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 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)

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




<PAGE>


ITEM 7.  EXHIBITS

99     Second Quarter 2004 Earnings Release

ITEM 12.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  August  2,  2004,   Principal   Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter ended June 30, 2004. The text of the  announcement 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:  August 3, 2004



                                       2
<PAGE>

                                                                      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 SECOND QUARTER 2004 RESULTS

Des Moines,  IA (August 2, 2004) -- Principal  Financial Group, Inc. (NYSE: PFG)
today  announced  quarterly net income for the three months ended June 30, 2004,
of $119.7 million, or $0.37 per diluted share,  compared to net income of $202.2
million,  or $0.62 per diluted  share for the three  months ended June 30, 2003.
The decrease in net income  primarily  reflects a $54.0  million  decline in the
results of mortgage banking (segment reported as discontinued operations)1 and a
$31.0 million  increase in  realized/unrealized  capital losses  compared to the
same period  last  year2.  The  company  reported  operating  earnings of $173.4
million for second  quarter 2004,  compared to $165.6 million for second quarter
2003.  Operating  earnings per diluted share for second  quarter 2004 were $0.54
compared to $0.51 for the same  period in 2003.  Operating  revenues  for second
quarter 2004 were  $2,047.9  million  compared to $1,968.0  million for the same
period last year3.

     Highlights for the second quarter 2004 include:

o    Record assets under management of $152.1 billion, up 19 percent from a year
     ago,   including  19  percent   growth  for  U.S.   Asset   Management  and
     Accumulation,  and 45 percent growth for International Asset Management and
     Accumulation.
o    Record  operating  earnings of $121.7 million for U.S. Asset Management and
     Accumulation, including a record $56.6 million of earnings for Pension Full
     Service  Accumulation,  which  increased  33  percent  over the prior  year
     quarter.
o    Double-digit  sales growth  compared to the prior year of the company's key
     retirement  and  investment  products,   including:  pension  full  service
     accumulation sales of $1.2 billion (all organic);  a record $501 million of
     individual annuities sales; and mutual funds sales of $733 million.

"Both  second  quarter  operating   results  and  The  Principal's   longer-term
performance  demonstrate the increasing  strength of our core asset accumulation
and asset management  businesses," said J. Barry Griswell,  chairman,  president
and chief executive officer. "Our U.S. Asset Management and Accumulation segment
improved 15 percent compared to a year ago,  delivering a fifth straight quarter
of record operating earnings. Over the trailing twelve-months, segment operating
earnings improved 27 percent, or nearly $100 million compared to the same period
ending a year ago.  Outstanding  segment  growth over this period  drove  strong
growth in total company operating  earnings,  giving us continued  confidence in
our  ability  to  achieve  our  longer-term  EPS  growth  targets  and to create
outstanding shareholder value."

"We're  also seeing  signs of  increasing  strength  in our two other  operating
segments,"  said Griswell.  "International  Asset  Management  and  Accumulation
delivered  another very solid earnings  quarter,  15 percent growth in operating

                                       3
<PAGE>

revenues,  and record net customer cash flows of nearly $500 million.  And while
earnings in the Life and Health Insurance segment were down for the quarter,  we
are very  encouraged  by continued  strong sales growth in the  Individual  Life
business and in each of the Specialty  Benefits lines, as well as improved lapse
rates in Group Medical."

Assets under  management were $152.1 billion as of June 30, 2004, an increase of
$2.3 billion,  or 2 percent compared to March 31, 2004, and an increase of $24.1
billion, or 19 percent compared to June 30, 2003.

         For the six months ended June 30, 2004:

o    Net income decreased to $313.3 million, or $0.98 per diluted share compared
     to $357.9  million,  or $1.09 per diluted  share,  during the same period a
     year ago.

o    Operating  earnings  increased  13 percent to $359.9  million,  compared to
     $317.3 million in the year earlier period.

o    Operating  earnings  per share  increased  17 percent to $1.12 per  diluted
     share compared to $0.96 per diluted share in the year earlier period.

o    Operating  revenues  increased 4 percent to $4,091.1  million from $3,937.7
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for second quarter 2004 were a record $121.7 million,
compared to $105.7  million for the same period in 2003.  The increase  reflects
improved  results in the pension  business,  which  generated  earnings of $93.7
million,  a 12 percent  increase  compared  to the same  period a year ago,  and
record earnings from Principal Global Investors.

Operating  revenues for the second quarter  increased to $906.8 million compared
to $862.0 million for the same period in 2003, primarily the result of increased
fees  within  the  pension  full  service  accumulation  operations,  and within
Principal Global Investors, reflecting growth in assets under management and the
acquisition of Post Advisory Group.

Segment assets under management continued to increase,  reaching a record $127.6
billion as of June 30, 2004, an increase of 1 percent from $125.9  billion as of
March 31, 2004, and an increase of 19 percent from $107.6 billion as of June 30,
2003.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for second quarter 2004 were $9.3 million,  compared
to $11.9 million for the same period in 2003.  Second quarter 2003 earnings were
higher than normal due to several items, including a tax benefit for the Mexican
AFORE business.

