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: August 4, 2003
                        (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)


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

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



                                       1
<PAGE>



ITEM 7.  EXHIBITS

99.1    Second Quarter 2003 Earnings Release

ITEM 12.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  August  4,  2003,   Principal   Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter ended June 30, 2003. The text of the  announcement is included  herewith
as Exhibit 99.1.




                                    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:  August 4, 2003



                                       2
<PAGE>
                                                                    Exhibit 99.1

RELEASE: On receipt              August 4, 2003
MEDIA CONTACTS:                  Tina Marchetti, 515-248-0065,
                                 MARCHETTI.TINA@PRINCIPAL.COM
                                 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 SECOND QUARTER RESULTS

Des Moines,  IA (August 4, 2003) -- Principal  Financial Group, Inc. (NYSE: PFG)
today  announced  quarterly net income for the three months ended June 30, 2003,
of $202.2  million,  or $0.62 per diluted share compared to net income of $120.2
million,  or $0.34 per diluted  share for the three  months ended June 30, 2002.
The company  reported  record  operating  earnings of $217.9  million for second
quarter 2003, up 17 percent  compared to $186.5 million for second quarter 2002.
Operating  earnings  per diluted  share for second  quarter  2003  increased  29
percent  to a record  $0.67  compared  to $0.52  for the  same  period  in 2002.
Operating  revenues for second  quarter 2003 were  $2,430.1  million,  down $0.1
million compared to the same period last year.1

"The Principal had another outstanding  quarter, as we continue to build a track
record  of solid and  dependable  growth,"  said J.  Barry  Griswell,  chairman,
president and chief executive officer.  "Earnings per share improved 29 percent,
driven by record  operating  earnings of $217.9 million.  Mortgage banking was a
key  growth  driver,  but  our  three  other  operating  segments  - U.S.  Asset
Management and  Accumulation,  International  Asset Management and Accumulation,
and Life and Health Insurance - each delivered record earnings.

"Reflecting  healthy  retirement sales over the past several  quarters,  coupled
with excellent retention, total company assets under management reached a record
$128 billion.  Pension account values also reached record levels,  up 14 percent
from a year ago to  nearly  $71  billion,"  said  Griswell.  "While  the S&P 500
improved  significantly  during the second quarter,  gains only partially offset
declines over the three prior quarters. The S&P daily average was actually still


                                       3
<PAGE>

down 12 percent  compared to second  quarter 2002. So  importantly,  we achieved
this growth despite the lingering effect of previous equity market declines.

"Sales of pension full service  accumulation,  our key retirement product,  were
very  solid -- $928  million  during  the  quarter,  and up more than $1 billion
year-to-date," said Griswell.  "While second quarter sales were down from recent
quarters,  this  reflects  our  aggressive  first  quarter  efforts to close out
KeyCorp cases,  which reduced our sales pipeline  activities.  Importantly,  our
recent pipeline building activities have strengthened,  and the pipeline for the
remainder of the year is strong.

"We  again  added to our  portfolio  of  customer-driven  retirement  solutions,
including our launch of The Principal Rollover Choice IRA, which was designed to
simplify IRA  rollovers  for retirees and job  changers,"  said  Griswell.  "Our
efforts,  and  strong  customer  commitment  continue  to be  recognized  in the
marketplace  - during the quarter we won  Defined  Contribution  News'  "Bundled
Provider of the Year" for our support of the American  worker and the  small-and
medium  sized  retirement  plan  sponsor,  and we  received  the 2003  Insurance
Innovators award for use of the internet to improve customer relations."

Assets under  management were $128.0 billion as of June 30, 2003, an increase of
$11.7  billion,  or 10 percent,  compared to March 31, 2003,  and an increase of
$8.4  billion,  or  7  percent,   compared  to  June  30,  2002.  (The  sale  of
substantially  all of BT Financial  Group closed in the fourth  quarter of 2002.
Therefore,  BT's assets under management are included for the period ending June
30, 2002.  Excluding BT, assets under management  increased $24.0 billion, or 23
percent, compared to June 30, 2002.)

For the six months ended June 30, 2003:

o    Net  income  increased  to  $357.9  million,  or $1.09 per  diluted  share,
     compared  to $85.3  million,  or $0.24 per diluted  share,  during the same
     period a year ago.  Net  income for the six  months  ended  June 30,  2002,
     includes an after-tax goodwill write-down of $280.9 million ($255.4 million
     related to BT Financial Group).

o    Operating  earnings  increased  16 percent to $428.4  million,  compared to
     $369.0 million in the year earlier period.

o    Operating  earnings  per share  increased  26 percent to $1.30 per  diluted
     share compared to $1.03 per diluted share in the year earlier period.

o    Operating  revenues  increased 5 percent to $4,809.0  million from $4,565.9
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for second quarter 2003 were a record $108.2 million,
compared  to $102.1  million for the same period in 2002.  The  improvement  was
driven by record operating  earnings in the pension business of $83.9 million, a


                                       4
<PAGE>

7 percent  increase  compared to the same period a year ago.  Reflecting  strong
sales  over the past  several  quarters,  and  excellent  retention,  the  asset
accumulation  businesses  achieved  net cash  flows of $1.6  billion  during the
second quarter, compared to $1.0 billion in the year earlier period.

