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 March 31, 2002


                                       or


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




                                                       I.R.S.
                     Registrant, State of            Employer
 Commission             Incorporation,             Identification
 File Number     Address and Telephone Number         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 April 22, 2002, were
44,255,171.





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Nicor Inc.                                                   Page i

Table of Contents

Part I - Financial Information

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

         Consolidated Statements of Operations:
           Three months ended
           March 31, 2002 and 2001 .............................. 2

         Consolidated Statements of Cash Flows:
           Three months ended
           March 31, 2002 and 2001 .............................. 3

         Consolidated Balance Sheets:
           March 31, 2002 and 2001, and
           December 31, 2001 .................................... 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 .................................................16


Part II - Other Information

   Item 1. Legal Proceedings ....................................16

   Item 6. Exhibits and Reports on Form 8-K .....................16

         Signature ..............................................17

         Exhibit Index ..........................................18


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 6,000 degree days.
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 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.

Nicor Inc.                                                         Page 2
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Consolidated Statements of Operations (Unaudited)
(millions, except per share data)

                                                     Three months ended
                                                           March 31
                                                     ------------------
                                                       2002      2001
                                                     --------  --------

Operating revenues                                   $  617.0  $1,473.7
                                                     --------  --------

Operating expenses
   Cost of gas                                          347.6   1,174.6
   Operating and maintenance                            105.4     101.4
   Depreciation                                          60.8      58.6
   Taxes, other than income taxes                        41.4      71.1
   Other                                                   .2         -
                                                     --------  --------
                                                        555.4   1,405.7
                                                     --------  --------

Operating income                                         61.6      68.0

Other income (expense), net                               7.0       4.6
                                                     --------  --------

Income before interest expense and income taxes          68.6      72.6

Interest expense, net of amounts capitalized              9.7      14.3
                                                     --------  --------

Income before income taxes                               58.9      58.3

Income taxes                                             19.0      19.5
                                                     --------  --------

Net income                                               39.9      38.8

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

Earnings applicable to common stock                  $   39.9  $   38.7
                                                     ========  ========

Average shares of common stock outstanding
   Basic                                                 44.3      45.4
   Diluted                                               44.5      45.6

Earnings per average share of common stock
   Basic                                            $     .90  $    .85
   Diluted                                                .90       .85

Dividends declared per share of common stock        $     .46  $    .44


The accompanying notes are an integral part of these statements.






Nicor Inc.                                                         Page 3
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Consolidated Statements of Cash Flows (Unaudited)
(millions)

                                                     Three months ended
                                                          March 31
                                                     ------------------
                                                       2002      2001
                                                     --------  --------
Operating activities
   Net income                                        $   39.9  $   38.8
   Adjustments to reconcile net income to net
     cash flow provided from operating activities:
      Depreciation                                       60.8      58.6
      Deferred income tax expense                        11.4      10.8
      Changes in:
        Receivables, less allowances                     (2.5)    (48.4)
        Gas in storage                                    3.6      20.3
        Deferred/accrued gas costs                      (41.0)    177.9
        Accounts payable                                (61.6)   (208.3)
        Temporary LIFO liquidation                      115.0     125.7
        Prepaid pension costs                            (3.2)     (8.4)
      Other                                              16.8       9.7
                                                     --------  --------
   Net cash flow provided from
     operating activities                               139.2     176.7
                                                     --------  --------

Investing activities
   Capital expenditures                                 (48.1)    (27.8)
   Net decrease (increase) in short-term investments      5.5      (4.6)
   Loans to joint ventures                              (10.4)     (1.2)
   Other                                                  4.5        .8
                                                     --------  --------
   Net cash flow used for investing activities          (48.5)    (32.8)
                                                     --------  --------

Financing activities
   Net proceeds from issuing long-term debt                 -      74.1
   Disbursements to retire long-term debt                   -     (50.0)
   Short-term borrowings (repayments), net              (60.0)   (151.0)
   Dividends paid                                       (19.6)    (19.0)
   Disbursements to reacquire stock                     (11.4)     (4.9)
   Other                                                  1.9        .1
                                                     --------  --------
   Net cash flow used for financing activities          (89.1)   (150.7)
                                                     --------  --------

Net increase (decrease) in cash and cash equivalents      1.6      (6.8)

Cash and cash equivalents, beginning of period           10.7      55.8
                                                     --------  --------

Cash and cash equivalents, end of period             $   12.3  $   49.0
                                                     ========  ========



The accompanying notes are an integral part of these statements.


