Duke Energy Annual Report 2001

Today’s investors seek real, reliable financial performance. Not platitudes. Not lofty talk of potential earnings and growth. Financial performance is the most basic of the basics, and we haven’t lost sight of that fundamental at Duke Energy.

You’ll see many impressive numbers in this report. Here are a few that matter the most in our business: A sound, sustainable earnings stream. The ability to deliver superior returns on capital. A debt level that gives us ready and secure access to that capital. And the ability to effectively manage risk exposure.

In 2001, revenues grew by 21 percent to nearly $60 billion, and earnings per share from our ongoing operations increased a record 26 percent. Reported earnings per share have seen a compound annual growth rate of 13 percent per year since 1998.

Our “A” Standard & Poor’s credit rating – the strongest in our industry – allows us to initiate projects and see them through. We’ve worked hard to protect and strengthen our credit standing. In 2001, those efforts paid off when we completed the largest-ever combined equity and equity-linked transaction in the industry. We expect to see attractive acquisition opportunities in 2002 and beyond, and our credit muscle lets us move quickly on new growth opportunities.

We have access to capital – and we earn superior returns on that capital. Since 1998, Duke Energy has ranked in the top five of a 20-company peer group in return on capital employed. Our debt-to-capital ratio is a solid 46 percent, and we lead the industry with 17 percent return on equity.


COMPARATIVE RETURNS	Duke Energy	S&P 500	Dow Jones Utilities

Like you, we’re less than satisfied with Duke Energy’s stock performance for the year, down 8 percent at year end. In context, we held our own, outperforming the S&P 500 and most of our energy peers. We exceeded our earnings estimates for 2001 and overcame the negative impacts of general economic uncertainty and energy sector weakness.


Ongoing Earnings per Share		Revenues (in millions)

Financial performance is important. So is financial transparency. Investors need access to information so they can make informed decisions. And they need to know that their company has a clear picture of its risks and exposures at any given moment in time.