Richard B. Priory
Chairman of the Board
Chief Executive Officer

DISCIPLINE IS OUR WATCHWORD FOR 2003.

We are focused on cash generation and capital management, limiting discretionary spending and reducing debt. To provide the financial flexibility needed to manage through near-term cycles, we’ve reduced planned capital expenditures by more than half to $3 billion in 2003. We expect cash from operations and asset sales to fund our capital expenditures and dividends, reducing the need for outside financing.

For 76 consecutive years we have paid quarterly dividends on our common stock. Our dividend delivered a 5.8 percent yield in 2002, and our plans for 2003 fully support the dividend at its current level of $1.10 per share.

We will continue to divest non-strategic assets when we can capture value. In addition to power plant and pipeline sales in 2002, we sold two businesses – Duke Engineering & Services and DukeSolutions – to companies with strategies better aligned with their capabilities.

We are reducing our workforce as we restructure to accommodate market changes and capture additional efficiencies. Consistent with the reductions, we’ve streamlined accountabilities and strengthened our focus on business operations. These changes are expected to reduce future costs by about $150 million annually.