Nicor Inc.                                                          Page 4
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Consolidated Balance Sheets (Unaudited)
(millions)


                                          March 31     December 31     March 31
                                            2002           2001          2001
                                          --------     -----------     --------

            Assets
Current assets
   Cash and cash equivalents              $   12.3       $   10.7      $   49.0
   Short-term investments, at cost which
    approximates market                       28.7           34.2          47.6
   Receivables, less allowances of $10.7,
    $12.3 and $21.7, respectively            357.1          354.6         707.2
   Notes receivable - joint ventures          41.6           31.2           2.4
   Gas in storage                             25.0           28.6          11.5
   Deferred income taxes                      33.7           33.9          60.2
   Other                                      21.6           24.7          15.7
                                          --------       --------      --------
                                             520.0          517.9         893.6
                                          --------       --------      --------


Property, plant and equipment, at cost
   Gas distribution                        3,455.4        3,425.6       3,314.5
   Shipping                                  310.9          304.6         284.4
   Other                                       3.3            2.8           1.9
                                          --------       --------      --------
                                           3,769.6        3,733.0       3,600.8
   Less accumulated depreciation           2,017.5        1,964.4       1,902.9
                                          --------       --------      --------
                                           1,752.1        1,768.6       1,697.9
                                          --------       --------      --------

Prepaid pension costs                        167.5          164.3         151.0
Other assets                                 124.3          124.0          89.5
                                          --------       --------      --------
                                          $2,563.9       $2,574.8      $2,832.0
                                          ========       ========      ========


    Liabilities and Capitalization

Current liabilities
   Long-term obligations due
     within one year                      $      -       $      -      $   75.0
   Short-term borrowings                     217.0          277.0         291.0
   Accounts payable                          334.3          395.9         398.3
   Temporary LIFO liquidation                115.0              -         125.7
   Accrued gas costs                          58.9           99.9         128.7
   Accrued mercury-related costs               6.3            7.0          61.0
   Other                                      50.1           46.6          93.1
                                          --------       --------      --------
                                             781.6          826.4       1,172.8
                                          --------       --------      --------

Deferred credits and other liabilities
   Deferred income taxes                     340.9          328.8         300.3
   Regulatory income tax liability            65.4           66.3          69.4
   Unamortized investment tax credit          38.5           39.0          40.6
   Accrued mercury-related costs              27.3           30.0             -
   Other                                     118.9          104.2         100.6
                                          --------       --------      --------
                                             591.0          568.3         510.9
                                          --------       --------      --------

Capitalization
   Long-term debt                            445.8          446.4         421.4
   Preferred stock                             6.1            6.1           6.3
   Common equity
    Common stock                             110.6          111.0         113.4
    Retained earnings                        629.1          616.9         608.4
    Unearned compensation                      (.4)             -             -
    Other comprehensive income                  .1            (.3)         (1.2)
                                          --------       --------      --------
                                           1,191.3        1,180.1       1,148.3
                                          --------       --------      --------
                                          $2,563.9       $2,574.8      $2,832.0
                                          ========       ========      ========



The accompanying notes are an integral part of these statements.



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Nicor Inc.                                                         Page 5
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Notes to the Consolidated Financial Statements (Unaudited)

ACCOUNTING POLICIES

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.

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

DERIVATIVES

Nicor periodically utilizes derivative instruments to reduce interest rate risk
associated with the anticipated issuance of debt. In the first quarter of 2002
the company terminated one such agreement because of a change in the anticipated
debt issuance. As a result, the company recognized a $2.3 million gain in other
income.

