SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: FEBRUARY 7, 2005
(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)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 7, 2005, Principal Financial Group, Inc. publicly announced
information regarding its results of operations and financial condition for the
quarter ended December 31, 2004. The text of the announcement is included
herewith as Exhibit 99.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
99 Fourth Quarter 2004 Earnings Release
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PRINCIPAL FINANCIAL GROUP, INC.
By: /S/ MICHAEL H. GERSIE
-------------------------------------------
Name: Michael H. Gersie
Title: Executive Vice President and Chief
Financial Officer
Date: February 8, 2005
2
RELEASE: On receipt
MEDIA CONTACT: Jeff Rader, 515-247-7883, rader.jeff@principal.com
INVESTOR RELATIONS CONTACT: Tom Graf, 515-235-9500,
Investor-Relations@principal.com
PRINCIPAL FINANCIAL GROUP, INC. REPORTS FOURTH QUARTER 2004 RESULTS
Des Moines, IA (February 7, 2005) -- Principal Financial Group, Inc. (NYSE: PFG)
today announced quarterly net income for the three months ended December 31,
2004, of $213.5 million, or $0.70 per diluted share compared to net income of
$203.9 million, or $0.63 per diluted share for the three months ended December
31, 2003. The company reported operating earnings of $199.7 million for fourth
quarter 2004, up 9 percent compared to $183.1 million for fourth quarter 2003.
Operating earnings per diluted share (EPS) for fourth quarter 2004 increased 16
percent to $0.66 compared to $0.57 for the same period in 2003. Operating
revenues for fourth quarter 2004 were $2,215.7 million, up 3 percent compared to
the same period last year.1
"The fourth quarter was a very strong finish for The Principal, capping
our sixth consecutive year of record operating earnings," said J. Barry
Griswell, chairman, president and chief executive officer. "Each of our
operating segments achieved record results for the year, contributing to 19
percent EPS growth."
"We're extremely pleased with our longer-term track record, as well,"
said Griswell. "Since our IPO, we've achieved a three-year compounded annual
growth rate of 10 percent for earnings and 15 percent for earnings per share.
We've also improved ROE2 from 8.9 percent at year-end 2001 to 12.3 percent at
year-end 2004."
Additional highlights for the fourth quarter and full year 2004 include:
o Record net income of $825.6 million and record net income per diluted share
of $2.62 in 2004.
o Record operating earnings of $764.8 million and record EPS of $2.43 in
2004.
o A seventh consecutive quarter of record operating earnings for the U.S.
Asset Management and Accumulation segment, at $134.3 million for fourth
quarter 2004, including record earnings for Pension Full Service
Accumulation.
o Record assets under management of $168.7 billion, up 16 percent from 2003.
o Record full service accumulation account values of $68.9 billion, up 23
percent from a year ago, and record full service accumulation deposits of
$13.3 billion.
o Strong sales of the company's key retirement and investment products in
2004, including: a record $3.0 billion for mutual funds; a record $2.0
billion for individual annuities; and $5.2 billion for organic full service
accumulation, including $1.4 billion in the fourth quarter.
"During 2004, we remained tightly focused on our fundamentals -
delivering innovative retirement and employee benefits solutions, responsive
service, and exceptional convenience, choice and value," said Griswell. "We
launched Total Retirement Suite and our combined High Deductible Health Plan
with Health Savings Account, both high quality, cost effective benefit solutions
that respond to evolving employer needs and preferences. We also expanded our
3
array of retirement income management solutions, as well as our role as trusted
advisor, adding a wide array of education, tools, and personalized guidance to
help employees assess their needs, evaluate their options, and develop and
execute a tailored financial plan."
"Importantly, our ongoing investment in helping customers achieve
financial security and success continues to drive strong and improving retention
across our businesses, as well as tremendous sales success," said Griswell. "In
our largest business, pension full service accumulation, employer-level
retention reached an all-time high in 2004, and our participant level retention
was double the industry average. In addition, combined sales of our three key
retirement and investment products - pension full service accumulation, mutual
funds and individual annuities - reached record levels, surpassing $10 billion
for the year.
