SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ------------------

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        Date of Report: FEBRUARY 2, 2004
                        (Date of earliest event reported)

                         PRINCIPAL FINANCIAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

         DELAWARE                      1-16725                 42-1520346
(State or other jurisdiction     Commission file number     (I.R.S. Employer
    of incorporation)                                     Identification Number)

                     711 HIGH STREET, DES MOINES, IOWA 50392
                    (Address of principal executive offices)

                                 (515) 247-5111
                         (Registrant's telephone number,
                              including area code)

                               ------------------

ITEM 7.  EXHIBITS

99       Fourth Quarter 2003 Earnings Release

ITEM 12.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  February  2,  2004,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  December 31,  2003.  The text of the  annnouncement  is included
herewith as Exhibit 99.

                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                            PRINCIPAL FINANCIAL GROUP, INC.

                            By:       /S/ MICHAEL H. GERSIE
                            --------------------------------------------
                            Name:     Michael H. Gersie
                            Title:    Executive Vice President and Chief
                                      Financial Officer

Date:  February 2, 2004

                                       2

                                                                     EXHIBIT 99

RELEASE: On receipt
MEDIA CONTACT:               Jeff Rader, 515-247-7883
                             rader.jeff@principal.com
INVESTOR RELATIONS CONTACT:  TOM GRAF, 515-235-9500
                             INVESTOR-RELATIONS@PRINCIPAL.COM

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS FOURTH QUARTER 2003 RESULTS

Des Moines, IA (February 2, 2004) -- Principal Financial Group, Inc. (NYSE: PFG)
today  announced  quarterly  net income for the three months ended  December 31,
2003, of $203.9  million,  or $0.63 per diluted share  compared to net income of
$215.4  million,  or $0.64 per diluted share for the three months ended December
31, 2002. The company reported  operating  earnings of $148.5 million for fourth
quarter 2003,  compared to $177.9  million for fourth  quarter  2002.  Operating
earnings per diluted share for fourth  quarter 2003 were $0.46 compared to $0.53
for the same period in 2002.  Operating  revenues  for fourth  quarter 2003 were
$2,452.6 million, compared to $2,423.7 million for the same period last year.1

"2003 was a very strong year for The Principal,  our fifth  consecutive  year of
record  operating  earnings,"  said J. Barry Griswell,  chairman,  president and
chief  executive  officer.  "In spite of the fourth  quarter  write-down  of our
mortgage  servicing  rights, we still delivered seven percent earnings per share
growth in 2003,  largely driven by record earnings in the U.S. Asset  Management
and Accumulation segment,  which improved 17 percent for the year and 41 percent
in the fourth quarter."

Highlights  for the  fourth  quarter  and full year 2003  include:  o Record net
income of $746.3 million in 2003.

o    Record  operating  earnings  of $750.6  million in 2003,  including  record
     operating earnings in three of the company's four operating segments - U.S.
     Asset  Management  and  Accumulation,  International  Asset  Management and
     Accumulation, and Life and Health Insurance.

o    Record quarterly  operating earnings in the fourth quarter for two segments
     - $117.6 million for U.S.  Asset  Management  and  Accumulation,  and $66.4
     million for Life and Health Insurance.

o    Record sales of the company's key  retirement  and  investment  products in
     2003,  including $6.4 billion for pension full service  accumulation  ($1.8
     billion in the fourth  quarter),  $1.8  billion  for mutual  funds and $1.4
     billion for individual annuities.

                                       3

o    Record assets under management of $144.9 billion, up 30 percent from a year
     ago,   including  31  percent   growth  for  U.S.   Asset   Management  and
     Accumulation,  and 70 percent growth for International Asset Management and
     Accumulation.

