 540
</TABLE>
Investments
- -----------
All investments at December 31, 1994 and 1993, were reported at fair market
value as determined by quoted market prices on a national exchange on the last
day of the Plan year. The current values of the investments in the mutual funds
are determined by the number of units held by the Plan and the current value of
each unit based upon quotations obtained from national securities exchanges on
the last day of the Plan year. Purchases and sales of securities were recorded
on the trade date of the related transactions.
Dividend income is recognized on the ex-dividend date and interest income is
recorded as earned. All dividend and interest income is reinvested in the
respective funds.
-16-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
2. Summary of Significant Accounting Policies - continued
Commencing on December 1, 1994, participants may direct their contributions
among ten investment options and were allowed to change their prior investment
elections subject to certain restrictions imposed by the Plan.
Investments in group annuity contracts with insurance companies are valued at
cost plus accumulated interest, which approximates current market value.
The State Street Bank and Trust Short-Term Income Fund and/or the Fidelity Trust
Management Company Institutional Cash Portfolio are valued at its redemption
price.
In 1990, the Trustee purchased four group annuity contracts, also known as
guaranteed income contracts (GIC), issued by four insurance companies. A
contract which matured in January 1992 was replaced with a mutual fund, the
Federated Short-Intermediate Government Trust. A contract which matured in July
1993 was replaced with an additional group annuity contract and a diversified
guaranteed income contract pool.
As of December 31, 1994, the common stock of Houghton Mifflin Company is valued
at the closing price on the last day of the Plan year as stated on the New York
Stock Exchange. Previously, the Company's common stock was valued at the average
of the high and low market prices on the last day of the Plan year. Under the
share accounting method used to account for participants' share activity in the
Houghton Stock Fund, no realized gains or losses on withdrawals and
distributions.
-17-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
2. Summary of Significant Accounting Policies - continued
Realized gains and losses are calculated based on the difference between the
value of the assets at the beginning of the year or at the time of purchase
during the year and the selling price. The unrealized increase/(decrease) in the
fair value of investments held is the difference in the fair value of the assets
at the beginning of the year and the fair value of the assets at the end of the
Plan year end.
For fiscal years beginning in 1990, ERISA reporting requires the disclosure of
unrealized increases/(decreases) for certain investments on Form 5500, "Annual
Return/Report of Employee Benefit Plans," to be calculated using the fair market
value of the securities at the beginning of the year or the purchase price of
the securities if purchased during the year, rather than the historical cost
basis required by generally accepted accounting principles. Under this method,
-----------------
the unrealized increase/(decrease) in the fair value of the Houghton Stock Fund
was approximately $(1,050,000), $5,910,000, and $8,160,000 for the years ended
December 31, 1994, 1993 and 1992, respectively.
3. Investments
A brief description of the Plan funds and investment options is provided below:
Managed Income Fund, formerly known as the Fixed Income
Fund, principally invests in pools and individual
insurance contracts, and other fixed income
investments. The investments held consist of the
following:
Group Annuity Insurance Contracts - Investments in
insurance contracts that guarantee a specific rate
of return on the invested capital over the life of
the contract.
-18-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
3. Investments - continued
Fidelity Managed Income Portfolio and the T. Rowe Price
Stable Value Fund - These investments seek preservation
of capital and a competitive level of income over time.
Investments are high quality investment contracts with
variable and fixed rates that have maturities between
one and seven years.
Houghton Stock Fund is invested in Houghton Mifflin Company
Common Stock that is either purchased by the Trustee or
contributed by Houghton Mifflin Company. A small portion
is invested in cash equivalents for liquidity purposes.
Mutual Fund Investments provide for investment
in various mutual funds, which include a bond fund,
asset allocation funds, and aggressive growth funds, all
of which may directly or indirectly invest in equity
investments. Seven of the mutual fund options are
managed by Fidelity Investments (R), a company affiliated
with the Trustee, Fidelity Management Trust Company.
Fidelity Puritan(R) Fund - This is a balanced fund that
seeks current income and some capital appreciation. The
portfolio principally invests in stocks and bonds.
