Nicor Inc.
                                                                 Form 10-K/A
                                                                 Exhibit 99.03




                   Report of Independent Public Accountants



To the Nicor Gas Thrift
  Plan Committee:


We have audited the accompanying statements of net assets available for benefits
of the Nicor Gas Thrift  Plan (the Plan) as of December  31, 1999 and 1998,  and
the related  statements of changes in net assets  available for benefits for the
years then ended.  These  financial  statements  are the  responsibility  of the
Plan's  management.  Our  responsibility  is to  express  an  opinion  on  these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the net assets available for benefits of the Plan as of
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States.


ARTHUR ANDERSEN LLP
Arthur Andersen LLP



Chicago, Illinois
June 23, 2000









                                    - 1 -




                          Nicor Gas Thrift Plan

             Statements of Net Assets Available for Benefits


                                                    December 31
                                          --------------------------------
                                              1999                1998
                                          --------------     -------------
Assets:
  Investment in Trust                     $ 119,950,120      $ 117,555,309

  Receivables:
    Participant contributions                   142,174            140,289
    Employer contributions                       56,163             55,717
                                          --------------     -------------
                                                198,337            196,006
                                          --------------     -------------

Net assets available for benefits         $ 120,148,457      $ 117,751,315
                                          =============      =============




        Statements of Changes in Net Assets Available for Benefits


                                               Year ended December 31
                                          --------------------------------
                                              1999                1998
                                          --------------     -------------

Net increase in Plan assets from
  investment activities of the Trust      $  8,745,708       $  10,585,678

Contributions:
  Participant                                3,692,076           3,720,600
  Employer                                   1,440,083           1,453,707
                                          ------------        ------------
                                             5,132,159           5,174,307

Distributions to participants              (10,603,894)         (9,402,160)

Transfers, net and other                      (876,831)               (631)
                                          ------------        ------------
Net increase                                 2,397,142           6,357,194

Net assets available for benefits at
  beginning of year                        117,751,315         111,394,121
                                         -------------       -------------
Net assets available for benefits at
   end of year                           $ 120,148,457       $ 117,751,315
                                         =============       =============



The accompanying notes are an integral part of these statements.





                                  -2-






                            Nicor Gas Thrift Plan
                      Notes to the Financial Statements

PLAN INFORMATION

The following  description of the Nicor Gas Thrift Plan (the Plan) provides only
general  information.  Participants  should refer to the Plan agreement for more
detailed information.

The Plan. The Plan is a defined  contribution plan which was established on July
1, 1973,  to provide  supplemental  retirement  security  to  substantially  all
employees  of Nicor Gas  Company  (the  Company),  represented  by a  collective
bargaining agreement. The funds of the Plan are commingled with the funds of the
Nicor Gas Savings Investment Plan and held for safekeeping and investment by the
Nicor Gas Savings  Investment and Thrift Trust (the Trust).  The Plan is subject
to the  provisions  of the  Employee  Retirement  Income  Security  Act of  1974
(ERISA).

Plan  administration.   Authority  to  control  and  manage  the  operation  and
administration  of the Plan is vested in a committee  appointed  by the Board of
Directors of the  Company.  Under the terms of a trust  agreement,  the Northern
Trust  Company  acts as trustee for the Trust and holds the  investments  of the
Plan.  The Northern  Trust Company also acts as  investment  manager for certain
investments of the Plan.  Administrative  expenses  associated with operation of
the Plan are paid from Plan assets.

Contributions.  The  participant  may  elect  to  make  either  tax-deferred  or
after-tax contributions,  or any combination thereof, by payroll deduction, that
are partially  matched by the Company.  For employees hired on and after January
1, 1998,  the Company  makes an  additional  annual  contribution.  Participants
direct the investment of their  contributions  into various  investment  options
offered by the Plan.

Participant  loans.  Beginning  in 1998,  participants  may  borrow a minimum of
$1,000 up to a maximum  equal to the  lesser of  $50,000  or 50 percent of their
vested account  balance.  Loans are repayable  through  payroll  deductions over
periods ranging from six months to five years, and are secured by the balance in
the  participant's  account.  The interest  rate is based on the Northern  Trust
prime rate plus 1 percent and is fixed over the life of the loan.  The  interest
rate at December 31, 1999 and 1998 was 9.5 percent.

Vesting and forfeitures.  The  participant's  contributions and earnings thereon
are immediately  vested.  The Company's  contributions  and earnings thereon are
vested  after  the  participant's  completion  of five  years  of  service,  the
participant's death while employed by the Company or retirement.

If the  participant's  interest  in the  Company's  contributions  and  earnings
thereon is not vested,  such  interest  will be forfeited  if the  participant's
employment with the Company or an affiliate is terminated and the participant is
not  reemployed  within five years by the Company or an  affiliate.  Any amounts
forfeited  by a  participant  are applied to reduce the amount of the  Company's
contributions under the Plan.  Forfeitures for 1999 and 1998 totaled $12,880 and
$5,625, respectively.