"As we had  anticipated,  even  stronger  earnings  emerged from our  retirement
businesses,  as equity markets and the economy  improved.  U.S. Asset Management
and Accumulation  was our key growth driver in 2003,  delivering $434 million in
earnings,  an  additional  $63 million  contribution  to the bottom  line," said
Griswell.  "Fourth quarter marked the segment's third straight quarter of record
earnings,  reflecting our continued success in growing account values and assets
under  management.  Principal  International  produced strong earnings growth as
well, up 58 percent for the year, the result of organic growth,  prudent expense
management and strategic acquisition activity.

"A number of other  leading  indicators  point to the  strength of our  position
going forward," said Griswell. "Pension full service accumulation account values
increased $13 billion, or 30 percent in 2003, to a record $56 billion, driven by
improved investment performance, as well as strong customer net cash flow, which
increased 69 percent  compared to 2002. Full service  accumulation net cash flow
grew to more than 11 percent of beginning of year account  values,  nearly twice
our long-term expectations,  reflecting strong deposits from existing customers,
excellent retention, and record sales.

"Our performance  reflects an  uncompromising  focus on meeting the needs of our
customers,  the strength of our people, and their ability to execute, even under
difficult  conditions.  In 2004, we'll continue to provide innovative retirement
and employee benefit solutions,  responsive service, and exceptional convenience
and choice,  which we believe is the key to delivering  sustainable,  profitable
growth, and to building long-term value for our shareholders."

Assets under management were $144.9 billion as of December 31, 2003, an increase
of $10.1 billion,  or 7 percent  compared to September 30, 2003, and an increase
of $33.8 billion, or 30 percent compared to December 31, 2002.

For the twelve months ended December 31, 2003:

o    Net  income  increased  to  $746.3  million,  or $2.28 per  diluted  share,
     compared  to net  income of $142.3  million,  or $0.41 per  diluted  share,
     during the same  period a year ago.  Net  income for the prior year  period
     includes an after-tax goodwill write-down of $280.9 million ($255.4 million
     related to BT Financial  Group),  a loss on  discontinued  operations of BT
     Financial  Group  ($196.7  million),  partially  offset by a favorable  tax
     benefit from an IRS audit issue of $138.0 million.

o    Operating earnings increased to $750.6 million,  compared to $749.4 million
     in the  year  earlier  period.  o  Operating  earnings  per  diluted  share
     increased  7  percent  to $2.30 per  diluted  share  compared  to $2.14 per
     diluted share in the year earlier period.

o    Operating  revenues  increased 3 percent to $9,483.0  million from $9,223.1
     million during the same period a year ago.

                                       4

RESTATEMENT OF THIRD QUARTER 2003 FINANCIAL STATEMENTS

The restatement of the company's  previously issued financial statements for the
quarter ended  September 30, 2003 reflects the  application  of a new accounting
standard for Principal Residential Mortgage Inc., the company's mortgage banking
subsidiary,  and the new  standard's  impact on the carrying value of loans held
for sale.  As a result of the  restatement,  third  quarter  2003 net income was
reduced by $31.8 million,  and third quarter operating  earnings were reduced by
$30.6  million.  (The  difference  between  net  income and  operating  earnings
reflects  a  $1.2  million  other  after  tax  adjustment.)  The  third  quarter
correction was effectively  reversed in the fourth quarter,  the period in which
the loans were sold, increasing fourth quarter net income and operating earnings
by $31.8  million.  For the full year,  the net effect of the  restatement is as
follows:

|.|      Net income was unchanged
|.|      Operating earnings increased by $1.2 million

The  restatement  is  the  result  of  a  review  of  the  application  of  FASB
Interpretation No. 46,  CONSOLIDATION OF VARIABLE INTEREST ENTITIES (FIN 46) and
the related  technical  application of  effectiveness  tests under  Statement of
Financial  Accounting  Standards No. 133, ACCOUNTING FOR DERIVATIVE  INSTRUMENTS
AND HEDGING  ACTIVITIES (SFAS 133) for hedging programs on residential  mortgage
loans held for sale.

