Duke Energy 2002 earnings fall below expectations

CHARLOTTE, N.C., Jan. 13, 2003 — Duke Energy said Monday that its 2002 ongoing earnings per share will fall below the previously indicated $1.95 to $2.05 per share. The company said these results were driven primarily by continued depressed conditions in the merchant energy sector and by the sluggish economy.

In October, the company said it expected to be at the low end of the projected earnings range. Although results for 2002 are not finalized, it now expects ongoing earnings to fall around 10 cents below that amount. Reported earnings will be below ongoing earnings, reflecting total charges for the year of about 65 cents.

This includes anticipated fourth quarter charges for ice storm damage, restructuring costs and goodwill and asset impairments. The company is scheduled to report fourth quarter and year-end earnings on Jan. 28, at which time additional details concerning these charges will be provided.

Duke Energy Chairman and Chief Executive Officer Richard B. Priory also said the company expects 2003 ongoing earnings per share between $1.35 and $1.60, excluding the effect of changes in accounting standards that were adopted Jan. 1, 2003.

“While we will continue to see strong cash flow and 80 percent of our earnings generated from our regulated businesses, the merchant energy sector remains challenged,” Priory said. “The signals we watch — macro and industry specific — are running counter to any near-term sector rebound.”

Priory said Duke Energy is taking aggressive steps to manage through the down cycle in merchant energy. The company has reduced its forecasted capital expenditures to $3.2 billion for 2003, less than half the amount planned before the market downturn.

“We are focused on cash generation and capital management, limiting discretionary spending and reducing our debt,” Priory said. “We expect cash from operations and asset sales will fund our capital expenditures and dividends, reducing the need for outside financing. While the dividend is subject to board approval, the guidance we are providing today supports the continuation of our existing dividend of $1.10 per share annually.”

Interested parties may see slides and listen to the audio of the conference call by accessing the investors’ section of the company’s Web site, at: www.duke-energy.com. A replay of the conference call will be available through Jan. 22. The replay number is 888/203-1112, confirmation code 406537. The international replay number is 719/457-0820, confirmation code 406537.

Duke Energy is a diversified multinational energy company with an integrated network of energy assets and expertise. The company manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses — meeting the energy needs of customers throughout North America and in key markets around the world. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.

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