Operating  revenues for the second quarter  decreased to $869.0 million compared
to $1,135.7 million for the same period in 2002. This decrease was the result of
lower sales of single premium group annuities. The single premium product, which
is typically used to fund defined benefit plan terminations,  can generate large
premiums from a few customers and therefore tends to vary from period to period.
Excluding this product, revenues for the segment increased 7 percent.
Segment assets under management continued to increase,  reaching $107.6
billion as of June 30, 2003,  up 10 percent  from $97.5  billion as of March 31,
2003, and up 28 percent from $84.2 billion as of June 30, 2002.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for second quarter 2003 were a record $12.1 million,
compared to $3.9  million for the same  period in 2002.  (For the quarter  ended
June 30, 2002,  segment  results include a loss of $0.7 million for BT Financial
Group.2)  Principal  International,   which  consists  of  the  company's  asset
accumulation  businesses outside the U.S., had second quarter operating earnings
of  $12.1  million,  compared  to $4.6  million  for the  same  period  in 2002.
Principal  International's earnings growth primarily reflects increased earnings
from its Mexico AFORE and Brazil operations.

Operating  revenues for the segment were $113.0 million for second quarter 2003,
compared to $93.6 million for the same period last year.

Assets under  management  for the segment were $5.8 billion as of June 30, 2003,
compared to $4.9 billion as of March 31, 2003,  and compared to $22.8 billion as
of June  30,  2002.  An $18.6  billion  decrease  from  second  quarter  2002 is
attributable  to the sale of  substantially  all of BT Financial  Group.  Assets
under  management for Principal  International  increased 38 percent compared to
June 30, 2002.

                                       5
<PAGE>

LIFE AND HEALTH INSURANCE

Operating earnings for second quarter 2003 were a record $62.9 million, compared
to $61.7  million for the same  period in 2002.  This  increase  was largely the
result  of  improved  loss  ratios   within  group  medical  and   dental/vision
businesses.

Operating  revenues  were $1,001.8  million for the quarter,  compared to $984.5
million for the same period in 2002, largely as a result of increases within the
group disability and group medical operations.  As expected,  operating revenues
were relatively flat 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.

MORTGAGE BANKING

Operating  earnings for second quarter 2003 were $45.1 million compared to $24.8
million for the same period in 2002.  Production  earnings  continued to be very
strong during the second  quarter at $133.8  million,  compared to $11.4 million
for the same period in 2002, due to increased  mortgage loan  production  volume
and higher  margins.  Servicing  generated  a loss of $88.7  million  during the
second  quarter,  compared to  earnings of $13.4  million for the same period in
2002. The second quarter 2003 loss from servicing reflects: a $48.7 million loss


                                       6
<PAGE>

from model  refinements  impacting the mortgage  servicing rights  valuation;  a
$59.1 million loss from other  impairments of mortgage  servicing rights (net of
hedges); and $19.1 million of earnings from servicing operations, which includes
$6.8 million after-tax from the sale of servicing.

Mortgage loan  production  was a record $17.1 billion in the second quarter 2003
compared to $9.1 billion in the year  earlier  period.  At $115.4  billion as of
June 30, 2003,  the servicing  portfolio  also continued to grow at a solid pace
during the quarter,  up $2.1 billion from March 31, 2003,  and up $18.9  billion
compared to June 30, 2002.

Operating  revenues  increased  116 percent to a record  $452.5  million for the
quarter,  compared to $209.7  million for the same period last year.  Production
revenues  increased  $212.5  million,  or 372 percent,  and  servicing  revenues
increased $30.3 million, or 20 percent, from the same quarter a year ago.

                                       7
<PAGE>

CORPORATE AND OTHER

Operating  losses  for  second  quarter  2003 were $10.4  million,  compared  to
operating  losses of $6.0  million for the same period in 2002.  The decline was
primarily the result of lower investment  yields in second 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
year ended December 31, 2002, and in the company's quarterly report on Form 10-Q
for the quarter ended March 31, 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 THIRD QUARTER AND FULL YEAR 2003
Based on estimated net realized  capital losses of $30 million  after-tax in the
third  quarter and of $130 million for 2003,  the company  expects third quarter
2003 net  income to range  from  $0.50 to $0.53 per  diluted  share and 2003 net
income to range from $2.05 to $2.10 per diluted  share.  Other items that we are
unable to predict  could  significantly  affect net  income,  such as changes to
laws, regulations, or accounting standards, or gains or losses from discontinued
operations.  The company expects third quarter 2003 operating  earnings to range
from $0.59 to $0.62 per diluted share and 2003 operating  earnings to range from
$2.45 to $2.50  per  diluted  share.  These  estimates  include  the  impact  of
expensing  employee  stock  options  and the  employee  stock  purchase  plan of
approximately 5 cents a share in 2003 and additional  pension benefit expense of
approximately 11 cents a share in 2003. These  expectations are based on certain
assumptions, including domestic equity market performance improvement, from June
30, 2003, of roughly two percent per quarter for the remainder of the year.