Under accepted  accounting prior to the company's  adoption of FIN 46 on July 1,
2003, Principal  Residential  Mortgage,  Inc. had an off-balance sheet facility,
used to hold and finance new  mortgage  loans.  With the adoption of FIN 46, the
off-balance  sheet  entity  was  consolidated  within  the  company's  financial
statements.

The  company's  hedging  program,  in place  to  hedge  the  market  value  risk
associated with interest rate movements  between the time of loan commitment and
time the loan is sold outside the  facility,  has been  economically  effective.
However, in the year-end closing process,  after revised FIN 46 consolidation of
the mortgage loan facility,  it was  determined  that the company could not hold
the loans at  market  value  because  it did not have  sufficient  documentation
needed to qualify  for special  hedge  accounting  treatment  under SFAS 133. In
effect,  it was determined that the company  correctly  recorded hedge losses in
the third quarter,  but needed to delay recording third quarter  appreciation on
the loans until the fourth quarter, the period in which the loans were sold.

The change had no effect on the economic results of hedging  activities or total
cash flows for any period,  and an  immaterial  impact to the  balance  sheet at
September 30, 2003. The company is evaluating  effectiveness-testing methods for
the first quarter 2004, and expects to meet the rigorous documentation standards
required by SFAS 133,  even  though the actual  hedging  strategies  themselves,
which have been effective in economic terms, will not change.

The  remainder  of this release  covers the  highlights  of fourth  quarter 2003
financial  results.  All  comparisons  to  prior  periods  are  restated,  where
applicable.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for fourth quarter 2003 were a record $117.6 million,
compared  to $83.7  million  for the same period in 2002.  The  improvement  was
driven by record operating  earnings in the pension business of $92.6 million, a
25 percent increase compared to the same period a year ago.

Operating revenues for the fourth quarter increased to $1,024.1 million compared
to $916.8 million for the same period in 2002. The improvement was primarily the
result  of the 2003  acquisition  of Post  Advisory  Group by  Principal  Global
Investors  and  increased   fees  within   pension  full  service   accumulation
operations.

                                       5

Segment assets under management continued to increase,  reaching a record $120.8
billion  as of  December  31,  2003,  up 9 percent  from  $110.4  billion  as of
September  30,  2003,  and up 31 percent  from $92.3  billion as of December 31,
2002.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for fourth quarter 2003 were $8.2 million,  compared
to $9.4 million for the same period in 2002. (For the quarter ended December 31,
2002,  segment results include a loss of $0.3 million for BT Financial  Group.2)
Principal  International,  which  consists of the company's  asset  accumulation
businesses  outside  the U.S.,  had fourth  quarter  operating  earnings of $8.2
million, compared to $9.7 million for the same period in 2002.

Operating  revenues for the segment were $122.4 million for fourth quarter 2003,
compared to $105.6 million for the same period last year,  primarily  reflecting
record annuity sales in Chile and higher assets under management in Brazil.

Assets  under  management  for the segment  were $7.5 billion as of December 31,
2003,  compared to $6.9 billion as of September  30, 2003,  and compared to $4.4
billion as of December 31, 2002.

LIFE AND HEALTH INSURANCE

Segment operating  earnings for fourth quarter 2003 were a record $66.4 million,
compared to $61.4  million for the same period in 2002.  The increase in segment
earnings is primarily due to the conversion to new deferred  policy  acquisition
cost  (DPAC)  and  policy  valuation  models on some of our life and  disability
products. The new models were implemented in the fourth quarter,  resulting in a
write-up  of the DPAC  asset,  and lower  amortization  expense,  which drove an
additional  $17.7  million of  operating  earnings  for the  segment.  Partially
offsetting  this item were higher  claims  expenses,  reflecting  normal  claims
fluctuations,   and  a  one-time  write-off  of  accrued  investment  income  in
connection with distribution alliances in which the company has invested.