Operating  revenues were $122.3  million for second  quarter  2004,  compared to
$106.2  million for the same period last year,  primarily  reflecting  increased
premium in Mexico and currency improvements in Chile.

Assets under  management  for the segment were $8.3 billion as of June 30, 2004,
compared to $8.2 billion as of March 31,  2004,  and compared to $5.8 billion as
of June 30, 2003.

                                       4
<PAGE>

LIFE AND HEALTH INSURANCE

Segment operating earnings for second quarter 2004 were $56.9 million,  compared
to $62.9  million for the same period in 2003.  The decrease  includes a premium
refund  accrual in second  quarter 2004 of $3.5 million,  after tax, for pending
litigation in the Health  division  related to a business the company  exited in
the 1990's.

Operating  revenues  increased  to  $1,030.7  million  for the  second  quarter,
compared to $1,001.8 million for the same period in 2003, largely as a result of
increases within the Specialty Benefits insurance operations. Operating revenues
were down slightly in the Individual Life division, as the company continued its
shift in marketing emphasis 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 are
not reported as GAAP revenue.  Operating revenues were up slightly in the health
business,  primarily due to revenues  generated from our 2004 acquisition of the
Molloy Companies (health administration and claims).

MORTGAGE BANKING

As a result of the sale of our mortgage banking operations, which closed on July
1, 2004,  the  operating  earnings of the  segment  reflect  only the  corporate
overhead  expenses  allocated  to the  segment.  This  treatment  is pursuant to
Statement  of  Financial   Accounting  Standard  No.  144,  ACCOUNTING  FOR  THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED  ASSETS ("SFAS 144"),  whereby all revenues
and  expenses  (excluding  corporate  overhead  allocated  to  the  discontinued
segment) are reported as discontinued  operations.  Based on this treatment, the
segment  generated an operating  loss of $5.4  million in second  quarter  2004,
compared to an operating loss of $4.5 million in the prior year quarter.

CORPORATE AND OTHER

Operating  losses  for  second  quarter  2004 were  $9.1  million,  compared  to
operating  losses of $10.4  million  for the same  period in 2003.  Because  the
corporate  operations are varied,  many items  contributed to the variance.  The
biggest  contributor to the improvement was reduced  interest  expense  stemming
from the early  extinguishment of $200 million of surplus notes in first quarter
2004.

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, 2003, and in the company's quarterly report on Form 10-Q
for the quarter ended March 31, 2004,  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.

                                       5
<PAGE>

OUTLOOK FOR FULL YEAR 2004
As communicated in the first quarter 2004 earnings release,  the Company will no
longer provide any quarterly operating earnings per share guidance or net income
per share  guidance.  In light of the sale of  Principal  Residential  Mortgage,
which  closed on July 1, 2004,  the Company is  providing an update to full year
earnings per share and net income per share expectations.  Based on an estimated
$20  million  in  2004  for  other  after-tax   adjustments  in  excess  of  net
realized/unrealized capital gains/losses, the company expects 2004 net income to
range from $2.34 to $2.38 per diluted share.  The company expects 2004 operating
earnings to range from $2.28 to $2.32 per diluted share.4

SHARE REPURCHASES
In May 2003, the Board authorized a repurchase  program of up to $300 million of
our  outstanding  common  stock.  This program was  completed  during the second
quarter.   Concurrent  with  our  announcement  to  sell  the  mortgage  banking
operations,  the Board authorized an additional repurchase program of up to $700
million.  Under  this  new  program,  as of  June  30,  2004,  the  company  had
repurchased 2.1 million shares for $75.0 million,  an average price per share of
$35.22. In total, the company  repurchased 6.31 million shares during the second
quarter 2004 for  approximately  $222 million,  or an average price per share of
$35.19.

STOCK OPTIONS
The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $6.1  million and $11.4  million,
respectively for the three and six months ended June 30, 2004,  compared to $4.7
million and $7.4 million,  respectively  for the three and six months ended June
30, 2003.

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. and
Canadian  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  and  Canadian   callers)  or  (706)   645-9291
(International callers). The access code for the replay is 8150995. Replays will
be available  through  August 10, 2004.  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))5 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 banking  through its diverse family of financial  services
companies. A member of the Fortune 500, the Principal Financial Group has $152.1
billion in assets  under  management6  and serves  some 14.6  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.

