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19.7
19.5
19.6
18.5
18.3
08 09 10 11 12

Customers1
(in millions)

$247
$285
$319
$335
$403
08 09 10 11 12

Assets Under Management
(in billions)

$396
$524
$630
$620
$773
08 09 10 11 12

Net Income Available to Common Stockholders2
(in millions)

$807
$682
$803
$844
$808
08 09 10 11 12

Operating Earnings2,3
(in millions)

13.1%
9.6%
10.0%
10.2%
9.6%
08 09 10 11 12

Operating Return on Average Equity2, 3, 4

$22.57
$24.04
$32.56
$24.60
$28.52
08 09 10 11 12

Common Share Price as of Year End

$0.45
$0.50
$0.55
$0.70
$0.78
08 09 10 11 12

Annual Dividends Paid on Common Stock

$9,935
$8,856
$9,198
$8,671
$9,215
08 09 10 11 12

Total Revenue2
(in millions)

$3.09
$2.28
$2.49
$2.66
$2.69
08 09 10 11 12

Operating Earnings per Diluted Common Share2, 3

$1,866
$7,297
$9,149
$9,018
$9,753
08 09 10 11 12

Stockholders' Equity Attributable to Principal Financial Group, Inc.2
(in millions)

$6,332
$7,817
$8,301
$8,218
$8,579
08 09 10 11 12

Total Stockholders' Equity Attributable to Principal Financial Group, Inc. excluding AOCI2
(in millions)

[1]
Includes employees and their dependents under employee benefit arrangements.
[2]
Certain reclassifications have been made to 2008, 2009, 2010 and 2011 to conform to 2012 presentation.
[3]
See page 16 for a reconciliation of non-GAAP measures to U.S. GAAP.
[4]
Stockholders' equity available to common stockholders excluding accumulated other comprehensive income (loss).

Consolidated Statements of Operations

For the year ended Dec. 31
2012 2011 2010
(in millions, except as indicated)
Revenues
Premiums and other considerations $ 3,219.4 $ 2,891.0 $ 3,555.5
Fees and other revenues 2,626.7 2,526.7 2,337.1
Net investment income 3,254.9 3,375.3 3,495.8
Net realized capital gains, excluding impairment losses on available-for-sale securities 232.7 75.0 50.0
Total other-than-temporary impairment losses on available-for-sale securities (135.9) (147.6) (296.3)
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income 17.3 (49.7) 56.1
Net impairment losses on available-for-sale securities (118.6) (197.3) (240.2)
Net realized capital gains (losses) 114.1 (122.3) (190.2)
Total revenues 9,215.1 8,670.7 9,198.2
Expenses 
Benefits, claims and settlement expenses 5,123.9 4,616.6 5,204.3
Dividends to policyholders 197.7 210.2 219.9
Operating expenses 2,934.1 2,950.8 2,988.3
Total expenses  8,255.7 7,777.6 8,412.5
Income before income taxes 959.4 893.1 785.7
Income taxes 134.7 204.2 104.9
Net income 824.7 688.9 680.8
Net income attributable to noncontrolling interest 18.8 36.2 17.9
Net income attributable to Principal Financial Group, Inc. 805.9 652.7 662.9
Preferred stock dividends 33.0 33.0 33.0
Net income available to common stockholders $ 772.9 $ 619.7 $ 629.9
Basic earnings per common share $ 2.60 $ 1.97 $ 1.97
Diluted earnings per common share $ 2.57 $ 1.95 $ 1.95