SHARE REPURCHASES
In November 2002, the board of directors  authorized a repurchase  program of up
to $300 million of our outstanding common stock.  During the first six months of
2003, the company repurchased approximately 10.3 million shares for $300 million
at an average price per share repurchased of $29.14. As of June 23, 2003, we had
completed  this program.  In May 2003,  the board of directors  authorized a new
repurchase  program of up to $300 million of our  outstanding  common stock.  No
shares were repurchased during second quarter 2003 under this new program.

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 $4.7
million for the three months  ended June 30, 2003,  and $7.4 million for the six
months  ended  June 30,  2003,  with no  corresponding  expense  during the same
periods of 2002.

                                       8
<PAGE>

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 call by  accessing  the webcast on the  Principal  Financial
Group Investor Relations (IR) website (www.principal.com/investor) or by dialing
(800)   374-1609  (US  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 1449098. Replays will
be available  through  August 12, 2003.  The  financial  supplement is currently
available on our website and will be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP

The Principal  Financial  Group(R) (The Principal  (R))3 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 States4.  A member of the Fortune 500, the Principal  Financial Group has
$128.0 billion in assets under  management5 and serves some 13 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
<PAGE>


<TABLE>
<CAPTION>
         SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                                                OPERATING EARNINGS* (LOSS) IN MILLIONS

                                            SEGMENT
---------------------------------------------------- ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
                                                     ------------------------------ ------------------------------
                                                        6/30/03         6/30/02        6/30/03        6/30/02
---------------------------------------------------- --------------- -------------- -------------- ---------------
<S>                                                       <C>            <C>            <C>             <C>
             U.S. ASSET MANAGEMENT AND ACCUMULATION       $108.2         $102.1         $205.7          $202.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
                                                            12.1            3.9           18.7             5.1
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE         62.9           61.7          122.0           116.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING         45.1           24.8           97.4            51.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER        (10.4)          (6.0)         (15.4)           (5.7)
---------------------------------------------------- --------------- -------------- -------------- ---------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)        217.9          186.5          428.4           369.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        (15.3)         (70.1)         (69.4)           (6.9)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         (0.4)           3.8           (1.1)         (276.8)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                       NET INCOME**       $202.2         $120.2         $357.9          $ 85.3
------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                          PER DILUTED SHARE
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                                        6/30/03         6/30/02        6/30/03        6/30/02
---------------------------------------------------- --------------- -------------- -------------- ---------------
<S>                                                      <C>            <C>             <C>            <C>
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)      $0.67          $ 0.52          $1.30          $1.03
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED      (0.05)          (0.18)         (0.21)         (0.02)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS        -               -              -            (0.77)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME      $0.62          $ 0.34          $1.09          $0.24
---------------------------------------------------- --------------- -------------- -------------- ---------------
        WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING
                                                        327.4           357.3          329.6          359.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
</TABLE>

*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  June  30,  2003   reflects  net
realized/unrealized  capital  losses  of $15.3  million,  which  includes  $23.5
million in credit losses stemming from impairments and credit impaired sales, as
well  as  $(0.4)  million  in  other  after-tax  adjustments  from  discontinued
operations.  Net income for the three  months  ended June 30, 2002  reflects net


                                       10
<PAGE>

realized  capital  losses of $70.1  million,  primarily made up of credit losses
stemming from  impairments and credit impaired sales of $111.7 million,  as well
as $3.8 million in other after-tax adjustments from discontinued operations.


                                       11
<PAGE>
<TABLE>
<CAPTION>

                               PRINCIPAL FINANCIAL GROUP, INC.
                                  RESULTS OF OPERATIONS
                                     (IN MILLIONS)
--------------------------------------------------------------------------------------------------------------
                                                          THREE MONTHS ENDED                SIX MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     6/30/03         6/30/02         6/30/03         6/30/02
                                                 ---------------- --------------- --------------- ---------------
<S>                                                    <C>            <C>             <C>             <C>
   Premiums and other considerations                   $   876.6      $  1,166.6      $  1,782.1      $  2,052.3
   Fees and other revenues                                 689.0           437.2         1,321.0           870.1
   Net investment income                                   857.7           823.2         1,693.7         1,634.3
   Net realized/unrealized capital gains                   (10.9)          (91.5)          (87.6)            6.6
        (losses)                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,412.4         2,335.5         4,709.2         4,563.3
                                                 ---------------- --------------- --------------- ---------------

   Benefits, claims, and settlement expenses             1,187.8         1,507.9         2,383.0         2,711.1
   Dividends to policyholders                               73.9            79.5           154.0           161.9
   Operating expenses                                      865.6           599.8         1,664.9         1,192.0
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        2,127.3         2,187.2         4,201.9         4,065.0
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                       285.1           148.3           507.3           498.3
   Income taxes                                             82.5            31.9           148.3           138.2
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        taxes                                              202.6           116.4           359.0           360.1

   Income (loss) from discontinued operations,
        net of taxes                                        (0.4)            3.8           (1.1)             6.1
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting change                                  202.2           120.2           357.9           366.2
   Cumulative effect of accounting change, net
        of taxes                                              -               -               -           (280.9)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                          $   202.2      $    120.2      $    357.9      $     85.3