                                       ###


                                       6
<PAGE>


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


                                                                OPERATING EARNINGS (LOSS)* IN MILLIONS


                                                           THREE MONTHS ENDED,             SIX MONTHS ENDED,
                                                     ------------------------------ ------------------------------
<S>                                                          <C>            <C>            <C>             <C>
                                            SEGMENT        6/30/04         6/30/03        6/30/04        6/30/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION          $121.7         $105.7         $241.2          $200.6
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
                                                                9.3           11.9           17.9            18.5
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            56.9           62.9          131.7           122.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING            (5.4)          (4.5)         (10.3)           (8.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER            (9.1)         (10.4)         (20.6)          (15.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS           173.4          165.6          359.9           317.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED           (44.5)         (13.5)         (67.6)          (66.6)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            (9.2)          50.1           21.0           107.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                      NET INCOME **          $119.7         $202.2         $313.3          $357.9
------------------------------------------------------------------------------------------------------------------

                                                                         PER DILUTED SHARE
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
                                                        6/30/04         6/30/03        6/30/04        6/30/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $  0.54           $ 0.51          $ 1.12          $ 0.96
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED        (0.14)           (0.04)          (0.21)          (0.20)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS        (0.03)            0.15            0.07            0.33
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME      $  0.37           $ 0.62          $ 0.98          $ 1.09
---------------------------------------------------- --------------- -------------- -------------- ---------------
         WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING      319.2            327.4           320.6           329.6
---------------------------------------------------- --------------- -------------- -------------- ---------------
</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,  2004   reflects  net
realized/unrealized  capital losses of $(44.5)  million,  which includes $(13.8)
million in credit losses  stemming from  impairments  and credit impaired sales,
$(6.4) million of losses related to mark-to-market of seed money investments, as
well as $(9.2)  million  in other  after-tax  adjustments.  The other  after-tax
adjustments  reflect the  discontinued  operations of Mortgage  Banking - $(9.5)
million and Argentina - $0.3 million. Net income for the three months ended June
30, 2003 reflects net  realized/unrealized  capital  losses of $(13.5)  million,
which includes  $(23.5) million in credit losses  stemming from  impairments and
credit impaired sales,  $23.2 million of gains related to mark-to-market of seed
money investments, as well as $50.1 million in other after-tax adjustments.  The
other  after-tax  adjustments  reflect the  discontinued  operations of Mortgage
Banking - $52.1 million,  Argentina - $(1.6)  million,  and BT Financial Group -
$(0.4) million.

                                       7
<PAGE>

<TABLE>
<CAPTION>
                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)

                                                       THREE MONTHS ENDED                SIX MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     6/30/04         6/30/03         6/30/04         6/30/03
                                                 ---------------- --------------- --------------- ---------------
   <S>                                                    <C>           <C>             <C>             <C>
   Premiums and other considerations                      $892.6        $  875.7        $1,813.0        $1,780.4
   Fees and other revenues                                 364.2           276.7           696.8           543.3
   Net investment income                                   789.2           808.8         1,575.4         1,601.8
   Net realized/unrealized capital losses                  (66.3)           (9.7)         (108.8)          (84.2)
                                                 ---------------- --------------- --------------- ---------------
     TOTAL REVENUES                                      1,979.7         1,951.5         3,976.4         3,841.3
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses             1,221.1         1,185.2         2,407.2         2,379.9
   Dividends to policyholders                               74.4            73.9           147.7           154.0
   Operating expenses                                      521.1           490.3         1,050.6           975.6
                                                 ---------------- --------------- --------------- ---------------
      TOTAL EXPENSES                                     1,816.6         1,749.4         3,605.5         3,509.5
                                                 ---------------- --------------- --------------- ---------------
      Income from continuing operations before
        income taxes                                       163.1           202.1           370.9           331.8
   Income taxes                                             34.2            50.0            78.6            81.1
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                               128.9           152.1           292.3           250.7
   Income (loss) from discontinued operations,
        net of related taxes                                (9.2)           50.1            26.7           107.2
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting change                                  119.7           202.2           319.0           357.9
   Cumulative effect of accounting change, net
        of related income taxes                              -               -              (5.7)            -
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                             $119.7        $  202.2        $  313.3        $  357.9
   Less:
   Net realized/unrealized capital losses, as
        adjusted                                           (44.5)          (13.5)          (67.6)          (66.6)
   Other after-tax adjustments                              (9.2)           50.1            21.0           107.2
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                     $173.4        $  165.6        $  359.9        $  317.3
                                                 ================ =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                        SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           6/30/04              12/31/03            6/30/03
                                                     --------------------- -------------------- -----------------
  <S>                                                   <C>                  <C>                   <C>
  Total assets (in billions)                            $   111.4            $   107.8             $    98.6
  Total equity (in millions)                            $ 7,139.1            $ 7,399.6             $ 7,539.0
  Total equity excluding accumulated other
       comprehensive income (in millions)               $ 6,378.0            $ 6,228.3             $ 6,118.4
  End of period shares outstanding (in millions)            314.9                320.7                 325.1
  Book value per share                                  $    22.67           $    23.07            $    23.19
  Book value per share excluding accumulated other
      comprehensive income                              $    20.25           $    19.42            $    18.82

