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 September 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 (NYSE:GAS),  par value $2.50,  outstanding at October 31,
2000, were 45,651,743.










<PAGE>


Nicor Inc.                                                              Page i

Table of Contents

Part I - Financial Information

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

           Consolidated Statement of Operations:
            Three and nine months ended
            September 30, 2000 and 1999 ...................................  2

           Consolidated Statement of Cash Flows:
            Nine months ended
            September 30, 2000 and 1999....................................  3

           Consolidated Balance Sheet:
            September 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 ........................... 10

   Item 3. Quantitative and Qualitative Disclosures about Market Risk ..... 17


Part II - Other Information

   Item 1. Legal Proceedings .............................................. 17

   Item 6. Exhibits and Reports on Form 8-K ............................... 17

           Signature ...................................................... 18

           Exhibit Index .................................................. 19




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 plan, 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.





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 accounting
principles  generally  accepted  in the United  States  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.


<PAGE>




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

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

                                  Three months ended        Nine months ended
                                     September 30              September 30
                                 ---------------------     --------------------
                                   2000        1999          2000       1999
                                 ---------   ---------     ---------  ---------

Operating revenues                $ 301.0     $ 227.3     $ 1,308.7  $ 1,075.5
                                 ---------   ---------     ---------  ---------

Operating expenses
   Cost of gas                      129.2        69.6         666.2      491.0
   Operating and maintenance         90.9        87.3         283.2      260.2
   Depreciation                      19.7        19.2         101.6       98.9
   Taxes, other than income taxes    14.2        13.1          85.1       77.5
   Other                            148.0           -         148.0          -
                                 ---------   ---------     ---------  ---------
                                    402.0       189.2       1,284.1      927.6
                                 ---------   ---------     ---------  ---------

Operating income (loss)            (101.0)       38.1          24.6      147.9

Other income (expense), net           6.4         2.0           9.9       15.2
                                 ---------   ---------     ---------  ---------

Income (loss) before interest on
  debt and income taxes             (94.6)       40.1          34.5      163.1

Interest on debt, net of amounts
   capitalized                       11.9         9.9          33.9       32.3
                                 ---------   ---------     ---------  ---------

Income (loss) before income taxes  (106.5)       30.2            .6      130.8

Income tax expense (benefit)        (43.8)       10.4          (6.1)      45.5
                                 ---------   ---------     ---------  ---------

Net income (loss)                   (62.7)       19.8           6.7       85.3

Dividends on preferred stock           .1          .1            .2         .3
                                 ---------   ---------     ---------  ---------
Earnings (loss) applicable to
  common stock                     $(62.8)     $ 19.7         $ 6.5     $ 85.0
                                 =========   =========     =========  =========

Average shares of common stock
   outstanding
     Basic                           45.8        47.2          46.3       47.3
     Diluted                         45.8        47.3          46.4       47.5

Earnings (loss) per average share of
   common stock
     Basic                        $ (1.37)      $ .42         $ .14     $ 1.80
     Diluted                        (1.37)        .42           .14       1.79

Dividends declared per share of
   common stock                    $ .415      $ .390       $ 1.245    $ 1.170


The accompanying notes are an integral part of this statement.










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

Consolidated Statement of Cash Flows (Unaudited)
(millions)

                                                             Nine months ended
                                                                September 30
                                                           --------------------
                                                             2000       1999
                                                           ---------  ---------
Operating activities
   Net income                                                 $ 6.7     $ 85.3
   Adjustments to reconcile net income to net cash flow
     provided from operating activities:
       Depreciation                                           101.6       98.9
       Deferred income tax expense (benefit)                   (7.8)      18.2
       Change in assets and liabilities:
         Receivables, less allowances                          91.6      118.4
         Gas in storage                                       (31.3)      37.9
         Deferred gas costs                                   (65.0)     (63.7)
         Accounts payable                                      73.8       71.0
         Postretirement benefits                              (21.1)     (12.9)
         Other                                                102.9      (27.7)
                                                           ---------  ---------
   Net cash flow provided from operating activities           251.4      325.4
                                                           ---------  ---------