BUSINESS SEGMENT INFORMATION

Financial data by business segment is presented below (in millions):

                                        Three months
                                           ended
                                          March 31
                                     -------------------
                                       2002       2001
                                     --------   --------
Operating revenues
   Gas distribution                  $  519.5   $1,346.5
   Shipping                              59.8       58.7
   Other energy ventures                 42.3       93.4
   Corporate and eliminations            (4.6)     (24.9)
                                     --------   --------
                                     $  617.0   $1,473.7
                                     ========   ========

Operating income (loss)
   Gas distribution                  $   57.8   $   64.6
   Shipping                               3.2        3.3
   Other energy ventures                  1.1         .9
   Corporate and eliminations             (.5)       (.8)
                                     --------   --------
                                     $   61.6   $   68.0
                                     ========   ========

Other energy venture operating revenues included $3.5 million and $24.2 million
in the 2002 and 2001 periods, respectively, from intercompany natural gas sales
to Nicor Gas.

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
are compared to a market-sensitive benchmark.

Nicor Inc.                                                        Page 6
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Notes to the Consolidated Financial Statements (Unaudited)
(continued)

Savings and losses relative to the benchmark are shared equally with customers.
Pursuant to the requirements of Illinois law, the plan is currently under
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 $2.9 million of estimated PBR results as operating revenue in the first
quarter of 2002 compared to $2.5 million in the first quarter of 2001.

COMPREHENSIVE INCOME

Other comprehensive income (loss) includes unrealized gains and losses from
derivative financial instruments accounted for as cash flow hedges.

Total comprehensive income (loss) consisted of the following (in millions):

                                                         Three months
                                                             ended
                                                            March 31
                                                      -------------------
                                                        2002       2001
                                                      --------   --------

   Net income                                         $   39.9   $   38.8
   Other comprehensive income (loss), net of tax            .4       (1.1)
                                                      --------   --------
                                                      $   40.3   $   37.7
                                                      ========   ========

LONG-TERM DEBT

In April 2002, Nicor Gas issued $50 million of 3 percent unsecured notes due in
2003 to be used for general corporate purposes.

RELATED PARTY TRANSACTIONS

At March 31, 2002, Nicor had $31.7 million of short-term notes receivable at
market interest rates due from Horizon Pipeline, a 50/50 joint venture between
Nicor and Natural Gas Pipeline Company of America. The notes cover a portion of
the initial construction costs of the pipeline. Horizon Pipeline intends to
finance the project with partnership equity and non-recourse third party
long-term debt, which is expected to be in place by May 2002.

At March 31, 2002, Nicor had $9.9 million of short-term notes receivable at
market interest rates due from Nicor Energy, a 50/50 joint venture with Dynegy
Inc. Nicor also guarantees up to $15 million of the joint venture's borrowings
under a line of credit, and up to $30 million of Nicor Energy's accounts payable
and performance commitments. As of March 31, 2002 Nicor had guaranteed $14.3
million under the line of credit.

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
company equipment.

Prior to 1961, gas regulators containing small quantities of
mercury were installed in homes.  These gas  regulators reduce
the pressure of natural gas flow from the service line to the
inside of the home.

Nicor Inc.                                                        Page 7
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Notes to the Consolidated Financial Statements (Unaudited)
(continued)

During the third quarter of 2000, the company learned that in certain instances
some mercury was spilled or left in residences.

As a result, in September 2000, Nicor Gas was named as a defendant in a civil
lawsuit (the "Attorney General's Lawsuit") brought by the Illinois Attorney
General and the State's Attorneys of Cook, DuPage and Will Counties, Illinois,
seeking, among other things, to compel the company to inspect and clean up all
homes and other sites that may have been affected by mercury from company
equipment. The Circuit Court of Cook County hearing this action entered two
preliminary injunctions requiring Nicor Gas, among other things, to conduct
inspections and, where necessary, to clean up mercury, to pay for relocating
residents until cleanup is completed, and to pay for medical screening of
potentially affected persons. Potentially affected homes are being inspected
using mercury vapor analyzers. Nicor Gas has called on every such home, although
it still has been unable to gain entry to some homes. Approximately 1,070 homes
have been found to have traces of mercury requiring cleanup.