Operating  revenues  increased to $1,004.5 million for the quarter,  compared to
$996.1  million  for the same period in 2002,  largely as a result of  increases
within  the  disability  insurance  operations.  Operating  revenues  were  down
slightly in the life business,  as the company has shifted marketing emphasis in
recent years from traditional premium-based products to fee-based universal life
and variable universal life products. Unlike traditional premium-based products,
universal  life and  variable  universal  life  premium is not  reported as GAAP
revenue.  Operating  revenues  were up  slightly  in the health  business.  Rate
increases and the change in accounting  treatment of a reinsurance contract were
largely offset by the decline in covered members from a year ago.

                                       6

MORTGAGE BANKING

Operating  losses for the  segment  in fourth  quarter  2003 were $42.8  million
compared to operating  earnings of $29.1 million for the same period in 2002. In
line with the earnings  guidance update on December 15, 2003, the company took a
write-down  of its  mortgage  servicing  rights  asset  in the  fourth  quarter,
reflecting   currently  available  external  indicators  of  market  value.  The
after-tax  impact of this write-down was $87.1 million,  or 27 cents per diluted
share. As described  earlier in the release,  the third quarter  restatement was
reversed in the fourth quarter,  increasing fourth quarter operating revenues by
$51.6 million, which reduced the fourth quarter operating loss by $31.8 million.

Mortgage banking earnings are generated from loan production and loan servicing.
Production  earnings were $53.0 million  (which  includes the $31.8 million item
described  above),  compared to $120.0  million for the same period in 2002. The
decline  in  production  earnings  reflects  a  52%  decline  in  mortgage  loan
production  compared to a year ago, as well as lower  earnings  due to decreased
gains on the sale of  mortgage  loans,  reflecting  rising  interest  rates  and
greater pricing  competition for new loan  applications.  Servicing  generated a
loss of $95.8  million  during the quarter,  compared to a loss of $90.9 million
for the same  period in 2002.  The  fourth  quarter  2003  loss  from  servicing
reflects:  the  previously  discussed  $87.1 million  write-down of the mortgage
servicing rights; $27.4 million of earnings from servicing operations (including
a $12.2 million gain from the sale of servicing);  and a $36.1 million loss from
mortgage servicing rights valuation adjustment (net of hedges).

Mortgage loan production was $7.9 billion in the fourth quarter 2003 compared to
$16.5 billion in the year earlier  period.  At December 31, 2003,  the servicing
portfolio  was $118.7  billion,  compared to $117.8  billion as of September 30,
2003, and compared to $ 107.7 billion as of December 31, 2002.

Operating  revenues  decreased  29 percent to $301.3  million  for the  quarter,
compared to $421.7  million for the same period last year.  Production  revenues
decreased $146.7 million, or 56 percent,  and servicing revenues increased $26.3
million, or 16 percent, from the same quarter a year ago.

CORPORATE AND OTHER

Operating  losses  for  fourth  quarter  2003 were  $0.9  million,  compared  to
operating  losses of $5.7 million for the same period in 2002.  The  improvement
reflects  higher  investment  income in the fourth  quarter 2003 compared to the
same period a year ago.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements are
based  on  a  number  of  assumptions  concerning  future  conditions  that  may
ultimately  prove to be  inaccurate.  Future  events  and their  effects  on the
company may not be those  anticipated,  and actual results may differ materially
from the results  anticipated in these  forward-looking  statements.  The risks,
uncertainties  and  factors  that could  cause or  contribute  to such  material
differences  are discussed in the  company's  annual report on Form 10-K for the

                                       7

year ended December 31, 2002, and in the company's quarterly report on Form 10-Q
for the  quarter  ended  September  30,  2003,  filed  by the  company  with the
Securities  and  Exchange  Commission.  These risks and  uncertainties  include,
without  limitation:  competitive  factors;  volatility  of  financial  markets;
decrease in ratings;  interest  rate  changes;  inability  to attract and retain
sales  representatives;  international business risks; foreign currency exchange
rate fluctuations; and investment portfolio risks.

