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Principal Life Insurance Co Separate Account C · 10-K405 · For 12/31/96

Filed On 3/13/97   ·   SEC File 811-02091-01   ·   Accession Number 278194-97-2

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  As Of               Filer                 Filing     On/For/As Docs:Pgs

 3/13/97  Principal Life Ins Co Separate..C 10-K405    12/31/96    1:27

Annual Report -- [X] Reg. S-K Item 405   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Annual Report for Separate Account C                  27±   114K

Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"Item 1. Business
"Item 2. Properties
"Item 3. Legal Proceedings
"Item 4. Submission of Matters to a Vote of Security Holders
"Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
"Item 6. Selected Financial Data
"Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation
2Item 8. Financial Statements and Supplementary Data
"Money Market Division
3Government Securities Division
"Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
"Item 10. Directors and Executive Officers of the Registrant
"Item 11. Executive Compensation
"Item 12. Security Ownership of Certain Beneficial Owners and Management
"Item 13. Certain Relationships and Related Transactions
"Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 
10-K4051st "Page" of 3TOCTopPreviousNextBottomJust 1st
 
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UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 Form 10-K

1. ANNUAL REPORT PURSUANT TO SECTION 15 (d) 

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1996   Commission File Number 2-39957 and
                       (current  number)   Commission File Number 33-58028

 PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT C
(Exact Name of Registrant, as specified in its charter) 

   Iowa                                           42-0127290
-------------------------------                ---------------------------------
(State or other jurisdiction of                  IRS Employer Identification No.
incorporation or organization)                 (Principal Mutual Life Insurance 
                                                            Company)

The Principal Financial Group                                                   
Des Moines, Iowa                                             50392-0200         
-------------------------------                ---------------------------------
(Address)                                           (Zip Code)

Registrant's telephone number, including area code         (515) 248-3842       

Securities registered pursuant to Section 12(g) of the Act:                     

 Variable Contracts - Participating with Pooled Separate Account
 Variable Benefits - HR-10 Plans
 ---------------------------------------------------------------
(Title of Class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.                                       

      Yes  ___X___      No _______

     Indicate by check mark is disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained,  to the best of registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]                               

The Registrant has no voting stock.                                   

PART I

Item 1. Business                                                                

        The  Registrant  is  a  separate  account  established  under  the  Iowa
        insurance  laws and  regulations  as  Principal  Mutual  Life  Insurance
        Company Separate  Account C on April 12, 1971,  pursuant to a resolution
        of the Executive Committee of the Board of Directors of Principal Mutual
        Life  Insurance  Company.   Principal  Mutual  Life  Insurance  Company,
        formerly  known as Bankers Life Company,  adopted its new name effective
        July 1, 1986. The account was formed to receive payments under Principal
        Mutual Life Insurance Company  Contracts  designed for use in connection
        with  pension  or  profit   sharing   plans  which   qualify  under  the
        Self-Employed  Individuals  Tax  Retirement  Act  of  1962,  as  amended
        ("HR-10").  Principal  Mutual  Life  Insurance  Company is a mutual life
        insurance company,  incorporated under the laws of Iowa,  offering life,
        disability,  health and annuity  contracts  written on an individual and
group basis.                                                    

        Pursuant to the Amendments enacted in 1970 to the Investment Company Act
        of 1940,  the Account is not an  investment  company for purposes of the
Act.                                                            

        The objective of these  Contracts is to provide for the  accumulation of
        retirement  funds and to provide for  payments,  usually  commencing  at
        retirement,  which  tend to reflect  changes in the cost of living  both
        during the years prior to and the years  following the  commencement  of
        annuity payments.  With Bankers Flexible Annuity Contracts (Registration
        No. 2-39957),  Principal Mutual Life Insurance  Company,  as a depositor
        for the Account,  seeks to  accomplish  this  objective by investing the
        payments  made  under  the  Contracts  in shares  of  Principal  Capital
        Accumulation  Fund,  Inc.  which invests  principally  in common stocks.
        Similarly,  with Pension Builder Contracts  (Registration No. 33-58028),
        it seeks to accomplish  this objective by investing  payments made under
        the Contract in three Divisions.  One is a "Common Stock Division" where
        payments are invested in shares of Principal Capital  Accumulation Fund,
        Inc. Another is a "Money Market Division" where payments are invested in
        Principal  Money Market Fund,  Inc.  which invests in  short-term  money
        market  instruments.  The third  Division  is a  "Government  Securities
        Division" where payments are invested in Principal Government Securities
        Fund,  Inc.,  which invests in  obligations  issued or guaranteed by the
        United States Government or its agencies.  There may be a combination of
investments in the three Divisions, as directed by Participants.

        Except for those Contracts described above with payments credited to the
        Registrant  (Principal Mutual Life Insurance Company Separate Account C)
        and Variable  Annuity  Contracts and Variable Life  Insurance  Contracts
        with  payments  credited  to  Principal  Mutual Life  Insurance  Company
        Separate Account B and Variable Life Separate Account, respectively, the
        Company  distributes its own products as permitted under the laws of the
        various jurisdictions in which the Company is authorized to do business,
        namely the fifty states of the United States,  the District of Columbia,
        the  Commonwealth of Puerto Rico and the Canadian  provinces of Alberta,
        British  Columbia,  Manitoba,  Ontario and Quebec.  Such distribution is
        through a field agency system of approximately 1,369 full-time agents, a
        group insurance sales  organization of approximately 237 individuals and
through a large number of independent insurance brokers.        

        The Contracts  described above with payments  credited to the Registrant
        and  other  Variable  Annuity  Contracts  and  Variable  Life  Insurance
        Contracts   are   distributed   through   Princor   Financial   Services
        Corporation,  an affiliated  broker-dealer  offering open-end management
        investment company shares, variable annuities,  variable life insurance,
        interests in limited  partnerships and general securities to the public.
        Such Contracts are sold primarily by registered  representatives  of the
        broker-dealer  who are also insurance agents of or brokers for Principal
        Mutual Life  Insurance  Company and authorized by applicable law to sell
        life  and  other  forms  of  personal  insurance  and who are  similarly
        authorized to sell variable  annuities.  Such Contracts may also be sold
through other selected broker-dealers.                          

        The  Registration  Statement  filed by the Registrant was made effective
        September  13,  1971,  and the first  sale of Bankers  Flexible  Annuity
        Contracts occurred on October 8, 1971.  Effective January 4, 1989, sales
of Bankers Flexible Annuity Contracts were discontinued.        