Investing activities
   Capital expenditures                                      (115.8)    (101.1)
   Short-term investments                                      (5.7)      24.4
   Other                                                         .5       (8.9)
                                                           ---------  ---------
   Net cash flow used for investing activities               (121.0)     (85.6)
                                                           ---------  ---------

Financing activities
   Net proceeds from issuing long-term debt                    49.9      101.5
   Disbursements to retire long-term debt                     (73.6)    (156.6)
   Short-term borrowings (repayments), net                      (.7)    (108.0)
   Dividends paid                                             (56.9)     (54.8)
   Disbursements to reacquire stock                           (44.4)     (14.6)
   Other                                                        1.3        (.1)
                                                           ---------  ---------
   Net cash flow used for financing activities               (124.4)    (232.6)
                                                           ---------  ---------

Net increase in cash and cash equivalents                       6.0        7.2

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

Cash and cash equivalents, end of period                     $ 48.5     $ 20.2
                                                           =========  =========

Supplemental information
   Income taxes paid, net of refunds                         $ 30.6     $ 37.6
   Interest paid, net of amounts capitalized                   36.3       33.4


The accompanying notes are an integral part of this statement.



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

Consolidated Balance Sheet (Unaudited)
(millions)

                                         September 30  December 31  September 30
                                             2000         1999          1999
                                          -----------  -----------   ----------
                Assets

Current assets
   Cash and cash equivalents                  $ 48.5       $ 42.5       $ 20.2
   Short-term investments, at cost which
     approximates market                        35.4         29.7         31.4
   Receivables, less allowances of $8.0,
     $7.1 and $7.5, respectively               268.2        359.8        145.6
   Gas in storage                               62.3         31.0         67.6
   Deferred gas costs                           80.9         15.9         33.8
   Other                                        82.3         29.1         43.9
                                          -----------  -----------   ----------
                                               577.6        508.0        342.5
                                          -----------  -----------   ----------

Property, plant and equipment, at cost
   Gas distribution                          3,262.2      3,200.3      3,171.3
   Shipping                                    300.7        280.8        272.3
   Other                                         2.0          2.0          2.0
                                          -----------  -----------   ----------
                                             3,564.9      3,483.1      3,445.6
   Less accumulated depreciation             1,822.1      1,747.9      1,714.4
                                          -----------  -----------   ----------
                                             1,742.8      1,735.2      1,731.2
                                          -----------  -----------   ----------

Other assets                                   235.4        208.6        203.1
                                          -----------  -----------   ----------

                                           $ 2,555.8    $ 2,451.8    $ 2,276.8
                                          ===========  ===========   ==========

    Liabilities and Capitalization

Current liabilities
   Long-term obligations due within one year $ 126.8       $ 74.2       $ 73.8
   Short-term borrowings                       343.5        344.2        126.5
   Accounts payable                            356.2        282.4        341.3
   Other                                       187.6         44.9         36.3
                                          -----------  -----------   ----------
                                             1,014.1        745.7        577.9
                                          -----------  -----------   ----------

Deferred credits and other liabilities
   Deferred income taxes                       284.7        266.6        261.5
   Regulatory income tax liability              71.9         74.8         75.7
   Unamortized investment tax credits           41.5         42.7         42.7
   Other                                        83.4         91.9        101.8
                                          -----------  -----------   ----------
                                               481.5        476.0        481.7
                                          -----------  -----------   ----------

Capitalization
   Long-term debt                              360.2        436.1        436.7
   Preferred stock                               6.3          6.3          6.3
   Common equity
     Common stock                              114.1        117.2        117.8
     Retained earnings                         579.6        670.5        656.4
                                          -----------  -----------   ----------
                                             1,060.2      1,230.1      1,217.2
                                          -----------  -----------   ----------

                                           $ 2,555.8    $ 2,451.8    $ 2,276.8
                                          ===========  ===========   ==========


The accompanying notes are an integral part of this statement.



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.  Year-to-date  operating  revenues
include $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.

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 (PGA). 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.

REGULATORY MATTERS

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 plan,
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,  and
results will likely vary from quarter to quarter.  Nicor  recorded  $5.4 million
and $7.6  million of estimated  PBR plan  results as  operating  revenue for the
three- and nine-month periods, respectively.