   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                              (15.3)          (70.1)          (69.4)           (6.9)
   Other after-tax adjustments                              (0.4)            3.8            (1.1)         (276.8)
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                  $   217.9      $    186.5      $    428.4      $    369.0
                                                 ================ =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                        SELECTED BALANCE SHEET STATISTICS

                                                                          PERIOD ENDED
                                                     ------------------------------------------------------------
                                                            6/30/03          12/31/02                 6/30/02
                                                     --------------------- -------------------- -----------------
<S>                                                       <C>                  <C>                   <C>
  Total assets (in billions)                              $    98.6            $    89.9             $    90.2
  Total equity (in millions)                              $ 7,539.0            $  6,657.2            $ 6,670.1
  Total equity excluding accumulated other
       comprehensive income (in millions)                 $ 6,118.4            $ 6,021.4             $ 6,507.1
  End of period shares outstanding (in millions)              325.1                334.4                 351.4
  Book value per share                                    $    23.19           $    19.91            $    18.98
  Book value per share excluding accumulated other
      comprehensive income                                $    18.82           $    18.01            $    18.52

</TABLE>




                                       12
<PAGE>

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

                                                                  THREE MONTHS ENDED            SIX MONTHS ENDED
                                                             ---------------------------     -----------------------
                                                                6/30/03          6/30/02        6/30/03       6/30/02
                                                             -------------- -------------- ------------- -------------
DILUTED EARNINGS PER SHARE:
<S>                                                                   <C>            <C>           <C>         <C>
Operating Earnings                                                    0.67           0.52          1.30        1.03
Net realized/unrealized capital gains/(losses)                       (0.05)         (0.18)        (0.21)      (0.02)
Other after-tax adjustments                                            -              -             -         (0.77)
                                                             -------------- -------------- ------------- -------------
Net income                                                            0.62           0.34          1.09        0.24
                                                             ============== ============== ============= =============

BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      18.82          18.52         18.82       18.52
Net unrealized capital gains/(losses)                                 4.83           1.22          4.83        1.22
Foreign currency translation                                         (0.46)         (0.76)        (0.46)      (0.76)
                                                             -------------- -------------- ------------- -------------
Book value including other comprehensive income                      23.19          18.98         23.19       18.98
                                                             ============== ============== ============= =============

OPERATING REVENUES:
USAMA                                                               869.0        1,135.7       1,755.0     1,997.8
IAMA                                                                113.0           93.6         189.8       169.5
Life and Health                                                   1,001.8          984.5       2,014.1     1,963.0
Mortgage Banking                                                    452.5          209.7         857.0       418.4
Corporate and Other                                                 (6.2)            6.7          (6.9)       17.2
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,430.1        2,430.2       4,809.0     4,565.9
Net realized/unrealized capital gains (losses)                      (17.7)         (94.7)        (99.8)       (2.6)
                                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,412.4        2,335.5       4,709.2     4,563.3
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               108.2          102.1         205.7       202.3
IAMA                                                                 12.1            3.9          18.7         5.1
Life and Health                                                      62.9           61.7         122.0       116.0
Mortgage Banking                                                     45.1           24.8          97.4        51.3
Corporate and Other                                                 (10.4)          (6.0)        (15.4)       (5.7)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            217.9          186.5         428.4       369.0
Net realized/unrealized capital gains (losses)                      (15.3)         (70.1)        (69.4)       (6.9)
Other after-tax adjustments                                          (0.4)           3.8          (1.1)     (276.8)
                                                             -------------- -------------- ------------- -------------
Net income                                                          202.2          120.2         357.9        85.3
                                                             ============== ============== ============= =============

</TABLE>

                                       13
<PAGE>
<TABLE>

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
<S>                                                                 <C>            <C>           <C>          <C>
Total net realized/unrealized capital gains (losses)                (15.3)         (70.1)        (69.4)       (6.9)
Add:
Amortization of DPAC                                                  0.4           (1.4)         (3.3)      (12.3)
Capital gains distributed                                             3.5           21.8           1.9        21.8
Tax impacts                                                          (5.9)         (45.0)        (28.7)       (5.2)
Minority interest capital losses                                     (0.4)             -          (0.3)         -
Less:
Unearned front-end fee income                                        (0.1)           1.4           4.3         4.0
Certain market value adjustments to fee revenues                     (6.7)          (4.6)        (16.5)      (13.2)
                                                             -------------- -------------- ------------- -------------

GAAP net realized/unrealized capital gains (losses)                 (10.9)         (91.5)        (87.6)        6.6
                                                             ============== ============== ============= =============

OTHER AFTER TAX ADJUSTMENTS:
Demutualization expenses                                               -              -             -         (2.0)
SFAS142 implementation                                                 -              -             -       (280.9)
Discontinued operations                                              (0.4)           3.8          (1.1)           6.1
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    (0.4)           3.8          (1.1)       (276.8)
                                                             ============== ============== ============= =============

</TABLE>


--------
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,  second quarter 2002 results for BT reflect three months
of allocated expenses with no corresponding activity in 2003.