        In 1982  the  Registrant  filed a  Registration  Statement  in File  No.
        2-78747,  to  register  a  new  class  of  securities  (called  "Pension
        Builder")  for the same  HR-10  plan  market  utilizing  the  contingent
        deferred sales charge  concept.  The  registration  for Pension  Builder
        contracts first became effective on May 5, 1983 and the first sale under
the Pension Builder Contract was made on September 19, 1983.    

        In 1989 the Registrant  filed a new  Registration  Statement in File No.
        33-27256  for the  contracts  in view of the fact that  aggregate  sales
        under  the  prior  registration   statement  approached  the  amount  of
        contracts  registered  thereunder.  The  contracts  offered  by the  new
        registration  statement are identical to contracts previously registered
under the 1933 Act in File No. 2-78747.                         

        In 1993 the Registrant  filed a new  Registration  Statement in File No.
        33-58028  for the  contracts  in view of the fact that  aggregate  sales
        under  the  prior  registration   statement  approached  the  amount  of
        contracts  registered  thereunder.  The  contracts  offered  by the  new
        registration  statement are identical to contracts previously registered
under the 1933 Act in File No. 33-27256.                        

Item 2. Properties                                                              

        The Registrant owns no physical properties.  The principal properties of
        the Depositor,  Principal  Mutual Life Insurance  Company,  are its home
    office complex at The Principal Financial Group in Des Moines, Iowa.

Item 3. Legal Proceedings                                                       

None.                                                           

Item 4. Submission of Matters to a Vote of Security Holders                     

Inapplicable.                                                   

 PART II

Item 5. Market  for the  Registrant's  Common  Equity and  Related  Stockholder 
Matters                                                         

        a.    The  Registrant  does  not  issue  common  stock.   The  Contracts
              described in Item 1. are  distributed  through  Princor  Financial
              Services  Corporation,   an  affiliated   broker-dealer   offering
              open-end management investment company shares, variable annuities,
              variable life  insurance,  interests in limited  partnerships  and
              general  securities  to  the  public.   Such  Contracts  are  sold
              primarily by registered  representatives  of the broker-dealer who
              are also insurance  agents of or brokers for Principal Mutual Life
              Insurance  Company and  authorized by applicable  law to sell life
              and  other  forms  of  personal  insurance  and who are  similarly
              authorized to sell variable annuities.  Such Contracts may also be
sold through other selected broker-dealers.         

              For Bankers Flexible Annuity Contracts  (Registration No. 2-39957)
              the high and low unit values for each quarterly period during 1995
and 1996 are:                                       

                             Lowest Unit Value                Highest Unit Value

First Quarter 1995              12.7340882                        13.7592135    
Second  "     1995              13.6942657                        14.6657898    
Third   "     1995              14.5577805                        15.6800495    
Fourth  "     1995              15.4730197                        16.8388145    
First   "     1996              16.1566920                        17.7276157    
Second  "     1996              17.2376898                        18.4981914    
Third   "     1996              17.1298163                        19.0972231    
Fourth  "     1996              19.0834302                        20.9438753    

              For Pension Builder  Contracts  (Registration  No. 33-58028) units
              were first  valued at $1.00 on  September  19, 1983 for the Common
              Stock  Division,  September 22, 1983 for the Money Market Division
              and March 30, 1987 for the Government Securities Division.  Listed
              below are the low and high unit values for each  quarterly  period
during 1995 and 1996.                               

                        Common Stock        Money Market    GovernmentSecurities
                    Division            Division            Division
                   ------------------- ------------------- -------------------
    Quarter         Lowest   Highest    Lowest    Highest   Lowest   Highest
     -------       --------- --------- --------- --------- --------- ---------

First  Quarter 1995 2.6211587 2.8254152 1.6964652 1.7132417 1.5645192 1.6662837 
Second   "     1995 2.8104369 3.0045562 1.7134358 1.7307405 1.6591219 1.7619418 
Third    "     1995 2.9813502 3.2043269 1.7311185 1.7474271 1.7282744 1.7774597 
Fourth   "     1995 3.1588549 3.4337785 1.7476067 1.7641630 1.7744906 1.8412779 
First    "     1996 3.2910145 3.6038869 1.7643456 1.7794169 1.7885686 1.8659123 
Second   "     1996 3.5027271 3.7531349 1.7795808 1.7944082 1.7579298 1.8082621 
Third    "     1996 3.4715323 3.8626355 1.7945771 1.8100784 1.7664483 1.8331690 
Fourth   "     1996 3.8592017 4.2249921 1.8102495 1.8260476 1.8293409 1.9038096 

        b.    The approximate number of holders of record of each group contract
              and the  number of the  participants  therein as of  December  31,
1996, are as follows:                               

                          (1)                    (2)
                       Number of Group           Number of
                         Contract Holders         Participants
                         ----------------         ------------
Bankers Flexible Annuity                 22                     22              
Pension Builder                          81                    100              

        c.    No dividends have been declared on units held by participants. Any
              changes  in net  investment  income,  net  realized  gains and net
              realized  appreciation  are included in the daily valuation of the
units of the Registrant.                            

Item 6. Selected Financial Data                                                 

        The information contained in the "Statement of Net Assets,  Statement of
        Operations and Statements of Changes in Net Assets for Principal  Mutual
        Life Insurance  Company  Separate Account C", filed as Item 8. should be
read in conjunction with this item.                             

Item 7. Management's Discussion and Analysis of Financial Condition and Results 
of Operation                                                    

        All payments made to the  Registrant on behalf of a Participant  under a
        contract (less any authorized deductions) are used to purchase shares of
        Principal Capital  Accumulation Fund, Inc., Principal Money Market Fund,
        Inc., or Principal Government Securities Fund, Inc., as appropriate,  at
        net asset value. In addition,  any  distributions  made by the Fund with
        respect to shares held by the  Registrant  are reinvested by the Fund at
        net asset  value.  Values  under the  contract  increase  or decrease to
 reflect the investment performance of the underlying investments.