Fidelity Contrafund - This is a fund which seeks
capital appreciation by investing in equities which
are believed to be undervalued, or fallen out of favor.
Fidelity Magellan(R) Fund - This fund seeks long-term
capital appreciation through investment in common
stocks and convertible securities of U.S. companies.
The fund diversifies investments among a variety of
industries and sectors within the market.
-19-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
3. Investments - continued
Fidelity Investment-Grade Bond Fund - This fund seeks
to provide a high rate of income consistent with
reasonable investment risk and capital appreciation
where appropriate. The underlying investments consist
of investment-grade debt securities rated Baa or higher
by Moody's Investor Service, Inc., or at least BBB by
Standard & Poor's Corporation. The fund may also
invest in preferred stocks.
Fidelity Asset Manager(TM) - This mutual fund seeks high
total return with reduced risk over the long-term. The
investment portfolio consists of domestic and foreign
stocks, bonds, and short-term instruments of U.S.
and foreign issuers.
Fidelity Asset Manager: Income - This fund seeks a high
level of current income by maintaining a diversified
portfolio of stocks, bonds, short-term instruments, and
other investments.
Fidelity Asset Manager: Growth - This mutual fund
seeks to maximize total return over the long-term
by allocating its assets among stocks, bonds, short-term
instruments and other investments.
The Parnassus Fund - This fund invests primarily in
the equity securities of companies that are socially
conscious, and believed to be undervalued, or fallen
out of favor. The Parnassus Fund is managed by
Parnassus Financial Management.
-20-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
3. Investments - continued
From July 1, 1992, until December 1, 1994, an investment
-----
option designated as the Equity Fund was available.
This fund invested directly or indirectly in equity
investments through purchases of shares in a registered
investment company.
Investments held by the Plan at December 31, 1994 and 1993 are
summarized as follows:
All amounts are presented in thousands of dollars,
except shares and units.
<TABLE>
<CAPTION>
1994 1993
Market Market
Cost Value Cost Value
--------------------- ---------------------
Managed Income Fund Fixed Income Fund
--------------------- ---------------------
<S> <C> <C> <C> <C>
Sun Life Insurance,
group annuity
contract, 8.7%,
maturity date
7/1/94 - - $ 7,167 $ 7,167
Metropolitan Life
Insurance, group
annuity contract,
8.95%, maturity
date 7/1/96 $ 5,787 $ 5,787 5,273 5,273
Sun Life Insurance,
group annuity
contract, 4.83%,
maturity date 7/1/95 3,221 3,221 3,060 3,060
Aetna, group annuity
contract, 5.10%,
maturity date 7/2/99 743 743 - -
------ ------ ----- -----
Total group annuity
contracts 9,751 9,751 15,500 15,500
------ ----- ------ ------
</TABLE>
-21-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
3. Investments (continued)
<TABLE>
<CAPTION>
1994 1993
Market Market
Cost Value Cost Value
-------------------- ---------------------
Managed Income Fund Fixed Income Fund
-------------------- ---------------------
<S> <C> <C> <C> <C>
T.Rowe Price Stable
Value Fund (6,335,157
units in 1994 and
5,349,138 units in 1993) 6,335 6,335 5,349 5,349
Fidelity Managed Income
Portfolio (8,130,396
units in 1994) 8,130 8,130 - -
Federated Short-
Intermediate
Government Trust,
Mutual Fund
(319,109 units in 1993) - - 3,328 3,357
------ ------ ------ ------
Total 24,216 24,216 24,177 24,206
------ ------ ------ ------
</TABLE>
_________________________________________________________________________
<TABLE>
1994 1993
Market Market
Cost Value Cost Value
--------------------- ---------------------
<S> <C> <C> <C> <C>
Houghton Stock Fund:
Houghton Mifflin
Company Common Stock
(635,835 shares in 1994,
and 657,084 shares in
1993) $ 14,689 $ 28,851 $14,221 $31,992
Fidelity Trust Management
Company Institutional
Cash Portfolio (169,445
