CHARLOTTE, N.C. -- Duke Energy reported 2002 earnings of $1.22 per share, or $1.03 billion in net income, compared to $2.45 per share, or $1.9 billion in 2001. Before certain charges disclosed in its third and fourth quarters, ongoing 2002 EPS was $1.88, or $1.57 billion in net income, compared with 2001 ongoing EPS of $2.64, or $2.03 billion in net income.

"Our regulated power and natural gas businesses remained strong in 2002, but we suffered from the effects of the sharp downturn in the energy merchant sector," said Richard B. Priory, chairman and chief executive officer. "To manage the impact of the merchant downturn and a sluggish economy, we have cut costs and downsized across the enterprise.

"Our watchword in 2003 is discipline. We are focused on operational efficiency, cash generation and capital management to preserve our financial strength. We have realigned our businesses to address current market realities and restructured our management team to lead effectively through these tough times. Both of these changes will position us well for growth with the inevitable recovery of the market."

In the fourth quarter of 2002, Duke Energy reported a loss of 6 cents per share, or a $52 million net loss, compared with earnings of 29 cents per share, or $225 million in net income, in the fourth quarter of 2001. Ongoing EPS for the fourth quarter of 2002 was 32 cents, or $290 million in net income before charging certain items primarily related to the company’s merchant energy and Franchised Electric businesses. This compares to ongoing EPS of 35 cents in the fourth quarter of 2001, or $271 million in net income.

As previously indicated, there are certain charges in fourth quarter 2002 reported results that are not ongoing in nature. The charges are as follows:

* Non-cash items
Of the $434 million in charges described above, $246 million are non-cash items.

Fourth quarter 2001 results included charges of $79 million, or 6 cents per share, related to the Enron bankruptcy and refinement of estimating factors used to calculate unbilled kilowatt-hour sales at Franchised Electric.

Earnings before interest and taxes (EBIT) were $393 million in the fourth quarter of 2002, compared with $571 million in the fourth quarter of 2001. EBIT for 2002 was $2.87 billion, compared with $4.26 billion in 2001. Excluding certain charges, 2002 ongoing EBIT was $3.62 billion. Ongoing EBIT in 2001 was $4.34 billion. The reduction is primarily due to substantially lower results at Duke Energy North America.

Earlier this month, Duke Energy announced that it expects 2003 ongoing EPS of between $1.35 and $1.60, excluding the effects of changes in accounting principles that were adopted Jan. 1, 2003, and will be taken in first quarter 2003.

These accounting changes include (1) a one-time charge as a result of the implementation of EITF 02-03, which changes the timing of earnings recognition for certain energy trading contracts, and (2) a small, one-time charge for the implementation of SFAS 143, "Accounting for Asset Retirement Obligations."

BUSINESS UNIT RESULTS

Natural Gas Transmission
The Natural Gas Transmission segment reported fourth quarter 2002 EBIT of $307 million, a 107-percent increase over the $148 million in the fourth quarter of 2001. Results included earnings from Westcoast Energy, acquired in March 2002, which contributed $154 million to fourth quarter 2002 EBIT. Included in Natural Gas Transmission's fourth quarter results were $9 million in severance costs.

EBIT for Natural Gas Transmission in 2002 was $1.17 billion, compared to $608 million in 2001. Westcoast Energy contributed $416 million to Gas Transmission’s 2002 results. The company expects EBIT of approximately $1.2 billion for Natural Gas Transmission in 2003.

Franchised Electric
Fourth quarter 2002 EBIT from Franchised Electric was $249 million, compared to $203 million for fourth quarter 2001. Included in these results are charges in fourth quarter 2002 of $89 million for expenses related to the December 2002 ice storm, $19 million for a previously announced settlement agreement with the North Carolina Utilities Commission and the Public Service Commission of South Carolina, and $14 million for severance costs. These charges were more than offset by favorable weather conditions and lower operating expenses at its power plants. Last year’s fourth quarter EBIT included a charge of $36 million for a refinement in the estimating factors used to calculate unbilled kilowatt-hour sales. EBIT for Franchised Electric in 2002 was $1.61 billion compared to $1.63 billion in 2001.

The company expects EBIT of approximately $1.6 billion for Franchised Electric in 2003, as a slow economy negatively impacts sales to industrial customers, and the company begins to amortize costs related to the 2002 clean air legislation in North Carolina.

Duke Energy North America
DENA, which includes Duke Energy's 60-percent share in Duke Energy Trading & Marketing, reported EBIT of $22 million in the fourth quarter of 2002, compared to EBIT of $177 million in the fourth quarter of 2001. Results in the fourth quarter of 2002 include charges of $24 million for an information technology system write-off, $10 million in plant demobilization costs and $7 million in severance charges. In the fourth quarter of 2001, DENA took a charge of $12 million related to the Enron bankruptcy.

DENA’s 2002 EBIT was $165 million compared to $1.49 billion in 2001. The 2002 results were below 2001 primarily due to low price volatility levels, reduced spark spreads, decreased market liquidity and asset write-downs.

The company expects EBIT from DENA of approximately $200 million in 2003.

Field Services
The Field Services business segment, which represents Duke Energy's 70-percent interest in Duke Energy Field Services (DEFS), reported fourth quarter 2002 EBIT of $27 million compared to $54 million in the fourth quarter of 2001. Results were negatively impacted by asset impairments of approximately $28 million and increased costs, primarily due to higher operating, maintenance and other expenses. Field Services benefited during the fourth quarter from relatively strong Natural Gas Liquids (NGL) prices, which were partially offset by higher natural gas prices.