        Principal  Capital  Accumulation  Fund, Inc. is an open-end  diversified
        management  investment  company,  sponsored  by  Principal  Mutual  Life
        Insurance  Company.  The  principal  objective  of the Fund is long-term
        capital  appreciation  and  growth of future  investment  income.  It is
        intended  that  the  assets  of the Fund  will  consist  primarily  of a
        portfolio of common  stocks.  The value of the  investments  held by the
        Fund fluctuates  daily. It is subject to the risks of changing  economic
        conditions  as  well  as  the  risks  inherent  in  the  ability  of the
        management  of the  Fund  to  anticipate  changes  in  such  investments
necessary to meet changes in economic conditions.               

        Principal Money Market Fund, Inc. is an open-end diversified  management
        investment  company,   sponsored  by  Principal  Mutual  Life  Insurance
        Company.  The principal objective of the Fund is to seek as high a level
        of  income  available  from  short-term   securities  as  is  considered
        consistent  with  preservation of principal and maintenance of liquidity
        by  investing  all  of  its  assets  in  a  portfolio  of  money  market
instruments.                                                    

        Principal  Government  Securities Fund, Inc. is an open-end  diversified
        management  investment  company,  sponsored  by  Principal  Mutual  Life
        Insurance Company. The principal objective of the Fund is to seek a high
        level of current income,  liquidity and safety of principal  through the
        purchase  of  obligations  issued or  guaranteed  by the  United  States
        Government  or  its  agencies,  with  emphasis  on  Government  National
Mortgage Association Certificates ("GNMA Certificates").        


10-K4052nd "Page" of 3TOC1stPreviousNextBottomJust 2nd


Item 8. Financial Statements and Supplementary Data                             

                                                        · Enlarge/Download Table

                         Principal Mutual Life Insurance                                                                   
                           Company Separate Account C                                                                      

                             Statement of Net Assets                                                                       

                                December 31, 1996                                                                          

Assets                                                                                                                     
Investments:                                                                                                               
   Capital Accumulation Division:                                                                                          
      Principal Capital Accumulation Fund, Inc. - 87,657 shares at net asset value of $29.84 per                           
                                                                                                                           
        share (cost - $2,076,366)                                                                             $2,615,699   
   Government Securities Division:                                                                                         
      Principal Government Securities Fund, Inc. - 38,003 shares at net asset value of $10.31 per                          
        share (cost - $389,669)                                                                                  391,816   
   Money Market Division:                                                                                                  
      Principal Money Market Fund, Inc. - 275,659 shares at net asset value (cost) of $1.00 per share                      
                                                                                                                 275,659   
                                                                                                       ====================
Net assets                                                                                                    $3,283,174   
                                                                                                       ====================
                                                        · Enlarge/Download Table

                                                              Unit                          
                                             Units            Value                         
                                            -------------- ------------                     
                                            -------------- ------------                     
Net assets are represented by:                                                              
   Capital Accumulation Division:                                                           
      Currently payable annuity contracts:                                                  
                                                                                            
        Bankers Flexible Annuity                10,748         20.56          $   220,979   
        Pension Builder Plus                     4,230          4.15               17,555   
      Contracts in accumulation period:                                                     
        Bankers Flexible Annuity                64,453         20.56            1,325,409   
        Pension Builder Plus                   253,535          4.15            1,051,756   
                                                                        --------------------
                                                                        --------------------
                                                                                2,615,699   
   Government Securities Division:                                                          
      Contracts in accumulation period                                                      
          - Pension Builder Plus                                                            
                                               209,017          1.87              391,816   

   Money Market Division:                                                                   
      Contracts in accumulation period                                                      
          - Pension Builder Plus                                                            
                                               150,959          1.83              275,659   
                                                                        ====================
Net assets                                                                     $3,283,174   
                                                                        ====================

See accompanying notes.                                                                     


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                                                        · Enlarge/Download Table

                         Principal Mutual Life Insurance                                                                         
                           Company Separate Account C                                                                            

                             Statement of Operations                                                                             

                          Year ended December 31, 1996                                                                           

                                                                               Capital           Government           Money      
                                                                            Accumulation         Securities          Market      
                                                            Combined          Division            Division          Division     
                                                          -------------- -------------------- ------------------ ----------------
                                                          -------------- -------------------- ------------------ ----------------
Investment income                                                                                                                
Income:                                                                                                                          
                                                                                                                                 
   Dividends                                                  $  89,960      $  46,413               $22,335           $21,212   
   Capital gains distributions                                  336,661        336,661                     -                 -   
                                                          -------------- -------------------- ------------------ ----------------
                                                          -------------- -------------------- ------------------ ----------------
                                                                426,621        383,074                22,335            21,212   

Expenses:                                                                                                                        
   Mortality and expense risks                                   45,532         31,077                 8,155             6,300   
   Administration charges                                        16,488         11,366                 3,342             1,780   
   Contingent sales charges                                       4,886          3,472                 1,243               171   
                                                          -------------- -------------------- ------------------ ----------------
                                                          -------------- -------------------- ------------------ ----------------
                                                                 66,906         45,915                12,740             8,251   
                                                          -------------- -------------------- ------------------ ----------------
                                                          -------------- -------------------- ------------------ ----------------
Net investment income                                           359,715        337,159                 9,595            12,961   

Realized and unrealized gains (losses) on investments                                                                            
Net realized gains on investments                               375,271        370,021                 5,250                 -   
Change in net unrealized appreciation of investments                                                                             
                                                               (128,013)      (104,624)              (23,389)                -   
                                                          -------------- -------------------- ------------------ ----------------
                                                          ============== ==================== ================== ================
Net increase (decrease) in net assets resulting from                                                                             
   operations                                                  $606,973       $602,556               $(8,544)          $12,961   
                                                          ============== ==================== ================== ================

See accompanying notes.                                                                                                          
                                                        · Enlarge/Download Table

                         Principal Mutual Life Insurance                                                                          
                           Company Separate Account C                                                                             

                       Statements of Changes in Net Assets                                                                        

                     Years ended December 31, 1996 and 1995                                                                       

                                                                               Capital          Government            Money       
                                                                            Accumulation        Securities           Market       
                                                             Combined         Division           Division           Division      
                                                           -------------- ------------------ ------------------ ------------------

                                                                                                                                  
Net assets at January 1, 1995                                 $16,226,329    $11,063,722         $2,701,646         $2,460,961    