"Strong contributions from existing retirement plan investors, along
with our retention and sales success, has in turn driven significant growth in
assets under management (AUM) and account values," said Griswell. "We've
achieved a three-year compounded annual growth rate of 17.5 percent for AUM and
nearly 15 percent for full service accumulation account values, further evidence
of the increasing strength of our businesses. Looking ahead, we remain highly
optimistic about the growth opportunities across our businesses. We'll continue
to leverage our strengths and execute our customer-focused strategy to deliver
sustainable, profitable growth and to create long-term value for shareholders."
Results for the twelve months ended December 31, 2004:
o Net income increased to a record $825.6 million, or $2.62 per diluted
share, compared to net income of $746.3 million, or $2.28 per diluted
share, during the same period a year ago.
o Operating earnings increased 15 percent to a record $764.8 million,
compared to $667.7 million in the year earlier period. Operating earnings
per share increased 19 percent to a record $2.43 per diluted share compared
to $2.04 per diluted share in the year earlier period.
o Operating revenues increased 4 percent to $8,418.6 million from $8,063.0
million during the same period a year ago.
SEGMENT HIGHLIGHTS
U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for fourth quarter 2004 increased 18 percent
to a record $134.3 million, compared to $114.1 million for the same period in
2003, primarily reflecting strong results from pension full service accumulation
and Principal Global Investors. Full service accumulation delivered a record
$64.6 million of earnings, a 20 percent increase compared to $53.9 million in
the prior year quarter. The increase in full service accumulation operating
earnings primarily reflects growth in mean account values, but also includes a
$6.2 million income tax benefit for a special dividend received in fourth
quarter 2004. Principal Global Investors' earnings more than doubled, an
increase of $9.3 million, due to increased earnings from the recently acquired
Post Advisory Group and from growth of existing commercial real estate
operations.
Operating revenues for the fourth quarter were $1,010.5 million
compared to $1,015.7 million for the same period in 2003. Increased fees within
the full service accumulation operations due to growth in account values were
4
offset by lower sales of single premium group annuities. The single premium
product, which is typically used to fund defined benefit 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 4
percent.
Segment assets under management continued to increase, reaching a
record $143.8 billion as of December 31, 2004, an increase of 9 percent from
$132.1 billion as of September 30, 2004, and an increase of 19 percent from
$120.8 billion as of December 31, 2003. Excluding the fourth quarter 2004
acquisition of ABN AMRO Trust Services, the increase in assets under management
would have been 6 percent and 16 percent respectively, compared to September 30,
2004 and December 31, 2003.
INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for fourth quarter 2004 were $11.5 million,
compared to $8.2 million for the same period in 2003, an increase of 40 percent,
primarily the result of increased earnings in the Chilean operations compared to
the year earlier period.
Operating revenues were $147.1 million for fourth quarter 2004 compared
to $120.5 million for the same period last year. The increase primarily reflects
higher revenues in the Chilean operations due to inflation and stronger
currency.
Assets under management for the segment were $10.2 billion as of
December 31, 2004, an increase of 12 percent compared to $9.1 billion as of
September 30, 2004, and an increase of 36 percent compared to $7.5 billion as of
December 31, 2003.
LIFE AND HEALTH INSURANCE
Operating earnings for fourth quarter 2004 were $52.9 million compared
to $66.4 million for the same period in 2003. The decline for the segment
primarily reflects the fourth quarter 2003 conversion to new deferred policy
acquisition cost and policy valuation models on some of the company's life and
disability products. The conversion lowered amortization expense, which resulted
in a $16.7 million increase in operating earnings for the segment in fourth
quarter 2003, with no corresponding activity in fourth quarter 2004. The decline
also reflects lower earnings in the health division, $9.2 million in fourth
quarter 2004, compared to $20.6 million in the year ago quarter, reflecting
seasonality and unfavorable claims experience. These declines were only
partially offset by improved results in the Specialty Benefits division.
Specialty Benefits earnings improved by $9.5 million in fourth quarter 2004 to
$18.2 million, reflecting growth overall as well as very favorable claims
experience - experience that is not expected to continue in future quarters.