OUTLOOK FOR FIRST QUARTER AND FULL YEAR 2004
Based on estimated net realized  credit  losses of $25 million  after-tax in the
first quarter,  and $65 million  after-tax for 2004,  the company  expects first
quarter net income to range from $0.53 to $0.57 per  diluted  share and 2004 net
income to range from $2.50 to $2.60 per  diluted  share.3  The  company  expects
first quarter 2004  operating  earnings to range from $0.61 to $0.65 per diluted
share.4 The company expects 2004 operating earnings to range from $2.70 to $2.80
per diluted share.5

SHARE REPURCHASES
In May 2003,  the board of directors  authorized  a repurchase  program of up to
$300 million of Principal Financial Group, Inc.  outstanding common stock. Under
this program, in the fourth quarter,  the company repurchased 2.3 million shares
for $75.0  million,  an average  price per share of $32.53.  In 2003, 15 million
shares  were  repurchased  by  the  company  under  board-authorized  repurchase
programs, for $453.0 million, an average price per share of $30.25.

STOCK OPTIONS
As communicated in the third quarter 2002 earnings release,  The Principal began
expensing   employee  stock  options  and  the  employee  stock  purchase  plan,
retroactive  to January 1, 2002.  This resulted in an after-tax  expense of $3.7
million and $14.3 million,  respectively,  for the three and twelve months ended
December 31, 2003, compared to $2.1 million and $7.7 million,  respectively, for
the three and twelve months ended December 31, 2002.

FIN 46 IMPACT ON ASSETS AND LIABILITIES
As  communicated in the third quarter 2003 earnings  release,  effective July 1,
2003, the company early adopted Financial  Interpretation No. 46,  CONSOLIDATION
OF VARIABLE INTEREST ENTITIES ("FIN 46") for variable interest entities ("VIEs")
created  on or after  February  1, 2003.  FIN 46  provides  guidance  related to
identifying  variable  interest  entities and determining  whether such entities
should be  consolidated.  The  guidance  resulted  in an  increase in assets and
liabilities of $2.2 billion within the company's December 31, 2003, consolidated
statement of financial position.

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CST) tomorrow,  Chairman,  President and CEO J. Barry Griswell and
Executive  Vice  President  and CFO Mike Gersie will lead a discussion  during a
live  conference  call.  Parties  interested in listening to the conference call
live may access the webcast on the Principal  Financial Group Investor Relations
(IR) website  (www.principal.com/investor)  or by dialing (800)  374-1609  (U.S.
callers) or (706)  643-7701  (International  callers)  approximately  10 minutes
prior to the start of the call.  To access  the call,  leader  name is Tom Graf.
Listeners  can  access  an audio  replay  of the call on the IR  website,  or by
calling (800) 642-1687 (US callers) or (706) 645-9291  (International  callers).
The access code for the replay is 4808487.  Replays  will be  available  through
February 10,  2004.  The  financial  supplement  is  currently  available on our
website and will be referred to during the conference call.

                                       8

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial  Group(R) (The Principal  (R))6 is a leader in offering
businesses,  individuals  and  institutional  clients a wide range of  financial
products and services,  including retirement and investment  services,  life and
health  insurance and mortgage  banking  through its diverse family of financial
services  companies.  More employers  choose the Principal  Financial  Group for
their 401(k) plans than any other bank, mutual fund, or insurance company in the
United States7.  A member of the Fortune 500, the Principal  Financial Group has
$144.9 billion in assets under  management8 and serves some 15 million customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM.

                                       ###

                                       9

         SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                                                OPERATING EARNINGS* (LOSS) IN MILLIONS
                                                     -------------------------------------------------------------
                                             SEGMENT      THREE MONTHS ENDED,                YEAR ENDED,
- ---------------------------------------------------- -------------------------------------------------------------
                                                         12/31/03       12/31/02       12/31/03        12/31/02
- ---------------------------------------------------- --------------- -------------- -------------- ---------------

             U.S. ASSET MANAGEMENT AND ACCUMULATION          $117.6          $83.7         $433.8          $370.9
- ---------------------------------------------------- --------------- -------------- -------------- ---------------