Increase (decrease) in net assets                                                                                                 
Operations:                                                                                                                       
   Net investment income                                          518,901        423,439             36,661             58,801    
   Net realized gains (losses) on investments                     566,777        619,160            (52,383)                 -    
   Change in net unrealized appreciation/ depreciation                                                                            
      of investments                                              955,515        665,019            290,496                  -    
                                                           -------------- ------------------ ------------------ ------------------
                                                           -------------- ------------------ ------------------ ------------------
Net increase in net assets resulting from operations            2,041,193      1,707,618            274,774             58,801    
Changes from principal transactions:                                                                                              
   Purchase payments, less sales charges, per payment                                                                             
      fees and applicable premium taxes                         3,592,629      1,872,882            801,970            917,777    
   Contract terminations                                       (5,907,945)    (4,319,096)          (800,094)          (788,755)   
   Transfer payments to other contracts                       (10,028,790)    (6,229,880)        (2,143,609)        (1,655,301)   
   Annuity payments                                               (20,258)       (20,258)                 -                  -    
                                                           -------------- ------------------ ------------------ ------------------
Decrease in net assets from principal transactions            (12,364,364)    (8,696,352)        (2,141,733)        (1,526,279)   
                                                           -------------- ------------------ ------------------ ------------------
Total decrease                                                (10,323,171)    (6,988,734)        (1,866,959)        (1,467,478)   
                                                           -------------- ------------------ ------------------ ------------------
Net assets at December 31, 1995                                 5,903,158      4,074,988            834,687            993,483    

Increase (decrease) in net assets                                                                                                 
Operations:                                                                                                                       
   Net investment income                                          359,715        337,159              9,595             12,961    
   Net realized gains on investments                              375,271        370,021              5,250                  -    
   Change in net unrealized appreciation of investments                                                                           
                                                                 (128,013)      (104,624)           (23,389)                 -    
                                                           -------------- ------------------ ------------------ ------------------
Net increase (decrease) in net assets resulting from                                                                              
   operations                                                     606,973        602,556             (8,544)            12,961    
Changes from principal transactions:                                                                                              
   Purchase payments, less sales charges, per payment                                                                             
      fees and applicable premium taxes                           534,112        289,839             56,253            188,020    
   Contract terminations                                       (1,979,669)    (1,610,547)          (191,392)          (177,730)   
   Transfer payments to other contracts                        (1,757,595)      (717,332)          (299,188)          (741,075)   
   Annuity payments                                               (23,805)       (23,805)                 -                  -    
                                                           -------------- ------------------ ------------------ ------------------
Decrease in net assets from principal transactions             (3,226,957)    (2,061,845)          (434,327)          (730,785)   
                                                           -------------- ------------------ ------------------ ------------------
Total decrease                                                 (2,619,984)    (1,459,289)          (442,871)          (717,824)   
                                                           ============== ================== ================== ==================
Net assets at December 31, 1996                               $ 3,283,174    $ 2,615,699         $  391,816         $  275,659    
                                                           ============== ================== ================== ==================

See accompanying notes.                                                                                                           

 Principal Mutual Life Insurance
Company Separate Account C

 Notes to Financial Statements

 December 31, 1996

1.  Investment and Accounting Policies                                          

Principal  Mutual Life  Insurance  Company  Separate  Account C was organized by
Principal Mutual Life Insurance  Company  (Principal  Mutual) in accordance with
the provisions of the Iowa Insurance Laws and is a part of the total  operations
of  Principal  Mutual.  The assets and  liabilities  of  Separate  Account C are
clearly  identified and  distinguished  from the other assets and liabilities of
Principal  Mutual,  with the remaining  aggregate value of units registered with
the Securities and Exchange Commission under the current registration  statement
(but not the authorized  number of units) limited to $10.6 million.  As directed
by  eligible  contractholders,  Separate  Account C invests  solely in shares of
Principal Capital Accumulation Fund, Inc., Principal Government Securities Fund,
Inc. and Principal  Money Market Fund,  Inc.,  diversified  open-end  management
investment companies organized by Principal Mutual.                             
Investments are stated at the closing net asset values per share on December 31,
1996.                                                                           

The  average  cost  method is used to  determine  realized  gains and  losses on
investments.  Dividends  are taken  into  income on an  accrual  basis as of the
ex-dividend date.                                                               

After September 30, 1995, Principal Mutual no longer accepted  contributions for
Pension  Builder  Plus  contracts.  Contractholders  were  given the  options of
withdrawing  their funds or transferring to another  contract.  Contingent sales
charges  were  waived for  contracts  transferred  prior to November  30,  1995.
Contributions   for  Bankers   Flexible   Annuity   contracts  were   previously
discontinued.                                                                   

2.  Expenses                                                                    

Principal Mutual is compensated for the following expenses:                     

   Bankers Flexible  Annuity  Contracts - Mortality and expense risks assumed by
   Principal Mutual are compensated for by a charge equivalent to an annual rate
   of 0.48% of the asset value of each contract. An annual administration charge
   of $7  for  each  participant's  account  is  deducted  as  compensation  for
   administrative   expenses.   The   mortality  and  expense  risk  and  annual
   administration charges amounted to $7,429 and $161, respectively,  during the
   year 1996.  A sales charge of up to 7% was  deducted  from each  contribution
   made on behalf of each  participant.  The sales charge was deducted  from the
   contributions by Principal Mutual prior to their transfer to Separate Account
C.                                                                        

 Principal Mutual Life Insurance
Company Separate Account C

 Notes to Financial Statements (continued)

2.  Expenses (continued)                                                        

   Pension  Builder  Plus  Contracts - Mortality  and expense  risks  assumed by
   Principal Mutual are compensated for by a charge equivalent to an annual rate
   of 1.4965% of the asset value of each contract.  A contingent sales charge of
   up to 7% may be deducted from withdrawals made during the first 10 years of a
   contract,  except for death or permanent disability. An annual administration
   charge  will be deducted  ranging  from a minimum of $25 to a maximum of $275
   depending upon a  participant's  investment  account values and the number of
   participants  under  the  retirement  plan and their  participant  investment
   account value. The charges for mortality and expense risks,  contingent sales
   and  annual  administration   amounted  to  $38,103,   $4,887,  and  $16,327,
respectively, during the year 1996.                                       

3.  Federal Income Taxes                                                        

Operations  of  Separate  Account C are a part of the  operations  of  Principal
Mutual.  Under  current  practice,  no federal  income  taxes are  allocated  by
Principal  Mutual to the operations of Principal  Mutual Life Insurance  Company
Separate Account C.                                                             

4.  Purchases and Sales of Investment Securities                                

The aggregate units and cost of purchases and proceeds from sales of investments
were as follows:                                                                