On October 10, 2001 Nicor Gas entered into a settlement agreement with respect
to the Attorney General's Lawsuit, and on the same date the Circuit Court of
Cook County entered an order approving the settlement. Under the settlement,
Nicor Gas is paying a total of approximately $2.25 million over a 5-year period.
Of this amount, $.4 million will be used to reimburse the plaintiffs for their
costs and the balance will be used to fund environmental programs. In addition,
Nicor Gas will continue for a period of five years to provide medical screening
to persons who may have been exposed to mercury from Nicor Gas equipment.

Nicor Gas was also the subject of an Administrative Order, and an amendment
thereto, issued during the third quarter of 2000 by the U.S. Environmental
Protection Agency (EPA) pursuant to Section 106 of the Comprehensive
Environmental Response, Compensation and Liabilities Act. The order required the
company, 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 facilities where regulators and mercury may have been
temporarily stored and at commercial/industrial sites where mercury-containing
equipment may have been used in metering facilities. Pursuant to the injunctions
and the EPA order, Nicor Gas has completed the work described above for all
affected recycling centers, commercial/industrial sites and company facilities.
On July 12, 2001, Nicor Gas received a Notice of Completion letter from the EPA
regarding the work performed under the Section 106 order.

In addition to the matters described above, Nicor Gas has been named a defendant
in several private lawsuits, all in the Circuit Courts of Cook and Dupage
Counties, claiming a variety of unquantified damages (including bodily injury,
property and punitive damages) allegedly caused by mercury-containing
regulators. One of the lawsuits in the Circuit Court of Cook County involves
five previous class actions that have been consolidated before a single judge.
On October 10, 2001, Nicor Gas entered into an agreement to settle the class
action litigation. Under the terms of that agreement, Nicor Gas will pay a total
of approximately $1.85 million, will continue for a period of five years to
provide medical screening to persons exposed to mercury from its equipment, and
will use its best efforts to replace any remaining inside residential mercury
regulators within four years. The class action settlement permitted class
members to "opt out" of the settlement and pursue their claims individually. On
February 7, 2002, the Circuit Court of Cook County entered a final order
approving the class action settlement. The "opt out" period has ended and
approximately 160 claimants have opted out of class.



Nicor Inc.                                                           Page 8
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Notes to the Consolidated Financial Statements (Unaudited)
(continued)

Nicor Gas charged $148 million to other operating expense in the third quarter
of 2000 for estimated obligations related to the previously described work and
for legal defense costs. A $9 million adjustment lowered the mercury-related
reserve and reduced other operating expense in the third quarter of 2001. The
adjustment reflected more recent experience which indicated a lower number of
homes expected to be found with traces of mercury requiring cleanup and a lower
average cleanup and repair cost. Through March 31, 2002, the company has
incurred $105.4 million in associated costs, leaving a $33.6 million estimated
liability. The remaining liability represents management's best estimate of
future costs, including potential liabilities relating to remaining lawsuits,
based on an evaluation of currently available information. Actual costs may vary
from this estimate. The company will continue to reassess its estimated
obligation and will record any necessary adjustment, which could be material to
operating results in the period recorded.

The company has certain insurance policies, has notified its insurers, and is
vigorously pursuing recovery of mercury-related costs pursuant to its insurance
coverage. In January 2001, the company filed suit in the Circuit Court of Cook
County against certain of its insurance carriers for a declaration that the
company's mercury-related losses are covered, and for the recovery of those
losses. Nicor Gas is also pursuing certain insurance recoveries through
arbitration. In addition, some of the removals of mercury-containing regulators
were conducted by independent contractors working for the company. In November
2000, the company filed suit in the Circuit Court of Cook County seeking
indemnification and contribution from these contractors. Through March 31, 2002,
Nicor Gas has recovered, net of related expenses, $2.8 million from certain
insurance carriers of the company and its independent contractors. These
recoveries have been recorded as a reduction to other operating expense. At this
stage, it is not possible to estimate the likelihood of additional recoveries
from insurance carriers or other third parties related to the mercury spills,
and 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 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.

