UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                  FORM 10-Q


      [X]   Quarterly Report Pursuant to Section 13 or 15(d) of the
            Securities Exchange Act of 1934

                 For the quarterly period ended June 30, 2000


                                      or


      [ ]   Transition Report Pursuant to Section 13 or 15(d) of the
            Securities Exchange Act of 1934





 Commission     Registrant, State of Incorporation,      I.R.S Employer
 File Number        Address and Telephone Number         Identification
                                                             Number
--------------  -------------------------------------  -------------------

   1-7297       Nicor Inc.                                 36-2855175
                (An Illinois Corporation)
                1844 Ferry Road
                Naperville, Illinois 60563-9600
                (630) 305-9500


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]

Shares of common stock, par value $2.50, outstanding at July 31, 2000, were
45,905,152.











<PAGE>


Nicor Inc.                                                              Page i

Table of Contents

Part I - Financial Information

   Item 1. Financial Statements (Unaudited) ...............................  1

           Consolidated Statement of Income:
            Three and six months ended
            June 30, 2000 and 1999 ........................................  2

           Consolidated Statement of Cash Flows:
            Six months ended
            June 30, 2000 and 1999 ........................................  3

           Consolidated Balance Sheet:
            June 30, 2000 and 1999, and
            December 31, 1999 .............................................  4

           Notes to the Consolidated Financial Statements .................  5

   Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations ...........................  8

   Item 3. Quantitative and Qualitative Disclosures about Market Risk ..... 13


Part II - Other Information

   Item 4. Submission of Matters to a Vote of Security Holders..............13

   Item 6. Exhibits and Reports on Form 8-K ............................... 13

           Signature ...................................................... 14

           Exhibit Index .................................................. 15


Glossary

Degree day.....The extent to which the daily average temperature falls
               below 65  degrees  Fahrenheit.  Normal  weather  for  Nicor  Gas'
               service territory is about 6,100 degree days per year.
ICC............Illinois Commerce Commission, the agency that regulates
               investor-owned Illinois utilities.
Mcf,  Bcf .....Thousand cubic feet, billion cubic feet.
PBR............Performance-based rate, a plan that provides economic
               incentives based on performance.
TEU............Twenty-foot equivalent unit, a measure of volume in
               containerized shipping equal to one 20-foot-long container.



<PAGE>


Nicor Inc.                                                              Page 1

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

The following condensed  unaudited financial  statements of Nicor Inc. have been
prepared by the company  pursuant to the rules and regulations of the Securities
and Exchange  Commission  (SEC).  Certain  information and footnote  disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted  pursuant to SEC
rules and  regulations.  The condensed  financial  statements  should be read in
conjunction with the financial  statements and the notes thereto included in the
company's latest Annual Report on Form 10-K.

The  information  furnished  reflects,  in  the  opinion  of  the  company,  all
adjustments  (consisting only of normal recurring  adjustments)  necessary for a
fair statement of the results for the interim periods presented. Results for the
interim periods  presented are not  necessarily  indicative of the results to be
expected for the full fiscal year due to seasonal and other factors.



Nicor Inc.                                                              Page 2
-------------------------------------------------------------------------------

Consolidated Statement of Income (Unaudited)
(millions, except per share data)

                                  Three months ended        Six months ended
                                       June 30                   June 30
                                 ---------------------     --------------------
                                   2000        1999          2000       1999
                                 ---------   ---------     ---------  ---------
Operating revenues                $ 348.4     $ 271.8      $ 1,007.7   $ 848.2
                                 ---------   ---------     ---------  ---------

Operating expenses
   Cost of gas                      146.8        95.4         537.0      421.4
   Operating and maintenance         97.9        86.2         192.3      172.9
   Depreciation                      25.1        24.6          81.9       79.6
   Taxes, other than income taxes    23.2        21.1          70.9       64.4
                                 ---------   ---------     ---------  ---------
                                    293.0       227.3         882.1      738.3
                                 ---------   ---------     ---------  ---------