Operating revenues increased 6 percent to a record $1,063.5 million
for the quarter, compared to $1,004.5 million for the same period in 2003, with
improvement in all three divisions: increases in Individual Life revenues were
primarily driven by higher fees from Universal Life and Variable Universal Life
products; increases in Health revenues primarily reflect the JF Molloy
acquisition; and increases in Specialty Benefits revenues were driven by strong
5
growth in each of the division's four business lines - group dental/vision,
group life, group disability and individual disability insurance.
MORTGAGE BANKING
The operating earnings of the segment, prior to the July 1, 2004 sale
of the mortgage banking operations, reflect only the corporate overhead expenses
allocated to the segment. This 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, there were no operating earnings for the segment in
fourth quarter 2004, compared to an operating loss of $4.7 million in the prior
year quarter.
CORPORATE AND OTHER
Operating earnings for fourth quarter 2004 were $1.0 million, compared
to operating losses of $0.9 million for the same period in 2003. Because the
corporate operations are varied, many items contributed to the variance. The
largest contributors to the increase were reduced borrowing costs in the
corporate segment, and income on proceeds from the sale of Principal Residential
Mortgage, Inc.
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 September 30, 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.
USE OF NON-GAAP FINANCIAL MEASURES
The company uses 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
the company's financial condition and results of operations. They are not,
however, a substitute for U.S. GAAP financial measures. Therefore, the company
has provided reconciliations of the non-GAAP financial measures to the most
directly comparable U.S. GAAP financial measure at the end of the release. The
company adjusts 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 investors and securities analysts.
6
SHARE REPURCHASES
In May 2004, concurrent with our announcement to sell the mortgage banking
operations, the Board authorized a share repurchase program of up to $700
million. During the quarter, the company repurchased 7.2 million shares for
$266.5 million, an average price per share of $37.17. As of December 31, 2004,
under this program the company had repurchased 17.5 million shares for $625.0
million, an average price of $35.65 per share. Under all board-authorized
programs, in 2004 the company repurchased a total of 21.7 million shares for
$772.0 million, an average price of $35.56 per share.
STOCK OPTIONS
The Principal expenses employee stock options and the employee stock purchase
plan, resulting in an after-tax expense of $5.6 million and $22.4 million,
respectively for the three and twelve months ended December 31, 2004, compared
to $3.7 million and $14.3 million, respectively for the three and twelve months
ended December 31, 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 (U.S. and Canadian callers) or (706) 645-9291
(International callers). The access code for the replay is 3002676. Replays will
be available through February 15, 2005. The financial supplement is currently
available on our website and may 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 banking through its diverse family of financial services
companies. A member of the Fortune 500, the Principal Financial Group has $168.7
billion in assets under management4 and serves some 14.9 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.
###
7
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS
OPERATING EARNINGS* (LOSS) IN MILLIONS
THREE MONTHS ENDED, YEAR ENDED,
SEGMENT 12/31/04 12/31/03 12/31/04 12/31/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
U.S. ASSET MANAGEMENT AND ACCUMULATION $134.3 $114.1 $499.0 $422.6
---------------------------------------------------- --------------- -------------- -------------- ---------------
INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION 11.5 8.2 40.3 34.5
---------------------------------------------------- --------------- -------------- -------------- ---------------
LIFE AND HEALTH INSURANCE 52.9 66.4 256.2 241.2