Manufactured gas plant sites. Gas manufacturing plants were used by Nicor Gas'
predecessor companies in the early 1900's to produce natural gas from coal,
producing a coal tar byproduct. Current environmental laws may require the
cleanup of coal tar at 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.

Nicor Inc.                                                           Page 9
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Notes to the Consolidated Financial Statements (Unaudited)
(concluded)

In December 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 reached a
settlement with one of the insurance carriers, and in February 2000, the court
dismissed the company's case on summary judgment motions by certain other
defendants. The company filed an appeal in March 2000. In May of 2001, Nicor Gas
reached a recovery settlement with certain insurance carriers who were involved
in this appeal. Management cannot predict the outcome of the lawsuit against the
remaining insurance carriers. Recoveries are refunded to the company's
customers.

In December 2001, a putative class action lawsuit was filed against Exelon
Corporation, Commonwealth Edison Company and Nicor Gas in the Circuit Court of
Cook County alleging, among other things, that the proposed residential cleanup
of a manufactured gas plant site in Oak Park, Illinois was inadequate. The
lawsuit claims that houses might have to be razed or removed and asks that
residents be compensated for the alleged loss in the value of their homes and
other monetary damages. An amended complaint adding additional plaintiffs and,
as defendants, the Village of Oak Park and the Oak Park Park District, was filed
in April 2002. Management cannot predict the outcome of this litigation.

In April 2002 Nicor Gas was named as a defendant, together with Commonwealth
Edison Company, in a lawsuit brought by the Metropolitan Water Reclamation
District of Chicago (the MWRD) under the Comprehensive Environmental Response,
Compensation and Liability Act seeking the recovery of past and future
remediation costs and a declaration of the level of cleanup for a former
manufactured gas plant site in Skokie, Illinois now owned by the MWRD. The suit
was filed in federal court in Chicago and the company has not yet filed
responsive pleadings. Management cannot predict the outcome of this litigation.

Since costs and recoveries relating to the cleanup of these manufactured gas
plant sites are passed directly through to customers in accordance with ICC
regulations, the final disposition of these matters is not expected to have a
material impact on the company's financial condition or results of operations.

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

Although unable to determine the outcome of these other 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.





Nicor Inc.                                                         Page 10
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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 2001 Annual Report on Form 10-K.

SUMMARY

Nicor's first quarter 2002 diluted earnings per common share was $.90 compared
to $.85 in the first quarter 2001. Net income for the 2002 quarter increased to
$39.9 million compared with $38.8 million a year ago. Lower net interest expense
and increased property sale gains more than offset a decline in operating income
in the gas distribution segment. Per share results were also favorably affected
by the company's common stock repurchase program.

Operating income. Operating income (loss) by major business segment is presented
below (in millions):

                                   Three months
                                      ended
                                     March 31
                                -------------------
                                  2002       2001
                                --------   --------
   Gas distribution             $   57.8   $   64.6
   Shipping                          3.2        3.3
   Other energy ventures             1.1         .9
   Corporate and eliminations        (.5)       (.8)
                                --------   --------
                                $   61.6   $   68.0
                                ========   ========

The following summarizes operating income comparisons for major business
segments:

o  Gas distribution operating income decreased from $64.6 million in the first
   quarter of 2001 to $57.8 million in 2002. The negative effect of warmer
   weather on year-to-year operating results was partially offset by the impact
   of weather protection benefits recorded in the current year. In addition,
   higher operating expenses due primarily to smaller pension credits, higher
   health care costs, and increased depreciation negatively impacted this year's
   results.

o  Containerized shipping operating income was about flat compared to a year
   ago. The positive effect of higher volumes shipped was offset by lower
   average rates resulting from soft economic conditions in the U.S. and
   Caribbean region.

o  Operating income from Nicor's other energy ventures reflects improved results
   at Nicor Enerchange, a wholesale natural gas marketing business, and at Nicor
   Services, a retail energy-related products and services business. Lower
   operating results at Nicor's energy system design and construction business,
   Nicor Solutions, partially offset these improvements.