</TABLE>

                                       8
<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
                                                             ------------------------------ ---------------------------
                                                                    6/30/04        6/30/03       6/30/04      6/30/03
                                                             -------------- ----------=---- ------------- -------------
<S>                                                                   <C>            <C>            <C>           <C>
DILUTED EARNINGS PER SHARE:
Operating Earnings                                                    0.54           0.51           1.12          0.96
Net realized/unrealized capital losses                               (0.14)         (0.04)         (0.21)        (0.20)
Other after-tax adjustments                                          (0.03)          0.15           0.07          0.33
                                                             -------------- --------------  ------------- -------------
Net income                                                            0.37           0.62           0.98          1.09
                                                             ============== ==============  ============= =============
BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      20.25          18.82          20.25         18.82
Net unrealized capital gains                                          2.94           4.83           2.94          4.83
Foreign currency translation                                         (0.51)         (0.46)         (0.51)        (0.46)
Minimum pension liability                                            (0.01)          -             (0.01)         -
                                                             -------------- --------------  ------------- -------------
Book value including other comprehensive income                      22.67          23.19          22.67         23.19
                                                             ============== ==============  ============= =============
OPERATING REVENUES:
USAMA                                                               906.8          862.0        1,800.1       1,741.9
IAMA                                                                122.3          106.2          235.3         180.7
Life and Health                                                   1,030.7        1,001.8        2,066.0       2,014.1
Mortgage Banking                                                      -              -              -             -
Corporate and Other                                                 (11.9)          (2.0)         (10.3)          1.0
                                                             -------------- --------------  ------------- -------------
Total operating revenues                                          2,047.9        1,968.0        4,091.1       3,937.7
Net realized/unrealized capital losses and related fee
     adjustments                                                    (68.2)         (16.5)        (114.7)        (96.4)
                                                             -------------- --------------  ------------- -------------
Total GAAP revenues                                               1,979.7        1,951.5        3,976.4       3,841.3
                                                             ============== ==============  ============= =============
OPERATING EARNINGS:
USAMA                                                               121.7          105.7          241.2         200.6
IAMA                                                                  9.3           11.9           17.9          18.5
Life and Health                                                      56.9           62.9          131.7         122.0
Mortgage Banking                                                     (5.4)          (4.5)         (10.3)         (8.4)
Corporate and Other                                                  (9.1)         (10.4)         (20.6)        (15.4)
                                                             -------------- --------------  ------------- -------------
Total operating earnings                                            173.4          165.6          359.9         317.3
Net realized/unrealized capital losses                              (44.5)         (13.5)         (67.6)        (66.6)
Other after-tax adjustments                                          (9.2)          50.1           21.0         107.2
                                                             -------------- --------------  ------------- -------------
Net income                                                          119.7          202.2          313.3         357.9
                                                             ============== ==============  ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital losses, as adjusted                 (44.5)         (13.5)         (67.6)        (66.6)
Add:
Amortization of DPAC and sale inducement costs                       (0.5)           0.4           (2.6)         (3.3)
Capital gains (losses) distributed                                   (0.8)           1.9            1.2           1.0
Tax impacts                                                         (22.5)          (4.9)         (45.9)        (27.2)
Minority interest capital gains                                       0.1           (0.4)           0.2          (0.3)
Less related fee adjustments:
Unearned front-end fee income                                         1.0           (0.1)          (0.1)          4.3
Certain market value adjustments to fee revenues                     (2.9)          (6.7)          (5.8)        (16.5)
                                                             -------------- --------------  ------------- -------------
GAAP net realized/unrealized capital losses                         (66.3)          (9.7)        (108.8)        (84.2)
                                                             ============== ==============  ============= =============
OTHER AFTER TAX ADJUSTMENTS:
SOP 03-1 implementation                                               -              -             (5.7)          -
Discontinued operations - Mortgage Banking                           (9.5)          52.1           26.5         110.9
Discontinued operations - Argentina                                   0.3           (1.6)           0.2         (2.6)
Discontinued operations - BT Financial Group                          -             (0.4)           -            (1.1)
                                                             -------------- --------------  ------------- -------------
Total other after-tax adjustments                                    (9.2)          50.1           21.0         107.2
                                                             ============== ==============  ============= =============
</TABLE>

                                       9
<PAGE>

----------------
1    The decline reflects  significantly  lower results from mortgage production
     operations  compared to gains in the prior year period, due to the changing
     loan  origination  environment,  partially  offset  by  lower  losses  from
     mortgage servicing rights adjustments.
2    The  difference  primarily  relates  to $(6.4)  million of losses in second
     quarter 2004 related to mark-to-market of seed money investments,  compared
     to gains of $23.2 million in second quarter 2003.
3    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.
4    Full year 2004 guidance is based on certain assumptions, including domestic
     equity  market  performance  improvement  of roughly 2% per quarter.  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.
5    "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.
6    As of June 30, 2004.