3 "The Principal Financial Group" and "The Principal" are registered  trademarks
referring to Principal Financial Group, Inc.

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

5 As of June 30, 2003


                                       14
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "final8kearn2003.txt", "description": "EARNINGS RELEASE - 2003", "secsgml_size_bytes": 40671}]
{"company-data": {"conformed-name": "PRINCIPAL FINANCIAL GROUP INC", "cik": "0001126328", "assigned-sic": "6321", "irs-number": "421520346", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-16725", "film-number": "03822342"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392", "phone": "5152475111"}}
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: August 4, 2003
                        (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)

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

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

                                       1
ITEM 7.  EXHIBITS

99.1    Second Quarter 2003 Earnings Release

ITEM 12.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  August  4,  2003,   Principal   Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter ended June 30, 2003. The text of the  announcement is included  herewith
as Exhibit 99.1.

                                    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:  August 4, 2003

                                       2
Exhibit 99.1

RELEASE: On receipt              August 4, 2003
MEDIA CONTACTS:                  Tina Marchetti, 515-248-0065,
                                 MARCHETTI.TINA@PRINCIPAL.COM
                                 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 SECOND QUARTER RESULTS

Des Moines,  IA (August 4, 2003) -- Principal  Financial Group, Inc. (NYSE: PFG)
today  announced  quarterly net income for the three months ended June 30, 2003,
of $202.2  million,  or $0.62 per diluted share compared to net income of $120.2
million,  or $0.34 per diluted  share for the three  months ended June 30, 2002.
The company  reported  record  operating  earnings of $217.9  million for second
quarter 2003, up 17 percent  compared to $186.5 million for second quarter 2002.
Operating  earnings  per diluted  share for second  quarter  2003  increased  29
percent  to a record  $0.67  compared  to $0.52  for the  same  period  in 2002.
Operating  revenues for second  quarter 2003 were  $2,430.1  million,  down $0.1
million compared to the same period last year.1

"The Principal had another outstanding  quarter, as we continue to build a track
record  of solid and  dependable  growth,"  said J.  Barry  Griswell,  chairman,
president and chief executive officer.  "Earnings per share improved 29 percent,
driven by record  operating  earnings of $217.9 million.  Mortgage banking was a
key  growth  driver,  but  our  three  other  operating  segments  - U.S.  Asset
Management and  Accumulation,  International  Asset Management and Accumulation,
and Life and Health Insurance - each delivered record earnings.

"Reflecting  healthy  retirement sales over the past several  quarters,  coupled
with excellent retention, total company assets under management reached a record
$128 billion.  Pension account values also reached record levels,  up 14 percent
from a year ago to  nearly  $71  billion,"  said  Griswell.  "While  the S&P 500
improved  significantly  during the second quarter,  gains only partially offset
declines over the three prior quarters. The S&P daily average was actually still

                                       3
down 12 percent  compared to second  quarter 2002. So  importantly,  we achieved
this growth despite the lingering effect of previous equity market declines.

"Sales of pension full service  accumulation,  our key retirement product,  were
very  solid -- $928  million  during  the  quarter,  and up more than $1 billion
year-to-date," said Griswell.  "While second quarter sales were down from recent
quarters,  this  reflects  our  aggressive  first  quarter  efforts to close out
KeyCorp cases,  which reduced our sales pipeline  activities.  Importantly,  our
recent pipeline building activities have strengthened,  and the pipeline for the
remainder of the year is strong.

"We  again  added to our  portfolio  of  customer-driven  retirement  solutions,
including our launch of The Principal Rollover Choice IRA, which was designed to
simplify IRA  rollovers  for retirees and job  changers,"  said  Griswell.  "Our
efforts,  and  strong  customer  commitment  continue  to be  recognized  in the
marketplace  - during the quarter we won  Defined  Contribution  News'  "Bundled
Provider of the Year" for our support of the American  worker and the  small-and
medium  sized  retirement  plan  sponsor,  and we  received  the 2003  Insurance
Innovators award for use of the internet to improve customer relations."

Assets under  management were $128.0 billion as of June 30, 2003, an increase of
$11.7  billion,  or 10 percent,  compared to March 31, 2003,  and an increase of
$8.4  billion,  or  7  percent,   compared  to  June  30,  2002.  (The  sale  of
substantially  all of BT Financial  Group closed in the fourth  quarter of 2002.
Therefore,  BT's assets under management are included for the period ending June
30, 2002.  Excluding BT, assets under management  increased $24.0 billion, or 23
percent, compared to June 30, 2002.)