Other income. Other income increased to $7.0 million in the first quarter of
2002 from $4.6 million a year ago due to increased property sale gains and a
gain resulting from the early termination of an interest rate derivative
instrument in January 2002. These positive factors were partially offset by
lower results at Nicor's retail energy marketing joint venture, Nicor Energy,
and less interest income.





Nicor Inc.                                                        Page 11
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Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (continued)

Interest expense. Interest expense for the three-month period decreased $4.6
million to $9.7 million in 2002 due to lower average borrowing levels and
interest rates. Reduced gas procurement costs contributed to the lower borrowing
levels.

Income taxes. The company's effective income tax rate decreased from 33.4
percent in the first quarter of 2001 to 32.2 percent in the current-year
quarter. The decrease was related to the completion of an income tax audit in
the first quarter of 2002.

2002 Outlook. Management currently estimates 2002 diluted earnings per common
share to be in the range of $3.10 to $3.25 and anticipates that second quarter
diluted earnings will be in the range of $.55 to $.65 per share. Both of these
estimates assume normal weather for the rest of the year and exclude any
mercury-related charges or credits. Although management believes the statement
about its earnings expectations is 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, natural gas and
electricity prices, interest rates, borrowing needs, credit conditions, economic
and market conditions, energy conservation, legislative and regulatory actions,
asset sales and performance-based rate plan results.

RESULTS OF OPERATIONS

The following discussion summarizes the major items impacting Nicor's results of
operations.

Operating revenues. Operating revenues by major business segment are presented
below (in millions):

                                        Three months
                                           ended
                                          March 31
                                     -------------------
                                       2002       2001
                                     --------   --------
   Gas distribution                  $  519.5   $1,346.5
   Shipping                              59.8       58.7
   Other energy ventures                 42.3       93.4
   Corporate and eliminations            (4.6)     (24.9)
                                     --------   --------
                                     $  617.0   $1,473.7
                                     ========   ========

Gas distribution revenues declined significantly in the first quarter of 2002
compared with a year ago due primarily to lower natural gas prices, which are
passed directly through to customers without markup. First quarter 2002 shipping
revenues reflect a small increase in volumes shipped compared to a year ago.
While the shipping industry continues to be affected by the current economic
slowdown, some improvement in Caribbean tourism appears to be occurring. The
decrease in revenues for other energy ventures was due primarily to the impact
of lower natural gas prices on Nicor Enerchange. The elimination of natural gas
sales from Nicor Enerchange to Nicor Gas is reflected in corporate and
eliminations.

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 without markup, decreased $3.8 million to $165.9 million in the first
quarter. The decrease was due primarily to lower deliveries resulting from 12
percent warmer weather than last year, the effects of which were partially
offset by weather protection benefits recorded in 2002. The positive effect of
lower natural gas prices on the cost of gas used to operate company equipment
and facilities was offset by lower customer finance charges.

Nicor Inc.                                                         Page 12
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Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (continued)

Operating and maintenance expense. Operating and maintenance expenses increased
$4.0 million in the first quarter of 2002 to $105.4 million. The increase was
due primarily to higher operating and maintenance expenses at Nicor's other
energy ventures and in the shipping segment. The increase in other energy
ventures was associated primarily with a higher level of activity and revenues
at Nicor Services and Nicor Solutions. The increase in the shipping segment
relates primarily to higher shipping volumes. In the gas distribution segment,
operating and maintenance expenses increased only slightly from a year ago as
the negative effect of smaller pension credits and higher health care costs was
nearly offset by decreased bad debt expense and customer service costs resulting
from lower natural gas prices in 2002.