EBIT in 2002 for Field Services was $126 million compared to $336 million in 2001.

The company expects EBIT of approximately $200 million from Field Services in 2003.

Duke Ventures
The Duke Ventures business segment, comprised of Crescent Resources, DukeNet Communications and Duke Capital Partners, reported EBIT of $121 million in the fourth quarter of 2002, compared to $89 million in the fourth quarter of 2001. Results were positively affected by increased residential and commercial land sales at Crescent Resources.

EBIT for Duke Ventures in 2002 was $204 million compared to $183 million in 2001.

International Energy
For fourth quarter 2002, Duke Energy International (DEI) reported an EBIT loss of $211 million, compared to fourth quarter 2001 positive EBIT of $68 million. The decline in EBIT is principally due to a $194 million impairment of goodwill at the company’s European gas trading and marketing business, originally recorded in connection with the company’s acquisition of Mobil Europe Gas Inc. (MEGAS) in 2000. The impairment is due to the company’s revised market outlook for the European natural gas trading market. Included in DEI's fourth quarter results were $4 million in severance costs. Other factors contributing to the fourth quarter decline in EBIT included (1) losses in Europe related in part to difficult market conditions and the company’s decision to exit power trading there, (2) a $22 million increase in reserves associated with non-performance by the supplier under a liquefied natural gas contract and (3) weak performance in Brazil.

DEI reported an EBIT loss of $102 million for 2002, compared to a positive EBIT of $286 million in 2001.

The company expects EBIT of approximately $250 million from International Energy in 2003.

Other Energy Services
Other Energy Services, including Duke/Fluor Daniel (D/FD) and Duke Energy Merchants (DEM), reported an EBIT loss of $29 million for fourth quarter 2002 versus an EBIT loss of $47 million in fourth quarter 2001. Fourth quarter 2002 EBIT was impacted by negative results at DEM and $18 million of severance charges at D/FD. Fourth quarter 2001 results included a charge of $24 million at DEM due to the Enron bankruptcy.

EBIT for Other Energy Services in 2002 was $63 million compared to an EBIT loss of $149 million in 2001.

INTEREST EXPENSE

Interest expense was $341 million for fourth quarter 2002, compared to $179 million for fourth quarter 2001. Interest expense for 2002 was $1.11 billion, compared to $785 million in 2001. These increases were primarily due to debt acquired in conjunction with the Westcoast Energy acquisition. Interest expense for 2003 is expected to be approximately $1.4 billion.

CASH FLOW

For 2002, cash flow provided by operations was $4.7 billion, compared to $4.6 billion in 2001. In 2003, Duke Energy expects cash flow from operations, including normal asset sales at Crescent Resources and divestitures at other business units, to more than adequately fund capital expenditures of approximately $3.2 billion and the approximately $1 billion needed to fund the $1.10 per share dividend. The company's business plans for 2003 fully support the dividend at this level.

LIQUIDITY AND CAPITAL RESOURCES

Duke Energy's consolidated capital structure as of Dec. 31, 2002, including short-term debt, was 55 percent debt, 36 percent common equity, 5 percent minority interests and 4 percent preferred securities.

Under various credit facilities, Duke Energy, Duke Capital and other subsidiaries had the ability to borrow up to $5.6 billion as of Dec. 31, 2002. The companies had borrowings and letters of credit outstanding under these programs of approximately $2.7 billion as of Dec. 31, 2002, resulting in unused capacity of approximately $2.9 billion. The company also had approximately $850 million in cash and cash equivalents at Dec. 31, 2002.

TRADING AND RISK MANAGEMENT DISCLOSURE TABLES

Last year Duke Energy played a leading role in the formation of the Committee of Chief Risk Officers (CCRO). The committee is composed of chief risk officers from more than 30 leading companies that are active in both physical and financial energy trading and marketing. The mission of the CCRO is to define industry best practices for risk management and develop common measures to provide enhanced transparency for evaluating energy trading activity and risk estimation. Duke Energy supports the CCRO as a platform to establish industry practices that benefit market participants, investors and consumers.

In November, the CCRO released a white paper that addressed risk management disclosures. The CCRO put forth recommended disclosures that seek to assist in quick and efficient comparisons of a company’s performance with others in the industry.

Duke Energy is introducing enhanced information to investors regarding the activities and risks involved in DENA’s energy trading and risk management activities, in line with the recommendations of the CCRO. The tables are listed below.

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 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.

An earnings conference call for analysts is scheduled for 10 a.m. ET today. The conference call can be accessed via the investors' section of Duke Energy's Web site or by dialing 800/946-0783 in the United States or 719/457-2658 outside the United States. The confirmation code is 776876. Please call in 5 to10 minutes prior to the scheduled start time. A replay of the conference call will be available through Feb. 9 by dialing 888/203-1112 with a confirmation code of 776876. The international replay number is 719/457-0820. A replay and transcript also will be available by accessing the investors' section of the company's Web site.

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Duke Energy believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include legislative and regulatory developments; the outcomes of litigation and regulatory proceedings or inquiries; the effectiveness of the company's risk management and internal controls systems; the timing and extent of changes in commodity prices for oil, gas, coal, electricity and interest rates; the extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding gas and electric markets; the performance of electric generation, pipeline and gas processing facilities; the timing and success of efforts to develop domestic and international power, pipeline, gathering, processing and other infrastructure projects; conditions of the capital markets and equity markets during the periods covered by the forward-looking statements; and other factors discussed in Duke Energy's filings with the Securities and Exchange Commission.

CONTACT: Terry Francisco
Phone: 704/373-6680
24-Hour: 704/382-8333