    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
                                                                8.2            9.4           34.9            19.5
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            66.4           61.4          241.2           233.1
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING           (42.8)          29.1           53.2           142.9
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER            (0.9)          (5.7)         (12.5)          (17.0)
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)           148.5          177.9          750.6           749.4
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED            16.0          (90.1)         (51.6)         (243.9)
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            39.4          127.6           47.3          (363.2)
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                                      NET INCOME **          $203.9         $215.4         $746.3          $142.3
- ---------------------------------------------------- --------------- -------------- -------------- ---------------

                                                                          PER DILUTED SHARE

                                                           THREE MONTHS ENDED,                YEAR ENDED,
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                                                         12/31/03       12/31/02       12/31/03        12/31/02
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)      $0.46           $0.53          $2.30          $2.14
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED       0.05           (0.27)         (0.16)         (0.69)
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS       0.12            0.38           0.14          (1.04)
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME      $0.63           $0.64          $2.28          $0.41
- ---------------------------------------------------- --------------- -------------- -------------- ---------------
        WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING
                                                        323.3           337.4          326.8          350.7
- ---------------------------------------------------- --------------- -------------- -------------- ---------------

*OPERATING EARNINGS VERSUS U.S. GAAP (GAAP) NET INCOME
Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance on a basis comparable to that used by securities  analysts.  Segment
operating  earnings are  determined  by adjusting  U.S.  GAAP net income for net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments we believe are not  indicative of overall  operating  trends.  Note:
after-tax  adjustments  have  occurred  in the past and  could  recur in  future
reporting  periods.   While  these  items  may  be  significant   components  in
understanding and assessing our consolidated financial  performance,  we believe
the presentation of segment operating earnings enhances the understanding of our
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of our businesses.

** Net  income  for  the  three  months  ended  December  31 2003  reflects  net
realized/unrealized  capital  gains/(losses)  of $16.0  million,  which includes
$(28.2) million in credit losses  stemming from  impairments and credit impaired
sales,  as well as $39.4  million  in other  after-tax  adjustments.  The  other
after-tax  adjustments  reflect a $28.9 million gain stemming from contested IRS
matters and a $10.5 million gain from  discontinued  operations.  Net income for
the three months ended December 31, 2002 reflects net realized capital losses of

                                       10

$(90.1)  million,  primarily made up of credit losses stemming from  impairments
and credit impaired sales of $(76.1) million, as well as $127.6 million in other
after-tax adjustments.  The other after-tax adjustments reflect a $138.0 million
gain  resulting  from the  settlement  of an IRS issue,  a $(8.6)  million  loss
resulting from the increase to a loss contingency  reserve established for sales
practices litigation, and a $(1.8) million loss on discontinued operations.

                                       11

                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)

                                                          THREE MONTHS ENDED                   YEAR ENDED
                                                 -------------------------------- -------------------------------
                                                    12/31/03         12/31/02        12/31/03        12/31/02
                                                 ---------------- --------------- --------------- ---------------

   Premiums and other considerations                $ 983.2         $ 940.8        $3,634.1        $ 3881.8
   Fees and other revenues                            619.7           604.1         2,416.2         1,990.8
   Net investment income                              848.0           849.2         3,419.6         3,304.7
   Net realized/unrealized capital                     27.6          (130.8)          (65.7)         (354.8)
   gains/(losses)
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                   2,478.5         2,263.3         9,404.2         8,822.5
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses        1,302.6         1,274.2         4,861.3         5,216.9
   Dividends to policyholders                          75.2            75.6           307.9           316.6
   Operating expenses                                 888.9           791.0         3,281.3         2,623.2
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                   2,266.7         2,140.8         8,450.5         8,156.7
                                                 ---------------- --------------- --------------- ---------------
        Income from continuing operations before
        income taxes                                  211.8           122.5           953.7           665.8
   Income taxes (benefits)                             18.4           (94.7)          225.8            45.9
                                                 ---------------- --------------- --------------- ---------------
        Income from continuing operations, net of
        related income taxes                          193.4           217.2           727.9           619.9
   Income (loss) from discontinued operations,
        net of taxes                                   10.5            (1.8)           21.8          (196.7)
                                                 ---------------- --------------- --------------- ---------------
          Income before cumulative effect of
        accounting changes                            203.9           215.4           749.7           423.2
   Cumulative effect of accounting changes,
        net of related income taxes                     -               -              (3.4)         (280.9)
                                                 ---------------- --------------- --------------- ---------------
         NET INCOME                                 $ 203.9         $ 215.4        $  746.3          $142.3