Consolidated Statements of Financial Position

Dec. 31
2012 2011
(in millions)
Assets
Fixed maturities, available-for-sale (2012 and 2011 include $194.6 million and $214.2 million related to consolidated variable interest entities) $ 50,939.3 $ 49,006.7
Fixed maturities, trading (2012 and 2011 include $110.4 million and $132.4 million related to consolidated variable interest entities) 626.7 971.7
Equity securities, available-for-sale 136.5 77.1
Equity securities, trading (2012 and 2011 include $0.0 million and $207.6 million related to consolidated variable interest entities) 252.8 404.8
Mortgage loans 11,519.7 10,727.2
Real estate 1,180.3 1,092.9
Policy loans 864.9 885.1
Other investments (2012 and 2011 include $80.3 million and $97.8 million related to consolidated variable interest entities and $113.9 million and $97.5 million measured at fair value under the fair value option) 3,291.1 2,985.8
Total investments 68,811.3 66,151.3
Cash and cash equivalents (2012 and 2011 include $0.0 million and $317.7 million related to consolidated variable interest entities) 4,177.2 2,833.9
Accrued investment income 584.4 615.2
Premiums due and other receivables 1,084.4 1,196.5
Deferred policy acquisition costs 2,673.8 2,428.0
Property and equipment 464.2 457.2
Goodwill 543.4 482.3
Other intangibles 927.2 890.6
Separate account assets 81,653.8 71,364.4
Other assets 1,006.8 942.3
Total assets $ 161,926.5 $ 147,361.7
Liabilities
Contractholder funds $ 37,786.5 $ 37,676.4
Future policy benefits and claims 22,436.2 20,210.4
Other policyholder funds 716.4 548.6
Short-term debt 40.8 105.2
Long-term debt 2,671.3 1,564.8
Income taxes currently payable 15.3 3.1
Deferred income taxes 626.5 208.7
Separate account liabilities 81,653.8 71,364.4
Other liabilities (2012 and 2011 include $302.9 million and $565.2 million related to consolidated variable interest entities, of which $85.0 million and $88.4 million are measured at fair value under the fair value option) 6,146.1 6,286.2
Total liabilities $ 152,092.9 $ 137,967.8
Redeemable noncontrolling interest 60.4 22.2
Stockholders' equity
Series A preferred stock, par value $.01 per share with liquidation preference of $100 per share — 3.0 million shares authorized, issued and outstanding in 2012 and 2011
Series B preferred stock, par value $.01 per share with liquidation preference of $25 per share — 10.0 million shares authorized, issued and outstanding in 2012 and 2011 0.1 0.1
Common stock, par value $.01 per share — 2,500.0 million shares authorized, 453.5 million and 450.3 million shares issued, and 293.8 million and 301.1 million shares outstanding in 2012 and 2011 Additional paid-in capital 4.5 4.5
Additional paid-in capital 9,730.9 9,634.7
Retained earnings 4,940.2 4,402.3
Accumulated other comprehensive income 631.9 258.0
Treasury stock, at cost (159.7 million and 149.2 million shares in 2012 and 2011) (5,554.4) (5,281.7)
Total stockholders' equity attributable to Principal Financial Group, Inc. 9,753.2 9,017.9
Noncontrolling interest 20.0 353.8
Total stockholders' equity 9,773.2 9,371.7
Total liabilities and stockholders' equity $ 161,926.5 $ 147,361.7

Consolidated Statements of Cash Flows

For the year ended Dec. 31
2012 2011 2010
(in millions)
Operating activities
Net income $ 824.7 $ 688.9 $ 680.8
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred policy acquisition costs 92.6 260.3 268.7
Additions to deferred policy acquisition costs (435.3) (349.6) (329.7)
Accrued investment income 30.8 50.9 25.8
Net cash flows for trading securities 335.8 110.8 188.3
Premiums due and other receivables 70.6 (130.2) (102.3)
Contractholder and policyholder liabilities and dividends 2,054.7 1,201.4 1,303.9
Current and deferred income taxes 20.4 20.4 41.2
Net realized capital (gains) losses (114.1) 122.3 190.2
Depreciation and amortization expense 141.3 115.8 164.7
Mortgage loans held for sale, acquired or originated (48.0) (132.3) (60.6)
Mortgage loans held for sale, sold or repaid, net of gain 90.0 82.0 61.2
Real estate acquired through operating activities (46.4) (37.4)
Real estate sold through operating activities 43.9 141.8 121.6
Stock-based compensation 63.8 43.4 47.6
Other (43.9) 524.8 190.3
Net adjustments 2,256.2 2,024.4 2,110.9
Net cash provided by operating activities 3,080.9 2,713.3 2,791.7
Investing activities
Available-for-sale securities:
Purchases (8,263.9) (6,742.4) (7,187.9)
Sales 1,303.7 980.7 1,684.6
Maturities 6,647.5 5,760.8 5,161.3
Mortgage loans acquired or originated (2,538.4) (1,484.9) (1,272.0)
Mortgage loans sold or repaid 1,668.0 1,793.1 1,798.0
Real estate acquired (151.8) (129.9) (53.8)
Net purchases of property and equipment (38.9) (56.9) (21.5)
Purchase of interests in subsidiaries, net of cash acquired (80.4) (270.5)
Net change in other investments (157.2) (52.1) (81.2)
Net cash provided by (used in) investing activities (1,611.4) (202.1) 27.5
Financing activities
Issuance of common stock 28.9 25.9 20.6
Acquisition of treasury stock (272.7) (556.4) (2.6)
Proceeds from financing element derivatives 51.8 75.9 79.3
Payments for financing element derivatives (49.9) (46.5) (46.5)
Excess tax benefits from share-based payment arrangements 10.8 2.0 1.0
Dividends to common stockholders (231.3) (213.7) (176.2)
Dividends to preferred stockholders (33.0) (33.0) (33.0)
Issuance of long-term debt 1,493.4 2.3
Principal repayments of long-term debt (450.6) (12.2) (11.1)
Net proceeds from (repayments of) short-term borrowings (68.8) 3.2 1.7
Investment contract deposits 6,900.4 6,302.1 4,283.8
Investment contract withdrawals (7,522.6) (7,079.0) (7,343.4)
Net increase (decrease) in banking operation deposits 32.0 (18.5) 46.2
Other (14.6) (4.5) (4.3)
Net cash used in financing activities (126.2) (1,554.7) (3,182.2)
Net increase (decrease) in cash and cash equivalents 1,343.3 956.5 (363.0)
Cash and cash equivalents at beginning of period 2,833.9 1,877.4 2,240.4
Cash and cash equivalents at end of period $ 4,177.2 $ 2,833.9 $ 1,877.4
Supplemental Information:
Cash paid for interest $ 127.7 $ 154.1 $ 123.4
Cash paid for income taxes $ 82.7 $ 152.8 $ 55.2