                                       10
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "final2dqtrrelease.txt", "description": "FORM 8-K", "secsgml_size_bytes": 38351}]
{"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": "04946757"}, "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 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     Second Quarter 2004 Earnings Release

ITEM 12.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  August  2,  2004,   Principal   Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter ended June 30, 2004. The text of the  announcement 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:  August 3, 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 SECOND QUARTER 2004 RESULTS

Des Moines,  IA (August 2, 2004) -- Principal  Financial Group, Inc. (NYSE: PFG)
today  announced  quarterly net income for the three months ended June 30, 2004,
of $119.7 million, or $0.37 per diluted share,  compared to net income of $202.2
million,  or $0.62 per diluted  share for the three  months ended June 30, 2003.
The decrease in net income  primarily  reflects a $54.0  million  decline in the
results of mortgage banking (segment reported as discontinued operations)1 and a
$31.0 million  increase in  realized/unrealized  capital losses  compared to the
same period  last  year2.  The  company  reported  operating  earnings of $173.4
million for second  quarter 2004,  compared to $165.6 million for second quarter
2003.  Operating  earnings per diluted share for second  quarter 2004 were $0.54
compared to $0.51 for the same  period in 2003.  Operating  revenues  for second
quarter 2004 were  $2,047.9  million  compared to $1,968.0  million for the same
period last year3.

     Highlights for the second quarter 2004 include:

o    Record assets under management of $152.1 billion, up 19 percent from a year
     ago,   including  19  percent   growth  for  U.S.   Asset   Management  and
     Accumulation,  and 45 percent growth for International Asset Management and
     Accumulation.
o    Record  operating  earnings of $121.7 million for U.S. Asset Management and
     Accumulation, including a record $56.6 million of earnings for Pension Full
     Service  Accumulation,  which  increased  33  percent  over the prior  year
     quarter.
o    Double-digit  sales growth  compared to the prior year of the company's key
     retirement  and  investment  products,   including:  pension  full  service
     accumulation sales of $1.2 billion (all organic);  a record $501 million of
     individual annuities sales; and mutual funds sales of $733 million.

"Both  second  quarter  operating   results  and  The  Principal's   longer-term
performance  demonstrate the increasing  strength of our core asset accumulation
and asset management  businesses," said J. Barry Griswell,  chairman,  president
and chief executive officer. "Our U.S. Asset Management and Accumulation segment
improved 15 percent compared to a year ago,  delivering a fifth straight quarter
of record operating earnings. Over the trailing twelve-months, segment operating
earnings improved 27 percent, or nearly $100 million compared to the same period
ending a year ago.  Outstanding  segment  growth over this period  drove  strong
growth in total company operating  earnings,  giving us continued  confidence in
our  ability  to  achieve  our  longer-term  EPS  growth  targets  and to create
outstanding shareholder value."

"We're  also seeing  signs of  increasing  strength  in our two other  operating
segments,"  said Griswell.  "International  Asset  Management  and  Accumulation
delivered  another very solid earnings  quarter,  15 percent growth in operating

                                       3
revenues,  and record net customer cash flows of nearly $500 million.  And while
earnings in the Life and Health Insurance segment were down for the quarter,  we
are very  encouraged  by continued  strong sales growth in the  Individual  Life
business and in each of the Specialty  Benefits lines, as well as improved lapse
rates in Group Medical."

Assets under  management were $152.1 billion as of June 30, 2004, an increase of
$2.3 billion,  or 2 percent compared to March 31, 2004, and an increase of $24.1
billion, or 19 percent compared to June 30, 2003.

         For the six months ended June 30, 2004:

o    Net income decreased to $313.3 million, or $0.98 per diluted share compared
     to $357.9  million,  or $1.09 per diluted  share,  during the same period a
     year ago.

o    Operating  earnings  increased  13 percent to $359.9  million,  compared to
     $317.3 million in the year earlier period.

o    Operating  earnings  per share  increased  17 percent to $1.12 per  diluted
     share compared to $0.96 per diluted share in the year earlier period.

o    Operating  revenues  increased 4 percent to $4,091.1  million from $3,937.7
     million during the same period a year ago.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating earnings for second quarter 2004 were a record $121.7 million,
compared to $105.7  million for the same period in 2003.  The increase  reflects
improved  results in the pension  business,  which  generated  earnings of $93.7
million,  a 12 percent  increase  compared  to the same  period a year ago,  and
record earnings from Principal Global Investors.

Operating  revenues for the second quarter  increased to $906.8 million compared
to $862.0 million for the same period in 2003, primarily the result of increased
fees  within  the  pension  full  service  accumulation  operations,  and within
Principal Global Investors, reflecting growth in assets under management and the
acquisition of Post Advisory Group.

Segment assets under management continued to increase,  reaching a record $127.6
billion as of June 30, 2004, an increase of 1 percent from $125.9  billion as of
March 31, 2004, and an increase of 19 percent from $107.6 billion as of June 30,
2003.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for second quarter 2004 were $9.3 million,  compared
to $11.9 million for the same period in 2003.  Second quarter 2003 earnings were
higher than normal due to several items, including a tax benefit for the Mexican
AFORE business.