Customer  Select(R).  Customer Select is a voluntary pilot program that offers a
choice of natural gas suppliers to all commercial  and  industrial  customers as
well as 250,000 residential customers in 16 communities.  A customer's choice of
another  natural  gas  commodity  supplier  has no direct  impact on Nicor  Gas'
operating  income  because  natural  gas costs are  passed  directly  through to
customers  without  mark-up  under the PGA.  Nicor Gas  continues to deliver the
natural gas, read meters,  maintain its distribution  system,  ensure safety and
respond to service and emergency calls.



<PAGE>


Nicor Inc.                                                              Page 6

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

In  September  2000,  the ICC  suspended  for  hearings  Nicor  Gas'  request to
permanently  expand the  Customer  Select  program to  include  all  residential
customers. The hearings may take up to 11 months to complete and are intended to
examine concerns consumer groups have raised about the program.  In the interim,
the ICC has granted a company  request to extend the existing  pilot program for
an additional year until April 30, 2002.

INCOME TAXES

The  overall  effective  income tax rate for the 2000  periods  varies  from its
customary  level due to the effect of the unusual charge by Nicor Gas related to
its mercury program  described on page 7. Excluding the mercury charge,  federal
and state income taxes were  provided at Nicor's more typical  effective  income
tax rate of 35% for the three- and nine-month periods, respectively.

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%.  The issuance  funded the redemption of
$50 million of maturing unsecured 5.065% notes.

DISCONTINUED OPERATIONS

The company  maintains a reserve for the remaining costs related to discontinued
contract  drilling,  oil and gas  exploration,  inland  barging  and  extractive
operations.  The reserve will  continue to be  evaluated  as  remaining  medical
benefit, tax and other contingencies are resolved.

BUSINESS SEGMENT INFORMATION

Financial data by business segment is presented below:

                              Three months ended    Nine months ended
                                 September 30          September 30
                              -------------------   -------------------
(millions)                       2000      1999        2000      1999
                              --------- ---------   --------- ---------
Operating revenues
   Gas distribution           $   203.0 $  161.8   $ 1,039.7  $  877.9
   Shipping                        60.4     55.5       180.9     164.0
   Other Nicor ventures            38.1     11.3        88.7      34.9
   Corporate and eliminations       (.5)    (1.3)        (.6)     (1.3)
                              ---------- --------   --------- ---------
                              $   301.0 $  227.3   $ 1,308.7  $1,075.5
                              ========== ========   ========= =========

Operating income (loss)
   Gas distribution           $  (106.6) $  35.4    $    5.9  $  137.1
   Shipping                         5.2      4.5        16.6      13.9
   Other Nicor ventures              .9      (.1)        4.5       (.1)
   Corporate and eliminations       (.5)    (1.7)       (2.4)     (3.0)
                              ---------- --------   --------- ---------
                              $  (101.0)$   38.1    $   24.6  $  147.9
                              ========== ========   ========= =========



<PAGE>


Nicor Inc.                                                              Page 7

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

CONTINGENCIES

Mercury  program.  Nicor Gas has  incurred,  and  expects to  continue to incur,
significant  costs related to its  historical use of mercury in various kinds of
equipment.

Prior to 1961,  gas  regulators  containing  small  quantities  of mercury  were
installed in homes.  The purpose of the regulators was to reduce the pressure of
natural gas flow from the service line for use inside the home. During the third
quarter of this year, the company learned that in certain instances some mercury
was spilled or left in residences when the regulators were removed.

As a result, on September 6, 2000, Nicor Gas was named as a defendant in a civil
lawsuit  brought by the Illinois  Attorney  General and the States  Attorneys of
Cook,  DuPage and Will  Counties  seeking,  among  other  things,  to compel the
company to inspect  and clean up all homes and other  sites  which may have been
affected by spills of mercury from company equipment. The Cook County, Illinois,
Circuit Court hearing this action has entered two agreed preliminary injunctions
requiring  Nicor Gas,  among other things,  to conduct  inspections  and,  where
necessary,  to clean up mercury, to pay for relocating  residents until clean-up
is completed,  and to pay for medical screening of potentially affected persons.
At  this  early  stage  of the  process  it is not  possible  to  determine  the
likelihood that the plaintiffs will seek and obtain fines or penalties.