Operating income                     55.4        44.5         125.6      109.9

Other income (expense), net           1.2         6.5           3.5       13.1
                                 ---------   ---------     ---------  ---------

Income before interest on debt
  and income taxes                   56.6        51.0         129.1      123.0

Interest on debt, net of amounts
  capitalized                         9.8        10.4          22.0       22.4
                                 ---------   ---------     ---------  ---------

Income before income taxes           46.8        40.6         107.1      100.6

Income taxes                         16.2        14.1          37.7       35.1
                                 ---------   ---------     ---------  ---------

Net income                           30.6        26.5          69.4       65.5

Dividends on preferred stock           .1          .1            .1         .2
                                 ---------   ---------     ---------  ---------

Earnings applicable to
  common stock                     $ 30.5      $ 26.4        $ 69.3     $ 65.3
                                 =========   =========     =========  =========

Average shares of common stock
  outstanding
     Basic                           46.3        47.4          46.5       47.4
     Diluted                         46.4        47.5          46.6       47.6

Earnings per average share of
  common stock
     Basic                          $ .66       $ .56        $ 1.49     $ 1.38
     Diluted                          .66         .56          1.49       1.37

Dividends declared per share of
  common stock                      0.415       0.390         0.830      0.780


The accompanying notes are an integral part of this statement.










Nicor Inc.                                                              Page 3
-------------------------------------------------------------------------------

Consolidated Statement of Cash Flows (Unaudited)
(millions)

                                                             Six months ended
                                                                 June 30
                                                           --------------------
                                                              2000       1999
                                                           ---------  ---------
Operating activities
   Net income                                                $ 69.4     $ 65.5
   Adjustments to reconcile net income to net cash flow
     provided from operating activities:
       Depreciation                                            81.9       79.6
       Deferred income tax expense                              6.5       11.8
       Change in assets and liabilities:
         Receivables, less allowances                         128.9      124.1
         Gas in storage                                         2.0       94.7
         Deferred/accrued gas costs                           (25.6)     (27.9)
         Accounts payable                                      32.1      (11.9)
         Temporary LIFO liquidation                           105.7       59.2
         Postretirement benefits                              (14.4)      (8.4)
         Other                                                 16.2       (9.3)
                                                           ---------  ---------
   Net cash flow provided from operating activities           402.7      377.4
                                                           ---------  ---------

Investing activities
   Capital expenditures                                       (71.0)     (63.1)
   Short-term investments                                      (3.2)      25.3
   Other                                                       (4.8)      (3.8)
                                                           ---------  ---------
   Net cash flow used for investing activities                (79.0)     (41.6)
                                                           ---------  ---------

Financing activities
   Net proceeds from issuing long-term debt                    49.9      100.6
   Disbursements to retire long-term debt                     (50.2)    (102.7)
   Short-term borrowings (repayments), net                   (288.2)    (217.0)
   Dividends paid                                             (37.8)     (36.2)
   Disbursements to reacquire stock                           (31.8)      (8.1)
   Other                                                         .9        (.2)
                                                           ---------  ---------
   Net cash flow used for financing activities               (357.2)    (263.6)
                                                           ---------  ---------

Net (decrease) increase in cash and cash equivalents          (33.5)      72.2

Cash and cash equivalents, beginning of period                 42.5       13.0
                                                           ---------  ---------

Cash and cash equivalents, end of period                      $ 9.0     $ 85.2
                                                           =========  =========

Supplemental information
   Income taxes paid, net of refunds                         $ 20.1     $ 25.6
   Interest paid, net of amounts capitalized                   23.6       22.4


The accompanying notes are an integral part of this statement.