                                                        · Enlarge/Download Table

                                                    For the year ended December 31, 1996                     
                                 ----------------------------------------------------------------------------
                                 Units Purchased    Amount Purchased    Units Redeemed     Amount Redeemed   
                                 ----------------- ------------------- ----------------- --------------------
                                 ----------------- ------------------- ----------------- --------------------
Capital Accumulation Division:                                                                               
                                                                                                             
   Bankers Flexible Annuity                   740           $208,889             26,244         $   470,421  
   Pension Builder Plus                    80,776            464,025            523,979           1,927,179  
                                 ----------------- ------------------- ----------------- --------------------
                                 ----------------- ------------------- ----------------- --------------------
                                           81,516            672,914            550,223           2,397,600  

Government Securities Division:                                                                              
   Pension Builder Plus                    31,099             78,588            275,487             503,320  

Money Market Division:                                                                                       
   Pension Builder Plus                   106,125            209,232            518,815             927,056  
                                 ----------------- ------------------- ----------------- --------------------
                                 ================= =================== ================= ====================
                                          218,740           $960,734          1,344,525          $3,827,976  
                                 ================= =================== ================= ====================
                                                        · Enlarge/Download Table

                         Principal Mutual Life Insurance                                                                         
                           Company Separate Account C                                                                            

                    Notes to Financial Statements (continued)                                                                    

4.  Purchases and Sales of Investment Securities (continued)                                                                     

                                                                        For the year ended December 31, 1995                     
                                                     ----------------------------------------------------------------------------
                                                     Units Purchased    Amount Purchased    Units Redeemed     Amount Redeemed   
                                                     ----------------- ------------------- ----------------- --------------------
                                                     ----------------- ------------------- ----------------- --------------------
   Capital Accumulation Division:                                                                                                
                                                                                                                                 
      Bankers Flexible Annuity                                  -             $  167,512             31,593         $   441,825  
      Pension Builder Plus                                    650,439          2,229,252          3,524,489          10,227,852  
                                                     ----------------- ------------------- ----------------- --------------------
                                                     ----------------- ------------------- ----------------- --------------------
                                                              650,439          2,396,764          3,556,082          10,669,677  

   Government Securities Division:                                                                                               
      Pension Builder Plus                                    494,421            866,680          1,762,773           2,971,752  

   Money Market Division:                                                                                                        
      Pension Builder Plus                                    535,936          1,006,023          1,424,097           2,473,501  
                                                     ----------------- ------------------- ----------------- --------------------
                                                     ================= =================== ================= ====================
                                                            1,680,796         $4,269,467          6,742,952         $16,114,930  
                                                     ================= =================== ================= ====================

Purchases include reinvested dividends and capital gains.                       

Money Market purchases include transactions where investment allocations are not
known at the time of the deposit.  Redemptions reflect subsequent allocations to
directed investment divisions.                                                  

5.  Net Assets                                                                  

Net assets at December 31, 1996 consisted of the following:                     

                                                        · Enlarge/Download Table

                                                                                              Net Unrealized   
                                                                          Accumulated          Appreciation    
                                                         Unit            Net Investment       of Investments   
                                     Combined        Transactions            Income                            
                                 ----------------- ------------------ --------------------- -------------------
                                 ----------------- ------------------ --------------------- -------------------
Capital Accumulation Division:                                                                                 
                                                                                                               
   Bankers Flexible Annuity          $1,546,388         $   230,592        $   909,246            $406,550     
   Pension Builder Plus               1,069,311             763,420            173,108             132,783     
                                 ----------------- ------------------ --------------------- -------------------
                                 ----------------- ------------------ --------------------- -------------------
                                      2,615,699             994,012          1,082,354             539,333     
Government Securities Division:                                                                                
   Pension Builder Plus                 391,816             347,236             42,433               2,147     
Money Market Division:                                                                                         
   Pension Builder Plus                 275,659             257,350             18,309                   -     
                                 ----------------- ------------------ --------------------- -------------------
                                 ================= ================== ===================== ===================
                                     $3,283,174          $1,598,598         $1,143,096            $541,480     
                                 ================= ================== ===================== ===================

Report of Independent Auditors

Board of Directors and Participants                                             
Principal Mutual Life Insurance Company                                         

We have audited the  accompanying  statement  of net assets of Principal  Mutual
Life Insurance Company Separate Account C (comprising, respectively, the Capital
Accumulation,  Government Securities, and Money Market Divisions) as of December
31, 1996, and the related  statements of operations for the year then ended, and
changes in net assets for each of the two years in the period then ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.                                                                     

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996, by correspondence with
the transfer agent. An audit also includes  assessing the accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.                                               

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Principal Mutual Life Insurance
Company  Separate  Account  C at  December  31,  1996,  and the  results  of its
operations  for the year then ended,  and the changes in its net assets for each
of the two years in the period then ended, in conformity with generally accepted
accounting principles.                                                          

/s/ Ernst & Young                                                               

Des Moines, Iowa                                                                
February 7, 1997                                                                

Item  9. Changes  in and  Disagreements  with  Accountants  on  Accounting  and 
Financial Disclosure                                                            

Inapplicable.                                                 

PART III

Item 10. Directors and Executive Officers of the Registrant                     

         Inapplicable,  the Registrant  does not have any directors or executive
officers.                                                     

Item 11. Executive Compensation                                                 

         Inapplicable,  the Registrant  does not have any directors or executive
officers.                                                     

Item 12. Security Ownership of Certain Beneficial Owners and Management         

         No  person  owns  beneficially  or of  record  the  assets  held by the
         Depositor,  Principal  Mutual Life Insurance  Company,  in the Separate
         Account.   As   contractholders   of  the   variable   contracts   each
         contractholder  has one vote in the  election of the Board of Directors
         at annual  meetings  and upon other  Principal  Mutual  Life  Insurance
         Company  matters,  if any, where a  policyholder's  vote is taken.  The
         contractholders  have  the  same  voting  privilege  as  do  all  other
         policyholders of Principal Mutual Life Insurance Company. An individual
         participant  (certificateholder)  does  not have a vote.  There  are no
         policyholders that are entitled to cast more than 5% of the votes to be
cast.                                                         

Item 13. Certain Relationships and Related Transactions                         

Inapplicable.                                                 

 PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K       

(a) Documents filed as part of this report:                   

       1. The following financial statements are submitted herewith:

Statement of Net Assets -- December 31, 1996    

       Statement of Operations -- Year ended December 31, 1996

                Statements of Changes in Net Assets -- Years ended  December 31,
1996 and 1995.                                  