FINANCIAL CONDITION AND LIQUIDITY

Operating cash flows. Net cash flow provided from operating activities decreased
$37.5 million to $139.2 million in the first quarter from $176.7 million in the
year earlier period. Year-to-year changes in operating cash flow result largely
from fluctuations in working capital items occurring mainly in the gas
distribution segment due to factors such as 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.

Financing activities. Nicor Inc. and Nicor Gas maintain short-term line of
credit agreements with major domestic and foreign banks. At March 31, 2002,
these agreements, which serve as backup for the issuance of commercial paper,
totaled $415 million and the company had $217 million of commercial paper
outstanding.

In April 2002, Nicor Gas issued $50 million of 3 percent unsecured notes due in
2003 to be used for general corporate purposes.

Under an existing common stock repurchase program, Nicor purchased and retired
261,000 common shares during the first quarter of 2002 at an aggregate cost of
$10.9 million.

Effective with the dividend paid on May 1, 2002, Nicor's quarterly dividend on
common stock was increased to 46 cents per share. This payment represents an
annual rate of $1.84 per share, which is 4.5 percent higher than the $1.76 per
share rate established with the May 1, 2001 dividend.

OTHER

Nicor Energy joint venture agreement. Nicor has a 50 percent interest in Nicor
Energy L.L.C., a joint venture with Dynegy Inc. that markets natural gas and
electricity to customers in the Midwest region, primarily in Illinois. In April
2002, Nicor and Dynegy renegotiated their joint venture agreement extending the
original agreement, which would have expired in mid-2002, by five years.

Asset acquisition. In April 2002, Tropical Shipping, a subsidiary of Nicor Inc.,
purchased certain assets of Tecmarine Lines Inc. and TMX Logistics Inc. With the
purchase, Tropical Shipping will offer customers an expanded all-water service
from Canadian and South Florida ports to an expanded network of Caribbean and
South American destinations. The acquisition is expected to increase Tropical
Shipping's annual volumes by about 10 percent.

Nicor Inc.                                                        Page 13
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Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (continued)

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 and electricity commodity prices and interest rates. It is Nicor's
practice to manage these risks utilizing derivative instruments and other
methods, as deemed appropriate.

With regard to commodity price risk, the company has established policies and
procedures governing the management of such risks and the use of derivative
commodity instruments to hedge its exposure to such risks. Senior management
actively participates in a risk management committee that oversees compliance
with such policies and procedures. The company utilizes various techniques to
limit, measure and monitor market risk, including value at risk (VaR). VaR is
the potential gain or loss for an instrument or portfolio from adverse changes
in market factors, for a specified time period and at a specified confidence
level. In addition to VaR, the risk management committee has established other
limits based on volume, dollar amounts, and duration. The risk management
committee has established exposure limits at such a level that any adverse
results are not expected to have a material adverse effect on the results of
operations or the financial condition of the company. The company's policies and
procedures continue to evolve with its businesses and are subject to ongoing
review and modification. As an overall measure of Nicor's direct exposure to
commodity price risk, every 10 percent change in natural gas prices at March 31,
2002 would have had about a $850,000 impact on Nicor's earnings.

Nicor's regulated utility, Nicor Gas, is generally not exposed to market risk
caused by changes in commodity prices because of Illinois rate regulation
allowing for the recovery of natural gas supply costs from customers. Although
the company has a PBR plan for natural gas costs, the plan does not directly
expose the company to commodity price risk because actual gas costs are compared
to a market-sensitive benchmark as opposed to a fixed benchmark.

Substantial increases in natural gas prices may impact Nicor Gas' earnings by
increasing the cost of gas used by the company, bad debt expense and other
operating expenses. Higher natural gas prices may also lead to lower customer
gas consumption. The company addresses these risks by using fixed-rate purchase
agreements, futures contracts and swap agreements to reduce the financial
impacts arising from natural gas price changes.

Nicor's other energy businesses are subject to natural gas and electricity
commodity price risk, arising primarily from fixed-price purchase and sale
agreements and natural gas inventories. Derivative commodity instruments such as
futures, options, forwards and swaps may be used to hedge this risk.