shares in 1994) 169 169 - -
------ ------- ------- -------
Total 14,858 29,020 14,221 31,992
------ ------- ------- ------
</TABLE>
-22-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
3. Investments (continued)
<TABLE>
1994 1993
Market Market
Cost Value Cost Value
----------------------- ---------------------
Mutual Fund Investments Equity Fund
----------------------- ---------------------
<S> <C> <C> <C> <C>
Investments in registered
mutual funds:
Fidelity Puritan Fund (R),
820,324.379 shares $ 12,271 $ 12,149 $ - $ -
Fidelity Magellan Fund (R),
9,260.097 shares 607 619 - -
Fidelity Contrafund,
31,686.621 shares 951 959 - -
Fidelity Asset Manager:
Income, 64,988.845 shares 687 677 - -
Fidelity Trust Management
Company Institutional Cash
Portfolio 104,000 shares 104 104 - -
Investment Company
of America Mutual
Fund (484,355 units
in 1993) - - 8,865 9,086
------- ------- ------ ------
Total 14,620 14,508 8,865 9,086
------- ------- ------ ------
Total Plan Investments $53,694 $ 67,744 $47,263 $65,284
======= ======= ======= ======
</TABLE>
-23-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
3. Investments (continued)
The fair market value of individual investments that represent 5% or more of
the Plan's net assets as of December 31, 1994, and 1993 are as follows:
All amounts are in thousands of dollars, except shares and units.
<TABLE>
1994 1993
- ------------------------------------------------------------------
<S> <C> <C>
Metropolitan Life Insurance,
group annuity contract, 8.95%
maturity date 7/1/96 $ 5,787 $ 5,273
T. Rowe Price Stable Value
Fund, 6,335,157 units 6,335 5,349
Fidelity Managed Income
Portfolio, 8,130,396 units 8,130 -
Houghton Mifflin Company
Common Stock, 635,835 shares 28,851 31,992
Fidelity Puritan Fund (R)
820,324.379 shares 12,149 -
Sun Life Insurance,
group annuity contract, 8.7%,
maturity 7/1/94 - 7,167
-----
Federated Short-Intermediate
Government Trust, 319,109 units - 3,357
Investment Company of America
Mutual Fund, 484,355 units - 9,086
-----
</TABLE>
-24-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Notes to Financial Statements
3. Investments (continued)
The net change in unrealized increase/(decrease)in the fair value of Plan
investments is as follows:
<TABLE>
<CAPTION>
Unrealized increase/(decrease)
(In thousands of dollars) in fair value of investments
- -------------------------------------------------------------------------------------
Managed Income Houghton Stock Mutual Fund
Fund Fund Investments
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
December 31, 1991 $ 0 $ 7,060 $ 0
December 31, 1992 20 14,872 13
-------- ------- --------
$ 20 $ 7,812 $ 13
======== ======= =======
December 31, 1992 $ 20 $ 14,872 $ 13
December 31, 1993 29 17,770 221
-------- ------- -------
$ 9 $ 2,898 $ 208
======== ======= =======
December 31, 1993 $ 29 $ 17,770 $ (221)
December 31, 1994 0 14,192 (112)
-------- ------- -------
$ (29) $ (3,578) $ (333)
======== ======= =======
</TABLE>
-25-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Supplemental Schedules
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1994
In thousands of dollars, except shares and unit amounts
<TABLE>
<CAPTION>
Description of Investment,
Including Maturity Date,
Identity of Issue and Rate of Interest Cost Current Value
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Metropolitan Life Guaranteed group annuity
Insurance contract 8.95%, maturity
date 7/1/96 $ 5,787 $ 5,787
Sun Life Insurance Guaranteed group annuity
contract, 4.83%,
maturity date 7/1/95 3,221 3,221
Aetna Insurance Guaranteed group annuity
contract, 5.10%,
maturity date 7/2/99 743 743
T.Rowe Price Stable
Value Fund 6,335,157 units 6,335 6,335
Fidelity Managed
Income Fund 8,130,396 units
in 1994) 8,130 8,130
------ ------
24,216 24,216
Houghton Mifflin *
Company Common Stock 635,835 shares 14,689 28,851
Fidelity Trust Management
Company Institutional
Cash Portfolio 169,446 shares 169 169
------- -------
14,858 29,020
</TABLE>
* Indicates party-in-interest to the Plan.