   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                          16.0           (90.1)          (51.6)         (243.9)
   Other after-tax adjustments                         39.4           127.6            47.3          (363.2)
                                                 ---------------- --------------- --------------- ---------------
          OPERATING EARNINGS                        $ 148.5         $ 177.9        $  750.6        $  749.4
                                                 ================ =============== =============== ===============

 

                        SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     --------------------- -------------------- -----------------
                                                           12/31/03             12/31/02            12/31/01
                                                     --------------------- -------------------- -----------------

  Total assets (in billions)                               $   107.8            $    89.9           $    88.4
  Total equity (in millions)                               $ 7,399.6            $ 6,657.2           $ 6,820.3
  Total equity excluding accumulated other
       comprehensive income (in millions)                  $ 6,228.3            $ 6,021.4           $ 6,672.8
  End of period shares outstanding (in millions)               320.7                334.4               360.1
  Book value per share                                     $    23.07           $    19.91          $    18.94
  Book value per share excluding accumulated other
      comprehensive income                                 $    19.42           $    18.01          $    18.53

                                       12

                         PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)

                                                                  THREE MONTHS ENDED               YEAR ENDED
                                                             ----------------------------- ---------------------------
                                                               12/31/03       12/31/02       12/31/03      12/31/02
                                                             -------------- -------------- ------------- -------------
DILUTED EARNINGS PER SHARE:
                                                                                                    
Operating Earnings                                                    0.46           0.53          2.30         2.14
Net realized/unrealized capital gains/(losses)                        0.05          (0.27)        (0.16)       (0.69)
Other after-tax adjustments                                           0.12           0.38          0.14        (1.04)
                                                             -------------- -------------- ------------- -------------
Net income                                                            0.63           0.64          2.28         0.41
                                                             ============== ============== ============= =============
BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      19.42          18.01         19.42        18.01
Net unrealized capital gains/(losses)                                 4.03           2.46          4.03         2.46
Minimum pension liability                                            (0.01)          -            (0.01)        -
Foreign currency translation                                         (0.37)         (0.56)        (0.37)       (0.56)
                                                             -------------- -------------- ------------- -------------
Book value including other comprehensive income                      23.07          19.91         23.07        19.91
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                             1,024.1          916.8       3,651.0      3,780.5
IAMA                                                                122.4          105.6         412.1        357.9
Life and Health                                                   1,004.5          996.1       4,014.3      3,946.8
Mortgage Banking                                                    301.3          421.7       1,396.8      1,153.0
Corporate and Other                                                   0.3          (16.5)          8.8        (15.1)
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,452.6        2,423.7       9,483.0       9,223.1
Net realized/unrealized capital gains (losses) and related
     fee adjustments                                                 25.9         (160.4)        (78.8)      (400.6)
                                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,478.5        2,263.3       9,404.2       8,822.5
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               117.6           83.7         433.8        370.9
IAMA                                                                  8.2            9.4          34.9         19.5
Life and Health                                                      66.4           61.4         241.2        233.1
Mortgage Banking                                                    (42.8)          29.1          53.2        142.9
Corporate and Other                                                  (0.9)          (5.7)        (12.5)       (17.0)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            148.5          177.9         750.6        749.4
Net realized/unrealized capital gains (losses)                       16.0          (90.1)        (51.6)      (243.9)
Other after-tax adjustments                                          39.4          127.6          47.3       (363.2)
                                                             -------------- -------------- ------------- -------------
Net income                                                          203.9          215.4         746.3        142.3
                                                             ============== ============== ============= =============

