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Principal Financial Group Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed March 4, 2005
Period End
December 31, 2004
Security
PFG
In the record · 2016–202610-K1110-Q338-K163

PFG filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 163 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Material agreement8-K · May ’19May ’19
  3. Leadership change8-K · Nov ’21Nov ’21
  4. Leadership change8-K · Aug ’25Aug ’25

01—Abstract

Summary

Summary of the 10-K filed March 4, 2005. Cited figures are marked; the original filing is the authoritative source.

Principal Financial Group, Inc. (PFG) reported 2004 net income of $825.6 milliona, up from $746.3 million in 2003, on total revenues of $8,303.7 million.

Income from continuing operations rose to $702.5 millionb, or $2.23 diluted per share, versus $1.98 in 2003. Total assets were $113.8 billion and assets under management reached $168.7 billion at year-end. Results were helped by $128.8 million of income from discontinued operations, mainly from the sale of Principal Residential Mortgage, Inc. to CitiMortgage for approximately $620.0 million in after-tax proceeds.

The core businesses showed steady growth. U.S. Asset Management and Accumulation segment operating earnings rose to $499.0 millionc from $422.6 million, and Life and Health Insurance operating earnings rose to $256.2 million from $241.2 million. The company also repurchased 21.7 million shares for $772.0 million during 2004 and paid a $0.55 per share annual dividend.

It acquired ABN AMRO Trust Services Company at year-end 2004 and agreed to acquire Columbus Circle Investors, which closed in January 2005. Key risks flagged in the filing include a $444.0 milliond IRS deficiency for tax years 1999-2000 that was paid in January 2005, pending litigation over demutualization allocations, a New York Attorney General subpoena regarding retirement product compensation, and indemnification claims from Westpac related to the BT Financial Group sale. Management states it does not expect the pending litigation to have a material adverse effect on the business or financial position.

02—Key points

Key Highlights

  1. Net income rose to $825.6 million in 2004 from $746.3 million in 2003; diluted EPS was $2.62 versus $2.28.
  2. Income from continuing operations was $702.5 million, up from $647.3 million, with diluted EPS of $2.23 versus $1.98.
  3. Total operating revenues were $8,418.6 million and total U.S. GAAP revenues were $8,303.7 million.
  4. Assets under management reached $168.7 billion, up from $144.9 billion in 2003, and total assets were $113.8 billion.
  5. Sale of Principal Residential Mortgage, Inc. closed July 1, 2004, with approximately $620.0 million in after-tax proceeds and resulting discontinued operations income.
  6. Share repurchases totaled $772.0 million for 21.7 million shares in 2004; the annual dividend rose to $0.55 per share from $0.45.
  7. The company paid a $444.0 million IRS deficiency (including interest) for 1999-2000 tax years in January 2005 and plans to seek refunds on the disputed adjustments.

03—Questions

Frequently Asked Questions

  1. What drove the increase in net income in 2004?

    Net income rose $79.3 million to $825.6 million. Income from continuing operations increased $55.2 million to $702.5 million, and discontinued operations contributed $128.8 million, mainly from the Principal Residential Mortgage, Inc. sale. Fee revenues grew 24% to $1,472.0 million, while net investment income slightly declined.

  2. How did the core segments perform?

    U.S. Asset Management and Accumulation operating earnings increased to $499.0 million from $422.6 million, and Life and Health Insurance operating earnings increased to $256.2 million from $241.2 million. International Asset Management and Accumulation operating earnings rose to $40.3 million from $34.5 million.

  3. What is the company's exposure to the IRS tax dispute?

    The IRS completed its examination of 1999-2000 tax years and issued a notice of deficiency. The company paid approximately $444.0 million including interest in January 2005. Most of the deficiency relates to disallowed loss and credit carrybacks that management expects the IRS to allow, and it does not expect a material impact on net income.

  4. What legal and regulatory matters are disclosed?

    The company received a New York Attorney General subpoena on March 3, 2005 about compensation agreements tied to retirement product sales, and faces a class action in Iowa over demutualization allocation. Westpac has also lodged indemnification claims of approximately A$50.0 million related to the BT Financial Group sale. Management states none is expected to have a material adverse effect on the business or financial position.

  5. How did the company return capital to shareholders?

    In 2004 the company repurchased 21.7 million shares at an aggregate cost of $772.0 million and paid $166.5 million in dividends. As of December 31, 2004, $75.0 million remained under the May 2004 $700.0 million repurchase authorization.

04—Continue

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