---------------------------------------------------- --------------- -------------- -------------- ---------------
MORTGAGE BANKING - (4.7) (10.3) (18.1)
---------------------------------------------------- --------------- -------------- -------------- ---------------
CORPORATE AND OTHER 1.0 (0.9) (20.4) (12.5)
---------------------------------------------------- --------------- -------------- -------------- ---------------
OPERATING EARNINGS 199.7 183.1 764.8 667.7
---------------------------------------------------- --------------- -------------- -------------- ---------------
NET REALIZED/UNREALIZED CAPITAL
GAINS (LOSSES), AS ADJUSTED 15.9 15.9 (62.3) (49.3)
---------------------------------------------------- --------------- -------------- -------------- ---------------
OTHER AFTER-TAX ADJUSTMENTS (2.1) 4.9 123.1 127.9
---------------------------------------------------- --------------- -------------- -------------- ---------------
NET INCOME $213.5 $203.9 $825.6 $746.3
------------------------------------------------------------------------------------------------------------------
PER DILUTED SHARE
THREE MONTHS ENDED, YEAR ENDED,
------------------------------ ------------------------------
12/31/04 12/31/03 12/31/04 12/31/03
---------------------------------------------------- --------------- -------------- -------------- ---------------
OPERATING EARNINGS $ 0.66 $ 0.57 $2.43 $2.04
---------------------------------------------------- --------------- -------------- -------------- ---------------
NET REALIZED/UNREALIZED CAPITAL
GAINS (LOSSES), AS ADJUSTED 0.05 0.05 (0.20) (0.15)
---------------------------------------------------- --------------- -------------- -------------- ---------------
OTHER AFTER-TAX ADJUSTMENTS (0.01) 0.01 0.39 0.39
---------------------------------------------------- --------------- -------------- -------------- ---------------
NET INCOME $ 0.70 $ 0.63 $2.62 $2.28
---------------------------------------------------- --------------- -------------- -------------- ---------------
WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING 304.7 323.3 314.7 326.8
---------------------------------------------------- --------------- -------------- -------------- ---------------
*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.
8
PRINCIPAL FINANCIAL GROUP, INC.
RESULTS OF OPERATIONS
(IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
---------------- --------------- --------------- ---------------
12/31/04 12/31/03 12/31/04 12/31/03
---------------- --------------- --------------- ---------------
Premiums and other considerations $ 973.2 $ 982.5 $ 3,710.0 $ 3,630.7
Fees and other revenues 411.6 353.2 1,472.0 1,185.8
Net investment income 828.6 810.2 3,226.5 3,233.4
Net realized/unrealized capital 25.3 27.4 (104.8) (63.2)
gains/(losses)
---------------- --------------- --------------- ---------------
TOTAL REVENUES 2,238.7 2,173.3 8,303.7 7,986.7
---------------- --------------- --------------- ---------------
Benefits, claims, and settlement expenses 1,314.3 1,301.5 4,959.5 4,855.8
Dividends to policyholders 77.0 75.2 296.7 307.9
Operating expenses 572.0 528.6 2,165.9 1,998.7
---------------- --------------- --------------- ---------------
TOTAL EXPENSES 1,963.3 1,905.3 7,422.1 7,162.4
---------------- --------------- --------------- ---------------
Income from continuing operations before
income taxes 275.4 268.0 881.6 824.3
Income taxes 59.8 40.1 179.1 177.0
---------------- --------------- --------------- ---------------
Income from continuing operations, net of
related income taxes 215.6 227.9 702.5 647.3
Income (loss) from discontinued operations,
net of related income taxes (2.1) (24.0) 128.8 102.4
---------------- --------------- --------------- ---------------
Income before cumulative effect of
accounting changes 213.5 203.9 831.3 749.7
Cumulative effect of accounting changes,
net of related income taxes - - (5.7) (3.4)
---------------- --------------- --------------- ---------------
NET INCOME $ 213.5 $ 203.9 $ 825.6 $ 746.3
Less:
Net realized/unrealized capital gains
(losses), as adjusted 15.9 15.9 (62.3) (49.3)
Other after-tax adjustments (2.1) 4.9 123.1 127.9
---------------- --------------- --------------- ---------------