-26-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Supplemental Schedules
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1994
In thousands of dollars, except shares and units
<TABLE>
<CAPTION>
Description of Investment,
Including Maturity Date,
Identity of Issue and Rate of Interest Cost Current Value
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity Puritan Fund (R)
820,324.379 shares 12,271 12,149
Fidelity Magellan Fund (R)
9,260.097 shares 607 619
Fidelity Contrafund,
31,686.621 shares 951 959
Fidelity Asset Manager:
Income, 64,988.845 shares 687 677
Fidelity Trust Management
Company Institutional
Cash Portfolio 104,000 shares 104 104
------ ------
14,620 14,508
</TABLE>
-27-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Supplemental Schedule
Reportable Transactions (a)
Year Ended December 31, 1994
Category (i)
Single transactions within the plan year that exceeded 5% of value
of net assets available for plan benefits:
<TABLE>
<CAPTION>
Number of
Shares/Units Selling or
Description or Face Purchase Maturity Cost of Realized
of Issue Amount Price Price Asset Gain/(Loss)
- ----------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
State Street
Bank Yield
Enhanced STIF 7,542,679 7,542,679
State Street
Bank Yield
Enhanced STIF 8,023,936 8,023,926 8,023,926 0
State Street Bank
and Trust Short-
term Investment
Fund 8,023,936 8,023,936
State Street Bank
and Trust Short-
term Investment
Fund 8,023,936 8,023,926 8,023,926 0
Sun Life Insurance
group annuity
contract, 8.7%,
maturity date
7/1/94 7,532,034 7,532,034 7,532,034 0
Investment Company
of America 597,306.238 10,948,623 10,932,319 16,304
Fidelity Puritan (R)
Fund 806,114.90 12,059,479
</TABLE>
-28-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Supplemental Schedule
Reportable Transactions (a)
Year Ended December 31, 1994
Category (iii)
Series of transactions within the plan year that exceeded 5% of value
of net assets available for plan benefits:
<TABLE>
<CAPTION>
Description Number of
of Issue Shares/Units Selling or
(Number of or Face Purchase Exchange Cost of Realized
transactions) Amount Price Price Asset Gain/(Loss)
- ----------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
State Street
Bank Yield
Enhanced STIF
(30) 10,445,886 $10,445,886
State Street
Bank Yield
Enhanced STIF
(33) 10,374,463 10,374,463 10,374,463 0
State Street Bank
and Trust Short-
term Investment
Fund (6) 8,465,855 8,465,855
State Street Bank
and Trust Short-
term Investment
Fund (6) 8,465,855 8,465,855 8,465,855 0
Federated Short-
Intermediate
Government Trust (30)
327,480 3,395,280 3,415,081 (19,801)
Investment Company
of America 654,016 12,001,882 11,968,992 32,960
</TABLE>
-29-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Supplemental Schedule
Reportable Transactions (a) - Continued
Year Ended December 31, 1994
(a) Reportable transactions are defined as any single transaction or series of
transactions involving an amount in excess of 5% of the fair value of the
Plan's assets as of the beginning of the year.
There were no category (ii) or (iv) reportable transaction during 1994.
-30-
<PAGE>
Houghton Mifflin Retirement Savings Plan
Supplemental Schedule
Schedule of Party-in-Interest Transactions
December 31, 1994
There were no party-in-interest transactions which were prohibited by ERISA
Section 406 and for which there is no statutory or administrative exemption.
-31-
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (No.2-69298) pertaining to the Houghton Mifflin Retirement Savings Plan
of our report dated June 27, 1995, with respect to the financial statements and
schedules of the Houghton Mifflin Retirement Savings Plan included in the Annual
Report (Form 11-K/A) for the Plan year ended December 31, 1994.
/S/ ERNST & YOUNG LLP
_____________________
ERNST & YOUNG LLP
Boston, Massachusetts
June 27, 1995