Nicor Inc.                                                        Page 14
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Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations (continued)

GAS DISTRIBUTION STATISTICS

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

                                                Three months ended
                                                     March 31
                                                --------------------
                                                  2002        2001
                                                --------    --------
Operating revenues (millions)
   Sales
    Residential                                 $  340.2    $  993.2
    Commercial                                      64.3       188.5
    Industrial                                      10.7        29.9
                                                --------    --------
                                                   415.2     1,211.6
                                                --------    --------
   Transportation
    Residential                                      3.1         2.9
    Commercial                                      25.7        27.8
    Industrial                                      11.0        12.0
    Other                                            2.5         3.9
                                                --------    --------
                                                    42.3        46.6
                                                --------    --------
   Other revenues
    Revenue taxes                                   36.4        66.5
    Environmental cost recovery                     12.0        10.3
    Performance-based rate plan                      2.9         2.5
    Chicago Hub                                      3.4         2.8
    Weather protection                               3.5           -
    Other                                            3.8         6.2
                                                --------    --------
                                                    62.0        88.3
                                                --------    --------
                                                $  519.5    $1,346.5
                                                ========    ========
Deliveries (Bcf)
   Sales
    Residential                                     94.7       102.4
    Commercial                                      17.2        19.3
    Industrial                                       3.1         3.1
                                                --------    --------
                                                   115.0       124.8
                                                --------    --------
   Transportation
    Residential                                      3.2         3.0
    Commercial                                      39.8        40.9
    Industrial                                      37.7        39.7
                                                --------    --------
                                                    80.7        83.6
                                                --------    --------
                                                   195.7       208.4
                                                ========    ========
Customers at end of period (thousands)
   Sales
    Residential                                  1,777.0     1,756.7
    Commercial                                     105.5       101.1
    Industrial                                       6.9         6.7
                                                --------    --------
                                                 1,889.4     1,864.5
                                                --------    --------
   Transportation
    Residential                                     58.2        51.3
    Commercial                                      64.7        67.2
    Industrial                                       6.9         7.3
                                                --------    --------
                                                   129.8       125.8
                                                --------    --------
                                                 2,019.2     1,990.3
                                                ========    ========

Other statistics
   Degree days                                     2,723       3,104
   Average gas cost per Mcf sold                $   2.74    $   8.88


Nicor Inc.                                                  Page 15
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Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations (concluded)

SHIPPING STATISTICS

                                                Three months ended
                                                     March 31
                                                -------------------
                                                  2002        2001
                                                --------    --------

TEUs shipped (thousands)
   Southbound                                       31.9        31.0
   Northbound                                        4.2         4.6
   Interisland                                       3.0         1.4
                                                --------    --------
                                                    39.1        37.0
                                                ========    ========

Other statistics
   Revenue per TEU                               $ 1,532    $  1,583
   Ports served                                       21          22
   Vessels operated                                   16          17




<PAGE>


Nicor Inc.                                                    Page 16
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Item 3. Quantitative and Qualitative Disclosures about Market Risk

For disclosures about market risk, see Market Risk on page 13, which is
incorporated herein by reference.


PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For information concerning legal proceedings, see Contingencies beginning on
page 6, which is incorporated herein by reference.

Item 6. Exhibits and Reports on Form 8-K

   (a)  See Exhibit Index on page 18 filed herewith.

   (b) The company did not file a report on Form 8-K during the first quarter of
       2002.



<PAGE>


Nicor Inc.                                                        Page 17
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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       April 25, 2002            By  /s/ KATHLEEN L. HALLORAN
      --------------------             ----------------------------
                                          Kathleen L. Halloran
                                          Executive Vice President
                                          Finance and Administration
                                          and Administration, and Secretary

<PAGE>


Nicor Inc.                                                        Page 18
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Exhibit Index

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

   10.01         2002 Long-Term Incentive Program.

   10.02         2002 Incentive Compensation Plan.