Nicor Gas is also the  subject  of an  Administrative  Order,  and an  amendment
thereto,  entered during the third quarter by the U.S. Environmental  Protection
Agency  (EPA)  pursuant  to  Section  106  of  the  Comprehensive  Environmental
Response,  Compensation and Liabilities Act. Pursuant to that order, the company
is required,  among other things, to develop and implement work plans to address
mercury  spills at recycling  centers  where  mercury  regulators  may have been
taken,   at   company   reporting    centers,    and   at   other   large-volume
commercial/industrial  sites  where  mercury  manometers  may have  been used to
measure gas pressure.

Pursuant to the  injunctions  and the EPA  Administrative  Order,  Nicor Gas has
initiated  the work  described  above.  Potentially  affected  homes  are  being
inspected  using  mercury vapor  analyzers.  Nicor Gas expects to have called on
every such home by December 31, 2000,  although  access to some homes may not be
gained until a later date.  Through  November 5, 2000,  approximately  780 homes
have been found to have traces of mercury requiring clean-up.

Nicor  Gas has also  inspected  all of its  reporting  centers  where  equipment
containing  mercury was handled and has become  aware of the presence of mercury
at nine reporting centers. Cleaning is underway at those locations. In addition,
the company is aware of four  recycling  centers  where  traces of mercury  from
regulators  have been  discovered  and is cleaning up the  mercury  spills.  The
company has also inspected  customer sites which use or previously  used mercury
manometers,  and the  company  has  identified  and cleaned up all 12 such sites
where mercury traces have been found.


<PAGE>


Nicor Inc.                                                              Page 8

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

As  of  September  30,  Nicor  Gas  accrued  $144.9  million  to  other  current
liabilities for estimated  obligations related to the previously  described work
and for legal defense costs. As a result,  and including  amounts already spent,
$148 million was charged to the company's  income  statement as other  operating
expense.  The  accrual  represents   management's  best  estimate  based  on  an
evaluation  of currently  available  information.  Actual costs  incurred in the
future may vary from this  estimate.  The company will  reassess  its  estimated
obligation  at the end of each  future  accounting  period  and will  record any
resulting  adjustment in such period.  Any such adjustment  could be material to
operating results in the period in which it is recorded.

In addition to the matters  described  above, as of November 6, 2000,  Nicor Gas
has been named a  defendant  in three  private  lawsuits,  claiming a variety of
unquantified  damages  (including bodily injury,  property and punitive damages)
allegedly  caused  by  the  presence  of  mercury-containing  regulators  inside
residences.  One of the lawsuits  involves five previous class actions that have
been consolidated before a single judge in Cook County, Illinois, Circuit Court.
At this early stage in the  litigation,  it is not  possible  to  estimate  what
liability,  if any,  may result to the  company  from these  lawsuits.  While no
amount has been recorded for this potential liability, a loss contingency for an
unfavorable outcome of these lawsuits will be accrued if it becomes probable and
can be  reasonably  estimated.  Any such accrual  could be material to operating
results in the period in which it is recorded.

The company has certain insurance policies, and has notified its insurers of the
claims.  The company will vigorously  pursue recovery of  mercury-related  costs
pursuant  to its  insurance  coverage.  In  addition,  some of the  removals  of
mercury-containing  regulators  were  conducted by  contractors  working for the
company.  The  company  intends to  vigorously  pursue its  indemnification  and
contribution  rights  against these  contractors,  as well as to seek  insurance
recoveries  under its  contractors'  policies.  At this early  stage,  it is not
possible to estimate the likelihood  that costs will be recovered from insurance
carriers or other third  parties  related to the mercury  spills,  and therefore
Nicor  Gas  has not  recorded  any  such  amounts  as  assets  in its  financial
statements.

Nicor Gas will not seek  recovery  of the costs  associated  with these  mercury
spills from its  customers,  and any proceeds from  insurance  carriers or third
parties will be retained by the company to offset costs incurred.

It is  management's  opinion,  taking  into  account the above  information  and
uncertainties,   including  currently  available   information   concerning  the
company's  existing and  potential  obligations,  insurance  coverage,  possible
recoveries  from other third parties and  available  financial  resources,  that
costs associated with the mercury spills will not have a material adverse effect
on the liquidity or financial position of the company.