Nicor Inc.                                                              Page 4
-------------------------------------------------------------------------------

Consolidated Balance Sheet (Unaudited)
(millions)

                                           June 30     December 31    June 30
                                             2000         1999         1999
                                          -----------  -----------   ----------
                Assets

Current assets
   Cash and cash equivalents                   $ 9.0       $ 42.5       $ 85.2
   Short-term investments, at cost which
     approximates market                        32.9         29.7         30.5
   Receivables, less allowances of $9.7,
     $7.1 and $8.7, respectively               230.9        359.8        139.9
   Gas in storage                               29.0         31.0         10.8
   Deferred gas costs                           41.5         15.9            -
   Other                                        34.3         29.1         26.5
                                          -----------  -----------   ----------
                                               377.6        508.0        292.9
                                          -----------  -----------   ----------

Property, plant and equipment, at cost
   Gas distribution                          3,240.3      3,200.3      3,144.6
   Shipping                                    291.3        280.8        270.6
   Other                                         1.9          2.0          1.8
                                          -----------  -----------   ----------
                                             3,533.5      3,483.1      3,417.0
   Less accumulated depreciation             1,813.1      1,747.9      1,703.5
                                          -----------  -----------   ----------
                                             1,720.4      1,735.2      1,713.5
                                          -----------  -----------   ----------

Other assets                                   228.9        208.6        185.2
                                          -----------  -----------   ----------

                                           $ 2,326.9    $ 2,451.8    $ 2,191.6
                                          ===========  ===========   ==========

    Liabilities and Capitalization

Current liabilities
   Long-term obligations due within one year  $ 74.2       $ 74.2       $ 51.2
   Short-term borrowings                        56.0        344.2         17.5
   Accounts payable                            314.5        282.4        258.4
   Temporary LIFO liquidation                  105.7            -         59.2
   Accrued gas costs                               -            -          2.0
   Other                                        51.4         44.9         37.2
                                          -----------  -----------   ----------
                                               601.8        745.7        425.5
                                          -----------  -----------   ----------

Deferred credits and other liabilities
   Deferred income taxes                       278.4        266.6        253.3
   Regulatory income tax liability              72.8         74.8         76.6
   Unamortized investment tax credits           41.9         42.7         43.0
   Other                                       102.1         91.9         98.9
                                          -----------  -----------   ----------
                                               495.2        476.0        471.8
                                          -----------  -----------   ----------

Capitalization
   Long-term debt                              435.9        436.1        508.7
   Preferred stock                               6.3          6.3          6.3
   Common equity
     Common stock                              115.0        117.2        118.3
     Retained earnings                         672.7        670.5        661.0
                                          -----------  -----------   ----------
                                             1,229.9      1,230.1      1,294.3
                                          -----------  -----------   ----------

                                           $ 2,326.9    $ 2,451.8    $ 2,191.6
                                          ===========  ===========   ==========


The accompanying notes are an integral part of this statement.




<PAGE>


Nicor Inc.                                                              Page 5

Notes to the Consolidated Financial Statements (Unaudited)

ACCOUNTING POLICIES

Weather insurance. On an interim basis, estimated weather insurance benefits are
recorded  based  on a  comparison  of  actual  year-to-date  degree  days  to an
allocation  of annual  insured  degree  days.  Second  quarter and  year-to-date
operating  revenues include $.4 million and $7.3 million of estimated  insurance
benefits  that will  partially  reverse if the  weather  remains  normal for the
remainder of the year.

Depreciation.  Depreciation for the gas distribution segment is calculated using
a straight-line method for the calendar year. For interim periods,  depreciation
is allocated based on gas deliveries.

Gas in storage. The gas distribution segment's inventory is carried at cost on a
last-in,  first-out (LIFO) method on a calendar-year basis. For interim periods,
the difference between current replacement cost and the LIFO cost for quantities
of gas  temporarily  withdrawn  from  storage is  recorded in cost of gas and in
current liabilities as a temporary LIFO liquidation.

Receivable credit risk.  Nicor's major  subsidiaries  have diversified  customer
bases  and  prudent  credit  policies  to  mitigate  risk.  At  June  30,  2000,
approximately  $34 million of Nicor's accounts  receivable  balance was due from
one natural gas marketing company.  Appropriate  assurance has been obtained for
this receivable.

NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative  Instruments and Hedging  Activities.  The company has
substantially completed an evaluation of the statement, as amended, and plans to
adopt it on January 1, 2001.  Implementation  is not expected to have a material
impact on the company's financial condition or results of operations.

At Nicor Gas,  derivative  instruments are primarily utilized in the natural gas
procurement  function.  Realized gains or losses are passed directly  through to
customers  through  operation of the company's  Uniform Purchased Gas Adjustment
Clause. As such, changes in the fair value of these derivative  instruments will
be  deferred  or accrued as a  regulatory  asset or  liability  until  realized.
Nicor's  wholesale  natural gas trading  business  will continue its practice of
marking energy-related contracts and physical inventory to fair value.

PERFORMANCE-BASED RATE PLAN

On January 1, 2000, Nicor Gas' performance-based rate (PBR) plan for natural gas
costs went into effect. Under the PBR, Nicor Gas' total gas supply costs will be
compared to a  market-sensitive  benchmark.  Savings and losses  relative to the
benchmark will be shared equally with customers.  After two years, the plan will
be subject to Illinois Commerce Commission (ICC) review.

Results of the company's PBR plan are determined annually.  On an interim basis,
the company  records an estimate of results  attributable  to the period.  Nicor
recorded  $1.0 million and $2.2  million of  estimated  PBR results as operating
revenue for the three- and six-month periods, respectively.


<PAGE>


Nicor Inc.                                                              Page 6

Notes to the Consolidated Financial Statements (Unaudited)(Continued)

BUSINESS SEGMENT INFORMATION

Financial data by business segment is presented below:


                              Three months ended     Six months ended
                                    June 30               June 30
                              --------------------   -------------------
(millions)                      2000       1999         2000      1999
                              ---------  ---------   --------- ---------
Operating revenues
   Gas distribution           $   263.1  $  203.4    $  836.7  $  716.1
   Shipping                        61.2      54.7       120.5     108.5
   Other Nicor ventures            24.2      13.7        50.7      23.6
   Corporate and eliminations       (.1)        -         (.2)        -
                              ========== =========   ========= =========
                              $   348.4  $  271.8    $1,007.7  $  848.2
                              ========== =========   ========= =========

Operating income (loss)
   Gas distribution           $    47.5  $   40.0    $  112.5  $  101.6
   Shipping                         5.9       5.0        11.5       9.4
   Other Nicor ventures             3.6       (.2)        3.6         -
   Corporate and eliminations      (1.6)      (.3)       (2.0)     (1.1)
                              =========  =========   ========= =========
                              $    55.4  $   44.5    $  125.6  $  109.9
                              =========  =========   ========= =========


LONG-TERM DEBT

In January 2000, Nicor Gas issued $50 million of adjustable rate unsecured notes
due in 2001 at an initial rate of 6.11% to fund the redemption of $50 million of
unsecured notes at 5.065% that matured in January 2000.

CONTINGENCIES

The company is involved in legal or  administrative  proceedings  before various
courts and agencies with respect to rates, taxes and other matters.

Current  environmental  laws may require cleanup of certain former  manufactured
gas plant sites. To date, Nicor Gas has identified about 40 properties for which
it may,  in part,  be  responsible.  The  majority of these  properties  are not
presently owned by the company.  Information  regarding preliminary site reviews
has  been  presented  to the  Illinois  Environmental  Protection  Agency.  More
detailed  investigations  and  remedial  activities  are either in  progress  or
planned at many of these sites.  The results of  continued  testing and analysis
should  determine to what extent  additional  remediation  is necessary  and may
provide a basis for  estimating  any  additional  future costs  which,  based on
industry experience, could be significant. In accordance with ICC authorization,
the company has been recovering these costs from its customers.

