Richard B. Priory
Chairman of the Board
Chief Executive Officer

WE ARE FOCUSED ON THE FUTURE.

2002 certainly taught us all the inherent dangers associated with a market bubble. It also brought renewed appreciation for timeless attributes like real assets, cash flow, sustainable earnings, operational know-how, reliable performance and customer service. We were reminded of the value and safeguards that diversification brings to the portfolios of individual investors and to companies like Duke Energy. And we are more focused on clarity and candor in reporting and assessing corporate performance.

Duke Energy’s stock price will rebound, of that I am confident. Predicting a recovery date is more difficult. Triggers that will prompt the return of a robust energy marketplace include economic recovery, a narrowing of electricity reserve margins in the U.S., the restoration of financial liquidity to our sector, certainty around new and proposed accounting and governance standards, and the credit health of energy customers and partners.

2002 was a tremendously trying chapter in Duke Energy’s 99-year history. But it was prologue, not epilogue. We’ve taken decisive action to weather the current cycle and to be ready to act on the growth opportunities that will emerge. We are relying on the fundamentals: Unyielding business values and operating principles. Strong, consistent value from core assets. Effective, conservative financial management. Solid, day-to-day execution. Reliable reporting driven not only by the new rules of the road – but also by our best judgment and highest intentions.

Our industry is far too vital to suffer a prolonged crisis of confidence. Duke Energy is focused not only on pulling our company through a tough time, but also on doing our part to restore order, accountability and honor to our critical sector. I hope that you will continue to stay the course with us, and I thank you for your confidence, which we work hard every day to both re-earn and reward.

Richard B. Priory
March 12, 2003