Operating  revenues were $122.3  million for second  quarter  2004,  compared to
$106.2  million for the same period last year,  primarily  reflecting  increased
premium in Mexico and currency improvements in Chile.

Assets under  management  for the segment were $8.3 billion as of June 30, 2004,
compared to $8.2 billion as of March 31,  2004,  and compared to $5.8 billion as
of June 30, 2003.

                                       4
LIFE AND HEALTH INSURANCE

Segment operating earnings for second quarter 2004 were $56.9 million,  compared
to $62.9  million for the same period in 2003.  The decrease  includes a premium
refund  accrual in second  quarter 2004 of $3.5 million,  after tax, for pending
litigation in the Health  division  related to a business the company  exited in
the 1990's.

Operating  revenues  increased  to  $1,030.7  million  for the  second  quarter,
compared to $1,001.8 million for the same period in 2003, largely as a result of
increases within the Specialty Benefits insurance operations. Operating revenues
were down slightly in the Individual Life division, as the company continued its
shift in marketing emphasis 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 are
not reported as GAAP revenue.  Operating revenues were up slightly in the health
business,  primarily due to revenues  generated from our 2004 acquisition of the
Molloy Companies (health administration and claims).

MORTGAGE BANKING

As a result of the sale of our mortgage banking operations, which closed on July
1, 2004,  the  operating  earnings of the  segment  reflect  only the  corporate
overhead  expenses  allocated  to the  segment.  This  treatment  is pursuant to
Statement  of  Financial   Accounting  Standard  No.  144,  ACCOUNTING  FOR  THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED  ASSETS ("SFAS 144"),  whereby all revenues
and  expenses  (excluding  corporate  overhead  allocated  to  the  discontinued
segment) are reported as discontinued  operations.  Based on this treatment, the
segment  generated an operating  loss of $5.4  million in second  quarter  2004,
compared to an operating loss of $4.5 million in the prior year quarter.

CORPORATE AND OTHER

Operating  losses  for  second  quarter  2004 were  $9.1  million,  compared  to
operating  losses of $10.4  million  for the same  period in 2003.  Because  the
corporate  operations are varied,  many items  contributed to the variance.  The
biggest  contributor to the improvement was reduced  interest  expense  stemming
from the early  extinguishment of $200 million of surplus notes in first quarter
2004.

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, 2003, and in the company's quarterly report on Form 10-Q
for the quarter ended March 31, 2004,  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.

                                       5
OUTLOOK FOR FULL YEAR 2004
As communicated in the first quarter 2004 earnings release,  the Company will no
longer provide any quarterly operating earnings per share guidance or net income
per share  guidance.  In light of the sale of  Principal  Residential  Mortgage,
which  closed on July 1, 2004,  the Company is  providing an update to full year
earnings per share and net income per share expectations.  Based on an estimated
$20  million  in  2004  for  other  after-tax   adjustments  in  excess  of  net
realized/unrealized capital gains/losses, the company expects 2004 net income to
range from $2.34 to $2.38 per diluted share.  The company expects 2004 operating
earnings to range from $2.28 to $2.32 per diluted share.4

SHARE REPURCHASES
In May 2003, the Board authorized a repurchase  program of up to $300 million of
our  outstanding  common  stock.  This program was  completed  during the second
quarter.   Concurrent  with  our  announcement  to  sell  the  mortgage  banking
operations,  the Board authorized an additional repurchase program of up to $700
million.  Under  this  new  program,  as of  June  30,  2004,  the  company  had
repurchased 2.1 million shares for $75.0 million,  an average price per share of
$35.22. In total, the company  repurchased 6.31 million shares during the second
quarter 2004 for  approximately  $222 million,  or an average price per share of
$35.19.

STOCK OPTIONS
The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $6.1  million and $11.4  million,
respectively for the three and six months ended June 30, 2004,  compared to $4.7
million and $7.4 million,  respectively  for the three and six months ended June
30, 2003.

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. and
Canadian  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  and  Canadian   callers)  or  (706)   645-9291
(International callers). The access code for the replay is 8150995. Replays will
be available  through  August 10, 2004.  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))5 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 banking  through its diverse family of financial  services
companies. A member of the Fortune 500, the Principal Financial Group has $152.1
billion in assets  under  management6  and serves  some 14.6  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.