<PAGE>


Nicor Inc.                                                             Page 7

Notes to the Consolidated Financial Statements (Unaudited) (Concluded)

On December 20, 1995,  Nicor Gas filed suit in the Circuit  Court of Cook County
against certain  insurance  carriers seeking  recovery of environmental  cleanup
costs of certain former  manufactured  gas plant sites.  Nicor Gas has reached a
settlement  with one of the  insurance  carriers.  In February  2000,  the court
dismissed the company's case on summary judgment motions by certain  defendants.
The company filed an appeal in March 2000. Management cannot predict the outcome
of the lawsuit against the remaining insurance carriers.  Any recoveries will be
refunded to the company's customers.

Although  unable to  determine  the outcome of these  contingencies,  management
believes that  appropriate  accruals have been  recorded.  Final  disposition of
these  matters  is not  expected  to have a  material  impact  on the  company's
financial condition or results of operations.

SUBSEQUENT EVENT

In July 2000,  Nicor Gas sold real estate at a gain of $3.8 million,  which will
be included in other income during the third quarter of 2000.

<PAGE>




Nicor Inc.                                                              Page 8

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations

The following  discussion  should be read in conjunction  with the  Management's
Discussion and Analysis section of the Nicor 1999 Annual Report on Form 10-K.

SUMMARY

Nicor's  diluted  earnings per share for the three- and six-month  periods ended
June 30, 2000, are $.66 and $1.49,  respectively,  compared to diluted  earnings
per share of $.56 and $1.37, respectively,  for the same periods in 1999. Second
quarter net income was $30.6  million in 2000 compared to $26.5 million in 1999.
Net income for the six-month period increased to $69.4 from $65.5 million a year
ago. Results for both the quarter and six-month  period reflect  improvements in
all business  segments  including gas  distribution,  shipping and Nicor's other
energy-related  ventures.  Per share results were also favorably affected by the
company's common stock repurchase program.

Operating income (loss) by major business segment was:

                              Three months ended     Six months ended
                                   June 30               June 30
                              -------------------   -------------------
   (millions)                   2000      1999        2000      1999
                              --------  ---------   --------- ---------
   Gas distribution           $ 47.5    $   40.0    $  112.5  $  101.6
   Shipping                      5.9         5.0        11.5       9.4
   Corporate and other           2.0         (.5)        1.6      (1.1)
                              ========  =========   ========= =========
                              $ 55.4    $   44.5    $  125.6  $  109.9
                              ========  =========   ========= =========

The  following  summarizes  operating  income  comparisons  for  major  business
segments:

o Gas distribution  operating income for the three- and six-month  periods ended
June  30,  2000,  increased  $7.5  million  and  $10.9  million,   respectively.
Improvements   for  both  periods   reflect  income  related  to  a  significant
construction  project,  customer  additions and contributions  from the gas cost
performance-based  rate plan. The quarter comparison also reflects the impact of
colder weather.  Although  weather for the six-month period was warmer than last
year,  its  adverse  effect on  operating  results  was more than  offset by the
company's  weather  insurance  coverage in 2000. The insurance  limits  earnings
volatility  and  ensures  that the net  impact  of  weather  in 2000  will be an
improvement over 1999.

o Containerized  shipping  operating  income increased $.9 million for the three
months and $2.1 million for the six months ended June 30, 2000.  Improvements in
both  periods  are  primarily  a result of an  increase  in volumes  shipped and
charter income.

o Improvements  in other  operating  income reflect a contribution  from Nicor's
technology business for both the quarter and six-month periods.

Other income for the quarter is $1.2 million, down from $6.5 million a year ago.
For the six months ended June 30, other income decreased to $3.5 million in 2000
from $13.1 million in 1999.  Nicor's  nonregulated  retail energy services joint
venture posted improved results in both periods, while 1999 included significant
contributions  from  various  items such as  interest  benefits  on tax  related
matters  and a gain on the sale of  Nicor's  interest  in an  electronic  energy
trading system.