For the six months ended June 30, 2003:

o    Net  income  increased  to  $357.9  million,  or $1.09 per  diluted  share,
     compared  to $85.3  million,  or $0.24 per diluted  share,  during the same
     period a year ago.  Net  income for the six  months  ended  June 30,  2002,
     includes an after-tax goodwill write-down of $280.9 million ($255.4 million
     related to BT Financial Group).

o    Operating  earnings  increased  16 percent to $428.4  million,  compared to
     $369.0 million in the year earlier period.

o    Operating  earnings  per share  increased  26 percent to $1.30 per  diluted
     share compared to $1.03 per diluted share in the year earlier period.

o    Operating  revenues  increased 5 percent to $4,809.0  million from $4,565.9
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for second quarter 2003 were a record $108.2 million,
compared  to $102.1  million for the same period in 2002.  The  improvement  was
driven by record operating  earnings in the pension business of $83.9 million, a

                                       4
7 percent  increase  compared to the same period a year ago.  Reflecting  strong
sales  over the past  several  quarters,  and  excellent  retention,  the  asset
accumulation  businesses  achieved  net cash  flows of $1.6  billion  during the
second quarter, compared to $1.0 billion in the year earlier period.

Operating  revenues for the second quarter  decreased to $869.0 million compared
to $1,135.7 million for the same period in 2002. This decrease was the result of
lower sales of single premium group annuities. The single premium product, which
is typically used to fund defined benefit plan terminations,  can generate large
premiums from a few customers and therefore tends to vary from period to period.
Excluding this product, revenues for the segment increased 7 percent.
Segment assets under management continued to increase,  reaching $107.6
billion as of June 30, 2003,  up 10 percent  from $97.5  billion as of March 31,
2003, and up 28 percent from $84.2 billion as of June 30, 2002.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for second quarter 2003 were a record $12.1 million,
compared to $3.9  million for the same  period in 2002.  (For the quarter  ended
June 30, 2002,  segment  results include a loss of $0.7 million for BT Financial
Group.2)  Principal  International,   which  consists  of  the  company's  asset
accumulation  businesses outside the U.S., had second quarter operating earnings
of  $12.1  million,  compared  to $4.6  million  for the  same  period  in 2002.
Principal  International's earnings growth primarily reflects increased earnings
from its Mexico AFORE and Brazil operations.

Operating  revenues for the segment were $113.0 million for second quarter 2003,
compared to $93.6 million for the same period last year.

Assets under  management  for the segment were $5.8 billion as of June 30, 2003,
compared to $4.9 billion as of March 31, 2003,  and compared to $22.8 billion as
of June  30,  2002.  An $18.6  billion  decrease  from  second  quarter  2002 is
attributable  to the sale of  substantially  all of BT Financial  Group.  Assets
under  management for Principal  International  increased 38 percent compared to
June 30, 2002.

                                       5
LIFE AND HEALTH INSURANCE

Operating earnings for second quarter 2003 were a record $62.9 million, compared
to $61.7  million for the same  period in 2002.  This  increase  was largely the
result  of  improved  loss  ratios   within  group  medical  and   dental/vision
businesses.

Operating  revenues  were $1,001.8  million for the quarter,  compared to $984.5
million for the same period in 2002, largely as a result of increases within the
group disability and group medical operations.  As expected,  operating revenues
were relatively flat 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.

MORTGAGE BANKING

Operating  earnings for second quarter 2003 were $45.1 million compared to $24.8
million for the same period in 2002.  Production  earnings  continued to be very
strong during the second  quarter at $133.8  million,  compared to $11.4 million
for the same period in 2002, due to increased  mortgage loan  production  volume
and higher  margins.  Servicing  generated  a loss of $88.7  million  during the
second  quarter,  compared to  earnings of $13.4  million for the same period in
2002. The second quarter 2003 loss from servicing reflects: a $48.7 million loss

                                       6
from model  refinements  impacting the mortgage  servicing rights  valuation;  a
$59.1 million loss from other  impairments of mortgage  servicing rights (net of
hedges); and $19.1 million of earnings from servicing operations, which includes
$6.8 million after-tax from the sale of servicing.

Mortgage loan  production  was a record $17.1 billion in the second quarter 2003
compared to $9.1 billion in the year  earlier  period.  At $115.4  billion as of
June 30, 2003,  the servicing  portfolio  also continued to grow at a solid pace
during the quarter,  up $2.1 billion from March 31, 2003,  and up $18.9  billion
compared to June 30, 2002.

Operating  revenues  increased  116 percent to a record  $452.5  million for the
quarter,  compared to $209.7  million for the same period last year.  Production
revenues  increased  $212.5  million,  or 372 percent,  and  servicing  revenues
increased $30.3 million, or 20 percent, from the same quarter a year ago.

                                       7
CORPORATE AND OTHER

Operating  losses  for  second  quarter  2003 were $10.4  million,  compared  to
operating  losses of $6.0  million for the same period in 2002.  The decline was
primarily the result of lower investment  yields in second 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
year ended December 31, 2002, and in the company's quarterly report on Form 10-Q
for the quarter ended March 31, 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 THIRD QUARTER AND FULL YEAR 2003
Based on estimated net realized  capital losses of $30 million  after-tax in the
third  quarter and of $130 million for 2003,  the company  expects third quarter
2003 net  income to range  from  $0.50 to $0.53 per  diluted  share and 2003 net
income to range from $2.05 to $2.10 per diluted  share.  Other items that we are
unable to predict  could  significantly  affect net  income,  such as changes to
laws, regulations, or accounting standards, or gains or losses from discontinued
operations.  The company expects third quarter 2003 operating  earnings to range
from $0.59 to $0.62 per diluted share and 2003 operating  earnings to range from
$2.45 to $2.50  per  diluted  share.  These  estimates  include  the  impact  of
expensing  employee  stock  options  and the  employee  stock  purchase  plan of
approximately 5 cents a share in 2003 and additional  pension benefit expense of
approximately 11 cents a share in 2003. These  expectations are based on certain
assumptions, including domestic equity market performance improvement, from June
30, 2003, of roughly two percent per quarter for the remainder of the year.