Notes to Financial Statements                   

             2. Schedules - All other  schedules for which  provision is made in
                the  applicable  accounting  regulation  of the  Securities  and
                Exchange   Commission   are  not  required   under  the  related
                instructions  or  are  inapplicable,  and  therefore  have  been
omitted.                                        

3. Exhibits:                                          

(20) Subsidiaries of the Registrant             

Subsidiaries of the Registrant

The Registrant is a separate account of Principal Mutual Life Insurance Company.
It has no subsidiary.  Principal Mutual Life Insurance Company, as the Depositor
of the Account,  owns or controls,  as of December  31,  1996,  subsidiaries  as
follows:                                                                        

I.   Principal Holding Company                                        

A.   Organized in Iowa.                                     

B.   Depositor owns 100% of outstanding stock.              

          C.   Subsidiaries  of  Principal  Holding  Company as of December  31,
1996, are as follows:                             

               1.   Princor   Financial   Services   Corporation  (a  registered
broker-dealer)                          

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

                    c.   Subsidiaries of Princor Financial Services  Corporation
         as of December 31, 1996 are as follows:

                         (1)  Princor   Management   Corporation  (a  registered
investment adviser) 

   (a)  Organized in Iowa.

                              (b)  Princor Financial  Services  Corporation owns
                100% of outstanding stock.

                         (2)  Principal Investors Corporation  (broker-dealer of
                 securities and registered investments
   - not currently active)

         (a)  Organized in New Jersey.

                              (b)  Princor Financial  Services  Corporation owns
                100% of outstanding stock.

              2.   Petula Associates, Ltd. (a real estate development company)

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               3.   Patrician  Associates,   Inc.  (a  real  estate  development
company)                                

a.   Organized in California.           

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               4.   Principal  Development  Associates,   Inc.  (a  real  estate
development company)                    

a.   Organized in California.           

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               5.   Principal   Spectrum   Associates,   Inc.   (a  real  estate
development company)                    

a.   Organized in California.           

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               6.   Equity FC, Ltd. (a general business corporation that engages
                    in investment transactions including limited partnership and
limited liability companies)            

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               7.   Principal Commercial Advisors,  Inc.  (purchasing,  managing
  and selling commercial real estate assets)

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

              8.   Principal FC, Ltd. (limited purpose investment corporation)

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               9.   Invista Capital  Management,  Inc. (a registered  investment
advisor)                                

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               10.  Delaware  Charter  Guarantee & Trust Company  (nondepository
trust company)                          

a.   Organized in Delaware.             

                    b.   Principal   Holding  Company  currently  owns  100%  of
outstanding stock.            

               11.  Principal Securities Holding Corporation,  formerly known as
The Principal/EGT Financial Corporation.

a.   Organized in Delaware.             

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

                    c.   Subsidiary of Principal  Securities Holding Corporation
        as of December 31, 1996 is as follows:

                         (1)  Principal  Financial  Securities,  Inc.(investment
                  banking and securities brokerage firm)

       (a)  Organized in Delaware.

                              (b)  Principal Securities Holding Corporation owns
                100% of outstanding stock.

               12.  The  Principal   Financial  Group,  Inc.  (general  business
                    corporation   established   in  connection   with  corporate
identity - not currently active)        

a.   Organized in Delaware.             

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

              13.  Principal Marketing Services, Inc. (a corporation formed to
                 serve as an interface between marketers and manufacturers
of financial services products)         

a.   Organized in Delaware.             

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               14.  Principal  Health Care, Inc. (a developer and  administrator
of managed care systems)                

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

                    c.   Subsidiaries  of  Principal  Health  Care,  Inc.  as of
   December 31, 1996 are as follows:

                         (1)  Principal Health Care of Delaware,  Inc. (a health
     maintenance organization)

       (a)  Organized in Delaware.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (2)  Americas Health Plan, Inc.(a developer of discount
provider networks)  

       (a)  Organized in Maryland.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (3)  Principal Health Care of the Mid-Atlantic, Inc. (a
             health maintenance  organization)

       (a)  Organized in Virginia.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (4)  Principal  Health Care of Florida,  Inc. (a health
     maintenance organization)

      (a)  Organized in Florida.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (5)  Principal Health Care of Illinois,  Inc. (A health
     maintenance organization)

       (a)  Organized in Illinois.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (6)  Principal  Health  Care of Kansas  City,  Inc.  (a
            health maintenance organization)

       (a)  Organized in Missouri.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (7)  Principal Health Care of Louisiana, Inc. (a health
     maintenance organization)

        (a)  Organized in Louisiana.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (8)  Principal Health Care of Nebraska,  Inc. (a health
     maintenance organization)

       (a)  Organized in Nebraska.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (9)  Principal  Health Care of Georgia,  Inc.(a  health
     maintenance organization)

      (a)  Organized in Georgia.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (10) Principal  Health Care of Indiana,  Inc.(a  health
     maintenance organization)

       (a)  Organized in Delaware.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (11) Principal  Health  Care  of  Iowa,  Inc.(a  health
     maintenance organization)

   (a)  Organized in Iowa.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (12) United Healthcare  Services of Iowa, Inc.(a health
     maintenance organization)

   (a)  Organized in Iowa.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (13) Principal    Behavioral    Health   Care,   Inc.(a
                              mental  and nervous/substance    abuse   preferred
  provider organization)

   (a)  Organized in Iowa.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (14) Principal  Health Care of the  Carolinas,  Inc. (a
                              health maintenance organization operating in North
        Carolina and South Carolina)

             (a)  Organized in North Carolina.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (15) Principal  Health  Care of  Pennsylvania,  Inc. (a
                              health  maintenance   organization   operating  in
                Pennsylvania - not currently active)

           (a)  Organized in Pennsylvania.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (16) Principal  Health Care of South Carolina,  Inc. (a
            health maintenance organization)

             (a)  Organized in South Carolina.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (17) Principal Health Care of St. Louis, Inc. (a health
     maintenance organization)

       (a)  Organized in Delaware.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (18) Principal Health Care of Tennessee, Inc. (a health
     maintenance organization)

        (a)  Organized in Tennessee.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (19) Principal  Health  Care of  Texas,  Inc.(a  health
     maintenance organization)

    (a)  Organized in Texas.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                         (20) The Admar  Group,  Inc. (a national  managed  care
                              service  organization  that  developes and manages
                     preferred provider organizations (PPO's))

      (a)  Organized in Florida.