OPERATING EARNINGS $ 199.7 $ 183.1 $ 764.8 $ 667.7
================ =============== =============== ===============
SELECTED BALANCE SHEET STATISTICS
PERIOD ENDED
------------------------------------------------------------
12/31/04 12/31/03 12/31/02
--------------------- -------------------- -----------------
Total assets (in billions) $ 113.8 $ 107.8 $ 89.9
Total equity (in millions) $ 7,544.3 $ 7,399.6 $ 6,657.2
Total equity excluding accumulated other
comprehensive income (in millions) $ 6,231.0 $ 6,228.3 $ 6,021.4
End of period shares outstanding (in millions) 300.6 320.7 334.4
Book value per share $ 25.10 $ 23.07 $ 19.91
Book value per share excluding accumulated other
comprehensive income $ 20.73 $ 19.42 $ 18.01
9
PRINCIPAL FINANCIAL GROUP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
(IN MILLIONS, EXCEPT AS INDICATED)
THREE MONTHS ENDED YEAR ENDED
----------------------------- ---------------------------
12/31/04 12/31/03 12/31/04 12/31/03
-------------- -------------- ------------- -------------
DILUTED EARNINGS PER SHARE:
Operating Earnings 0.66 0.57 2.43 2.04
Net realized/unrealized capital gains/(losses) 0.05 0.05 (0.20) (0.15)
Other after-tax adjustments (0.01) 0.01 0.39 0.39
-------------- -------------- ------------- -------------
Net income 0.70 0.63 2.62 2.28
============== ============== ============= =============
BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income 20.73 19.42 20.73 19.42
Net unrealized capital gains/(losses) 4.67 4.03 4.67 4.03
Foreign currency translation (0.28) (0.37) (0.28) (0.37)
Minimum pension liability (0.02) (0.01) (0.02) (0.01)
-------------- -------------- ------------- -------------
Book value including other comprehensive income 25.10 23.07 25.10 23.07
============== ============== ============= =============
OPERATING REVENUES:
USAMA 1,010.5 1,015.7 3,741.9 3,622.4
IAMA 147.1 120.5 518.4 399.5
Life and Health 1,063.5 1,004.5 4,181.3 4,014.3
Mortgage Banking - - - -
Corporate and Other (5.4) 6.9 (23.0) 26.8
-------------- -------------- ------------- -------------
Total operating revenues 2,215.7 2,147.6 8,418.6 8,063.0
Net realized/unrealized capital gains (losses) and
related fee adjustments 23.0 25.7 (114.9) (76.3)
-------------- -------------- ------------- -------------
Total GAAP revenues 2,238.7 2,173.3 8,303.7 7,986.7
============== ============== ============= =============
OPERATING EARNINGS:
USAMA 134.3 114.1 499.0 422.6
IAMA 11.5 8.2 40.3 34.5
Life and Health 52.9 66.4 256.2 241.2
Mortgage Banking - (4.7) (10.3) (18.1)
Corporate and Other 1.0 (0.9) (20.4) (12.5)
-------------- -------------- ------------- -------------
Total operating earnings 199.7 183.1 764.8 667.7
Net realized/unrealized capital gains (losses) 15.9 15.9 (62.3) (49.3)
Other after-tax adjustments (2.1) 4.9 123.1 127.9
-------------- -------------- ------------- -------------
Net income 213.5 203.9 825.6 746.3
============== ============== ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Total net realized/unrealized capital gains (losses) 15.9 15.9 (62.3) (49.3)
Add:
Amortization of DPAC and sale inducement costs (4.2) (2.1) (6.2) (5.1)
Capital gains distributed 3.1 1.3 4.4 3.3
Tax impacts 8.2 10.1 (51.1) (25.3)
Minority interest capital gains - 0.5 0.3 0.1
Less related fee adjustments:
Unearned front-end fee income (2.0) (0.5) (2.1) 4.6
Certain market value adjustments to fee revenues (0.3) (1.2) (8.0) (17.7)
-------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses) 25.3 27.4 (104.8) (63.2)
============== ============== ============= =============
OTHER AFTER TAX ADJUSTMENTS:
IRS audit issue - 28.9 - 28.9
FIN 46 implementation - - - (3.4)
SOP 03-1 implementation - - (5.7) -
Discontinued operations (2.1) (24.0) 128.8 102.4
-------------- -------------- ------------- -------------
Total other after-tax adjustments (2.1) 4.9 123.1 127.9
============== ============== ============= =============
--------
1 Use of non-GAAP financial measures discussed on page 4 of this release
2 Operating return on average equity, excluding other comprehensive income
3 "The Principal Financial Group" and "The Principal" are registered service
marks of Principal Financial Services, Inc., a member of the Principal
Financial Group.
4 As of December 31, 2004
10