SHARE REPURCHASES
In November 2002, the board of directors  authorized a repurchase  program of up
to $300 million of our outstanding common stock.  During the first six months of
2003, the company repurchased approximately 10.3 million shares for $300 million
at an average price per share repurchased of $29.14. As of June 23, 2003, we had
completed  this program.  In May 2003,  the board of directors  authorized a new
repurchase  program of up to $300 million of our  outstanding  common stock.  No
shares were repurchased during second quarter 2003 under this new program.

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 $4.7
million for the three months  ended June 30, 2003,  and $7.4 million for the six
months  ended  June 30,  2003,  with no  corresponding  expense  during the same
periods of 2002.

                                       8
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 call by  accessing  the webcast on the  Principal  Financial
Group Investor Relations (IR) website (www.principal.com/investor) or by dialing
(800)   374-1609  (US  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 1449098. Replays will
be available  through  August 12, 2003.  The  financial  supplement is currently
available on our website and will be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP

The Principal  Financial  Group(R) (The Principal  (R))3 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 States4.  A member of the Fortune 500, the Principal  Financial Group has
$128.0 billion in assets under  management5 and serves some 13 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,             SIX MONTHS ENDED,
                                                     ------------------------------ ------------------------------
                                                        6/30/03         6/30/02        6/30/03        6/30/02
---------------------------------------------------- --------------- -------------- -------------- ---------------
U.S. ASSET MANAGEMENT AND ACCUMULATION       $108.2         $102.1         $205.7          $202.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
                                                            12.1            3.9           18.7             5.1
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE         62.9           61.7          122.0           116.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING         45.1           24.8           97.4            51.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER        (10.4)          (6.0)         (15.4)           (5.7)
---------------------------------------------------- --------------- -------------- -------------- ---------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)        217.9          186.5          428.4           369.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED        (15.3)         (70.1)         (69.4)           (6.9)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS         (0.4)           3.8           (1.1)         (276.8)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                       NET INCOME**       $202.2         $120.2         $357.9          $ 85.3
------------------------------------------------------------------------------------------------------------------
PER DILUTED SHARE
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                                        6/30/03         6/30/02        6/30/03        6/30/02
---------------------------------------------------- --------------- -------------- -------------- ---------------
OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)      $0.67          $ 0.52          $1.30          $1.03
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED      (0.05)          (0.18)         (0.21)         (0.02)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS        -               -              -            (0.77)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME      $0.62          $ 0.34          $1.09          $0.24
---------------------------------------------------- --------------- -------------- -------------- ---------------
        WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING
                                                        327.4           357.3          329.6          359.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
*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  June  30,  2003   reflects  net
realized/unrealized  capital  losses  of $15.3  million,  which  includes  $23.5
million in credit losses stemming from impairments and credit impaired sales, as
well  as  $(0.4)  million  in  other  after-tax  adjustments  from  discontinued
operations.  Net income for the three  months  ended June 30, 2002  reflects net

                                       10
realized  capital  losses of $70.1  million,  primarily made up of credit losses
stemming from  impairments and credit impaired sales of $111.7 million,  as well
as $3.8 million in other after-tax adjustments from discontinued operations.

                                       11
PRINCIPAL FINANCIAL GROUP, INC.
                                  RESULTS OF OPERATIONS
                                     (IN MILLIONS)
--------------------------------------------------------------------------------------------------------------
                                                          THREE MONTHS ENDED                SIX MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     6/30/03         6/30/02         6/30/03         6/30/02
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                   $   876.6      $  1,166.6      $  1,782.1      $  2,052.3
   Fees and other revenues                                 689.0           437.2         1,321.0           870.1
   Net investment income                                   857.7           823.2         1,693.7         1,634.3
   Net realized/unrealized capital gains                   (10.9)          (91.5)          (87.6)            6.6
        (losses)                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,412.4         2,335.5         4,709.2         4,563.3
                                                 ---------------- --------------- --------------- ---------------

   Benefits, claims, and settlement expenses             1,187.8         1,507.9         2,383.0         2,711.1
   Dividends to policyholders                               73.9            79.5           154.0           161.9
   Operating expenses                                      865.6           599.8         1,664.9         1,192.0
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        2,127.3         2,187.2         4,201.9         4,065.0
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations before
        income taxes                                       285.1           148.3           507.3           498.3
   Income taxes                                             82.5            31.9           148.3           138.2
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        taxes                                              202.6           116.4           359.0           360.1

   Income (loss) from discontinued operations,
        net of taxes                                        (0.4)            3.8           (1.1)             6.1
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting change                                  202.2           120.2           357.9           366.2
   Cumulative effect of accounting change, net
        of taxes                                              -               -               -           (280.9)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                          $   202.2      $    120.2      $    357.9      $     85.3