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



<PAGE>


Nicor Inc.                                                              Page 9

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

Current   environmental   laws  may  require  the  clean-up  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.

On December 20, 1995,  Nicor Gas filed suit in Cook  County,  Illinois,  Circuit
Court against  certain  insurance  carriers  seeking  recovery of  environmental
clean-up 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  other   contingencies,
management  believes  that  appropriate  accruals  have  been  recorded.   Final
disposition of these other matters is not expected to have a material  impact on
the company's financial condition or results of operations.


<PAGE>


Nicor Inc.                                                             Page 10

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 Inc.  1999 Annual  Report on Form
10-K.

SUMMARY

Nicor's  third  quarter 2000 diluted loss per common share was $1.37,  down from
earnings per common share of $.42 in 1999.  There was a net loss for the quarter
of $62.7  million,  compared with net income of $19.8  million in 1999.  For the
nine  months  ended  September  30,  2000,  diluted  earnings  per common  share
decreased  to $.14 from $1.79 a year ago. Net income for the  nine-month  period
was $6.7 million in the current year compared to $85.3 million in 1999.

An unusual charge of $148 million was recorded as operating expense in the third
quarter of 2000 related to the company's  mercury  inspection and repair program
described  on page 7. The  after-tax  effect  of this  charge  on third  quarter
earnings was $1.96 per share.  Net income excluding the unusual charge increased
$7.2 million and $11.1  million,  to $27.0  million and $96.4  million,  for the
three- and nine- month periods, respectively.

Operating income (loss) by major business segment was:

                              Three months ended    Nine months ended
                                 September 30          September 30
                              -------------------   -------------------
   (millions)                    2000       1999        2000      1999
                              --------- ----------   --------- ---------
   Gas distribution           $  (106.6) $   35.4    $    5.9  $  137.1
   Shipping                         5.2       4.5        16.6      13.9
   Other Nicor ventures              .9       (.1)        4.5       (.1)
   Corporate and eliminations       (.5)     (1.7)       (2.4)     (3.0)
                              ---------- ---------   --------- ---------
                              $  (101.0) $   38.1    $   24.6  $  147.9
                              ========== =========   ========= =========

Excluding  the  effects  of the  mercury-related  charge,  results  for both the
quarter and nine-month period reflect  significant  improvements in all business
segments, including gas distribution,  shipping and Nicor's other energy-related
ventures.

The  following  summarizes  operating  income  comparisons  for  major  business
segments:

o  Gas distribution operating income for the three- and nine-month periods ended
   September 30, 2000, decreased $142 million and $131.2 million,  respectively,
   when  compared to the  corresponding  prior-year  periods.  Gas  distribution
   operating income excluding the effect of the unusual mercury charge increased
   to $41.4 million and $153.9  million for the three- and  nine-month  periods,
   respectively.  The impact of the mercury charge more than offset improvements
   in both periods related to contributions from the gas cost  performance-based
   rate (PBR) plan, increased income from power-generation services and customer
   additions. Nine-month operating results also benefited from weather insurance
   benefits in 2000,  which more than offset the adverse  effect of weather that
   was 4 percent warmer than last year. The weather  insurance  coverage ensures
   that the net impact of weather in 2000 will be an improvement over 1999.



<PAGE>


Nicor Inc.                                                             Page 11

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

o  Containerized  shipping  operating income increased $.7 million for the three
   months  and $2.7  million  for the nine  months  ended  September  30,  2000.
   Improvements in both periods are primarily a result of an increase in volumes
   shipped.

o  Improvements   in  operating   income  for  other  Nicor   ventures   reflect
   contributions  from Nicor's  service and  technology  businesses for both the
   quarter and nine-month periods.

Other income for the quarter is $6.4 million, up from $2 million a year ago. For
the nine months ended  September  30, other income  decreased to $9.9 million in
2000 from $15.2 million in 1999.  Results for the three- and nine-month  periods
reflect the positive  impact of utility  property sales,  improved  results from
Nicor's nonregulated retail energy services joint venture and an investment in a
cargo  container  leasing  business.  Year-to-date  results  for  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.