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted          16.0          (90.1)        (51.6)      (243.9)
Add:
Amortization of DPAC                                                 (2.1)         (16.6)         (5.1)       (35.4)
Capital gains (losses) distributed                                    1.5           (6.1)          4.5         12.7
Tax impacts                                                          10.0          (47.6)        (26.7)      (134.0)
Minority interest capital gains                                       0.5            -             0.1          -
Less related fee adjustments:
Unearned front-end fee income                                        (0.5)         (20.0)          4.6        (14.0)
Certain market value adjustments to fee revenues                     (1.2)          (9.6)        (17.7)       (31.8)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                  27.6         (130.8)        (65.7)      (354.8)
                                                             ============== ============== ============= =============
OTHER AFTER TAX ADJUSTMENTS:
IRS audit issue                                                      28.9          138.0          28.9        138.0
Demutualization expenses                                              -              -             -           (2.0)
Loss contingency reserve                                              -             (8.6)          -          (21.6)
FIN 46 implementation                                                                -            (3.4)         -
SFAS 142 implementation                                               -              -             -         (280.9)
Discontinued operations                                              10.5           (1.8)         21.8       (196.7)
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    39.4          127.6          47.3       (363.2)
                                                             ============== ============== ============= =============

                                       13

- ------------------------------
1    We use a number of non-GAAP financial measures that management believes are
     useful to investors  because they illustrate the performance of our normal,
     ongoing operations,  which is important in understanding and evaluating our
     financial  condition  and results of  operations.  While such  measures are
     consistent  with  measures  utilized by investors to evaluate  performance,
     they are not a substitute for U.S. GAAP financial measures.  Therefore,  we
     have provided reconciliations of the non-GAAP financial measures, including
     consolidated operating earnings and consolidated operating revenues, to the
     most  directly  comparable  U.S. GAAP  financial  measure at the end of the
     release.  We adjust U.S.  GAAP  financial  measures  for items not directly
     related to ongoing operations. However, it is possible that these adjusting
     items have  occurred in the past and could recur in the future.  Management
     also  uses  non-GAAP  financial  measures  for  goal  setting,  determining
     employee and senior  management  awards and  compensation,  and  evaluating
     performance on a basis comparable to that used by securities analysts.

2    As a result of the sale of substantially  all of BT Financial Group,  which
     closed on October 31, 2002,  the operating  earnings of BT reflect only the
     corporate  overhead expenses allocated to BT. This treatment is pursuant to
     Statement of Accounting  Standard No. 144, Accounting for the Impairment or
     Disposal of Long-Lived  Assets  ("SFAS 144").  Under SFAS 144, all revenues
     and  expenses  (excluding  allocated  corporate  overhead)  are reported as
     discontinued  operations.  Therefore,  fourth  quarter  2002 results for BT
     reflect one month of allocated  expenses with no corresponding  activity in
     2003.

3    Other items that we are unable to predict  could  significantly  affect net
     income,  such as changes to laws,  regulations,  or  accounting  standards,
     litigation, or gains or losses from discontinued operations.

4    First  quarter  2004  guidance is based on certain  assumptions,  including
     domestic equity market performance improvement, of roughly two percent from
     December 31, 2003 levels.

5    Full year 2004 guidance is based on certain assumptions, including domestic
     equity market performance improvement of roughly 2% per quarter for 2004.

6    "The Principal  Financial  Group(R)" and "The  Principal(R)" are registered
     service  marks of  Principal  Financial  Services,  Inc.,  a member  of the
     Principal Financial Group.

7    CFO  Magazine,  April/May  2003,  based on total  plans  served  in 2002 by
     insurance companies, banks and investment firms.

8    As of December 31, 2003

                                       14