   Less:
   Net realized/unrealized capital gains
        (losses), as adjusted                              (15.3)          (70.1)          (69.4)           (6.9)
   Other after-tax adjustments                              (0.4)            3.8            (1.1)         (276.8)
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                  $   217.9      $    186.5      $    428.4      $    369.0
                                                 ================ =============== =============== ===============
SELECTED BALANCE SHEET STATISTICS

                                                                          PERIOD ENDED
                                                     ------------------------------------------------------------
                                                            6/30/03          12/31/02                 6/30/02
                                                     --------------------- -------------------- -----------------
Total assets (in billions)                              $    98.6            $    89.9             $    90.2
  Total equity (in millions)                              $ 7,539.0            $  6,657.2            $ 6,670.1
  Total equity excluding accumulated other
       comprehensive income (in millions)                 $ 6,118.4            $ 6,021.4             $ 6,507.1
  End of period shares outstanding (in millions)              325.1                334.4                 351.4
  Book value per share                                    $    23.19           $    19.91            $    18.98
  Book value per share excluding accumulated other
      comprehensive income                                $    18.82           $    18.01            $    18.52
12
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)

                                                                  THREE MONTHS ENDED            SIX MONTHS ENDED
                                                             ---------------------------     -----------------------
                                                                6/30/03          6/30/02        6/30/03       6/30/02
                                                             -------------- -------------- ------------- -------------
DILUTED EARNINGS PER SHARE:
Operating Earnings                                                    0.67           0.52          1.30        1.03
Net realized/unrealized capital gains/(losses)                       (0.05)         (0.18)        (0.21)      (0.02)
Other after-tax adjustments                                            -              -             -         (0.77)
                                                             -------------- -------------- ------------- -------------
Net income                                                            0.62           0.34          1.09        0.24
                                                             ============== ============== ============= =============

BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      18.82          18.52         18.82       18.52
Net unrealized capital gains/(losses)                                 4.83           1.22          4.83        1.22
Foreign currency translation                                         (0.46)         (0.76)        (0.46)      (0.76)
                                                             -------------- -------------- ------------- -------------
Book value including other comprehensive income                      23.19          18.98         23.19       18.98
                                                             ============== ============== ============= =============

OPERATING REVENUES:
USAMA                                                               869.0        1,135.7       1,755.0     1,997.8
IAMA                                                                113.0           93.6         189.8       169.5
Life and Health                                                   1,001.8          984.5       2,014.1     1,963.0
Mortgage Banking                                                    452.5          209.7         857.0       418.4
Corporate and Other                                                 (6.2)            6.7          (6.9)       17.2
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,430.1        2,430.2       4,809.0     4,565.9
Net realized/unrealized capital gains (losses)                      (17.7)         (94.7)        (99.8)       (2.6)
                                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,412.4        2,335.5       4,709.2     4,563.3
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               108.2          102.1         205.7       202.3
IAMA                                                                 12.1            3.9          18.7         5.1
Life and Health                                                      62.9           61.7         122.0       116.0
Mortgage Banking                                                     45.1           24.8          97.4        51.3
Corporate and Other                                                 (10.4)          (6.0)        (15.4)       (5.7)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            217.9          186.5         428.4       369.0
Net realized/unrealized capital gains (losses)                      (15.3)         (70.1)        (69.4)       (6.9)
Other after-tax adjustments                                          (0.4)           3.8          (1.1)     (276.8)
                                                             -------------- -------------- ------------- -------------
Net income                                                          202.2          120.2         357.9        85.3
                                                             ============== ============== ============= =============
13
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Total net realized/unrealized capital gains (losses)                (15.3)         (70.1)        (69.4)       (6.9)
Add:
Amortization of DPAC                                                  0.4           (1.4)         (3.3)      (12.3)
Capital gains distributed                                             3.5           21.8           1.9        21.8
Tax impacts                                                          (5.9)         (45.0)        (28.7)       (5.2)
Minority interest capital losses                                     (0.4)             -          (0.3)         -
Less:
Unearned front-end fee income                                        (0.1)           1.4           4.3         4.0
Certain market value adjustments to fee revenues                     (6.7)          (4.6)        (16.5)      (13.2)
                                                             -------------- -------------- ------------- -------------

GAAP net realized/unrealized capital gains (losses)                 (10.9)         (91.5)        (87.6)        6.6
                                                             ============== ============== ============= =============

OTHER AFTER TAX ADJUSTMENTS:
Demutualization expenses                                               -              -             -         (2.0)
SFAS142 implementation                                                 -              -             -       (280.9)
Discontinued operations                                              (0.4)           3.8          (1.1)           6.1
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    (0.4)           3.8          (1.1)       (276.8)
                                                             ============== ============== ============= =============
--------
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,  second quarter 2002 results for BT reflect three months
of allocated expenses with no corresponding activity in 2003.

3 "The Principal Financial Group" and "The Principal" are registered  trademarks
referring to Principal Financial Group, Inc.

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

5 As of June 30, 2003

                                       14