Excluding the impact of the unusual  mercury  charge,  Nicor continues to expect
2000  earnings  to be in the  range of $2.85 to $2.95  per  share.  Furthermore,
management currently expects 2001 earnings to be in the range of $3.00 to $3.15.
Although management believes the foregoing forward-looking  statements about its
earnings  expectations are based on reasonable  assumptions,  actual results may
vary materially from stated  expectations.  Factors that could cause  materially
different results include,  but are not limited to, weather conditions,  natural
gas prices,  interest rates,  short-term  borrowing  needs,  economic and market
conditions,  legislative and regulatory actions,  asset sales, PBR plan results,
and any future mercury-related charges or credits.

RESULTS OF OPERATIONS

Details of various  financial and operating  information by segment can be found
in the tables on pages 15 and 16. The following discussion  summarizes the major
items impacting Nicor's earnings.

Operating revenues. Operating revenues by major business segment were:

                              Three months ended    Nine months ended
                                 September 30          September 30
                              -------------------   -------------------
   (millions)                    2000      1999         2000      1999
                              --------- ----------   --------- ---------
   Gas distribution           $   203.0  $  161.8    $ 1,039.7  $  877.9
   Shipping                        60.4      55.5        180.9     164.0
   Other Nicor ventures            38.1      11.3         88.7      34.9
   Corporate and eliminations       (.5)     (1.3)         (.6)     (1.3)
                              ---------- ---------    --------- ---------
                              $   301.0 $   227.3    $ 1,308.7  $1,075.5
                              ========= ==========    ========= =========

For the  third  quarter,  gas  distribution  revenues  increased  $41.2  million
primarily due to higher natural gas prices, which are passed directly through to
customers,  and $5.4  million of revenues  from the PBR plan.  Year-to-date  gas
distribution  revenue increased $161.8 million. The impact of higher natural gas
prices  more than  offset the  effect of warmer  weather  during the  nine-month
period.  Year-to-date gas  distribution  revenues also include $7.6 million from
the PBR plan and $7.3  million of  estimated  weather  insurance  benefits.  The
insurance  benefits  will  partially  reverse if weather is normal in the fourth
quarter.

Nicor Inc.                                                             Page 12

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

Shipping  revenues rose for the three- and  nine-month  periods due to increased
volumes.  The increase in other  revenues for both periods was  primarily due to
revenues   generated  from  Nicor's  wholesale  natural  gas  trading  business.
Increased  revenues from Nicor's  technology  business also  contributed  to the
year-to-date improvement in other revenues.

Gas distribution margin. Gas distribution margin,  defined as operating revenues
less cost of gas and revenue tax expense, which are both passed directly through
to customers, increased for the three- and nine-month periods by $5.6 million to
$98.2 million and $19.7 million to $372.7  million,  respectively.  Improvements
for both periods reflect estimated  results from the PBR plan,  increased income
from power-generation services and customer additions.  Although weather for the
nine-month  period was warmer than last year,  its adverse effect on comparative
operating  results  was more than  offset by  contributions  from the  company's
weather insurance policy in 2000.

Operating and  maintenance.  Operating and  maintenance  expense  increased $3.6
million to $90.9 million,  and $23 million to $283.2 million,  respectively,  in
the three- and  nine-month  periods  ended  September  30, 2000,  due largely to
higher  volume-related  expenses in the shipping  segment.  The increase for the
nine-month  period is also due to higher  costs  related to  Nicor's  technology
business.

Other operating  expense.  Other operating  expense in the current-year  periods
reflects  estimated costs associated with the company's  mercury  inspection and
repair program. Additional information about this program is presented under the
heading Mercury Program on page 7.

Interest  on  debt.  Interest  on debt for the  three-  and  nine-month  periods
increased due to increased average borrowings.

Income  taxes.  For the 2000  periods,  the  effective  tax rate varies from its
customary  level  due  to  the  effect  of  the  mercury  charge.   For  further
information, see Income Taxes on page 6.

FINANCIAL CONDITION AND LIQUIDITY

Operating.  Net cash flow from  operating  activities  decreased  $74 million to
$251.4  million for the nine months ended  September 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 and  presently  intends to
finance the mercury program with short-term debt.