                                       ###

                                       6
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                                                OPERATING EARNINGS (LOSS)* IN MILLIONS

                                                           THREE MONTHS ENDED,             SIX MONTHS ENDED,
                                                     ------------------------------ ------------------------------
SEGMENT        6/30/04         6/30/03        6/30/04        6/30/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION          $121.7         $105.7         $241.2          $200.6
---------------------------------------------------- --------------- -------------- -------------- ---------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
                                                                9.3           11.9           17.9            18.5
---------------------------------------------------- --------------- -------------- -------------- ---------------
                          LIFE AND HEALTH INSURANCE            56.9           62.9          131.7           122.0
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                   MORTGAGE BANKING            (5.4)          (4.5)         (10.3)           (8.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                CORPORATE AND OTHER            (9.1)         (10.4)         (20.6)          (15.4)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS           173.4          165.6          359.9           317.3
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED           (44.5)         (13.5)         (67.6)          (66.6)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS            (9.2)          50.1           21.0           107.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                      NET INCOME **          $119.7         $202.2         $313.3          $357.9
------------------------------------------------------------------------------------------------------------------

                                                                         PER DILUTED SHARE
                                                     ------------------------------ ------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
                                                     --------------- -------------- -------------- ---------------
                                                        6/30/04         6/30/03        6/30/04        6/30/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                 OPERATING EARNINGS      $  0.54           $ 0.51          $ 1.12          $ 0.96
---------------------------------------------------- --------------- -------------- -------------- ---------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED        (0.14)           (0.04)          (0.21)          (0.20)
---------------------------------------------------- --------------- -------------- -------------- ---------------
                        OTHER AFTER-TAX ADJUSTMENTS        (0.03)            0.15            0.07            0.33
---------------------------------------------------- --------------- -------------- -------------- ---------------
                                         NET INCOME      $  0.37           $ 0.62          $ 0.98          $ 1.09
---------------------------------------------------- --------------- -------------- -------------- ---------------
         WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING      319.2            327.4           320.6           329.6
---------------------------------------------------- --------------- -------------- -------------- ---------------
*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,  2004   reflects  net
realized/unrealized  capital losses of $(44.5)  million,  which includes $(13.8)
million in credit losses  stemming from  impairments  and credit impaired sales,
$(6.4) million of losses related to mark-to-market of seed money investments, as
well as $(9.2)  million  in other  after-tax  adjustments.  The other  after-tax
adjustments  reflect the  discontinued  operations of Mortgage  Banking - $(9.5)
million and Argentina - $0.3 million. Net income for the three months ended June
30, 2003 reflects net  realized/unrealized  capital  losses of $(13.5)  million,
which includes  $(23.5) million in credit losses  stemming from  impairments and
credit impaired sales,  $23.2 million of gains related to mark-to-market of seed
money investments, as well as $50.1 million in other after-tax adjustments.  The
other  after-tax  adjustments  reflect the  discontinued  operations of Mortgage
Banking - $52.1 million,  Argentina - $(1.6)  million,  and BT Financial Group -
$(0.4) million.

                                       7
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)