<PAGE>




Nicor Inc.                                                              Page 9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations (Continued)

In July 2000,  Nicor Gas sold real estate at a gain of $3.8 million,  which will
be  included  in other  income  during the third  quarter of 2000.  The  Company
continues to assess its nonstrategic real estate holdings, and is evaluating the
potential to maximize the value from these holdings through additional  property
sales or development over the next several years.

RESULTS OF OPERATIONS

Details of various  financial and operating  information by segment can be found
in the tables on pages 11 and 12. The following discussion  summarizes the major
items impacting Nicor's earnings.

Operating revenues. Operating revenues by major business segment were:

                              Three months ended     Six months ended
                                   June 30               June 30
                              -------------------   -------------------
   (millions)                   2000      1999        2000      1999
                              --------   --------   --------- ---------
   Gas distribution           $ 263.1    $ 203.4    $  836.7   $ 716.1
   Shipping                      61.2       54.7       120.5     108.5
   Corporate and other           24.1       13.7        50.5      23.6
                              ========   ========   ========= =========
                              $ 348.4    $ 271.8    $1,007.7   $ 848.2
                              ========   ========   ========= =========

For the second  quarter,  gas  distribution  revenues  increased  $59.7  million
primarily due to higher natural gas prices, which are passed directly through to
customers,  and the  impact of colder  weather.  Year-to-date  gas  distribution
revenue  increased $120.6 million.  The impact of higher natural gas prices more
than  offset  the  effect  of  warmer  weather  during  the  six-month   period.
Year-to-date  gas  distribution  revenues also include $7.3 million of estimated
weather  insurance  benefits that will partially  reverse if the weather remains
normal  for the rest of the year.  Shipping  revenues  rose for the  three-  and
six-month  periods due to  increased  volumes,  charter  revenues  and fuel cost
surcharges.  Revenues  generated from Nicor's  wholesale natural gas trading and
technology businesses accounted for the increase in corporate and other for both
periods.

Gas distribution margin. Gas distribution margin,  defined as operating revenues
less cost of gas and revenue taxes,  which are both passed  directly  through to
customers,  increased for the three- and  six-month  periods by $ 8.1 million to
$111.3 million and $14.1 million to $274.5 million,  respectively.  Improvements
for both periods reflect income related to a significant  construction  project,
customer  additions and contributions from the gas cost  performance-based  rate
plan.  Quarter  results  also  reflect  the impact of colder  weather.  Although
weather for the six-month  period was warmer than last year,  its adverse effect
on operating  results was more than offset by the  company's  weather  insurance
coverage in 2000.

Operating and  maintenance.  Operating and maintenance  expense  increased $11.7
million to $97.9 million, and $19.4 million to $192.3 million,  respectively, in
the three- and  six-month  periods  ended June 30,  2000,  due largely to higher
volume-related  expenses in the  shipping  segment.  The increase is also due to
higher costs related to Nicor's technology business.


<PAGE>


Nicor Inc.                                                             Page 10

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations (Continued)

FINANCIAL CONDITION AND LIQUIDITY

Operating.  Net cash flow from operating  activities  increased $25.3 million to
$402.7  million for the six months ended June 30, 2000, due primarily to changes
in working capital items in the gas  distribution  segment.  Working capital can
swing sharply due to certain gas distribution  factors  including  weather,  the
price of gas,  the  timing of  collections  from  customers  and gas  purchasing
practices.  The  company  generally  relies  on  short-term  financing  to  meet
temporary increases in working capital needs.

Investing.  In the second quarter of 2000, Nicor has committed an additional $10
million to expand its cargo container leasing investment.

Financing.  Nicor and its gas distribution subsidiary maintain short-term credit
agreements  with major  domestic  and foreign  banks.  At June 30,  2000,  these
agreements,  which serve as backup for the issuance of commercial paper, totaled
$342.5   million  and  the  company  had  $56.0  million  of  commercial   paper
outstanding.