Investing.  In the second  quarter of 2000,  Nicor  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 September 30, 2000,  these
agreements,  which serve as backup for the issuance of commercial paper, totaled
$442.5  million  and  the  company  had  $343.5  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%.  The issuance  funded the redemption of
$50 million of maturing unsecured 5.065% notes.

<PAGE>


Nicor Inc.                                                             Page 13

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

Nicor  completed an existing  common stock  repurchase  program during the third
quarter of 2000 by purchasing  and retiring the final 19,519 common shares at an
aggregate cost of $.7 million. In July 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. Under the program announced in July, Nicor
purchased and retired  290,000 common shares during the third quarter of 2000 at
an aggregate cost of $10.7 million.  For the nine-month period,  Nicor purchased
1,225,519 common shares at an aggregate cost of $42.7 million under both plans.

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.

FACTORS AFFECTING BUSINESS PERFORMANCE

Weather  protection.  Nicor Gas  entered  into an  agreement  with a third party
designed  to protect the  company's  2001  earnings  and cash flow if weather is
warmer than 5,700  degree  days,  the same level as the current  year's  weather
insurance policy. To partially offset the cost of this warm weather  protection,
Nicor Gas has also  agreed to pay the third  party if weather for 2001 is colder
than 6,100 degree  days,  which is  approximately  normal for Nicor Gas' service
territory.  As a result,  this weather hedge  minimizes  the earnings  impact of
large variations in weather.  Nicor's rule of thumb is that,  excluding  weather
protection,  every 100-degree-day  variation in weather has an impact of about 2
1/2 cents per share.

Customer  Select(R).  During the third  quarter of 2000,  the Illinois  Commerce
Commission (ICC) suspended for hearings Nicor Gas' request to permanently expand
the Customer Select program to include all residential  customers.  The hearings
may take up to 11  months to  complete  and are  intended  to  examine  concerns
consumer  groups have raised  about the  program.  In the  interim,  the ICC has
granted a company request to extend the existing pilot program for an additional
year until April 30, 2002. For further  information  see Customer Select on Page
5.

Discontinued operations. The company maintains a reserve for the remaining costs
related to  discontinued  contract  drilling,  oil and gas  exploration,  inland
barging and extractive operations.  The reserve will continue to be evaluated as
remaining medical benefit, tax and other contingencies are resolved.

Horizon pipeline.  On September 14, 2000,  Horizon Pipeline  Company,  L.L.C., a
joint  venture of Nicor and Natural Gas  Pipeline  Company of America,  received
preliminary  approval from the Federal Energy  Regulatory  Commission (FERC) for
the  construction  and  operation  of a $75 million  natural gas  pipeline  from
Joliet,  Illinois to McHenry County in northern Illinois. FERC found the project
to  be  in  the  public   convenience  and  necessity  subject  to  a  favorable
environmental  review.  Assuming  timely  approval,  construction is expected to
begin in the summer of 2001 with completion anticipated in mid-2002.


<PAGE>


Nicor Inc.                                                            Page 14

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

Higher  natural gas prices.  Natural  gas prices  have  increased  significantly
during 2000.  Changes in the price of natural gas have no direct impact on Nicor
Gas'  margin  from  deliveries  since gas costs are passed  directly  through to
customers  under  the  company's  Uniform   Purchased  Gas  Adjustment   Clause.
Furthermore,   while  price   fluctuations   can  affect   accounts   receivable
collections,  customer  demand,  company gas usage expenses and financing costs,
any such impact has generally not been material.  Higher natural gas prices also
do not significantly  affect Nicor Gas' PBR plan risks,  since the PBR benchmark
is tied to market prices.

Mercury  program.  Future  operating  results may be impacted by  adjustments to
estimated mercury program costs or recoveries, and any such adjustments could be
material.  Additional  information  about this  program is  presented  under the
heading Mercury Program on page 7.

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.


<PAGE>





Nicor Inc.                                                            Page 15

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  statistics.  Operating
revenues, deliveries, customers and other statistics are presented below.