                              (b)  Principal  Health  Care,  Inc.  owns  100% of
        outstanding stock.

                              (c)  Subsidiaries  of The Admar Group,  Inc. as of
        December 31, 1996.

                                   1)   Admar   Corporation   (a  managed   care
                      services organization)

                             a)   Organized in California.

                                        b)   The Admar Group,  Inc. owns 100% of
                            outstanding stock.

                                   2)   Admar  Insurance   Marketing,   Inc.  (a
                                   managed care services organization)

                             a)   Organized in California.

                                        b)   The Admar Group,  Inc. owns 100% of
                            outstanding stock.

                                   3)   Benefit  Plan  Administrators,  Inc.  (a
                                   managed care services organization)

                           a)   Organized in Colorado.

                                        b)   The Admar Group,  Inc. owns 100% of
                            outstanding stock.

                                   4)   SelectCare   Management   Co.,  Inc.  (a
                                   managed care services organization)

                             a)   Organized in California.

                                        b)   The Admar Group,  Inc. owns 100% of
                            outstanding stock.

                                   5)   Image  Financial &  Insurance  Services,
                                        Inc.    (a   managed    care    services
             organization)

                             a)   Organized in California.

                                        b)   The Admar Group,  Inc. owns 100% of
                            outstanding stock.

                                   6)   WM. G.  Hofgard & Co.,  Inc.  (a managed
                           care services organization)

                             a)   Organized in California.

                                        b)   The Admar Group,  Inc. owns 100% of
                            outstanding stock.

               15.  Principal Asset Markets,  Inc. (a residential  mortgage loan
broker)                                 

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               16.  Principal Financial Advisors,  Inc. (a registered investment
advisor)                                

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               17.  Principal  Portfolio  Services,  Inc. (a mortgage  diligence
company)                                

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               18.  Principal Residential Mortgage, Inc. (a residential mortgage
loan broker)                            

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

               19.  Principal  International,  Inc.  (a  company  formed for the
      purpose of international business development)

a.   Organized in Iowa.                 

                    b.   Principal  Holding  Company  owns  100% of  outstanding
stock.                        

                    c.   Subsidiaries  of  Principal  International,  Inc. as of
   December 31, 1996 are as follows:

                         (1)  Principal Insurance Company (Hong Kong) Limited (a
  Hong Kong corporation)

        (a)  Organized in Hong Kong.

                              (b)  Principal  International,  Inc.  owns  99% of
                                   outstanding stock and Principal International
                                Asia Limited owns 1% of outstanding stock.

                         (2)  Principal   International   Argentina,   S.A.  (an
           Argentina services corporation)

        (a)  Organized in Argentina.

                              (b)  Principal International,  Inc. owns 97.03% of
        outstanding Stock.

                              (c)  Subsidiaries of International Argentina, S.A.
                             as of December 31, 1996 are as follows:

                                   (1)  Ethika-Jacaranda S.A.  Administradora de
                                        Fondos de  Jubilaciones  y Pensiones (an
                           Argentina pension company).

                            (a)  Organized in Argentina.

                                        (b)  Principal International  Argentina,
                                             S.A.  owns  68.12%  of  outstanding
                stock.

                                   (2)  Princor  Compania  de Seguros de Retiro,
                                        S.A.  (an  Argentina   annuity  company)
        inactive

                            (a)  Organized in Argentina.

                                        (b)  Principal International  Argentina,
                                             S.A. owns 99% of outstanding  stock
                                             and Principal  International,  Inc.
                                       owns 1% of outstanding stock.

                                   (3)  Prinlife  Compania  de  Seguros de Vida,
                                        S.A.  (an   Argentina   life   insurance
        company)

                            (a)  Organized in Argentina.

                                        (b)  International Argentina,  S.A. owns
                                             99%  of   outstanding   stock   and
                                             Principal International,  Inc. owns
                                  1% of outstanding stock.

                         (3)  Principal  International Asia Limited (a Hong Kong
corporation)        

        (a)  Organized in Hong Kong.

                              (b)  Principal  International,  Inc.  owns  50% of
                                   outstanding   stock  and  Principal   Holding
                            Company owns 50% of outstanding stock.

                         (4)  Principal  International  de Chile,  S.A. (a Chile
corporation)        

    (a)  Organized in Chile.

                              (b)  Principal   International,   Inc.   owns  99%
                                   outstanding   stock  and  Principal   Holding
                           Company owns 1% of outstanding stock.

                              (c)  Subsidiary  of  Principal   International  de
                                   Chile,  S.A.  as of  December  31, 1996 is as
follows:  

                                   (1)  BanRenta  Compania  de  Seguros de Vida,
                          S.A. (a Chile corporation)

                        (a)  Organized in Chile.

                                        (b)  Principal  International  de Chile,
                                             S.A. owns 50% of outstanding stock.

                         (5)  Principal International Espana, S.A. de Seguros de
      Vida (a Spain corporation)

    (a)  Organized in Spain.

                              (b)  Principal  International,  Inc.  owns  99% of
                                   outstanding   stock  and  Principal   Holding
                           Company owns 1% of outstanding stock.

                              (c)  Subsidiary of Principal  Internationl Espana,
                                   S.A.  de Seguros de Vida as of  December  31,
         1996 is as follows:

                                   (1)  Princor  International  Espana  Sociedad
                                        Anonima  de  Agencia de Seguros (a Spain
                     corporation) inactive

                        (a)  Organized in Spain.

                                        (b)  Principal   International   Espana,
                                             S.A. de Seguros de Vida owns 99% of
                                             outstanding   stock  and  Principal
                                             International,   Inc.  owns  1%  of
                            outstanding stock.

                         (6)  Principal Mexico Compania de Seguros, S.A. de C.V.
  (a Mexico corporation)

     (a)  Organized in Mexico.

                              (b)  Principal  International,  Inc.  owns  99% of
                                   outstanding   stock  and  Principal   Holding
                           Company owns 1% of outstanding stock.

               (7)  Qualitas Medica, S.A. (an Argentina HMO)

        (a)  Organized in Argentina.

                              (b)  Principal    International    owns   30%   of
        outstanding stock.

                         (8)  Zao Principal International (a Russia corporation)
inactive            

     (a)  Organized in Russia.