In January 2000, Nicor Gas issued $50 million of adjustable rate unsecured notes
due in 2001 at an initial rate of 6.11% to fund the redemption of $50 million of
unsecured notes at 5.065% that matured in January 2000.

Under an existing common stock repurchase  program,  Nicor purchased and retired
630,000  common shares during the second quarter of 2000 at an aggregate cost of
$21.8 million.  For the six-month period,  Nicor purchased 916,000 common shares
at an aggregate cost of $31.3 million.  In July of 2000, Nicor announced another
$50 million common stock repurchase program.  Purchases are being made as market
conditions  permit through open market  transactions and to the extent cash flow
is available after other investment opportunities.

Effective with the dividend paid on May 1, 2000,  Nicor's quarterly  dividend on
common stock was increased to 41.5 cents per share.  This payment  represents an
annual rate of $1.66 per share,  which is 6.4 percent higher than the $1.56 rate
established with the May 1, 1999 dividend.

OTHER

Market Risk.  The company is exposed to market risk in the normal  course of its
business operations,  including the risk of loss arising from adverse changes in
natural gas  commodity  prices and  interest  rates.  There has been no material
change in the company's exposure to market risk since December 31, 1999.

New Accounting  Pronouncement.  In June 1998, the Financial Accounting Standards
Board issued  Statement  No. 133,  Accounting  for  Derivative  Instruments  and
Hedging Activities. The company has substantially completed an evaluation of the
impact the statement will have on the company's  financial condition and results
of  operations  and has  concluded  that it will not be  material.  For  further
information see New Accounting Pronouncement on page 5.


Nicor Inc.                                                             Page 11
-------------------------------------------------------------------------------

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations (Continued)

GAS DISTRIBUTION STATISTICS

Changes in weather can materially affect operating results.  Operating revenues,
deliveries, customers and other statistics are presented below.

                                  Three months ended        Six months ended
                                       June 30                   June 30
                                 ---------------------     --------------------
                                   2000        1999          2000       1999
                                 ---------   ---------     ---------  ---------

Operating revenues (millions):
   Sales
     Residential                  $ 171.1     $ 128.2       $ 558.4    $ 472.4
     Commercial                      30.1        25.1         106.0      101.7
     Industrial                       4.3         3.2          15.4       15.0
                                 ---------   ---------     ---------  ---------
                                    205.5       156.5         679.8      589.1
                                 ---------   ---------     ---------  ---------
   Transportation
     Residential                      1.3          .3           2.2         .3
     Commercial                      15.6        13.8          40.4       36.3
     Industrial                      10.9         9.8          22.8       21.4
     Other                            1.4         1.1           3.7        2.2
                                 ---------   ---------     ---------  ---------
                                     29.2        25.0          69.1       60.2
                                 ---------   ---------     ---------  ---------
   Revenue taxes and other           28.4        21.9          87.8       66.8
                                 ---------   ---------     ---------  ---------
                                  $ 263.1     $ 203.4       $ 836.7    $ 716.1
                                 =========   =========     =========  =========

Deliveries (Bcf):
   Sales
     Residential                     28.7        26.3         118.9      126.7
     Commercial                       5.2         5.4          22.3       26.5
     Industrial                        .7          .6           3.4        4.2
                                 ---------   ---------     ---------  ---------
                                     34.6        32.3         144.6      157.4
                                 ---------   ---------     ---------  ---------
   Transportation
     Residential                       .5          .1           1.4         .1
     Commercial                      13.5        12.0          50.2       46.1
     Industrial                      37.2        41.0          81.4       87.0
                                 ---------   ---------     ---------  ---------
                                     51.2        53.1         133.0      133.2
                                 ---------   ---------     ---------  ---------
                                     85.8        85.4         277.6      290.6
                                 =========   =========     =========  =========