                                Three months ended     Nine months ended
                                  September 30           September 30
                               -------------------    -------------------
                                 2000       1999         2000      1999

Operating revenues (millions):
   Sales
     Residential                $ 133.2   $ 103.6     $ 691.6    $ 576.1
     Commercial                    20.3      16.3       126.4      118.0
     Industrial                     2.8       2.4        18.1       17.4
                                --------  --------    --------   --------
                                  156.3     122.3       836.1      711.5
   Transportation
     Residential                    1.8        .6         4.0         .9
     Commercial                    13.7      12.9        54.2       49.2
     Industrial                    12.8      11.2        35.6       32.6
     Other                           .9        .9         4.5        3.1
                                --------  --------    --------   --------
                                   29.2      25.6        98.3       85.8
   Other revenues
     Revenue taxes                  9.3       8.1        70.1       62.0
     Performance-based rate plan    5.4         -         7.6          -
     Weather insurance                -         -         7.3          -
     Chicago Hub                    1.6       3.2         3.9        5.1
     Other                          1.2       2.6        16.4       13.5
                                --------  --------    --------   --------
                                   17.5      13.9       105.3       80.6
                                --------  --------    --------   --------
                                $ 203.0   $ 161.8    $1,039.7    $ 877.9
                                ========  ========   =========   ========
Deliveries (Bcf):
   Sales
     Residential                   15.4      15.1       134.3      141.9
     Commercial                     2.4       2.4        24.7       28.9
     Industrial                      .3        .5         3.8        4.6
                                --------  --------    --------   --------
                                   18.1      18.0       162.8      175.4
                                --------  --------    --------   --------
   Transportation
     Residential                     .5        .2         1.8         .2
     Commercial                    10.1       9.3        60.3       55.5
     Industrial                    40.3      42.4       121.7      129.4
                                --------  --------    --------   --------
                                   50.9      51.9       183.8      185.1
                                --------  --------    --------   --------
                                   69.0      69.9       346.6      360.5
                                ========  ========    ========   ========
Customers at end of period (thousands):
   Sales
     Residential                1,726.3   1,733.7
     Commercial                    93.9     104.0
     Industrial                     6.2       7.0
                                --------  --------
                                1,826.4   1,844.7
                                --------  --------
   Transportation
     Residential                   54.1      16.6
     Commercial                    70.6      58.4
     Industrial                     7.5       6.7
                                --------  --------
                                  132.2      81.7
                                --------  --------
                                1,958.6   1,926.4
                                ========  ========
Other statistics:
   Degree days                       79        67       3,283      3,441
   Colder (warmer) than normal      (10)%     (24)%       (17)%      (13)%
   Average gas cost per Mcf sold $ 5.20    $ 3.31      $ 3.63     $ 2.61


Nicor Inc.                                                            Page 16

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

SHIPPING STATISTICS

                                Three months ended    Nine months ended
                                   September 30           September 30
                               -------------------    -------------------
                                  2000      1999         2000      1999
                               --------   --------    --------   --------
TEUs shipped (thousands):
   Southbound                     33.2       30.3       100.9       90.2
   Northbound                      4.6        4.4        13.2       13.6
   Interisland                     1.6        1.9         5.3        6.4
                               --------   --------    --------   --------
                                  39.4       36.6       119.4      110.2
                               ========   ========    ========   ========
Other statistics:
   Revenue per TEU             $ 1,510    $ 1,512     $ 1,501    $ 1,487
   Ports served                     22         23
   Vessels owned                    13         13



Nicor Inc.                                                              Page 17

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

For quantitative and qualitative  disclosures about market risk, see Market Risk
on page 14, which is incorporated herein by reference.


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

For information  concerning legal proceedings,  see Regulatory Matters beginning
on page 5 and Contingencies  beginning on page 7, which are incorporated  herein
by reference.

Item 6.  Exhibits and Reports on Form 8-K

   (a)   See Exhibit Index on page 19 filed herewith.

   (b)   On September  14, 2000,  the company filed an analyst  presentation  on
         Form 8-K.


<PAGE>


Nicor Inc.                                                             Page 18

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   November 7, 2000               By   KATHLEEN L. HALLORAN
      -------------------                -----------------------------
                                           Kathleen L. Halloran
                                           Executive Vice President
                                           Finance and Administration
                                           and Secretary




<PAGE>


Nicor Inc.                                                             Page 19

Exhibit Index

  Exhibit
  Number                          Description of Document
  -------   ------------------------------------------------------------------

    27.01   Financial Data Schedule.