                              (b)  Principal  International,  Inc.  owns  99% of
                                   outstanding   stock  and  Principal   Holding
                           Company owns 1% of outstanding stock.

     II.  PT  Asuransi   Jiwa   Principal   Egalita   Indonesia   (an  Indonesia
corporation)                                                

A.   Organized in Indonsesia.                               

B.   Depositor owns 75% of the outstanding stock.           

          C.   Subsidiary of PT Asuransi Jiwa Principal  Egalita Indonesia as of
December 31, 1996 is as follows:                  

               1.   Dana Pensiun Lembaga Keuangan  Principal  Egalita  Indonesia
(an Indonesia company)                  

(a)  Organized in Indonesia.            

                    (b)  Dana  Pensiun  Lembaga   Keuangan   Principal   Egalita
           Indonesia owns 100% of outstanding stock.

The  Depositor's  investment  in its  subsidiaries,  which in turn  includes the
subsidiary's  investment  in its  subsidiaries,  is  included  in the  financial
statements of the Depositor.                                                    

SIGNATURES

       Pursuant to the requirements of Section 15(d) of the Securities  Exchange
Act of 1934, Principal Mutual Life Insurance Company has duly caused this report
to be signed on behalf of  Principal  Mutual  Life  Insurance  Company  Separate
Account C by the undersigned thereto duly authorized                            

PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT C                      

By   PRINCIPAL MUTUAL LIFE INSURANCE COMPANY                                    

/s/ D. J. DRURY                           
By   ---------------------------------------------------                        
D. J. Drury, Chairman and Chief Executive Officer                   

March 13, 1997                        
Date ---------------------------------------------------                        

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant in the capacities with Principal Mutual Life Insurance Company and on
the dates indicated.                                                            

Signature                        Title                                 Date     

 /s/ D. J. DRURY               Chairman and                       March 13, 1997
---------------------          Chief Executive Officer                          
D. J. Drury                                                                     

/s/ D. C.  CUNNINGHAM          Vice President and                 March 13, 1997
----------------------         Controller (Principal                            
D. C. Cunningham               Accounting Officer)                              

/s/ M. H. GERSIE               Senior Vice                        March 13, 1997
----------------------         President (Principal                             
M. H. Gersie                   Financial Officer)                               

  (M. V. Andringa)*            Director                           March 13, 1997
----------------------                                                          
M. V. Andringa                                                                  

  (R. M. Davis)*               Director                           March 13, 1997
----------------------                                                          
R. M. Davis                                                                     

  (C. D. Gelatt)*              Director                           March 13, 1997
----------------------                                                          
C. D. Gelatt                                                                    

  (G. D. Hurd)*                Director                           March 13, 1997
----------------------                                                          
G. D. Hurd                                                                      

  (T. M. Hutchison)*           Director                           March 13, 1997
----------------------                                                          
T. M. Hutchison                                                                 

  (C. S. Johnson)*             Director                           March 13, 1997
----------------------                                                          
C. S. Johnson                                                                   

  (W. T. Kerr)*                Director                           March 13, 1997
----------------------                                                          
W. T. Kerr                                                                      

  (L. Liu)*                    Director                           March 13, 1997
----------------------                                                          
L. Liu                                                                          

  (V. H. Loewenstein)*         Director                           March 13, 1997
----------------------                                                          
V. H. Loewenstein                                                               

  (R. D. Pearson)*             Director                           March 13, 1997
----------------------                                                          
R. D. Pearson                                                                   

  (J. R. Price, Jr.)*          Director                           March 13, 1997
----------------------                                                          
J. R. Price, Jr.                                                                

  (B. A. Rice)*                Director                           March 13, 1997
----------------------                                                          
B. A. Rice                                                                      

  (J-P. C. Rosso)*             Director                           March 13, 1997
----------------------                                                          
J-P. C. Rosso                                                                   

  (D. M. Stewart)*             Director                           March 13, 1997
----------------------                                                          
D. M. Stewart                                                                   

  (E. E. Tallett)*             Director                           March 13, 1997
----------------------                                                          
E. E. Tallett                                                                   

  (D. D. Thornton)*            Director                           March 13, 1997
----------------------                                                          
D. D. Thornton                                                                  

  (F. W. Weitz)*               Director                           March 13, 1997
----------------------                                                          
F. W. Weitz                                                                     

                                        /s/ DAVID J. DRURY
                                       *By -------------------------------------
                    David J. Drury
                                          Chairman and Chief Executive Officer

                                            March 13, 1997
                                           -------------------------------------
                                    Pursuant to Powers of Attorney
                                         Previously Filed or Included Herein

 POWER OF ATTORNEY

KNOW ALL MEN BY THESE  PRESENTS,  that the  undersigned  director  of  Principal
Mutual Life Insurance  Company,  an Iowa  corporation  (the  "Company"),  hereby
constitutes  and appoints D. J. Drury,  G. D. Hurd,  T. M.  Hutchison  and F. W.
Weitz,  and each of them  (with full  power to each of them to act  alone),  the
undersigned's  true and lawful  attorney-in-fact  and agent,  with full power of
substitution to each, for and on behalf and in the name,  place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to  registration  under the  Securities  Act of 1933 with  respect  to  variable
annuity contracts, with premiums received in connection with such contracts held
in the Principal Mutual Life Insurance Company Separate Account C on Form N-4 or
other forms under the Securities Act of 1933, and any and all amendments thereto
and reports  thereunder  with all  exhibits  and all  instruments  necessary  or
appropriate in connection therewith,  each of said  attorneys-in-fact and agents
and his or their  substitutes  being empowered to act with or without the others
or other,  and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary  or  appropriate  with  respect  thereto  to be done in and  about the
premises in order to  effectuate  the same, as fully to all intents and purposes
as the undersigned might or could do in person;  hereby ratifying and confirming
all that said  attorneys-in-fact  and agents, or any of them, may do or cause to
be done by virtue hereof.                                                       

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 13th
day of March, 1997.                                                             
         /s/ R. D. PEARSON
                                   _____________________________________________
   R. D. Pearson

Dates Referenced Herein   and   Documents Incorporated By Reference

Referenced-On Page
This 10-K405 Filing   Date First   Last      Other Filings
1/1/953
9/30/953
11/30/953
12/31/95310-K405
For The Period Ended12/31/9613
2/7/973
Filed On / Filed As Of3/13/973
 
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