Suspensions and withdrawals.  The participant may suspend contributions and will
not cease to be a participant during the suspension period.

The participant may elect,  under certain  conditions,  to withdraw  participant
contributions  and earnings  thereon prior to  termination  of  employment.  The
Company's  matching  contributions  and earnings thereon will not be distributed
until the vested  participant's  attainment of age 59-1/2 or employment has been
terminated.



                                    - 3 -


<PAGE>



                            Nicor Gas Thrift Plan
                Notes to the Financial Statements (Continued)


Plan  termination.  The Company expects to continue the Plan  indefinitely,  but
reserves the right to amend or discontinue it at any time in a manner consistent
with any collective bargaining agreement and subject to the provisions of ERISA.
In the event of plan termination, participants will become fully vested in their
account balances.

ACCOUNTING POLICIES

Investment  valuation.  The  Plan  states  its  investment  in the  Trust at the
underlying value of the investments of the Trust as follows:

Group  annuity  contracts  are  recorded  at  contract  value.   Contract  value
represents  contributions made plus interest at the various contract rates, less
Plan withdrawals and administrative  expenses. The aggregate market value of the
group  annuity  contracts at December 31, 1999 and 1998,  approximated  contract
value. Estimated market value is based on a variety of factors, such as contract
terms,  interest rate, maturity date and credit worthiness of the issue. For the
years ended December 31, 1999 and 1998, the average return was approximately 6.8
percent.

The market value for Nicor Inc.  common  stock is based on the closing  price on
the New York Stock Exchange Composite Tape.

The market  value of the units of the  common/collective  trusts and  registered
investment  companies are determined based on the underlying market value of the
investments of the funds.

Allocation provisions. The Trust's net investment gain (loss) is allocated daily
to the Plan based on the  beginning  ratio of the Plan's  investment  balance to
total Trust investments.

Use of estimates. The preparation of financial statements requires management to
make  estimates  that affect the reported  amounts.  Actual results could differ
from those estimates.

Reclassifications.  Certain  reclassifications  were made to  conform  the prior
year's financial statements to the current year's presentation.

INCOME TAXES

The Internal Revenue Service has determined and informed the Company by a letter
dated  January 16, 1997,  that the Plan is qualified  and the Trust  established
under the Plan is tax exempt under Section  401(a) of the Internal  Revenue Code
(the Code).  The Plan's  management  believes  that the Plan and  related  Trust
continue to be designed and operated in compliance with the  requirements of the
Code.

NET TRANSFER TO NICOR GAS SAVINGS INVESTMENT PLAN

If an employee transfers between the Plans, their account balance is transferred
into a new account in their current  plan.  During 1999 and 1998, a net transfer
of $822,994 and $165,468,  respectively, was made from the Nicor Gas Thrift Plan
to the Nicor Gas Savings Investment Plan.




                                    - 4 -


<PAGE>


                            Nicor Gas Thrift Plan
                Notes to the Financial Statements (Continued)


TRUST FINANCIAL INFORMATION

The following  schedules  present the Trust's net assets as of December 31, 1999
and 1998,  the  increase  in the  Trust's  net assets  derived  from  investment
activities for the years then ended and the Plan's share of each:

                             Net Assets in Trust

                                                  December 31
                                        ---------------------------------
                                            1999               1998
                                       --------------    --------------
   Assets:

   General Investments:
     Group annuity contracts            $ 112,587,125     $ 118,233,043
     Common/collective trusts*             21,990,550        21,115,362
     Nicor Inc. common stock*              23,080,168        23,011,419
     Registered investment
       companies*                         104,432,679        87,804,603
     Loans to participants*                 3,797,948         3,051,418

     Other assets                             349,741           425,832
                                        -------------    --------------

                                          266,238,211       253,641,677

         Liabilities:

         Operating payables                    94,739           240,545
                                        -------------     -------------

         Net assets in Trust            $ 266,143,472     $ 253,401,132
                                        =============     =============

         Plan's interest in Trust net
           assets                       $ 119,950,120     $ 117,555,309
                                        =============     =============

* Includes Party-in-Interest Investments.
















                                       - 5 -

<PAGE>


                            Nicor Gas Thrift Plan
                Notes to the Financial Statements (Concluded)


                         Trust Investment Activities



                                            Year Ended December 31
                                        -------------------------------
                                            1999              1998
                                       ---------------    -------------
   Investment income:
     Interest                            $  8,388,351     $  8,400,725
     Dividends                                967,266          844,741
     Net change in market value
       of Nicor Inc. common stock          (5,779,130)         (65,239)
     Net investment gain from
       common/collective trusts               193,751          996,540
     Net investment gain from
       registered investment companies     19,329,540       14,475,016
                                         ------------     ------------

                                           23,099,778       24,651,783

     Administrative expenses                 (308,720)        (223,153)
                                         ------------     ------------

     Increase in Trust net assets
       derived from investment
       activities                        $ 22,791,058     $ 24,428,630
                                         ============     ============

     Plan's interest in Trust
       investment activities             $  8,745,708     $ 10,585,678
                                         ============     ============











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