Customers at end of period (thousands):
   Sales
     Residential                  1,722.9     1,729.7
     Commercial                      93.0       104.2
     Industrial                       6.2         7.1
                                 ---------   ---------
                                  1,822.1     1,841.0
                                 ---------   ---------
   Transportation
     Residential                     55.9        17.0
     Commercial                      72.5        59.6
     Industrial                       7.7         6.9
                                 ---------   ---------
                                    136.1        83.5
                                 ---------   ---------
                                  1,958.2     1,924.5
                                 =========   =========

Other statistics:
   Degree days                        619         491         3,204      3,365
   Colder (warmer) than normal        (10)%       (29)%         (17)%      (13)%
   Average gas cost per Mcf sold   $ 3.80      $ 2.54        $ 3.44     $ 2.53

Nicor Inc.                                                             Page 12
-------------------------------------------------------------------------------

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations (Concluded)

SHIPPING STATISTICS

                                  Three months ended        Six months ended
                                        June 30                   June 30
                                 ---------------------     --------------------
                                   2000        1999          2000       1999
                                 ---------   ---------     ---------  ---------

TEUs shipped (thousands):
   Southbound                        34.5        29.7          67.7       59.9
   Northbound                         4.5         4.6           8.6        9.2
   Interisland                        1.7         2.3           3.6        4.5
                                 ---------   ---------     ---------  ---------
                                     40.7        36.6          79.9       73.6
                                 =========   =========     =========  =========

Other statistics:
   Revenue per TEU                $ 1,488     $ 1,493       $ 1,496    $ 1,475
   Ports served                        24          23
   Vessels owned                       13          13




<PAGE>


Nicor Inc.                                                             Page 13

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

For  disclosures  about  market  risk,  see  Market  Risk on page  10,  which is
incorporated herein by reference.

PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders

The Annual  Meeting of  Stockholders  of the company was held on April 20, 2000,
for the purpose of electing the Board of Directors. Proxies for the meeting were
solicited  pursuant to Section 14(a) of the Securities  Exchange Act of 1934 and
there has been no solicitation in opposition to management's  solicitation.  The
results of the voting as  reported  below are for shares  eligible to vote as of
the record date, February 23, 2000. There were no "broker nonvotes."

All of management's nominees for directors as listed in the proxy statement were
elected as indicated below:

                                                 Shares           Shares
                                                 Voted             Voted
                       Nominee                    FOR            WITHHELD
          --------------------------          -------------     ------------

          Robert M. Beavers, Jr.               40,774,952         509,643
          Bruce P. Bickner                     40,795,399         492,805
          John H. Birdsall, III                40,778,197         505,687
          Thomas A. Donahoe                    40,769,646         510,424
          Thomas L. Fisher                     40,759,564         526,924
          John E. Jones                        40,730,124         542,404
          Dennis J. Keller                     40,775,542         509,021
          William A. Osborn                    40,764,430         519,760
          Sidney R. Petersen                   40,683,691         583,808
          John Rau                             40,769,489         513,485
          Patricia A. Wier                     40,741,783         536,714


Item 6.  Exhibits and Reports on Form 8-K

   (a) See Exhibit Index on page 15 filed herewith.

   (b) The company  did not file a report on Form 8-K during the second  quarter
       of 2000.



<PAGE>


Nicor Inc.                                                             Page 14

Signature

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                    Nicor Inc.




Date  August 8, 2000          By    KATHLEEN L. HALLORAN
      --------------                ---------------------------
                                    Kathleen L. Halloran
                                    Executive Vice President,
                                    Finance and Administration
                                    and Secretary



<PAGE>


Nicor Inc.                                                             Page 15

Exhibit Index

  Exhibit
  Number                          Description of Document

10.01 Form of Change-in-Control Agreement, dated June 2, 2000, between Nicor and
Mr. Fisher, Mr. Cali and Ms. Halloran.

10.02 Retirement Agreement, dated May 2, 2000, between Nicor and Mr. Cyranoski.

27.01 Financial Data Schedule.