Non-GAAP Financial Measures

The company uses a number of non-GAAP financial measures that management believes are important in understanding and evaluating the normal, recurring operations of our businesses. Non-GAAP measures included in the Year in Review are operating earnings per diluted share, operating earnings and operating return on average equity excluding other comprehensive income. While such measures are also consistent with metrics utilized by the investment community to evaluate performance, they are not a substitute for U.S. GAAP financial measures. Therefore, we provide below a reconciliation of the non-GAAP measures to the comparable GAAP financial measures.

For the year ended Dec. 31
2012 2011 2010 2009 2008
(in millions, except as indicated)
Net income available to common stockholders per diluted share
Operating earnings per diluted share1 $ 2.69 $ 2.66 $ 2.49 $ 2.28 $ 3.09
Net realized capital gains (losses) 0.13 (0.45) (0.58) (0.76) (1.89)
Other after-tax adjustments (0.25) (0.26) 0.04 0.23 0.32
Net income available to common stockholders per diluted share1 $ 2.57 $ 1.95 $ 1.95 $ 1.75 $ 1.52
Net income available to common stockholders
Operating earnings1 $ 808.0 $ 843.8 $ 803.2 $ 681.6 $ 806.8
Net realized capital gains (losses) 39.1 (141.8) (189.0) (227.9) (494.9)
Other after-tax adjustments (74.2) (82.3) 15.7 69.8 84.0
Net income available to common stockholders1 $ 772.9 $ 619.7 $ 629.9 $ 523.5 $ 395.9
Stockholders' equity attributable to Principal Financial Group, Inc.
x-OCI2 available to common stockholders1 $ 8,579.3 $ 8,217.9 $ 8,300.5 $ 7,816.9 $ 6,332.1
Net unrealized capital gains (losses) 1,235.7 728.4 465.2 (663.6) (4,272.5)
Foreign currency translation (115.3) (109.3) 29.7 (2.0) (168.2)
Net unrecognized post-retirement benefit obligations (488.5) (361.1) (188.2) (396.2) (567.3)
Preferred stock, at par 0.1 0.1 0.1 0.1 0.1
Paid-in capital – preferred stock 541.9 541.9 541.9 541.9 541.9
Stockholders' equity attributable to Principal Financial Group, Inc.1 $ 9,753.2 $ 9,017.9 $ 9,149.2 $ 7,297.1 $ 1,866.1
Net income ROE available to common stockholders (including OCI)
Operating earnings ROE1 (x-OCI) 9.6% 10.2% 10.0% 9.6% 13.1%
Net realized capital gains (losses) 0.5% -1.7% -2.4% -3.2% -7.9%
Other after-tax adjustments -0.9% -1.0% 0.2% 1.0% 1.2%
Net income ROE available to common stockholders (x-OCI) 9.2% 7.5% 7.8% 7.4% 6.4%
Net unrealized capital gains (losses) -1.0% -0.5% 0.1% 4.0% 3.0%
Foreign currency translation 0.1% 0.0% 0.0% 0.2% 0.2%
Net unrecognized post-retirement benefit obligations 0.4% 0.3% 0.3% 1.4% 0.7%
Net income ROE available to common stockholders1 (including OCI) 8.7% 7.3% 8.2% 13.0% 10.3%
[1]
Certain reclassifications have been made to 2008, 2009, 2010 and 2011 to conform to 2012 presentation.
[2]
OCI, or Other Comprehensive Income, consists of three items — net unrealized gains (losses) on available-for-sale securities and derivative instruments, net foreign currency translation adjustments and unrecognized post-retirement benefit obligation.

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