                                                       THREE MONTHS ENDED                SIX MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     6/30/04         6/30/03         6/30/04         6/30/03
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                      $892.6        $  875.7        $1,813.0        $1,780.4
   Fees and other revenues                                 364.2           276.7           696.8           543.3
   Net investment income                                   789.2           808.8         1,575.4         1,601.8
   Net realized/unrealized capital losses                  (66.3)           (9.7)         (108.8)          (84.2)
                                                 ---------------- --------------- --------------- ---------------
     TOTAL REVENUES                                      1,979.7         1,951.5         3,976.4         3,841.3
                                                 ---------------- --------------- --------------- ---------------
   Benefits, claims, and settlement expenses             1,221.1         1,185.2         2,407.2         2,379.9
   Dividends to policyholders                               74.4            73.9           147.7           154.0
   Operating expenses                                      521.1           490.3         1,050.6           975.6
                                                 ---------------- --------------- --------------- ---------------
      TOTAL EXPENSES                                     1,816.6         1,749.4         3,605.5         3,509.5
                                                 ---------------- --------------- --------------- ---------------
      Income from continuing operations before
        income taxes                                       163.1           202.1           370.9           331.8
   Income taxes                                             34.2            50.0            78.6            81.1
                                                 ---------------- --------------- --------------- ---------------
   Income from continuing operations, net of
        related income taxes                               128.9           152.1           292.3           250.7
   Income (loss) from discontinued operations,
        net of related taxes                                (9.2)           50.1            26.7           107.2
                                                 ---------------- --------------- --------------- ---------------
   Income before cumulative effect of
        accounting change                                  119.7           202.2           319.0           357.9
   Cumulative effect of accounting change, net
        of related income taxes                              -               -              (5.7)            -
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                             $119.7        $  202.2        $  313.3        $  357.9
   Less:
   Net realized/unrealized capital losses, as
        adjusted                                           (44.5)          (13.5)          (67.6)          (66.6)
   Other after-tax adjustments                              (9.2)           50.1            21.0           107.2
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                                     $173.4        $  165.6        $  359.9        $  317.3
                                                 ================ =============== =============== ===============
SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           6/30/04              12/31/03            6/30/03
                                                     --------------------- -------------------- -----------------
Total assets (in billions)                            $   111.4            $   107.8             $    98.6
  Total equity (in millions)                            $ 7,139.1            $ 7,399.6             $ 7,539.0
  Total equity excluding accumulated other
       comprehensive income (in millions)               $ 6,378.0            $ 6,228.3             $ 6,118.4
  End of period shares outstanding (in millions)            314.9                320.7                 325.1
  Book value per share                                  $    22.67           $    23.07            $    23.19
  Book value per share excluding accumulated other
      comprehensive income                              $    20.25           $    19.42            $    18.82
8
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
                                                             ------------------------------ ---------------------------
                                                                    6/30/04        6/30/03       6/30/04      6/30/03
                                                             -------------- ----------=---- ------------- -------------
DILUTED EARNINGS PER SHARE:
Operating Earnings                                                    0.54           0.51           1.12          0.96
Net realized/unrealized capital losses                               (0.14)         (0.04)         (0.21)        (0.20)
Other after-tax adjustments                                          (0.03)          0.15           0.07          0.33
                                                             -------------- --------------  ------------- -------------
Net income                                                            0.37           0.62           0.98          1.09
                                                             ============== ==============  ============= =============
BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income                      20.25          18.82          20.25         18.82
Net unrealized capital gains                                          2.94           4.83           2.94          4.83
Foreign currency translation                                         (0.51)         (0.46)         (0.51)        (0.46)
Minimum pension liability                                            (0.01)          -             (0.01)         -
                                                             -------------- --------------  ------------- -------------
Book value including other comprehensive income                      22.67          23.19          22.67         23.19
                                                             ============== ==============  ============= =============
OPERATING REVENUES:
USAMA                                                               906.8          862.0        1,800.1       1,741.9
IAMA                                                                122.3          106.2          235.3         180.7
Life and Health                                                   1,030.7        1,001.8        2,066.0       2,014.1
Mortgage Banking                                                      -              -              -             -
Corporate and Other                                                 (11.9)          (2.0)         (10.3)          1.0
                                                             -------------- --------------  ------------- -------------
Total operating revenues                                          2,047.9        1,968.0        4,091.1       3,937.7
Net realized/unrealized capital losses and related fee
     adjustments                                                    (68.2)         (16.5)        (114.7)        (96.4)
                                                             -------------- --------------  ------------- -------------
Total GAAP revenues                                               1,979.7        1,951.5        3,976.4       3,841.3
                                                             ============== ==============  ============= =============
OPERATING EARNINGS:
USAMA                                                               121.7          105.7          241.2         200.6
IAMA                                                                  9.3           11.9           17.9          18.5
Life and Health                                                      56.9           62.9          131.7         122.0
Mortgage Banking                                                     (5.4)          (4.5)         (10.3)         (8.4)
Corporate and Other                                                  (9.1)         (10.4)         (20.6)        (15.4)
                                                             -------------- --------------  ------------- -------------
Total operating earnings                                            173.4          165.6          359.9         317.3
Net realized/unrealized capital losses                              (44.5)         (13.5)         (67.6)        (66.6)
Other after-tax adjustments                                          (9.2)          50.1           21.0         107.2
                                                             -------------- --------------  ------------- -------------
Net income                                                          119.7          202.2          313.3         357.9
                                                             ============== ==============  ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital losses, as adjusted                 (44.5)         (13.5)         (67.6)        (66.6)
Add:
Amortization of DPAC and sale inducement costs                       (0.5)           0.4           (2.6)         (3.3)
Capital gains (losses) distributed                                   (0.8)           1.9            1.2           1.0
Tax impacts                                                         (22.5)          (4.9)         (45.9)        (27.2)
Minority interest capital gains                                       0.1           (0.4)           0.2          (0.3)
Less related fee adjustments:
Unearned front-end fee income                                         1.0           (0.1)          (0.1)          4.3
Certain market value adjustments to fee revenues                     (2.9)          (6.7)          (5.8)        (16.5)
                                                             -------------- --------------  ------------- -------------
GAAP net realized/unrealized capital losses                         (66.3)          (9.7)        (108.8)        (84.2)
                                                             ============== ==============  ============= =============
OTHER AFTER TAX ADJUSTMENTS:
SOP 03-1 implementation                                               -              -             (5.7)          -
Discontinued operations - Mortgage Banking                           (9.5)          52.1           26.5         110.9
Discontinued operations - Argentina                                   0.3           (1.6)           0.2         (2.6)
Discontinued operations - BT Financial Group                          -             (0.4)           -            (1.1)
                                                             -------------- --------------  ------------- -------------
Total other after-tax adjustments                                    (9.2)          50.1           21.0         107.2
                                                             ============== ==============  ============= =============
9
----------------
1    The decline reflects  significantly  lower results from mortgage production
     operations  compared to gains in the prior year period, due to the changing
     loan  origination  environment,  partially  offset  by  lower  losses  from
     mortgage servicing rights adjustments.
2    The  difference  primarily  relates  to $(6.4)  million of losses in second
     quarter 2004 related to mark-to-market of seed money investments,  compared
     to gains of $23.2 million in second quarter 2003.
3    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.
4    Full year 2004 guidance is based on certain assumptions, including domestic
     equity  market  performance  improvement  of roughly 2% per quarter.  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.
5    "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.
6    As of June 30, 2004.

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